This is the third in a series on the four ways to grow your business.
Again, those four ways are:
1. INCREASE THE NUMBER OF CUSTOMERS (OF THE TYPE YOU WANT)
2. INCREASE THE BUYING FREQUENCY
3. INCREASE THE AVERAGE DOLLAR VALUE OF A SALE
4. INCREASE THE EFFECTIVENESS OF OPERATION
The previous two articles focused on increasing your customer base through a combination of acquisition and retention strategies. In this article we’ll look at strategies for increasing the number of times customers buy from you.
Finding new customers isn’t the only way to grow your business. And it certainly isn’t the most cost effective.
Have you ever asked yourself this question? “What am I presently doing now to nurture customers to get them to deal with my business more often?” If you haven’t, you may be missing a great opportunity to increase your sales volume.
The following are six general strategies to make sure your customers keep coming back for more:
- Thank you notes and nurturing letters – Staying in touch with your customers on a regular basis is the key to retention as well as a great way to increase buying frequency. The more personal the communication the better. Always write from the customer’s point of view. When you take the time to show your appreciation, inform, educate and add value, your customers will find new reasons to buy from you.
- Customer clubs – We’ve all heard of airline frequent flyer programs. This same strategy can work for many small businesses. When you reward your customers based on cumulative sales, they will usually increase their buying frequency. This may be a strategy you want to test to see if it works in your industry.
- Until further notice programs – Another strategy that has been successful is a program that generates regular orders until the customer decides to stop. Or, another twist is an invitation to order that is sent on a regular basis (i.e. the Book of the Month Club). Both programs give the customer the convenience of recurring orders with the option to cancel at any time.
- Awesome service – It seems like I mention this every month, but awesome service is critical to the success of every business. It is especially important for retailers and restaurants. Customers will keep coming back only if they enjoyed the experience of dealing with you. Every time you deal with a customer you have an opportunity to sell them on coming back.
- Bounce backs – If yours is the type of business that ships products to your customers, including a flyer or brochure in the package can give you your customers another reason to purchase some related products or services. Or, if you’re a retailer, give your customer a coupon for a special gift or discount on their next visit. You also might want to let your customers know about a special event coming up at your store.
- Direct mail marketing – Direct mail marketing starts with a solid customer database. For a retailer, this takes some effort. If you don’t know who your customers are or where they live, you’ll first need to develop a system to start capturing this information (a few retailers are starting to do this). Then you’ll need to create some compelling advertising that will give them a reason to buy from you again. Don’t waste your money on direct marketing to cold prospects until you’ve tried it with your existing customers.
To evaluate the effectiveness of any business development strategy, you must know the numbers. In the case of buying frequency, you need to be able to track the number of transactions per customer over a given period. Fortunately, most sales/accounts receivable software programs allow you to obtain this information without any extra work.
If you’re in the retail business it may be harder to measure and monitor your performance in this area. But with a little creativity and current technology, you should be able to develop a system that will enable you to nurture your existing customers and thereby increase the number of times they buy from you.
If your customers (on average) buy from you 6 times per year and you can get that average up to 7 with some of the above strategies, you would be amazed at the impact on the bottom line. Do the numbers, I think you’ll find it’s worth the investment. Small improvements can have a dramatic impact on the success of your business.
LSL is committed to helping our small business clients succeed. That’s why we created the P3 Group. The P3 Group of accountants and advisors want to be your Peak Performance Partners by providing, compliance, performance and strategic services that will help your business reach its full potential and run smoothly with, or without you. Call us to schedule a free consultation and business performance assessment at 714.672.0022.
Next article: Strategy #3 – Increasing Average Dollar Value of a Sale
This article submitted by Gary Cates, CPA Partner.
The 4 Ways To Grow Your Business Article #2- Strategies for Increasing Buying Frequency PDF
