A different way of marketing to your customers
Do you remember your days in kindergarten or elementary school? You probably had a part of your school week that contained a music lesson. In this class, many children learned the song about Johnny Appleseed.
According to the song, Johnny went about the countryside spreading seeds to start apple orchards. He carried a bag of seeds and sang a song about how he was thankful for having the necessary ingredients to grow a successful tree.
I don't remember the song having a second verse. Without a second verse, I suppose we will never know if Johnny Appleseed ever went back to fertilize the trees he had planted. Doesn't this make you wonder how successful each of the apple tree orchards was? After all, as with any plant, just putting the seed in the ground and leaving the rest to nature does not guarantee results.
Small business is a lot like that: the seed, or invitation to do business with you, is spread through traditional advertising methods. Sometimes it works, and sometimes it does not; but the business continues to spread seeds hoping to see its sales grow. An old adage states that the cost of gaining a new customer is $20.
The reason for this high price is the amount of advertising that is sent out to people who have absolutely no intention of, or interest in, doing business with your company. After all, if you advertise in a newspaper, by direct mail, or on a radio or television station, you are sending your message to the masses.
If they have no interest in purchasing what you sell, your advertising goes to waste. We all know this is true for the vast majority of the people being exposed to the advertising of any business.
For example, the local newspaper may have a daily circulation of 50,000. If you place an ad in the newspaper, and are hoping for even a mere 3-percent response, then some 1,500 people would come into your store or call to ask about the product or service you mentioned in the ad. As you can see, most businesses would be happy if even one-tenth of the 3 percent would respond, for that would mean 150 people came to do business with them.
So, when 25 people actually do respond to the ad, and the cost of the ad was several hundred dollars, you can see that it would easily cost $20 to get each of these customers into your business.
The second half of the above-mentioned adage states that it costs only $4 to keep a customer. The logic and economics of this equation say that when a customer has walked into your business or done business with you over the phone, you have identified a prime suspect.
While we are not suggesting you stop looking for customers, what we are suggesting is that you spend more time looking for the customer who has done business with you previously.
Think about the person who buys something from you. Most likely this will not be the one and only time they will do so. If they have made even one purchase, you need to find a way to stay in contact with this person. As compared to the rest of the public reading your newspaper ads, you know this individual has an interest in the products you sell.
I know of a dealer who tracks the sale of every major item he sells. Within two weeks of the customer’s purchase, a call is made to ask the customer how he or she is enjoying the new purchase. When the customer does not return to the store within six weeks, someone from his sales staff initiates a phone call to the customer.
The conversation begins by confirming that the customer has made a purchase and that he or she has not been back in to shop lately. The question to ask is how he or she is enjoying their purchase.
Utilizing a computer software program to track sales, you can keep in touch with these customers. Another way of contacting customers is to create a monthly newsletter to simply say hello and tell your customers what products are new and what is going on with your business.
With these two ideas, or any other idea for customer contact, you are far ahead of any competitor when it comes to customer retention. When it comes to growing a business, we all know the critical ingredients—just like Johnny Appleseed knew what he needed. Perhaps now it’s time to write the second verse and spend time cultivating and fertilizing these customers.