Secrets to Success
Secrets to Success
How to mine profits
from your own backyard
Editor's note: Secrets to Success is moving from its original spot in Thursday's paper to Tuesdays, beginning this week.
Part five of an eight-part series There is an easier, more profitable and even enjoyable way to grow your business than the way you're doing it now.
How do I know that? Because you're too close to the answer.
What's the answer? It's the current client relationships you already have.
Yes, if your business is less than two years old, you will have to put more effort into acquiring new clients. But even brand-new businesses should know that this principle is often what separates people surviving in business from the winners experiencing outstanding success and extremely high profit margins.
So if you really want to experience incredible gains in your client base and drive your profits through the roof, this maximum profit marketing principle is foundational.
Principle 8
The fastest, easiest way of increasing your profits lies with your current clients.You see, most businesses approach marketing from a "lead-generating" standpoint. Their major objective? To get as many new clients through the door and into the selling cycle as possible. As a result, nearly all of their advertising and promotions are geared exclusively to generating new prospects.
This is a fatal flaw!
Pretty strong statement, but true. I've seen businesses literally sit by and watch their current sales dissipate while trying to attract more and more new clients. New business is not the primary source of increased profits. Your existing client base is. As you learned in the second installment of this series, the lifetime value of a client is not represented by their first purchase. If this is the way you're doing business, then you'll soon be on the way to the poor house.
One of the things you know from the lifetime value principle is that the first sale you make to a client rarely represents the total of their capacity to do business with you. In actuality, the first purchase usually represents a client's test of your ability to deliver on your promise. It''s just the breaching of the dam in regard to ongoing repeat sales.
If you have delivered what you promised, you almost always have established trust with the client. They want you to offer them more, to serve more of their needs. If you do, you're now saving them from having to shop around and waste their time and money. Your words mean something because you've backed them up with action. Why in the world would you not want to use this relational foundation to the mutual benefit of both you and your client? Yet the vast majority of businesses do not.
There is far too little space here to even begin to scratch the surface on specific ways to apply this principle. But what I do want you to leave with today is a firm understanding of exactly how to apply your marketing resources. So how much time and money should you invest in your current clients? Here are some suggested guidelines.
>> 60 percent of all your marketing efforts should be devoted to reselling your current clients.
>> 25 percent of your efforts should be spent converting inactive clients back to active, repeat buyers.
>> 15 percent of your marketing should be devoted to gaining new leads and converting them to active clients.
Of course these figures must fluctuate depending on the status of your business. If you're a start-up, nearly all of your marketing will concentrate on converting prospects to new clients. As you approach being in business for two years or more, you're essentially established and can gradually shift your distribution to the suggestions above.
Yes, you always want to be adding new clients to your business. But always remember that your most lucrative area for increasing profits will always be your current client base. If you take this advice to heart it will mean a return of dozens (more likely hundreds) of times on whatever amount of time, money and energy you invest in your marketing.
This article series is based on our TeleCourse, "Small Business, BIG Profits."
John-Paul Micek is a small business strategist
and chief operating officer at RPM Success Group.
Reach him at JPM@RPMsuccess.com
or toll-free at (888) 334-8151.