Giving Customer Incentives Will Grow You Rich

Do you run a business? Is your product so unique that it cannot be bought from anywhere else? Is your price the lowest customer can pay in the market place? Is there any other reason why your customer must speak to you fist before placing order with any one else? May be you provide a great service… may be you give your customer a satisfaction guarantee that your competitors cannot beat or come any where near to.

As a business owner, you probably recognise one fact – competition is fierce. It is not getting easier to do business and prosper unless you offer your customer that no one can. In other words you must differentiate yourself from your competitors so that when they think of buying the service or product that you offer they think of you.

Business consultants offer many recommendations for doing that. Competitor analysis… branding… product-sourcing strategies so that you get them cheap…and so on and so forth!

From my experience working with small to medium sized business owners, I am certain that the following one strategy works better than any other consultant speak. Make your customer want to give you more business. If your customer is willing to come to you fist before going elsewhere, you have foundations of a very profitable business. But how do you do that? Surely it is easier said than done, right?

It is in fact easier done than said. A small business I know of operates in insurance industry. He has been in business for years so he had plenty of experience of closing the deals. Because he knows his way around the industry, he can get good deal according to the requirements of his clients for them to put pen to paper. He was doing fine but he wanted to grow faster than his competitors. So his problem was to generate leads on the front end.

Every one in his industry was advertising in newspapers and other media outlets to generate leads. He took a creative approach. He stopped advertising and started to approach his existing customers for referrals. He offered them an inducement that not many could refuse – free week long vacation for two to almost anywhere in the country in return for introductions to their friends who may be interested in his services. His existing customers were already happy with the service they got and didn’t mind introducing friends. His new customer acquisition costs came to halt and customer database started to swell. His costs of give away vacation incentives: None! This was a win-win situation all around.

Businesses do not have to come up with large advertising or marketing budgets to generate fresh business. If you already have existing customers than they can be the best source ore business. In a study published in Harvard Business Review not very long ago, it was concluded that 5% increase in retained customers increased the profitability by an average 80% for most industries. Existing customers are your gold pot. By being creative you can use that resource to get even more customers.

And yet most marketing departments spend more than 50% of their budget on new customer acquisition who are least profitable in the first place.

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