By Reed Richardson
By necessity, most small business owners quickly become creative problem-solvers, finding unorthodox means of survival and alternative pathways to success. After all, almost all entrepreneurs launch their businesses with a shortage of funds and a lack of support staff, meaning that they must not only figure out how to build that better mousetrap, but also produce it on a shoestring budget and then advertise and sell it using low or no-cost marketing tactics.
But for all their resourcefulness, there is one potentially powerful asset that small businesses all too often overlook or underestimate; it’s the same one that fills their cash register everyday—their customer. So, if you think that your small business’ current customers are only good for occasionally buying your products or services, it’s time to readjust your expectations and start leveraging their value for greater prosperity and growth.
1. Turn them into sales prospectors for your business
Those satisfied customers going in and out of your front door everyday—or clicking to and then away from your website—could be some of your best salespeople, if only you would ask them. But far too many businesses simply forget or intentionally avoid systematically asking for customer referrals. Even the simple, passive act of putting up a sign in your office or on your website that says, “If you like our widgets, please tell a friend!” rarely occurs at most small businesses.
During research on this topic for his recent book, The Referral Engine, author and “Duct Tape Marketing” guru John Jantsch conducted an informal survey of thousands of small businesses. From his results, he found that more than 63 percent of the small companies he surveyed received a majority of their business from referrals, yet nearly 80 percent of those same businesses acknowledged that they had no system in place to consistently generate such referrals. “If you don’t feel strongly enough about the value you or your products deliver to expect that your clients will voluntarily make an effort to see that others receive it,” Jantsch writes in his book, then it’s time to “get to work on creating a brilliant system that’s focused on getting results for your customers.” Doing so might be the difference between getting or losing a majority of your future business.
2. Enlist them into your advertising and marketing plan
With the advent of social media, the playing field has significantly leveled when it comes to extending a small business’ brand. Encouraging happy customers to “like” your business on Facebook or re-tweet product offers and updates you post on Twitter means you can unleash a digital army of marketers for little or no money. But it does require time and careful effort to build these relationships properly. A dormant Facebook wall or, conversely, a constant barrage of unengaging Twitter posts will quickly burn up any word-of-mouth goodwill between you and your customers.
Investing in and fostering these fans of your business eventually pays dividends, according to this recent survey by social media consultant Syncapse. Its results estimated that the average annualized value of a Facebook fan to a business was roughly $138 and that each fan spends an additional $72 on products they “like” online versus those they don’t. What’s more, the Syncapse study found Facebook fans are 28% more likely than non-fans to stick with a brand and also 41% more likely to recommend that brand’s products to others. That’s a powerful way to extend your reach and feed the referral engine.
3. Tap their knowledge of your business as a source of innovation and R & D
Entrepreneurs, so focused on rolling out their new product or their latest service, routinely fail to take into account the input of the end user—the customer. But by seeking out your customer’s advice and suggestions—before, during, and after a rollout—a small business owner can often avoid a disastrous product launch, refine their existing platforms, and add successful new companion services to their offerings.
Indeed, it pays to think of your existing customers as kind of a never-ending focus group. You may think you know why your customers are purchasing, but unless you ask them you may never know the real reasons. By distributing a steady stream of customer surveys—whether it’s in person, by mail, or online—you can arm your business with a rich database of information about everything from sales frequency to price points to marketing effectiveness to packaging and shipping preferences. Even if you find out that you do have an accurate read on why your customers like your current products or services, it’s worth taking the extra step to find out what else they might like or want to see you provide them. And once you do, be willing to enlist your loyal customers’ help in trying out, or beta testing, these new offerings before you execute a full launch. Such a gesture will convey the trust you have in them and will further cement their loyalty to your company, while, at the same time, your business will reap the real-life, unbiased opinions of the marketplace, making your new endeavor more profitable.
