Back in 1981, Jim Lark wanted to let his customers know about the special "themed" dinners he and his wife, Mary, would be serving monthly at their exclusive restaurant, The Lark, in West Bloomfield, Michigan. He designed a newsletter to present each month's five-course gourmet dinner menu. The bulletin also offers tidbits of information about the couple's travels to Africa (and their chef's European trips) to search out new French dishes to prepare back home.
The friendly communiquÃ©, which customers receive by filling out a patron card found at their table, did the trick. "The newsletter has filled reservations for our monthly themed dinners," Lark explains. In addition, the newsletter, also called "The Lark" and mailed to 1,140 customers, gives Lark an important link with his customers. "It creates a bond," he says. "I write it myself and treat it like a personal letter to a friend."
Lark, whose only other form of advertising is an occasional advertisement in a charity publication, credits his 16-year-old newsletter with helping to build a very loyal clientele. "About 85 percent of our business is repeat business," says the restaurateur. "I know the newsletter is working. There isn't a night that goes by that a patron doesn't tell me how much he enjoys reading it."
Customer newsletters are one of many proven methods entrepreneurs can use to keep in touch with existing customers and generate return business. Why cultivate a relationship with a customer once the sale is made? Studies show that it's four times more expensive and time-consuming to drum up new business than it is to nurture the customers you have. Besides, satisfied and happy customers do more than make repeat purchases: They're likely to tell others about your business, thereby generating potential revenues for you without any work or investment on your part. Here are six other sure-fire strategies you can use to keep your customers coming back for more:
1. Try punch cards. At the Brooklyn Coin Laundry in Brooklyn, Michigan, Jim Reiff's customers are given "Wash Cards" that contain 10 spaces on the front and a place for the customer's name and address on the back. Every time a customer uses the laundry facility, an attendant stamps his card. After 10 stamps, the customer receives a free wash and becomes eligible for a monthly drawing. The prize: five free washes.
The punch cards, Reiff believes, help generate repeat business. "People like to get something for nothing," says Reiff, who displays pictures of his monthly winners on a bulletin board at his laundry. "It doesn't cost me much to offer the program, just some free washes. And with so much competition in this business, I want to keep my customers coming here, rather than going to a competitor."
Punch cards are a natural promotion for a variety of retail and service businesses, including video-rental stores, car washes, shoe-repair stores, bagel shops and coffeehouses. "They're a good way to make your business different from your competitors'," Reiff adds. "For us, the cards are more effective than any other advertising we do."
2. Offer something special. If your business isn't set up to use a punch-card promotion, consider other customer freebies. If you sell office supplies, give away a new pen with a sizeable purchase. If you're in the cosmetics business, offer customers a free half-hour beauty consultation when they buy $50 worth of skin-care products. If you run a restaurant, give away a glass of wine or bottle of mineral water when diners place an order for a new menu item.
3. Stay in touch. Besides a newsletter, there are several ways to maintain contact with your customers. Send a written thank-you note expressing appreciation for their business. Remember them with a holiday or birthday card. Depending on your type of business, you might call key customers to see how they're doing. You don't need to sell anything; the next time they need your product or service, they'll remember you.
If you sell retail, why not invite past and present customers to a special pre-sale event? It's a great way to give them an exclusive, first-hand look at sale merchandise and, at the same time, say "thank you" for their patronage. That's what Noel Charonet, owner of Sierra Nordic, a ski-equipment store near Lake Tahoe, California, does at his annual Labor Day weekend cross-country-ski sale. Who gets first notice of his one-time discounted prices on new cross-country skis and equipment? The regular customers on his mailing list.
4. Nurture your referrals. Referrals are probably the most powerful way to develop a solid client base for your small business. "Referred customers require less selling time and are more loyal than other customers," says Jill Griffin, author of Customer Loyalty: How to Earn It, How to Keep It (Jossey-Bass, $23, 800-956-7739). "They come ready to buy because, in effect, they have already been sold."
The best way to generate referrals, Griffin says, is to give your customers "something to talk about" so they'll have reason to tell their friends and business associates about your business. That "something" could be a product guarantee, a service warranty, a liberal replacement policy, highly trained and knowledgeable employees, or honest and competent service with a smile.
5. Ask why they left. Before you go after new prospects to replace lost customers, find out why a customer stopped doing business with you. Contacting them might not win the person back, but you could gain important insights into how you can improve your customer service, billing procedures, or the way your receptionist answers the phone and takes messages.
6. Give top-notch customer service. Cliff Miller and Karen Carson operate Boulevard Coffee Roasting Co. in Carmichael, California, a $1 million-a-year-plus coffeehouse and roasting operation. Boulevard Coffee is well-known for its high brewing standards and ambient coffeehouse setting, with its cherrywood display counters and antique tables and chairs. Still, it's how employees relate to them that keeps the customers returning time and again.
The staff greets customers by name, recalls their favorite coffee orders, and explains the best ways to brew a diverse selection of coffees and teas at home. "The environment here is easy and comfortable. We want our customers to feel at home," says Miller. "Besides a good cup of coffee, we believe excellent customer service will keep our customers coming back."
Can You Manage?
For years, small-business owners found it hard to compete for good employees because they couldn't offer them health insurance. Now, an increasing number of states are establishing community health-insurance purchasing alliances that make health insurance more affordable for entrepreneurs.
The basic concept of the purchasing alliance is as follows: By combining the purchasing power of several small employers, an alliance can offer small-business owners increased bargaining clout and better rates. Several states have included the alliance idea in their health-care reform bills.
The National Association of Insurance Commissioners (202-624-7790) has developed three legislative models to be used in the alliance discussion. One of the most successful models, the Florida system, is based on a regional system governed by regional boards. In Florida, this entity is called a Community Health Purchasing Alliance (CHPA).
