Imagine you are one of the 82 auto repair and service shops shown in this Google map and you are either not achieving your revenue goals or want to increase revenue this financial year.
The distance from one end of the road to the other is about 7 kilometres (4.5 miles). This means on average there is one competitor to your business every 85 meters (50 yards)!
Your customers and potential customers are spoilt for choice. If they don’t like you for some reason they don’t have far to travel to find an alternative.
Well you know one thing. You are going to need to stand out from the crowd. But how, and to whom?
You do have a marketing budget but it’s rather small and you don’t have a lot time as you work in the business. You are obviously aware who some of your competitors are because you can see a lot from your location and drive past others every day. You also see their advertising in the local newspaper and community papers.
So what are you going to do? There are certainly a lot of things to think about and do.
But what’s the one unique thing you have in your business that your competitors don’t?
It’s your customer database. That is your current active customers and your past customers. Hopefully 80% to 90% of your customers are repeat customers and would say you did a reasonable job. This comment is not really a great endorsement but gives you something to work with.
If you have been in business for say 5 years, around 20% of your former customers are likely to have left you. Many will not have told you. This gives you a customer retention rate of 80%.
So think about it. If you serviced 1,000 customers’ cars last year you would be expecting 800 of those same customers to bring their car back this year. Another way to look at is that if you didn’t replace a single customer between 1 January 2015 and 31 December 2020 you would only have 328 customers left! (What do your business’ figures look like?)
Some customers left you because they have moved away, others because they don’t like your service and/or prices. However, a whopping 67% of those who left you did so because they perceived that you were indifferent to them i.e. they didn’t know if you loved them or not!
Doing a great job is an important part of delivering a service but that’s not all that brings a customer back. With 81 competitors, or perhaps even only 10 competitors working in your niche, in the geographic area, you need to “show customers the love”.
Now, not all customers need to be treated as equal. You can if you want but it is unlikely to be the path to greater profitability. The best idea is to divide your customers into segments based on a variety of criteria that works for your business.
In this example two easy points of differentiation can used to start the process
Rank them by number of times they used your business
Rank them by total value of work paid for
Note the order I have suggested. You would expect that a customer who uses your services two or more times a year would spend more than a customer who uses your business once a year. Those customers who purchase multiple times per year should be your most valuable customers.
Segmenting a database based on different customer profiles requires thinking and analysis but it is critical to the continued success of your business. The goal of profiling is to be able to draw a sketch of a person that represents each key profile group. The more detailed the better
As part of your process, you need to consider where you are going to store the customer and contact information.
Today, due to the use of the Internet to source information and communicate a Customer Relationship Management (CRM) system is becoming a necessity. CRMs enable you to manage customer, prospect and contact information easily and incorporate aspects such as segmentation, social media streams, opportunity management and importantly other communications. Systems like Nimble are very easy to use but are extremely powerful.
However, if you install a CRM without proper planning and incorporation into you overall business process you will end up feeling your money has been wasted. Seek professional assistance as part of planning your CRM implementation.
Once you have profiled and segmented your database you can then identify the messages you want to get across to each profile group and what media you may use. You will also decide on how to best build the relationship with each group within your database. You will consider pricing, special offers, gifts, website, use of social media, advertising, e-newsletters, tracking of contact and response to advertising and other communications.
Imagine if you set a goal of reducing the number of clients leaving you because of indifference to 33%. If you actively work to build an authentic, trusted relationship with your customers it would mean, in this example, 66 customers are retained. Multiply 66 by the average sale value and you have calculated the forecast in sales revenue retained. This of course then improves the profitability of your business.
You can increase revenue and profits in your business if “you show customers that you love them!”.
Your customer database is one of the most valuable assets in your business. If someone bought your business would they want that list? Most would if they knew it had current names, addresses, phone numbers, email addresses and some purchase history.
Your most valuable customers in the database are those who purchase from you multiple times per year and who buy year after year. Don’t let them go to one of the other “81 businesses”. Treat your repeat customers with tender loving care.
So what’s the One Secret to Help You Achieve Your Revenue Goals?
“Build trusted, authentic relationships with your existing and past customers over time so that they want to only do business with you.”
Ross Keating, The Client Orchardist
Ross Keating, The Client Orchardist has more than 20+ years helping businesses increase revenue and profits by building trusted, authentic relationships with customers. If you have any questions about customer relationship management, customer retention or would like to discuss how you achieve your sales and business goals click this link to schedule a time to connect