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Seminar urges owners to know their customers
 
Monday, Oct 06, 2008 - 12:05 AM 
 
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By IRIS TAYLOR
TIMES-DISPATCH COLUMNIST

Joe Dawson of Glen Allen, proprietor of a home services and repair business called Executive Home Serv ices, came to a marketing seminar in Powhatan County "just to kick me in the pants.

"Any help I can get will help me," he said. He has been growing his home-based business by word of mouth since he started it last July.

Bruce and Janna MacConnell, owners of Goin' Postal Powhatan and the Curves facility next door in Powhatan's South Creek One complex, came to hear tips on customer retention.

Bruce MacConnell said he wanted to network with other owners and get marketing and customer-service ideas.

The three of them joined other entrepreneurs, local government officials and corporate representatives at the free educational seminar in the village.

The gathering was about fundamental ways to increase revenue and profit. Sheri McGuire of the Longwood University Small Business Development Center moderated the event.

Every year, take a look at your growth-efficiency ratio -- the percentage of change in profit divided by the percentage of change in revenue, McGuire urged. "You want this ratio to be greater than one."

Achieve that by:

Focusing on growth customers. These are ones who will grow your business, she said. You want profitable customers who buy from you long term.

"Only a small part of your growth is going to come from new customers," she said. "It's a lot cheaper to market to existing customers."

Do something to build up that customer relationship, McGuire advised. If you're a mechanic, sit down with your customer and explain how you repaired her transmission. Provide a little extra value if it doesn't break the bank: "By the way, I fixed that squeak in your door."

"It's easy to delight people these days," McGuire said. The customer "will probably come back again and again."

Woo back former customers, she also urged. Go into your database and find out who they are. Humbly ask why they stopped coming to you and learn from their feedback. Pay them a visit if it's a large account. Remind them of your services.

"Sometimes, I think they leave because they forget" about your business, McGuire said.

Also, figure out what you've done right in the business and keep doing it.

Tweak and tweak until you find the perfect pricing. You want to charge what customers are willing to pay at the level that will maximize your profit, McGuire said.

Do that by:

  • Finding out from industry sources what profit should be for your type and size of business.
  • Figuring out how much you have to charge to make a profit.
  • Setting your price based on how much competitors charge.
  • Testing different prices to see what works.
  • Selling high volumes of product at a discount, if you can do that profitably. But be careful. You can get caught up in deadly price wars, and your customer might buy only if your products are on sale, McGuire said.

    Contact staff writer Iris Taylor at itaylor@timesdispatch.com or (804) 649-6349.
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