Marketing Mistake #20 | Not Using A Risk Reversal

Suppose a customer is not happy with a purchase they made from you.

What do you do? Do you make them keep the item? Do you give them their money back? Do you an “in-store credit?” How should it be handled? How do you handle it?

All the major stores offer money-back guarantees. And there’s good reason.

If you fail to give someone their money back, you haven’t just lost one customer; you’ve lost a bunch of them.

People don’t hesitate to talk about the bad service they received or the “rip-off” they got from a business. In fact, they’ll talk more about the one bad experience to more people than they will about all the good service and good deals they got from the business.

In many cases, if you cheerfully and unhesitatingly offer to give money back to a customer who is dissatisfied, they’ll end up spending that same amount of money, often more, with you again. And, they’ll tell others about what a good attitude you had and what a pleasure it is to do business with you.

Any time a selling situation exists, someone is being asked to take a risk. Either the buyer is taking the risk, or the seller is.

If you, as a business owner are willing to shoulder the entire amount of the risk, that is, offer a complete 100 percent money-back guarantee, you’ll make a significantly greater amount of sales.

Look at it this way:

If a potential buyer knows that if they purchase a certain item and they are unsatisfied with it in any way, that they can return it, more of those potential buyers will be willing to take a chance. On the other hand, if they knew they would be “stuck” with whatever it is that they purchased, there would be more hesitation, more resistance and more reluctance.

“But,” you say, “If I give a money-back guarantee, people will take advantage of me, and I’ll lose money.”

Yes, it’s true. Some people will take advantage of you, and you will lose some money… on those people. (Maybe!).

As far as the “(Maybe)” part, remember that how you give the money back has a lot to do with your attitude.

And remember, that some, in fact the majority of those people will turn around and spend that money with you again… and will tell their friends.

But, most people are honest. And most won’t try to rip you off. In fact, more people will be inclined to buy from you because of the guarantee than would buy from you if there were no guarantee.

Sure, you’ll get a few returns. But the additional purchases you make will more than offset any dollars you lose because of the returns.

Marketing Mistake #19 | Not Working Joint Ventures

Joint Ventures, or teaming up with another business can be one of the most profitable things you can do. And they turn out to be win-win-win situations.

Here’s how it might work:

A financial planner can arrange with an insurance agent to provide a complimentary 20-minute consultation with the agent’s clients.

The agent provides the list of names and writes a letter (paid for by the financial planner) to his or her clients making the complimentary offer as a “thank you” for doing business with the agent. The client gets the feeling that the agent cares about them (customer win), and gets a free 20-minute consultation (customer win).

They may even contract with the financial planner to do some additional work for them (financial planner win). The insurance agent gets to contact his clients on a non-threatening, here’s-another-service-I-provide-for-you basis (agent win).

The financial planner gets to show off his skills and expertise to someone they’ve never met (and may never have had the opportunity to meet), with the potential of gaining a new client (financial planner win).

In this situation, everyone wins… the insurance agent, the financial planner and the client. And the same thing can happen in any business.

Look around for businesses that provide complimentary, but non-competing services. See if you can arrange similar joint ventures with them. You can set up an arrangement where you get a percentage of the profits of any sales made to your clients. Or, you may choose to approach it as just another service you can provide your clients, and build more goodwill with them.

The opportunities are endless… and they really work!

 

Marketing Mistake #18 | Failing To Ask Your Customers What They Want

Ask nearly anyone in business, from insurance to computers, cars to clothes, what their customers want, and they’ll usually respond with something that has to do with low price.

But when you look around at what people spend their money on… what they drive, what they wear, where they live, where they dine out… you quickly see that that argument goes right out the window.

Yet, in nearly every business, if you exhibit hesitation at buying, the salesperson will almost always try lowering the price as a first resort.

The best way to find out what your customers or prospects want is to ask them. That’s it. Simply ask them. The answers might just surprise you.

