Eleven ways to find new customers
You always need new customers, both to expand trade and to replace the customers you inevitably lose for one reason or another. This guide offers you 11 tips how to gain these extra customers.
1. Build a customer profile
The first step to finding more customers is to build a profile of your most profitable current customers. Do this by reviewing the top 20% of your customers to see if you can identify some common characteristics. For example, their age, gender, income group, location, preferences, the magazines, newspapers or media they prefer, or any other distinguishing features. (If you don’t already have a database of your existing customers, start gathering this valuable information immediately. Read the related Solution Guide, ‘Why databases are a valuable asset’).
The more you understand about your best customers, the better placed you are to find more customers like them and to target your promotions effectively. For instance, your research might uncover that your best customers live only in upper income suburbs. If you use letter drops, you would therefore save money by concentrating on these suburbs and ignoring the rest. You could source demographic information from Statistics New Zealand www.stats.govt.nz that will help you select suitable areas in unfamiliar cities.
2. Use your existing customers to find more like them
Your existing customers are valuable to you in another way too. They can be a rich source of new customers and new business. If they are impressed by your business, they will provide you with new customers through positive word of mouth.
But you can develop and accelerate this process by starting a referral system. There are many variations to this tactic. The simplest is to make a point of asking satisfied customers if they would mind referring others to you. You can do this by saying something like, “I’m very pleased that we’ve been able to be of good service to you. We’re looking to expand our business, so I’d really appreciate you telling your friends about us.” If you train both your staff and yourself to do this after each completed deal, the results will flow.
You can strengthen this approach through incentives, for instance, gift vouchers they can pass on to friends. Take note of referral tactics used by other businesses and see if you can adapt them for your business. For example, many magazines encourage you to renew your subscription by offering you a discount if you sign up one or two other people for a subscription.
Since some people don’t like benefiting at the expense of their friends, a variation is to offer the discount to the new customer, not the existing customer. A simple example every business can use (once you’ve qualified the customer as willing to tell friends about you) is to hand out half a dozen of your business cards to a satisfied customer. Then say to the customer, “I’m writing your name on the back of these cards, so if any of your friends come in, we’ll give them an introductory discount.”
Be sure to thank the existing customer when a card comes back: “Ms Jones called in to purchase some product from us yesterday, and we made sure that as a friend of yours she got exceptional service. Thank you for referring Ms Jones to our business.”
Use other tactics to encourage referrals as well. For instance, if you send out a newsletter, encourage customers to pass it on to others. In the case of an email newsletter, they can do this instantly (before their attention is diverted) by forwarding it on to others - a good reason to start an email newsletter!
3. Target your promotions
Now that you’ve built a profile of the new customers you’re hoping to attract, use this knowledge to target your marketing spend more accurately. The more focused your aim, the more cost-effective your promotions are likely to be.
Use suitable language and imagery
A clear focus also enables you to adjust your adverts, sales letters and brochures to appeal to the target group. For instance, you would use a different style, imagery and colours to market to young teenage girls than to retired people.
4. Promotions and specials
To increase sales and attract new customers run special promotions, events or sales. With some imagination these can even attract new kinds of customers. For example, a hardware storeowner noticed that few women bought power tools. His successful solution was to run special ‘ladies only’ demonstration days. He discovered an untapped market for women who wanted to acquire the skills to complete home DIY projects themselves.
5. Offer free seminars or training
People who run seminars are seen as authorities in their field, so running a seminar or training session is a great way both to increase your credibility and gain new customers. You can run the seminar yourself, or joint venture with others.
For example, a person running an Information Technology (IT) type consultancy could run informative seminars on IT topics, such as computer security and dealing with computer viruses, or how to network computers in offices.
Offering some kind of free help or training is a good way of gaining new customers. For instance, ‘free first consultation’ or ‘first hour free’ is a tactic successfully used by many consultancy businesses. Another successful tactic is to offer a free guide or booklet for people using your services. These cost little to produce, yet can be the point of difference between your business and the competition.
