Top 10 Reasons Businesses Fail: Number 8 – Operational Mediocrity.
How many owners like to say their business is mediocre? The bottom line is that some businesses have to be average because everyone can't be above average, but maybe you should leave that up to the other businesses. Repeat and referral business is critical for the survival of a business, but not for the growth and success of a business. I know this sounds odd and most of you believe you have to spend dollars on keeping your existing customers. Think about your own experiences as a consumer and my point will make sense to you. I have been with the same cell phone company for 15 years. Why? Because the product is good, the service is good and more importantly, they have never done anything to turn me off and make me look to stray. Once a consumer purchases a car from a dealership and has no major service issues, there is more than a 45% chance that they will go back to that same dealership to purchase their next car without even visiting another one. While this is fine for getting repeat revenue, it doesn't do a lot to bring new business, except for the referral factor.
If you want to increase business and make your revenues grow, you have got to spend your resources and time on obtaining new clients. Why do you think cable companies offer specials for new customers and nothing for existing customers? Develop your marketing plan and notice that I didn't say sales plan or advertising plan.
The marketing plan uses the 4 P’s, also called the marketing mix. Product, Price, Place, and Promotion. You need to evaluate and execute all 4 aspects of marketing to successfully grow your business:
1. Product – This is the product or service you offer. Does it fulfill the needs and wants of your consumers? How is it different from your competition? Will it have longevity in a changing market?
2. Price – This is the cost of your product or service. Cheapest is the worst thing you can be. People really do believe that you get what you pay for and if you spend $5.00 on a diamond, chances are you didn't get a diamond worth $5.00. Rather, look to build value in your product or service? We pay 100 times more for a Rolex than a Timex, when a Timex seems to tell time more accurately. Rolex has the slogan “The crown of achievement” and bases its value on the idea that if you can afford it, you are successful.
3. Place – This is where your product or service is available. Where/How can your consumer get your product? Retail locations, online, special events, etc…If you can’t get your product readily to market, you will never be successful.
4. Promotion – This is your typical advertising or sales plan. What type of advertising works for your product? How do you measure ROI (return on investment)? Offer $100 off in your radio ads, $75 off in your print ads, and buy one get one free in your television commercials. By doing this, you will know where your consumers heard about you based on what they ask for. And notice I said sales plan. It should be written. Base your employees’ bonuses and pay plans on Customer Lifetime Value (CLV) instead of on number of sales or amount of revenue immediately brought into the company.
Written By Ameen Walker