“The Fourth Way to Grow Your/Any Business?”

This is fourth in a series of four posts I’m going to share with you centred on the 4 Key Questions of Business Growth…

You’ll recall the first three key questions are:

How do you/we increase the number of Customers?
How do you/we increase the average order value?
How do you/we increase the average order frequency?

Well now we’re going to look at the final question:

How do you/we increase the retention of customers?

“Are Your Customers Slipping Silently Out the Back Door of Your Business?”

Client retention… or most importantly lack of it - is costing businesses worldwide millions in lost turnover and profits each and every year.

The worldwide market place is now bigger than ever - however as the market grows – so does the competition.

New companies moving into new markets!
Old companies moving into new markets!
New companies moving into old markets!

The competition is on the march!

Your customers and clients are constantly UNDER ATTACK from rival organisations attempting to steal them from your business.

In many businesses and organisations as fast as customers are persuaded in through the front door – they are silently slipping out the back.

Now you and I both know that we do need to bring in new customers.

· No matter how good our retention strategies!
· No matter how good we are at developing relationships!
· No matter how good our products and services!

We’re going to lose some customers/clients – FACT!

WHAT IF - through increased focus – through a well thought out Customer Retention Strategy and through effective implementation of that strategy - we could just reduce the attrition rate of your customer base by small percentage points?

This, coupled with effective front-end new business activity is how many successful businesses now attack the market – and by so doing achieve exponential growth instead of linear growth.

Think of it like this: Would you rather spend year after year bringing in new customers just to stand still or…

By focusing on a number of multiple strategies really drive your business to levels of growth that previously you’d only dreamed possible.

Why Retain Customers?

Pti were consulting with one of our regular clients recently.

The consultant led the client through 50 key ways to attract new customers to their business. The client was obviously delighted with the results - and could not wait to get started implementing the ideas - attracting new and exciting customers to their front door.

Until that is - the consultant took them on a very scary journey – he asked about the numbers of customers lost each year?

Using our clients’ data the consultant projected that over the next five years they would need to invest £3,790,000 to re-acquire the customers, (based on current data) they were losing each year.

Together they also calculated that it could cost them a further £10,000,000 in lost business of standard orders placed - not including extra sales of new products over the period – a very sobering thought.

I’m so passionate about Client Retention I’ve written a 59 page Special Report dedicated to this very subject. You can download your copy by going to www.pti-worldwide.com - however today let me share with you just 3 of the 17 Key Customer retention strategies detailed in the report;

1. Building Your ‘Ideal’ Profile of Client:

+ What does the ideal profile of customer look like for your business?
+ What is the demographic/psychographic profile? (Who buys/why do they buy?)
+ Are they transactional or relational?
+ What are the key factors and ingredients in the make up of your ‘Ideal’ profile customer?

Page 17 of the report explains in depth how to build your ideal profile client.

2. ‘Satisfied’ or ‘Very Satisfied’

Customers who rate the service from a supplier as "satisfactory" have a retention rate of 65%.

However - those customers who rate the service they receive as "Very Satisfactory" have a loyalty rate of 95%.

Yes – a 50% uplift in retention or loyalty - from 65% to 95% - just by an increase in perception of service - from ‘satisfied’ - to ‘very satisfied’.

Where would you say your customers would rate their satisfaction on your business satisfaction meter? Which of these strategies are you going to implement first to move the needle on your satisfaction meter to the ‘Very Satisfied’ end? (More details on page 24 of the Special Report).

3. Speed Stuns!

You’ve heard the expression under promise and over deliver. Well here’s another take:

“Over promise and… over over deliver!”

+ Your customer places up with that urgent order – you guarantee delivery for the day after tomorrow – however it arrives next morning – Speed Stuns!
+ The proposal the client needs by the end of the week – it’s on their email within 24 hours – Speed Stuns!
+ You go to an important meeting – next morning the customer receives a hand written card from you thanking them for the meeting – Speed Stuns!

I know you have the point. What a great expression and what a brilliantly simple strategy to build loyalty. I’m sure you’re already thinking of ways to use this in your business.

