Management Memos

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August 2018
 

August 2018 About Recruiting New Customers

Each year's budget setting leaves us with higher and higher sales targets. Are these budget figures just parts of a wish list, or is there some science in your planning?


Early discussion about a new budget for the new financial year in the July edition asked a fundamental question: "If growing the customer base is one of the worries, that puts the sales growth plan at risk. So what will you do?"

One strategic answer would be "Forget new customers - sell new products to the customers we already have". Good answer in some situations, but new products means new stock and a whole lot of other costs as well. No problem if you've done the arithmetic and it all works out fine.

For others, though, the question still has to be: "What can we do to increase the customer base?" So let's take a sober, down-to-earth look. Nothing fancy, right?

Two Keys:
The simple answer is that there are two keys to customer recruitment. Keep these keys in mind, and keeping them clearly separated is vital to growing your customer base.

Key #1: Advertising. You have to get your value message out to new customers.That means using a paid message, so let's look at the options. Be serious about this, and think carefully!

Key #2: Making A Value Offer. While your advertising is indispensable, it has to be advertising a great value offer. So your offer is the second key you will have to get just right. Let's get started!

Letter box drops:
Letterbox Drop Old hat, and so last generation. They just work even so, and they can be relatively inexpensive. Worth considering.

A client once took a black and white mailing piece we had prepared for him, and with his wife distributed it to one hundred letter boxes on their way home one night. Two sales leads worth almost $3,000 came in next day. Client decided to stop it. because in his words "It didn't work"! (Was this client thinking carefully about advertising, or just (wrongly) convinced that letter box drops don't work?)

Printed direct mail:
Again, straight out of the 20th Century. It works well if there is a specific and highly relevant offer. You need an address list - that's what makes it so effective in recovering lapsed customers. (Everything old is new again! These are easy new customers.)
    
A mechanic client was suffering from dealer servicing for new cars taking his customers, and his mail campaign brought back numbers of customers who had just forgotten about him. Now that they no longer felt tied to the dealer, lots of them came back. He couldn't get another car on a hoist for six weeks. His comment: "It didn't work"! (Again was this client thinking carefully about advertising, or just convinced that printed personal mail doesn't work?)

Printed press:
Local PaperNewspapers are dying, right, so why bother? If you've been in the practice of running your ad in the local paper every week or fortnight, and you haven't changed it in a year or two, your prospects have already switched off long ago.

But what if you revisit your local paper and see which pages get the most readership? People don't read right through the local paper like they do on metro main press, but when you look at the 'Letters' page, there are clearly a lot of articles that do get read. If you don't have a really good offer, don't bother, but if you make a strong case for trying out your product or range, create a great ad (almost always new!!), and place it in spaces right where people do read.

Perhaps you feel sorry for the poor sods who still pay for local paper advertising. Really, are those advertisers just not thinking?

Various Other Formats:
Outdoor, bus-back, taxi-back, cinema, and discount trade coupon books: These media are not very exciting, although some traders find that they can work. Generally these media are used for fill-in advertising, and not for the main lead generation. Can be useful in announcing a big new program, but generally not useful for SME's.

Web Advertising:
Here is a whole new field to explore. This approach makes full use of running advertising postings on Google or other social media. This kind of program takes a lot of managing, and is laced with traps for the unwary.

The main things, if you want to follow this route, are to have a simply unbeatable offer, link it to a really appealing landing page, and then keep an eye on expenses - especially the 'pay-per-click' variety. (One past prospective client we thought we might have join us was 'over-the-moon' about the success of their landing page program. They were getting an enormous number of 'hits'. No sales - just 'hits'. They didn't understand 'hits'.)

Own Web site advertising:
Once you've sunk a lot of money into your website, you'd like it to produce value for your business. Too late. You needed to have had your website designed in the first place to be an active part of your customer recruitment. Perhaps it's time for a new website that does just that.

Landing Page To make it work, though, you might take one of your press ads, (or a radio ad if you're that flush with funds,) and have it point to a special offer that's available at a special landing page you put on your web site for just this purpose. The offer can be changed daily, weekly, or monthly, just as you please - there is little cost in changing your website, as long as you set up yourself to do it.

The trick to remember is that you must get a response from the offer you make, and the response must include providing contact details and permission for you to send electronic messages to the respondents.

So that's quite different from the 'set-and-forget' type of web site most businesses have. Your new website will be very interactive, and constantly monitored and modified. (Will this just be 'busy work' as you find new time to do new things in this modern world, or will you be getting real buying customers out of it?)

Social Media:
Quite the buzzword. And such a good distraction from real business. Social media works quite well to let people in your group know what's happening. Letting loyal customers who have joined your group know of a 'VIP Shopping Night' for instance, and asking for registration of their intention to attend.

As for recruiting new customers, it is costly and has a poor record. Hundreds of 'likes' simply do not produce buying customers! (One client had a major supplier do an expensive main media campaign. Then their social media page reminded customers where they could buy this product. Lots of sales. Effective advertising. But no new customers from social media. Remember to think clearly!)

Convert to a Sale:
If you're looking for store visitors with your advertising, actually making the sale is a clear cut challenge. With web advertising, of any kind, ask how your new contacts will buy? For a more explicit review of this aspect of web advertising, click for the May edition and June edition of Management Memos.

Making A Value Offer:
This is the second key consideration. When it comes to making an offer, there are three things to keep in mind.
Make a value offer
First, you want to get new customers who have not dealt with you before.

Second, if you have been marketing well before, you have already harvested the 'low hanging fruit'. Your next new customer will be harder to catch. Your next lot of new customers will be more price conscious, and your average sell prices will be lower. That's life.

Third, making a value offer is not simply making a price off offer at 10% or some other similarly affordable figure. There are a zillion solutions to the question 'what makes a great value offer?'. Find the right one for you - or contact My Red Zebra.

Finally, factor into your consideration that competing harder means lower prices and margins, and probably higher selling expenses too. For one thing, you will be advertising harder and more expensively.

 

Think clearly

Plan Advertising based on fact

Measure the real results

Plan for lower average prices and higher selling expense


We can help you see your strategic strong points, protect your strategic weak points, and win on the digital sales front. And then you can just hang up. NSA!

Phone us (see the numbers below) or use the contact form here to get help. Absolutely obligation free.

 

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Any advice, information or comment contained in this document is general in nature, and should not be relied on as the basis for any specific commercial, business, employment, or financial decision. Specific advice should always be obtained for each individual circumstance. Accordingly any advice, information or comment contained herein is for general guidance only.