The Incremental Value of New Customers and Mom and Pop: Hip Again

Part 1:  Do you have customers in your community walking around lost, wanting to know where to spend their money?  You might not think you do, but you do.

 

In every community, large or small, there are new customers.  Some have moved into the area.  Some have moved around, from one home or apartment to another.  Some are passing through or spending time in your community, but they live somewhere else. 

 

All of these customers have one thing in common: they don’t know where to spend their money on the problems they have.  For example, they might not know which restaurant is best for dinner or breakfast.  They might not know where the best dry cleaner is.  They might not know where the best pizza can be found.  They might not know where to get their car fixed. 

 

In many cases, new people are left to themselves to learn where to spend their money.   

 

Here are some questions to ask yourself about how your business courts new customers:

 

• Are you hoping that new customers will find you through word-of-mouth?  That would be the wrong thing to do as word-of-mouth is the slowest form of marketing.
• When someone walks in your business, do you have a system in place to identify first-time customers?  If you don’t, you are losing a major opportunity to bond to a new person in your community.
• If you are trying to market to new customers moving to your area, direct mail is typically the most targeted method because it is easy to obtain a new address of a new person moving to an area.  When someone moves into a new town or city,  they leave a trail of database information when they get phone, trash, cable, water, and electric service.  There are numerous companies that can help you get this database information of new consumers moving into your area, and one of my favorite database companies is Jay Siff’s Moving Targets, which uses a proprietary system to gather new home buyers, renters, and others moving into a city. You can learn more about them at www.MovingTargets.com.  There might be other database companies in your city who provide a similar service.

 

New Consumers Must Be Invited Back

 

OK, let’s say you have pulled someone new to your city into your business.  That’s great, but your job has only begun.  Unless you can convert that one-time customer into a regular customer, your business sales will never grow as rapidly.

 

A wise business owner once told me: “My goal with every customer is to get them to come back for an additional visit.”  Smart person!  If you think about it, that really is the only goal every business should have.

 

Let me give you a specific example of a business in our town that doesn’t understand this principle.  There is a cute little coffee shop in our city, and when I buy something there, the only question I am ever asked is:  “Do you have one of our punch-cards?”

 

They are referring to their customer reward cards that you receive if you are a regular customer of their shop.  The card has 9 spaces on it, which can be punched whenever I purchase a drink.  When I get 9 cups punched, I can get my tenth cup for free.  I probably don’t have to describe this in too much detail because this seems to be the mandatory marketing tool of coffee shops nationwide.

 

Now, my first time in this coffee shop, I didn’t have a card.  So they gave me one.  They didn’t ask me if I was a new customer, so they couldn’t know if this was my first visit, or my tenth.  The mistake this company is making is presuming that their incentive for 1 free drink after purchasing 9 is enough to get me to return another 8 more times. 

 

For me, this incentive is not enough.  I might accumulate 9 punches eventually, but then, the card is just a reward for my perseverance.  But it is not an incentive capable of causing a repeat visit, after just one visit!  Unfortunately, these cards are also a problem because I always forget my card, and so, I am always getting a new card punched, which I often misplace again, so my repeat customer visits essentially go unrewarded.

 

How do you do a better job of bringing customers back?  Follow these steps:

 

1.     Decide that you will start attracting first-time customers.

2.     When someone enters your doors, develop a system to identify first-time customers.  Perhaps a question, like: “Have you ever been here before?”  If they answer “Yes”, go to #3.

3.     Develop a method to invite them back.  This is where you must create an incentive that is designed just for first-timers, to get them to become second-timers.  It must be a powerful enough incentive to take a first-time customer, and bring them back.

4.     When they come in the second time, convince them to become part of your core-consumer database, where they will receive all the benefits of a full-time customer.  This assumes you have a system in place to capture their names in your database system. 

5.     Finally, you will have to train your employees to capture customers’ names, and provide incentives for them to continue to do it.  If you don’t, they won’t perform, and your future marketing efforts will always be more costly.

 

Mom and Pop Are Hip Again

 

Let me go back to this coffee shop.  The place is attractive and pleasant, but honestly, it could be anywhere, and coffee shops like these are everywhere.  I have been in hundreds just like it.  Do coffee shop owners read some type of “Coffee-House Instruction Manual” that says everyone must have the coffee shop when they plan the interior of their business?  Or do coffee house naturally radiate to an image that Starbucks created with their muted colors and upbeat music?  Let me suggest two things:

 

• It is not a good thing to be an exact copy of their competitors
• Create noticeable differences that are extremely visible when a customer enters your door are some of the easiest ways to convince someone that your business is worth revisiting.

 I won’t dwell on the obvious point except to say, for goodness sake, if all of your competition looks the same, alter several components in your business to at least surprise the customer and catch them off guard!  Surprise is a powerful emotion for a new customer to feel when they walk through your doors!

 

One quick mention about the Mother of All Coffee Shops, Starbucks.  Maybe you haven’t seen it yet, but Starbucks has launched a new prototype store that essentially takes their chain-concept, and repositions itself to look like an independent Mom and Pop.  No, they aren’t deceptive, saying they are a Mom and Pop outlet.  They just look like one, by adding independent attributes that we enjoy at Mom and Pop coffee houses.  They know that people will feel the independent vibe from these restaurants in a totally different way from the Starbucks cookie cutter system.

 

If you haven’t read about Starbucks new prototype 15^th Avenue Coffee & Tea, just follow these links:

 

http://news.starbucks.com/news/fact+sheet+15th+ave+coffee+and+tea.htm

 

They are so independent, they even have their own Facebook page:

 

http://www.facebook.com/15thAveCoffee

 

Isn’t it cool that Mom and Pop are being endorsed by Starbucks!

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