An interesting CRM business story

What do these establishments below have in common?  How do they survive and grow?

  • A neighborhood specialty exotic pizza store that uses wheat dough?
  • An exotic flower boutique that provides bouquets for special occasions?
  • A made-to-order shoe manufacturer that does fit-to-walk shoes for you?
  • An organic fresh-from-farm outlet that gives you the most tasty fruits and vegetables?
  • A specialist dry fruit and nut store that sells around-the-world products?
  • A baker renowned for tasty and nutritious bread and biscuits.

       Yes, you are right.  They offer specialized services, not run-of-the-mill sort of solutions.  They may all be family-owned and they may be one of a kind, and most likely, do warrant higher margins than the rest.  They may be pricier than the common pizza or a florist or a normal baker which means they would have lower volume of business (not necessarily though) but definitely a particular type of customer who wants to enjoy the very best. They survive due to the patronage of these customers and their word-of-mouth campaigns.

     But a growth question always bothers the owner of such establishments – how do I grow? Should I grow?  What is the best way? As any consultant would say, the answer is simple – “It depends”.  They definitely take care of all their customers who walk into their door well but going above and beyond this is something that is not in their DNA.   Believe it or not, many of these businesses make anywhere on the upward of a quarter of a million dollar a year.  I will explain to you how and it is simple- let us say on an average 50 unique customers order a specialty pizza and a drink at an average price of $15, which makes the owner get to the annual revenue an upward of quarter of million$.

     My observation on these establishments is that even today, in these connected times, they do not seem to be going after customers, neither new nor old.  Once they have decided to grow, all they need to do is to simple things would make their dreams come true.   Let me tell you a real business story and how we worked with them to help them grow(some of them are already done, some are being done and some planned but I thought I would add this all up in this story)- there was this businessman in New Delhi who sourced the top notch variety of dry fruits, nuts and spices from Turkey, Iran, Afghanistan and other parts of the world etc. whose average daily revenue was $1000 (on an average he had 20-25 customers walk in to the store and buy items worth $40 to $50) – on weekends he made double.  He normally sits at the front desk, had couple of helpers packing stuff for the customers and had one computer for billing.  He had a small storage at the back- his “go-down” which was used to replenish the items in the store.  His customers are from all walks of life – from tie-wearing executives to politicians to seemingly rich business men.  They come to the store, look at the basket and based on their perception of freshness (all of the products are relatively fresh as there is not a stock for more than three weeks and he gets fresh products every fortnight) and their desire, pick up items, get them packed, get billed, pay the money and they are out – all within 10 minutes.

    This dry fruit and nut man Mr. H definitely wanted to take the next step and grow.  Honestly, he is not a typical client I get as I usually work with the manufacturing or information technology business, but I was excited and wanted to give it a shot. So, I verified with him if he can get a bigger store, can he sell online and hence can he work out better logistics and packaging for the same, can he get into a bigger social presence online, etc. and for all my questions he answered in the affirmative confidently. Then I had him do a desired sales projection on a monthly basis for the next two years.  Then I asked him for the increase of input cost he sees as he has to source more materials and operations costs would increase due to additional helpers and packers, and he gave me a reasonable estimate. Then I knew he had it in him and he was serious – he knew all about WHAT is to be done, and I told him I will help with the HOW part and we agreed on a partnership and a financial relationship and we both would work on attaining the same goal.

   There are three things that can be done to improve the way one conducts business, all of them related to one another:

  • Some low hanging change to the way one operates.
  • What can we do socially and online – either in person or through umpteen websites?
  • What extra can we do for our customers – the ‘above and beyond’ rule.  In any selling business, statistics show that more than 70% are repeat customers – why cannot we make their experience levels delightful?

What can be changed in the way one operates his business?

    From the first month on, he had one of his helper welcome each customer at the entrance and get their contact details – their phone #, email address, their social accounts their location of residence in New Delhi and important dates in their family (birthdays and wedding days) – during the wait time, they volunteered this information which was keyed into the system by the end of the day.

   After every week, and every month, he had a summary tally of how much and what each customer bought.

