I often ask my audiences “why are you in business?” and inevitably, the answer is “to make money”.
Unfortunately that’s not the right answer. You are not in business to make money.
You are in business to create and keep customers profitably.
You cannot have a business, or a profit, without first having customers. Charge what you like, but if nobody buys, you don’t make money. This is not new thinking. Theodore Levitt and Peter Drucker started preaching this around 50 years ago.
Here’s another fact that may surprise you dear reader, but it’s true and often overlooked.
No matter what the product or service, the leading brand in any category is always the one with the most customers. It’s not the one with the most advertising, or even the highest brand awareness.
All things equal, the more customers you have, the more sales and referrals you get, the more revenue you create and ultimately the more profit hits your bottom line.
While it is important that people are aware of your brand, if that awareness doesn’t translate into sales, it doesn’t matter how many people know about you – your business won’t grow. You can have thousands of Likes, entrants into a competition, or high unaided awareness, but unless these convert to sales, it’s all for naught.
All businesses, regardless of the economic conditions or product category, should focus on four things to survive and grow:
- Listen to and look after current customers
- Find new customers profitably
- Encourage your customers to spend more with you, more often
- Keep them buying from you for as long as possible
This is why databases are so important. They give you the means to store relevant information about your individual customers. With customer data you can find common ground about which to carry conversations. So the more you know about your customers the easier it is to talk with them, rather than try to sell to them.
And forget BIG DATA. Focus on the small data – who has bought recently, who buys frequently, who spends the most per sale?
Remember the marketers’ adage:
“one thing you know about your customer is worth more than anything you know about your product or service”
And the more you know about your customers the less you have to rely on creativity for creativity’s sake to attract their attention. The reason why traditional brand advertising has always needed a big idea to stand out from the clutter and attract attention is because it is targeted at masses, not individuals. And it is executed in highly cluttered media channels.
But when you can converse with individuals based on relevant knowledge, your advertising messages can be designed around the relationship with the customer, not the product or service, or an advertising idea. It’s a much easier way to sell and grow your business and usually far cheaper.
Your database also allows you to profile your customers to give you information with which you can increase your sales, or find new customers with similar traits.
It helps minimise your marketing wastage, so you spend time creating content (there’s that buzzword again) that’s relevant and works most profitably for you.
After all, if your customers don’t make you rich…