“We see our customers as invited guests to a party, and we are the hosts. It’s our job every day to make every important aspect of the customer experience a little better.” – Jeff Bezos
Customer Service Made Easy… and Profitable
There are two types of sales in business. In my industry, we call them front-end sales and back-end sales.
A front-end sale is the acquisition of a new customer. A back-end sale is any subsequent sale to that existing customer.
Front-end sales are almost always more expensive and more difficult than back-end sales. You are selling a product to someone that hasn’t bought from you before, may not have much trust in you, and – to make matters worse – you may not know who he is and where to find him.
Front-end marketing, therefore, is all about research, experimentation, and testing. And each of these can be very costly. That’s why I have said that the first responsibility of the Stage One entrepreneur is discovering the optimum selling strategy (OSS) for his/her business.
Because of the enormous costs of front-end marketing, most new customers will come to you at or below your allowable acquisition cost (the maximum dollar figure you have, through testing, determined you can spend to bring in a new customer).
What that means is that, for most businesses, you are not going to be making profits on your front-end sales. (If you are making profits, it means that you are probably not spending enough money on front-end sales.)
Profits, therefore, come from back-end sales – i.e., selling additional products/services to your recently acquired and existing customers.
How do you do that?
There are many ways to answer that question, but for our purposes here I’m going to answer it this way: Back-end sales depend on the customer’s experience of his initial purchase and how he’s been treated since then.
In other words, back-end sales depend on customer service – how you treat the customers you create.
Great customer service has three components:
- Knowing what your customers want – i.e., what they really want.
- Figuring out how to give them an endless supply of what they want.
- Learning how to start a conversation with them and keep it going.
Let me show you what I mean.
I was walking down a fashionable street in Bucktown in Chicago when I saw a large poster in a shop window that shouted, “New! Children’s Yoga – Sign Up Here!”
I looked up at the store’s marquee, expecting it to be a yoga studio. Instead, it was a children’s clothing store. “That’s smart,” I thought, “very smart.”
Knowing What Your Customers Really Want
Indeed, if the woman who owns this store knows what I think she knows, she will have a very successful, growing business. What I think she has figured out is the first component of great customer service: knowing what your customers really want. In this case, she knows that her customers – young women with children, for the most part – want to give their children a rich and productive growing-up experience.
She hasn’t settled for the most obvious and superficial conclusion: “The people who come into my children’s clothing store want clothes for their children.” She knows that if clothing their offspring were their main goal, there are other stores – discount outlets and department stores – where they could get a wider selection at better prices.
She has recognized, in renting space on a fashionable street and stocking her store with expensive, hard-to-come-by clothing, that she is going to be selling to a certain type of young mother – an affluent, educated, and upwardly mobile woman who sees the success of her children as a direct reflection of her. Perhaps because this store owner is such a mother herself, she understands that her customers are interested in much more than clothing.
What her customers really want is to do everything possible to give their children the best of everything. And for these mothers – being young and affluent and upwardly mobile – that means indulging them in all the latest trends in quality living.
One of these trends is surely yoga. Yoga is practically de rigueur among wealthy 20- and 30-something mommies these days. If it is good for the mommies, why wouldn’t it be good for their children too?
I don’t know how this clothing store merchant managed to offer kiddie yoga classes, but it’s likely that she made a deal with a local yoga teacher who agreed to provide free or low-cost lessons in hopes of securing other, more lucrative business from the store’s customers later on. But however she managed it, she is sending her customers an important signal: She understands who they are and what they really want.
I can imagine the positive response her yoga promotion must have created: new customers walking into the store, asking about the classes… goodwill generated by her existing customer base… and both new and old customers feeling that she really gets it… not to mention thousands of extra dollars from the sale of a line of little yoga outfits.
Figuring Out How to Give Them an Endless Supply of What They Want
If the owner of this children’s clothing store really does understand what her customers really want, you can bet that the yoga classes are just a single step of a lifelong journey she (and they) will be embarking upon. Long before the success of the yoga line ebbs, she will have thought of a half-dozen other campaigns that might attract additional back-end sales.
She could, for example, test a line of expensive educational toys and invite someone to lecture on early childhood development. Or she might do something with a local music conservatory – perhaps arrange for free introductory piano lessons, and then back-end the lessons with a line of clothing appropriate for giving recitals.
As the children of her current customers grow up, so could her offerings. If her customer base is sufficiently large, her children’s clothing store could, for example, give birth to a teenage clothing store.
Likewise, she could create new product lines that are connected to her customers’ lifestyles – traveling outfits for the summer, skiing outfits for the winter holidays, and so on.
And by making strategic alliances with other local businesspeople who could profit on the back end, she could provide additional benefits for her customers – demonstrations, tastings, and the like – at no cost to her.
The key thing she will have to remember in developing her back-end products and services is that everything she does has to be consistent with the understanding she has of who her customers are and what they really want.
Learning How to Start a Conversation With Them and Keep It Going
If you recognize your customers’ deeper desires and provide them with more and better products more frequently, you will double or triple your back-end sales and, thus, double or triple your company’s profitability.
And if you do one more thing – talk to your customers about what you are happy to do for them – your profits can skyrocket.
This is an aspect of customer service that too many entrepreneurs, even good entrepreneurs, neglect.
If our shop owner is as good as I hope she is, she is already collecting the names and addresses (or, better yet, email addresses) of all her customers and is sending them information on a regular basis. She is surely sending them announcements about special events and sales, but she should also be sending them advice that helps them achieve their deeper objectives.
She should be sending them a monthly newsletter that talks about all the great new parenting books and information products that are specifically geared toward affluent parents. She should be talking about what events are taking place in the store and what new ones are being planned, and including testimonials (which she should be collecting) from customers who have experienced her special events in the past.
The wonderful thing about the internet is that it makes this sort of communication easy and affordable. Instead of printing up a four-color monthly newsletter, she can email her customers informally any time she has something to say. If she reads something interesting in The New York Times, she can pass that along to them. If she is thinking about bringing in a tennis teacher to give introductory lessons, she can ask her customers if that’s something that would interest them.
With the software available these days, it would be easy for her to communicate with all of her customers on a first-name basis. Each of her communications can have the intimacy of a personal letter and, where appropriate, the urgency of a postcard. By establishing a pattern of communicating in this way, she can create a very profitable, long-term relationship with all of her customers.