People, as a rule, buy on emotion. Then they back up that purchase decision, or justify it by using logic or reason. Here’s what I mean:

An acquaintance of mine was in the market for a new car. He was married and had two small children. It was the second marriage for both he and his wife, they had just moved into a new home and finances were tight.

One Saturday, he found himself at a local auto dealership. The salesperson, after asking my friend about his situation, assessed his needs and determined that he needed a small, economy model, four-door sedan.

This would fit his small family comfortably, was economically priced, got good gas mileage and was a nice looking car.

But my friend saw the sleek sports model on the next row and asked the salesman to show it to him. Well, he took the car for a drive, quickly fell in love with it and ended up buying it.

When he arrived home with his new purchase, his wife became very upset. My friend explained that the salesman had indeed, shown him another model. But, that even though the sports car cost more, it held its value longer, and would be worth more as a trade-in when they were ready to sell it.

He also explained how there was a small “jump-seat” in the back where the kids could ride, and that by the time they were big enough to not be able to fit in the back anymore, he should be doing better at his job and they could afford a larger car.

What it really came down to, was that my friend had always wanted a sports car growing up, and throughout his first marriage. But as a teenager, he didn’t have the money, and his first wife insisted they couldn’t afford it.

Well, on this particular Saturday, he found himself alone, went to the dealership by himself and bought the car of his dreams. He satisfied a suppressed desire, bought based on emotion, and justified his purchase through the use of logic and reason

The salesperson initially did the right thing by asking about my friend’s needs, and trying to fit him into the logical car for him and his family.

But that wasn’t what my friend wanted. When the salesperson found out what he wanted, he changed his presentation to help him satisfy those wants.

The sports car obviously had a higher sales price, and the salesperson didn’t have to discount the vehicle, because he could see that the buyer wanted that vehicle. In fact, his mouth was probably watering just at the sight of it.

If the salesperson had been trying to sell to his customer’s needs… the four-door economy sedan… he most likely would have had to discount the vehicle to make it more attractive.

The end result? The customer got what he wanted and the salesman made a greater commission.

Now, what about you in your business? Do you sell your prospects and customers what they need? Or do you take the time to find out what they want, and sell them that?

There are several ways you can determine the wants of your prospects and customers. Surveys and questionnaires, whether by phone or mail are some of the easiest and most effective ways.

You can follow-up after a purchase to find out how they like the product or service they just bought, see if they have any questions about how to use it, and ask about other products they may be interested in.

You can ask them when they come into the store or your place of business.

You can have them fill out information cards and at the same time, register for a competition. The ways you can get information from your customers are only limited by your imagination. Think about your business, and the various ways you can get this information from your customers and prospects.

By applying this concept of selling to their wants and not their needs, you’ll not only make more sales, but the transaction value of the sale will be higher. And, your customers will return to make more purchases and bring their friends with them, because you’ve treated them the way they want to be treated and not the way you think they should be treated.

Now, there are a couple of reasons why people won’t spend their money with you.

 

1. No Want – We’ve already discussed that people will buy what they want before they’ll buy what they need.

 

2. No Trust – You haven’t established the level of credibility, trust and believability they need to make a purchasing decision.

 

3. No Value – You haven’t created enough value “perceived value” in their minds to equal or exceed the value of the money they will have to give in exchange for the item. Remember, it’s not what’s “real.” What is perceived in the customer’s mind is reality to them.

 

4. No Ability – Some people genuinely don’t have the financial ability to pay for the item.

 

Once you’ve established a level of trust and believability, and found out if they can afford what you offer, you’ll make more and bigger sales by selling to the wants than to the needs.

Take the time now to survey your customers. Find out why they purchased a particular item from you in the first place, why they chose your business over your competitors, and what additional products or services they may be interested in. Then work on finding out how to satisfy those wants. It’s no longer, “Find a need and fill it.” You’ll be much farther if you “Find a want and satisfy it.”

