You happy just just made a sale. But are they coming back to spend more money with you?
Are most of your sales one-off Transactional sale? Which means now you have to find another customer.
The hardest space to survive in business is where you only make 1 off sales.
Are you spending all your time, effort & money chasing one-off Transactional Sales?
When you have a Relationship Funded Business, your customers keep coming back & spending more money.
Do You Have One-Off Transaction Business Or A Relationship Funded Business?
What is a Relationship Funded Business & why is important to your business?
Well, just bear with me. I promise you, I’M going to give you a serious money-making tip in just a minute (…or two).
Let me show what this means.
Let’s take a look at Fred’s Flooring. He sells & installs Carpets, Laminated & Timber Floors and Vinyl Flooring.
These are big ticket margin items, which have good profit margins.
So Fred runs ads targeting people looking to replace their worn out flooring. Also, people building & renovating who need flooring.
To Sell Carpet & Flooring You Need To Them To Come Your Showroom
If Fred’s ads have been effective. Then the ads should stimulate his target audience enough to ring up or come down to his showroom.
Once Fred gets into a conversation about flooring, he has a pretty good sales process.
He’s asking them questions about their home,
- Do they have children with allergies?…
- Do they have pets?…
- Do they have stairs?…
- Are they replacing old flooring?…
- What colours do they like?…
- What type of flooring are they looking for?…
So each question helps him guide his flooring customers. So they get the flooring that meets their budget & suits their lifestyle.
Fred’s been in the game a long time, so he knows his stuff.
He leads them through a sensual flooring journey. He gets them to take off their shoes and walk barefoot across the selected flooring.
He gets them to imagine waking up in the morning on their new floor. So they can experience the feeling the plush carpet underfoot.
This works so well. Once they take their shoes off they’re emotionally invested in this flooring. Not only can they see the flooring, they’re touching it & walking on it.
Their hearing the noise as their feet glide over the flooring. Remember they are in a showroom, so they going to be gentle on the floor.
By getting them to imagine this flooring in their bedroom. They are now anchored to an emotional connection with this flooring in their home.
Now Fred Kicks it up a notch.
He starts pulling out a slab of Blackbutt Timber flooring or metre of Cross Pile Wool Carpet and hands it to them.
Then he says…
“Takes these samples home and see how they work with your homes colour scheme. You need to make sure you’re happy with the look & feel at your place. Because this flooring is going to be down for a long time.”
Then he follows up with.
“I pop around in a couple of days to pick them up. While I’m there I’ll measure your place so you will know how much flooring you will need?”
“You’ll get a free written quote. So there won’t be any surprises when it comes to installing your flooring. Ok?”
Fred is a gun. Once he has you come down to the showroom he’s stacking the odds in his favour. Fred converts 7 out 10 qualified visitors into flooring customers.
Fred’s Sales strategies is not left up to fate,luck & chance. Fred developed this marketing system over a long time. Because he needs to get his website visitors to come down to his showroom. So he can do his flooring magic.
So Fred can crank out sales once he gets them to his showroom.
This all sounds good but Fred has a big problem.
If you have a local business then you might be facing the same issues.
Fred has a good sales process in place once he gets you in his showroom, yet it suffers from a fundamental flaw.
Fred’s Flooring is a transactional business.
Whoa, Hang on there “What you talkin about Willis!”
Transactional Business What?
Ok, let me explain…
Buying flooring is a One-Off Transaction. Once you get new floors, you’re not going to be in the market for more flooring for at least 10 years.
Fred even reinforces in his sales pitch. Just in case you don’t remember I’ll quote Fred.
“You need to make sure you’re happy with look & feel at your place. Because this flooring is going to be down for a long time.”
If you’re making sales why is this a problem?
Let’s break this down so you can take these lessons and apply them to your business.
Selling & Laying flooring is a local business.
Fred has invested in a compelling website. He uses Social Media like a champion.
His Facebook & Google Adwords ad campaigns target his local audience.
But unless he can get them to his showroom it’s a struggle to keep finding new prospects.
Let’s face we all do our initial research on the internet.
I can’t imagine anybody going to search on the internet for carpets. They see something they like & the price is right & click to buy.
With flooring, you’re talking about Carpet Rolls which are 4 metres long or timber slats which are 2.4 metres long.
