Three Uncommon, Yet Effective, Ways to Grow Your Customer BaseRamon Ray
Customers write your paychecks. Assuming your products are priced profitably, the more customers you have, the more revenue and profit you earn.
Here are three ways to grow your customer base:
Reactivate inactive customers.
An inactive customer is a customer who has bought from your company in the past but not in the past 18 months.
Go through your customer data base and find all customers who have not done business with your company in the past 18 months. Find out why they haven’t used your company’s services.
Assuming there are thousands of customers, you might segment the list into customers who have spent over $500 with you, over $1,000, over $5,000, etc. Those that have spent the least might get a postcard with an offer to get them back.
Those that have spent over $5,000 probably should get a telephone call.
Do it in a humorous way to put the inactive customer at ease:
Mrs. Customer, I am NAME, the CEO of COMPANY NAME. I probably don’t want to know the answer to this question…but I need to know the answer to this question.
Usually you’ll get a laugh. At the very least you will put the customer at ease.
I noticed that we hadn’t done business with you in the past 18 months, two years, etc. What did we do to screw up (or what did we do to cause you not to use our company’s services)?
Listen to the answer.
Then ask: How can we get you back?
Listen to the answer.
Don’t offer anything until you hear the answer.
Don’t be surprised if the answer is “I thought you went out of business because I hadn’t heard from your company.” This is, unfortunately, a very common response.
Build a recurring revenue program.
Recurring revenue programs are products or services that you offer every month or every year to your customers. If you have a Netflix subscription, a gym membership, or are a part of other programs where a monthly/annual fee is paid, you participate in recurring revenue programs.
Some programs, such as a restaurant’s birthday club, or frequent flyer programs, have no fees. You agree to give your contact information to the restaurant or airline. The restaurant offers special incentives to dine at the restaurant for a birthday, anniversary, etc. The airline gives you points when you travel that are redeemable at a later time.
Determine what your recurring revenue program will be. Will it be a product that a customer receives every month? A quarterly or annual service?
Determine the benefits of the program. For example, a maintenance program for your heating and air conditioning equipment, helps you save money on your utility bills and increase the life of the system.
Then, price the recurring revenue program and make sure it is at least break even with respect to profit. For free programs, you won’t get revenues when customers enroll. You get revenues when customers use the program. Just remember to include the marketing expenses when calculating the profitability of your program..
Finally, get the word out. Ask your customers to join. Give them the benefits for doing so.
With a thriving recurring revenue program you experience loyal customers, increased profits, and more regular cash flow.
Build a referral program
There are two types of referral programs: active and passive. A passive referral program is where a customer refers a friend without prompting from a company. There is no incentive to refer. The customer does it because she was pleased with the company and knows the company’s products will help a friend.
Active referral programs are marketing programs. They specifically ask customers for referrals.
Sometimes it is as simple as this statement on business cards or invoices: We build our company by taking excellent care of our customers. If we’ve done a great job for you, please tell your friends. If we made a mistake, please tell us so that we can correct it.
Or, 30 days after your completed work on a project, call the customer. Make sure the customer is happy and the work was done properly. Then ask, who have you talked with about this project? Everyone who spends thousands of dollars tells someone…probably a lot of people. Asking the question this way, gets the customer thinking about conversations.
The customer will tell you a person’s name. Then you ask, “Do you think PERSON’s NAME would be as happy as you are with their own project?
Then contact the person using your customer’s name (with permission).
Sometimes the referring customers are paid for their referrals. For example, the marketing program might be: for each referral the company gives you a gift certificate for $x dollars.
Let customers know that you appreciate referrals. This should be a consistent reminder by your salespeople, on your business cards and invoices, and potentially on your email signatures.
Reactivating inactive customers, building a recurring revenue program, and building a referral program, help you build a strong customer base.
Ruth King is well-known as “The Profitability Master” the author of the #1 Bestselling New Book, Profit or Wealth: Simple Rules for Sustainable Business Growth. You can reach Ruth at www.ruthking.info.