Frequently, dry cleaners ask the question, “Why should I market to my current customers, since I already have their business?” Let’s begin with the definition of a “current customer.” The fact is that the only people whom you know for sure are your current customers are those who are standing at your counter at this very minute. Everyone else is a free agent! There’s no written contract. They can go wherever they want. Hopefully back to you, but maybe to a competitor.
You can never be 100% sure that any of your customers will bring their next order to you, because they’re under no obligation to do so. Maybe they will, and maybe they won’t. In other words, it’s just as important to promote your services to someone who regularly uses them as it is to someone who has never done business with you before.
It’s well known in business theory that you can only gain increased sales in three ways:
- Attract new customers. (This is an important avenue, but is also the most costly.)
- Get your current customers to come in more frequently and bring larger orders.
- Offer additional services to your current customers.
That’s it! Those are the only ways you’ll ever increase your sales.
As you can see, two of the three ways to build sales are by marketing to your current customers. These people have previously been to your store. Hopefully, they liked the service you provided and, unless they have any unresolved problems, they can easily be encouraged to increase their expenditures with you. The first step in developing an effective marketing plan is to ensure that you are charging enough for your services and that your costs of performing those services are tightly controlled. You can’t offer current customers a substantial discount or any other inducement to bring in additional volume unless you can afford to do so and still make a profit. Good control of your overhead costs will give you the ability to utilize a wider variety of marketing programs. Here’s an example.
A Sweetheart Deal
I suggested to a dry cleaner that he run a Valentine’s Day promotion, utilizing a coupon. The promotion was to run from February 1–14. It was to be sent only to current customers. After he had completed the promotion, he estimated that he had “given away” $468 in free dry cleaning and was questioning how he benefited from giving away his work. It was a legitimate concern, and I agreed to help him determine if this was a prudent business maneuver.
He sent out 230 Valentine offers and received 61 responses. He was not sure if he had received responses from 61 different customers or if these had been multiple responses from the same customers. Because he had not tracked that aspect, it was impossible to determine how many times the same customers had accepted his offer. Personally, I was not concerned with the answer to that question. What did concern me were his gross sales for the two-week period
(February 1–14). His sales volume for those two weeks was $13,366, after deducting the $468 in discounts he had given as part of the promotion. I then asked what his sales volume was for the same two-week period from the previous year. It was $8,734. That was an increase of $4,632. Or, in other words, a 53% increase in actual cash flow!
This real-life success story demonstrates what a powerful tool marketing to your current customers can be. This increase in sales occurred at a time when many cleaners around the country were suffering sales decreases.
My final question to this dry cleaner was, “Would you trade $468 in free cleaning for an increase of $4,632 in sales?”
Would you?
This article is from IFI’s bulletin MARKMETH-10
