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Subject: Why Good Small Businesses Are Struggling To Survive

Author:
Dennis S. Vogel

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Date Posted: 20:13:22 05/22/01 Tue

Somebody asked this in another forum I'm
involved in-
>Can someone tell me why these 98% of small
>business provide better services but still
>struggle to survive?
The whole answer to this question would re-
quire more space than is available in this
forum.
My short answer to his question is-
The best product/service, even ancillary cus-
tomer service is unprofitable unless it's
properly marketed.
Some small business owners say they rely on
Word Of Mouth. So, of course, they're
struggling.
Referral marketing (please don't call 'Word
Of Mouth' a form of marketing unless it's
managed)is good but not effective if the
business's customers aren't articulate or
motivated enough to refer their relatives
and friends to the business.
Some businesses use customer testimonials
that are just generalties like-
"It was terrific." JM St. Paul MN
This is the way some people talk about their
good experiences with businesses. That's why
referral marketing doesn't always work.
When you talk to customers, ask them for
specific examples of what pleased them. That
will give you better feedback that you can
take action on (implement on a wider scale)
and also may help them bring you referrals
because they'll have something specific to say.
You may have to softly coach them by saying
something like-
"So, what you're saying is- We took the time
to find out what you needed instead of trying
to sell what would bring us the most profit.
Is that what you mean?" Then when they talk
to others they'll have a clearer statement to
make.
Wal-Mart goes into its stores and makes com-
mercials that seem like real testimonials
from customers and employees. W-M spends big
bucks on airing them. (They should, however,
be required to post the notice "Your actual
experience may vary." Or "WILL vary.")
Small businesses don't have enough money to
match that. But small business owners have a
better chance (than big businesses) of
tracking who refers others to them. By
tracking it, business owners can thank and
maybe reward their vocal customers.
Remember that whichever behaviors you praise
a person for will probably be repeated.
People want positive strokes
There are some other methods of encouraging
referrals that I'm including in my Marketing
Report about Referral Programs. Unfor-
tunately, I've been very busy lately, so I
haven't finished it yet. I plan to offer it
to subscribers of my future Thriving Business
e-zine. Oh yeah, that's something else for me
to work on.

I recently read an article in Zig Ziglar's
e-zine. I'll quote part of it then I'll write
my view.
You can subscribe to his e-zine by visiting
his site- www.zigziglar.com
>Keeping More Of Your Customers
> By John P. Hayes, Ph.D.
>Why does your business lose customers?
>Studies of customer defection tell us
>that 3% of customers move away or die;
>5%, friends lead them to shop elsewhere;
>9%, competitors provide a better offer;
>14%, product dissatisfaction causes them
>to shop elsewhere; and 68%, indifference
>makes them feel no one cares about them,
>so they spend their money elsewhere.
>Notice: More than two-thirds of customers
>defect because of indifference!
>There's not much you can do about the 3%
>of customers who move away or die. Nor can
>you do much about the 5% of customers
>who are persuaded by friends to shop elsewhere.
I disagree. I know there are things business owners
can do to prevent defections. Below is one of my
proposed solutions.
Institute A "Defector Detector Program"
Post a message (send it if you have a mailing
list) that "We're Looking For Defectors."
Let customers know that you're interested in
knowing why they buy from your competitors.
Ask what it would take to keep them as a
customer.
Yes, I realize that some may just say that
they're leaving you to get some kind of
concession, but wouldn't it be worth it to
stop as many defectors as you can.
Whatever it takes to keep a customer, it's
apt to cost more to replace a lost customer.
How else will you easily find out what your
competitors are offering AND what is inter-
esting to your customers?
By doing this, you may not only keep a cus-
tomer, but gain the vocal, evangelical person
who (almost) persuaded your customer to
switch sides. This "evangelist" would be a
valuable member of your team, right? How many
people might s/he convert to you?
This will also show the 9% who may think that
you're indifferent, that you really care.
I know that spending levels vary from cus-
tomer to customer, but can you afford to
lose 14% (5% + 9%) or more of your profits?
This program may cut into your profit margin,
but losing and replacing customers will
definitely cut into your profit margin.
If you invest 10% of your profits to keep
customers (you would otherwise lose), you'd
still probably save four or more percent.
This is besides what you'd gain in referrals.

Dennis S. Vogel
No competitor is invincible. You don't need
a miracle. Your business will THRIVE if you
have the right marketing.
http://www.thrivingbusiness.homestead.com
http://wz.com/business/SmallBizThriving.html

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