One of the weirdest things I sometimes hear from business owners is, “we are busy enough, we don’t need to advertise to get new customers.”  Sorry, but you ALWAYS need new customers, and today, I’ll tell you why.

I had a conversation recently with a new business owner about the reality of his customer retention.  This young man is smart, has advanced degrees in the medical field and has been in his profession for awhile.  However he is also a new business owner who just celebrated his one year anniversary.

From all indications, he has made some good choices during the past few years.  He knows about his competition since he used to work for them.  He bought an existing business that had 4 decades of history in the neighborhood.

He even advertises, mostly continuing what the previous owner was doing, but I uncovered a couple of items that he was unaware of, that as a business owner, you should know.

While he had some understanding of what areas of his business were more profitable than the others, he hadn’t taken the time to figure out a Return On Investment formula that is important if you are going to spend any time or money on advertising.  As we talked about some of those figures, they were eye opening to him.

But when I told him that he is likely losing 20% of his customers each year, his jaw dropped.

This was something that had never occurred to him.

(By the way, he’s not the one that I quoted at the beginning of this piece, that was another business owner that I visited last month that I don’t want to work with. That guy will likely be out of business in the next 5 years or sooner.)

Back to the bright young business owner.  I shared with him some simple facts of doing business that I wrote about a few years ago.  Here’s what happened to the customers you no longer have:

Some have moved out of town.

Some have died.

Some simply don’t need what you are selling.

Some have found an alternative.

It’s the last one that should concern you the most.

You need to find out what that alternative is and why it became an alternative for your customers.

You also need to find out why you are losing customers.

No matter how many new customers you have coming in your front door, if you can keep them from going out the back door, you should see your profits increase.

This is true of nearly any business that is at least a year old, and something you should plan for.

There are ways to attempt to decrease the percent of customers you lose each year and that involves taking a strategic look at your marketing plan, not just advertising.  This is one of the fun things that I really enjoy doing and I am good at.

When I help you develop a Marketing Strategy Model, I will ask you questions that you may have never thought of.   I may also tell you to do somethings that you might find go against the flow of what you think needs to be done.

Some of the things I have told others is they need to raise their prices and stop using discounts.  That is not applicable to everyone, or all the time, but that kind of advice made sense to the advertising partners I work with that followed my direction and have made positive changes in their operations.  They actually did lose a portion of the customers, but it was the ones that were the most difficult to work with and they replaced them with customers they enjoy working with.

This 20% rule also applies to what I do in my business.  Since I joined WOWO radio in 2013, I have worked with over 100 companies.  Each year most of them continue but some don’t and for various reasons.

Last year a long time advertising partner that I worked with for 10 years had health issues and decided to slow down. Actually losing 20% of their customers for the next few years was a good thing.

This year, another advertising partner is being affected by regulation changes in their industry, so we are on hold for now.

What this means for you is that I always have time to consider adding new customers.  Depending on your needs, you could be what I call an advertising partner, which is the highest level of my involvement with you, or, at the other end of the spectrum, we don’t work together to help your business grow.

It all starts with a conversation, usually face to face and if you want to see how this works, contact me.