By Mary Eule Scarborough, Certified Guerrilla Marketing Coach
As the title states, there are only four ways to grow any business – large or small. They are:
1. Getting New Customers: This is so obvious that it doesn’t require more explanation. In fact, most entrepreneurs devote the vast majority of their time, money and energy on acquiring new customers and all but ignoring the next three… a huge mistake.
2. Increasing the Average Transaction ($) Amount: Simply put, you should be looking for ways to increase the average dollar amount per transaction. Do the math… see how your yearly revenue is affected when you add just one additional dollar (e.g. offer your customers complimentary product or service add-ons).
3. Increasing the Average Number of Transactions per Customer: Let’s say your average customer purchases “something” from you twice a month. Why not offer them complimentary products (add-ons) and/or services (e.g. free delivery) which encourage them to purchase from you more often? Again, do the math and you’ll be amazed at how quickly the numbers rise.
4. Increase Customer Loyalty: Simply put, this is the average amount of time your customers remain your customers. For example, if your average customer remains your customer for six months, think of how your profits would rise if you kept them longer!
Following is a simple example of how this might look if I were to slightly improve numbers 2, 3 and 4 only.
Let’s say the following assumptions apply:
- I am a widget retailer
- I have just acquired 300 new customers
- My average customer:
– Spends $10/transaction
– Conducts two transactions per month
– Remains loyal for six months
Given this, I will earn about $36,000 is gross revenues from these 300 people during their “lifetime” as my customer! (i.e. 300 x $10 x 2 transactions x 6 months)
But what if I…
1. Increase the average transaction amount by $1.00?
$39,600 (+ $3,600 or 10% increase)
2. Increase the average number of transactions per month from
2 to 3?
$54,000 (+ $18,000 or 34% increase)
3. Increase average length of stay from 6 months to 7 months?
$42,000 (+ $6,000 or 17% increase)
4. Increase all three by ONE?
$69,300 = (+ $33,300 or 93% increase)
As you can see, increasing each one of these – or all three – by a small amount produces dramatic results. So, in addition to acquiring profitable new customers look for ways to grow your business using the clients you already have.
Mary Eule Scarborough is a credible, award-winning speaker, writer, and certified Guerrilla marketing coach who weaves humor throughout her practical, plain-speaking advice. She draws upon her real-life experiences as a Fortune 500 marketing executive; founder of two successful small businesses; and independent strategic marketing consultant to aid companies, organizations, and non-profits both nationally and internationally.
She and her husband, David, are the authors of “The Procrastinator’s Guide to Marketing: A Pain-Free Solution that Delivers a Profit-Producing Marketing Plan” (due for release fall 2007, Entrepreneur Press). Additionally, Ms. Scarborough recently co-authored (along with Mitch Meyerson, the founder of the Guerrilla Marketing Coaching Certification Program) the soon-to-be-published book, “Mastering Online Marketing: 12 Easy Ways to Turn Your Website Into a Sales Powerhouse.”
She continues to write marketing articles for many online publications and the company’s own website – www.StrategicMarketingAdvisors.com.