Let’s say you run a successful business. You have dozens, maybe even hundreds of employees managing departments, teams, multiple concurrent initiatives, projects, and products. Your business is complex and there is a lot to deal with. You may find yourself overwhelmed with how to stay ahead of the next great idea, or how to make sure your competition doesn’t catch up; perhaps even finding a way to catch-up and surpass your competition.
What does this have to do with marketing? Well, everything. Your company may have the best product or service, however, when looking at sales numbers and marketing spend, your head is spinning over how to increase revenues & profitability and decrease marketing spend. At the end of the day profitability is what keeps you in business. Right? You may be lucky enough to have infinite loads of cash to play with, in which case, you can stop reading this article now as it will likely be irrelevant.
For those of you who are seeking to improve your business, this article IS for you. Read on…
Let’s be honest, in my work with hundreds of business owners & C-level executives of Fortune 100 companies, most look at their business myopically missing massive opportunities to maximize their profitability without constantly generating new leads. You see most companies spend enormous amounts of money on advertising through TV, print, and the myriad of online channels to generate leads and make a sale. Yes, ‘a’ sale. See, it’s a great thing to generate new customers, however, the missed opportunity is generating repeat customers and increasing the customer’s LTV (lifetime value).
First, let’s take a look at what the industry calls ‘profit multipliers’ which is a simple way of identifying the various ways that your company can add value to your customers while increasing their immediate and long-term spend with your business.
Below are a few examples that your company can increase the profitability of each customer by just 5% or more, which sounds like a small amount, however, ‘multiply’ this by the number of customers you have that you are not engaging and you’ll see that this can add a significant amount to your bottom line.
Example 1- Customer Engagement Conversations
Let’s look at a retail store – when people come in, what does your staff ask them? “How can I help you?” This question overwhelmingly leads to the same answer over and over again, “No, I’m just looking.” Then the customer walks out without purchasing anything. If we just changed the conversation to “I’d love to show you our new XYZ” or “This item has been super popular” or a myriad of other possible conversation starters which lead to increased customer engagement, we can produce greater sales opportunities.
Example 2- Objection Handling & Data Collection
Let’s look at a service provider that has a call center in which a customer calls in to inquire about a product. Starting with one of the most important ways to determine ROI, your agents must track how every single phone call was generated. This is the first step to determining if your marketing efforts are profitable. The next step is to track and refine your script to answer all of the objections that people have before they even ask them. It is likely that most customers will have the same questions over and over. Train your sales agents to properly answer these questions.
The next step is to integrate data collection early in the conversation so that regardless of sales, you may follow-up with your customer with the appropriate conversation. Pretty much all CRM systems these days will allow for automated prospect follow-up whether it’s a simple email (believe it or not, most companies don’t do this) or a direct mail piece that goes out to support the conversation. These tactics are so simple yet so seldom used, and have the effect of increasing customer conversion significantly.
Example 3- Leveraging Data Between Buying Cycles
Let’s look at an online business that has generated hundreds, thousands, or millions of customers in the past and has their email and mailing address on file. This should be the first place to go when identifying ways to increase profitability. You see, they have already purchased from you, they know who you are, and if you have done a good job in fulfilling your product or service, the customer will trust you and likely re-purchase. Most customers go through buying cycles, whether it’s a month, a year or every two years, they will re-purchase. Make sure they re-purchase from your company.
Leverage the data you have, continually engage them, add value, and stay in front of them during their cycles and ask for the sale. It really is that simple. Most companies fear emailing or mailing their customers not to annoy them when in fact it leads to losing customers in most cases. It is much cheaper to make a recurring sale than to generate a new customer. Leverage your data.
Example 4- Recurring Value-based Add-on Services
This strategy can be used for any business and creates a reliable source of income over a period of time. When most businesses are constantly seeking new customers, you can increase the LTV of your customer by providing an ongoing subscription service that is directly associated to your base product or an ancillary product that increases the value of your service. Not everyone will sign-up; those who do will add a new recurring revenue stream to your business without spending any more money on the acquisition.
Without getting into the nitty-gritty details of how to execute these strategies, you can implement one or all to your business and substantially increase the per customer profitability exponentially.
Take a moment, step back from your business, and think about how you would like to be treated as a customer if given the opportunity. What offerings can you add to increase value to your customer transactions and to your business without increasing marketing spend by incorporating these strategies into your current marketing process?