A couple of us were having a coffee with a successful Essex business owner last week. We talked about how better marketing could help his business grow even further. (You’ll see why I’m telling you this in a minute).
He wanted to kick around the usual ideas designed to attract new customers. Improved SEO, more frequent blogs, a Pay per Click (PPC) campaign.
We stopped him there. New customers, we explained, are not the whole picture.
So, we ordered more coffee and started again.
Here’s what we talked about:
Marketing is about getting more business. But, to simply focus on new customers is missing a trick. The first port of call when growing your business should always be getting more value out of your existing customer base.
After all, they already know you and (hopefully) trust you.
I suggested that he should first identify customer types. Before then deciding on an appropriate marketing strategy for each type, based on their profitability and levels of activity.
Customer types in this exercise can be based around the 4xRs: retention, reactivation, reconditioning and reach.
Here’s how it works:
1. Retention: Active clients that are high profit
Customers who provide you high profit and are actively engaged with your business. As a rule of thumb, this customer type will be 20% of your overall database and provide you with 80% of your business. Keep these through hell or high water.
2. Reactivation: Inactive clients who were once high profit
Customers who were once very actively engaged, but who have fallen off the radar in recent months. They were once providing high profile business. You should prioritise winning them back.
3. Reconditioning: Active clients delivering low profit
Think of these customers as your “comfort zone”. You may be scared to change the status quo, for fear that this group will stop buying from you. However, consider this. They’re active. Which means they like what you’re doing. You can (and should) do more to grow business within this customer type.
4. Reach: Inactive clients who were once low profit
Of course, this group should not be where your main emphasis is placed. But don’t forget about them! Have a strategy, get them back on board. These customers could become even more valuable to your business in the future.
Once customers have been placed into clearly defined categories then it’s far easier to design a marketing strategy, and achieve smarter business growth.
Only then, I explained, should we start talking tactics. And, yes, improved SEO, more frequent blogs and Pay per Click (PPC) campaigns may well play a part.
Facing the same business challenge?
Let’s grab a coffee.