Bringing Business to Retail
Why You Should Think About Customers BEFORE You Open Your Retail Store
Bringing Business to Retail podcast, episode 10 with me, Selena Knight. Welcome to the Bringing Business to Retail podcast on selenenights.com. Stay ahead of the competition by opening your doors to business experts so you can learn, grow, and be inspired. Passionate about bringing business strategies to independent retailers. Please welcome your host, Selena Knight. Hey there, Selena Knight here and welcome back to another episode of the Bringing Bringing Business to Retail podcast. Today's episode was inspired from a bunch of conversations I've had in the last couple of months. Now, I don't know about you, but a lot of people I've spoken to have said that this first quarter of 2015 has been pretty sucky in terms of customer in the door and turnover. So, I kept hearing people saying, "Sal, how do I get more customers? I just need more customers." And so, I thought, "If these many people are asking me, then I should do an episode on how to get customers." In fact, I was so inspired that you're here right at the end of the interview about something that I've created for you to help you get customers. So, let's jump on in and find out all about our customers. Welcome back. Today, I'm going to talk to you about why it's important to get customers before you open. Now, it's one of these things I find that people get caught out on. They get so excited about opening their store that they kind of forget that they need to find people to come. That whole, if they build it, they will come. There doesn't always work. So, we all know that we need customers. And I'm sure that you've heard that it's far cheaper to market to an existing customer than it is to acquire new customers. And this is true. But you're still going to need customers when you first start out. And you could need a continuing stream of customers as the weeks, months, and years go by. It's just the way business works because it depends on how much, how often your customer is going to come back to you or your customer lifecycle. And it would be great to think that our customers are going to come back to us forever. And there aren't many businesses where that is the case. It may be, but I would think for the majority of people, you have a set period of time where somebody needs your product. And after that, they no longer need it. So you have what's called a customer lifecycle. So some of the things I'd like to talk to you today about how often you're going to need new customers and how much a new customer is going to cost you, how much it's going to cost you to find them and educate them and turn them into a sale. And what's the average spend over your customer's lifecycle? Now, customer acquisition is one of your top three costs in business. You've got rent and wages. They usually make up your top two. And this is excluding stock, of course, and then finding new customers. So it's important to know how much it's costing you and what you're getting in return when you're going out to find new customers. If you have 100 customers in a day that come through your door, and 30 of those actually go ahead and buy, and of those 30 sales, they total $3,000. Your conversion rate is going to be 30%. So 30 out of 100 customers that came in actually went ahead and bought. And they had an average dollar spend of $100. So that's $3,000 divided by 30. And let's say your customer has a lifecycle of one year, and they come in monthly. With an average spend of $100 once a month, over 12 months, each customer is worth around $1,200 in revenue to you. And that's a really important number to know because if you don't know how much an average customer brings you, how much return they bring you, then you're not going to know how much money you can spend to try and get new customers. So you're not going to spend $1,800 trying to acquire one new customer if you know that that customer only brings you in $1,200 worth of revenue. You can take out your overheads, wages, all those sorts of things, cost of goods, and come up with a figure. Now let's just say that that $1,200 figure calls back to $400 once you've taken out cost of goods and overheads. So you know that you can spend up to $400 to acquire a new customer and still end up cost neutral. Now how much you want to profit out of that you have to work out yourself. But once you've worked out your average dollar spend of a customer and the customer's lifecycle, you now have a basis for being able to market to them. Now in business, we know a customer needs to build trust before they go ahead and buy from you. They need to know you and your reputation and your product or service before he or she is willing to make a purchase. And if you've already built trust, then an impulse purchase is exactly that. It's an on-the-spot decision to buy from you because the customer has already bought into what you're offering. However, for most businesses, a customer will need around 5 to 12 touches with you. Now these touches are interactions and that can be something as simple as seeing your sign or looking in a window, a friend mentions your product to them or they saw a catalog or they visited your website and they say seven is the average. Seven touches before a customer goes ahead and buys with you. So how do we go about building this trust? A customer is going to buy from you when they know, like and trust you. So how can you ensure that you're satisfying these customer pain