How to build a flaky customer base that will leave you at the drop of a hat.

To be honest, the low interest balance transfer credit card was one of greatest customer acquisition ideas ever. The way it was implemented meant that it has become one of the most costly ideas to long term business stability.

We all know that every bank has a low interest option for credit transfers.  Like 1% or 2% for 6 months. The typical credit card has an interest rate of say 17%. And the banks won’t give the balance transfer rate to their existing customers. Makes sense – they ruin their profitability.

So say I have a credit card balance with ‘bank A’ paying the 17% interest. I ask my bank for the balance transfer rate. They are going to say something like ‘that rate is for new customers only’

How do I feel? Really underappreciated – how stupid does my bank think I am?

If I’m smart, I go to another bank offering low interest on credit card balance transfers, then switch to another bank once the interest rate resets. There are lots of banks, building societies and credit unions out there. We can play this game for a long time before I run out of ‘new’ low interest credit cards.

By the way, I did a wealth creation course a few years ago now and this is exactly what we were told to do in order to manage our credit card debt while we paid it off. It’s almost like the banks don’t want anyone paying 17% interest of their credit cards ever again.

Here is the problem for the banks. They are losing their existing long term customers to other banks low interest credit cards, their new customers are 1/9^th as valuable to them and they only stay for 6 months. The average credit card balance is $3,100. If you were a bank would you want 17% interest or 2% on that balance?

The banks are going to be financially better off focusing on keeping their customers they have paying 17% interest rather than going out and trying to get new customers who pay 2% interest for 6 months and then move their debt to another bank and another low interest credit card.

This is what happens if you neglect your existing customers while trying to get new ones with crazy discounts.  You lose your proverbial goose that lays the golden eggs.

The easiest way to keep your loyal, long-term customers is to implement the 12-24X contact systems. 12 to 24 sales free contacts a year. Almost every business can implement this exact system with their existing customers using a printed monthly customer newsletter. To see if this is the right strategy for you, request a newsletter suitability audit by going to www.newslettermarketingsystems.com.au/get-started or else call 1300 120 106

A while back, I consulted with a prospective client about implementing a newsletter in their business. They were keen on the idea, they could see the benefit in a newsletter but… the maths didn’t really work.

They were making on average about $80 profit per sale and their products were the sorts of things people may only need once every few years, so there was not a high repeat purchase opportunity. Their referral rates were pretty good though, about 1 in 4 jobs would refer a client to them, which is better than most businesses I talk to.

When it came time to talk pricing and implementation, they were not really in a position to afford it. Knowing the maths in the business, I could see why. I told them that a Newsletter is going to benefit them long them, however I also mentioned that they need to make some adjustments in their business to really accommodate a newsletter and to be able to afford it.

I am a firm believer that if you can’t afford a newsletter, then the structure of your business needs re-thinking. Ideally you want to be able to calculate the lifetime value of your average customer. This involves working out how much your average client spends per transaction and what the gross profit is, how many times they purchase each year. This then allows you to work out what a client is really worth to you each year. I advise that ideally to make a newsletter work, a customer needs to be worth at least $200 per year. A newsletter will on average cost you $30-$60 per year, per customer depending on how many you are mailing. Which is a small price to pay to keep them active and continuing to buy and refer, especially if you are getting back $200+ a year from each and more referrals!

So if your average yearly value is less than $200 and you can’t afford to implement a newsletter. There are a few solutions:

1. Scrap your business and start over – Sometimes it’s better to admit your baby is ugly… If the maths really don’t work and you can’t find a way to fix it, maybe it’s time to find a new money-creation vehicle.
2. Increase Transaction Value – You can do this in a number of ways, add additional products (preferably ones that are purchased regularly), find cheaper suppliers which will increase your profit per transaction, increase your prices. Cross sell other products, Partner with affiliated businesses with similar or relevant products and take a cut.
3. Increase number of transactions per year – Actively follow-up with customers, educate your customers about whay they need it more regularly, get new products or additional services that are needed more frequently.
4. Change the market you’re targeting. – Sometimes we are fishing in a small, smelly pond… There’s no big fish to be caught in a small pond… Throw your bait into the ocean and you’ll have a better chance, there are a few changes you’ll need to make, but often it’s not a lot more effort to go for a different market. Often to increase repeat purchases if you target re-sellers, contractors etc. someone who is buying regularly vs one-off it can make a massive difference to your bottom line because now you’re talking $1000+ transactions on a more regular basis than $200 transactions.

