Tag Archives: client marketing

Halloween Special: How Groupon Kills Most Small Businesses

 

Groupon can make or break a small business.

As well as every testimonial on Groupon there are thousands of horror stories of small businesses losing significant amounts of money and in some instances, bankruptcy.

So, what is it that separates businesses who are successful and those who are less so?

Client Lifetime Value

In many Groupon horror stories a company will approach Groupon who will develop an advert for their email list and mail it to them. The business will then sit back and wait for the new “customers”. The business will fulfill their obligation to the Groupon voucher and the “customer” will consume the offer and leave.

And while this may work for a handful of businesses, very few actually capitalise fully with the Groupon offer.

A business philosophy of mine is this:

Customers are valuable, Clients are invaluable

The difference between a Groupon customer and a Groupon client is their lifetime value to your business.

A Groupon customer will be a one-off purchase and consumption of your service or product.

A Groupon client will be introduced to your business and will be led through a process where they can achieve the outcome they want.

To illustrate this with an example:

A hairdressing studio offers a cut and blow dry at a discounted rate through Groupon at £47.

A Groupon customer will come in for the cut and blow dry, use the voucher and leave having spent £47.  They are not contacted or marketed to again by the hairdressing studio.

A Groupon client will come in for the cut and blow dry. Their experience is increased through time spent discussing the cut, colouring, styling, products etc. The client is given an outstanding experience and their contact details are taken for further consultations. The client pays £47 and an additional £19 for hair products. THEN the Groupon client relationship is developed. They receive a follow-up email from the stylist with some suggestions on how to keep the style looking professional for longer. Over the course of several weeks they receive useful information on their hair, styling and colouring to maintain the professional look for longer. Then once trust has been developed a follow-up appointment is recommended to the client and agreed upon.

It is then possible to understand what the full lifetime value of your Groupon Client is rather than just thinking of them as customers who purchase once.

 

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There Are Only 3 Ways To Increase Revenue

I was working with my personal trainer the other day who came to me with a problem:

“How can I grow my client base?”

One of the principles I learnt very early on in my career was that the first question that someone asks you is rarely the real question they want answered. What he really wanted to know was “how can I make more money?”.

While this question obviously has a lot more depth behind it, for the purpose of this blog I will tell what I told him.

“There are only 3 ways that you can increase your revenue.

1. Increase the number of clients you work with

2. Increase the revenue per transaction per client

3. Increase the frequency that they purchase”

That’s it. Now, the secret to this answer is this. Each principle can be ranked according to how easy it is to achieve.

Increase revenue per transaction per client.

This is by far the easiest principle to implement. You set out an up front “contract” of the service that you will deliver against how much it will cost the client to achieve that result. Once you have a client in your system they develop loyalty to you (if you are genuinely providing an outstanding service) and will stay with you even if your fees increase.

Increase the frequency that they purchase

If clients working with you they are predisposed to give you money for your services. Why not – they are already doing it so there is already implicit trust established and bonding the two of you. As their trusted advisor, coach, mentor, trainer if you recommend something they are much more likely to purchase this based on the trust that they already have in you.

Increase the number of new clients that you work with

By far the “hardest” of the three as you are going out into the marketplace to attract new clients to you. This is where most marketers spend most of their time looking at new ways to reach a niche with the latest technologies. When marketed exceptionally the results are very high, executed good to average the results are average at best. Competition is too intense to be anything less than exceptional – long gone are the days when just about any form of marketing and advertising worked.

Assess what principle you are currently using. Assess what principle the best in your industry are using. I guarantee this. Most of the top names in most industries communicate more to their own customers than they do trying to attract new customers.

Why? Because they recognise the power of word of mouth and viral information in our world which is more powerful than any marketing message that they can craft that might meet some of the wants and needs of new customers.