Archive for the ‘customer retention’ category

Strategies for Thriving in a Tough Economy

August 8th, 2022

Whether or not you believe we’re heading into a recession, or even if you have come to believe that what we have now is pretty much as good as it’s going to get, there’s no getting around the fact that we’re experiencing poor economic times. An enduring lack of consumer confidence and decreased sales threaten all businesses, but small businesses are particularly vulnerable as they often don’t have the reserves to help them survive difficult times.

Entrepreneurs who are survivors will look at this as an opportunity to improve their business practices so they can not only weather the tough times, but thrive during them. How, then, can you recession-proof your business? Thinking through the following practices and how you can make them your strategies will help ensure your business’s success in a tough economy.

1. Protect your cash flow

To keep your business healthy, cash needs to continue flowing through it. As long as your business exists, you will have expenses. But the harder times get, the harder it can be to keep the cash flowing into your business. Be more diligent in how you are spending money. It’s important to be frugal and aware of your income and expenses. By doing a line item cost for each expense, you will be able to identify areas that need greater attention. Efficient cash flow management is crucial. The sections below are all, for the most part, areas that will have impact on your cash flow, but take special note of the ones regarding evaluating your vendors, reviewing your inventory management, and keeping your personal credit in good shape.

2. Streamline your business practices

This is an opportune time to review your business procedures for effectiveness. Consider areas that can be combined into one. Consider areas that can be structured differently to reduce costs. Think about sharing resources, like administrative or payroll work, with other entrepreneurs to reduce overhead. The goal is to streamline operations so you can still provide a quality product or service, yet realize a greater profit by reducing the expenses to produce it.

3. Evaluate your vendors

If you use vendors for packaging, labeling, distribution, or in other areas of your business, this is a good time to do some price comparisons. There is a lot of competition among vendors to attract new business, so you could realize some serious savings in this area. Since no one wants to lose business during a bad economy, chances are good that your current vendors will meet the competitor’s price. If not, it’s time to move your business to the lowest bidder, just as long as you’re not sacrificing quality.

4. Review your inventory management practices

See what can be done to reduce inventory costs without sacrificing the quality of goods or inconveniencing customers. Are you ordering too many of particular items? Can an item be sourced somewhere else at a better price? Is there a drop-shipping alternative that will work for you, eliminating shipping and warehousing costs?

Just because you’ve always ordered something from a particular supplier or done things in a particular way doesn’t mean you have to keep doing them that way, especially when those other ways may save you money.

5. Focus on your core competencies

A diversification strategy is often recommended for small business success. But too often small business owners simplify the concept of “diversification” to “different”. Just adding other products or services to your offerings is not diversification. It’s potentially just a waste of time and money. Worse, it can damage your core business by taking your time and money away from what you do best. It may even damage your brand and reputation. If you have diversified out into different areas over the years to improve market reach, it might be time to regroup and focus on the core of your business and outsource the rest. Evaluate what is and isn’t working and put more effort into what started you out as a successful entrepreneur in the first place. It’s important to get in touch with your core business and make sure it continues to meet the changing needs of customers. So consider dropping the extras and focus on what you do best and which is most profitable to recession-proof your business.

6. Develop and implement strategies to get your competition’s customers

If your small business is going to prosper in tough times, you need to continue to expand your customer/client base. If you have competitors, then they have customers. So, there are already people out there buying what you sell, just not from you. What will it take to attract those customers? You’ll need to offer something more or something different. Research your competition and see what you can offer to entice their customers into becoming your customers. It’s not only lower prices or a better price/quality trade-off that gets the business. Providing better customer service is often identified as one of the easiest ways to outdistance the competition. But you need to do the research in your own market to find out what it takes to be the customer’s first choice.

7. Make the most of the customers/clients you have

They say that a bird in the hand is worth two in the bush. The bird in the hand is the customer or client you already have. These customers are an opportunity to make more sales without incurring the costs of finding a new customer.

