Frequently, when new customers call to inquire about our marketing programs they ask the question, “Why should I market to current customers, since I already have their business?”
Let’s begin with the definition of a “current customer.” The fact is that the only people who you know for sure are your current customers are those who are standing at your counter, at this very minute. Everyone else is a free agent! There’s no written contract. They can go wherever they want. Hopefully back to you, but maybe to a competitor. You’ll never know for sure unless they return to your store.
You can never be 100% sure that any customer will return to your store with their next order, because they’re under no obligation to do so. Maybe they will, and maybe they won’t. In other words, it’s just as important to continue to promote your services to someone who regularly uses your cleaners, as it is to someone who has never done business with you before.
It’s well known in business theory, that you can only gain increased sales in three ways: 1) You can attract new customers. (This is an important avenue, but is also the most costly.) 2) You can get your current customers to come in more frequently and bring larger orders. 3) You can offer additional services to your current customers. That’s it! Those are the only ways you’ll ever increase your sales.
As you can see, two of the three ways to build sales are by marketing to your current customers. These people previously have been to your store. Hopefully, they liked the service you provided. And, unless they have any unresolved problems, they can easily be encouraged to increase their expenditures with you.
The first step in developing an effective marketing plan for your business is to insure that you are charging enough for your services and that your costs of performing those services are tightly controlled. You can’t offer current customers a substantial discount, or any other lucrative inducement to bring in additional volume, unless you can afford to do so and still make a profit.
In addition to developing marketing programs, the Golomb Group works with its members to help them control their overhead costs, which gives them the ability to utilize a wide variety of marketing programs.
Recently, we suggested to Golomb Group members, through our newsletter, that they run a Valentine’s Day promotion, utilizing a verbal coupon. This promotion was to run from February 1st through February 14th. It was to be sent only to current customers. Several of the members implemented the program and were well satisfied with the responses they received.
One member on the East coast called because, after he had completed the promotion, he estimated that he had “given away” $234 in free drycleaning and was questioning how he benefited from giving away his work. It was a legitimate concern and I agreed to help him determine if this was a prudent business maneuver.
He stated that he had sent out 230 Valentine offers and that he had received 61 responses. He was not sure if he had received responses from 61 different customers or, if these had been multiple responses from the same customers. Because he had not tracked that aspect, it was impossible to determine how may times the same customers had accepted his offer. I personally, was not concerned with the answer to that question. What did concern me were his gross sales for the two-week period (Feb. 1 – 14). He stated that his sales volume, for the two weeks, was $6,683.00, after deducting the $234 in discounts he had given as part of the promotion. I then asked his sales volume for the same two-week period in 2003. It was $4,367.00. That was an increase of $2,316.00. Or, in other words, a 53% increase in actual cash flow!
I realize that this is not a high volume cleaning plant, but his relative success emphasizes the point I’m trying to make. It also allows me to demonstrate what a powerful tool marketing to your current customers can be.
This increase in sales occurred at a time when many cleaners around the country are suffering sales decreases of 10% to 30%. I also know that a record number of drycleaners are closing their doors. I’d venture to say, that right now we are seeing the greatest number of store closings since the 1970-74 combination, polyester, leisure-suit, coin-op drycleaning debacle.
My final question to this drycleaner was, “Would you trade $234 in free cleaning for an increase of $2,316.00 in sales?”