Five Deadly Mistakes You Can’t Afford to Make in Today’s Economic Climate
There is little doubt that if you are a small business owner you are facing some interesting challenges in today’s economy. If your business is not thriving, there is a good chance that you are making at least one, if not more of the mistakes below. My purpose in writing this article is to help you recognize them and address them--so that you can start thriving and not just surviving!
Mistake #1 -- Treating Marketing and Sales as One Activity
Having worked with entrepreneurs and small business owners for nearly 30 years, I see this time and time again. Marketing and Sales are two very different disciplines. They require different focus, measurement and timeframes.
To use an analogy, Marketing plows the soil and lays down the fertilizer. Sales sows the seeds and tends the plants. You need both if you are going to be successful in your farming or gardening activity.
Marketing requires a long-term focus. Sales requires one that is short term.
John Jantsch from Duct Tape Marketing uses a wonderful definition of marketing: “Getting people who have a need for your product or service to know you, like you and trust you so that when the time comes, they will want to buy from you.”
You must continue to market and sell on a regular basis, or else your business will either die, or you will be living month-to-month forever.
Mistake #2 – Out of Sight Out of Mind
The Referral Institute has the VCP model. It stands for Visibility, Credibility and Profitability. Tying it to John’s definition of marketing, you can see that unless people know who you are and trust you, they won’t buy from you.
My experience with solopreneurs and small business owners is that they do a very poor job in maintaining visibility with their customers and prospects.
According to Chet Holmes, best selling author of The Ultimate Sales Machine, only 3% of people are in the market to buy your products or services at any given time. There’s an additional 7% open to buying your product or service because they are either dissatisfied with their current item, their provider or are just willing to take a chance and change. The remaining 90% are either neutral about your offering--meaning they haven’t decided whether they are interested or not; or they think they’re not interested; or they know for sure they’re not interested.
Since only 3% of your potential prospects and clients are ready to buy at any given time, you need a way to stay visible with the rest. Why? So when the time comes for them to move into the 3% who are buying now, you are the only logical alternative for them. However, this won’t happen unless you stay in regular contact with them.
A personal example has to do with buying ink cartridges for my printer. I typically buy cartridges about four times per year. I had met a fellow who represented a company that offered new and recycled ink cartridges, and I decided to get some from him. It was a convenient way to get cartridges and the prices were comparable to those on the Internet or the office supply store. However, after I had gotten my cartridges, I never heard from the fellow again. When the time came to re-order, I couldn’t find his card. So, simply stated--I ended up buying them online instead.
Mistake #3 – Focusing on Customer Acquisition and Forgetting About Retention
Talk to a small business owner. They are constantly worrying about how to acquire new customers. There is nothing wrong with this except for when they start forgetting about the retention of existing customers. Getting new customers is sexy. Retaining customers is boring.
A survey I conducted last year showed that nine out of 10 small business owners had no formal customer retention program in place. Frederick Reichheld of Bain & Company reports: “Over a five-year period businesses may lose as many as half of their customers. Acquiring a new customer can cost six to seven times more than retaining an existing customer. Businesses that boosted customer retention rates by as little as 5% saw increases in their profits ranging from 5% to a whopping 95%.”
A friend of mine is a financial planner. I recently found from three mutual acquaintances that they had stopped using him and the primary reason they gave was--“I never hear from him.”
Mistake #4 – Trading Time For Dollars
Most small business owners don’t really have a business–they have a job instead. The only way they can make more money is by working more hours or charging more money for the hours they do work.
When you have a job, if you don’t do the actual work, you don’t get paid. So if you go on vacation or get sick, you don’t earn any money. You are in essence trading your time for dollars.
Michael Gerber in his book The E-Myth Revisited goes into great detail about the difference between working IN your business vs. working ON your business. The bottom line is that unless you devote time, focus and money to developing systems (working ON your business), you will never turn your job into a business.
Time = money. When you are trading time for dollars, this is true. However if you want to stop following that equation and free yourself to build your business, the formula changes to Relationships = Money. The more you can build and leverage your relationships, the more money you will generate.
Mistake #5 – Having No Systems in Place –
Particularly For Follow-up or Staying in Touch With Customers and Prospects
Most small business owners and entrepreneurs attend networking meetings and meet people on a regular basis. However as we mentioned in mistake number #2 . . . Out of Sight = Out of Mind. Since only between 3% - 7% will be purchasing right away, the rest of these prospects (who would be open to buying at a later date) don’t buy because there was no structured follow-up system in place to stay in touch.
The same is true for customers who bought in the past. Many of them would buy again (or more often) if they are contacted on a regular basis. Here’s another personal example. I go to my chiropractor whenever I’m in some kind of pain. While I recognize that there is value in preventative visits, I typically don’t do them. Yet, every time I get a call from his office, I end up booking an appointment–especially since they point out how long it’s been since my last visit. There is no doubt in my mind I would visit more often – to both our benefits – if he was paying more attention to me.
Here’s something else that boggles my mind. Most small business owners don’t collect email addresses from their customers. And of those who do, 92 % don’t have a systematic way to stay in touch with them via email.
In Conclusion – A Solution
If you are making any of the above mistakes, you will have a tough time surviving in the current economic climate.
The good news is that there is tremendous opportunity for those who fix the above five mistakes through bonafide Client Relationship Management (CRM) systems. Some affordable contact management programs are: online newsletter services like Constant Contact, Topica, MyNewsletterbuilder, Mail Dog to name a few, as well as email daily message systems like QuoteActions and snail mail greeting cards and postcards through Send Out Cards.
For more information contact Rick Itzkowich at (858) 456-7653 or rick@productivelearning.com
About Rick Itzkowich
Rick Itzkowich is the Co-founder and Vice President of Marketing of Productive Learning & Leisure.
He brings over 20 years of experience in the seminar and training industry to his corporate program facilitation.
Rick conducts executive and management workshops covering topics such as business development,
communication skills, conflict resolution, goal setting and the study of the mind in business.
Prior to launching PL&L with partner Lindon Crow in 1992, Rick was a senior trainer for 12 years with the
Summit Organization, a nationally respected seminar company. Rick has trained thousands of individuals
over his career.
Rick is also the creator of "QuoteActions" - a unique stay in touch marketing system for the small
business owner. Check it out at <a href=www.stayingintouchmarketing.com>Stay in Touch Marketing.</a>
