There are two distinctly different ends of your business for marketing purposes. To successfully and profitably market your business, it is critical you fully understand both ends and continue to operate them effectively and continuously. I will refer to these as front-end and back-end activities. Each requires different activities. The two need to be kept separate and must never be confused. Before we go on to consider these concepts more fully, I would like to explain the term Lifetime Value. Understanding Lifetime Value Lifetime value is the accumulated value of your customers to your business, over the duration of the customer relationship. For example, we will assume that your average customer produces 100 of profit per year and you keep them on average for 5 years. Then lifetime value of each customer is on average 500. Once this is realised, this can become a revelation and can be instrumental in driving your business forward substantially. With each marketing activity, by being aware of this factor and marketing to lifetime value instead of immediate profit, your business will take on a completely different shape. You will be prepared to invest appropriately to maximise responses. Front-End Activity This involves marketing for customer acquisition purposes. Even the largest and most successful of businesses require new customers on an ongoing basis. If you are not constantly and actively marketing for new customers, the size of your customer base will decline with time. Circumstances change, people move, people die, competitors attack and your customer base will decline. This is not an area to be complacent. The biggest mistake that many business owners make in this area, is attempting to obtain maximum profitability from the first sale with a new customer. The fact you are acquiring a new customer is valuable in itself to your business and you will not attract the maximum numbers of customers unless you are offering something of tangible value in return. Here is a list of some of the activities you can do to produce the best response: Make irresistible offers to lure new potential customers Just break-even on the first sale Offer money back, no quibble guarantees Communicate the unique benefits of your offering Explain the reasons why you are making the offer available Limit the offer to a targeted, finite group with a deadline date Back-End Activity This is where you maximise the profitability from your ongoing customer relationship and ethically create a pipeline of profits. In order to do this you MUST communicate REGULARLY with your existing customer base and make worthwhile offers available to them. Monthly communications is a good target to aim for as a minimum. Segment your customer base into loyalty groups. Loyalty can take account of factors such as, sales revenues, frequency of purchases, servicing hassle factor and potential for growth. By continuing to educate and inform your existing customer base and offer meaningful value to them on an ongoing basis, the more you will benefit from back-end profitability. You need to develop a conveyor belt of offers and communications that nurture your customers to greater fulfilment of your products and services. Some of these activities may include: Establishing a customer loyalty programme Sending out regular newsletters Asking for customer feedback in a survey Taking select customers to visit suppliers/manufacturers Making a customer referral programme available The Importance of Keeping Records In order to monitor and refine the responses you receive from all of your marketing activities, requires you to code and track each element. Make sure every advert, flyer, mailer letter etc has a response mechanism and make sure you code each element with a unique reference. Keep records of responses and continue to look for ways to increase responses. By combining front-end and back-end activity on an incessant and effective basis you ultimately cannot fail to attract maximum number of customers and maximum rewards for your efforts. Brian James. |
