As a small business owner, thinking up new ways to grow your business isn’t something you always have time for. You’re thinking about running your business, making your products great, and making customers happy. What’s not always on your mind is how to build and engage your customer list.
Yet, there is a direct connection between building your customer list and increasing purchases.
In our 15 Minute Breakthrough Series, Fanbank Founder & CEO Mitch Jacobs tackles practical tips for how small businesses owners can grow their customer base. His recent webinar discusses how small businesses can create and engage their customer lists to maximize sales. Watch the recording and read insights from the broadcast below.
Key takeaways
- Introduction
- Why customer lists matter
- Controlling your customer list
- Building and engaging your customer list
- Free vs. paid engagement
Why Building and Engaging Customer Lists Matter for the Small Business Sales Funnel
When it comes to both new and repeat customers, customer lists are an essential part of any small business. When you have a strong customer list, you can be more prepared to respond to challenges and opportunities in your business.
It is a multi-step process to build and engage a customer list. This is even more important for independent small businesses because they fundamentally have a very different sales funnel than an online business, or a chain or franchise.
National chains and franchises automatically benefit from multi-million dollar general awareness ad campaigns that are run by their corporate offices. Online businesses rely on inbound marketing and other digital strategies. These often don’t make sense for independent small businesses.
The traditional sales funnel for small business includes three stages:
1. Driving Awareness with Customers
The awareness stage is all about capturing and increasing attention for your brand with local shoppers. This can be interest demonstrated through likes and follows on social media. Or, it could be capturing potential custom contact information through online and email sign-up forms. Above all, you want to engage them and continue reaching out once their initial interest has been piqued.
However, for small businesses, there’s simply a limit on the amount and scale of awareness efforts you can do. Getting your name out in the community is no small task due to time and budget. You can’t compete with the chains and e-commerce sites, and that’s okay. That’s why we’re focused on the next stage: build and engage your customer list.
2. Building and Engaging Customers Lists
The second phase of the sales funnel is where small business owners can see the greatest impact from their efforts. If you’re going to invest your budget into one area of customer engagement, it should be this stage.
Building and engaging customer lists means continually offering something of value to customers who have shown interest in your business. Conducting this engagement efficiently requires using a platform or communication channel you have control over.
We recommend using promotional and email platforms to send new promotions, informational content, and information about your business to your customer list. That way, when you conduct these activities over time can both build brand loyalty and inch your customers closer to making a purchase from you.
3. Purchase
This phase is all about converting customer engagement into a sale. After the point of purchase, you can use follow-up tactics to continue to drive repeat customers and segment them based on purchase behavior.
Tactics for Building and Engaging Your Customer List
If you can consistently put the right amount of energy into controlling, building, and engaging your customer list, you can achieve your sales goals. Here’s how:
1. Use a platform you can control
Many small businesses exclusively use third-party apps, social media platforms, or customer review sites. Yelp and Google are popular choices to do the heavy lifting of nurturing their local customers into buyers and delivering sales.
While those tools can be important, they are largely unreliable and expensive for driving consistent sales. Plus, you’re at the mercy of their rules and regulations. Social media sites can change their algorithms with no warning. When Facebook changed its algorithm in favor of a paid model, the platform started showing organic content to only about 2% (social@Ogilvy) of all followers of a small business’s Facebook page.
If you want to properly engage and convert your fans into customers on your customer lists, look for solutions that you can have control over. This makes it much easier to convert followers and grow sales, instead of relying on third-parties to deliver those sales for you.
2. Break through the promotional noise and offer a reason to engage
Once you’ve identified a platform you have control over to run promotions, such as Fanbank, the next step is to find a way to break through all the promotional and awareness noise. The goal here is to capture attention and give potential customers a reason to sign up for your list.
We recommend looking at what major chains and franchises have done. While you won’t have their advertising budget, you can apply the same line of thinking and partner with major brands that customers are familiar with to immediately draw attention to your business.
