Impressions - March 2015 - 53
wrong with the most perfect job. At some
point, you will mutually decide to part
ways. Hopefully there won't be too many
of these.
The next reason to add new customers is to grow the top-line revenue of the
business faster than you can with other
methods. Top-line revenue is emphasized
because simply adding new customers
does not add much to the bottom-line
profit - at least not in the first year or
two. Adding new customers should be
considered a long-term investment.
Finally, you may find yourself in the
position to reduce your exposure to big
customers. This happens often with contract printers. Customers may start small
and then start to dominate production.
After major growth, they leave for a bigger
contract printer with cheaper prices, better terms, faster turnaround times or something else. This happens all the time and
the contract printers find themselves with
a huge hole that needs to be quickly filled.
COST TO ACQUIRE
Marketing has changed a great deal
in the past few years as more firms move
online and go digital. The amount of
advertising "noise" now is so great that trying to gain new customers with a few ads
and fliers is like yelling into a windstorm.
Not only are you faced with more competition for attention, but the sheer number
of ads, emails and other messages simply
is overwhelming.
Getting and holding a prospect's attention requires much more research,
targeting, messaging, education and engagement. This is expensive and - more
importantly - time consuming. One recent study on customer engagement and
development revealed that it takes nine to
16 months to attract a new major client
(one with the potential of generating 5%
of revenue), depending on the industry.
Many small businesses are disappointed
or disillusioned by the response to their
advertising and marketing spends. It's understandable because there's no order or
system to it. They don't measure or track
their responses or efforts. This often is
called "hope marketing." It's akin to gambling and the money spent is completely
at risk.
impressionsmag.com
If you're losing customers because they
aren't a good fit, then change the way you
attract prospects. Defining the exact profile of your ideal customer is necessary
to determine if he truly is a good fit for
your business. It's pointless to spend time
and money acquiring a new customer that
you'll struggle with moving ahead.
How much will this actually cost? The
cheapest approaches are word-of-mouth
(WOM) and client referrals. While not free,
you're really measuring opportunity cost:
the expense of your time if you were using it
to produce billable product instead of prospect development that may not convert.
Defining the exact
profile of your ideal
customer is necessary
to determine if he
truly is a good fit for
your business.
WOM and client referrals only go so
far. While they're still the most common
ways to market for small companies, they
are random, undependable and unpredictable. In the bigger picture, you can count
on some percentage of growth from this
area, but it's variable.
How much budget should you set
aside for marketing and sales to acquire
new customers? The numbers vary by industry. They range between 4% and 60%
of top-line revenue. For industries similar
to ours, the range is 4%-20%. Even if you
are a small shop with $200,000 in annual
sales, the range would be $8,000-$40,000
per year, or $667-$3,300 per month.
OTHER COST FACTORS
New clients don't know you and are
looking for you to prove yourself to them.
They're taking a risk to work with you
and, as such, want to minimize the risk.
Therefore, the focus usually is on price.
You can gradually raise prices, but it's a
slow process. Take that into consideration
when negotiating your first order.
New customers also often are considering other vendors. Your competitors also
want the business and most often use price
as their club. Customers so focused on the
cheapest price never are loyal. Thus, you
run a high risk of spending time and money
to develop a transient relationship.
Finally, there's a proven strategy to
break even on the first job so you can profit in the future. Simply put, if you know
your costs, look to bring on a new client at
the break-even point. Your pricing doesn't
have to be rock bottom, but you need
enough margin to cover your acquisition
cost. There are numerous examples and
strategies that prove longtime clients are
much more profitable than new ones.
A study by the Harvard Business Review tracked multiple industries' client
retention during a six-year span. The average profit annually for a one-year customer
was 6% on sales. Remarkably, the average
profit for a six-year client was 43% on topline sales. That's an enormous difference
and the driving reason to do everything in
your power to retain an established client.
EDUCATIONAL COSTS
For decorators working with schools,
community organizations and nonprofits,
the time spent answering numerous questions, getting committee approvals and
anything that isn't directly tied to production can eat up all your profits. It's a
huge problem for small operators working
out of a storefront location where random
walk-in traffic is common.
Another part of the educational element is the time spent explaining why
you differ from the competition and how
it's reflected in your sales prices. These
conversations take considerable time to
develop. To speed them along, you need
"social proof." This has become a big
deal in the past few years with the rise of
social media.
It comes down to how you independently prove your claims. This is the cost
of your online reputation - Yelp, Google,
Angie's List, BBB, reviews and so on.
There's a cost to maintain your account
on many of these sites. They range from
$10-$30 per month. If you do a lot of local work, it's definitely worth being on the
major sites.
