The Hidden Goldmine in Your Business

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The easiest sale you’ll ever get. If you’re not doing this, you’re leaving waaaaay too much money on the table.

Whenever I meet with a new client, one of the first things I ask them is to show me their list. Inevitably, I’m met with a confusing and sheepish look until they finally utter the question they’re almost afraid to ask, “What list?”

My most successful clients religiously maintain a list of every prospect they’ve spoken with and drip feed them content over time.

We’ve all heard the assertion from Forrester Research that it costs more to drive new business than it does to retain current customers. And in fact, an internet marketing blog called Flowtown actually did the numbers and has found that it costs you 6-7 times more money and resources to prospect for new clients than it does to retain existing ones. That’s a lot of money, but those numbers can’t apply to every industry. Depending on the type of business you’re in, the cost can be more or it can be less.

The most successful companies know their list is a goldmine?of re-occurring business. Maintaining and working their list is a habit that all my successful clients do.

We have to expend time and money building trust with new clients. An existing one has already bought from us so we know they trust us. Sometimes all it takes to sell something to an existing client is a phone call or an email, especially if we have an upgrade or new product that they may like. A new client doesn’t quite know us yet and will need more hand-holding. Many prospects may need our service or product, but won’t buy from us until we’ve proven to them that we’re trustworthy and that we know what we’re doing. This takes time and money.

The most successful companies understand this and know that their list is a goldmine of re-occurring business. Maintaining and working their list is a habit that all my successful clients do.

What do we mean by working the list? First, they religiously log the details and contact information of every client they do business with. And over time, they drip-feed useful content that not only keeps them in the minds of their clients, but it gives them an opportunity to sell new products and services.

I’ll get into the different ways you can do this in a moment, but for some, you may believe that keeping a list is a waste of time. Let’s use mortgage brokers as an example. Once a loan is closed for a new home owner, what is the likelihood that you’ll sell to that person again anytime soon? If you refinanced their mortgage at a very low interest rate, that customer may be set for the next 30 years. Why keep drip-feeding them content if you’re never going to sell to them again?

In cases like this, you could provide that client a second mortgage or a new loan for a second home or rental property, but the real reason you continue to stay in touch is for the referrals. If you provide a good service and leave your customers happy with good follow-up after the sale, they’ll remember you when one of their friends, family members or co-workers mentions that they’re looking to get qualified for a new loan.

“Oh, I’ve got a great guy for you. He did such a great job on my refinance. You gotta use this guy. Here’s his number.”

There is no better way to get business than from a referral like that. That customer is sold before you even talk to them.

And this leads to the goal that every business owner I’ve ever spoken to has; to be in a position where you never have to advertise or worry about sales again because all your previous customers are out there selling for you. They’re your sales force and they don’t cost you a dime. Now, you may want to provide a gift or something nice to those who refer you customers, but that’s nothing compared to what it costs you to find new clients on your own.

The point is; there is no down side to maintaining and working a list. You can only make more money.

Let me give you another example. I have a friend in Newport Beach who owns a salon. He’s also a biker and rides a Harley. Hangs out with a pretty tough crowd – I love the contrast and apparently so do a lot of other people because he does a pretty good business. But I also know that he’s struggled over the years to pay the bills. It’s expensive trying to run a business in Newport Beach. Now, I’ve been going to him to get my hair cut for about 20 years, up until about 3 years ago. It’s a bit of a distance for me to drive up there just to get my hair cut. My ex-girlfriend used to live near there so for a while it was easy for me. But, the point is, I remember one of his assistants taking down all my contact information, but I have never received a single email, postcard or promotion from them, ever. Not once. I guarantee you that if I had, I’d probably be up there, maybe not as often as when my girlfriend lived there, but I would have given him some business. How much other business has he lost by not staying in touch with his previous customers?

The Data

First, know what information to collect. Name, address, phone number and especially an email address are essential. Some collect birthday information and hobbies. Some of my mortgage broker clients have collected important loan information such as when a prepayment penalty expires or the date a variable rate loan begins to adjust. They set a trigger when these events occur so they can remind the customer that it’s coming and perhaps refinance before a payment starts to go up. A heating and air client I have sets automatic reminders to let him know when it’s time for an annual service, air duct and filter cleaning. He emails or calls his clients to set the appointment.

