There’s only one sure way to long-lasting profits in your small business

Small Business Owner, Website Design, Customers (3)I was a small business marketing consultant for many years.  I helped my small business clientele develop new business and helped them increase sales and profitability through my marketing services.  I often informed them of the truth about my services: my services could only do a tiny fraction of the job of growing their business.

Sure profits can only be created and retained this way

The Gallup Management Corporation is a company that provides management consulting only to large companies with 1000 or more employees and are publicly traded.  They have a part of their company that you may have heard about, The Gallup Poll.  Using the awesome capabilities of their polling skills, they set out to find out how a company can have reliable and sustained profit and they found the real answer.

A business can only have dependable, long-lasting profits by developing strong repeat business and referrals from happy customers.

It is simply too expensive to have to pay (advertise) to create new customers all the time.  While advertising and marketing is vitally important to a profitable business, it cannot be the only way of growing a business — it simply cannot last long paying for every customer.  A profitable business must rely on their customers loving their business so much that they return and they tell their family and friends.  Advertising simply cannot compete with the power of evangelical customers.

So, the question is how do you develop repeat and referral business

The Gallup Poll had a hard time with this part.  They found it troubling because when people would answer “yes” to these questions: “Would you return to do business again?” and “Would you tell others about the business?” did not mean the would.  In other words, people surveyed said they would, but they just didn’t.  So, what then did get them to return and refer?

After 11 years and over 25 million surveys of all types of people, Gallup found the answer and it cannot be over-emphasized.  It is “Emotional Engagement.”  That is when a customer feels and emotional commitment to the business they will come back and refer their sphere of influence.  Many of us intuitively know this, but their research makes it a scientific discovery.  YOUR BUSINESS SUCCESS DEPENDS ON CREATING POSITIVE ON EMOTIONS.

When your customers walk away from the transaction with your company and they feel like it was great, you are on the road to profitability that you can depend upon. It’s pretty simple math at work here.  When you start a business with a handful of customers who love your business, they come back and they tell their friends.  The referred customers then love your business, and they come back and tell their friends too.  This process works exponentially as long as your customers really love doing business with your company.

How do you get customers to love doing business with your company?

Small Business Owner, Website Design, Customers (2)Here’s the simple, yet complex problem.  The business of emotion is not totally scientific.  Customers are fickle and getting every one of them loving your company can be quite a challenge.  Gallup has figured it out and they call it “The Gallup Path.”  They wrote many books on their findings and reading them can truly give you an edge.  But, I will do my best to distill it here. Because I work with small businesses exclusively, I’ll answer this question to that group in mind.  Large organizations have different resources available that small ones don’t.

For your small business it is ALL ABOUT YOUR PEOPLE (and you, the owner).  You must recruit, hire, train and retain the right type of person to interface with your customers.  A mistake here is a simple math mistake.  Let’s whittle this down:

  1. A customer makes a transaction with your company.  It can go one of two ways:
    1. The customer feels great about your people, your products or service and leaves the transaction feeling positive and happy.
      1. This customer returns.  If the your business sees a good customer 3 times per year, for example, that equals a total of 4 purchases from one customer.
      2. Each customer refers friends and family.  If the customer referred you to 3 people that try your business, you get another 3 purchases. When they return 3 times, you have a total of 9 more purchases.
      3. A Total of 13  purchases in one year from one customer
      4. Multiply this over and over again and you have great success that exponentially grows.
    2. The customer feels nothing, not positive or negative.  Just neutral.
      1. This customer forgets about you and doesn’t return.
      2. This customer doesn’t tell any of their friends or family and forgets about you.
      3. You only net a total of one customer.
    3. They customer leaves the transaction with neutral or negative feelings.
      1. This customer doesn’t return, your net is one purchase.
      2. Like the happy customer, they tell other people about their negative experience, except they tell a lot more.  On average the unhappy customer tells 16 people, while happy customers only tell about 4 (sorry, it’s not fair).  If one 3 of those 16 people were one of the ones that considered giving your company a try, you now have a -2 purchases( 1 initial customer – 3 discouraged prospects=-2).
      3. Every time your company comes up in conversation with those 16 people, they tell of the negative experience, and it spirals out of control negatively for your company.
      4. The net gain is a big loss.

Do you and your employees make it hard for your customers to resist returning and referring?  Does the number of customers that LOVE your business significantly outweigh those that don’t really get it or HATE your business?

If you have the wrong people in the jobs that interface with your customers, your business has to make changes to reach the profitability that you can depend on to grow your business.