5 solutions for the number one challenge in small business
Would you like more new customers? Did you know that forty one percent of small business owners rate their number one issue with their business is that they “want more new customers.”
Given this is such a common challenge, we thought we’d share a few tips with you on how to do just that.
1. Look to your existing customers
Sometimes, hidden under the need for new customers is a problem with a business and their existing customers. Either their existing customers aren’t profitable enough, or the business is losing too many customers due to poor service or not meeting their needs.
So our first tip is for you to look at your existing customers. Survey them and make sure you are delivering on your promises and that your current customers love you. Do you get high ratings for service, are they willing to refer you?
There is a rating scale called the Nett Promoter Score. By asking customers on a scale of 1 to 10 how likely they would be to refer you and calculating this score by subtracting all scores of 6 or less from those scoring you 9 or 10 you’ll get a positive or negative score. If it is highly positive, then you can move on to tip number 2.
2. Ask customers to refer you
Actively asking customers who love you already to refer you is probably the easiest way to pick up new business – word of mouth is the best form of marketing. You can either just nicely ask on a regular basis, or even incentivise people to refer you with a promotion or offer.
Companies that ask for referrals are known to get three to four times more than those who are doing a great job with existing clients but just passively wait to get referrals.
3. Ideal Customer
If you want new customers, it pays to do an assessment on who your ideal customer is. There is no point going out and chasing just any old customer. Have a good think with your team about who is the best type of customer for your business. How big are they, how regularly do they buy, what industry do they come from, what are their demographics – age, sex, income level, interests?
Companies that have more of their ideal customer are always happier and more profitable than those who don’t. You don’t run a charity, so think about who you want as a client or who you are best at serving and go and find more of those.
4. Check your churn rate
Churn rate is the rate of losing customers. Some businesses can lose 5, 10 or even 20% of their customers every year. Often because they are not servicing them well enough or haven’t delivered on their promises. If you lose 10% of your clients each year, you have to get 10% new clients just to stay the same size.
Businesses always lose clients, but if you can minimise this, or even ask lapsed clients why they are leaving you’ll be in a better position to keep them, or perform better for new clients when you pick them up.
5. Check your fundamentals
Sometimes the desire to get new customers is because there are fundamental hidden issues in a business such as poor cash flow, profitability or processes.
If you can’t service a client profitably, or poor processes mean you’re spending too much time servicing them, or they don’t pay you on reasonable terms – there could be other reasons why you feel you need to constantly find new clients.
Make them more profitable, fix your processes, tighten up payment terms and you could be on the way to a much more profitable business even with your existing clients.
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About the contributor:
Hunter Leonard is The Marketing Chef ®. His passion for the past 25 years has been to help business owners find their sweetspot and build a better marketing strategy. Hunter has benchmarked over 1200 business owners to understand their needs and wants in regards to marketing. He has won six major marketing awards for effectiveness, contributed to over $2b in sales growth for his clients, and consulted directly to more than fifty companies in 20 different industries. Hunter has also written five books on marketing and communication and is on a mission to change the lives of one million business owners through marketing. When not working on marketing strategies, he is cooking, playing music or bush walking. Website: http://bluefrog.rapidmarketingcentre.com.au