If you don’t like writing, commission a freelance writer or journalist to compile some booklets for you.
6. Speak to community groups
Take your message out to community groups. Organisations such as Lions, Rotary clubs are always on the lookout for good speakers. To use the example just discussed, for instance, the IT consultant could speak on the issue of computer security and the Internet, both topics that many people are anxious about. The talk for such organisations would have to be informative rather than hard sell, but at the end the speaker could simply say, “by the way, if you’re interested in knowing more about this topic, you can drop by our offices and collect a free booklet we’ve put together, or give me a business card and I’ll post you a copy.” People who respond automatically qualify themselves as sales prospects and can be followed up appropriately.
7. Competitions and draws
Competitions and draws are also a good way of attracting new customers. Build the competition around a newsworthy prize and/or perhaps an extraordinary event in the community to attract interest and perhaps publicity. If possible get a local celebrity to make the draw.
Always capture details
Competitions and the like also offer you a golden opportunity to expand your customer database, because people must fill an entry form. Make sure, however, that you comply with the provisions of the Privacy Act. See the related Solution Guide ‘Why databases are a valuable asset’ for more details.
8. Direct marketing
Direct marketing is an excellent way to gain new customers, provided you can access up-to-date database lists from list brokers or other sources that effectively target your customer profiles. Read the related Solution Guide ‘Building your sales through direct marketing,’ which covers this topic in more detail.
9. Strategic alliances and joint promotions
Since every business has (or should have) a customer base, it makes good sense to think about the kinds of reciprocal business links you can form to increase business for both parties.
A good example of a ‘win/win’ joint promotion is to support a charity in a fund raising promotion (for instance, you could offer to donate a portion of each sale to the charity). Most charities have extensive databases of people who support the charity through donations. This alliance therefore not only enhances the reputation of your business in the community, it can also gain your business exposure to a whole new range of potential customers.
A manufacturer of wedding albums provides another example of successful strategic alliance creation. Worried by stagnant sales, she decided to think more widely about the whole wedding process. This led to the realisation that an album was just one part of a wedding party’s needs. The broader needs included a venue, a caterer, a photographer, entertainers and venue decorators. If she could form an alliance with complementary businesses, she could reach a much wider pool of potential customers. She decided to form a strategic alliance first with a photographer (the closest link) but then to broaden this by including other businesses to form a convenient ‘one-stop shop’ for people planning a wedding. Ask for the related Solution Guide ‘How to develop strategic alliances’.
More common joint promotions often come in the form of banding together to share advertising or marketing costs.
The promotion could be based around an event or a particular location (such as a street or a mall) or possibly both (such as a school holiday event in a mall).
10. Trade fairs
Exhibitions and trade fairs offer good opportunities to gain new customers. Don’t be put off by the cost of renting a stall or exhibition space - there is always the possibility of ‘piggybacking’ on the stall of a complementary business, or of forming some kind of joint venture. For more information, see the Solution Guide, ‘Are trade fairs and exhibitions worth it?’
11. Website promotion
Your website (and an associated email newsletter) offers many opportunities for attracting more customers and building sales. See the Solution Guide, ‘Advertising your Internet site’ for some relevant ideas.
Monitor the success
Finally, remember the first principle of good marketing: always monitor the results. Work out a breakeven point for each promotion and then monitor the results to see if you have made a profit or loss on the promotion. This is the best way to find out what is effective and what is a waste of money. It also allows you to fine-tune your efforts. For example, you can run two adverts, or send out two different direct mail letters, with different wording and check the results. Once you find a profitable formula, you can repeat it until it stops pulling in customers.
If you don’t monitor results, then it’s hard to tell what is working and what is a waste of money. So include coded coupons on all adverts, or use a ‘bring this in for a 10% discount’ type wording so you can record the success rate. The better your monitoring process, the better placed you will be to spend your marketing budget productively.
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