Jay Abraham said there are three ways to increase your business.
1. Increase the Number of Customers coming to your business. There are four ways to increase the number of customers.
• Create new customers
• Retain current customers
• Win back lost customers
• Get referrals from your current clients (the best of these come from your best clients). See my blog on this subject titled: The 80/20 Principle
2. Increase the Average Dollars per Sale
3. Increase Repurchase Frequency
Before moving forward you must know what it costs you to acquire a new customer.
Here is the information you need:
Cost of all Advertising, Promotions, Promotional discounts on 1st transactions plus some Allocated fixed overhead expenses – the same percentage as new customers contribute to overall revenue.
Add these all together, divide by the number of new customers you acquire by month and/or by year.
- Let’s look at a hypothetical business as an example:
• Let’s say you spend $15,000/mth spent on advertising (print, tv, radio, billboards, etc)
• You have one of your employees manage your social media (like Facebook) and manage your website and it takes her 40 hrs/mth = 40 hrs x $25/hr = $1000
• Fixed overhead is $30,000/mth and you calculate that 30% of your mthly revenue comes from new customers who never return = $30,000 x 30% = $9,000
• You acquire 100 new customers/mth
In this example, your cost to acquire a new customer is $25,000/100 or $250.00.
Here’s the Rest of the Story that no one considers:
A lost customer costs you the $250 you invested to acquire him PLUS another $250 to replace him = $500.
How many business owners think like this? In my experience, very few.
So, hypothetically, this business should be spending $300 to acquire each new customer.
BUT it gets worse:
A lost customer can’t refer someone. With Principle Centered Marketing, Selling & Business Practices we think a desired end result should be that every customer refer at least one other customer to your business.
In fact, the easiest way to double your business is to have every client refer one person.
So, in that first year you lose the new customer that cost you $250 to acquire plus it cost you an additional $250 to replace him.
BUT you also lost the referral he would have sent you and in my blog
What Are Your Clients Really Worth? we showed you how to calculate the real lifetime value of every customer or client.
Every business I’ve ever spoken to is vastly under-investing in marketing because of the way they think…or don’t think.
Tom Peters in his landmark book “In Search of Excellence” opined that it costs 10 times more to acquire as it does to retain (a customer).
Keeping customers = Success
Losing customers = Failure
What would happen if instead of spending $250 or $300 or even $450 to acquire a new client, you spent $50 rewarding your best customers, making them feel like a V.I.P. and providing so much value that they become your outside sales force?
Principle Centered Marketing, Selling & Business Practices focuses primarily on creating trusting relationships at every level so that not only does your business grow with less time, effort and money invested than your competition, but your personal income grows, becomes more predictable and your personal time with family increases.
Here is an important point: People don’t want to be customers of a business, they want to be in a relationship. They want to be educated, remembered, entertained, made to feel important.
Your clients want to feel personally and emotionally connected to you and your business.
Decide now which way makes more sense to increase your business and then…Take the appropriate action!
We help small business owners:
1. Leverage their time
2. Increase their cash flow
3. Attract and keep the Right clients and employees
How:
1. Essential Elements Discovery Process
2. Automated Email marketing
3. FB marketing
4. Video marketing
5. 1-on-1 “Do It For Me” coaching, consulting, mentoring