Even better, he or she might be a loyal customer, giving you many more sales opportunities. If you want to recession-proof your business, you can’t afford to ignore the potential profits to be had from established customers. But remember that your customers are going through tough times too. In order to retain their business, implement measures to express your appreciation. This could be a one-time price reduction, a customer loyalty card, or a referral incentive. Whatever the strategy may be, it should be something of value to the customer and within your marketing budget.

8. Continue to market your business

In lean times, many small businesses make the mistake of cutting their marketing budget to the bone or even eliminating it entirely. But lean times are exactly the times your small business most needs marketing. Consumers are restless and looking to make changes in their buying decisions. You need to help them find your products and services and choose them rather than others by getting your name out there. So don’t stop marketing. In fact, if possible, step up your marketing efforts.

9. Keep your personal credit in good shape

Hard times make it harder to borrow and small business loans are often among the first to disappear. With good personal credit, you’ll stand a much better chance of being able to borrow the money needed to keep your business afloat if you need to. To recession-proof your business, keep tabs on your personal credit rating as well as your business one and do what’s necessary to keep your credit ratings in good shape.

There’s absolutely nothing that will make your small business one hundred percent recession-proof. But implementing the practices above will help ensure your small business survives tough times and might even be able to profit from them.

Cool Product: Constant Contact

May 3rd, 2012

email marketing made easy

I’ve been using Constant Contact to give my emails a professional look for almost a year and a half. I’ve now put out 17 issues of my newsletter, The Small Biz Bulletin (get it free – see the Join Our Email List link to the right —–>), and have noticed that dozens of businesses on my emailing list have adopted this product for their use too. So, it’s high time I did a Cool Product Review on it.

Constant Contact email combines your email campaigns and your social networking efforts into one easy-to-use service. It’s intuitive and easy to use for all skill levels. It breaks down the set-up process into three easy steps: “Create the look, select your audience, then schedule and send.”

Email Campaign Creation

You start by picking one of over 400 templates as the basis of your email, or create your own. The templates come in a variety of layouts, colors and patterns, are easy to customize as well as to insert text, images, documents, blog content, links, surveys, polls, videos and more. There’s a social-share toolbar and buttons for Facebook, Twitter, Google+, LinkedIn and others to send readers directly to your various social media properties.

Campaign Reporting

You’ll get comprehensive reports on your campaigns, including bounces, spam complaints, opt-outs, click-throughs, forwards and more. And Social Stats reporting tools tell you the number of Facebook shares and likes, tweets from Twitter and more, that your messages receive. You can also see the number of total social shares and page views your email campaign has generated.

Contact Management

You can add customers to your list by typing them in, importing a spreadsheet list or your address book from Gmail or Outlook. Contact fields are customizable so your contact database can hold all the info you need to keep on each contact.

Help & Support

Support includes a searchable knowledge base, tutorials, FAQs, a user manual, a blog, user forums, recorded demos and webinars. And the phone support is the best I’ve ever had for any product I’ve ever needed help on. They will even edit your email directly to fix a problem.

Try Constant Contact for Free!

You can try Constant Contact for free for 60 days to see if it fits your needs. If you do want to try it, click on the link below (or the logo at the top) and you will also receive a $30 credit when the free trial is over. Full disclosure: Yes, they will be kicking me back a $30 credit too, but if a couple hundred of you stick with it, well it could be sweet! Thanks!

Click here to get your 60 day free trial and your $30 credit if you continue beyond the trial period.

 

Retaining Your Current Customers

April 26th, 2012

When focusing on growing your small business, acquiring new customers should probably be at the top of your list. And that would be the best possible approach for a startup company. But I would suggest that the most important thing for any established business is to keep their existing customers.

You have probably heard this before; it is far less expensive to retain old customers than to acquire new ones, but you should also ask yourself what is the point of acquiring more customers if you can’t hold onto your existing ones? Also, what is the cost to your brand of all of those defecting customers? Are you just replacing angry customers with ignorant ones?

