Small Things in Strategic Places

Small Things, Done in Strategic Places, Make a Huge Difference

I was reminded today of an incident which occurred several years ago, but which has had a significant and ongoing impact on two businesses. All because of a "little thing" NOT DONE!

Several years ago, my young daughter needed chiropractic treatment. My wife made the appointment with one of our local chiropractors, then arranged for our daughter to take time off from school (an undertaking in itself, but that is a different story!) to attend the appointment. When my daughter arrived at the chiropractic practice, everything was locked up and the building was in darkness. So she left. Because she wanted to have treatment quickly, she went to the other local chiropractor near where we live. There she was welcomed and, despite not having made an appointment in advance, given the treatment she needed. Her condition improved and she now has regular maintenance treatment with that chiropractor.

Two days later, the chiropractor where she had made the original appointment phoned to apologize and say that he had been ill. He wanted to arrange another appointment for the one he missed, but of course, "the horse had already bolted"!

Now, sudden illness is not something always within our control. However, if we need to reschedule appointments with our clients, would it make sense to do it in advance? (Yes, that IS a rhetorical question!) What about something "simple and creative" like having someone put a sign on the door of the chiropractic practice, stating that the chiropractor is ill, that the practice will be closed and apologizing for any inconvenience?

Well, that little thing could have rescued not only one potential client - as a result of my daughter's outstanding success with her chiropractic treatment, she has referred both her mother and father to that same chiropractor. We are now all three regular clients and will likely be for many years to come. Now that could have been business for the first chiropractor she had made the appointment with! But that little thing NOT DONE, made a huge difference!

Reactivating Customers

If something cost you, say, $100,000 in marketing expense to obtain, would it make sense to just ignore it and never use it after you paid for it? Of course not! However, that is what a lot of business owners do. What I'm talking about your list of past customers and lapsed customers. Each name on that list represents every dollar you've spent on marketing and all the time you've spend on creating fancy ads, networking, writing letters and all the other marketing you do to capture customers and get them into your database.

It costs some 8-10 times as much to acquire new customers, so the "past" customer list becomes even more valuable. These customers already know you and presumably trust you, which makes them far more likely to buy from you again if you have something of value to them.

So, don't think of these customers as "past". Think of them as "inactive" customers with the potential to come back and do business with you now and many more times into the future. But you will need to help them and give them an incentive.

One good way to get "inactive" customers back, is with a letter - this should be highly personalized and begin with something like: "We miss you! We want you back!" Remind the customer that you consider them just that - a valued customer - and give them a reason why they should come back and do business with you again. Make an offer or give them an incentive to come back, such as a discount or two for one offer. Ask them to take action and place a time limit on your incentive offer.

Another way is to phone your "inactive" customers. The message should be the same as in the letter. Also, take this opportunity to get their updated contact details.

Your "inactive" customer list is almost certainly a far richer source of future business than customer you have yet to attract and sell. You still need to continue your efforts to find new customers to constantly build you database, but once you have those names, "never let them go"! (That reminds me of a song!!)

Making Sense of Customer Value

Your business could be worth much more than you think!

What is the true value of a customer? How would you ascertain this? If you know the true value of your customer, you get a better sense of how much money you can afford to invest in customer acquisition activities.

The true value of the customer is the total lifetime purchase of that customer and more! The "total lifetime" value of a customer is the average purchase value of that customer, multiplied by the average number of times that customer buys in a year multiplied by the average number of years they remain a customer PLUS the value of referral business that customer generates for your business.

Let's revisit my weekend Café where my cycling buddies and I stop for a coffee every Saturday and Sunday (actually a different one each day due to the location we ride to!). The Café owner may consider the $3 I spend on a cup of coffee as "small-fry". But that is actually far from the truth!

Let's say for arguments sake that his profit margin on that cup of coffee is $2. Now, I try to cycle each week, even in bad weather (yes I know I'm an obsessed cyclist!). So, that makes roughly 50 cups of coffee per year or $100 in profit. If I keep this up and visit the same Café (if they keep me happy, I will!) for say 5 years, then my business is now worth $500 in profit to the Café owner. Still "small-fry" in the overall scheme of things...................., maybe?

