The 80/20 Rule
Im sure most of you reading this, as business owners or managers would be familiar in some way with the 80 / 20 rule. That is, as a general rule 80% of the income for your business comes from 20% of your customers. Now I can hear you already saying 'no way that's not true' and for some of you that may be the case, though as I mentioned it is a 'general' rule. and generally you will find that 20% pay their accounts on time, return regularly, purchase often and aren't bothered too much with your prices.... and you like them!
With that said, many business experts and marketing professionals will then tell you to go out and spend money on different, often expensive advertising campaigns to get the other 80% of your customers back in the fold.... BAD idea! Why spend all that money, and i'm talking thousands of dollars to potentially get you 1, 2, 10 more clients that want to haggle on price, give you grief and waste your time.
So what then do I suggest you do? well I am a 'practice what you preach' type person, so with that I suggest an active review of your current marketing practices and review of who your client's are. Easier said than done you say? What kind of person would I be if I didn't at least give you a few questions that, when answered honestly will automatically start you thinking of ways to implement them. Just make sure you have a pen and paper handy, because when the ideas come, they'll keep coming!
- Who are my best clients? These can be specific names of people or businesses or a group or demographic of clients.
- What are they buying? Keep your answers general, to categories of products or services
- What are my most profitable products? Highest profit margin NOT most expensive!
Just 3 simple questions I know, though ones that may not have been specifically thought about in detail. This will give you a rough guide to who your clients are and their buying habits are and where you want them to be. Armed with this information your now more capable of promoting these products or services.
Now, how to get them to come back? You know who they are, what they buy and what you want them to buy so there are 2 things that I want you to do
- Collect their details, first name, last name and email address (as a minimum, the more info you get without being obtrusive the better)
- Ask them to come back!
Easy isn't it! You can ask them to come back in many ways from using a targeted email marketing campaign to offer incentives, up sell, cross sell with other products / services. Tell them they are important with the VIP treatment, make them feel special by offering them something free (high perceived value, low actual cost for you), get to know them personally... the list goes on and i'm sure your able to think of at least another 10 if you really try.
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DID YOU KNOW? We originally posted this article on Wednesday, September 3, 2008 and it's still relevant!