Summary…

So there we have it – the final question of the 4 Key Questions of Business Growth. This series of four ezines contains so many powerful ideas to accelerate the growth of your business. I urge you to block out some quality time to personalise and apply the ideas – after all action is the Key to success.

The post has been made by Royston Guest from Pti International.

The Third Key Questions Of Business Growth...

This is the third in a series of four articles. We've already looked at the first two questions of the 4 Key Questions of Business Growth. You'll recall they are:

How do you/we increase the number of customers? And...
How do you/we increase the average order value?

The focus for today is the third key question of business growth:

How do you/we increase the average order frequency?

So, we've already attracted the new customer through the front door of our business - we maximised the average order value at the front end - now is the time to leverage the average order frequency - or in other words programme the customer to buy more and…More often!

Whenever I consult with new clients - particularly those setting up a new business there are a number of questions I always ask as we start to explore this third key question of business growth.

And these questions are centred on what the potential lifetime value of a customer is worth to your business – something I call the LTV.

So lets make this real for a moment and take a simple example that you and I will easily relate to. Lets imagine for a moment you’ve always shopped at Sainsbury’s, however one of your friends is raving about Tesco and how good they are, so you decide to test them out yourself. You go along to your local Tesco with your list of 40 items and 30 minutes later your at the checkout packing all the items into bags – all 80 of them!

Yes we’ve all been there haven’t we – a trolley full of stuff which resembles nothing like the list you went in with, why does that always happen! And…your now £100 lighter in the pocket.

However the experience was great – you agree with your friends raving endorsement and your now a convert – Tesco’s is definitely for you.

Here’s where the LTV (lifetime value) kicks in. How many times do you go to the supermarket in a year?

Well for a family with 2 children probably once a week.

And how much do they spend? An average order value of £100

They’re the first two questions of business growth taken care of.

Here comes the third question:

What is the average order frequency?

Well for our family, taking out 2 weeks for the annual holidays the average order frequency is 50 times per year.

Tesco’s are delighted! New customer – average order value £100 – 50 times a year – That’s £5000.

Now that’s lifetime value, and here were just talking about year one. How long have you been going to your current supermarket for?

I bet if you’ve been a customers for a while and you actually sat down and calculated your worth to them over that period it would be huge!

So lets spin this into a focused question, which can relate and apply to your business;

What is a customer worth to your business? – Not just year one but over their lifetime? Their LTV?

And I suggest you don’t just calculate the turnover figure, what are they worth in terms of profitability? After all you and I know that’s the real measure.

Turnover is vanity
Profit is sanity and…
Cash is reality.

Its amazing when you calculate the REAL lifetime value of a customer or client how it changes your focus within the business.

You can then calculate what your prepared to spend in marketing sales to attract new customers at the front end and…

Once you’ve got them in, what is going to be your contact strategy in order to educate them on all the products and services they can buy from you – after all;

Frequency of contact = Frequency of order

Summary…

So, there you have it, the third of four key questions of business growth:

How do you/we increase the average order frequency?

Action really is the key to success – so here’s my summary of the suggested actions you can do from this ezine:

+ Calculate the lifetime value of your customer and clients and…
+ Perhaps do a focused question exercise, what are the various strategies I can implement in my business in order to increase the average order frequency

This is the second in a series of four posts that I’m going to share with you. Practical ideas on how you can create a number of positive outcomes for yourself, for your organisation and for your customers.

The 4 Key Questions of Business Growth…

The ideas are related to the 4 Key Questions of Business Growth. You’ll perhaps recall in a recent posting, I covered the first of the four questions;

How do you/we increase the number of Customers?

And we came up with 3 key strategies in answers to this question – Your Systematised Referral Process, Alliance Partnerships and Special Events.

I also suggested an exercise you could run, either on your own or with your team, in order to get those creative juices flowing.

(If you’ve not seen the previous ezine you can download a copy from http://www.pti-worldwide.com/ – it would be great to read it in conjunction with this edition)

Well now we’re going to look at the second of the four key questions;

How do you/we increase the average order value?