 

Marketing Mistake #17 | Not Monitoring Your Competition

You can learn a lot from your competition. Sometimes they can be your best source of what to do or what not to do. You should set up a system to periodically research your competition to see what they’re up to. Some of the things you should consider are:

 

• Who they are
• How big they are
• What major and secondary product lines they carry
• What their advertising strategy is
• Where they advertise
• How big the ads are
• How often they run
• Where they run them
• Who their customers are
• Who their target market is
• How they contact them
• How they answer the phone
• How many salespeople they have
• Who their salespeople call on
• How often they call on them
• And anything else you can find out about them.

 

Once you begin to develop files on your competition, and begin to understand who they are and how they operate, you can use that information to gain a tremendous advantage over them.

Just like a General in the Armed Forces, once you know the enemy, understand them, and know where their weaknesses are, you can determine what you need to do to exploit those weaknesses and gain the advantage.

On the other hand, if you don’t know their operation, how they do business, and where it comes from, you are operating at a tremendous disadvantage.

Just because you have competition, doesn’t mean you have to be enemies. In fact, your competition can be one of your greatest allies, or sources of additional, untapped income.

One way to capitalise on your competition is to form strategic alliances with them.

If you don’t have a particular product that your customer or prospect is looking for, you may be able to get it from your competition – and still keep that person as a customer.

By letting your customer see that you’re more interested in helping him or her solve their wants and needs, even if it means you don’t get the business… even if it’s from one of your competitors, your customer will appreciate your thoughts and efforts, and reward you by continuing to do business with you, and referring others to do business with you.

If you can’t obtain the product or service from your competitor yourself, perhaps you can refer your prospect or customer to your competitor so they can get the product or service themselves.

In either case, you’ve performed a valuable service for your customer and they’ll appreciate you looking out for them and trying to help them solve their problems, rather that just sending them away to solve them on their own. This goes a long way towards creating customer loyalty.

Your competition can be a great ally for you, and can provide you with very valuable market and marketing research. Take the time to check them out. Find out what they’re doing, and how they operate.

If they continue to run the same ad in the same place over and over, it’s probably working for them. Look closely at that ad. See what you can do to improve it, offer a better value or a better reason for your customers to buy from you.

 

Marketing Mistake #16 | Using Catchy Tunes, Jingles, Slogans And Mottoes Instead Of Solid Reasons To Buy

You’ve heard them. They’re everywhere on the radio and television. In fact, you probably catch yourself singing or humming at least a couple of different jungles or tunes throughout the course of your day.

Or, you may find yourself quoting some catchy slogan or motto you’ve heard or read.

The question you may ask is, if they’re so catchy, and I find myself singing, humming or quoting them, aren’t they working?

Aren’t they doing their job?

And the answer, of course, is, “Yes, they are working,” and, “Yes, they are doing their job.”

So, if jingles, slogans, and tunes are working and doing their job, why not use them? It all depends what you’re trying to accomplish with your advertising and marketing dollars.

If you want new customers… more customers… people who can and will come to your place of business, or pick up the phone and call you willing to give you their money, then these tunes, jingles and slogans may not be the best use of your money.

On the other hand, if you want people to remember you, to have the name of your business dancing around in their heads, but really don’t care about getting them into your place of business, then it’s probably okay to use them.

Just ask yourself: When was the last time you found yourself driving along singing a jungle or tune and decided that you’d head on over to the place of business that that tune belonged to, with the intent of buying something?

Probably never, right?

Jingles and slogans do work. There’s no question about it. For the specific job they’re intended, they do work.

But, as a business owner, you have to make the decision if you want to spend your money to accomplish that job. Or, if you would rather spend your money in a more productive, results-producing, profit-generating way.

Your ads, letters and promotional campaigns must be treated like commissioned employees. There has to be accountability if you want results, and want them cost-effectively.

You probably wouldn’t allow your best salesperson to call on your prospects or customers and sing a jingle, recite your slogan or motto, mention the name of your company and your phone number and then leave, would you?

Of course not.

Sounds silly, doesn’t it?

Yet day in and day out, you’ll see and hear that type of marketing from hundreds of businesses in the newspaper, in magazines, on radio and TV.