In a nut shell – if a newsletter doesn’t fit in your business, it’s likely that there is some aspect of your business that needs changing and you’ve got much bigger problems. Try some of the suggestions above and hopefully you can make a significant improvement to your bottom line.

Perceived Value Depends Entirely On The Person…

Often we fall into the trap of assuming that our clients and prospects already know what our products and services are valued at. We figure that they understand the work and effort involved, we expect that they know what they would normally pay for the service.

These assumptions we make are sometimes true, but some people are clueless as to value, or some people don’t mentally calculate value without being told…

A good example is the person who walks into the grocery store and only buys products which have “Special” on them… They don’t calculate and just assume that they’re saving money! Personally I’m a little bit of a scrooge and always try to get the best value possible, But I’ve met plenty of people who have completely different buying habits to me.

Anyway… The main point of this post is that I want to show you some simple ways that you can control people’s perceived value of your products and services to ensure people don’t under-value your product or service.

Here are three easy tactics that are so simple, yet are rarely used.

#1 – Put a Dollar Value On Your Product / Service / Time…

It is such a simple technique and works amazingly… This works particularly well when you are adding value to a product or offering something for free or at a discount. The key here is to show people what great value they are getting.

I know plenty of real estate agents who offer “FREE Appraisals” – now this over-utilized term has ZERO impact in the market-place now, the perceived value of this is $0. If I was an agent I would put a value on my time and call it something different so people actually value it. “Detailed Property Value Calculation, Normally $197, but yours FREE if you act now!” as you can see it suddenly has a higher perceived value!

Anytime you offer something FREE – put a value on it. – FREE Quotes, FREE Consultations, FREE Trial. – If it has no specified value then it is often heavily devalued in your prospects eyes. Do not let your prospects assumptions set the benchmark for the value of your products.

#2 – You Already Offer Massive Value – Tell People Everything!

Decent businesses tend to already be heavily customer focused and they usually offer a huge amount of extras to their clients, but these extras are only ever found out about after the purchase…

It’s insanity in my eyes. If you are going to offer all the little extras, you should at least tell them up-front in case it is the deciding factor between using you or a competitor.

A good example of this is when you sell a product that may require a few questions answered from time to time after the purchase. Most businesses will happily answer questions and queries about the product, and they don’t even mention it at the point of sale… Instead what should be mentioned before the sale is “2 years unlimited phone and email support (valued at $397)”

Another thing I see a lot of businesses doing is 2 services, but only charging for one. An example that hits my head first is someone who does massage. They charge $90 for a hour. But during that hour they also spend the whole time giving health and lifestyle advice, plus if the client is sitting they’ll give them a foot spa too!

Now saying you’ll get an hour massage for $90 sounds okay, but it’s not irresistible. Try this on for size, nothing done different, just presented differently!:

As you can see it makes a normal service seem like a great offer, and the little extras are all valued for what they are and not just assumed to be worthless Freebies. And the best part is people buy on value – not price…

EG – would you prefer the above $245 service for $90 or just a regular massage from a competitor with no extras for $75? – 7 / 10 people will buy the dearer one based on value not price!

#3 – Case Study Proving The Amazing Value

Much like testimonials, case studies use a client’s experience to prove that your product or service delivers what you promise.

What you want is case studies where someone has used your product and it has saved them a lot of money. Eg. – for a quit smoking program it may be $500, but if you use a case study of someone who has been spending $100 a week on cigarettes for the past 10 years (over $50,000) and now just 6 months later, they have not only got their health and lifestyle back, they have also saved over $2500 on cigarettes!

In the above example, someone else’s experience proves the potential value of the product. Usually you can somehow work a dollar value into an experience because people tend to calculate value in dollars.

A Quick Summary

Just to sum up what I’ve said here is basically that you need to tell your prospects what your product / service / time is worth in dollars otherwise they could possibly under-value it. The three suggestions I made were put a dollar value on everything, list all the little extras and use case studies to prove the value!

I hope you try the above tactics out in your business. – It’s amazing how much more appreciative clients are when they are aware of the great value that they are getting.

OR Anywhere else for that matter…

One of the best things you can include regularly in your newsletter is testimonials from satisfied customers. It shows your other newsletter recipients that you are getting business and they are satisfied with what your products and services. And logically your products and services will do the same for them.

