Photo (CC) by Quinn Dombrowske, on Flickr

Success for a small business means watching your pennies. Margins are usually small, sales are often weak, and there is little or no cushion available to absorb a mistake.

It is also true that small business owners must not get so caught up in watching pennies that they miss the holes that are leaking dollars. Harry Barnes, in 1942, referenced this as “penny wise and pound foolish.” And I have discussed this idea in two previous columns, Follow the Money and Chasing Bright Shiny New Things.

Yet a recent experience suggest that you also need to consider customer perception of your efforts to minimize costs. This may sound funny but here is my story. Consider this picture.

Our refrigerator has a mechanical issue. When the service rep came out, he diagnosed the problem (we hope but that’s another story). The parts weren’t available locally s0 he ordered them to be shipped to us. He will be coming later this week to install them. What we received are the three envelopes shown along with the items you see. As near as my wife and I can tell, all three mailings came from the same location. Two came one day and the third a day later. Each envelope had postage for a pound but all the items weighed only about 7 ounces.

This may have been an effective and efficient way for the company to handle this. But to me, the customer, I’m asking “REALLY?”

Effectiveness and efficiency form part of your business image. We applaud companies that portray, through words and actions, a mission of customer service. Think of the places where you do business. This concept is probably part of why you go where you do.

I might even go further and suggest  we may pay a slightly higher price for a company that demonstrates efficiency than one where we get the cheapest price but its operation is somewhat helter skelter. My rationale would be that the well organized company can probably find a way to bring their costs down while the second company may offer a bargain today but we can’t see how they will be there tomorrow when we need service or want more.

I don’t know where the balance point is between being efficient and your company’s rating on customer service.  My purpose is to remind you that these concepts, efficient, effective and perception, are intertwined.

Developing an on-going sustainable business means finding that balance for your business.

Photo (CC) Justin Grimes, on Flickr

Read anything offering marketing tips and you will be encouraged to learn who your customers are. You want to understand the demographic make-up as well as their likes and dislikes and, of course, what they buy.

Yet, so often that is the end of the effort.

Getting the data can be done with registration information, sales receipts, and even contest applications. You can also ask simple questions, “how can I help you?” or “did you find what you wanted?” It may also come from asking what they like about shopping in your store. And then there are short surveys, a comment box, online engagement polls, etc.

So getting the data is not usually the problem.

Yet, how often do we take the time to dig into the data and look for clues to help us run our business. Do you analyze what it means and then make changes on what you found. And do you remember to thank the customer and tell them what has been done because of their help. (I must take a moment of self-confession. I don’t do any of this as much as I should. Time to up my game.)

In my case, doing this blog allows a number of data points to be collected. One such effort is just looking at the number of people who engage with a blog post.

So I decided to look back on my 2016 blog posts for Small Business Survival. For this first effort, I simply wanted to find my top two posts based on the number of people who commented on them. Engagement could have also been likes but I felt people who commented where especially interested in the topic.

The results were:

1. Your Small Business Needs a Sign – https://smallbizsurvival.com/2016/07/your-small-business-needs-a-sign.html
2. Information Helps Your Small Business Succeed – https://smallbizsurvival.com/2016/06/information-helps-your-small-business-startup-succeed.html

This simple look at the data reinforces survey information that I first gathered in 1996 and at several other points in time. At a broad-brush level, marketing and startup information seem to be of greater interest.

If you look at the second article though, maybe the issue is more of a time management question. It’s important to go deeper than what a quick overview might suggest. This might be a time where additional information is needed – Is it time management that is the issue or do you have some specific startup questions or is it both?

Bottom line, data can move your business forward if (1) you take the time to analyze it; and (2) you act on what you heard.

Thanks for your blog comments, likes, and interactions. They help us focus on what you need. Keep them coming.

Photo (CC) by One Way Stock, on Flickr

Customers like doing business with people they know. As a small-business owner, you can use that to your advantage.

Some advantages can include knowing your customers by name. You can learn what products and services they want. If customers have a problem, “talking to the boss” to get an immediate solution is easy for them. What’s also easy is to ask them to be your ambassador, take pictures for your use and write a review.

But do not abuse the advantage. Today the consumer has certain expectations that all businesses need to meet. Being small should not be used as an excuse.

