There are three important marketing fundamentals that every business needs to follow.
As a business you have to:
It doesn’t get any simpler than that.
You can complicate it all you want (and a lot of people do), but marketing success comes from these 3 fundamentals. How well you know your customer, your product and your business the more successful you will be in marketing.
In the first post about “Know Your Customer” we learned how to do that and why. Customers are why you have a business. If you did not have them you would not have a business – you would have a hobby.
In the second post “Know Your Product” we learned about products and services and why customers buy from you. Customers buy products from you for a reason. You need to know that reason so that you can continue doing what you are doing well but you also have to be weary about changes to your products to keep up with the changes in your markets. Unless you have a monopoly you are not alone so do not make business decisions autonomously.
Know Your Business
Knowing you business is understanding how your business makes money. Businesses make money three ways. That’s all. Everything is a variation of that, but they all filter down to these three ways.
Every business makes money by having customers:
1. Spend more or upgrade.
2. Come back often or use more
3. Grow their business with you.
We are going to look at each of these across 3 diverse industries to show you how these are true for any business.
Here is a quick summary against three different industries (banks, casinos and manufacturers).
1. SPEND MORE OR UPGRADE
When a business can get their customers to spend more, or upgrade their products and services, the business tends to make more money. The tactics a business uses looks at incenting customers to spend more. Not many businesses do this consciously, but it is a very effective tactic to make money for the business and should form part of your marketing plan.
If you are a bank you will want your customers to spend more and rack up debt on credit card balances or upgrade their credit card to a loyalty cards which cost more (air miles, Aeroplan). They will use tactics like balance transfers, no payment months and other enticements.
Casinos want customers to spend more so they try to encourage a gamer to play $1.00 slot machines instead of $0.25 cent ones. They may add bonus spins, higher paybacks and longer play time.
Manufacturers want customers to buy higher end models or upgrade to new features. Remember people buy expensive items for relatively inexpensive features. Realtors will know how people fell in love with a house because it had a hot tub or some other features the buyer could have just went out to buy. Tech is often the biggest enticement to upgrade when it comes to phones and now recently car commericals selling the integration of iPhones to the GPS and other features using SIRI.
2. COME BACK OFTEN OR USE MORE
This next strategy for businesses to make money is to try to get customers to come back often, or use more of the product or service. When someone uses a product it causes wear and tear. Nothing lasts forever. Whatever you produce will eventually wear out. At some point the customer will need to replace it (refrigerator, running shoes etc). Although some products can be repaired, such as the brakes on your car, at some point you will need a new car, new refrigerator, phone and so on.
By having your customers use products often speeds up that process.
If your business sells “services” instead of products, you likely have a fee based approach using things like labour fees for tradespeople, retainers for lawyers, or fees for transactions – just as examples. A service doesn’t wear out like a product but it does become dated and it often has to be updated to what is out in the market. This happens when a market becomes saturated with a lot of competition.
A bank will make more money when their customers come back often because they can charge transactions fees.
A casino will make more money having customers come back often because they know each time a gamer visits a casino they spend money. The tactics that a casino uses is to invite customers for a free dinner, to see a show or to try a new slot machine.
A manufacturer will want customers to use their products because using them more often wears them out.
3. EXPAND THEIR BUSINESS WITH YOU
This last strategy has businesses trying to get customers to expand their business with them. The more business a customer has with your business the stronger will be their relationship, retention and loyalty.
A bank will want you to grow your business with them by adding credit cards, opening up mutual funds or adding lines of credit.
A casino will want to expand your business by having you eat at their restaurants or buy some concert tickets.
A manufacturer will want you to expand your business by having you buy a new dishwasher to go with that new refrigerator and stove you are buying. They may incent you to package deals.
The ways that a business make money is consistent from business to business. The more that you understand your business, the more evident you will see these 3 strategies in what you are doing.
Know your customer well, know your products well and then learn about how your business makes money by knowing your business.
Do not let others try to complicate the marketing. There are only 3 strategies in knowing your business, but there are hundreds of tactics.
If you need help with any of these topics or learning what tactics made these companies successful then contact us. Let us show you how small changes can make big differences for very little money.
(416) 986 1735