by Ronald Nzimora
Dear Business Friend,
Marketing is simply 2 things:
- Behavioural psychology
The maths involves customer acquisition cost (if you don’t know this number, you’re dead meat), initial profit per sale, lifetime customer value, upsells, cross sells, undersells, etc.
Customer Acquisition Cost (CAC): is the amount of money you spend to get one customer. If you spend
N70,000 on an advert and it brings you 10 customers, your CAC is N7,000. Every business goal is to make this amount as low as possible. The lower it is, the higher your profit will be.
Initial Profit Per Sale: This is the amount remaining after you subtract the cost of production of one unit of your product or service and your customer acquisition cost (CAC).
Lifetime Customer Value: This is the total amount of money one customer will spend with you throughout, his ‘lifetime’. Lifetime here does really mean life literally. It only means a period of time.
Let’s say I own an upscale restaurant (say it’s the uber brilliant 7 Sea Spurs at Ikeja Shopping Mall) and one diner comes in once a week for 52 weeks. That means h/she eats 52 times there.
Let’s say he/she spends
N3,000 naira per meal. My lifetime customer value will then be N3,000 X 52 is equal to N156,000.
This means that I can spend at least
N156,000 to acquire one customer and still break even.
Upsells: This is an additional product you sell to a customer that costs a little bit higher that what he just bought.
Cross Sells: This is a complimentary product you sell to a customer in addition to what he just bought that earns you more.
Undersells: This is an additional product you sell to a customer that costs a little bit lower that what he just bought.
So you need to have these.
Next, determine this: why are you in the market?
You have to determine and know clearly your reasons for playing in the market. In order words, what advantage are you bringing to the attention of the customer?
You can do this in four different ways
- Price Difference: Your price is higher or lower than others in your market.
- Size Difference: You have different sizes of products or services for different products.
- Market segment difference: You sell only to rich people or only to the masses. For example, the local beauty salon sells beauty treatments only to the middle class who live around the vicinity. House of Tara sells beauty treatments to the affluent around Lagos State.
- Your USP: Your USP is what differentiates you from other competitors in your market. This should be a clear concise statement that once heard has people remembering what your business is about.
Tantalizers USP is “every bite a promise kept.” Personally I don’t believe Tantalizers keeps true to this ‘promise’ these days. That’s why they’re not as popular as they were when they started.
Nike’s USP is “Just do it”. See that? Just Do It.
But be warned. A USP is not a slogan, It’s a promise you make your customer that will make him choose you above others. And you MUST make sure this promise is kept 24/7 with EVERY single interaction you have with them. If you can’t do it, close up shop and get a job because your business will surely fail or at best be one of the ‘I get am befores’
So when you create a USP, you have to make it perverse throughout your business and be sure your customers feel it when they transact with you.
Who else is selling something similar to them, and how? Examples are product or delivery similarity. Play prospect all the way through but not including signing the dotted line by responding to other ads that sell to that market.
But wait that’s not all.
You also need to know 10 things to know about your market
1) What keeps them awake at night, indigestion boiling up their intestines, eyes open, staring at the ceiling?
2) What are they afraid of?
3) What are they angry about? Who are they mad at? (be on their side against their perceived enemy is very useful)
4) What are their top three daily frustrations?
5) What trends are occurring and will occur in their businesses or lives?
6) What do they secretly, ardently desire most?
7) Is there a built-in bias to the way they make decisions? (Example: engineer = exceptionally analytical)
8) Do they have their own language? It won’t take much screwing this up to destroy your credibility with that group. Read what they read, go where they go.
I have two businesses.
I consult for businesses helping them find more customers. I run a trucking company. To do all of this successfully, I have to be current and follow what they follow.
9) Who else is selling something similar to them, and how? Examples are product or delivery similarity. Play prospect all the way through but not including signing the dotted line by responding to other ads that sell to that market.
10) Who else has tried selling them something similar, and how has that effort failed?” Archive service.
Know this the MOST IMPORTANT thing you must show customers is Differentiation:
You differentiate via the market segment you serve, the products you offer and our USP.
Differentiation means showing how you are different from your competitors.
How do you do that?
You do that with
– The story
– Lead generation sources
– Providing a unique experience
Know this, there is no such thing as loyalty.
It’s just business day to day loyalty is a function of day to day marketing
The more you market, and please your audience the more you cultivate loyalty.
For now, I will expand more on this in a future article.
Keep doing great things.
Ronald Nzimora runs Profits Marketing Systems Limited, an online marketing communications and publishing firm. He’s also invested in two more.
Op-ed pieces and contributions are the opinions of the writers only and do not represent the opinions of Y!/YNaija.