Skip to content

Category: Marketing

Published on

There are only three ways to grow your business.

The three ways are:

  1. Increase the number of enquiries
  2. Increase the number of enquiries that become jobs (conversion rate)
  3. Increase the average value of each client

This will also work with your existing client base. Most businesses focus on growing their business by just getting more new customers, more new customers. But getting a new customer is one of the most expensive things you will ever do. Yet most businesses overlook the customers they already have, even though they have spent a great deal of time and money acquiring them.

The real leverage is in working the ’back-end.’ In other words, focusing on the customers you already have and selling them more of what you have or selling them a different service that they haven’t had from you.  Now, why does this make sense?

Well, it’s much harder to get a prospect to use you for the first time as opposed to getting an existing customer to use you again. Depending on which studies you read, I’ve seen reports stating that it’s between six to sixteen times easier to sell to your existing customers than it is to get a prospect to use you for the first time. Why is this?

It’s because you need to win them over... to get them to trust you. After all, we work in peoples private homes. And they are very careful who they let into their homes. Also we go where other contractors do not. We work in their bedrooms and other private places and see things that other workmen do not. They really do need to trust us before they let us do that. So it’s foolish to build up that trust and then simply let the relationship go.

But are you thinking “my customers are ‘loyal’ and will always know how to find me?”

In todays busy world, customers forget their suppliers very quickly...even if they are satisfied! It has been estimated that every month that passes by without contact, a customers loses 10% of their ability to recall who they bought from. So after a year...its all gone! That’s why it’s important to have regular customer communication, even if you have delighted customers.

This alone will increase your number of enquiries..and is much cheaper than the cost of getting new prospects to trust you. Your conversion rate should also be better than normal because these are customers who know and trust you. They already know the quality of your work and service. You are also increasing the average value of each client as the cost of acquiring them the second time is much lower. It may simply be the cost of a reminder letter after twelve months.

I’d recommend spending at least 70% of your marketing budget on marketing to your existing clients and only 30% on getting new customers. This shift alone will cause exponential growth in your business.

Published on

Over the past few posts we’ve seen that we have not one business but three:

  1. A Marketing Business with the purpose of lining up new business
  2. A Service Delivery Business which job is to deliver world class service
  3. A Client Retention Business to keep the clients we already have.

Once we’ve started to put systems into our business, how do we know if they are effective? The answer is to monitor exactly what’s happening and see if it’s working.

This time I’m going to look at tracking our advertising and marketing so we know if we’re wasting our money or not.

There is a saying that “Everything measured improves.”

I’ve often asked carpets cleaners about their response to advertising, such as Yellow Pages for example. They respond by telling me “Yellow Pages works really well for me. We get a lot of work from it.”

Then I ask them “exactly how much work?”

In most cases they don’t know because they do not track where their enquiries come from. So at best, they only have a gut feeling that their advertising is working. But oftentimes it is not.

I’ve often thought that a particular marketing campaign has worked well, but when I look at the ‘numbers’, that is the numbers of enquiries or jobs that it has produced, it’s quite the opposite!

Now I track everything that is useful...the number of enquiries from a given advert, the cost of acquiring a new client, how much it costs to get the job from each advert and so on. It’s given me quite an insight into what’s really going on in my business.

And this way, I’m never an advertising victim.

Whenever an advertising rep phones me with a special offer in the newspaper or wherever, I’m able to look at my numbers and forecast whether or not the rep is telling the truth. Especially when he tells me that other businesses are getting so many enquiries for work from advertising with them.

A few years ago a local directory rep told me casually that one of my competitors was getting a ridiculously high number of enquiries from advertising in his directory. Because I knew exactly how many enquiries I had the year before, I was not swayed by this nonsense. It was clearly untrue because the ‘numbers’ simply did not add up. My competitor should either have retired by now or he should have had a fleet of vans on the road just to cope with demand from this one source. Neither in fact was true. Hence, I saved myself several hundred’s of pounds by not being an advertising victim.

So what numbers do I track?

One thing is Return on Investment (ROI). My goal when I advertise is to get a new client for free. Did you not realise that new clients cost money? In fact, getting a new client is one of the most expensive things you will do in business.

For example if you run an advert in the local paper and it cost you £400 and you get 10 jobs, each new client has cost you £40 to get. For Yellow Pages, the numbers can be much higher. A few years ago, it was costing me £54 to get each new client from Yellow Pages. I’ve now got that down to well under £20. Many business owners do not even think about this! Now armed with this information I know a number of things: Firstly, if I was charging less than £54 plus expenses to clean their carpets I’m slowly going broke unless I can get more money on the back-end i.e. repeat work and referrals.

And secondly, I am now able to ask the question “can I get the same clients cheaper using different media or methods?” For instance, I could have paid a salesman £40 for each new client and it would have been cheaper than what I was currently doing.

This is just one example of how ‘knowing your numbers’ is critical if you don’t want to waste money on advertising. And if you want to improve its effectiveness.

Next time: What other ‘numbers’ you need to know so you can systemise your marketing business.