Here are three ideas for you – I know you’ll be able to come up with many more.

Accelerator 1…

The first idea is to increase your prices – an instant quick win!

“I can’t do that” I hear you say! “It’s a competitive market!”

When was the last time you had a price increase in your business?

Do you think your market place could handle just a 1%, 2%, or even 3% increase? More, depending on the nature of your business of course?

Do you have a differential pricing policy?

This could be a dedicated subject itself – however you have the point. Perhaps just take a moment to re read and answer those three questions I’ve just posed!

Accelerator 2…

The second idea is increasing the number of products and services your customers buy from you and your business.

In my experience, and feedback from our consulting and training teams (we’ve interacted with over 10,000 businesses now) most people do not buy ALL the products and services they could from you, simply because they do not know everything that you sell.

Could this be the case in your business?

Do you have a systematised process to educate and up sell customers and clients on your full compliment of products and services available to them? – a subject very close to my heart!

You’ve already invested the time in acquiring the new customer – you’ve already invested the money - now is the time to capitalise on all the effort you’ve invested to date.

I have another spin on this related to delivering the exceptional customer experience – however we’ll save that for another day.

And finally my third idea for you;

Accelerator 3…

Can you parcel or bundle products and services together?

Let’s go through the numbers first so I can explain the idea.

Let’s say that we have a product that sells for £100 and we can make it or buy it for £50, then the profit on a single sale of that product would be £50.

Sales Price - 100
Cost - 50
Profit - 50
Increase in Profit

However if there was a second product that we also normally sell at £100, which we buy at £50, then we could bundle these two products together to increase the average order value and more importantly the average order profit.

Let me show you.


Sale Price - 100 170
Cost - 50 100
Profit - 50 70
Increase in Profit 40%


As you can see we’ve bundled the products together and sold them at combined price of £170 a discount of £30 or 15% and yet the profit on this sale has increased from £50 to £70 an increase of 40%.

Naturally if we believe that customers would normally buy both products at normal price, this wouldn’t be a strategy to employ – however if the discounted price prompts additional sales then an increase in 40% profit would be very welcome I’m sure.

Summary…

So there you have it – the second of the 4 Key Questions of Business Growth and…three key accelerators you can instantly implement and personalise for your business.

Perhaps you can take some quiet time and brainstorm either on your own, or with your team, further ideas on the various ways to increase the average order value. My list now stands at 38 ideas!

Guest Article by Royston Guest

“10 Little Known Business Growth Secrets Uncovered”

There are 10 little known business growth secrets that are costing businesses millions of pounds each and every year...Ignore them at your peril!

Why is this so when the fundamentals of growing a business are pretty basic? I’d go as far as to say they’re simple. Yet, isn’t it so true the most simple and basic things in life are the things so often overlooked!

To this end, over the coming weeks I’d like to share with you the 10 closely guarded secrets of business growth. Once learned you’d better take action with them as these nuggets of information provide you with the keys to unlock the door of exponential business growth.

When I say exponential I don’t mean 3 or 4% per year, as after all this is barely better than inflation. By exponential I mean 10, 20, 50 or even 100% or more growth year on year. Now the actual growth you’ll achieve will depend on a number of things, namely:

+ How well you take on board these ideas
+ How committed you are in taking action with these ideas
+ The industry you’re in
+ The quality of your offering
+ And many more factors.

To go into each of these ideas in great detail is not the remit of this article, I’ll save the details for future articles. For now, let’s uncover the 10 closely guarded secrets, so you’re able to benefit from a greater understanding of these ideas. The first one is...

1. Understanding the 4 Key Questions of business growth – which are, how do we:
+ Increase the number of customers? – (This is the area most companies spend their entire time.)
+ Increase the average order value?
+ Increase the average order frequency?
+ Increase our retention of customers?

To find out more about these questions see Royston's contribution below, where he goes into more detail about Q1 - How to increase the number of customers?

He'll also be writing more on the other four questions over the coming week, so watch this space!