Business Marketing Basics

Following on from Part 1.

THE SECOND THING YOU MUST DO TO IMPLEMENT A BUSINESS MARKETING BASICS PLAN IS:

Work Out The Lifetime Value Of Your Customers

Now that you know who your customers are, it’s time to work out the lifetime value of each of them. Why? Because it’s so very much cheaper to sell to existing customers than it is to go out and try to entice new customers.

And … once you realise how much an existing customer can be worth to you over time, you’ll quickly start working on ways to improve your customer service abilities and your communications with your existing customers to make sure they keep coming back.

Here’s how to calculate the lifetime value of a customer. (Of course, every business is different and you’ll have to adjust this example to suit yourself.)

A) Average sale per customer $100
B) Deduct the cost of the average sale $30
C) Average profit per sale (A-B) $70
D) Multiplied by average number of sales per year x 12
E) Profit per customer per year (C x D) $840
F) Multiplied by average number of years as a customer x 10
G) Gives the lifetime profit per customer (E x F) $8,400

THE THIRD THING YOU MUST DO IS:

Define Yourself

Most people try to be everything to everyone, and then wonder why they are treated as just one of the pack in their industry. They’ve never asked themselves: “What distinguishes me (my product, my services, my business), or what can I find or create that distinguishes me – from all my competitors that will make me stand out, appeal more, to my customers or potential customers?” You must ask yourself this… now. You must consult your staff, your suppliers… anyone who can help you come up with the most powerful Unique Selling Proposition (USP) for your business!

When you ask most business owners to articulate clearly and concisely in one paragraph or less his or her USP, most of them have no answer. How crazy is this? If you don’t know what you have (or can create) that makes you stand out from your competitors, how in the world do you expect potential customers to single you out?

Your entire marketing and operational success should be built around your Unique Selling Proposition (USP).

Why Is It So Important?

Without a clear USP that you and your staff understand, and that can be clearly and concisely articulated to your customers in fewer than 15 seconds, and in less than a paragraph, you will always have an unfocused, confused business. You have many options in choosing your USP. For example:

• You can position yourself as having the best selection or broadest array of buying options… the “broad choice” USP.
• You can offer a more limited selection, but position yourself as “low price.”
• You can position yourself on quality at a higher but reasonable price. Quality or exclusivity – even snob appeal – becomes your USP… “Quality”… “Exclusive”
• Again, you can offer your product at a reasonable price, but make your USP that you provide better service, assistance, or installation help…. “The best back-up service in the business.”

Your USP can be anything, so long as it is easy to articulate and has strong market appeal. Decide if you are going to:

• Be less expensive? Example: The average mark-up on new tyres is 82% – our mark-up is 20%.
• Render more service? Example: Most video repair businesses operate from 9 to 5. We’re there for you 24 hours a day, 7 days a week
• Give better value? Example: At Steak Haven, you get a 25g steak for $9.95. At our restaurant you get a 50g steak AND a free glass of wine for exactly the same money.
• Give a better guarantee? Example: Every other motor mower dealer around offers you a 12 months’ “limited” guarantee. Buy a mower from us and we’ll give you an unconditional, three year guarantee and 24 hour breakdown service – FREE!
• Give two for the price of one? Example: When you rent an overnight video from us, we’ll give you another overnight selection, absolutely free.

Study your competitors and see what they’re offering, and how they might be distinguishing themselves through their USPs. Now, think long and hard about what you have, can add, or can create, that will distinguish you from all of them… that will make you stand out in your market and form the basis of all your marketing and advertising appeals.

The point is to focus on the one niche, need or gap that is most sorely lacking – provided you can keep the promise you make in your USP.

Now, here’s a little test to see how distinguishable you are in the market place. Take your adverts, direct mail pieces, etc. and paste the logo of a competitor over yours. If the communication works just as well, you can’t have a very strong market identity.

Main point:
You have to work out what’s great about you that distinguishes you from your competitors, or you need to create that edge. Then you have to articulate that Unique Selling Proposition in just one paragraph so that you can use it effectively in all your marketing programs. Again, involve your staff… and make sure each and every staff member knows what your USP is and talks about it at every opportunity. Print it up and give each staff member a copy. Print your USP on your letterheads, business cards… in all your advertising and marketing material. Live by it!

Stay tuned for the next installment in our series on Business Marketing Basics.

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