Part of the fun we have in our practice is hanging out with small business owners. These people are smart, driven, competent and experts in their chosen industry. We always learn something, and we are always in awe of how successful they are at doing something we couldn’t imagine even understanding, let alone doing for a living.
But they all have something in common: they work really long hours, they think about work constantly, and they worry—a lot.
This is where we come in. We may not understand how to run a fabricating plant, but we do know why prospects agree to stay in touch; why people buy things and why customers decide either to stick around and spend more of their money or leave, taking their business with them and telling ten of their friends why they should do business elsewhere.
Here is what we have learned are the biggest reasons why small businesses will not double their business this year (yes, this year—even in the current economic climate):
1. They don’t know who their ideal customers are. These are the customers who pay on time, give you most of their budget and can recommend other people just like them.
2. They don’t create best customer relationships that lead to a constant stream of referrals—great high margin business with practically zero cost of sales.
3. They lose sight of their prospects. These days it takes at least seven touches before a prospect tries you for the first time—and it can take fifty, or even a hundred. Most small
businesses stop at four, sometimes two.
And of course they do! Who has the time, the sales force and the money to pursue leads that may or may not pan out?
Well, take a look at this: 99% of small businesses do not consistently follow up with their prospects and customers. And this leaves a whole lot of money lying on the table for your competition to grab hold of.
For example: if your average sale is $10, and you have 1,000 people coming into your store four tines a year, that’s $40,000 in sales. If you could get half of those people to make one more visit, you’ve just grown your business by 12.5 percent.
Here’s one more: if you have 100 prospects, maybe 25 are “hot” and maybe you close 25 percent of them, or six people. If you could increase your close rate from 25 percent to 35 percent, you would now have nine customers—a 50 percent increase.
If on top of that you could increase your “hot” leads from 25 to 30, you would now have ten new customers—a 66 percent increase. The variables may seem small, but you can see how things start to multiply.
Of course you’ll need a system to do this, and we’ll be writing more about how to install one in future articles.
Ken Burgin and Elizabeth Walker are the Marketing Masters, a full-service marketing and advertising partnership that helps build busy businesses.
