Some years ago a burger restaurant placed a $100 coupon ad in a newspaper for whom I worked. One ad: two offers. Cents off on a hamburger or cents off on a milk shake. Or both.
A few days after the coupon ad ran, the sales rep stopped by the restaurant to check results. The burger meister was not happy! Only 17 hamburgers and 18 milk shakes were sold off the coupon, a total of 35 returns.
The burger meister often worked his own counter so we knew that he had a good handle on the daily flow of his business. We asked how many NEW customers came in from the 35 returns. His guesstimate was 20.
In our ensuing discussion, the burger meister shared that his average customer spent $6 per visit and returned to his burger haven approximately once a month.
Using his numbers, this means that if the food and service meet the expectations of each customer, the meister could expect 240 visits from the 20 new customers in the coming 12 months.
240 visits x $6 average ticket equal $1,140 of incremental revenue in play. $1,140 is a very decent return on a $100 investment!
And that is assuming that each of these new customers come in alone and that they do not tell anyone else how great the burgers and milkshakes are at the meisters!
Over-simplified? Perhaps, but this true-life example deals with two of the keys to making a small business grow and thrive:
1.Knowing what your customer is really worth.
2.Making sure you DELIVER on your value promise each and every time the customer crosses your threshold.
Lifetime customer values are frankly best suited for larger tickets-- vehicles as an example. Let us surmise that the average vehicle owner from age 35 to 59 buys a different vehicle every 4 years. In 24 years that equates to six vehicles --a conservative number for sure! Use your own numbers and assumptions.
Let us further assume that this average customer buys both new and used vehicles equating to an average ticket of $20,000. Another conservative number!
The lifetime value of the customer in this example is $120,000. That is what the real sales pros see when a prospect walks through the front door of the dealership: $120,000 in 2-foot high red letters blinking off and on above the head of the prospect!
Too often small business owners measure only the immediate sale from a given ad or promotion. That is short sighted. It is the lifetime value of each customer that is important.
The real value underscores the crucial importance of over-the-top- service and consistency in your customer dealings. These are the two key elements that will allow you to leave your competition in the dust, even the Zillion Dollar Goliaths!
The small business world will always contain plenty of ideas, competition, and talent. There will almost always be some other company doing exactly what you do. They may do things better than you or worse. And so we always end up asking ourselves what is it that we can do better than them? What can we do to differentiate ourselves from them? Well there is always one thing that is available to you and that is passion?
There is one major difference between owning a small business and just working for someone else. The small business owner can't just up and change jobs. If the worker doesn't like where they work or what they do for a living they do have the option of finding another job. The small business owner does not have that option. So it becomes even more important to do something that they have a real passion for.
I write articles on small business topics that I hope can help small business owners and entrepreneurs because I love small business. I love the fact that a person can take an idea and develop it into a money making enterprise. I love the fact that a small business owner can then use that money making enterprise to help others by offering better wages and benefits to employees. That customers can be helped by giving better service, and products. And that a business can give back to its community more effectively that can just one person.
Small Businesses can have a great deal of impact on a great many people if you wish it to. I write articles and run my website because I have a passion for small business. I want to help others with their businesses. If you run your own small business or are considering joining the ranks and becoming an entrepreneur then you need to make sure that you find something that you can be passionate about doing. I know I have that passion. The question is do you?
Passion for what you do increases your willpower to get things done. Running your business should not be a chore. It needs to be enjoyable. How else can you expect to survive doing what you do everyday. If you consider running your business a chore then you might as well quit and go find a job. At least then you'll have less responsibility.
With passion comes the energy you need to get the job done. As business owners we need all the energy we can get. Coffee and energy drinks can only get you so far. You have to want to get things done. Knowing that what you are doing will make a difference to someone should help give you that energy. Your company was hired to provide something to someone. And you are not just a cog in the process of providing that something. You are the driving force. And you need to remember that.
Passion inspires others. Your employees want to believe that what they do makes a difference. A difference to your business and your customers. They want to believe that what they do will make a difference to them in the future. Seeing that you are passionate about your business and the future will inspire them. Your passion can even inspire your customers because passion shows. If they see how passionate you are about your business and your relationship with them they will be inspired too. Inspired to put their faith in you.
In business passion is the difference maker. If you don't love what you do how can you inspire others to put forward their best effort. If you show them you are truly passionate about what you do then they know you are giving your best effort and that may inspire them to give theirs. So remember that having passion in small business is a necessity. It is that extra edge.
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