Just put a stamp on the flooring & post them. It ain’t going to happen.
Flooring works in the local area because the size makes it impractical to Post.
For Fred his ideal customers are people live within a 15 to 20 minutes drive from his showroom. (And that’s probably a stretch) There looking to get new flooring.
Fred Understands the concept “If you’re not talking to people who are looking for a solution, then you’re wasting time and money.” That’s why he uses Local Demographics.
Fortunately, these people are a lot easier to find now days using Geodemographic
“Geodemography is a branch of market research that assigns the attributes of small areas – usually neighbourhoods – to the consumers who live within them and, based on this assignment, divides the consumer marketplace into meaningful segments that are locatable and reachable.” – http://www.environicsanalytics.ca/blog-details/ea-blog/2011/05/03/10-reasons-to-use-geodemography
So Now You Can Ask Your Customers’ The Who, What, How & Why Questions…
Who are my customers? Where do they live? and How can I best reach them?
If you get this right it’s so powerful. You can use this to find your local audience sweet spot.
So it’s possible to find & reach your local audience, by advertising to them.
Fred does not just have to rely on his advertising because he also gets plenty of referrals from happy customers.
So being a local business is not such an obstacle if you can reach right people.
As a Transactional Business, Fred’s Flooring doesn’t get many repeat customers.
Once you get new flooring there’s no reason go back to the flooring company unless there’s a problem.
So now Fred has to go & find more people looking for flooring.
If you want to grow your business then you have to transform your business from a Transactional Model to a Relationship Funded Business.
Transactional business can be compared to an event. Once you make the sale, money changes hand, goods get delivered, everybody moves on.
You Want Your Customers Become Raving Fans…
When you build your business as a relationship you want to provide ongoing Products & Services. No more One-Off Sales.
Each sale helps build the next sale.
This was a problem that Microsoft faced.
We would buy a computer & it would come installed with Windows Operating System & Office.
We were reluctant to upgrade to the new bright shiny Windows.
You could upgrade from Windows 3.0 to, Windows 3.1x to, Windows 95 to, Windows 98 to, and Windows ME to, Windows XP to, Windows Vista to, Windows 7 to, Windows 8 to Windows 10.
Did you manage all these or did you skip a few?
If you’re like most us, then you jumped over a fair few of these.
Sure some zealots jumped onboard after each version launch.
We needed bombarding from advertising to persuade them to make the change.
You still find computers running Windows XP. I know it’s hard to believe these machines must be dinosaurs. Just so slow.
We tended to skip versions rather than upgrade to the faster more powerful software.
So even though Microsoft were selling heaps of Windows Operating Software. Because it comes bundled when you buy a PC.
It’s lot harder trying to sell a new version of Office to existing customers, so it becomes a waiting game.
So how did Microsoft fix this problem?
The couldn’t sit around waiting, hoping we would eventually buy the new Office version.
So instead of getting a One-Off Payment when they sold the Office Suite. They change their business model to a monthly subscription.
So now they’re making, even more, money.
Find a Consumable Products So They Keep Coming Back for More…
So if you’re Stuck like Fred’s Flooring.
What can you do to move from struggling with One-Off Transactional Sales to an ongoing revenue funded relationship with your customers?
Here’s what Fred did.
Every time he sold a Carpet or a Timber Floor, he would give them either Carpet Care Kit or Timber Care Kit.
These Kits consisted a laminated Stain Removal Guide…
His own private label Cleaning solutions for carpets & the different flooring products…
His own branded cleaning tools…
Fred’s Flooring How to guide on “How to look after your Carpet”…
A gift voucher for 50% off their next purchase of his Cleaning Solutions. Of course, Fred’s Flooring was the only place they could get his cleaning solutions….
Fred’s Flooring How To Deal With Frequently Encountered Spills and Stains Guide
The purpose of the voucher was to get them in the habit. To keep them coming back for more cleaning solution.
The Cleaning solution is a consumable product. It runs out so they need to buy more if they want to look after their carpets.
Ok, I know you’re saying: “That’s fine for him. But I’m not a scientist I don’t have any secret consumable product.”
Never did Fred.
You don’t need to make this yourself. There are heaps businesses who make these types of products and will brand them with your logo. So they become your products.
