Understand Your Customer Base
As we were growing our flooring business in the early 2000s, we wanted to ensure our customers were happy with our work and service. Before emailing invoices was the norm, we would attach a physical survey directly to every final invoice.
The survey proved a useful tool for two unexpected reasons: first, it gave the client an opportunity to quickly share any minor issues we needed to address. Secondly, and relevant to the subject of this article, we got an insight into our customer base. We got that because we asked customers whether they were a previous customer, had used us on a recommendation, or had shopped with us for another reason.
“If flooring businesses had to rely on completely new customers, most flooring businesses would not be viable.”
Every quarter, we would analyse the survey data and found something quite surprising: 70-75% of our business came from the Previous Customer and Recommended by a Friend categories.
We were surprised, and I expect most flooring business owners would be similarly surprised if they ran the numbers. If flooring businesses had to rely on business from customers completely new to us, most flooring businesses would not be viable.
The takeaway for business owners is the importance of returning customers who not only come back but also recommend our services. This is our customer base. It’s not enough to maintain it; we have to grow it.
The Snowball Effect
Our customer base is like the proverbial snowball rolling downhill; so long as we maintain momentum, it will grow.
“This is our customer base. It’s not enough to maintain it; we have to grow it.”
The thing we need to recognise about our customer base is that, without momentum, it will shrink: customers move away, go out of business, sell their business, or simply purchase their final flooring needs. Also, we might drop the ball, their job might go wrong, and they shift their business elsewhere. We have to continually add to our client base just to maintain it, and we have to work even harder to grow it.
So the question is, how do we grow our customer base?
By working just as hard to get small jobs as we do to get the larger ones. Small jobs and insurance work are two elements of our business that go beneath the radar, but they shouldn’t.
We Want to be the “Flooring Guy”
We all have "guys". We have a "guy" for our plumbing, a "guy" for our insurance, and a "guy" for car repairs. Often they are not guys, but hopefully you get my point. These are the first people we think of when we have a leaking pipe, a new house to insure, or a car that breaks down.
If we are asked to quote on a small job, that person likely doesn’t have a “flooring guy” in their phone. Similarly, if an insurance company directs their client to your store, you have the opportunity to become their “flooring guy”. By caring about winning these small or low-margin jobs, we win their business and are in the box seat for the new house, holiday home, or business premises.
The Friction of Sales Targets
All of our salespeople should have sales targets, but the challenge of small jobs is that they don’t seem to move the needle for salespeople working to meet those targets. They need to understand that they are important for future work and to you as the business owner.
“Small jobs have distinct advantages: high margin, easy to manage, minimal risk, and four or five of add up to the profit of a house lot of flooring. ”
To an extent, I understand why salespeople might not focus on these small opportunities, but small jobs have distinct advantages: margins are higher than for large projects, they're easy to manage, the risk of something going wrong is minimal, and four or five of them in a week can add up to the profit of a house lot of flooring.
Insurance, on the other hand, is a challenge; customers are in the market unwillingly and, more often than not, don’t want to spend anything beyond the excess. Insurance is low-margin and messy, but these are clients that wouldn’t otherwise be in our stores, and the opportunity is to add them to our customer base. The goal is to make the process as painless as possible for them, so they come back to us when they need flooring.
Following up on these smaller opportunities is also more rewarding; customers are less likely to shop around for a small project, and if they have shopped around, your competitor is unlikely to follow up with them. If you have read any of my previous articles, you will know that follow-up is your superpower. Or it should be.
What are the takeaways from this article?
Existing customers and referrals play a bigger role in our business than we might think.
A very real factor in growing our business is capturing the small opportunities and insurance work that your competitors neglect.
Small opportunities can contribute significantly to your bottom line
Following up on small jobs is productive.
To effectively manage your opportunities, and those of your salespeople, you need visibility. You need a simple CRM tool and reporting. If you would like to see how RFMS can provide that, let us know and we will be happy to meet you online for a discussion.
Chris Ogden is a consultant and Managing Director of RFMS Australasia (RFMSanz.com), a supplier of IT solutions for the flooring industry. Chris has an extensive background in all aspects of the flooring industry, and he can be contacted at cogden@rfmsanz.com.