points? So let's talk about the no, so no like and trust. I find it starts with first impressions. Now I don't even, they say first impressions count and they really, really do. What is the first thing a customer sees when they view your store, whether it's from the outside or whether it's your website? Because it's your job to make sure that every part of this first site resonates with what your brand's values are and how you want to be perceived. First contact count and it's essential that even if an existing customer is mentioning your brand to a friend that the words that they're using convey your brand's persona and this is super important to get right from the ground up. Having your brand's values communicated in a clear and concise manner to everyone who works with you is the first step to ensuring that that message is consistent all the way through a customer's interactions with you. The last part of a potential customer getting to know you is to make sure that you're unique. There's a reason that every business coach and every marketing person will always ask you what your unique selling point is or your USP and that's because if you don't have one then there's no reason the customer should buy from you when they've got dozens of other options. If you don't convey why you're different you make it difficult for a customer to know exactly who you are. Okay so so far we've covered how often you're going to need new customers which will depend on your life cycle and how much you're prepared to spend or how much is a new customer going to cost you and we've also talked about getting that customer's trust so no liking and trusting. We've done no and let's get on to like how can you get a customer to like you and getting a customer to like you is not as hard as it sounds. When you've identified who your ultimate customer is you'll know exactly what kind of likes they have or you'll have a pretty good indication. You may not actually know your ultimate customer yet if you're just starting out but you'll have an idea of what it is that they like and what their interests are. So you can then go ahead and use this to craft a marketing strategy focusing on those likes and interests. Now of the interest that your customer has which one of these or which ones of these are you actually qualified to talk about. There is no reason going off and talking about skiing if your customer is into winter sports if you have no idea about it. It's going to come across as fake and it's going to come across as not being unique and just trying too hard. So grab the interests that you think your customer has and which ones can you talk about? Which ones can you actually draw on your own experiences to create some content that's going to appeal to your ultimate customer and to make sure you encourage them to go ahead and give feedback to get engaged and to share the information. Because this will come out if you are running from the heart versus writing from doing some research on the internet and having an NFI about what it is you're talking about. So what's essential in this stage is that you're true to your brand. You're being authentic and your information is relevant and your entire approach is consistent because if it's not the customer is not going to like you. They're going to think it's a bit odd. We know they were talking about skiing last week and now they're talking about babies. I don't quite get what's going on here. So you aren't building a relationship with your customer. So that's the like. Nose done, like's done. Let's get on to trust. People buy on emotion and then they go ahead and justify it to themselves afterwards. Now how often have you bought something not on impulse but because you really really wanted it. And then as you walked out you could justify that you bought those new sheets because they are on sale and your current sheets are three years old and they're getting a little bit threadbare. You bought them because you like them. Let's be honest. You like them and you wanted them. So if you've built trust your customer is more likely to feel comfortable with their decision to purchase. But you only get that trust when you've got a relationship. So you need to foster that relationship with your potential customers. Now some of the examples that I would have here to foster some trust would be letting them have a free trial of your product or service. Now the benefits of a bricks and mortar store are that customers can see and feel your products. So make sure that you have samples out. Don't keep everything tucked away in its package. Make sure that you encourage people to pick things up to feel them, to smell them, to try them on because if you're encouraging them to do that you're building trust because if you're saying to someone hey pick this up and smell it it smells so great and it does then subconsciously they have trust in you because you told them that something was going to happen and it did. The outcome was as you suggested so they've built trust with you. So now that we've talked about no liking and trusting we've talked about developing a relationship with your customer and why it's so important. Let's talk about why it's important to know what that new customer costs. Knowing how much a customer brings in, how much revenue a customer brings in and how much you can spend to acquire them will help you work out whether your campaign has been profitable. It will also help you work out if your campaign is being successful and it