Now, I don't cycle alone! In fact, our group varies from 6 (on the rainy days) to 25 - let's take an average of 15 over the year. Now "my" business is worth $500 x 15, or $7500 in profit to the Café owner - not to be laughed at now. And that doesn't take into account our "Cyclist's Christmas in July" dinner that we had there with partners (some 40 people all up with an average spend of about $100 - say $50 per head profit to be conservative). So, now "my" business is worth $7500 plus $2000 x 5 years, or $17,500 in profit to the Café owner! Hey, I'm starting to feel mighty important!

But wait.........

There's more! Because I really like this Café, and they always treat me well, I love to tell other people about it and suggest they try it out. If only two other people, directly as a result of my telling them about this wonderful Café, visit, then that is additional business that I have brought to the Café and increases my value as a customer.

Now, the BIG question - would it hurt the business owner to occasionally provide a cup of coffee for "free" (even to the whole group), or a few bottles of wine complements of the house at our dinner? On a cost basis, that might be an investment of $15 occasionally (coffee) or $30 (wine). Isn't that investment well spent, to secure a customer worth at least $17,500?

So, what is the true value of your customers?

Ultimate Outcome and Unique Selling Proposition

There is a lot of talk, and lots written these days about your "Unique Selling Proposition". What is your unique proposition to sell your services or products? This is important to understand, because it is what differentiates you in the market place from your competitors. It is also important to ensure that your customers and prospects KNOW what makes you unique. Recently I read a newsletter from Robert Middleton, of Action Plan Marketing where he talks about your "Ultimate Outcome" and your "Unique Service Offering". The ultimate outcome is essentially your value proposition or more simply stated, the actual result you deliver to your customer. The unique service offering is the way (product or service) in which you deliver the ultimate outcome to your customer. I like this concept much more than the unique selling proposition, because it focuses on the customer - after all, the customer is less interested in what YOU are SELLING, but much more interested in what THEY need and how you might be able to fill that need! Worth thinking about......

Be Outstanding, to Stand Out

Seth Godin in his book "Purple Cow" describes the principle of Remarkable Marketing, by using the purple cow as a metaphor - if you are different, and stand out from the herd, you'll be noticed. You can be different in a number of ways. One is by looking striking (like the purple cow). In business, you can be different by being outstanding. Unfortunately (or perhaps fortunately for those of us who are outstanding in what we do!), not everyone approaches business, customer service or product quality with this mindset. So stand out by being outstanding and watch you business grow as a result.

Customer Delight vs Customer Disgust

What is the difference between customer delight and customer disgust? Very little! But, the impact of the difference is huge! Whilst that may be bad news to some, the good news is that to delight the customer takes very little effort. It just takes the right attitude!

Let me explain by describing two recent experiences I had.

On my weekend bike ride with a bunch of friends we always stop off for a coffee mid-ride. On one of these occasions at the Café we'd stopped in, we had been waiting over 40 minutes for just a simple coffee! When we enquired as to what was happening, we were told it would be another 15 minutes by one of the wait-staff! Having already waited what seemed like an unreasonable time for our coffee, we requested a refund. The Café owner was behind the counter and did not even acknowledge us, let alone offer an apology! We took our refund and headed off on the rest of our ride never to return to this Café!

On another ride, we stopped at a different Café. There, while our coffee was being made, we received a complimentary plate of warm raisin toast from the Café owner, some fresh bottled water and then had our coffees served in under 5 minutes! The Café owner chatted with us and enquired about our ride. For those of you near Geelong and the Surf Coast in Victoria, Australia, that Café is the Rhino - well worth a visit! We get a similar reception at Annie's Providore in Barwon Heads.

Can you see the subtle difference between providing your customer with a disgusting and a delightful experience? And how little cost and effort is required to achieve customer delight? Now guess which Café is our regular coffee stop each weekend? Yes, no prizes for that, although if you worked out that it is the Rhino on Saturday and Annie's on Sunday then that is impressive!

It takes just a little effort, but the right attitude to delight the customer and get repeat business!