Remember, the ads you run and the letters you send out are nothing more than paper or electronic sales people.

What you expect from your human salespeople, you should also expect from your paper and electronic salespeople.

Your ads and letters should provide information about your products and services, make an enticing offer and give compelling reasons why the recipient should take action now. And remember our discussions about accountability and testing. Each ad should be able to be measured as to its effectiveness.

If they don’t pull like you think they should, then test another approach, and exchange the jingles and slogans for good solid reasons for your prospects to buy.

 

Marketing Mistake #15 | Taking Advice From The Wrong Sources

It seems like everyone is an “expert” nowadays. Advice is so freely found and offered, even if you have no intention of seeking it or asking for it.

Family, friends, co-workers, associates, neighbors… nearly every person you come in contact with has something to say, or some advice to offer. And, for the most part, it’s well-intentioned.

You can even get on the internet and type in a key word and download tons of information on nearly any subject you desire.

Some of it comes from credible sources, and other information comes from self-proclaimed “gurus” or “experts.”

It will pay you big dividends to carefully consider the source of any and all information or help you receive or seek out on your own.

Check out credentials and credibility. Ask for references and testimonials from others they have helped in the same line of work you’re in!

Too often, testimonials are used that relate to work done in a field or project that bears absolutely no resemblance to what you’re involved in.

While “Principles” are constant, the “Specifics” can and will change. Here’s what I mean:

A Principle is timeless. It never changes. For example, in advertising, a Principle would be that you will get more readership from an ad using a headline.

A Specific, on the other hand, is the application of a Principle to a unique situation.

In our advertising example, how the headline is used may vary from one type of business to another.

An auto body repair shop, for instance, may run a headline that relates to their type of business.

And a printing company, while still using a headline, will want to tailor their headline to the needs of their printing customers and prospects.

The point is, make sure that the advice you get, whether it’s volunteered or sought out, comes from a credible and reliable source, and make sure the source has some specific knowledge of your business.

Or, at least they can relate the Specifics of your business to the tried, tested and timeless Principles that apply to all businesses.

Marketing Mistake #14 | Changing Your Marketing Even Though It’s Working

One of the most common mistakes business owners make with their marketing, is to try something, find out it works, then stop doing it and try something else.

A better approach would be to find something that works, tweak a certain part of it, try it again, tweak it again, and keep doing it.

As long as something continues to work, don’t give it up. Just keep trying to improve it so it will work better.

There are several reasons why people change their marketing even though it’s working for them:

• They don’t test their ads or promotions, and they don’t monitor the results. So, they don’t know what’s working, how well what they’re doing is working, or even if it is working.

• They get tired of doing the same old thing every time, and change their ads just for the sake of change.

• They see or hear about something someone else is doing and want to see if it will work for them. Usually, very little thought goes into the decision.

When you take a close look at these reasons, you’ll notice that none of them make any sense. Yet business after business, day after day, makes one of these fatal marketing mistakes.

But, if a business owner were to implement two of the most important concepts… that of Testing and Monitoring, these mistakes could be avoided, and the result would unquestionably be more and increased profits.

One of the worst things you can do is discontinue running an ad, a mailing campaign or a promotion if it is getting results.

There are usually only three reasons you should consider changing or discontinuing a promotion:

1. If you’re testing a new ad, sales letter or promotion, and you want to see if you can improve its results, then certainly, you would want to change part of it and run another test. But, you would only change one item at a time. If an ad is an absolute bomb, then you may want to consider discontinuing it altogether.

 

2. If you’ve used a certain ad or campaign to market to your prospect list or customer base, you may not want to run the same promotion to those people again. Another promotion with a different emphasis may well be in order.

 

3. If the ad or promotion no longer pulls a satisfactory response, then for sure, you’d want to make some changes. This why the Testing process is never complete.

 

The only reason you would ever want to change any ad, campaign or promotion is to see if you can make it perform better. Any other reason shouldn’t even be considered.

