You've
probably heard statistics about how much extra it costs to attract
new customers rather than keeping existing ones. Are they true? You
bet they are! At a minimum, studies have shown that it costs 5 to
6 times more to attract new customers than it does to implement strategies
to retain existing customers.
The key here is to "implement strategies" to keep your existing customers.
These strategies can be in the form of either switching barriers or
relationship marketing. Switching barriers can create a sense of familiarity
with your business and discourage customers from trying competitors.
Relationship marketing tactics increase the degree of loyalty customers
have towards your business.
With many customers now being well educated in sales and marketing
gimmicks, they are usually loyal to the value they receive, so look
at your 'value offer' and make sure it meets the grade.
2. Understand your customers value equation.
These days customers are loyal to the concept of value, not necessarily
to one brand (or business). So it's important to understand your customers
value equation in order to present your services in the best possible
way.
What's a value equation? It's simply the difference between the costs
a customer incurs in using your service and the benefits they derive
from it.
For example, costs include such things as inconvenience, time, risk,
even sometimes personal pain, and of course the monetary price they
pay.
Benefits include not only the obvious outcome of the service, but
also personally-oriented aspects like confidence, social benefits
and a feeling of special treatment.
It's important to recognise this equation may vary depending upon
the type of service provided and the unique mix of client/service
provider that is an essential element of service encounters.
3. Create opportunities to cross-sell.
Have you ever gone into your bank to use a teller and upon completion
of the transaction had the teller suddenly ask "Can I help you with
insurance today?" Like most people you probably say "No" and simply
walk away.
The teller is trying to cross-sell the banks insurance services to
you. But it fails. You know the teller has no understanding of your
situation and is simply trying to sell you insurance.
Don't just promote your other services to every client you have. Your
customers want you to understand their needs so you can recommend
what will suit them. First build the relationship…then offer suggestions
on how they can improve their situation by using your other services.
To be successful you must develop an effective selling process.
In some cases you may find it helpful to develop alliances with complementary
service providers so you can recommend their services when it is in
the best interest of your client.
4. Don't concentrate on your price.
"All customers buy on price!" Work to this philosophy and you'll miss
many opportunities to build your business. Price is important, as
it is often a major factor in the value equation (see point 2 above).
But don't assume you must always offer the lowest price. Various studies
have shown the top criteria by which clients choose service providers
is often competence, courtesy and understanding of the clients needs.
Also, price has been shown to be only third important in reasons for
clients leaving a firm. Core service failures and service encounter
failures are the main reasons for customers to defect from service
firms.
5. Don't have a USP!
For many years the mantra has been to develop a single Unique Selling
Proposition (USP) that will position your business in its own niche.
For many service businesses this approach can be very limiting. Often
the same service can be offered to numerous segments of the market,
with each segment having its own reasons for using the service.
But don't abandon the USP concept. Use it to develop a meaningful
position focused on the needs of each of the segments you wish to
target. This may mean having a slightly different emphasis on your
sales and marketing message for each of the different target audiences.
For example, I have a client in the employment services market. Her
firms services can be used either in 'recruitment', 'staff development'
or 'career transition' situations. Whilst the underlying benefits
may be very similar, from the clients perspective they are looking
for different types of results. Tailor your message to the recipient.
If you want to boost your service business revenues consider these
ways to improve customer loyalty and generate more sales - without
investing in expensive advertising campaigns.
6. Evaluate your customer portfolio to identify high-value segments.
It may not sound nice to say, but not all clients are equal. So it
is important to assess which clients are profitable for you.
Identify the characteristics that make your good clients valuable
to you. Review your sales records, data on previous clients and other
sources to determine the profile of your ideal client. This enables
you to define a segment that you can consequently target with your
marketing efforts. Consider:
- The type of service your clients are buying from you.
- The nature of their 'need' that you have addressed.
- Their type of business - by industry or by size (e.g. sales,
employees, facilities)
- The degree of their knowledge of your services.
The nature of your clients buying process (e.g. do you have more success
with entrepreneurial style clients, or with more structured buying-decision
processes.)
The idea is to focus on your A category prospects. Don't get side-tracked
by chasing lower value prospects, but we wont forget about them either.
By focusing on your A category prospects you will also generate additional
interest from other prospects. Todays C category prospect may evolve
into tomorrows A category client.
Now you can efficiently target your 'ideal' prospects by selecting
relevant media and promotional opportunities, developing an appropriate
benefit message, and by implementing suitable sales practices tailored
for this type of prospect.
7. Involve your 'back-office' personnel.
In a service business there can be a lot of client contact, and not
always by the front-office person (or service provider) in the business.
Think about the potential impact of client contact with your accounting/administrative
staff, service technicians, maintenance staff, and support personnel.
Identify the "moments
of truth" in your business and focus on improving these brief
encounters. Also consider possible breakdowns in the delivery of your
service and train staff on how to handle these critical incidents.
So try to think of all back-office staff as part-time marketers. Use
their customer contact to enhance the image of your firm by improving
their skills, involving them in training, and obtaining regular feedback
from them on issues affecting clients.
 8. Use the Internet to be available when you are not.
The Internet never sleeps, gets caught up on phone calls, has sick
days, or is out to lunch. When designed correctly, a web site for
a service business can substantially enhance the provision of great
customer service.
It is also an excellent tool for generating qualified leads. Your
web site is the modern "silent salesman". Use your web site to add
"tangibility" to your service business, explain your processes, and
to reassure your prospective clients of your ability to satisfy their
needs.
Don't get confused by the array of technological options - keep it
simple for your clients. A web site will add a 24-hour-a-day element
to your business, and can incorporate online systems to automate business
processes such as bookings and appointments, payments
and the provision of information.
Importantly, by structuring the contact process correctly on your
web site, you can help prospects to qualify themselves, and in doing
so minimise the time you spend dealing with low value enquiries.
Lastly, always respond promptly to any enquiries generated via your
web site. Prospects and customers will judge the quality and reliability
of your services by the manner in which you respond to their initial
request.
About the Author:
Stuart Ayling of Marketing Nous specialises in effective marketing
for service businesses. He helps clients in Australia and New Zealand
to improve their marketing, get more clients, and increase revenue.
For additional marketing resources, including Stuart's popular monthly
newsletter, visit his web site at www.marketingnous.com.au
Read this Newsletter at: http://www.smallbusinessupdate.com/2004/0312.html |
| | From the Forum: | | Will Google Survive? | Back in the ‘90s, when the Internet was a new and virtually (pun-intended) unexplored frontier, four names dominated the world of search: Yahoo, Intomi, Excite, and AltaVista.
That was then. This is now.
So far, the reigning search engine champion of the new millennium is Google, which accounts for over 75 percent of all searches today and at times seems almost invincible… Almost. ...
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By Stuart Ayling
