Marketing Matters
Cultivating Current Customers
By Murray Raphel

The average business in America spends six times as much money trying to attract new customers as it does enticing its current customers to spend more money.

Like other retailers, ECPs around the country wake up every morning and ask: "How do I attract new customers to my business?"

But they are asking themselves the wrong question. If they really want to increase their businesses' profitability, and they really want to have more money in their pockets at the end of the day, they should ask themselves a more fruitful question: "How do I increase sales to the current customers of my business?"

That is Raphel's Rule: "It is easier to sell more to your current customers than it is to sell to new customers." This rule is a fact proven in the airline industry, in the hotel industry, in the supermarket industry, and even in the casino industry. It works in optical, too.

Brian Woolf, author of Customer Specific Marketing and Loyalty Marketing: The Second Act, has done extensive studies on the value of current customers in the supermarket industry. He found that the top 20 percent of customers at supermarkets spent 50 times as much as the bottom 20 percent. He also discovered that new customers were unreliable, with few of them contributing substantially to the bottom line.

The supermarkets that decided to reward their best customers with discounts and other perks saw a 30 percent rise in their bottom line, even with no gross volume increase.

Your best customers tend to buy higher margin items. Plus, when you treat them well, these patrons become walking ambassadors for your business, saying nice things about you and recommending that people give your business a try.

REPEAT BUSINESS

Here are some ways you can capitalize on repeat business to increase your sales:

1. Recall. Start a recall program if you don't have one. The biggest mistake any optical business can make is not having a recall program. Your customers expect to come back to you for periodic check-ups. Make sure you remind them when it is time for a visit.

2. Mailings. Mail to your current customers (who've given you permission) at least six times a year. The mailings can tell them about a new line of frames. Or you can give them a special offer just because they are your customers. For example, have a sunglass sale in the spring only for your current customers. This makes them feel special.

3. Spending records. Keep track of how much each of your customers spends with you, and keep this information by family. You should know by name the top 50 families that do business with you. These are the most important contributors to the economic well-being of your dispensary. To show gratitude, have a private party once a year for these people. Or you give them free tickets to a local event. The top customers are the lifeblood of your dispensary.

4. Focus groups. Have a focus group once a year with your customers. Most business owners do not look at their business through their customers' eyes. You will be surprised at how eager your best customers will be to help you improve your bottom line. Here are tips on running focus groups.

• Be sure to have a professional run the meeting.
• Limit the group to from six to 10 customers.
• Serve a lunch.
• Keep the meeting to an hour.
• Take notes, and share the notes with your staff.
• Give all of the participants a gift at the end.
• And, most important, do not interrupt any criticism or become defensive. You should welcome advice from your customers. They are performing a valuable service for you.

5. Birthday program. The most important holiday for your customers is their birthday. Send a card a few days before their birthday month. (Note: Do not ask customers for the year they were born, only the month and day). Offer them a special gift for coming in, but don't ask that they buy something in order to receive it.

The gift can be small, costing you a couple of dollars wholesale, but your customers will feel like a million dollars. And, making them feel that way is the goal of these programs. So, when you wake up tomorrow, don't think about new customers. Think about your current customer base instead.

Raphel Marketing is a marketing and publishing firm that specializes in helping small-to-medium sized businesses do more business through better marketing techniques. You can contact the firm at neil@raphel.com.