In Part 1 of this 3-part series, I outlined the first way to grow your business; Grow your number of new clients. If you didn’t read it, here is another chance:
Part 1; Grow the number of new clients.
As a reminder, there are only 3 ways to grow a business (adapted from The Sticking Point Solution by Jay Abraham):
- Grow the number of clients you have
- Increase the amount each client spends with you
- Increase the frequency with which your customers will buy from you
Numero Duo; Increase Frequency of Purchases
What’s a business owner to do when they have spent all this time and money invested in marketing for new clients and now either have no budget left to continue marketing to new clients or, EVEN WORSE, do not have any capacity to serve their clients?
Let me start with an apology. You deserve an apology because you have been told that marketing is all about getting more clients. That’s the path to growth. I apologize because that is only partly true.
It is true in the way that growing your client list is an amazing way to build your business. But I am here to tell you that you are
LEAVING A TON OF MONEY ON THE TABLE
I had started my professional career with Chrysler Financial back in the day right around the time of the Daimler-Benz ‘merger of equals’. I recall that one of the figures they communicated was that it cost approximately $3000 USD to attract a new customer. This was a customer who had never purchased a Chrysler, Dodge or Jeep vehicle. It only cost $800 to get the customer to re-purchase.
In other words, their COA or Cost of Acquisiton was $3000 and COR (Cost of Retention) was $800. Let’s put this in perspective. If you spent $3000 to get 100 clients, your investment would be $300,000 (I like to use simple math). Then the next year, you would need to spend another $300,000 to attract another 100 new clients. I can tell you are smart because you’re asking yourself ‘Yeah, but what about the other 100 clients I worked hard to get?’
Most small businesses, by default or effect, pretty much walk away from those first 100 clients. They certainly don’t intend to but most of their focus is spent on getting ‘new’ clients and any repeate business happens to be by circumstance.
If you were to use the same simple math, your investment would be $80,000 ($800 COR x 100 Clients) to keep those orginal 100 clients. This sounds so rediculous that most people I speak to, whether in groups or at events, don’t believe that a business would do this. Once I show them how they are practically walking away from existing clients, they are astonished.
A YABUTT is alot like a hiccup. It comes on suddenly, we can’t stop it and we can’t move on until we fix it. The YABUTT is usually followed by …’Ya But How’. So you carefully read Part 1; Grow the number of clients you have and invested substantial time and money. Now it’s time to increase the number of times they buy from you. Here are 3… (and I have a list of about 115 other ways)
- Add other complimentary products or services to your lineup that your clients are already buying from someone else.
- Sell other companies’ products or services that your clients are already buying as an affiliate.
- Joint venture with other companies who are in the same vertical as you to offer their services to your clients.
Here’s an example….
Joe Smith (no relation) is a roofer. He has a small crew to install new roofs on residential homes. He spends half his time managing the crew on-site and the other half on following up for new clients (door knocking, cold calling and other painful sales strategies). Joe tells me the problem is that he can only work with new clients because once he has replaced the roof on a house, they don’t need to go back for another 10 years.
What would you ask Joe about other products/services residential homeowners buy? Siding, landscaping, heating & airconditioning to name a few? Joe has opportunity (provided he did a good job) to increase his value to the homeowner. Joe could start up or acquire a siding division or partner with a landscaping company to market their services to his clients.
This is how Joe can invest in the COA and re-invest in his COR to 3x his business. If Joe really got serious, it wouldn’t take much more effort to 10 or 20x his business in a very short period of time.
How much money are you leaving on the table? Next I will venture into the 3rd way to grow your business AND demonstrate how you will be able to 3x your business at a MINIMUM with only a 10% increase in effort.
Thanks for reading.
Continue on to Part III >> Increase Average Transaction Value
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Thanks a ton for reading this blog… If you liked it, please share it and add your 2-cents. If you didn’t like it, share it anway and explain why you thought it is garbage. Either way, I will respond!