From Whom

Secondly, who do you include in your database? Don’t just limit your database to customers. I would include everyone. Certainly you want to include prospects who may not have bought from you in the past, but include networking partners, family, friends, vendors and anyone else you can think of. You can categorize them in multiple ways in case you want to send different emails to different people.

CRM

Next, start gathering the data. You can do this by having them fill out a form for a free service or gift or you can just ask them for it. Put this information into a database. Most industries have CRM software you can purchase. CRM stands for?customer relationship management, but I like to call it?customer retention management. A CRM is nothing more than a piece of software that makes it easy to log customer details and keep track of your database. Some systems are pretty robust and help you do a lot of other things such as make appointments, track sales, accounts receivable, billing and job estimates and so forth. It’s up to you whether or not you want to invest in any of these programs, but really, all most of you need is a spreadsheet. I think a spreadsheet is good enough to start off with because you can always purchase a more robust program later and they all should allow you to easily transfer data from a spreadsheet to their software.

 

If you’re starting a brand new company, make sure that collecting contact data is part of your sales or closing procedure. If you have an existing company, hopefully this information is already in your records somewhere. If not, you’re going to have to go out and get it.

How to Drip Feed

Drip-feeding is nothing more than sending useful content to a group of people over a long period of time. So you may follow up a closed sale with a thank you call. Then, you can send a thank you letter a week or two later. Maybe 30 days out you can email them information that will help them maintain or care for their purchase. You can send them holiday cards, birthday cards, service updates and sometimes, you may just want to get on the phone with them to ask how they’re doing? If you have a database with some personal information, you can use it to remember spouses’ names or names of kids, hobbies or whatever.

I have a client who tracks hobbies and sends information based on that. He’ll send golfing information to all his clients who like to golf, for example. Get creative and don’t forget to send a promotion or ask for a referral from time to time.

Make note of important dates in your business cycle and use that information to contact the people on your list. Warranty expiration dates, service agreements, check-ups, important milestones and so forth—all are good reasons to stay in touch. Don’t let them forget about you.

Be sure to pay attention to the news. If anything goes on that may affect your customers, be sure to contact them to let them know what’s going on. For example, every insurance agent should be using the new healthcare laws to keep their clients informed. If property values jump, then real estate agents should reach out to their clients. If water prices spike, landscapers and plumbers should reach out to their list of clients as well. You get the idea.

Email Clients

Before the Internet, I used to send a very costly physical newsletter to my entire database each month through regular mail. Then I started sending fancy email newsletters, but I don’t do that anymore. I don’t send newsletters. They’re just too much work and I think the novelty has worn off. People appreciate simple emails that get right to the point so that’s what I send instead. That doesn’t mean a newsletter won’t work for you.

If you do choose to send an email newsletter, there are several different email platforms out there that you can use to send mass emails and fancy newsletters. So if you have a list of say 1000 customers you want to send a promotional email to, you can do it all from one place. These platforms usually cost between $10 – $50 a month depending on the number of emails you send and the size of your list. If you have a pretty big list, it can be a lot more than that.

I do a lot of volunteer work for a few nonprofit organizations and one of them uses Constant Contact. I don’t like it and cannot recommend that you use it. Their interface is clunky and difficult to figure out. I had a quick look at iContact once, but chose not to use it either. My preferred contact management software is Aweber. Most of the people in my industry use it because it’s easy and they have excellent customer support. The only drawback is that to import a database, your subscribers are going to have to give their permission. This is a real drag and I’m not sure why Aweber still does this because you can import lists into the other systems easily enough. Regardless, I really like Aweber and if you want to give them a try, I think they have a trial period for the first month that’s only a dollar. You can use my Aweber affiliate link?here.

If you have a pretty big list and don’t want to bother them with an opt-in email, then just use one of the other programs. Also keep in mind you should be able to send emails and newsletters from many of the CRM programs as well so an email client may not even be necessary.

What to Send

So what should you send?

