By learning how to work the back-end of a business...
To many business owners and marketers, marketing only means getting new customers.
True, getting new customers is important for every business but it is only one part of the OPTIMIZATION equation.
In order for a business to achieve geometric growth, it must do the following three things:
1) Increase its customer base.
- Increase each customers frequency of purchase.
- Increase each customers average amount of purchase.
Marketing must address all three of these areas to optimize a business. For some reason, though, 95% of marketing dollars are spent on gaining new customers.
But by failing to increase your current customers frequency and amount of purchase, theres a good chance that you’re wasting valuable resources.
Restaurants are a good example of perpetual one-shot selling. Its not that people don't come back necessarily, just that the restaurant makes no proactive effort to get them back.
That’s why I’m going to use a restaurant to illustrate a simple 3-Step formula that will keep customers coming back over and over again. This formula can and should be applied to every business.
STEP ONE: Capture the names and addresses of all of your customers.
STEP TWO: Systematically contact all of your customers and ask them for more business.
STEP THREE: Offer a reward when you ask for more business.
Sounds simple enough - and it is. But I can assure you that any business that is struggling isn’t doing it and 90% of businesses that aren’t struggling could double their profitability if they would execute this formula.
By execute, I mean contacting the customers either individually or by a letter that is computer addressed and laser printed and sent to them.
Lets say you own a small but classy restaurant in Addison. You just opened your doors in the same shopping plaza as Tony Roma’s, who seems to be getting all of the business.
How could you make this formula work for you?
First, print up 1,000 small cards with a space for each customer to print his name, address, telephone number and email address.
At the top of the card print the words “Grand Prize Eligibility Card.”
When each table is through with their meals but not yet ready to leave, have the waiter hand each person one of the cards to fill out.
The waiter would then inform the diners that your restaurant is giving away a complete dinner for two including unlimited bar drinks, appetizers, and desserts.
The customers would fill in the cards and the waiter would pick them up when he gives them the check and tell them that the winner would be notified by mail/email/phone (whichever applies.)
Assuming you can get most of your customers to fill the card out, you now have nice customer list to work with. But what do you do with it?
First, pick a winning card every couple of weeks and send a letter or email telling them they’ve won. Thats the obvious part.
Now heres the important part:
Send a letter or email to everyone else who entered that says something like this:
My name is Bob Jones, owner of The Atrium Restaurant on Belt Line in Addison.
I’d like to thank you for entering our drawing for a complete dinner for two.
Jack Stevens won the prize and he and his wife said it was terrific. Im sorry you didn't win the first prize.
But here’s the good news. You’ve won a valuable second prize. If you will bring this letter in next time you come for dinner, I will present you with a bottle of fine wine.
Thank you again for entering our contest.
We hope to see you soon.
Bob Jones, Owner
P.S. Your wine will be waiting for you any afternoon or evening this month. Please remember to bring this letter in with you. Thanks again.
Assuming that your restaurant offers good food at a good value, people will respond to the offer.
Lets say that Bob collects 1,000 cards in a month, and sends out 1,000 emails/letters.
If only 10% of the people respond, that’s 100 people who are coming in to the restaurant for the second time.
Since they must bring their letter in to claim the prize, the host or waiter can greet them by name. People like that.
A certain percentage of these repeat customers will become regular customers. And since you now have a complete customer list, you can now contact any or all of your customers at any time for any reason.
THIS METHOD BEATS PASSING OUT COUPONS
Compare that method to the one most small-time restaurants use: couponing.
I’ll submit to you that most people using your half-off coupon are looking for a deal more than they’re looking for a good restaurant to frequent.
Think about the message the coupon sends to customers:
Our place is so bad that we’ve got to give it to you at half price to make it worth your while.
Plus, you don’t make any money on the transaction.
Contrast that to the letter I just described.
Customers are coming in feeling like a winner.
Your restaurant doesn’t give people that “It’s half price, so just put up with it if its terrible,” attitude.
What if your restaurant doesn’t have enough customers yet?
The 3-Step formula still works like a charm:
Get names, ask for business, offer a reward.
In this case you would obtain a prospect list from an outside source.
You could rent a mailing list.
You could buy or trade a list from another restaurant.
You could get a list of certain types of people or professions.
Lets say you decide to get accountants into your restaurant.
You can rent a list of CPAs in your area for just a few cents per name.
There should be anywhere from a couple hundred to a few thousand and theres a good chance that all of them eat food!
Write them a letter that goes something like this:
Im writing you this letter because you’re a CPA.
My name is Bob Jones, owner of The Atrium Restaurant on Beltline in Addison.
Every day for the rest of this month, Im going to give a free bottle of wine to every CPA who eats dinner at my restaurant.
I have a rather strange reason for being so nice to CPAs, and Ill be glad to tell
you when you come in.
Just make sure you bring this letter with you.
I hope to see you soon!
Bob Jones, Owner.
It’s not sophisticated, but it asks for the sale.
Your reason for being so nice to CPAs could be anything...
Your accountant saved you a lot of money last year, your daughter just married one and you think he’s a nice guy.
Whatever. When all of the accountants in your town have come in, then write the same letter to lawyers or dentists or teachers or anyone who is identifiable and eats food.
Granted, this method may cost some money in the beginning for cards, postage, wine, etc. But could you really afford not to do it?
If you can calculate the lifetime worth of a customer, you’d find the cost to be negligible compared to the money to be accrued over the buying life of that customer.
You must proactively seek to work the back-end. Most businesses let their customers dictate what their buying habits will be, how often they’ll come back, how much they’ll spend when they do buy, etc.
Most businesses are reactive when it comes to reselling their customers.
If you already have the sunk cost of generating and nurturing a customer once, why not annuitize the relationship and profit from him forever?
Start immediately to do everything in your power to gain repeat sales from your current customers.
It may be something as simple as writing them a letter or giving them a telephone call.
But one thing is certain, if you don’t ask for the business, your competitors will.Share This Post: