About 80% of new businesses fail within 18 months, according to Bloomberg Business research.
And, throughout the past 30-plus years, the amount of new businesses has drastically declined, according to Gallup. During the economic meltdown of 2008, it was the first time in several decades in which more businesses failed than new ones were started. About 70,000 more businesses fail than are launched.
“We see it all the time in our communities – signs on doors that read, ‘Due to circumstances beyond our control we have to close our business…’ What business owners today don’t seem to understand is that what’s required, not only to survive but to thrive, is absolutely within their control,” says Pamela Herrmann, author of “The Customer Manifesto: How Business Has Failed Customers And What It Takes To Earn Lasting Loyalty,” ranked No. 3 on the list of customer service books every business owner should read by Business.com.
“The truth is, what is required is way outside their skill sets. The typical business owner has no idea how to create leverage, how to utilize new technologies, how to strategize on any level that makes them competitive or how to stop the hemorrhaging of cash in the form of failed online marketing investments.
Herrmann is co-founder, along with Patty Dominguez, of CREATE Buzz (www.CreateBuzzNow.com), a Fortune 50 branding expert which they say is changing the way small businesses connect with their customers – both online and offline. Dominguez and Herrmann review four mistakes – and ways to correct them– to keep help new businesses thrive:
1. Don’t miss your biggest revenue opportunity. “When we look at traditional marketing, so many solutions providers are focused on customer acquisition and how to get prospects into their marketing funnel – which is totally necessary and valid,” Dominguez says. “However, the biggest revenue opportunity is in knowing how tokeep these customers, because that’s where the higher profits are in the lifecycle of a customer.”
“We teach our small business clients not only how to get new customers but more importantly, how to keep their existing customers,” Herrmann says. “Most small businesses don’t have the foundational strategy for how to build their business for growth. Once you have that in place, marketing tactics such as word-of-mouth online can be fully leveraged, and that is the key to organic growth.”
2. Entrepreneurs not only track the wrong metrics, they don’t even know what they are. In the absence of a strategy, small business owners make marketing decisions based on short-term data, like how much money is in the bank or how many sales they made last month. This is reactive — not proactive.
“In life and in business, it’s often not the ability to answer a question, but rather whether or not you’re asking the right questions,” Dominguez says.
So, what are some of those questions? The duo have come up with the following:
• How many new leads did you get this month?
• How much did it cost you to acquire that new lead or customer (CAC)?
• What’s the average value of a single transaction?
• What is the lifetime value of your customer (LTV)?
3. Businesses don’t manage their message across all customer touch points. Technology brings customers to us from so many sources. Most businesses are not aware of all the ways consumers are using technology to find businesses to transact with. Businesses should go through the process of creating a Customer Journey Map so that they can see all the touch points across all channels and first measure how well they are doing and then identify gaps and opportunities. The goal in this process is to know exactly what your customer is thinking, feeling and doing throughout their engagement at touch point. This one exercise alone will show you where your profits are being won or lost.
4. They don’t know the fundamentals of marketing that are the cornerstones to any long-term growth strategy. Just like an archer tries to hit the bull’s-eye, an entrepreneur tries to reach her customers. No matter how many arrows that may be in her quiver, if she doesn’t know how to aim, she’ll probably miss with each attempt. The same is true with marketing: you can spend vast amounts in a campaign, but you need to know the who, the how and the why of your aim.
Dominguez, a Fortune 50 business strategist, says: “You need to know who you’re marketing to. Why are you marketing to them? What are their wants and needs; what keeps them up at night? Are there emotional triggers that make your marketing relevant? What is your brand promise and what makes you different from the guy down the street? And, you when you do you this effectively, you shift from sinking money into fixing problems and into growing your business through strategic decision making.”
About Pamela Herrmann and Patty Dominguez: Pamela Herrmann and Patty Dominguez cofounded CREATE Buzz (www.createbuzznow.com), an online training experience which helps business owners and their employees get powerful, positive and practical customer engagement habits that build loyalty. As CREATE Buzz, Herrmann and Dominguez provide deep insights and strategic planning on how to make marketing dollars convert more sales. They co-host the “Customers For Life” podcast and “The Morning Would Show,” providing daily motivation.