One of the biggest mistakes I see business owners and sales people make with their list that they send junk. Look, nobody cares about your recipe for meatballs. It’s not going to better than mine anyway so just give it up already. But really, recipes and pictures and stories of your service are not compelling enough. Nobody cares about you or your business. They care about themselves. Always try to send something that helps to improve the lives of those who are receiving it. For me it’s easy, because I can always send tips and ideas to business owners that will help them promote their business to more consumers and make more money.

One of my friends is a real estate agent and he sends me interest rate updates and real estate market news once a month. I don’t even open the email and I would unsubscribe completely if he wasn’t a friend. Nobody cares about that stuff. You have to really put yourself in the shoes of your clients.

Some will argue that it doesn’t matter what you send as long as you send something to remind them to use you when the time comes. There is some truth to that, but remember, they can also unsubscribe from your list, which will happen if you keep sending them garbage. How is that going to help customer retention?

Format

Plain text emails with helpful tips and advice are the best. The frequency with which you send them is up to you and it really depends on the expectations of your market. A stock broker may want to send his clients market updates daily, or even more frequently than that. Generally speaking, if you have the kind of business where your clients pay you regularly, say once a month or regular commission as in the case of financial planners, cleaning services, landscapers and insurance agents, you can get away with more frequent emails. If you have a one-and-done kind of business where you perform a service and there are no re-occurring charges such as a real estate agent, plumber or contractor, then your emails should be less frequent.

Plain text emails are good because a lot of email programs block images and not all computers can read fancy fonts. I find that simple and direct is the best method.

I also try to make my emails as personal as possible. If I have first names, I try to address the email to each person specifically. Your email client will automate this process for you so it’s quick and easy.

Now here’s the real important question. What should be your ratio of good content to sales promotions? In other words, how much good helpful content should you send to the people on your list and how many times should you send them a sales pitch? How much is too much?

A big-time marketer in my industry swears by a 0:1 ratio. He sends no helpful information. Every email he sends—and he sends a minimum of one a day—is a sales pitch. But, in all fairness, a lot of his sales pitches are invitations to his webinars where he gives a lot of good information, but always follows it with a sales pitch at the end.

For me, this is too much. He swears by it because it makes him a lot of money. Maybe it does, but I’ve opted out of a lot of email lists because they were sending me too many sales pitches. He lost me as a potential customer as well. I would have stayed on his list if he wasn’t always trying to sell me his junk.

One of my mortgage broker clients was sending information out to his referral sources, which were mostly real estate agents. He sent a market update once a week and got complaints that it was too much.

So, I can’t tell you what the best ratio is. It really depends on your industry and the type of customers you have. This is something you’ll have to monitor closely because what you don’t want is to piss off valuable customers and networking partners by cluttering their email in-boxes with a bunch of crap that they don’t have time to read.

In the next post, I’ll give you some good case studies—some real examples from some of my top clients. Until then, I challenge you to gather your list if you haven’t got one and create a strategy to reach out to them. You’ll be pleasantly surprised how well it will drive new sales for your business.

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4 Comments. Leave new

  • I find it amazing how many small business owners do not make an attempt to sell to the customers who have bought from them in the past. This is low hanging fruit, yet they spend twice as much money and effort going after new business. It’s the one track mind of small business owners – the more business they can get through the front door, the better they think their business is doing, yet they’ll neglect customer retention, efficiency and all the other ways they can increase revenue.

    Reply
  • Some good information here, but your posts are really long. Glad to see you putting so much time and effort into them Dino. As a real estate agent, keeping and tracking a list of all my past clients doesn’t seem to be that profitable to me, though. Once someone buys a house, they’re not likely to be a repeat customer for some time. I think that it is worth spending my time on finding new business.

    Reply
    • @M, I disagree. I absolutely think you should be staying in contact with your clients. You may not get an immediate return, but when they do come back to you, it’s a big pay day in your business. Just think, if you keep track of all your customers over a 10 year period, how much money would you have earned from that list? Not just repeat business, but from referrals as well. Plus, it’s not just your customers in your list, you put everyone in it – everyone you know – and market to them over a long period of time. Build a complete database.

      Reply
  • Thanks, Dino. Just got around to reading it (Yes, your posts are long, but worth the read).

    Reply

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