Wednesday, September 22, 2010

Flip Your Funnel, Explode Your Profits

In Flip the Funnel, Joseph Jaffe wrote the book I largely base my consulting practice on.

He (and I) believe it is more profitable to grow your business by convincing current customers to buy more often and refer others, rather than spending most of your time and money chasing new customers.

The subtitle of Flip The Funnel says it all: How to use existing customers to gain new ones.

By creating a more memorable customer experience and acknowledging those people who buy from you, you set the stage for increased customer loyalty -- and profits.

Here are three takeaways from Jaffe's book that you can use today:

1. Flip the funnel

Traditional marketing focuses dumps many prospects in at the wide top, to get out a small number of customers at the bottom, where the process ends. This can be time-consuming and costly.

By flipping the funnel, you can start with the first purchase and turn a small number of existing customers into many new ones. This can be faster and less expensive, because you are building from a base of people who already trust you -- your customers.

2. Deliver a memorable customer experience

The customer experience is the sum of all contacts, transactions, and encounters between customers and your company, your brand, your people, and your products and services.

Companies like Apple, USAA Insurance, Virgin America, Zappos, and others put serving the customer ahead of profits in the NOW, when customer service happens. This has made them highly successful -- and profitable -- over the months, quarters, and years.

3. Do more of what really matters

You can grow your business in four ways: getting more clients, getting them to buy more often, getting them to spend more, and getting them to refer their friends.

Most businesses spend most of their time on money on the first goal only. This is insanity. Don't be insane.

Instead, follow the ADIA model:

  • Acknowledge - Clients, like all people, crave recognition. Examples: a personal thank-you note, regular progress reports, a gift. 
  • Dialogue - Encourage clients to engage in conversation by giving them multiple ways to contact you, such as Twitter or the old-fashioned phone. 
  • Incentivize - Encourage clients to recommend your business to their friends. Example: Reward them, either in cash or with gifts, for every new client they send your way. 
  • Activate - Use social media to communicate with your clients, and encourage them to pass the word via blogs, Twitter, Flickr, YouTube, and Facebook. Example: Create a money-saving tip sheet that clients can download from your blog and share with friends.

My own "inside marketing" model departs from Jaffe's in several ways, especially when it comes to marketing for small office/home office (SOHO) service business owners -- my specialty.

But we agree on the same basic premise: Stop stepping over the dollars that lie hidden inside your business (in the form of existing customers) to chase pennies down the street (in the form of prospects who don't know you from Adam).

Instead, start using existing customers to gain new ones.

(For more ideas like these, download Guaranteed Marketing for Service Business Owners.)

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