The No 1 mistake small businesses will make in 2017, will you?
How I am able to predict the future so confidently? Because it’s the exact same mistake small businesses made in 2016, 2015 and 2014. It’s Groundhog Day…again.All the focus is on how to get more clients (or customers) when the business should be focused on converting the customers (or clients) you have into loyal, repeat business, Don’t plant more seeds, water what’s already planted.
Improving that area of your business has a ridiculously positive effect on your business and if it’s not something you’re focusing on, you’re taking money out of your own pockets and putting it into your competitors
Cost per Acquisition
In most cases, it costs you to acquire a new customer. We call it the cost per acquisition. Whether that’s through online advertising, leaflets, posters or a prominent location on the high street. That extra cost eats into your profit margin for that first sale, but any subsequent sales don’t have the cost of acquisition which means more money in your pocket.
Spending some energy and improving your customer’s experience is going to reap the rewards. Let me give you example with numbers.
A car mechanics add a profile in YELL, which costs them £1000 for the year. That advert generates 20 new customers. It means they have a Cost Per acquisition of £50.
Now, of course, a mechanic has other costs, parts, labour, etc, so they’ll be lucky to make even a profit from a small job like an oil change. However, treat that customer right and they might come back.
Let’s say this particular mechanic does something to make their customers come back and trust them, so which in turn starts to convert them into loyal customers.
The average household has 2 cars. Become their go-to, trusted, mechanic and they’ll come back to you for servicing, repairs, new tyres, MOT’s. None of which has a cost of acquisition so the profit margins are better.
Word of mouth is free
Why advertise when you can get others to do it for you, for free? It’s no secret that a referral or recommendation is the best type of advertising. Here’s why:
No cost. It’s FREE, which means your profit margin is better. Which is nice!
Conversions are better. It’s one thing to make someone interested in your business, but getting them to buy is another thing altogether. That is unless they come to you from a referral, then they already come with the mind-set that you’re trusted by others whose opinion they value.
And we’ve only just scraped the surface.
My personal favourite is simply this. Customers are price driven. If they’re not coming to buy from you, they’re buying from your competitor because they are either cheaper of the perceived competitor offers more value for money.
Loyal customers have a completely different mind-set. They will stick with you even with price increases, even if you are not one of the cheapest thanks to the trust you’ve developed, the loyalty they have, takes your relationship above just pricing.
Loyal, repeat business is so much more cost effective than striving to get new customers day after day, month after month, but it’s something plenty of small businesses fall into the habit of doing, much to the detriment of their business.
We’ve made it our mission to help our clients with that change in mind-set, and to give them the resources and tools they need to maximise the revenue from their existing clients. If you’d like to get in touch to find out how we can help you too. arrange your free consultation.