Develop your profile. Get reviews and
testimonials. Respond to others posting
about your company and your performance.
March 2015 | Impressions
53
http://www.impressionsmag.com
Impressions - March 2015
Table of Contents for the Digital Edition of Impressions - March 2015
Contents
First Impressions
From the Show Director
FYI
Product Gallery
ISS Conferences
On Design
Laser Tag
Ladies First
What Women Wear
Adding the ‘WOW’ to Womenswear
The Most Expensive Sale You’ll Make
Shop Spotlight
Embroidery Production
Screen Printing Production
Digital Decorating
Digital Decorating
Classifieds
Online Directory
Ad Index
Impressions - March 2015 - BB1
Impressions - March 2015 - BB2
Impressions - March 2015 - Cover1
Impressions - March 2015 - Cover2
Impressions - March 2015 - 1
Impressions - March 2015 - Contents
Impressions - March 2015 - 3
Impressions - March 2015 - First Impressions
Impressions - March 2015 - 5
Impressions - March 2015 - From the Show Director
Impressions - March 2015 - 7
Impressions - March 2015 - FYI
Impressions - March 2015 - 9
Impressions - March 2015 - 10
Impressions - March 2015 - 11
Impressions - March 2015 - 12
Impressions - March 2015 - 13
Impressions - March 2015 - 14
Impressions - March 2015 - 15
Impressions - March 2015 - Product Gallery
Impressions - March 2015 - 17
Impressions - March 2015 - 18
Impressions - March 2015 - 19
Impressions - March 2015 - 19a
Impressions - March 2015 - 19b
Impressions - March 2015 - 20
Impressions - March 2015 - 21
Impressions - March 2015 - ISS Conferences
Impressions - March 2015 - 23
Impressions - March 2015 - On Design
Impressions - March 2015 - 25
Impressions - March 2015 - Laser Tag
Impressions - March 2015 - 27
Impressions - March 2015 - 28
Impressions - March 2015 - 29
Impressions - March 2015 - 30
Impressions - March 2015 - 31
Impressions - March 2015 - 32
Impressions - March 2015 - 33
Impressions - March 2015 - Ladies First
Impressions - March 2015 - 35
Impressions - March 2015 - 36
Impressions - March 2015 - 37
Impressions - March 2015 - 38
Impressions - March 2015 - 39
Impressions - March 2015 - 40
Impressions - March 2015 - 41
Impressions - March 2015 - What Women Wear
Impressions - March 2015 - 43
Impressions - March 2015 - 44
Impressions - March 2015 - 45
Impressions - March 2015 - Adding the ‘WOW’ to Womenswear
Impressions - March 2015 - 47
Impressions - March 2015 - 48
Impressions - March 2015 - 49
Impressions - March 2015 - 50
Impressions - March 2015 - 51
Impressions - March 2015 - The Most Expensive Sale You’ll Make
Impressions - March 2015 - 53
Impressions - March 2015 - 54
Impressions - March 2015 - 55
Impressions - March 2015 - Shop Spotlight
Impressions - March 2015 - 57
Impressions - March 2015 - Embroidery Production
Impressions - March 2015 - 59
Impressions - March 2015 - 60
Impressions - March 2015 - 61
Impressions - March 2015 - Screen Printing Production
Impressions - March 2015 - 63
Impressions - March 2015 - 64
Impressions - March 2015 - 65
Impressions - March 2015 - Digital Decorating
Impressions - March 2015 - 67
Impressions - March 2015 - 68
Impressions - March 2015 - 69
Impressions - March 2015 - Digital Decorating
Impressions - March 2015 - 71
Impressions - March 2015 - Classifieds
Impressions - March 2015 - Ad Index
Impressions - March 2015 - 74
Impressions - March 2015 - Cover3
Impressions - March 2015 - Cover4
Impressions - March 2015 - S1
Impressions - March 2015 - S2
Impressions - March 2015 - S3
Impressions - March 2015 - S4
Impressions - March 2015 - S5
Impressions - March 2015 - S6
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https://www.nxtbook.com/nxtbooks/impressions/20210102
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https://www.nxtbook.com/nxtbooks/impressions/202009
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https://www.nxtbook.com/nxtbooks/impressions/202008
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https://www.nxtbook.com/nxtbooks/impressions/202003