Below is an example of a free cruise giveaway that a Fanbank member ran as a summer promotion to local customers. By offering an eye-catching promotion, the business incentivized potential customers to provide their email. Plus, they generated awareness for their business in the process.
3. Transform interest into captured contact information
Now that you’ve generated interest in your business, it’s imperative to convert a viewer’s interest into a contact on your customer list. Do this by capturing their information, such as an email address and phone number. Then, you can communicate with that potential customer moving forward for free instead of continuing to pay for awareness.
In the giveaway example above, anyone who entered the giveaway was then added to the business’s Fanbank customer list. The business now has those email sign-ups and can contact each potential customer at any time, for free, at whatever interval they choose.
Remember that every interaction is an opportunity to convert local residents to your customer list. In the past, businesses would capture this same information with a fishbowl for business cards. Today’s fishbowl is everywhere: anything from QR codes, email forms, social media follows, customer referrals, and more.
Because small business owners are already part of the neighborhood, they actually have a huge advantage for managing this conversion. You want to make every point of contact an opportunity to build your customer list.
The ultimate key is to make it easy for your customers to convert into a contact on your customer list. Do this either through digital experiences, like landing pages or in-person connections. Don’t forget to begin the engagement process once they’ve converted.
4. Continue to build engagement at regular intervals
Often, businesses are so focused on capturing customer awareness or getting customers to sign up for their customer lists. This results in them missing critical follow-up opportunities that can deepen customer relationships and turn engaged customers into buyers.
Your point of capture should be the start of long-term engagement with your customer list. Little things can be essential for growth, like simply sending an automated email with links to your social media profiles, websites, or other methods by which customers can learn about your business. These will help your customer base immediately engage with your brand, offers, and content on your channels.
After initial sign-up, sending follow-up communication allows you to keep your brand top of mind. By staying consistent with your content, you can tap into a topic or incentive that you know a lead is already interested in while you build engagement for your business.
If this seems like a lot of customer touch points to manage, it is. Tools like Fanbank can automate much of the heavy lifting:
- When the customer enters their information for an online giveaway hosted by Fanbank local business, they automatically receive an email that welcomes them to that business.
- That message contains customized content, as well as links to that business’s social and webpages encouraging them to make a purchase.
- The customer then receives an email every three weeks or so, which reminds them of the initial offer they signed up for and additional incentives to make a purchase from that business.
Making the Choice to Pay for Customer Acquisition
So far, we’ve covered mostly free options to build and engage your customer list.
However, when it comes to investing in paid channels for generating leads for your business, most small businesses actually underestimate how much they can spend.
Paid channels can be a smart investment for building their customer base if you know the core metric: what is a customer worth to your business? To answer that question, you should know three metrics:
- Your margin on goods and services
- The average cost of a customer’s transaction
- The customer’s average number of visits to your business
Example Engagement Cost Calculation
For example, say your business’s average customer purchase is $50. You calculate your margin on that purchase to be $30. If that customer visits your business four times in a year, that customer generates $120 in total margin for you.
If you’re spending $120 to acquire that customer, you’re breaking even. But, if your goal is to generate three times the amount you’re spending to acquire that customer, reaching a $120 margin means you can spend $40 on engagement. Spending $40 on paid engagement per customer to build your customer list is a much more reasonable engagement goal and provides more bang for your buck.
When it comes to investing in building and engaging your customer lists, we recommend digging in and getting aggressive. Don’t be timid with customer engagement. Smart investments to grow your customer lists and your business.
Additional Resources:
- How to Choose the Right Seasonal and Holiday Sales Offers
- How Independent Business Owners Can Use Big Chains’ Sales Formula to Attract Local Customers
- Fanbank Overview
Learn how to grow your customer lists with a demo of the Fanbank platform for small business!
Source: “Facebook Zero: Considering Life after the Demise of Organic Reach.” social@Ogivly. 5 March 2014. https://www.slideshare.net/socialogilvy/facebook-zero-white-paper-31934430
