A lot of small, local business owners spend a lot of time trying to figure out how to acquire new customers. A lot of small, local business owners are doing it wrong.
First Things First: Keep Your Existing Customers
The most important investment you can make in your small business is investing in keeping your existing customers.
Savvy marketers know what their cost per acquisition is. How much does it cost, in advertising and other marketing tactics, to bring in exactly one customer? How does that scale? How much can you afford to scale that?
But there’s an element of cost per acquisition that’s much easier to wrap your head around: repeat business.
The math is simple: you spend a certain amount of money to bring in one customer. When a customer leaves your store or your restaurant happy, they come back. That costs nothing.
The small business space is competitive, no matter what your industry is. Your pizza shop isn’t just competing against the pizza shop down the street for the same customer’s dollar. You’re competing against the Chipotle next door, the oven pizza at the grocery store, the movie theater across town, and the upgrade on a car wash next to your customer’s house.
The point is, your customers have an overwhelming amount of choice on how to spend — or save — their money. To help them decide how they want to spend their money, they use a handy mental shortcut: how much did I enjoy the last time I went?
The Power of Delighting Your Existing Customers
If you ask a potential customer what it would take for them to do business with you, especially in a competitive market, you’ll likely get some pretty basic answers. You’ll likely hear price, quality, convenience, maybe even necessity.
Those are standard reasons that come to people’s minds. A lot of business owners don’t want to play the price game — they will, to a point, but nobody likes to. Quality is important to focus on, but it’s often hard to use quality as a differentiator. If you have a truly superior product or service, chances are good that a competitor is going to figure that out, and raise the bar for themselves.
Convenience can be a good driver of repeat business, but how much can you do to increase how convenient you are? Location is difficult to change once it’s set for a lot of brick-and-mortar locations. Maybe you can think outside the box, toward delivery – but that gets into a ton of cost issues that may be barriers for you.
And as far as necessity, for how many of your customers are you truly the only option?
Instead, let’s refocus our view. Let’s ask this question of customers who have already been through your doors: what would make them come back?
Now we start to get into some good insights. Superior customer service, a great environment, perceived value, and the experience they had with your business.
How to Delight Existing Customers
At our company, we work with clients in all different industries to create excellent experiences that earn their customer’s loyalty. And we see them do it quite successfully.
Our platform provides businesses with SMS marketing capabilities, giving them the ability to incentivize customers to come back by providing them with something uniquely valuable. That may be something as simple as a deal or discount, but it’s part of a larger series of touchpoints that extends beyond just your own walls.
That’s an important concept. Customer loyalty is a key driver of repeat business. Repeat business, as we know, is a key indicator of customer satisfaction.
The Power of Word-of-Mouth
“Compounding is the greatest mathematical discovery of all time” -Albert Einstein
Al was really onto something here. We mentioned before that the cost per acquisition of a repeat customer is essentially zero. The best kind of business is repeat business.
There’s one more type of business that holds the same amount of value for you with the same lack of cost: referral.
People trust people. And people trust people more than brands.
Brands are inherently selling themselves (or at least, that’s how a market perceives messaging from a brand). Your marketing can be persuasive, to be sure. Pour a few thousand dollars into a persuasive TV spot and you’ll get new customers. But there’s the tiny issue of a few thousand dollars.
Word-of-mouth, on the other hand, is the most powerful form of marketing.
Some business owners argue that word-of-mouth is great, but impossible to control. On the contrary, it’s entirely within your control.
You create the experience of your customer. You have the ability to delight, in a small or large way, when they don’t expect it. You have the ability to create something for your customers that’s worth telling their friends about.
And when they do tell their friends, when you’re successful in creating an environment or a product or a service worth sharing, you’ll not only keep your existing customers for life, you’ll experience the power of compounding for yourself.