Archive for the ‘Strategy’ Category

Don’t forget your customers and they’ll buy more from you

July 7, 2010

The next time you ask “how can I bring in more business?” don’t forget your existing customers. It’s faster and cheaper to sell more to existing and prior customers than it is to convince new prospects they should buy from you. You should be marketing to those who already like your products or services, so what’s the best way unlock this significant source of revenue? Read more…

They already love you, so stay on their mind

Every day clients ask us to figure out how to reach new prospects with their amazing, incredible, valuable product. Bringing in new customer leads is a huge part of what any marketing company can do for you, but we have to remind our clients not to forget their already-sold-to market of existing customers. These are the people who already love your amazing product, the outstanding service, and incredible value, but that aren’t necessarily thinking about you every day. They should be, though. They’d buy more if you were on their minds more often.

Remind them often

Customers decide to purchase products and services over a long period of time. That vendor selection process can be quite harrowing for your sales people, but once the customer has decided to buy it is very likely they will buy again. You just have to remind them what you do for them and what you can do for them on a regular basis.

Why do they love you? Let them count the ways….

If your product has reduced their costs or effort and made them more profitable, even this awesome savings will become rote and commonplace after a few months. You’ll have to remind them how you delivered that efficiency or savings so they open up and look to you, a trustworthy vendor, for more.

When you deliver outstanding service in one area and the customer gets used to things being that easy or that great, they tend to forget what it was like without you or take for granted what you do for them. It’s important for them to recognize, often, the great job you’re doing or the extra capability you give them.

I never knew you could do that

It’s not just about reminding them what you already do, either.  Most customers don’t know all of what you can do or they forget half the things you product can do after they finish training. No one expect a customer to read all the directions or all the chapters in the manual, so it should come as no surprise to you when you discover the customer isn’t using your product to its full potential. You have to keep your company and what you deliver in their minds to stay in place and to increase revenue from existing customers.

Keep your competitors away from the hen house

Finally, regular communication about what you do for them and for others prevents attrition.  If your customer doesn’t know your product also does X, Y and Z, they might just switch vendors when your competitor pitches their equivalent product. The customer might switch to an inferior product just because they don’t know or don’t remember you do that, too.

How to keep customers buying and increase their spending

You have to communicate your value to customers regularly, often, across several channels and up and down the influence ladder. That means you need a campaign, even if it’s a simple one, to reach your customers. Here’s how:

  • Keep your mailing list, even when a prospect becomes a customer
  • Separate the mailing list into “prospects” and “customers”
  • Query the new customers on who all will use your product or be influenced by it. Add all of these names to your mailing list.

The receptionist or the office manager is the one who selects a coffee service vendor and signs the contract, but all the workers in the office and the warehouse drink the coffee and would love to know there is a new Trolley Coffee flavor to try. And the boss and the salespeople will want to know you can now deliver cup-at-a-time coffee for better image and special visitors. Keep all these influencers on the mailing list so they can convince your point of contact to stay with you and to buy new products.

  • Every week gather the news about new products, the latest customer service home runs and how the just-signed new customers will use your product and put all this news in one spot. Like a Word document on the file server under “on-going marketing”.  Make sure you include any promotions or sales in this “marketing news” document.
  • Pick the slowest day of the week and post one or two of these news bits on your Twitter account and your Facebook page. Post the customer-centric and new product announcements on the local business blog or magazine’s Facebook page.
  • Pick a day of the month to dedicate to getting new sales from existing customers and set aside an hour that day to gather the best of tidbits in your marketing news document into a Constant Contact template. Select your “existing customers” mailing list and press the “Send” button.

Read More About Newsletter Best Practices

Keep your customers engaged and the register ringing

It’s as easy as that. If you’ve done a good job, your customers will start to comment on the newsletter. If you use a marketing company like us, the customers will start visiting your website more often due to all the links we’ve embedded in these posts and the newsletter articles. Comments mean the customer is reading your news. They’ll think it’s interesting, even if you see it as “typical, boring business stuff.” Include a contest or a quiz or something fun and your customers will start lo0oking forward those Facebook posts and monthly newsletter.

You’ll be on their mind more. They’ll know more about what you do now for them and what more you can do for them. All from a trustworthy, known vendor. That’s what will unlock more business from your existing customers.

Doug Lucy is the president of AdLinea, an Internet marketing strategy company in Richmond, VA.


Increasing your prices without losing customers

May 7, 2010

At the 2010 Virginia Council of CEOs annual Retreat, we heard how coming inflation and an improving economy makes this the right time to increase prices. But how do businesses in Richmond do so without losing customers?

Costs are going up, so plan your pricing

Inflation will come into play over the next few years and that means your costs will be going up. Assuming the CPI will hit 3% in 2011 and 6% the following year, what will your prices need to be to keep up? Your staff will need some kind of additional compensation at the same time your buying power is impacted, so you need to plan what your prices should be. Once you know where they need to be, you can plan how to get there and how to convey the change to existing clients.

Is there something more you add? Or subtract?

Vendors are often reluctant to increase prices and many of us have held off pricing increases so any change will be new or unexpected. Is there something you can add to what you are delivering, something that helps relieve a customer problem or meets another customer desire? Adding value to your current product or service can help ease the price increase.

If you are currently selling bundles or packages, you could break those bundles out so customers could choose which they want and those they don’t really need. Beer lovers with a beer budget don’t need or want champagne. Unbundling is one way to keep the total cost to the customer acceptable, lower your costs, and charge a premium for what they really want or need.

