Every company’s goal is to grow each year. Nobody wants to just hold steady or have their business go into a backslide.
However, when I visit most companies and businesses I rarely find that a solid growth plan is in place.
They often want to talk all about how to improve their rankings on Google or gain more traffic on social media. They think simply getting more visibility will help their longterm revenue needs.
Growth is not guaranteed by search engine rankings, social media or paid ads…these are merely tools for helping you arrive at your end business goal. Without the right product, at the right price these marketing tools are meaningless.
This is rarely the case.
Unfortunately, these things mean nothing if a proper business development plan is not in place. This might seem obvious, but very few businesses think this way.
You (the owner) or your business development team needs a strategy for:
- Acquiring new customers
- Retaining customer for max lifetime value
Acquiring New Customers
Your business needs new customers every week, every month, every year. This means getting brand new people trying your product or servicer for the very first time.
New customers open the flood gates to increased revenue and market share.
Without new customers, there is no new revenue. It’s just the same revenue being generated from the same customers, and this is a dangerous spot for your business to be in.
Now, how you acquire new customers should be in-line with your unique selling proposition, which is typically based on:
- Product/service deliverables
- Pricing strategy
- Marketing initiatives
The Low Barrier Offer (LBO)
In my opinion, every business needs some form of a low barrier offer. This is something that is inexpensive (relative to your niche) and easy for interested individuals to purchase that then enables them to experience your brand first-hand.
Even the luxury jewelry store Tiffany’s has a low barrier product offer with their line of jewelry under $250. This line is in no way keeping the company afloat, but it brings in a steady stream of new, first time buyers into the store who then get to have the full brand experience without the hefty price tag.
These first time buyers might not have realized that Tiffany’s carries much more than just diamond jewelry. They now offer sunglasses, handbags, fragrances, etc., as well as their famous line of luxury bridal jewelry. This product variety now allows them to cater to a wider demographic with varying income levels, and it also gives them multiple touch-points throughout the full lifecycle of a customer.
Tiffany’s now has the ability to generate more revenue from each new customer they acquire. That’s powerful.
Once purchased that individual now can experience your brand quality, ideas, customer service and support, etc.
This gets them into your sphere. And, now you have the ability to talk with them directly, and possibly upsell them more products or services later once they get to experience and trust your service.
It costs more money to acquire a new customer than it does to re-sell to a previous or existing customer.
Individuals new to your brand need to know, like and trust you before they are willing to buy from you. Even then your product or service must be priced accordingly and have good value to the consumer.
I’m not contradicting myself here.
My point is this, it does take a lot of effort to acquire new customers. This is necessary for your business to thrive. But, don’t let all of that effort fall short after you make the initial sale.
New customers have the ability to be new fans of your brand. You need to keep them engaged throughout their entire life cycle.
This is where customer retention strategy comes into play.
A good customer retention strategy builds-in the elements that create a rich, longterm customer experience that is mutually beneficial both the business and customer. These things include:
- good customer service
- solid product/service support
- are their products/services you can cross-sell during or after the first purchase
- is there are high-level version of your product/service that you can up-sell to the customer later
- what is your customer follow up strategy? How do you touch-base with your new customers to make sure they are satisfied with their purchase?
- Do you offer an exclusive email newsletter to new customers with exclusive promotional offers?
All of these elements work together, in-unison, to increase value to the consumer while also incrementally increasing per customer revenue.
Big Companies Depend on Customer Retention
We see this a lot in the hospitality industry. Restaurants and hotels reward customers that loyally stay with them and offer them exclusive deals on trips or free drinks/food during their next visit.
Starbucks does this very well. When you download and use their app, you are being tracked and accruing points. Once you buy enough drinks and accrue enough points you start to become eligible for free drinks and food.
In retail, Tiffany’s sends out an exclusive email newsletter to past customers that offers them exclusive deals.
This idea of rewarding those that have done business with you in the past is not new. However, I don’t see enough small businesses utilizing this tactic. In my opinion, failure to adopt these business tactics is what dooms most small businesses.
Revenue growth is a 1-2 punch of acquiring new customers and retaining the customers you have to generate future purchases and revenue from them. As a business owner this is vital strategy you need to adopt (if not doing so already) that will turn your business into a longterm revenue generating machine.