However not all testimonials are created equal. Some are vague and wishy washy. Some don’t really tell you anything. Others are highly believable, create credibility and show that your products or services are delivering results.

If you get enough high quality testimonials you can create 95% of a sales letter out of them. Bestselling author and star of ‘The Secret,’ Joe Vitale did exactly this. He created a sales letter in less than a day and sold $25,000 worth of product in less than 24 hours. Obviously you can’t be doing that with any old testimonials, you need good ones.

So what do the good Testimonials have that bad ones don’t?

The good testimonials that are highly persuasive have 4 things in common:

1. Relevant to your target audience. If your target audience is dentists, make sure the testimonials about your product are from dentists or from people they perceive as authority figures. Make sure your testimonials have ‘authentic dentist talk’ in them. You want the readers of your testimonials to think they are the same as the person giving the testimonial or that they should listen to them.
2. Believability. Scepticism and trust are at an all time low these days so be sure that the results in your testimonial seem believable in the eyes of your prospects. They lose all of their selling power if your audience doesn’t believe what is said. Add details to make the person giving the testimonial seem real. Full name, location, those sorts of things and before and after photos if they are dramatic.
3. One Benefit per Testimonial. This keeps testimonials clear and easy to understand. Too many benefits in a single testimonial dilutes the testimonial’s persuasiveness.
4. Specifics. There should be nothing in your testimonials like “your product saved me about 25% off of…” Sounds phoney. “Your product saved me 23%…” It makes your client’s saving sounds more real and believable.

Make the effort to collect good testimonials and make sure you put them in your newsletter as well as in all your other marketing materials.

According to the dictionary the definition of Marketing is:

The total of activities involved in the transfer of goods from the producer or seller to the consumer or buyer, including advertising, shipping, storing, and selling.

Now, this definition is NOT what I would use to define marketing. If I had to sum up “successful marketing” into a sentence, this is what I’d say:

“The strategic planning, implementation and testing of a mixture of business activities intended to educate your customer and prospects to understand, appreciate and desire the BENEFITS that your product or service gives them which convinces them to buy from only you.”

You’ll notice that my definition outlines 3 important steps: Planning, Implementation and Testing.

Planning: In order for your marketing to be successful, there is a lot of planning that must be done. You need to decide which business activities (marketing techniques) should be carried out. In most cases you need do some research so you can decide who you want to target, what medium will you use to reach that group of prospects, what message you want them to receive. Then you need to plan how you will implement the ideas and how you will test and measure the results. There are so many other things that need to be considered when planning, so ensure you really take time to plan. A little planning usually makes a massive difference to the end result.

Implementation: Planning is important, but equally, if not more important is implementation and action. Do what you plan! Write a draft and contact a copywriter, get a graphic artist to put together an advertisement, put together a referral program, re-decorate your shop-front. Planning without implementation is a MASSIVE waste of your time and energy.

Testing: Ensure you have systems in place to measure and test the results of your marketing, have ways to track the number of enquiries that come from an advert, or ways to track how many clients come into your shop each day so you can accurately see the results of an ad. Measure the amount of referrals you get , so you can see if a referral system has made a difference. By measuring and testing, you can ensure that you spend your time, effort and money on the marketing techniques that give you the best return. It also allows you to adjust your advertising in a controlled way so you can actually determine if a minor change (eg, changing a headline) makes the ad work better or worse.

So. What are the “tactics” that you can plan, implement and test? There are various “Marketing Techniques” that you can use to ultimately get your clients to buy from you.

To give you a quick list, here are a few:

• Advertising
  Newspaper, Magazine , Business Directory Listings
  Flyers / Brochures, Pricelists, Menus.
  Vehicle & Shopfront Signage
  Business Cards, Postcards, Stationery etc
  Other Offline Media (Radio, TV, Etc)
  Online Media (Google Ads, Social Media)
• Run A Competition
• Create A Referral Program
• Write & Advertise A Guarantee
• Create A Monthly Newsletter
• Create Follow Up Systems
• Survey Your Clients
• Gather Testimonials & Start Using Them

You need to make sure that you have a mixture of the above strategies and make sure your focus on two specific tasks:

• Attracting New Prospects
• Retaining Existing Clients

Many businesses focus too much on number 1, when your existing clients have already used your services, they trust you, you have began to build a relationship with them. – So ensure you nurture that relationship so when they need your “services” again they remember who you are and that you’ve given them a reason to return.