 

 

Marketing Mistake #13 | Not Selling To Your Existing Customers

Your best prospects are people who have purchased from you before. They have already experienced the products you offer as well as the service you provide.

They know you, like you and trust you. (At least they did when they first bought from you… enough, at least, to give you their money.) Hopefully, things haven’t changed. And ideally, your relationship with them has improved.

Research shows that it costs around six times more to acquire a new customer than it does to sell something additional to an existing customer.

So, if nothing else, it makes good financial sense to attempt to sell your existing customers before looking outside for new prospects.

One of the best ways for doing this is to constantly keep in touch with them. Make it impossible for them to forget you. Let them know you really appreciate not only their business, but their friendship, as well.

One of the best and most effective methods is to send a newsletter to your clients. You can publish articles of interest to them, and at the same time, let them know of special, customer-only sales or special items they may be interested in at reduced prices.

If you have a “Referral Reward” program that rewards your customers for referring others to you, you can publish the results in your newsletter. This reminds your other customers about your program, and may entice them to participate in it.

Your newsletter can be published monthly, every two months or even quarterly. It really doesn’t matter. The most important thing, is to keep in touch and get your name in front of them in a welcome, non-threatening way, on a regular, consistent, and predictable basis.

But remember, people don’t necessarily care about what you care about, or your business. They care about what they care about.

So, make sure your newsletter contains items of interest to them. There are several other methods that are effective, and we’ll discuss them in more detail further in our Marketing Mistakes series.

Marketing Mistake #12 | Failing to Calculate the Cost of Losing a Customer

The “Ripple Effect” is one of the most powerful forces in business. And it can affect you both in a positive manner, as well as negatively.

In our last example, we discussed how valuable each of your customers can be to you over time.

We called it the Lifetime Profit Value of your customers. Now, let’s take a look at what the cost could be to you if you lost a customer, instead of gained one.

Let’s suppose for a minute, that you or one of your employees got upset with a customer, and they stopped doing business with you.

No big deal, right? I mean, they were just one customer. And it’s not too difficult to get another one to replace them. And, how much would you lose if they never returned?

In our previous example, $2,000.

But now, let’s take a closer look at how the Ripple Effect could impact that one bad experience between you and your customer.

If that unhappy customer were to tell 12 other people about that experience (or not refer those 12 people to your business), and each of those 12 were to tell six others, the total number of people affected by your one bad experience would total 85. (6 x 12 = 72 + 12 = 84 + the original unhappy customer = 85).

Now, if only 25 percent of those people chose not to do business with you, that comes to 21 people.

If each of those 21 had similar buying habits as your original customer, your total lost revenues would be $42,000! (That’s $2,000 x 21 people.)

$42,000… all from one bad experience!

But what if those figures are way off, and it’s only 10 percent of that amount? That still totals $4,200.

That’s a lot of money for letting one person leave your business unhappy. And here’s an unfortunate thing:

Sometimes people are unhappy and leave, and you don’t even know it

 

They just get their feelings hurt, feel slighted, or have something completely unexplained happen, and take their business somewhere else. And you never know.   However, mostly its because of perceived indifference.

So what do you do about it?

Well, you can’t afford to do anything but treat each of your customers the very best way possible. Give them all the love, care, attention and service you can. Kill them with service. Go overboard. Make it nearly impossible for them to even consider doing business with anyone else but you, regardless of price, location, convenience, or any other reason. Become not only the preferred place to do business with, but the only consideration your customers, clients and prospects have.

Marketing Mistake #11 | Not Calclulating the Lifetime Profit Value of Your Customer

There’s no question about it. Your existing customers are your most valuable assets. Since they’ve already purchased from you previously, and have experienced the benefits of your products and/or services (and presumably are pleased with those experiences), they are likely to purchase from you again, and if given the opportunity, are likely to refer you to others who may have a need for what you sell.

Yet, nearly every business allots more money, time and effort to the acquisition of new customers than they do to keep their existing customers.

