Your Real Goldmine is Your Customer Database
The Success Margin
Wednesday, April 16, 2003
*** The secret to success, in life and in business, is to work hard at the margin. Relentlessly. Those little marginal extra efforts will inevitably grow into something big.***
”God is in the details”
What is your most valuable business asset?
What about your: Inventory? Equipment? Cash? Real Estate? Special process? A Patent or Trademark? Employees?
The above are the answers most given by owners and company executives. But if you answered any of the above you are…
The number one asset in any business is–
You can survive the loss of any business asset except your customers. Every asset you have but one can be replaced. You would be inconvenienced and possibly lose a lot of money. But, with your customer list intact, overnight you could start over again.
It’s truly amazing how few entrepreneurs fully appreciate the value of their customer list. A relatively small percentage consistently act toward building their database. And nurturing it.
It will cost you 5 to 10 times as much money to attract a new customer than to sell to an existing one. Once fully understood, you can act towards multiplying your success manyfold.
Here is the fastest ticket I know toward building a business that will provide you great wealth…
Develop a strategy that will build a database of your best prospects. And, of course, your customers. And contact them regularly.
Assuming those who have done business with you are pleased with their original purchase, people who have bought something from you are your best prospects for future purchases.
Your main business goal should be to create a customer list of happy customers. Many of them will become raving fans who will recommend you to others. You then can sell them a continuous flow of related products and experience continuous growth and prosperity.
However, you have to start from scratch if you don’t have a database now. The first major task of new businesses and/or new products which have new markets is to find interested prospects.
Clearly, you need a large enough group of people who have expressed someinterest in what you have to offer. You can sell to them directly. Or contact them to visit your place of business.
In this issue I will reveal some strategies that will help you build your
database whether or not you now have a single customer.
You can make it complicated. But, as with all great truths, creating and mining your database is basically simple.
It’s shocking but true. Many–perhaps most–entrepreneurs have an incomplete, sloppy, or even no database whatsoever of their customers and prospects.
Therefore, potential profit which is lost by not exploiting this opportunity is truly staggering.
I view it this way. Whenever I think about new products or services in any field, the customer database is my very first consideration. I want to be very clear on how many people I have to whom I can send a regular flow of sales messages.
Who are your key contacts?
For businesses with a limited number of prospective customers who can be readily identified, here is the process. You simply create what I call a ”key contact” list.
You then contact this database. I recommend at least once a month. I’ve found unless you are in regular communication with your customers and prospects, they tend to forget about you. And rather quickly. The old saying ”out of sight, out of mind” is true.
You should ideally use a combination of personal contact formats. These can include letters (through the post office or e-mail), postcards, telephone contacts, and personal visits.
How do you create a prospect database when you are starting out?
Recently my son David, who is starting a new business, asked for my advice. His proposed new product is a book he is writing. The audience is wannabe musicians–music lovers who play an instrument and want to break into paid ”gigs” to make money.
I recommended that David prepare a special report which contains proven and valuable information to the aspiring musician. It would be offered free, mostly on the Internet and also on mailing lists of music instrument buyers and students.
The Special Report title (which is very important) would be something like:
Famous professional musicians reveal…
The 7 Most Important Secrets Which Can
Take You From Jam Sessions In Your Basement
To Highly Paid Gigs!
Those who requested the Free Report would then be offered the book, of course on a paid basis. The book would contain the advice David and several well- known professional musicians have for aspiring musicians.
Think the chances are good for the success of such a project?
Tip: One key component to many successful database (mailing list) building programs is the use of a valuable free gift. A well-chosen gift. If the gift is really valuable, as it should be, psychologically your client often feels a special type of obligation to do business with you as a form of reciprocation.
Examples of clients with database goldmines
Internet information marketer: Joel Christopher is a young, successful Internet marketer (website: www.MasterListBuilder.com).
His strategy is to help his clients fill the biggest challenge of every
successful Internet marketer–how to build an enthusiastic opt-in list. He offers seminars, books and tapes which deal with this topic. In a little over a year he built his mailing list to over 110,000 people.
Art Gallery: Here is a successful regional business with just 757 art- collecting customers on its database. The business prospers by sending a letter, postcard, or e-mail each month inviting its customers and prospects to its gallery. New artists as well as ”art clearance” sales are featured. When new prospects are brought as guests, they are asked to provide contact information.
Restaurant: This highly successful Italian bistro invites each customer that enters its door a free gift just for providing contact information. Gifts successfully used are wine and brandy glasses, recipe books, and discount vouchers. The mail list number is now over 20,000. Customers are invited regularly to special ”invitation only” dinners which are always fully booked. I helped this great chef create a special individual voice (very important) for all his communications.
These techniques are simple to plan and implement. Yet, not one in 1,000 restaurants does anything resembling this type of marketing.
Department Store: This family-run store located in the United Kingdom is thriving, racking up over $100,000,000 in sales.
Of course, one of the biggest challenges in every business is to differentiate itself from competitors, to create its own Unique Selling Proposition (USP).
In this case we did it with: (a) a new ”voice”; (b) in the inimitable style and vocabulary of the department store founder; and (c) fantastic customer service and, most importantly, the use of free gifts to build its mailing list.
Every single customer is asked, ”Would you like to join our mailing list and be the first to receive news about special sales and other information?” The mailing list number is now over 250,000 customers.
The mailings, brochures, and offers from this company are producing trulyoutstanding results–over 15% of sales.
Vitamin Supplements: This European company markets its products primarily through direct consumer mailings. Formed in 1997 with zero capital, sales currently exceed $50,000,000 and is highly profitable. The mailing list sizeof customers and prospects is approximately 165,000. A website will soon be added to help boost its database and revenues.
Equipment Supplier: This company sells high-priced specialized equipment, a relatively small target market of just 357 existing and prospective customers.
Ninety percent of its sales arise from just 65 of its database. The marketing strategy is relatively simple and inexpensive. Each month a postcard, letter, e-mail, phone call or personal visit is made with each person on the list.
This strategy produces a steady and profitable stream of new business.
The above examples are but a few of the organizations I’ve worked with.
In each example, the result of regular contacts, each one containing an interesting and informative sales message, generates a constant flow of new business.
Most entrepreneurs do not contact customers often enough. I didn’t myself for several years.
Frankly, I was so good at getting new customers by simply writing new ads and mailings. Without realizing it I was practically ignoring existing customers.
In hindsight I left a lot of money on the table. But the biggest losers were my customers who didn’t receive enough important information which could have helped them more than I was able to do with a few contacts.
I used to be concerned about contacting my database too often. But this is a fallacy. Don’t worry about offending customers with too many contacts. Indeed, properly done your customers will love you for keeping them informed with product and service information, special offers, as well as new developments in your field.
Without a doubt, you will own a goldmine by building your own database that is carefully developed and nurtured.
P.S. You can generate new prospects for your mailing lists by using other low-cost marketing techniques. These include paid advertising as well asregistering with search engines and directories on the Internet. I’ll cover these and other list-building techniques in future issues.
P.P.S. Anyone who somehow missed receiving a free copy of my personal affirmations mentioned in my last newsletter (also referred to as the ”Yes” exercise), just send an e-mail to firstname.lastname@example.org and it will automatically be sent to you.