will help you budget for marketing expenses and to help you plan future campaigns. So speaking of campaigns how can you assess the success of a marketing campaign? That's a bit of a tongue twist up and this is a little bit of an aside but I think it's really really important to point out. When you do a marketing campaign you need to know what your desired outcomes are. It's really easy to get caught up in the dollars so how much did a campaign cost you versus how much revenue it brought in but you also have to factor in another side of the equation. How many potential customers did you get? Now remember right at the start we talked about a potential customer and potential customers are great because they've already had an existing contact with you so it's a lot easier to sell to them and a lot of people refer to this as having a customer on your database or a customer on your email list. I point this out because it's important to make sure that you're capturing a customer's data whenever you run a campaign. Don't just make it purely based on revenue because every person that parts with their personal data and it's usually an email address has already indicated that they like or trust you enough to handle this information. It's now about how you go about building the other parts of the known like and trust equation. Each person that goes onto your mailing list is a potential customer so you need to work out what a potential customer is worth to you. I did a little bit of research and an existing customer, so existing customer, one that's really bought from you, is about 60 to 70% likely to buy from you again versus 5 to 20% of people who had no interaction with your brand. That's a huge difference. So when a customer parts with their information to go on your mailing list or onto your customer database they're one step closer to being an existing customer. In fact, I know some people who say that they're already a customer even if they haven't bought because they've bought into your brand and you can then go ahead and mark it to them. You've already got several touches in place, several interactions that you've already had and my guess would be that those people become in that group between the 20% of people who have no interaction with your brand and the 60% that are likely to buy from you again. So instantly your chances of being able to mark it to them and actually have them buy from you have increased significantly. But back to the beginning, why is it so important to get customers before you open? I'm hoping that you can see now that building this relationship with a potential customer is going to take time and effort and probably some money. When you decide to open a store you've got months sometimes even a year or more before you actually open to start developing those relationships to get a customer to the point where they know, like, and trust you to get them on board with your brand. And if you wait until you open your store you may have the initial flux of customers for the first week or the first month but if you haven't made the effort to build a relationship those customers are going to have no reason to come back to you. Word of mouth is super important and if you haven't clearly conveyed your brand message to customers they'll find it really difficult to tell other people why they should come into your store. And if they can't instantly grab words that describe you they're just not going to bother to actually talk about you. Like if you can't say oh I went there and it was beautiful and it smelled so good and they had all the stuff out so you could actually touch it. If you don't actually know why you liked it you're probably not going to tell anybody about it because we don't like to feel like idiots do we? And if you can't think of the words to describe why it was you liked something you're probably just not even going to mention it. And having a steady stream of new customers is key to keeping your business thriving. As a customer gets to the end of that lifestyle that we talk life cycle that we talked about not the end of their lifestyle hopefully you need at least one new person to replace them and preferably more than one so that you can actually grow your business. And I know how difficult this can be. I know first hand because I've been there. So to help you I've developed a free course to help you get customers before you open your store. Now even if you already have a store that's already open there's loads of stuff in here that you'll find helpful. It's called the 21 day boutique bootcamp. It's free and if you head on over to thecelynonight.com website you can sign up for free. Have I mentioned it's free. I've had loads of feedback from the beta testers and they love the information that's in there so I'm hoping that you'll find it super helpful too. Thanks so much for being here on the show with me today. I hope the birds in the background the lorokites they're super noisy. I hope they weren't too distracting for you. You can find all the information about the 21 day boutique bootcamp over on thecelynonight.com website. You can sign up there and get your free challenge that we'll be launching on Friday the third of April Australian time so that's Thursday for most of you people in the US. And until next week where I have a super fantastic exciting and uplifting guest have a safe Easter drive safely be safe and spend loads of time with your family and friends. I'll catch you on the next episode. [Music] [BLANK_AUDIO]