From the blog 3 Things You Can Do TODAY to Create Business Growth
Are you struggling to grow your business on a small-business budget? You’re in good company.
But here’s the good news. In this article, we’ll explore 3 things you can do to grow your business right now. And the best part? These tips are all no or low cost. Business growth doesn’t have to break the bank.
Before you start
Customers are the heartbeat of a business. Without a strong client base, you can’t operate. For that reason, we’re going to begin with two fundamental, critical numbers.
If you don’t already know these two costs for your business, take the time to calculate them.
Cost Per Acquisition
Cost Per Acquisition (CPA) is how much it costs your business to acquire one new customer. The lower your CPA, the less you have to invest to build your customer base. Some businesses naturally have a high or low CPA. Your goal is to get yours as low as possible.
How you calculate it
Take the total amount you spent on marketing for a certain period—no less than a month and no more than a year—and divide it by the total number of new customers you acquired during that period.
Cost Per Acquisition = Marketing Expense / New Customers
That’s your CPA.
Last month, you spent $2500 on marketing. You acquired 50 new customers. So,
$2500 / 50 = $50
Your CPA for that month is $50. On average, it cost you $50 to gain one new customer.
Lifetime Value (LTV) is the total amount of money the average customer spends with your business during the time they’re a customer. The longer customers stick with you, the higher your LTV. Selling additional services to existing customers will also improve your LTV.
How you calculate it
First, calculate your Customer Value per Year. Do that by multiplying the average amount a customer spends per transaction by the number of transactions the average customer makes each year.
Customer Value per Year = Average Transaction * Number of Transactions
Next, determine your Customer Lifetime by estimating how many years a customer typically remains loyal. (It’s okay to estimate this value if you don’t have data to pinpoint it, exactly. Just be sure to try to be accurate, even if it’s uncomfortable.)
Finally, calculate the LTV by multiplying Customer Value per Year by Customer Lifetime.
Lifetime Value = Customer Value per Year * Customer Lifetime
Your average customer spends about $50 per transaction and makes about 3 transactions each year. Your Customer Value per Year is then $150.
$50 * 3 = $150
If your average customer has a Customer Lifetime of 4.5 years, your Lifetime Value is $675.
4.5 * $150 = $675
These values are important because they can help you determine your marketing budget and incentivize you to improve customer loyalty. The less it costs to acquire customers and the more you make from each customer during the lifetime of their relationship with your business, the better.
1. Keep the customers you already have
Acquiring a new customer can cost as much as five times more than keeping the ones you already have. Clearly, your business growth plan should make retaining your existing customers a priority.
Here’s how you make that happen.
Engaged customers tend to spend more.
For those who like to see the math, engaged casual-dining restaurant customers visit 56% more than disengaged customers. Similarly, engaged hotel guests visit 46% more times per year than disengaged guests. Your goal, then, is to create engaged customers.
How do you do that? By engaging with them.
Get to know your customers. Ask what they like. Ask what they don’t like. Greet them when they enter your business and thank them as they leave. It’s a good idea to even call your most valuable customers to check in. Let them know they matter.
Yes, this is all fairly basic stuff. But these simple techniques don’t cost you a dime and have the potential to create deep engagement with your customers. You can literally start doing this right now, and the benefits will be immediate.
Pay attention to your social media profiles.
Customers often share feedback about your business on social media. If you’re not paying attention, you could miss it. When you see comments about your business, positive or negative, be sure to reply to the feedback.
It’s easy to gracefully accept compliments. Complaints are a little more challenging. Never fight a customer on a social media platform. Instead, thank them for their input, invite them to contact you directly, and tell them you’d like to make the situation better.
Anyone else who sees the complaint will also see your proactive, inviting response. That lets your social media followers know you’re listening and you value their input.
Turn seasonal customers into regulars
Seasonal rushes are nice. Regular customers are nicer.
Whatever the nature of your business—retail, restaurant, auto shop or medical office—you almost certainly experience cycles of increased business. That could be due to the holidays, the weather, the tourist season, or even summer vacation. The trick is learning how to turn seasonal customers into regular customers.
You can do that first and foremost by providing great customer service. Be sure to mention ways your business is beneficial during the rest of the year. You might also consider offering gift cards so happy customers can encourage their friends to visit your business, as well.
2. Capitalize on what you already offer
Conversations with customers can uncover great ideas for new products and services. But imagining, designing, and introducing new products or services can take time—and cash. So before you roll out something completely new, capitalize even more on the products and services you already offer.
For example, could you bundle two or three products together to reach new customers? Could you offer a discount (and still make a profit) on popular options by packaging them together? Could you promote a product or service that’s not selling well but might sell better if more people knew about it?
Get creative with the products and services you already offer. Test new bundles and experiment with product placement to garner more attention. A little creativity could even lead to a new product or service you could introduce over time.
3. Reach new customers—on the cheap
With so many online tools now available, small businesses have more ways than ever to affordably get the word out.
Testimonials are a powerful way to attract new customers. The hard part? Requesting a testimonial can be daunting.
The trick to getting a good testimonial is to make it easy for customers to provide one.
Start by reaching out to loyal customers. Thank them for their business. Let them know how much you’d appreciate their sharing a brief sentence testimonial. Just ask for two or three sentences. You might even provide a sample testimonial with sample questions.
Be sure to let them know how you’ll use their testimonials in your marketing materials, on your website, or on your social profiles.
Hop on Yelp
Over 92% of consumers use Yelp to make purchasing decisions. Odds are, some of your potential customers will look up your business on Yelp.
If you’re not actively managing a Yelp page, get on that. Register your business, adding or claiming your Yelp business page. Then be sure to use the very same tips we covered in the social media section (above) to respond to good and bad Yelp reviews.
Schedule some events
Whether onsite or online, you should absolutely host events—drop-ins, neighborhood mixers, webinars on topics that interest your customers, and special events for your premier clients.
Events give you a way to build relationships, demonstrate community leadership, show appreciation for your customers, and attract new ones. In fact, you should always be on the lookout for reasons to plan events—holidays, business anniversaries or customer milestones.
While events can be expensive, they don’t have to be. You just have to get creative. For example, consider partnering with a local restaurant for a joint event—they provide finger foods and you provide the space.
If you have the marketing budget to do blow-out events, great. But if you don’t, you can still host fun events that will boost your business.