Hi there! I’m Mihaela Akers from www.builduplab.com. Welcome, and thank you so much for being here with me today. This audio training is called “4 strategies to get more profit”.
Now, before we begin, for those of you who are not familiar with my work, I’d like to really quickly introduce myself. I’m a marketer, more precisely, I’m a direct marketer. For the past 14 years I’ve been working with companies big and small, including Ralph Lauren, Gucci, and most recently, MedicAlert, which is a non profit committed to saving and protecting lives. And my work typically entails creating customer focused marketing strategies that bring in more profit and that also, at the same time, create customer loyalty. I’m not interested in short term wins, but only in the wins that ultimately translate into a more meaningful customer experience.
Builduplab.com is my corner on the internet, where I share my writing and my online classes with others.
And this audio training is for anybody in business. It doesn’t matter if you’re a business owner, a marketer or any other function in a business, if you’re here, you’re here for a reason and I sincerely hope that what I put together for you will be helpful in one way or another. I do want you to know that after you’ve listened to this audio, or after you’ve read the transcript, if you’d like to reach out to me and tell me what you thought, I would love to hear from you! I really really would, I promise you. So, just reply to the email you see from me in your inbox or email me at firstname.lastname@example.org, and let me know what you thought, and also let me know it there’s anything in this training that you’d like me to expand on at some point in the future.
Now, let’s dive right in.
The first strategy is to make customer retention & loyalty a strategic objective in your business.
A loyal customer is a customer who pays attention to you, who buys again and again from you, who refers others, who feels an attachment to you, and who feels some form of fulfillment from doing business with you. I call them “life-long” customers, customers who have a relationship with you for life. They buy from you, they spread love and good words about you, and they’re just a joy to work with.
Customer retention and loyalty is my favorite marketing topic. The reason why I love it so much is because I deeply believe that the purpose of marketing should be not only to generate sales, but to also make your customers feel appreciated and heard and seen and adored. And that’s what a customer retention and loyalty strategy helps you achieve.
Yes, you make more profit when you get more retention and loyalty. There’s that one study from Bain & Co, that says that a 5% increase in customer retention leads to an increase in profit of 25-95%. Even though I’ve seen different types of increases across different businesses, what’s always clear is that there is a hefty increase in profit when you’re able to better and for longer retain your customers.
So, yes, there is more profit.
But profit is a side effect from the work you do to make your customers feel heard and seen and adored, which is how they want to feel. And I don’t know about you, but to me that’s where the fun is. Sure, it’s fun to collect the profit at the end. But that doesn’t compare to the long lasting and energizing fulfillment you get from doing the daily work of helping your customers feel joy from doing business with you.
Now, do you know what the biggest killer of customer loyalty is? It’s so simple, you’re going to laugh. The biggest killer, from what I’ve noticed, is NOT trying. Not making retention and loyalty a strategic objective in your business, and not doing the legwork required. It’s not rocket science, but you do need to set the ground for loyalty in order for you to get it from your customers. Customer loyalty, like everything else that’s meaningful, does not happen by accident. You’ve got to decide you want it, make it your strategic objective and then you’ve got to do the work.
Now, I want to give you two keys to creating customer loyalty in your business.
Key # 1: build an emotional connection
And I want to share something here. This is my favorite story, so apologies if you’ve heard me say it before. Years ago, I met a loyal client in person at an event. This was a loyal client to the company I was working with at the time, which was a company with a strong brand, that sold luxury products.
This client and I were talking. And at one point in our informal conversation she told me something that I remember clearly to this day:
“It’s unbelievable how much work and preparation goes into each of your products. To me, each product is a unique work of art.”
It was this last part, “a unique work of art” that stuck with me to this day.
It was true that a lot of preparation went into making each of our products, but the reality was that our products were produced in as large numbers as those made by any other company in that industry. So, they certainly weren’t unique works of art.
But my client’s perception was different. She looked at the product she bought not as something you use or consume, but as something you hold and cherish, something unique that gives you as much fulfillment as a work of art would.
And I realized then, that what she was buying was not a product, not a logo, and not a status either.
What she was buying was a feeling that deeply resonated with her, a feeling that added more meaning to her life.
That’s why she felt such a deep connection to our products and our brand, and that’s why she was willing to pay a premium price, buy again and again and refer other clients to us.
You see, people make buying decisions based on their emotions. Loyalty itself is an emotion. Loyalty is something you feel. Loyalty comes from relationships, not from tricks and shortcuts. That’s why, creating an emotional connection matters.