In a world of increasing competition and ease of defection to other products and services, building and focusing on keeping your customers longer can be a significant way to grow your business. Realize that:

  • Businesses in many industries may lose up to 50% of their customers over a five year period.
  • Studies have shown it is 5 to 7 times more expensive to acquire a new customer than it is to retain a current customer.
  • As little as a 5% increase in customer retention can increase profits by 25 to 95%.

Unaware of these figures, many businesses still focus on acquiring new customers as their primary growth strategy rather than protecting and nurturing those they already have.

Why do customers leave?

 Before we can start keeping customers, we first have to try and understand why customers leave. Studies tell us that the main reasons customers leave, or stop doing business with a specific company are:

  • 1% die
  • 3% move to another area
  • 5% are influenced by friends or contacts to go elsewhere
  • 9% are lured away by your competition
  • 14% don’t stay because they are disappointed with your product or service
  • 68% leave because they perceive an indifferent attitude toward them

Furthermore, research also shows that there is a significant difference between the reasons that companies think customers leave and what their customers actually think. If these findings are true then they have huge implications for business. They suggest that loss of customers is not so much about how good your product or service is, or how competitive your industry is, but rather it’s more about how you are with your customers, and how much they believe you care about them.

The implications of this falls into a few areas that businesses need to focus on:

  • It’s not about you (the business), it’s about them (the customer)
  • Customer service/care involves everyone in your business not just your customer-service people
  • Your relationship with your customers. This may take some time, effort and a lot of trust in your front-line staff because everyone is different and technology and systems are not always the best way to solve a problem. Sometimes it’s about just being a bit more human, taking a bit more time and a longer view of the relationship you have with the customer.

Want to improve your retention of customers? Here are a few steps to help you get started:

Get to know your customers

This is not just about how long they have been a customer or how much money they spend. Get to know them, find out what they like, what they don’t like, ask for their opinion on how you could better serve them.

Segment your customer-base according to their similarities

Segmenting your customers into different groups will make this project easier and allow you to track retention progress in each group. Create a strategy to get to know each group of customers that focuses on their expectations. Since each group is different, it is reasonable to expect they will have different preferences.

Decide which customers are going to work for your business

This is where reality and tough choices kick in. Not all customers are going to be a good fit for your business so choose which customers will work and be very clear about which ones will not. If you can identify the customer that will be disappointed with your customer experience as it does not fit with their needs and you choose not to do business with them (in the nicest possible way), then you will have saved yourself a lot of time and energy and brand equity in the process. They’ll appreciate the honesty. Refer them onto someone who will be able to fill their needs and you’ll create an advocate for your business.

Use Customer Relationship Management software

You’re going to need to have a way of gathering and storing the information about your relationships with your customers. This is where Customer Relationship Management (CRM) technology can lend a hand. Talk to an expert about this but don’t be led by the technology. Let your customers lead.

Measuring your progress and success

Set targets, monitor and measure your progress. It’s the only way that you will know if you are improving. However, realize that this can take time and will depend on the nature of your business and current relationships with your customers.

The results of improving your retention

The process of creating a focus on customer retention is not easy, and it takes time. But when you put it all into place you will be pleased with the results. Listening, learning and paying attention will get a positive response from your customers, and that means more business for you. Once you establish a learning relationship with your customers, you can develop a partner-like relationship. And at that stage, you’ll be able to meet and exceed their expectations by anticipating their needs. The deeper the relationship and more complex their needs, the more they will appreciate your relationship with them and the less likely they will be to move their business elsewhere.

Customer loyalty has a direct impact on the market value of your business

It’s been said that the most valuable asset a company possesses is not its buildings, employees or intellectual property, but its customer list. And that’s certainly a defensible position to take. A true entrepreneur, stripped of his or her entire infrastructure, could conceivably rebuild from scratch with only a list of proven buyers.

Interestingly, anyone who may wish to acquire your business will assess your company’s market value by taking your customer list into account. Should you ever choose to sell your business, it will be easy to point to a well-maintained customer list and express customer loyalty as a considerable value.