Try White Label Product Packaging
You only need to do a Google search for “white label product packaging”. According to Google their 3,550,000 results for this search term. You just need to do a bit of digging.
Or you could go to Alibaba. There you will find International companies offering you the ability import any product. You will be surprised at the range & quantities you can get. (Don’t be frighten the quantities, they’re a lot smaller than you would expect.)
The next step was to buy carpet cleaning business.
You may say he was lucky because an established carpet cleaning business offered to sell their business. This carpet cleaner was not very good at marketing and was getting worn out trying to get more customers.
He knew Fred was good at marketing, & also had a similar vertical Market.
Fred Bought the carpet cleaning business. The old owner agreed to stay on to clean carpets.
This was an ideal situation as the carpet cleaner. He did not need to know where he was going to find more customers because Fred took care of this.
Fred now an extra service he could add to carpet care kit. A 60% off their first carpet clean.
Guess what? The How to guide on “How to look after their Carpet” went into great detail why they should be getting their carpets cleaned every 6 months.
Did every customer take him up on this offer? Heck no. Only 20 to 30% took him on this offer he’s still making a truckload of money.
With just these 2 concepts Fred was able to convert a good percentage from of one-time carpet buyers into ongoing customers. These customers were happy to invest in cleaning their carpets on a regular basis. So he started building Relationship Funded customers
Once he understood the numbers. Fred knew every month if he looked after & maintained his customers they would keep coming back to get their carpets clean.
Your Numbers help you to understand your Customer Lifetime Value .
Do you know what your Customer Lifetime Value?
Bare with me & I go into greater detail on why you need to your Customer Lifetime Value Concept. This will grow your business… ok?
All Fred had to do was send out a reminder email when their carpets were due for cleaning. And like magic people would get their carpets cleaned.
Can you imagine what this would do to your cash flow if you could put in place a similar process for your business?
Those 2 steps made a big difference to Fred’s Flooring, but he didn’t stop there.
Selling carpets to mums & dads is a good place to start if you get them to keep coming back to spend more money with you.
You can only scale this so far, it’s still a long-term play. Just because they’re spending money on a regular basis still does not solve the problem. They not going to buy a carpet for at least 7 years.
This why selling flooring is a Transactional business, it has limited opportunities for repeat sales.
So the next piece of the puzzle was to target people who need to keep replacing their flooring.
So Fred Set up new ad campaign designed to target Real Estate Agents, Property Managers, Developers & Builders.
On a day to day basis, they are not thinking of getting new flooring. But every month there’s a constant trickle of new flooring leads from these people.
TurnThe Trickle Of Enquiries Into A Waterfall Of Qualified Leads…
So his marketing was to turn the trickle of enquiries into a waterfall of qualified leads.
They are looking for people solve their flooring problems quicker & economically. Without the headaches of dealing with painful suppliers.
Sure you don’t make the same margins. But more importantly, he now has a relationships with clients who refer ongoing work to him.
Fred took these steps to move his business from One-Off Transaction to ongoing Relationship Funded Business.
I promised to explain CLV – Customer Lifetime Value. How much every new customer spends with you over the Lifetime with your business…
Once you get your head around Customer Lifetime Value concept your building Relationship Funded Business.
Each new customers will catapult your profits by compounding the Customer Lifetime Value Concept…
Each Repeat customers put heaps of money in your pocket…
Your business needs to understand the importance of Lifetime value of its clients.
You must continue to treat customers as your most valuable asset. You don’t want them to feel they’ve been dropped off the face of the earth as soon you have their money.
The purpose is to embrace them and make them feel like they’re appreciated. You’re looking to build an ongoing relationship that keeps providing them with service, so they keep handing over money.
The goal of your business should be: to build a long-term profitable relationship with each client you get.
It’s not what you sell: it’s What Else you Sell that’s important. That’s the whole point to the system and process of your marketing.
New customers (the front-end) are the lifeblood of any business. But most of the profits come from the extra sales you make to those same clients (the Back-end). The more money made on the back-end, the more you can afford to spend acquiring new clients.
And whoever you can spend the most to acquire a new client, will ultimately dominate their market and competitors.
Do you see how this changed his business?
Do you need help to move from One-Off Transaction business to ongoing Relationship Funded Business?
If you’d like me to help you do all this stuff, I’d be happy to.
It’s up to you…