The Legendary Marketer, Jay Abraham teaches the following:
There are three ways to grow your business, and the one that probably instantly comes to your mind, getting more customers, is in fact the hardest, and most expensive way of them all...
You can either get more customers, which every business owner and marketer knows is the most expensive, or you can focus on increasing the average transaction size, and/or increase the frequency of purchases from said customer.
One little know factor people don't often think of is called "Attrition rates", this is a $10 word for customers who stop patronizing your business.
There are two main reasons why people stop doing business with you:
- They have had a bad experience with you and they simply chose to stop buying from you, and they never told you about it. I am guilty of doing this at restaurants, rather than make a big scene and complain about my food, I just don't go back.
- They have had some sort of interruption in their life. Maybe they lost their job, moved, got divorced- something along those lines. These customers are the easiest to retrieve if you will. All it usually takes is a calling or writing them and asking them if everything is okay and that you appreciate their business etc. Basically state that you appreciate them and ask what you can do to make it right for them.
This comes from keeping very detailed records of your customers. You should keep track of everything, when they buy, how often, what they like, their email's, names, and even addresses if it is appropriate.
In order to increase the average transaction size, it's all about educating your customer and making them aware of all their options. You need to determine exactly what they need and make sure that they don't get anything less than that.
There are three ways to increase transactional size:
- Increasing the quality of your product.
- Increasing the quantity that you sell to that customer at any time
- Adding additional services or complementary services.
Your ultimate goal in business is to know the total lifetime value of your customers. Only then can you know exactly how much you can spend to bring in new business.
The worst situation you can be in is spending $2 and making 1...
However if you know that the lifetime value of your customer is $2000, that means if you sell your services at $200 a pop for example, then you know you can easily spend that $200 or give away one session for free in order to acquire their business.
Whatever the number might be, you have to find it out to create a marketing machine. This is by the way how big companies can justify spending buckets of cash to acquire new customers, they know that over their entire lifetime, they will be profitable- If they can convert them to their brand.
All of this comes from analyzing and understanding your customers buying patterns.
In order to increase the frequency of your customers purchases, figure out a way to get your customer to come back consistently. If you can change your business from the selling business to the repeat customer and referral business, you instantly become better off for it. If you try hard enough, you can turn almost any business into a subscription business.
Your need to ask yourself the following question...Am I in the transaction business, or the relationship business? That one question can change everything.
One way to be in the relationship business is to make an effort to always make your customers feel...special!
Most people want to become an entrepreneur so they can be their own boss, but they forget something very important...Even if you run your own company, you always have a boss.
The person paying your bills simply shifts from your actual boss to...
I'm hoping all of this isn't news to you, but if it is, well then it's about time you learned.
Well that's all for now,