But make sure you Really know the Right numbers.
Pat Mcgraw explains:
Posted: 20 Dec 2010 06:00 AM PST
John Jantsch, the man behind Duct Tape Marketing, has a great concept that I really like – he calls it the Marketing Hourglass. What makes this concept so powerful is the focus on life-time value over first-time sale.
Think about it for a second – most businesses fail to turn a profit on the first sale to a new customer. Typically the business needs that new customer to make 2+ purchases before the business recoups the cost of lead generation…but, unfortunately, most companies don’t think this way. Too many companies look at the transaction, not the related costs.
(For example, if you spend $10,000 on a lead generation campaign, and that produces 100 leads, you have a cost per lead of $1,000. Then, if 50 of those leads buy your product, you have a cost per sale of $2,000. Now, if the purchase is $5,000 with 20% profit, you’ve only realized $1,000 of profit while spending $2,000 to generate the sale. With those numbers, you need those new customers to make at least 2 purchases in order to break-even.)
Four Simple Terms That Describe Great Marketing.
My own version of John’s Marketing Hourglass can be condensed into the following 4 words…
Attract. Engage. Convert. Retain.
How are you going to attract qualified buyers to your business? Notice I didn’t say ‘attract leads’ – that’s because for too many businesses, ‘leads’ now means ‘inquiries’ and that focus on quantity over quality is too expensive and inefficient.
To be successful at attracting qualified leads, you need to know your audience and use the most appropriate communication channels to deliver a relevant message and offer that motivates a desired reaction. Sometimes that could be an offer to buy – but most times, it’s an offer to learn something of importance thanks to your expertise and experience.
How are you going to engage qualified buyers into an ongoing dialog? Congratulations – you attracted an incredible number of qualified buyers to your webinar or white paper or open house. But success isn’t a one encounter thing. You need to talk with them, listen to them, get to know them better and continue to consistently provide them with value.
Listen. Care. Help.
Your goal is to build trust, gain a better understanding of their needs and learn how you can best provide them with a solution.
Do you have simple, easy processes in place that make converting that lead into a first-time buyer a uniquely valuable experience for the customer? You’ve invested a great deal of time, effort and energy to attract and engage qualified buyers – remember to make it easy for them to buy your products when the time is right.
Have you ever struggled to get a business to take your money and sell their product to you? Be honest – have you walked into a store and couldn’t find an employee that could ring up your purchase? Or called a business and gotten lost in the phone tree?
Continue to talk with your qualified leads and new customers about their perception of doing business with your company.
One time, I asked the COO to use my cell phone to call the main number of his business and ask to speak someone about their products. The first call was transferred into someone’s voice mail. The second call was transferred to someone that didn’t have all the answers so the call was transferred to someone else…and it was transferred several more times before ending up in the same voice mail as the first call.
Bottom line, after 30 minutes, the COO couldn’t find anyone to take his money and sell him a product.
What’s your plan to retain the first-time buyer and capture a greater share of the buyer’s budget? Too many businesses focus on the first sale and then forget the customer. They assume that existing customers will just come back to buy again through the same process as the first purchase.
Unfortunately, the real work begins at the first purchase. You need to make the experience surpass the expectations you have set. You need to help the buyer get the most out of the purchase – and you need to have a process in place for learning about other needs that you can solve with other products and services.
You want to focus on ways to increase order size, order frequency, annual purchases…the key metrics that help drive your business long-term.
A SPECIAL BONUS WORD – REFER. I always include referrals with retention because if you are doing a great job at keeping your current customers happy, they will refer others. That said, it’s best never to make that type (any type) of assumption so a formal referral process is critical to successful marketing and sales.
So does your business have clear processes in place that address attracting, engaging, converting, retaining profitable customers? And does your business also have a formal process for asking, managing and converting referrals?
Let me know what works for you – and what hasn’t – so the rest of us can learn and grow.Sphere: Related Content