Generally, if you get more customers to buy your product or service, you will make more money.
The problem is what you have to do to get new customers. If you have to spend a fortune on advertising and promotion or lower your price to make your product or service more attractive, more customers can easily cost your business a fortune!
And that’s not good.
There are only three methods to increase sales in ANY business. I call them the Three Mo: #1. Mo’People #2. Mo’Money #3. Mo’Frequently
#1. Mo’People – Get more customers (more people who will buy from you).
Most companies spend all their time and money on this: getting more customers. They’ll mail out thousands of colorful brochures, pretty postcards, and witty sales letters. They will spend BIG dollars on advertising in newspapers, magazines, circulars, and directories. They will have huge sales where they hope a new customer will be lured in by disgustingly low prices.
All the “Mo’ People” things that companies do to get new customers consume a LOT of money and time. Plus…
It’s hard to make it work.
Businesses that send out mailers are thrilled when they get a 1% conversion rate. That means that out of 100 pieces of mail sent, 1 person ends up buying something. You don’t need a Ph.D. in math to realize that it also means 99 out of 100 pieces of mail:
- never came to perspective
- were ignored (and trashed) by the prospect
- didn’t excite the prospect at all
- did not excite the prospect enough to buy
Not only that, but if it costs $1 to send each piece of mail, then whatever you sell to that miserable customer bring in at least $100 of profit or your campaign will end in the red.
New customer acquisition campaigns can (and do) work, but only when the campaign’s cost per new person is much less than the lifetime value of each new customer you gain.
For example, if you are selling yachts or private jets, you may send expensive mailings to your prospects because a single conversion will put you on an easy street.
There’s a pretty famous new customer acquisition success story from a few years ago. You may remember a time when you couldn’t open a box of bathroom soap without finding a free AOL CD inside. But here’s the deal…the lifetime value of each new AOL customer was hundreds of dollars, I guess $400 at least. Each of those CDs probably cost about 20 cents to produce and distribute. So if we do the math, AOL only needed to get 1 customer per 2,000 CDs (0.05% conversion) to break even. 2, 3, or 4 new AOL customers per 2,000 CDs (0.1%, 0.15%, and 0.2% conversion) would mean a profit of $400, $800, or $1,200 per 2,000 CDs. Now maybe you can see why those CDs were EVERYWHERE.
But even a successful campaign like this requires a great deal of time and money.
Getting new clients is difficult and expensive. If your business is new, then you have no choice. Customer acquisition campaigns are a necessary evil.
The good news is that if you’ve been in the market for a while and already have customers, you can make a lot more money with a lot less effort and expense by focusing on numbers 2 and 3: Mo’ Money and Mo’ Frequency. .
#two. More paste- Get more money from your customers every time they buy from you.
#3. Mo’Frequently – Make your customers buy from you more often.
How do you get your customers to spend more money and spend it with you more often? Making sure they get what they want from your business. And what do they want? That part is easy. Every good customer wants only one thing… COMFORT.
- Value-conscious customers want to feel comfortable because they are getting good value for their money (CostCo Wholesale Club)
- Wealthy customers want to feel that the quality, service and exclusivity of your product is equal to their “station” (American Express Platinum card)
- Early adopters want to feel comfortable with your product or service, it puts them ahead of the pack (Apple iPhone)
- Professional clients want to feel comfortable knowing that the tools and service you provide will ensure their business runs smoothly. (Nikon Professional Services)
Giving your customers what they want is a piece of cake once you know what they want and once you’ve decided that you and your business are ready to satisfy that desire.
So this is what you need to do:
STEP 1: Assess – You’ll need to take an honest look at your business and its processes. If your business isn’t ready (operations, call center, shipping, etc.) for your customers to feel comfortable, your first task is to work your business until they are.
STEP 2: Educate – Once you are confident that your business or service can make your customers feel comfortable, you will need to make sure that your customers fully understand how comfortable you can make them. You will first let them know how your product or service will make their lives more comfortable. Then you will communicate how your business is designed to make them feel much more comfortable than your competitors.
You can do this relatively easily and cost-effectively with a monthly email newsletter sent to customers’ email inboxes.
Why only “relatively” easily? Because the newsletter won’t work if your customers see it as something in the mail that you want them to read. You’ll need to make sure your newsletter is a “comfort delivery” device. Every article, promotion, or testimonial MUST be written to bring that sense of comfort to every recipient.
STEP 3: Demonstrate – Ultimately, you’ll want to show people how comfortable you can make it. A good way to do this is with FREE trials. Another is to use testimonials where you introduce your entire customer base to a select few customers who have already had excellent, profitable, and rewarding experiences with you and your business. Testimonials are a great way to communicate the benefits of your business, and the proof will come from people your customers can easily identify with.
Yes, more clients CAN mean more profit, but the time and expense required to attract new clients is HUGE.
Smart business owners have learned that focusing on their current customers is much less expensive and just as profitable…
… if not more.