(Temporarily) forget your product and build a relationship

(Temporarily) forget your product and build a relationship

The term “build a relationship” is tossed around in sales frequently, but effective salespeople understand that it’s more than just a catch phrase. Going into a conversation with sales in mind ensures any effort you make to get to know the prospect will feel manipulative to them. Instead, push your business and your product to the back of your mind and focus on formulating an understanding of what your prospect is looking for as well as who he or she is as a person. Learn their business, chat about sports and family, and take detailed notes. Building a relationship happens over the course of several conversations, making for a rather lengthy process, but it results in loyalty and trust. Remember, you’re not just trying to make one sale – be in it for the long haul.

Be an expert, not a salesperson

People respond best to someone who knows the entire industry rather than just the product or service they’re selling. Spend time each day staying abreast of current trends and news in your industry, and determine how that ties in to what your business offers. Approaching prospects with this information elevates you to an expert, not just someone grabbing for their wallet, and also affords you the opportunity to tailor your pitch to come out ahead against competitors.

Don’t overwhelm – minimize choices

Wander around any big box retailer, and you’re quickly inundated with choices. Extrapolating that to assume that your business prospects want the same level of inventory is a huge mistake. A study conducted by Harvard found that the more options potential customers have, the less likely they are to complete the transaction. And this is where ample research prior to contact, building a relationship with your potential customers, and ensuring you’re an expert in your field come into play. With this information at hand, tailor your offer to include what you know will best serve the prospect. Move away from “we offer this, this, and this over here” and focus on “this product/service can do X, Y, and Z for you”. Instead of making a choice between services, prospects make a yes/no decision on your business, which increases the chances of a sale.

Ultimately, effective sales tactics are less about tricks, and more about working with people to come up with a solution that actually helps them.

Using negative feedback to your advantage

Negative reviews repel potential customers, and if the review goes viral, it can severely or permanently damage your company’s image. But it doesn’t have to be that way. An articulate, thoughtful response lets you utilize public criticism to promote your brand’s integrity, bolster the trust your happy customers have in your company, and draw in new customers. The trick is handling each review promptly and courteously, and adjusting your business practices as applicable to fix underlying issues.

A few quick tips:

• Check Yelp, Google, Facebook, and other review sites where your business is listed on a daily basis
• Respond to authentic negative reviews, but ignore “troll” comments
• Post publicly as often as possible, or post on the site stating that you’ve contacted the reviewer privately

Be prompt, but strategic

No matter what the customer is dissatisfied with, you’ve poured your time and effort into your business, so it’s sometimes difficult to not take the criticism personally. Recognize that and, if necessary, give yourself some space before responding. Even if you think you’re being professional, responding while angry, frustrated, or annoyed easily comes through in your tone. This results in an angrier customer, and paves the way for a back-and-forth that does not cast your company in a flattering light.

Be receptive, not defensive

Your goal in responding to lackluster reviews shouldn’t be defending your company. It should, at minimum, let the customer know that you hear them and understand their issue; at best, it should provide a solution that turns an angry customer into a satisfied one. Instead of trying to defend your company’s honor by offering excuses, tell the customer that you’re taking their criticism to heart and working to ensure that the situation doesn’t occur again.

Be apologetic and empathetic

Offering your customers empathy prompts loyalty and builds trust. Sometimes a customer is just having a bad day, sometimes the experience was completely outside of your control, and sometimes your business truly messed up. But the end result is the same – your customer needs you to apologize for their experience and empathize with how it affected them. This not only works to tone down the individual’s anger, but also shows anyone who’s reading the interaction that your company cares about its customers’ experiences.

Stay solution oriented

While there are cases where all you can do is apologize, strive to be creative and thoughtful with offers to rectify the issue. Apologize for a delay in shipment that made a birthday present late, and then offer free, fast shipping on the customer’s next order. Meet a complaint regarding the quality of a service provided with an offer to redo or fix the project or job free of charge. Offers of refunds or coupons are also worth their weight in gold, provided you use them in situations where they’re warranted. Handing out a coupon for every single bad review, no matter the merit, hurts your bottom line and gives the impression that you’re trying to buy off angry customers.

By responding publicly to negative reviews in a receptive, empathetic, and helpful manner, you cement your company as truly customer oriented, and give your satisfied customers proof that, should they ever have an issue, you’re willing to help. And sometimes, you’ll manage the seemingly impossible: turning an angry customer into a loyal one.

How much should you spend on customer acquisition?

Customer acquisition cost (CAC) is the price of turning a potential customer into an actual customer. You’ll often hear the acronym or phrase tossed around by investors as a factor in determining the viability of a startup, but a slightly simpler CAC calculation aids you in honing your marketing techniques.  Knowing and understanding your business’s CAC, as well as each customer’s lifetime value (LTV), gives you a starting point for increasing the effectiveness of your advertising and promotional efforts. This information is especially important when working with a smaller budget – every cent spent on marketing should provide a concrete benefit to your business.

Calculating CAC

Start with this basic calculation: divide what you’ve spent on marketing over a set period, such as the last year, by the number of new customers you’ve earned during that same period. If you’ve spent $2,000 during the last 12 months on marketing, and acquired 500 new customers, your CAC is $4 per customer.

Calculating LTV

Just $4 to draw in a new customer sounds good, but depending on your customers’ habits, it could be terrible. This is where LTV comes into play, which is essentially how much money a customer will spend over the course of their relationship with you.

Look at the average amount your customer spends per transaction and how frequently they make a transaction. If you spend $4 per new customer, and that customer regularly makes $50 purchases, of which you net $20, those few dollars up front translate to a pretty good deal for your business. But if the new customer only makes one $10 transaction, and never comes back again, the $10 transaction minus the $4 CAC likely puts your business in the red.

Use your records to make an educated best guess based on how frequently your current customers use your services or shop with you. Multiply the average number of visits a returning customer makes by the net profit you make per transaction. If you own a coffee shop and the average customer comes in twice a week and spends $5 each transaction, of which you net $3, your LTV for a year is $312.

Using and understanding CAC and LTV

Numbers are all well and good, but how you use them matters, and it all starts with how much data you keep on your marketing efforts. Although you can use general CAC and LTV calculations based on all marketing campaigns and avenues to determine how “good” your business is doing and whether or not you need to branch out to find something more efficient, this is really only a step above shooting in the dark.

Instead, track each marketing campaign or avenue separately to determine which campaign drew in which customers. From here, calculate a separate CAC for each campaign to determine which is the most effective, and what you need to alter or cut altogether.

It all boils down to profitability – no matter what your revenue is, if you’re spending too much to acquire low-value customers, your business won’t grow. Pull out your records, do the calculations, and then improve your record keeping on future campaigns so you get an even clearer picture of where your company stands, and where it’s heading.