Every business needs customers. Our business would fail without them. But only focusing on customer acquisition is a short sighted strategy. Sure, you should keep building your customer base, but you should also focus on your existing customers too. What is the average spend of a customer? Do you have other products and services to offer? It is much easier to sell to an existing customer than to continually keep looking for new ones.
Back End Products
If you have a range of products and services which you can sell to existing customers, you can increase your income quickly, simply by promoting them. By focusing on your ‘back-end’ products you can easily increase your income, without having to chase down new customers all the time.
Companies like Amazon are experts at this. Have you noticed that whenever you purchase from them they also offer you a range of other products which people have bought with that same product? McDonald’s do this across all their stores too. If you don’t hear “Do you want fries with that?” after your order, someone is going to get fired! I That’s because McDonald’s and Amazon know that by applying the strategy of an up-sell they can dramatically increase their profits across the board.
You can also test a price increase with your products. Just a small shift in pricing can have dramatic effects on your business. Many business owners are scared to try this because they don’t want to scare off their loyal customers. But look at banks and utility companies. Mobile phone companies also do this all the time.
No sooner have you entered into a deal with them and you’re getting a price hike. The reason: it works. People are often too busy to change providers, so they accept the changes. By testing a small price change of even only 10% you can determine what flexibility you have in your pricing.
Ask For Referrals
Have you got a referral system in place to reward your customers when they bring in a new customer? This could be as simple as a discount token for referring a customer. When customers know they will be rewarded for bringing in new clients, they start to think of ways to do it. Imagine an army of sales representatives all working for your company bringing in new customers. Focusing on rewarding your existing customers like this is another method of finding new customers very cheaply.
Many people don’t purchase from you because they can’t see the value of what you offer, or they don’t want to risk it. By offering guarantees you help them overcome this potential roadblock to their purchases. Guarantees increase sales. They show a customer that you are serious enough about your service of product to offer a refund if the customer doesn’t get value from it. Guarantees build customer confidence. Testimonials also help potential customers overcome some psychological barriers to purchasing your products or services.
Look After Your Customers
Looking after existing customers can be a much better way to increase your profits than only focusing on finding new ones. Existing customers can keep buying from you for a long time. Do you know your return on investment for a single customer? How much does the average customer spend with you year after year?
ROI – Return On Investment
Knowing your ROI also empowers you when it comes to advertising. If a loyal customer spends money year after year in your business, it’s worth paying for advertising to acquire a customer. Perhaps your advertising budget is limited? When you realise the amount spent by each customer year after year, you will be likely to spend much more on advertising, knowing you will be making that money back, and building your business.
Authority and Status
Increasing your authority and status as a business owner can also have an impact. Status is perceived to be worth more by people even when the same products are being sold. Companies like Harrods charge much more than a normal store, simply because they have premium pricing based on their status and profile.
Don’t Focus Only On Customer Acquisition
Although customer acquisition is a necessary part of owning a business, there are other ways to build profit into your business model. Up-selling to your existing clients, increasing pricing, status and looking after existing customers are all ways to increase profits without getting another single customer.
Knowing your return on investment is an empowering way to find the value of a customer over years in your business, and price your advertising accordingly. By changing only a few things within your business, you can dramatically increase profits.