So far, the state's 11 CHPAs have enrolled more than 40,000 employees and cover nearly 80,000 people, according to Connie Ruggles, senior management analyst for the Florida Agency for Health Care Administration (904-922-8447), which helps run the CHPAs.
Another approach involves a single purchasing alliance for the entire state. This approach has worked in California through Health Insurance Plan of California (800-447-2937). The program is intended for companies with between three and 50 eligible employees, and now has more than 6,000 businesses participating in the plan.
The third model encourages private, competing alliances. This idea has taken off in Colorado, Iowa and Ohio. For example, 11 alliances are registered with the Ohio Department of Insurance (614-644-2658), according to David Randall, deputy superintendent for the agency. These alliances provide coverage for companies that employ up to 150 people and, to be certified, must cover at least 2,500 people. In many cases, the alliances are being run by local chambers of commerce.
Contact your state's department of insurance or state health department to see if they've organized any health-insurance purchasing alliances for small businesses. --David Volz
Tired of digging through sofa cushions looking for loose change to finance your newest project or idea? The Small Business Financial Resource Guide may be just the tool you've been looking for. Sponsored by MasterCard International, the 150-page guide can help you find the much-needed capital to start up your new business or expand the one you've already started. Five sections of helpful information are provided for your perusal, geared toward gaining different types of aid offered by the private sector and the state and federal governments.
The guide provides specific contact information for such resources as the Minority Business Development Agency, the Small Business Innovation Research Program, as well as a brief description of some of the Small Business Administration's (SBA) loan programs, including Basic 7(a) Loans, MicroLoans, and the Caplines Loan Program. For those intimidated by the thought of directly approaching the federal government for financial assistance, the guide also offers an entire chapter's worth of local resources--including the SBA's district office's phone numbers and addresses--for each of the 50 states.
Another helpful feature for the small-business owner is the glossary of terms at the end of the guide, which lists important terms for gaining the financial support needed to get your business off the ground. Are you familiar with the difference between a direct loan and a guaranteed loan? Knowing your financial terminology can be critical when trying to make heads or tails of the fine print of loan and credit applications and other financial paperwork.
The Small Business Financial Resource Guide is a free publication. For ordering information, call (800) 821-6176. --Matt Squires
Just For You
When Anchorage, Alaska, watercolor artist Teresa Ascone went to see Credit Union One president and CEO Leslie Ellis, she didn't ask for a loan. She sought advice on tempering her right-brain creativity with left-brain business sense. Their meeting of the minds launched a profitable paint-palette manufacturing business and a satisfying mentor/protÃ©gÃ© relationship.
A mentor can be a valuable, often untapped resource for entrepreneurs starting or expanding a business. For Ascone, a business mentor gave her new ideas and renewed confidence. "I'm an artist. I feel at sea when it comes to business," says Ascone. "Leslie helped me develop a plan of attack."
Ascone designed a paint palette that was selling well in Alaska. She was ready to expand into the "Lower 48," but didn't know how. Choosing a mentor who was savvy in business and finance was the solution.
Ascone found Ellis through the Women's Network of Entrepreneurial Training, a federal program offered by the Small Business Administration's (SBA) Anchorage District Office. The program pairs protÃ©gÃ©s--women who have been in business for at least one year--with successful businesspeople who are willing to volunteer their time as mentors. Within months of their first meeting, Ascone's sales quadrupled and expanded worldwide as her palette was picked up by art-supply distributors outside Alaska.
Choosing a mentor is an important investment in time and energy. If you think the guidance of a mentor might help you and your small business, here are five important characteristics to look for:
1. Successful. You'll want someone who has been in a successful business for at least five years--enough time to survive some economic downturns.
2. Committed. Choose someone who's willing to meet with you regularly, assign you business "homework," and hold you accountable for those tasks.
3. Active in the business community. Someone who's involved in the business community will be able to refer you to other resources and help you develop a business network.
4. Someone who's different. Your weaknesses should be your mentor's strengths. Choose someone in a field other than your own; you want compatibility, not competition. The only thing your mentor should gain from the mentorship is the personal satisfaction of helping you succeed.
5. A cheerleader. A mentor should be your personal cheering section by acknowledging your successes and encouraging you to challenge yourself.
Your local SBA office may have networking programs established to help you identify potential mentors. To find such a program in your area, call the SBA's national business resource line at (800) U-ASK-SBA or (800) 827-5722. --Janet Asaro
For Your Information
Want to know more about how to keep your customers coming back? Try these helpful resources:
- Turning Lost Customers Into Gold, by Joan Cannie (AMACOM, $19.95, 800-262-9699). Shows how to know you're losing customers and how to regain their loyalty.
- 50 Powerful Ideas You Can Use to Keep Your Customers, by Paul R. Timm (Career Press, $7.99, 800-227-3371). Suggests creating customer user groups and in-store demonstrations to offer value to your customers.
- How to Keep Customers Coming Back ($59), a 13-minute videotape produced by Communication Briefings, a business communications firm in Alexandria, Virginia. To order, call (800) 888-2086.
Boulevard Coffee Roasting Co., 5901 Fair Oaks Blvd., Carmichael, CA 95608, (916) 972-8967.
Brooklyn Coin Laundry, 140 Wramplers Lake Rd., Brooklyn, MI 49230, (517) 592-3088.
Sierra Nordic, P.O. Box 905, 21455 Donner Pass Rd., Soda Springs, CA 95728, (800) 426-4566.
Teresa Ascone, P.O. Box 241453, Anchorage, AK 99524-1453, (800) 278-7386.
The Lark, 6430 Farmington Rd., West Bloomfield, MI 48322.