How do we measure success in a business?
Updated: Dec 12, 2019
It’s the dream of many small business owners to have a large business with a hundreds of customers. They see this as a sign of success. But masses of customers is not a true measure of a business’s success. In fact many times, the point at which established companies fail is when they try to serve too many customers – or rather the activities involved in acquiring these new customers and then maintaining them proves too much of a burden on the organization.
How is this possible?
Every new customer you bring into your business requires an additional investment in time and money in advertising and marketing, and the manpower you need to sell to these potentials. For example – you may have launched an ad campaign on social media or published a series of ads in a magazine – each of these actions cost you time and money. Once the campaign is underway, you need to have the staff to actually sell to the customer – to answer their questions and then to direct them to buy from you.
In addition, a business may have added the “burden” of special offers to bring in customers – such as free service for a limited period of time or heavy discounts on premium services for first-time customers. These discounts can mean a temporary loss or reduction in revenue, but not a reduction in the manpower needed to provide these services, which puts a further financial burden on the company.
Now consider the fact that serving a new customer is more expensive to your business than serving an existing customer. New customers need more handholding and more reassurance that they made the correct decision when they chose you over the competition. New customers require more expectation management than an existing customer who understands your service package.
Acquiring a number of new customers at one time creates stress on your overall business resources. It is a mistake to think that if you can handle five customers on your own, hiring one additional employee will enable you to handle twice the number of customers; the math just isn’t that easy and straight-forward. Your physical resources can be strained as well, for example one phone line may not be enough to handle all your customer calls, your WIFI may be too slow to deal with your online communication needs, your small office or home office or neighborhood coffee shop may no longer provide a professional business-level venue your new customers will expect.
Acquiring twice the number of customers does not ensure that you will double your revenue!
You cannot consider the addition of new customers as an additional revenue stream that flows directly from the customer’s pocket into your bank account. If you acquire too many new customers too quickly or your calculations for per-customer-upkeep and maintenance is unrealistic, you can find yourself in a situation worse than not having enough customers and that is: having too many unhappy customers.
What’s the solution?
Before soliciting new customers – consider adding or extending the package of services you provide to your existing customers. You have already proven yourself to these customers; you know them and their needs and you have built up a level of trust. The investment in time and resources into upselling - that is selling existing customers additional, higher-priced services - can have a better ROI (return on Investment), than casting your net further afield to new, untested customers.
How to put the solution into action
Look at your current customer profile list and your service package and identify the areas where you can provide higher ticket (higher priced) services, or a fuller package of services. Brand and package these services. Now you’ve created the perfect reason to reach out and contact your customers and tell them about your new or improved line of services and sell to them.
Invest in expanding your business relationship with your existing customers. Once you’ve accomplished this, you can begin to evaluate and calculate the resources and investment you need to market, sell, deliver and maintain new customers.
Do you want to open yourself to a more successful business? Are you lost in the social media jungle? Let me help you re-energize your business and rediscover your passion in your profession. We’ll work together to improve your online exposure and find the perfect target markets for your business.
Contact me today to schedule a free introductory meeting. Yochi Eisner | 052-3413249