https://www.nxtbook.com/nxtbooks/impressions/202002
https://www.nxtbook.com/nxtbooks/impressions/202001
https://www.nxtbook.com/nxtbooks/impressions/201912
https://www.nxtbook.com/nxtbooks/impressions/dd_2019
https://www.nxtbook.com/nxtbooks/impressions/201910
https://www.nxtbook.com/nxtbooks/impressions/201909
https://www.nxtbook.com/nxtbooks/impressions/teamactive_2019fall
https://www.nxtbook.com/nxtbooks/impressions/201908
https://www.nxtbook.com/nxtbooks/impressions/20190607
https://www.nxtbook.com/nxtbooks/impressions/201905
https://www.nxtbook.com/nxtbooks/impressions/201904
https://www.nxtbook.com/nxtbooks/impressions/201903
https://www.nxtbook.com/nxtbooks/impressions/teamactive_2019spring
https://www.nxtbook.com/nxtbooks/impressions/201902
https://www.nxtbook.com/nxtbooks/impressions/201901
https://www.nxtbook.com/nxtbooks/impressions/201812
https://www.nxtbook.com/nxtbooks/impressions/dd_2018
https://www.nxtbook.com/nxtbooks/impressions/201810
https://www.nxtbook.com/nxtbooks/impressions/201809
https://www.nxtbook.com/nxtbooks/impressions/teamspirit_2018fall
https://www.nxtbook.com/nxtbooks/impressions/201808
https://www.nxtbook.com/nxtbooks/impressions/201806
https://www.nxtbook.com/nxtbooks/impressions/201805
https://www.nxtbook.com/nxtbooks/impressions/201804
https://www.nxtbook.com/nxtbooks/impressions/201803
https://www.nxtbook.com/nxtbooks/impressions/teamspirit_2018spring
https://www.nxtbook.com/nxtbooks/impressions/201802
https://www.nxtbook.com/nxtbooks/impressions/201801
https://www.nxtbook.com/nxtbooks/impressions/201712
https://www.nxtbook.com/nxtbooks/impressions/201710
https://www.nxtbook.com/nxtbooks/impressions/201709
https://www.nxtbook.com/nxtbooks/impressions/201708
https://www.nxtbook.com/nxtbooks/impressions/teamspirit_2017fall
https://www.nxtbook.com/nxtbooks/impressions/20170607
https://www.nxtbook.com/nxtbooks/impressions/201705
https://www.nxtbook.com/nxtbooks/impressions/201704
https://www.nxtbook.com/nxtbooks/impressions/201703
https://www.nxtbook.com/nxtbooks/impressions/teamspirit_2017spring
https://www.nxtbook.com/nxtbooks/impressions/201702
https://www.nxtbook.com/nxtbooks/impressions/201701
https://www.nxtbook.com/nxtbooks/impressions/sportsfanretailer
https://www.nxtbook.com/nxtbooks/impressions/201612
https://www.nxtbook.com/nxtbooks/impressions/201610
https://www.nxtbook.com/nxtbooks/impressions/201609
https://www.nxtbook.com/nxtbooks/impressions/201608
https://www.nxtbook.com/nxtbooks/impressions/teamspirit_2016fall
https://www.nxtbook.com/nxtbooks/impressions/20160607
https://www.nxtbook.com/nxtbooks/impressions/201605
https://www.nxtbook.com/nxtbooks/impressions/201604
https://www.nxtbook.com/nxtbooks/impressions/201603
https://www.nxtbook.com/nxtbooks/impressions/teamspirit_2016spring
https://www.nxtbook.com/nxtbooks/impressions/201602
https://www.nxtbook.com/nxtbooks/impressions/201601
https://www.nxtbook.com/nxtbooks/impressions/sportsfanretailer_201512
https://www.nxtbook.com/nxtbooks/impressions/201512
https://www.nxtbook.com/nxtbooks/impressions/digitaldecorator_2015fall
https://www.nxtbook.com/nxtbooks/impressions/201510
https://www.nxtbook.com/nxtbooks/impressions/201509
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https://www.nxtbook.com/nxtbooks/impressions/teamspirit_2015fall
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https://www.nxtbook.com/nxtbooks/impressions/digitaldecorator_2015summer
https://www.nxtbook.com/nxtbooks/impressions/sportsfanretailer_201506
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https://www.nxtbook.com/nxtbooks/impressions/201503
https://www.nxtbook.com/nxtbooks/impressions/teamspirit_2015spring
https://www.nxtbook.com/nxtbooks/impressions/201502
https://www.nxtbook.com/nxtbooks/impressions/201501
https://www.nxtbook.com/nxtbooks/impressions/sportsfanretailer_201412
https://www.nxtbook.com/nxtbooks/impressions/201412
https://www.nxtbook.com/nxtbooks/impressions/201410
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