Key # 2: create end to end automated customer journeys
And there are two things within this concept that I’d like you to remember. First, the word “journey”. There is a journey that your customers take with your business, and it’s important to acknowledge this. They don’t feel the same way when they first meet you, as they feel after they buy from you for the first time, as they feel after they buy multiple times and multiple years. There is a journey, and this journey takes the path that any relationship takes, you see.
And second, I’d also like you to pay attention to the words “end to end”. The key here is to not just create a journey, mindlessly, but an end to end journey. End to end, from beginning to the end. Not just to get people to buy, but to also create an amazing post purchase experience after they buy. Not just to get them to buy again, but to also get them to become and remain VIP customers.
And since I’m on the topic, I’ll share with you, and I hope this helps you, that one of the things that I recommend to every company is to create a VIP customer appreciation program, which consists of gifts and experiences created specifically for your VIP customers. The story of the woman that I just shared with you a couple minutes ago was a client I met through a VIP customer appreciation program we created in that one company.
You know, one of the biggest mistakes companies make is to spend most of their efforts on trying to convince uninterested people to buy, instead of spending most of their efforts on trying to strengthen the relationship they have with their loyal customers.
And this brings me to something really important about your customer journeys. The end of their journey matters. You see, when it comes to end to end journeys, most experts spend most of their time on the front end of the journey, the “funnel” they call it, but the most important part of the journey is what happens AFTER they buy, after they come out of the funnel, not before. That’s what truly sets you up for retention and loyalty.
Now, if you’re interested to learn more about how to make customer loyalty the norm in your business and make more profit with retention, I have a training program that I created specifically about this topic, called “Lifelong customers”. There, I walk you step by step through all the touches you should create in your customer journey, how to build an emotional connection and much more. Depending on when you listen to this, it may or may not be open for enrollment, but I do want you to know that the resource exists for you. And if you’re on my email list, you’ll be the first to know when doors open.
Ok, now let’s move on.
Strategy #2: Apply direct marketing best practices
Direct marketing is my area of expertise, this is what I’ve been doing for the past 14 years today. You know, my dad used to be a math teacher, before he turned business owner in his late forties. And I remember one time as a child, I asked him why he loves math so much. And he said to me “I love it because math is the most rigorous field that I know”. I had no idea what rigor meant when he said that to me. Well now, as an adult, I know very well what he meant. And that’s one of the aspects that I love so much about direct marketing.
Direct marketing is rigorous. There’s no fluff, no second guessing with direct marketing.
The reason why I say “best” practices here is because, you see, these practices are all things that have already been tested and perfected by companies that have millions and millions of dollars to play with. That’s why I say “best” practices. You can reinvent the wheel if you’d like, but it’s not necessary in this case. Direct marketing, like math, is a rigorous field, where the groundwork, the basic formulas have already been discovered.
And that’s not to say that you shouldn’t innovate. That’s not what I’m saying at all. What I am impressing upon you is that there are certain practices that work the best and that if you don’t have millions of dollars to play with, it’s better to stick to what works, and then make your innovative discoveries in addition to implementing direct marketing best practices.
And I’ll share with you here three best practices.
Best practice number #1: Customer segmentation
Customer segmentation means two things: First, that you create meaningful customer segments (for example, my favorite of all are the two segments of prospects and customers, or you could have women, men and so forth as separate segments), and then second, what customer segmentation means, and this is the most important part - that you communicate differently with each segment, that you speak to each segment in their own preferred language, the language that makes them feel the most respected as individuals and that truly reaches their hearts.
Best practice number #2: Measure with a control group
This means that you measure your efforts with a control group of people who don’t receive that particular marketing communication. For example, your direct mail. You can have tracking codes, coupon codes - none of that matters anymore. What matters the most is how much more the people who receive that direct mail respond than a like group of people who don’t receive that direct mail. And the reason why you want to do this is because your customers may shop from you from your website whether you send them that direct mail or not. So, the only way to know for sure if you should invest money in that direct mail, is by holding back a control do not mail group of people. And you can do the same with email or any other direct marketing channel you use.
Best practice number #3: Don’t put all your eggs in one direct marketing channel
What I’ve personally seen in my career, and this might be helpful to you, is that the people who receive communication from more than one direct marketing channel have a higher lifetime value than the people who only receive communication from one direct marketing channel. So, it’s better to not put all your eggs in one basket.
