Under capitalization, inexperience and poor management are blamed for most business failures. Of course, there can be one or several other reasons that will cause a business to go belly up. However, from what I’ve seen, marketing mistakes are by far the primary reason businesses, especially drycleaners, don’t survive.
These are the most common marketing mistakes:
1. Management does not know specifically what it costs to recruit a new customer, and they have no accurate statistics on the average lifetime value of a customer.
Without this information, it’s impossible to make sound decisions. You cannot determine how much to invest in marketing. If you spend more to gain a customer than their lifetime value, you’ll go broke. Without this information, many businesses can and do fail. Unfortunately, few of them ever understand what happened.
Before you invest any more money in marketing, determine the average lifetime value of a drycleaning customer.
2. The customer database is not marketed to. While this is especially true about drycleaners, I’ve seen it happen at many other businesses. For instance, the supermarkets I frequent all track my spending, but none of them target specific marketing to me.
A company’s database of customers is its biggest asset. It’s much more valuable than equipment, inventory or anything else. Every company that wants to survive and prosper needs to build and utilize a database.
3. The company does not communicate often enough with its customers. The result is lower sales and lower profits.
Contact your customers a minimum of once a month. This is not a random guess at frequency. As a drycleaner for 31 years, I experimented with different intervals. I tried once a year; twice a year; every other month; twice a month and several variations of those. I found that the ideal and most profitable interval was once a month. And I found that the most effective method of regular contact with drycleaning customers is with a postcard.
At first I thought that contacting customers every 30 days might be too often and that customers would stop paying attention to my mailings. But that didn’t happen. My sales kept going higher. As long as your customers feel that your service is a good value, they want to hear from you frequently. Of course, you have to send excellent offers.
If you are not in frequent contact, your customers will quickly forget about you. Many will start buying from your competitors.
Making offers to your database is often referred to as the “back-end” in direct marketing. But every business should cash in on the huge potential of existing customers by simply making frequent offers to them and giving them more opportunities to do business with you.
4. Most businesses have no method of accurately measuring the results of their advertising investments.
The solution is to ask for a direct response from each promotion. Code each promotion. The coding system can be numbers or letters. Or you can simply ask if they are responding to a particular ad. Then when an order is received or a customer visits your store, you can trace their response to a particular promotion.
5. Marketing is considered a business “expense” rather than a necessary “investment.” And there’s a big difference. An expense produces no revenue. Like supplies and the electric bill. An investment will bring a return. The confusion is the result of the misconception by many small businesses that they should receive a 100% return, immediately. There’s really no reason to expect this. No more than a landlord should expect an immediate 100% return on newly purchased rental property. The return will surely come. It just takes patience.
To successfully market any service business you have to:
A) Allocate sufficient resources to your marketing program.
B) Build your entire business strategy around your marketing.
Your whole company should be focused on what the customers want and be prepared to satisfy their needs.
If marketing is not at the heart of a business, it is doomed to a life of mediocrity, at best, and failure, at worst.