Will your customers stay with you?

The ultimate fear with a price increase is that you may lose too many customers or lose the most profitable ones. It’s nearly impossible to ask a customer “how much more can I charge you?”, but it is important to know that your customers will stick with you after a price change.

You may be in a dangerous position and be counting on Fred Reichheld calls “bad profits”. In his book, The Ultimate Question: Driving Good Profits and True Growth he makes the case for “good profits” versus “bad profits”. Good profits are those that come from customers who genuinely love your company, brand or services. They will continue to buy from you and recommend you to others even when you increase your prices.

However, Reichheld warns that you should be wary of bad profits. These are profits from customers that, given a better deal or better terms or even just a whim, would jump ship and buy elsewhere. It is these customers you need to know about before making a pricing change.

You can use Reichheld’s Net promoter Score to determine how much of your current customer base is likely to leave if you increase prices. Read his book and have your marketing department survey your customers. If you can’t spare the time but still need to know which are good profits, have AdLinea create an online web survey and email campaign to your customers to determine the Net promoter Score NPS.

When is the right time?

Look at what new products you plan to release in the next 12 months, what changes to your services or your bundles you are planning, or what time of year would be best for changing product bundles or service prices. Plan to have the changes in place well before any critical seasonal times.

How do you tell the customers?

One way or another you’ll need to announce the price change to your customers. Some industries and transaction volumes are such that simply including a notice in a bill is sufficient. For businesses where the relationship with customers is high touch or long term, more notice and more direct, personal contact may be the right way to go.

Alan Beaulieu and Jay Goltz both had recommendations for dealing with telling the customers. The one I found especially useful was when you have a great long-term customer and you don’t think the sudden price change will go well. The suggestion was to talk to them directly, explain the need for the price change, reference the long relationship and ask to increase the price slowly for that one client to minimize its impact.

For the normal customers, a phone call or letter should be enough. Here are some examples across several industries and situations:

Phone call #1

The reason I’m calling is to discuss our services for you over the upcoming season. We do our best to keep our prices reasonable and we have held off any kind of increase due to the economy over the last two years. Even though we’ve kept your prices the same, our costs have increased and now we have to raise our prices 15%. I wanted to call you personally and let you know you have been a great client over the years and we are making an exception for you and only increasing your price 7%. Your price has been $450 for the past three years, our new price will be $520, but we are keeping your price down to $480.

Letter #1

Due to the increase in our costs, we must raise the cost to you so we can continue to provide the quality and service you’ve come to expect. We have avoided raising our prices for as long as possible, but we can no longer prolong the inevitable.

The new price list is attached for your review and goes into effect on [date]. We will honor the current prices for any orders placed between now and [date of increase] so you can take advantage of them before the price increase.

We thank you for your business and appreciate your understanding the necessity for this price increase.

Announcement #1

Good news! We’re continuing to hold down costs for you!

Price changes since 2007:

40% increase on price of housing

110% increase on cost of medical insurance

35% increase on [other products they buy]

Just 15% on [your product]

Letter #2

My new rates go into effect as of January 2011 (I wanted to give you some time to adjust). I will be offering a discount to customers who sign up for regularly-scheduled cleaning. The new prices will be:

Weekly cleaning (year-round – 42 week minimum commitment): $80 per visit

Single “start of season” full house clean: $125

End of season “close the house down special”: $125

Monthly cleaning:

3 month commitment: (1 visit per month): $90/visit

6 month commitment: (1 visit per month): $85/visit

Please mark your calendars so you’re not surprised by the new rate! I look forward to continuing to work with you.

Letter #3

We regret that rising costs for raw materials necessitate our raising the price of all footwear 10%, effective September 1. We have made every attempt to avoid the increase, but we refuse to compromise on quality. This is our only recourse. We think you will agree that the quality of Shell shoes should not be sacrificed. We look forward to another year of association with you.

Letter #4

The price of diesel fuel for our delivery trucks will rise approximately $3 a gallon this fall. That and the higher cost of corn syrup in our soda drinks has forced this increase. Our competition will have to make similar increases, but we’ll still deliver better service. We appreciate your past patronage and look forward to serving your future refreshment needs.

Phone call #2

We are notifying our best customers of an upcoming price change. It is just a slight rate adjustment, due to the Consumer Price Index changes and increased transportation costs over the last twelve months, and it will go into effect on March 1.

We have been investing in efficient equipment and improved technology and that helps us keep rate increases at a minimum, today and in the future. We anticipate no additional rate adjustments for the next full year.

What if we cannot increase prices?

There are other ways to endure your costs increasing if you find price increases are impossible.

  • Get paid sooner as anything that accelerates cash flow has the same net effect as a price increase. Send out invoices earlier, set terms to net 15, or offer early bird discounts.
  • Reduce or eliminate discounts. Count the number of transactions at various price levels and make adjustments if 50% or more of your deals are discounted.
  • Improve customer loyalty and develop a relationship or annuity model. Sell upgrades and add-ons to loyal customers and they will buy more annually.
  • Sell a complete, packaged deal. Include everything that the customer could possibly need, add value and service and you can command a higher price.
  • Remove high-cost components. For customers with limited budgets, remove the labor-intensive highest cost items from your regular product and offer them separately.

So, we know pricing increases are coming and we are headed into a recovery and growth phase. The best path forward is understanding what to increase, planning the changes and announcing it to customers. Make sure you are surveying the competition and the customers and using marketing advice and communications to implement the increase without jeopardizing your business.