4. Transform them into a vendor or subcontractor of your business by discovering what mutually beneficial talents they possess
Stare at a financial spreadsheet for too long and it’s easy to start viewing your business’s customers as little more than lines on a graph or numbers in a table. That one-dimensional approach fails to consider the talents or skills that your customers possess, talents and skills that just may benefit your business, if only you knew about them. So if your retail business is looking for permanent back-office help like, say, an accountant to do your books, or even someone to handle a temporary project, like a freelance graphic artist to design new promotional materials for your business, it’s a good idea to put out the word to your customers first, both in your store and on Facebook. While you probably won’t find an exact match each and every time, you’re still likely to get at least a few good references.
Mining your existing customers for vendor or subcontractor help has an additional benefit—it opens up the possibility of bartering for those products or services, an old-fashioned business tactic that is making a comeback in an era of near universal belt-tightening. Most of the more popular small business barter exchanges, like ITEX, BarterQuest, and NuBarter work by matching up pairs of entrepreneurs and other businesses or individuals, based on correlating wants and offerings. Because these barter exchanges involve larger networks, they have the advantage of offering a more expansive menu of products or services available for barter. However, thanks to their larger size, they almost always match up barter partners that are unfamiliar with one another and, therefore, some risk is involved in the process, even if the exchanges are careful to put policies in place to mitigate that. But bartering with your customers means dealing with someone with whom your small business already has an established relationship, making questions about reliability much less of a concern.
5. Provide more ways for them to pay for what you offer
Small businesses looking for better ways to turn their current customers into greater cash flow should think beyond getting paid at the point of purchase. Instead, develop creative ways to bring in revenue more consistently, through mechanisms like subscriptions, automatic bill pay, and even layaway.
“The last 10 years have seen a dramatic increase in companies using the subscription model to offer everything from music, movies, and textbooks to even cars for a monthly fee,” explained Tien Tzuo in a VentureBeat column last summer. Tzuo, CEO of the online billing company Zuora, points to the recent rollout of Apple’s iPhone 3G as an example of why savvy subscription pricing beats one-shot-sales thinking in the long run. “When the iPhone 3G was introduced, AT&T dropped the price of the iPhone by $100 and simultaneously raised monthly fees by $10. In doing so, they were able to sell more iPhones (lower entry fee) but earn more money over the life of the two-year contract.”
By building up your customer’s paying “habits,” you’re also building up their loyalty to your business and making it less likely they will stop buying altogether or move on to a competitor. And by linking automatic bill pay capability to a subscription model, you’re less likely to deal with late or missed payments, meaning your business can enjoy greater consistency in terms of cash flow. If your business sells big-ticket items that aren’t a good fit for a subscription model, help your customers avoid dealing with missed or late payments on their credit cards by offering them a layaway plan. Layaway, which is also experiencing a resurgence in the marketplace, gives your business a few weeks or months of steady revenue while turning one big sale into a series of smaller transactions. Here again, your business is getting paid outside the point of final sale, but is also making it increasingly comfortable for a customer to think of him or herself as a repeat customer.
6. Convert them from mere customers to trusted employees
Just as when you invited your customers to work with your business as a vendor or freelancer, don’t overlook asking them to work for your business when you need to hire more staff. Loyal customers make for a great initial pool of job candidates for several reasons: They’re familiar with your products or services, they likely know your staff if not you as well, and they already like what you do enough to spend their money with your business. That you won’t have to engage in a lengthy and expensive job search is yet another advantage to hiring from your customers.
Of course, simply hanging a “Help Wanted” sign above your cash register or on your front door is a good start to this process, but don’t forget to post the same sign on your business’s online doorways, like your company website and Facebook page. Why? Because those online friends of your business aren’t just interested in your next product launch or discount offer; increasingly they are looking at your company’s social media sites for news about hiring. In fact, according to this CareerBuilder survey from last August, an online job posting is now the No. 1 thing—cited by 35 percent of respondents—someone visiting your business’s social media site wants to see. That kind of interest can turn a valued customer into an even more precious commodity—a good employee.