Why do salespeople, entrepreneurs, and business owners fail to make sales, fail to generate referrals, and lose clients? The reason is a lack of follow-up. Now, follow-up can fall into several categories. Let’s look at your own customers, and then we will look at prospects.
I have heard many business people say, “I just don’t understand why my customers chose to do business with someone else. I did everything right.” I then ask them, “When was the last time your customer heard from you? “ The answer is usually, “Well, umm….errrr.” The same has been said in many instances for a prospect that chose to do business with a competitor.
The relationship between a customer and a business is much like a dating relationship. There are certain things that you don’t do on the first date…and if you do, you may be risking the relationship down the road. There are also certain things that you should do if you want to cultivate the relationship. For example, a phone call now and then to say you are thinking of them, a thoughtful note from time to time, or an unexpected gift can all lead to a deeper relationship.
The average business owner out there tends to be very short sighted when it comes to building relationships with current customers. Many believe that marketing dollars should only be spent in the acquisition of new customers. What they don’t realize is that it actually costs 5-7 times more to get a new customer than it does to keep a current customer.
Why is this? When a customer buys they are in essence saying that they trust you or your product. They liked something about you. It is much easier to build a relationship with a person you know already likes something about you than it is to try to convince a complete stranger of how great you are.
Let’s also look at this example when you are trying to make a sale. How many times do you follow-up? Did you know that it takes, on average, 6-9 points of communication to make a sale? Why is this? There are several reasons, but mainly you need to build trust and to educate your prospect on why to buy from you versus someone else.
There is another factor in play. Sometimes your prospects are not ready, willing, or even able to buy when you first approach them. By continually following up in a professional, helpful and non-nagging way you increase your market share. Remember, only a certain percentage of people you speak to are in the “buying now” mode. If you don’t follow-up, you are missing out on a large percentage of the market.
Plus, once you have made the initial sale, if you don’t follow-up you are basically wasting all of the time, energy, and money you put into obtaining that customer. You may say, “I made a sale. How is that a waste?”
It is a waste because you have not realized the potential lifetime value of your customer. Many business owners think of the value of a customer in terms of one transaction. However, the true picture of a customer’s value takes into account the average number of transactions in a customer’s lifetime.
In other words, while one transaction may be worth $100, if a customer buys 5 times over their lifetime they are in fact worth $500, not $100. That is without taking into account any referrals that would be gained from a long term client.
So what does it take to develop a marketing plan that allows you to follow-up with both prospects and customers? It must be systematic and consistent. It does no good to follow-up with a phone call and a thank you letter or card at the beginning of your relationship only to drop off the face of the planet later. In the same way, it does no good in a dating relationship to ask for a second date just to stand them up later.
Also, much like a dating relationship, it doesn’t always take a lot of money to impress. Sometimes the best way to build a relationship is by being sincere and letting the person get to know who you are, not with elaborate gifts. This can be accomplished in business through marketing methods such as monthly print or email newsletters, holiday cards or letters, and small customer driven gifts such as the newest book from their favorite author or a gift card to their favorite restaurant. By following up in a professional yet personal way you will make prospects into customers and customers into loyal raving fans.
Sarah Wenger
Psychological Marketing Insights
317-436-4808
http://www.psychological-marketing.com
Tags: Follow-up, indianapolis small business