Studies have proven time and time again, that it costs more than five times as much to bring a new customer on board than it does to retain existing customers.

It’s an interesting phenomenon, but most business owners can tell you almost to the penny, what the value of their furniture, fixtures and equipment is, as well as how much money they have tied up in stock and inventory.

Yet, when it comes to the most valuable asset they have… their customers, they don’t have any clue as to what they are worth.

Determining the Lifetime Profit Value of a customer is simple,

it’s the most profitable thing you can do for your business.

 

If you’ll take a few minutes to work through the numbers, in very short time, you’ll find yourself light years ahead of your competitors.

That’s right, this one simple exercise can immediately place you ahead of 95 percent of other businesses who compete against you.

 

The Lifetime Profit Value of a customer is simply, the total profit produced by an average customer over his or her lifetime of doing business with you.

For the sake of example, let’s suppose that the first time someone buys from you, you realize a profit of $100 on the sale. And, let’s say that they buy from you three more times during the course of the year, and each time they buy, you realise another $100 profit. That’s $400 in total profits for the first year.

Now, let’s say that your average customer continues to do business with you for 5 years before their needs change, they move, or switch to another provider.

If they continue to purchase from you at the same frequency and profit level for those next 4 years, you will have realized $2,000 in profits from them during their “lifetime” of doing business with you.

Now, of course these numbers are for illustration purposes only. You’ll have to use your own numbers to come up with a meaningful figure for the lifetime value of your own customers.

So, what does all this mean? Well, if you know how much your average customer is worth to you over the course of their lifetime, you gain several advantages over your competition.

For instance, if you know your average customer is worth $2,000 over the course of their association with you, you know how much you can afford to spend to keep that customer happy and coming back for more, and you’ll also know how much you can afford to spend to acquire a new customer.

For example, let’s say your competitors are using a direct mail approach to contact their prospects. And if they’re like most people who use direct mail, they only send one introductory letter with one or two follow-up letters.

If they don’t get a response, they stop contacting that prospect and move on to another. But now you, knowing that the Lifetime Profit Value of your average customer is $2,000 (in our previous example), know that you can spend up to $2,000 to acquire that customer and still break even.

Not that you have to spend that much, but look at the leverage and advantage you have over your competitors, just knowing what your numbers are.

But that’s not all. Let’s suppose that you give really great service (you do, don’t you?), and that your customers are thrilled enough with it to tell their friends about you.

What is the cost to you to acquire those friends as customers? They come on board as pure profit to you… no marketing costs, whatsoever.

 So, what should your marketing budget be?

Some businesses use a percentage of sales. Others use a fixed dollar figure. But think about it another way.

As long as you’re making a profit, why set a limit on your marketing budget?    Instead…

Spend whatever you can afford so long as the acquisition costs are less than the profits you make on your average customer.

The only limiting factor should be your cash flow. And, as you increase your customer base and your profits, increase your budget as well. Figuring out exactly what your average customer is worth to you (their sales plus the profits on any referrals they give), can be one of the most important things you can do.

Take a minute and put your figures in the accompanying tables. You’ll see just how valuable each of your customers is.

Below, is a table titled, “Restaurant Example.” This table is an illustration of how the Lifetime Profit Value can be determined for a restaurant, and is included to give you an idea of how you the table is to be used.

Restaurant Example A. Amount of average sale $ 50 B. No. of sales/year/customer (2 x per month) 24 C. No. of years customer patronizes restaurant 10 D. No. of referrals from customer 10 E. % of referrals who become a customer 50 % F. Gross income per year per customer (A x B) $ 1,200 G. Gross income over buying lifetime (F x C) $ 12,000 H. Referrals who become customers (D x E) 5 I. Gross income from referrals (G x H) $ 60,000 Total value of a loyal customer (G + I) $ 72,000

Following the Restaurant Example we have two additional tables that you can use to determine the LPV of your own customers or clients.  Email us and request them – Don’t pass these tables up – seriously – they are Super Valuable! One condition though – make sure you take the time to complete them.