Your database of customers and prospects is a vital part of your business’s value, and it’s one of the easiest areas of a business to improve quickly.
And yet the value of a database is often overlooked by business owners – most businesses we see don’t have good records or regular contact with their customers, many have none at all.
In this eclass we are going to cover the essentials of building, growing, managing and leveraging your list of customers and potential customers. We’ll show you how you can add instant value to your business, and how you can increase turnover and sales with very little effort.
We’ll start by looking at why you need to build your database, then ways you can build it and how you can manage it, then we’ll cover how to build your relationship with your customers and prospects and finally, how you can make use of your database to quickly increase profits and sales.
Why build a database?
1. People buy from people they know, like and trust.
Think about your own shopping behaviour – do you have favourite stores and businesses you go back to because you like and trust them (even if they are a bit more expensive)?
The more you build a relationship with your customers and back it up with good reliable products and service, the more they will trust you, the more they will keep buying from you and the more they will recommend you to others.
Frederick F. Reichheld, author of “The Loyalty Effect: The Hidden Force Behind Growth, Profits and Lasting Value” reported that:
- Acquiring a new customer can cost 6 to 7 times more than retaining an existing customer.
- Businesses who boosted customer retention rates by as little as 5% saw increases in their profits ranging from 5% to a whopping 95%.
So the fastest, easiest way to turn your business around is to look at your existing customers first, and make sure they are coming back to you to buy again and again.
2. On average, a person needs to be exposed to your message or business 7 times before they buy.
Again this is to do with trust – you wouldn’t expect someone to agree to a marriage proposal on the first date, and your prospects probably won’t buy the very first time they encounter your business.
But if you give your potential customers the chance to have more contact with you, you allow them the time and space to get to know and trust you.
Big companies do this with big budget branding and advertising campaigns, but you can be just as effective at a tiny fraction of the cost…read on to find out how!
How to build your database
The main reason for building your database is to contact people, so your number one priority is to get their name and contact details. At a bare minimum, this should be their name and email address, but also include phone number (especially mobile phone), address and even birthday.
This process is a “mini-sale” – you need to give them a reason WHY or offer something in exchange for their information.
10 Fast and Easy Ways To Build Your Database:
1. Creative promotions in store – such as a free draw each week to win a high perceived value prize – for example fuel vouchers, show-tickets, holidays or accomodation or your own products. Collect names and emails on entries (our local butcher does this – you put your name and email on the back of your docket and put it into a draw to win a meat tray each week. They email us with special offers, recipes and ideas for quick and easy dinners for the family). Here is an example of a sign that could be used in a retail shop:
2. Loyalty cards or Special Customer Club Membership – many franchise systems and large retail chains use this method, so it’s a tried and tested way to collect details and keep customers coming back. Just ask them to join when they are in store and offer special discounts, free information or VIP service for members.
3. Run Competitions – prize draws, colouring competition, slogan competition
4. Special offers – offer a special discount, gift or bonus in return for their details
5. Feedback forms – for customer comments and suggestions, offer your product or service as a prize each month (like a free meal if it is a restaurant or cafe) for the first drawn form
6. Just ASK! – If you take phone orders or enquiries, make sure you ask for their name and phone details and enter them onto a spreadsheet. Make sure you ask for their permission to contact them again later about special offers or events.
7. Website – create a website page with an OPT-IN form and offer a free report, a free e-course, access to a VIP area, discounts or a bonus in exchange for their name and email details. Also make sure your business’s website has an email capture form on the top right of every page, which makes an offer in return for their details.
8. Google Adwords – You can drive people to your offer page using Pay-Per-Click (PPC) advertsing on Google.com, Yahoo.com and Bing.com. To find out more about how to set up an account in the right way, we wuold highly recommend Mike Rhode’s free 7-day ecourse which you can get by putting your name and email into the opt-in on his webpage (plus you get to see a live opt-in in action!). Go to http://websavvy.com.au
9. Social Media – Social media is a great way to grow your list through referrals. On www.facebook.com you can create a fan page for your business. People can sign up to your page and you can send messages to keep them up to date with special events or offers. You can also use www.twitter.com to stay in contact, or www.linkedin.com to create business networks.
10. Joint Ventures (JV’s) with other businesses that are not direct competitors but have your customers (eg a carpet cleaning company offering a discount to the rental clients of a real estate agent). You can offer their clients a special discount or membership in return for their details so you can stay in contact with them
For manufacturing wholesale and distribution businesses:
- Find potential B2B customers in trade magazines or directory listings and offer a VIP membership with a newsletter, special pricing or preordering Contact your end-users and start building a relationship with them.
- Offer a free newsletter with tips and hints for your products, discount coupons or special bonuses
Choose at least ONE of these methods of building your database and put it into action in the next TWO DAYS. For the 12 Week Turnaround to work for you – you MUST take action on this, even if it is just a small step to start.
And the more you do, the more value and profit you will grow.
How to manage your database?
Luckily, there are now simple, easy to use tools available to make managing your list fast and easy.
Autoresponders: You can maintain very personal contact without actually having to write messages to every single person on your database by using autoresponders.
We use http://www.aweber.com to manage our autoresponders, which is a program that automatically sends messages out to people who join our list. You are receiving these messages every week when you get your e-classes!
