Are You Missing ‘Hidden Gold’ In Your Business?

Business is a funny old game, and it’s quite amusing how valuable lessons can land on your lap at...

Hidden Gold In Your Business

Business is a funny old game, and it’s quite amusing how valuable lessons can land on your lap at the strangest of times. I’d like to share a story that I received recently. During what has turned out to be an incredibly busy month, and in search of respite, the magnetic draw of the Norfolk seaside, seemed too hard for me to resist.

One morning, my father-in-law, Chris and I were taking a walk with Maple asleep in her pushchair along the seafront promenade in Cromer when he shared an interesting story from his days of running his business.

Chris owned and operated a milk delivery franchise and had done since the early 90’s. What he shared with me, had clearly held strong in his mind some 30 years on. It centred around one of his former customers, an accountant.

Chris had been on the lookout for a new accountant, when a customer of his professed he could be the person to help.

Whilst at £300 a year (it was a lot of money back then, Chris informs me), it wasn’t necessarily a bargain price, but Chris had taken value from the fact that they already knew each other, and he had no reason to doubt his capabilities.

The first 12-months passed by and the accounts were submitted as agreed with no hitches or glitches at all.

It wasn’t until the 2nd year, that Chris found himself in a surprising situation. Shortly after a further routine submission of the accounts, an invoice landed on his doorstep. It wasn’t for the same amount as last year, instead the total had doubled to £600 without prior explanation or warning. Seeking clarification, Chris enquired as to why the price had gone up when the amount of work required had stayed pretty much exactly the same?

Much to his bemusement, the accountant informed him, that the first year was merely a promotional rate and now he’d returned to the full rate.

Having not been informed of this at the time, Chris settled the bill and was left with no choice but to take his business elsewhere. It was at this point that he was greeted with a further invoice of £800 for ‘additional services‘ which he had apparently also received over the past two years but had not been declared until this moment.

Whilst the recount of this story agitated as yet unhealed wounds in Chris’s memory, there’s a very valuable lesson both you and I can take from this, and it isn’t particularly one of pricing strategies for managing customer expectations (although it certainly could be).

It’s a simple lesson of understanding where the real money lies within your business. For many of us it isn’t in the first transaction or even the second. The gold lies in the ability to service your customer’s needs for months, years and even decades into the future, multiplied by all of the new customers they could (and should) refer along the way.

Think about this for a moment. If you’ve been in business long enough, how many customers have been with you for several years? Whilst it would be worth working out the total amount they’ve accumulative spent, they also have some other valuable qualities.

They know you, they like you, they trust you. They’re used to the way that you work and have been trained on how to be a good customer. They clearly value you what you do, or they wouldn’t have stuck around for so long, surely?

Best yet, they cost you a lot less in terms of the money spent marketing and effort to get them to buy more from you.

If the accountant really wanted to make money, he wouldn’t have a short term ‘churn and burn’ attitude, but instead, he’d keep Chris as a customer for 25 years, and have chris recommend at least 5 of his friends, who also went on to stay for years and recommend their friends (this actually happened for Chris’s next accountant).

Whilst it seems that so many business owners are running around like headless chickens looking for new customers, sometimes, there’s gold right underneath their noses, if they only knew where to look.

Acquiring a brand new customer can be one of the most expensive and time-consuming tasks your business can undertake, so take a few moments to think about what you are doing to stay in touch in touch with your existing customers. Don’t forget, they got you where you are today. Show them you care, welcome them back to spend more money with you or at least have them share details of their experience to help with future marketing.

Even if your business doesn’t particularly lend itself to repeat business, then don’t underestimate the long-term game of consistently delivering high-level of value until you build a huge bank of satisfied customers and testimonials in order to lubricate the process at which your authority and positioning allows you to attract new customers.

The theme of this month’s newsletter is one of longevity and simple strategies that you can swipe and deploy to nurture your customers and build value into your business.

The first step for maximising the future return on your long-term relationships is to understand what has already happened so far until this point.

Put a few hours aside to look at your past purchase data on a per customer basis. How many times does the average customer purchase from you? How much do they typically spend in a year? How many years do they stay as a customer? Which products do these customers buy? How many times do they refer their friends?

Until you have a better understanding of these questions, it’s hard to envision how these numbers can be improved over the coming months and years.

If you can’t answer these questions right now, what can you do to monitor and track this going forward?

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