Expanding Your Small Business Customer Base
By Stephen Parezo
December 2006 Small businesses that are serious about building their operation realize that perhaps the best way to accomplish this is by expanding their customer base. Unlike a recent television commercial where the "easy" button is pressed when a situation gets tough, there are no easy routes here. Experts advise that networking, developing a Web site, spreading the word through advertising and just kicking your quality of service up a notch will help you further develop your customer list.
Sam Smith, a Fiducial franchisee in Middletown, MD, recently moved his office for the fourth time in eight years because of his ever-expanding clientele. He said that probably one of the easiest and least costly ways to increase your customer base is through networking.
"Just getting out there and putting yourself in front of people makes a difference," said Smith.
Some entrepreneurs, however, balk at the idea of having to network but Smith knows that without doing so, the business is teetering on the brink.
"If you're not willing to go out there in front of a business owner and if you have problems doing that then you either have to hire people to do it or go into another type of business," he said.
In his 14 years as a small business owner, Smith observes that clients usually fail for two main reasons: Either they don't keep good records so they have no idea financially what's going on or they're not good at promoting their business.
If you can't market, you can't sell
"If you don't have that outgoing personality then you're going to struggle," he said. "It's going to be more difficult if you are not comfortable getting in front of people if you can't explain about the attributes or benefits of buying a product or using services, then you're not going to be able to sit behind a desk and wait for the phone to ring."
The bottom line shows that potential customers aren't buying a product/service until they know about you and what you have to offer.
"You could be Home Depot or a construction materials store that has a brand name but if you can't market, you're not going to sell—that's the bottom line," Smith said. "Most companies are not in a unique or specialized industry so there are usually alternatives but if you can't express why they should buy from you, you're in trouble."
Sometimes business owners go overboard trying to please customers such as a handyman client of Smith's that was a perfectionist.
"I kept telling him that he was selling the client 150% and only getting paid for 100%," he said. "He was going above and beyond and wasn't able to communicate value to his customers. He was also a person who couldn't delegate. He didn't have to triple check measurements and eventually realized that he shouldn't be doing that."
A landscaping client was in a similar position where he wasn't comfortable going out and talking to potential customers. The owner was advised that the business couldn't continue down this road unless he was willing to remove himself from the field.
Expanding your market
"He was detail-oriented but couldn't see the big picture," Smith said. "You need to turn the spigot off or this is going to be it."
Owners need to take a closer look at their business to determine where they can make some changes to bring in more customers. That's what several golf course clients did in Louisville, KY, according to Rebecca Daigrepont, a senior business advisor for Fiducial.
Daigrepont noted that a number of the golf courses decided to expand their facilities by adding smaller nine-hole courses. They are also appealing to younger golfers and are offering educational programs through reduced memberships for students. A youth golf league has been established and together with a reciprocal membership that allows members to play on several courses, provides greater challenges for both veteran linksters and newcomers.
Golf course operators, like other small business owners, Daigrepont added, "are looking for opportunities to expand their market in more creative ways."
Referrals have always been one of the best ways for entrepreneurs to get new clients through the spread of word-of-mouth.
"If you've got a satisfied client then they'll recommend you to a friend that needs a similar service," said David Gadberry, a senior business advisor in Fiducial's Houston, TX, office. "Doing a good job is what's going to make satisfied customers and make them willing to recommend the service to a friend."
Spending money to make money
Among the referrals Gadberry has received in recent months are a pizzeria and a tire wholesaler.
Advertising is another avenue where business owners are not taking full advantage of opportunities to tout their products and services.
"They're probably not doing enough, especially smaller businesses," Gadberry said. "They feel that they can't justify the expense but you've got to spend money to make money if you're not getting referrals from clients for new customers. Advertising is the next step to get your name in front of people."
In the final analysis, industry watchers maintain that building a customer base comes down to making the quality of your service the absolute best it can be.
"You've got to distance yourself from your competitors," said Russell Kesler, a senior business advisor in Fiducial's Oakland, CA, office. "In our field, the accounting profession, we have to be price-competitive but give better competitive service. We have to be up on tax laws and have to set yourself apart from competitors. In one instance, a new client wasn't getting statements on a timely basis or another wasn't getting enough hand-holding [from his former accountant]."
Name recognition also plays a key part in expanding your customer base, Kesler said.
Getting some fresh ideas
"If I'm an auto mechanic and own a small shop, you can't be standing outside the door with a sandwich board on," he said. "You've got to give quality service which is spread by word of mouth. I have a mechanic and when I refer a customer to him he knocks 5% to 10% off the current bill."
Having a website is another effective tool to build your list of clients, especially if it's appropriate for your business.
"You don't have to be technically savvy to have a website," said Larry Recor, a Fiducial franchisee with three upstate New York offices in Boonville, Old Forge and Utica. "Just have somebody do it for you because it doesn't cost a lot of money. Even if you don't use it to take orders, it lets potential customers know what your business is all about."
Recor suggests that businesses should have a referral program in place from their present customer base that can lead to the friends and relatives of present customers also becoming customers. He said more entrepreneurs need to take advantage of this type of program and offer an incentive for those making referrals.
One of his clients owns three jewelry stores and sends out fliers on a seasonal basis to existing customers. A note on his mailers tells customers that if they pass the flier onto a friend or relative and he sees your name on the label, you will receive a free gift certificate. Though the owner has been conducting this campaign each year it was Recor that suggested he get present customers to refer friends and family.
"He took an existing program and expanded on it a little bit," he said. "That's really what we bring to the table is ideas. Obviously, [small business owners] need some fresh ideas every now and then."
STEPHEN PAREZO is the Media Manager for Fiducial.2006 Fiducial. www.fiducial.com. Used with permission.