The Two Reasons Why Businesses Fail
Mark Hale ‐ January 28, 2014
The most overlooked source of potential income by small and medium sized businesses is people who have already bought from them, their customers. Being able to tap into this resource is vital. The major goal of a business should be capturing identities that can be marketed to with the purpose of selling their products or services. An identity is simply the name and contact information of people who have bought from you or shopped at your business.
Why is building a database of your customers important?
- People who have bought from you are already familiar with your business. If happy, they are the most likely people to buy from you again and are very easily persuaded to do so. The simple law of business is that business goes where it is invited. If you are not inviting them REGULARLY to do business with you, your competition will and are. A fact of life is that your competitors are always trying to steal your customers out from under you. Are you making it easy for them to steal customers away? If you are not continually marketing to your customers, you are making it easy on your competition.
- Your best source of referrals is from happy customers. There are tools we can help you with to tap into this source of new business.
- 75% of the market value of your business lies in your customer database. It is not your inventory, your building or even your employees or you. The more information you have about who your customers are the more value your business has. In the future, if you ever want to sell your business, the potential value to a buyer lies in your database. The more complete your database is the more money someone is likely to give you for your business. This could mean the loss of tens of thousands to hundreds of thousands of dollars to you simply because you did not make it a priority to keep a useable record of who is doing business with you.
The basic information you need to gather is name, address, phone and email address. Better if you can also gather their sex, where they live, household income, birthdates, how often they buy, how much they spend and what other purchases they are likely to make after buying your product.
During economic slow downs the first place you should concentrate on for more business is selling to people who have already bought from you. The second place is marketing to get new customers who are similar to your regular customers. It also makes it easier to buy mailing lists of viable prospects if you know the profiles of people who have already bought from you. This information will dramatically improve your results from your promotion.
There are mainly two reasons why businesses fail today. Number one is a poor product or service. Number two is because these businesses did not market to the right people often enough.
Step #1 Storing the Data
You have to have a place to store the information so that it is accessible and useable to you. There are many database programs available, Gold Mine and ACT are a couple of the more popular ones. Microsoft Access comes standard with most PC’s today. If you have a cash register program many of them have features for storing and down loading data about customers and purchases.
Step #2 Gathering Data
How do you get this information?
- If your business uses invoices, survey old invoices. Old invoices can contain a lot of the data you need (Name, address, phone number, purchase amounts and regularity of purchases). Require that your employees ask for the information from customers on every purchase and fill out invoices as completely as possible.
- Loyalty cards. Punch cards are a great tool because they reward customers for making regular purchases. IMPORTANT: Don’t just pass punch cards out like candy without getting some basic information in return. Have a punch card registration form made. On the form ask the customer their name, address, email address and birthday. People like these cards and will usually give you the data, if you ask for it.
- Coupon books are another great tool to get customer information. You can sell the booklets or give them out for free. The catch is, the customer has to give you their contact information.
- Register to win programs. A simple fish bowl for people to drop their business cards in to win something of value works great. It requires little effort on the part of your customer and gives you basic information on that customer. The catch is you have to empty the fish bowl weekly and enter the data into your database. You also have to train your employees to actively promote the contest to your customers.
*Please note, gathering customer data is a never-ending task. Much emphasis needs to be placed on gathering this information by YOU or it will not get done. In today’s economy, not building a database of your customers means that you have a death wish for your business. I’m sorry if I did not sugar coat it enough for you, but in today’s market place it is vital to the survival and expansion of your business.
Once you have your customers in some sort of database you can start marketing to them. There are many tools you can use to reach your customers. Wilson Printing can help you design and implement these tools into a program that will take your business to the next level.
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