Go On; Spoil Your Customers

We are often asked by clients “How can I improve my marketing?” – Often this means – “How can I get new customers?” Indeed, most businesses put most of their marketing effort – and budget – into new lead generation.

However, it’s amazing how few businesses are effectively marketing to their existing customers. Most business owners are sitting on massive untapped potential in terms of their existing client relationships.How do you unleash that potential? Try answering these questions:

  • What cross-sales, up-sales, new products/services could you offer your existing customers?
  • And when did you last let them know? In fact, when was the last time you wrote to your customers or emailed them or phoned them. And what kind of response rate did you get?

If you doubled the number of times you contacted them what would happen? One retail client used a brochure to market to his client base and generated hundreds of thousands of pounds in turnover each year from this method. The brochure was sent out once a year, in springtime. We asked him to try sending it again in autumn. Guess what happened!Play the easy game. Make sure you have a database with all your existing clients listed. And then……speak to them……pamper them……offer them special previews and promotions……ask them to tell their friends.

Remember It costs six times more to get new customers than it does to increase sales to existing customers and 64% of customers don’t purchase from your business a second time because of the perceived indifference with which they are treated.

If you want to reduce your marketing spend, or the cost of customer acquisition, reinvest your pounds into strategies that will retain your customers, so they keep buying from you. Investing in customer relationship strategies – the payback is stunning.

Get in touch and ask us to conduct a business evaluation and find out about our unique way of designing and implementing strategies to generate sustainable business improvement.
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Improve Your Cashflow

In previous newsletters, we have talked about keeping track of jobs in your business, how to improve your cashflow and the importance of managing client expectations. Implementing these suggestions in your business should result in:

  • Clients who understand what you do, when you will deliver it and how much it will cost
  • Jobs that are carefully monitored from start to finish and
  • Prompt and regular invoices being sent to clients

But what do you do if a client still doesn’t pay your invoice? As you transform business you will naturally start to develop systems to monitor your key performance indicators. These monitoring systems will allow you to take snapshots of the performance of your business and help you with your planning and preventative maintenance. One system of monitoring will be checking on financial performance and will include regular review of your outstanding debtors. Unfortunately it is a fact of life that no matter how efficient or competent we are, we will have clients that are slow to pay us, or may not pay us at all. Clients will not pay an invoice for three main reasons:

  • The time effect
  • The cash impact
  • Conscious or subconscious avoidance

The time effect: The Time Effect refers to a delay between the job and your invoice. You can deal with the Time Effect by ensuring invoices are sent out when a job is completed or at the end of each month. Avoid sending out annual invoices because the lapse of time between the job being finished and the invoice arising diminishes the value of the job to the client.

The cash impact: The Cash Impact refers to how the invoice affects the client’s hip pocket. The Cash Impact is felt when the invoice is much higher than the client expected. The Cash Impact can be dealt with by ensuring their expectations are clear at the beginning of the job. On occasion, the client may simply be experiencing a cash squeeze. Time to pay may be appropriate but will depend on your collection policy.

Conscious or subconscious avoidance: Unfortunately, we can sometimes get clients who have no intention of paying. Usually these clients can be identified and rejected at the first meeting. Having a good engagement letter setting out your payment terms will help minimise bad debts but it will only be effective if you remain firm and follow your procedure. That means handing delinquent accounts to a debt collector for further action, including court orders for payment. Occasionally a client will just be forgetful and not remember to pay your invoice. Have a simple debtor management procedure, and regularly remind clients of overdue invoices. If you follow up outstanding invoices regularly, you will avoid the Time Effect and reduce the risk of bad and doubtful debts. It is important to remember that the job isn’t finished when you get the job lodged or back to the client – the job really only finishes when the invoice is paid! Ensure all your team is aware of the importance of following up outstanding invoices promptly.

Get in touch and ask us to conduct a business evaluation and find out about our unique way of designing and implementing strategies to generate sustainable business improvement.