Jewelery Marketing Plan – Business Growth Strategies Part 2
In a recent article we talked about “buying customers” as the definition of marketing.
Yes, you can measure specifically and precisely – virtually to the penny – what you pay to acquire the typical new customer. And you should, because it will help you make better decisions about how you invest your marketing dollars, and give you a position of strength when negotiating with media and other marketing channels.
The same formula can be employed when calculating what it costs you to re-acquire a customer you have already once bought.
Mr. Miller’s car dealership pays more than a salesman’s commission in marketing dollars to send that car out the door. There’s an allocation for national advertising, an allocation for the regional dealer group that advertises jointly, and an allocation for the dealer’s local advertising budget. All tolled the marketing budget for a single car runs into the hundreds of dollars.
But it could be a lot less, if Mr. Miller allocated by CUSTOMER, instead of by car.
Focusing on Your Existing Customers
Consider this. Mr. Miller spends – oh, let’s hypothetically say, $360.00 – on the advertising required to sell a car. Or better in addition, let’s say to bring in one buyer. If he follows the rule of the typical dealer and past practices, he’ll continue to do the same kind of media advertising week after week, and year after year, and hope that when it’s time to buy another car, the customer who bought the first one will come to him again.
Frequent Friendly Communication
however, what if Mr. Miller adopted the practice of sending a greeting card to that buyer once a month, and did so each and every month. Sometimes the card would simply be a greeting. Happy birthday or anniversary; Happy Holidays or Happy New Year. Other times, Mr. Miller might make offers to the customer. It might be for service work, or to truly consider another car buy. On event, he might simply recommend other products and sets in the area that might bring additional value to the lives of his customers.
If it truly cost him two complete dollars to print and mail each one of these greeting cards – a very high price indeed – Mr. Miller could send the cards for 180 consecutive months. That’s 15 YEARS worth of contact and customer relationship building before it would have cost him his complete allocation, to get that customer to come back and buy again.
How To obtain Customer Relationships
Now, we know that the typical buyer is in the market to buy another car every two to three years. By following the “re-acquisition” approach we are recommending, Mr. Miller no longer leaves to chance whether he’ll get that customer back again. He virtually GUARANTEES it, because he has built a relationship, instead of merely advertised.
The most important thing to remember in this scenario is the dramatically reduced cost of re-acquisition, compared to the original cost to buy the customer. If it takes him a complete three years to get this buyer back, at his $2.00 a month investment, he will have use just $72.00. What happens to the other $288.00? Why that’s profit for Mr. Miller.
This is what we call “re-buying” your existing customers at “wholesale” instead of “retail” rates.
Most everybody knows it’s far easier and less expensive to keep your existing customers than it is to buy new ones. It’s far easier and cheaper, and more profitable to get your existing customers to return than it is to regularly have to buy new ones.
nevertheless, few businesses have “frequency of buy” marketing programs, specifically designed to get customers to come back in. They allocate few, if any dollars to this specific purpose, and they leave their existing customer promotions to the “afterthought” category.
What an incredible, inexcusable blunder!
Why would Mr. Miller – or you, for that matter – want to use $360.00 to get a customer back in the door, when he could do it easier, for $72 or less?
Re-acquisition of existing customers is so much less expensive and so much more profitable, that at some point, if you really concentrate on it, you can all but eliminate that expensive, complete retail-priced new customer acquisition stuff, and strictly go for re-buying those wholesale-priced customers.
Here’s What You Do…
Specifically, here are our recommendations for you and Mr. Miller…
- Make frequency of buy marketing programs the number one priorities on your list of marketing initiatives.Once you acquire new customers, do at all event it takes to transform them into “clients” with whom you have an on-going relationship. You want them to see you as “their car dealer”, “their plumber”, “their podiatrist”, or “their jeweler.” Contact your existing customer base at the minimum six times a year, preferably monthly. It doesn’t have to be a solicitation every time, but it should be most of the time. Remember, if you fail to ask your customers to buy, they’ll fail to continue to be your customers.
- Allocate up to 50% of your marketing budget to your existing customer base, if you’re an existing business that sells a consumable product. And we do consider automobiles a consumable. (We’ve worked with a company that sells bird feeders by a franchise operation. They put a lifetime guarantee on their feeders. It may only be a $20 to $50 item, but it’s not a consumable, because customers never have to buy another. Of course, the seed they sell is consumable. Cars, however are about shot after three or four years, despite their sky high price tags, so they are consumables.)
- Have private sales.
- Use bounce back offers.
- Use frequent buyer cards or clubs.
Don’t be afraid to sink this much of your marketing budget into your existing customer base. This is such a profitable thing to do, you’ll nevertheless be able to do all the new customer marketing you want, using the surplus profits you rake in from shifting your marketing emphasis to this re-acquisition strategy.
Consider using up to 25% of your budget to request new customers from the existing customer bases of other non-competing businesses who have your same kind of customers, and to whom you would pay a small commission only when one of their customers also becomes one of yours.
Finally, the value of an existing customer is so great, make sure all employees understand it, and empower them to make existing customers happy. And make sure you have a system in place to re-activate idle customers.
clearly, those starting out in business, or who simply don’t have enough existing customers or a consumable product line, must concentrate on buying new customers. But as soon as you get those new ones, you must have a program in place to get them back and get them back more often, for a longer period of time.