Then, moving on…
Strategy #3: Use your customer data
Socrates said that “an unexamined life is not worth living”, and that applies to business as well. An unexamined business is not worth building. My goal and my desire for you, whether you’re the owner or the contributor, is that your business, grows and grows and that it truly fulfills you and satisfies you in every way in which you want it to. But the only way in which it can grow is if you know what works - so that you can amplify it and build on it - and if you know what doesn’t work, so that you can eliminate it. And that’s where your numbers come in. You have to calculate the right numbers and then use them to make decisions.
And the right numbers are not the number of likes, clicks or followers. Please, you’re smarter than that. In the end, these numbers are not only meaningless, but also harmful, because they take your attention away from what truly matters.
The right numbers are the ones that are about your customers, and more specifically the ones that help you inform the business decisions that can ultimately affect the experience that you create for your customers.
For example, knowing your profit per customer tells you if you run your business in such a way that you have money left to improve the experience you create for your customers. And you do need to think about that - improving the experience you create for them. The way I see business is that you create something you love. When you sell it, you create value for others, which means that you create value for the world at large. But when you get that money from the customer who buys from you, you can now create even more value the next time somebody else buys, because now you have more money to create an even better experience for your customers. And so, business making is a cycle that makes the world expand with every customer relationship. And that, my friends, is a very beautiful thing.
But you’ve got to know your profit, before you can know how much money you can invest back into your customer experience.
And finally, the last strategy is pricing.
Strategy #4: Price smart
First off, I want to share with you that what I’ve seen is that pricing is something that depends highly on your unique business. This is one of those things that is truly unique to your business. So, marketing advice like “the more people pay for your product the more value they get out of it” is nonsense. I’ve seen free products that were used much more and enjoyed much more than similar products that cost $2K. Also, marketing advice like “giving your product away for free means that people will never pay a high price for your other products”- again nonsense, in my experience.
My general advice about pricing is to first and foremost focus on the quality and depth of your product and on the care and attention you put into your product. And then, charge a price that gives you a margin that allows you to reinvest money back into your business.
Now, that being said, I do want to give you here two tips for how to make more profit with your pricing.
Tip #1: reduce the costs of “time” and “space”.
Here’s what this means.
There are 3 costs that customers pay with, there’s time, money and space. That’s because, think about it, time, money and space are usually the only 3 things that people feel like they don’t have enough. They feel like don’t have an unlimited amount of time, money or space at their disposal.
Time is - does your prospect have to give you a chunk of their time to use your product? For example, when people buy a book, it’s not just the $20 they have to spend to buy the book, it’s also the time they’ll have to spend reading the book afterwards that matters to them.
Money- this one is obvious. It’s the price. It’s the $20 you spend for that book.
Space - this one is least obvious. It’s the space your product will occupy in your prospect’s home, on their computer, on their phone, in their car, in their garden, or anywhere where there is a limited physical space. For example, when you buy a chair or a painting, you’re giving away space in your house, not just money. You may also be giving away the freedom you may have felt in connection with that space, because that space can no longer be occupied with anything else.
So you have three costs that people pay you with. If you want to increase the price, the money cost, you have to reduce the other two costs. Then the sum of the cost people pay you with stays the same, but you get more benefit, because you get people to pay you a higher price.
So, look inside your business and find all the little areas where you can reduce the time and space your customers give you. Can you make it easier and faster for people to buy from you? Can you create cheat sheets that make it easier and faster for people to consume your content? Can you allow people to try out a piece of furniture before they commit to buying it? There’s various ways in which people give their time and their space.
Tip #2: find the low hanging fruit, where you can increase your price without reducing demand.
There’s research that shows that people buy more when the price ends in 9 than when the price ends in a smaller number. So, as an example, if you have products that cost 44 dollars, you can increase that price to 49 dollars and make more money. Here, what you’ll want to do is find your products that don’t end in 9 and then, if this works for you, change their price to end in the nearest nine.
Ok, we talked about four strategies, about creating your customer retention and loyalty strategy, about applying direct marketing best practices, about using your customer data and about your pricing.
And now, that was all I wanted to cover with you in this training. But before you go, I want to tell you thank you for being here with me today. Thank you for caring about your work. I hope our time together was helpful for you, as you build up your business.
And please, keep in touch, feel free to reply to my emails that arrive in your inbox, feel free to reach out to me on social media, or wherever works for you. Thanks again, and all my very best to you.