Finding the Extra Million Dollars Hidden in Your Business
How follow-up can net you more money and grow your business.
Could you use an extra million bucks?
I'll wager the answer is yes. Well, I'm happy to direct you to where that extra million is hidden inside your business. It's in the follow-up that isn't happening.
Many times, owners of profitable ad and marketing campaigns are terribly slothful about this. If they spend $1,000 to get 50 calls, then only convert five to appointments and only acquire two as customers -- but those customers are worth $1,000 each, they turn $1,000 into $2,000 and are pretty happy about that.
But each call cost $20, and 45 didn't turn into appointments -- that's $900. Nearly as much waste as profit. But the total reality is far worse than that. If with diligent and thorough follow-up, another five appointments and two customers could be had, that business owner has let $900, plus $2,000, slip through holes in his bucket. If each customer can be made to refer one, and an endless chain of referrals created, the $2,900 in waste goes to $4,900, then $6,900, then $8,900, then $10,900. Let that happen once a month, and that's $109,000 that should have been in the bucket that leaked out onto the floor. In 10 years, it's a million dollars. It's my experience that in just about any small business, over a 10-year term, there is at least $1,000,000 in lost money to be had. If you own a small business and would like to retire as a cash millionaire, here's your opportunity.
Direct marketing is never just about acquiring customers -- what we call "front end." It is as much or more about retaining, repeat selling to, cross-selling to, and ascending customers on an ongoing basis -- what we call "back end." It is also the means of building a system to prevent leads or prospects, who could be converted to customers, from getting lost and coming and going unnoticed.
Here are some of the holes in business buckets, through which money leaks:
1. The person who calls and asks questions, stays unknown, and gets no follow-up. Remember, you paid for that person. If you don't capture his contact information so you can do follow-up marketing, you wasted your money.
2. Little or no follow-up on leads obtained at trade or consumer shows. This is particularly abysmal. In my most recent experiment at a big, local home and garden show, I visited nine competing companies' booths, very clearly presented myself as a viable prospect for their products, made it clear I was not interested in lowest price and made sure they had my complete contact information (except email, which I do not use).
And what follow-up did I get? By mail? Zero. By phone? Zero. Each of those exhibitors paid to get me, then they did nothing with me.
3. No follow-up on referrals. When Betty says, "I told Billy about you. I hope he gives you a call," the correct response is not: "Thanks, Betty. I hope he does, too." That's the common response, but it most certainly is not the correct response. You ask for and get Billy's address so you can send him a copy of your book or information package, with a note mentioning Betty's recommendation or a note from Betty, and an offer or offers. If Billy fails to respond, you send him a second letter. And a third, fourth and fifth. With offers. And you put him on your newsletter list and send him your monthly newsletter. With offers. You enroll him in your six-week email "course" tied to your product or service. That's follow-up.
4. No immediate follow-up to new customers. Newly acquired customers need to become frequent and habitual repeat purchasers or ascend to higher levels of membership or somehow move from first transaction to committed relationship. This means they need to be quickly thanked, welcomed and brought back, moved up or otherwise committed. Think about the last five times you patronized a business for the first time -- store, restaurant, service company, professional practice. What formal thank-you did you get? In four or five out of five, none. What "welcome to the family" gift did you get? None.
5. No prevention or organized rescue efforts related to lost customers. For more than 30 years, surveys have consistently revealed "indifference by provider" as, by far, the #1 reason customers leave a business and drift elsewhere. Not some egregious act of incompetence or negligence or insult, not cheaper prices, not anything major. Just a sense of indifference toward them. That left them open to easy seduction.
The best answer to lost customers is, of course, not having any. That requires very frequent, very consistent, and interesting online and offline communication. On-time rescue efforts work. Every kind of business has a set time by which a customer should be back -- for the clothing store, it's once before each season; for the diner, it might be every morning; for the auto salesman, every three years. Whatever it is for you, alarm bells should go off for every customer not back before his stamped-on expiration date, and that alarm should set in motion a flurry of marketing and follow-up activity.
I've just named five holes that exist in many businesses, but there are other holes. You have to find every hole in your business and plug it.
Entrepreneur Editors' Picks
This Co-Founder Was Kicked Out of Retailers for Pitching a 'Taboo' Beauty Product. Now, Her Multi-Million-Dollar Company Sells It for More Than $20 an Ounce.
Have You Ever Obsessed Over 'What If'? According to Scientists, You Don't Actually Know What Would Have Fixed Everything.
After He Was Fired From the UFC, This Former Fighter Turned His Passion Into a Thriving Business
Most People Don't Know These 2 Things Are Resume Red Flags. A Career Expert Reveals How to Work Around Them.