by Harry Burns
A business cannot survive and prosper without attracting new customers.
Any business, no matter how well run, loses customers every year. Not
only must these be replaced, but if the firm is to grow, additional new
customers are essential. Poor service, unsatisfactory merchandise, prices
and customer relocation are reasons why customers no longer frequent
your business. It is imperative that you always look at and plan ways
to attract new customers.
Examining the causes for lost business may be the best place to start.
If a lot of customers are moving, there is obviously something going
on in the economy that is causing this. Should you move with your customers?
Can you still serve them by locating a branch in another location? Should
you consider moving?
If poor service is the cause of lost customers, it’s time to get
aggressive in correcting this. Do you need to re-train employees? Are
poor systems or follow-up the cause? If so, how can you fix the problem?
If the merchandise you sell doesn’t meet customer expectations
it’s time to look for new suppliers. If price is the problem, you’ve
got your work cut out for you.
In one case, there was a young owner of a company that provided a service.
The company was known for two things: excellent quality and higher than
average cost. Business remained the same year to year but the owner wanted
to “grow the business.” He was looking for more sales and
higher profit. The answer to this problem seemed fairly easy. With 14
employees working in the field providing service, there were nine in
the office. To get more profit, costs needed to be cut. To get more business,
costs had to be cut without affecting quality. To get it all done, the
owner had to take a closer, more personal interest in the running of
the business and less time doing that part of the business he liked the
most.
By now I hope you’re getting the picture that, even though
the basic problems were identified, correcting the problems required
hard decisions and a level of discipline by the owner that had not been
present before. Fixing the problem of getting new accounts may not be
easy.
Too often small business owners are so wrapped up in the day to day operation
of the business that they fail to recognize the need for new accounts
until there is a noticeable drop off in sales. An ongoing plan to attract
new customers is essential. There are a few things basic to any such
plan.
- Determine the kind of customer you have. If you are a retailer,
what age, income level, and other demographics are typical of your
market?
- Determine how many accounts you want to add. The starting point
is identifying how many customers you lost last year and adding the
number of additional
customers you want to grow the business. Divide this number by four
to put it on a quarterly basis for easier tracking of the success of the
plan you put into place.
- Identify the customers you believe are good
prospects. This is easy if you sell to business or industry. The Yellow
Pages are a good source
of information. It’s a little tougher if you are a retailer but
you can determine, through census data, precisely where the people
with the desired demographics live. Knowing this, mass mailing by ZIP
code
is a good first step. This isn’t as hard as you may expect. Libraries
are an excellent source of this kind of information. Usually, there
are people trained in just this type of information search that are
most
helpful.
You must grow the business. “But how?” you ask. The old
standby response fits here as well as most places. You must plan.
If you would like to discuss preparing for business ownership, contact
the Service Corps of Retired Executives (SCORE) Association. SCORE
was formed in 1964 as a non-profit association dedicated to entrepreneur
education and the formation, growth and success of small business nationwide.
For information about starting or operating a small business, or to
obtain
counseling via email, contact the midcoast SCORE office at 236.7030
or 622.8509; or visit them online at www.score.org.
SCORE is sponsored by the Small Business Administration.
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