Understanding Your Customers Will Improve Your Sales
According to the Small Business Association, eighty-five percent of small businesses fail in the first five years. The most common cause is not reaching the “break-even level” before the startup money runs out. On the surface this might seem like a money problem, but in reality it’s much bigger and more involved than that.
Many small businesses think of their business in terms of the movie, “Field of Dreams,” “… if you build it, he will come.” There is a lot more to building a business than just opening the front door. The more a business owner knows about his or her customers, the more successful their business will become.
New business owners, and many that have been around for a while, often fail to understand, and capitalize, on customer thinking. The customer’s buying process has six basic steps. Business owners, who can recognize these steps and incorporate them into the marketing and advertising plan, usually find themselves in the 15% who survive the first five years in business.
Step One: Customer Awareness of You and Your Products or Services
New businesses have grand openings. But usually it’s the only one they ever do. I recommend that all businesses have a yearly grand opening. New people move to town every day, month, and year. They need to find you. The problem is that finding you is not always easy with 4,000 or more competing ads bombarding your potential customers. Advertising and marketing is an investment; not an expense. Customers have to know you exist before they can do business with you.
Step Two: Customer Education
Once your customers become aware of you their next step is to do some investigation. They might find accurate information but there’s also a chance of finding inaccurate information about you. Use your marketing and advertising to make sure the customer knows what you do and how you do it. They more they know about you and your products and services the more confident they become in doing business with you.
Step Three: Risk vs. Reward
Once the customer knows you exist and have been educated about your products or services it’s time to decide if you are a “need” or a “want.” This is where the emotion of the buyer comes into play. Hunters need rifles, shotguns, while non-hunters don’t. Actual need is often more lifestyle than self-preservation.
Knowing your customer, and how your product or service fits into their lifestyle, is critical to the success of your bottom line. The more “hot buttons” you have the more desirable your product looks in the eyes of the buyer.
Step Four: Affordability
They want it, they need it, but can they afford it? There is a big difference between price and affordability. Customers can always justify paying your price if they see the value and emotional reward for having the product or service.
Many new businesses try to buy the business with a cheap price. “If you build your business around being the lowest-cost provider, that’s all you’ve got. … Cheaper price is the refuge for the marketer with no ideas left or no guts to implement the ideas he or she has,” Seth Godin.
Step Five: Doing the Homework
In this step the customer decides on cost vs. need. “Do I buy top of the line or will a step or two down do the job?” “Do I need a laptop or an iPad?” “Where will I get the most bang for my buck?”
This is where the business owner really needs to tread carefully. There is always a desire on the part of the sales person to gravitate towards the biggest ticket with the most reward for them. But there is one important fact you must keep in mind.
You are also trying to develop a loyal customer. One who will buy more than once and will also recommend you to friends and family. Finding the best product or service that fits each customers needs is the most important job you have. A “hard sell” might get you the money one time, but it will also buy you negative publicity every time that customer is asked about what it’s like to deal with you.
Step Five: Buying the Product or Service
The customer found you, checked you out, checked out the value of your products and services, justified the risk vs. reward, and is ready to sign on the dotted line. As a business owner, you do not want to take that decision lightly. A person you may not know has decided to place their trust in you. Whether they buy a can of motor oil, or a top of the line vehicle to put that oil in, they are trusting in you to keep your word, and back up what you provide.
Step Six: How to Bring Them Back
When was the last time you bought something and got a call from the salesperson a few days later asking if everything was going OK with your purchase? I’m guessing not very often. This is a “no-brainer.” As frugal as today’s customers are, and the economic conditions we’re experiencing, there is no excuse not to follow-up on bigger ticket sales.
A simple phone call says you care, about both the customer, and the need the product filled for that customer. It’s these little extras that make all the difference in today’s marketplace. It’s these gestures that people will relate at work and in social conversations. It’s publicity you can’t buy at any price.
Some Final Thoughts
In case you missed it, the goal of the customer and the business owner are the same. Each is trying to build a working relationship that benefits both parties over the long haul. Give the customer what they need and want and they will reward you with their loyalty. There’s nothing quite as rewarding as making that second sale to a loyal customer.