SMS services: – this can be incredibly lucrative and we can help you set it all up – just email us with the subject line “SMS Promotion” at [email protected] for more information.
Start outsourcing basic list management to a Virtual Assistant (VA) – they are very cost-effective and easy to use. You can find them on services like http://odesk.com and http://elance.com, or on dedicated VA sites like http://australia.taskseveryday.com or http://www.remotestaff.com.au
You can also outsource telemarketing and receptionist tasks so you can make systemised phone contact and have incoming calls answered professionally but inexpensively.
Leveraging your Database
Once you have a database, how do you use it to turn your business around and create value and profit?
1. Start the relationship
If you have bought or own a business that already has a list, then your first step is to make sure the contact details are all up to date and correct, and find out where you stand with the existing customers.
People love being asked for their feedback and comments – it shows you care what they have to offer you and that you are interested in giving them the most suitable service or product. Plus you get to find out exactly what they want – so you can give it to them.
You can create an online survey for free at http://www.surveymonkey.com, ask your customers what they like about the business and what they would like to see improved. You can also do this over the phone or in person.
This is a great way to introduce yourself as the new owner and build some trust and rapport – you will probably get a boost in sales just because you made the effort to contact everyone.
The next thing you can do is thank them when they make a purchase. For online purchases this can be set up as a completely automatic system. For offline purchases, make it part of your sales process system to send a thank you email to buyers – this is a perfect task for a VA.
2. Build the relationship
Remember – give before you get.
The best way to build trust and a relationship with a customer or potential customer is to give them something valuable and follow through on your promises. Here are some ideas:
- VIP status or membership with special discounts
- Closed-door sales or events
- Free gifts or special offers
- Priority ordering or delivery
- Longer payment terms
- A newsletter or regular emails giving helpful information, tips on using your products, news from the marketplace, sharing your expert knowledge
- Webinars or teleseminars with great information, or interviews with the experts and leaders in your field
- E-courses – step by step guides to help them learn a new skill, or improve their business or life
- Free report or e-book offering valuable information or expertise
- SMS messages offering special discounts, free gifts or important updates (like our examples in eclass 10 of a restaurant messaging past customers to offer a discount or free bottle of wine if they come in for dinner, or a wholesaler or distributor letting buyers know when shipments have landed and offer specials for immediate orders)
The writing, the web design, the set-up of the autoresponders, the phone calls and SMS. You don’t have to do all this yourself, in fact it’s sometimes better if you don’t. We’ll cover in detail how to outsource effectively in a future eclass, including how to find good people, how to know how much to pay them and how to manage them.
3. Ask for the sale
Once you have built the relationship, you need to ask for the sale. Ideally, you want to be in a business where people can buy from you again and again – either the same product or service over and over, or be offered different complimentary products or services.
This is where you make all your money!
It may cost you more than the value of the first sale to actually get a customer, but over their lifetime they may spend many, many times that amount.
1. Work out the lifetime value of your average customer.
How much do your customers generally spend with you over a year, 2 years, 10 years?
2. Look at your sales process and customer service and ask yourself these questions:
- Can you increase your profits by getting customers to buy more often?
- Can you offer them different products?
- Can you offer them upgrades or more expensive versions?
- Do you make it easy for them to come back and buy again?
- Do you follow up after the sale?
- Do they know how to contact you if they need you again?
- Is there follow-up advice or help that you can give?
- Do they know about your other products or services?
- Could you send a friendly reminder notice?
You can do this via email autoresponders, a website, a sales letter, follow-up phone calls, or with a systemised set of questions at the time of purchase.
3. Write down at least ONE “ask for the sale” process that you can add into your business.
Implement it into your business by next week.
4. Ask for referrals
The fastest and cheapest way to get new customers is to ask your existing ones for referrals.
If you have a business with limited capacity for repeat sales, then you need to think of other products or services you can add to your range, or you need to work on generating lots of referrals.
By building a good relationship with your customers, they will be much happier to recommend you to others. You can offer a bonus for referring a friend or associate, or you can simply ask if they know of for exaple “two” (always ask for a specific number) other people who would benefit from knowing about your business.
Write out a simple referral process for your business – How will you ask for referrals? Who will ask? When will they ask? What will you give in return for a referral?
Once you have built a good reationship with your customers, start asking if they know of others who would benefit from your products or service.
The value of a DATABASE
Buyers and investors in business place great value on the database. As you have just seen, it is a powerful way of generating profit, and it is also an indication of the strength of the relationship that the business has with it’s customers (the BRAND).
If you can show a buyer that you have regular contact with your list, that is completely automated and yields a measurable result (ie sales) – they will immediately see more value in your business.
It is fast and easy to achieve this, yet many business owners do not bother because they don’t realise how important it is to value and profit.
The take home message is this:
Building your DATABASE is an essential part of preparing your business for a quick, profitable sale, and the best way to create a cash-cow business that is easy to grow. And the big bonus, it allows you to greatly increase your profit, in less time.
In the next eclass we’ll look at the next essential factor in renovating a business – the SYSTEMS. Getting this right not only increases your business value, but it is the key to setting you free and giving yourself the lifestyle that you want.
Until then, if you have any questions please email us at [email protected]
All the best,
MATT AND LIZ