    He also started offering a card membership stating that after an overall purchase of 5 kegs or more, they are entitled for 500g of Golden Raisins.  This made his customers stay a little longer inside the store which helped his store helpers push other items that they do not usually buy.  The system automatically resets after they take this freebie and they are given a new card.  Just like a Starbucks card!

  After a few months, once he was getting good results, he started another shop in another corner of Delhi and had his son take control of this one.  His son was also made responsible for all the online sales.

What did he do online or socially?

   First he got into Pinterest so that he can start using PINS for his business and he also got lots of ideas from this social site from other store owners globally.  Although Pinterest is not that prevalent in India, it gave him some exposure to other similar businesses and seeds ideas into his operations and offering.

  Next he started testing the online market – he outsourced to develop a website for his store and also selling his goods in one leading e-tailer in India.  After about three months, he added one more leading e-tailer.  In both these e-tailing option, he captured the customer’s data to the level he could so that he can start sending advertisements to them during festival days.  Now he has perfected his packaging in a more cost effective manner based on the initial feedbacks he got. After some initial hiccups in review, the customers started giving him good feedback.  His only complaint was the credit time to get the money from the e-tailers is a bit longer, and his return rate either due to bad packing or some customer not liking the product was about 8%.   Slowly he moved some of his e-tailing customers to his website as well.

  He had a business page setup in Facebook and then he started adding the social accounts of the customers that were given to him.  Every fortnight, he would suggest some recipe to be made out of dry fruits and nuts and spices, and also would send out an advertisement for his local customers of Delhi region.

Customer Delight:

 This is the best part.  He had info about most of his customers who visit his shop and the anniversaries. Whenever they had one anniversary, an email was sent out to them (as well as a Facebook message) to make their next purchase on which he gave anywhere from 2-4% off. If he is close to one of the two shops, he would deliver it in a basket.  The customer just loved it.   Due to this alone, his original customers just started selling his store everywhere in NCR region.

   For his online customers, he made a database separately and asked for the same information about their anniversaries, social account etc. and although many did not respond as they preferred to shop through recognized retailer, he did manage to get some of them to his online store direct and had similar promotions for them.

    During 4-5 festival days, he prepared an awesome newsletter stating his promotions, even interviewed the less known chefs of local restaurants that were famous in the Delhi and had their favorite recipes published (this was easily recognized by his Delhi customers as they identified with the restaurateur), health benefits data of his produces and a small write-up of the origin of his dry fruits and nuts.

   Let me tell you, a year into this journey, he stood by his personal and financial commitments with me and he does send a sumptuous sweet box and a nut and dry fruit box on two festival days of the year – our New Year and Diwali.  We did some more than what has been published here, and it takes the passion and diligence of the business owner to be sold on the suggested idea to make this happen.   His intent must be clear combined with his passion and desire to grow, and then a small nudge by a consultant like me can help him achieve it.   For me it was a great experience and first of its kind as usually I work only with the IT and manufacturing folks.

   Due to him, a few of his business friends have started talking to me about their business.  Just like practicing Yoga or going to a much needed training program, both of which can be accomplished as home through self-study, it takes a mentor or a consultant to guide you through the process and partner with for success.

    So, RECOLLECT your customers for repeat buy and RECONNECT with them as much as possible, in a sensible non-intrusive way, so that there is a win-win both for your business as well as the end customers. Research has proved it takes 5 to 7 times more to acquire new customers (mostly advertising and marketing) than to retain repeat customers, existing customers spend 67% more than the new customers and 50 to 70% of the sales occur due to repeat customers.  There is a Pareto figure that states that 20% of the customers provide 80% of the revenue, and 8% of the customers account for 40% of the revenue.  Doing the math well, why should one have to spend 7 times to get a sales volume of < 30% if there is a high probability of a sale to an existing customer?  You definitely need new customers for revenue growth and higher market segment share and this must be a key focus area as well. This is something I always preach the specialty segment that your uniqueness does sets you apart from the crowd but you need to have the momentum going your way to enable more business to happen by trying out small things in a periodic way with little investment.

The author is a co-founder of Business Intellects and operates out of Bengaluru, India and is a business and technology consultant and a corporate trainer. Their motto is “We Make Success Happen”.