Some of the areas where being small is used as an excuse are:

• Inability to compete, typically in terms of price – Price is just one way businesses can compete, and it is not the leading factor typically. Small businesses can be very competitive in many other ways.
• Not looking for the opportunities they have.
• Ignore planning – Planning is a crucial step in being successful. Planning need not be developing an elaborate set of written documents. It is, however, going through a thoughtful process and jotting down key goals, objectives and time frames.
• Avoid competing for help – Small businesses can offer certain benefits that big businesses can’t. Plus, small businesses often can be very competitive in terms of wages and salaries.
• Not using technology – It really isn’t a matter of whether you want to use it; technology is a part of today’s society.
• No marketing – Small businesses face lots of competition. You need to be visible to your customer base. Today that means being online as well as in traditional marketing methods. All businesses need a website. Beyond that, you need to be using the tools that your customer is using.
• Poor customer relations – I hate to repeat myself, but don’t take advantage of your customers. Being small does not mean you can ignore your customer, talk about your customer or not be totally professional in how you treat your customer. You know how you want to be treated. Treat your customer the same way.

Most small-business owners understand what they need to do in terms of customer relationships. What usually is the case is that we get lax in these long-term relationships and slowly let go of some of the things that once made our small business stand out. You can’t let that happen. Never assume the customer will be back tomorrow.

Your customer base is your most valuable resource. Make sure to pay attention to them. They are your business tomorrow.

Photo (CC) Justin Grimes, on Flickr

A lot has been written about how market research will help you achieve business success, and many of these claims are true.

That connection, however, is not a simple, direct link. Collecting information about your potential market is useful only if you take the next step of analyzing the data.

Data analysis yields clues about who your customers are, what they are buying and problems they face. It provides you with an insight of the benefits they are seeking.

Data analysis begins before you even start collecting the information. Thinking about the questions you want answered. This guides the data you need to collect. Remember to start with data you already may have:

• Customer lists – Do the lists answer how much customers spend, when they buy and what they buy?
• Effectiveness of your marketing – Are your customers responding to your marketing and advertising efforts? If so, what efforts are working best?

Your local chamber of commerce or economic development office will also have information about the trade area and the people who live there.

You also can get information from third-party sources. Trade journals, news magazines and papers, plus writers you find online or in books, often share information about your target market.

Finally, vast amounts of data are available for free from the state and federal government. Here in North Dakota, you might check out ND Compass and the U.S. Census Bureau. Both of these are adding tools to make data analysis easier for anyone.

After having examine the information available, then look for the gaps. Make plans to fill those gaps.

Tools to help collect such information include surveys (paper, oral or electronic); contests structured to provide feedback information; checkout data, such as asking a question or two as a person is checking out; and customer feedback. Data also can come from observation, interviews or simple testing. Data collection can be done one-on-one, in a group or through the mail.

But to this point, your data is just numbers and words. The return for your effort comes from making sense of the information. You can use in-depth statistical packages or textual analysis software. Many business owners start by putting numbers into a spreadsheet and looking at frequencies, charts and graphs. The idea is to see if any trends emerge. The same goes for textual information.

Having others look at your initial findings is helpful. This is a good time to have your mentors and advisers review the information and have some frank conversations about what everyone is seeing. Different interpretations will emerge, giving you greater insight. If you can supplement the numbers with customer conversations, then your analysis will yield even more.

It sounds complicated, but it’s really not. Start simple and build your skills and your database. You don’t have to collect everything at once.

When doing market research, balance what you need with the cost and time required to get it. Don’t forget to take into account your customers’ perspective, how much time are they willing to give and what information might they want to keep private.

Building your business means knowing your customers. Good market research can help you know your customers, so start your effort today.

Todd Holder rings up our soaps and lotions. Photo by Becky McCray.

A common concern among small-business owners is how to increase revenue. Often, they try to do this by finding new customers.

That is an expensive way of doing it. On average, it will cost from $20 to $50 to get a new customer. Yet it only costs from $1 to $5 to expand sales to an existing customer.

Not only does increasing sales to current customers save money, but existing customers tend to spend more money than will new customers.

So whether you are encouraging your staff or doing it yourself, focusing on your existing customers can provide good returns for a low-cost investment.

Focusing on the existing customer starts with thinking in terms of not only today’s sale but the purchases a customer will make long term. A customer buying from a business represents income not only today but for many years.

An easy way to increase sales to existing customers is to offer complementary products and services. For instance, if you sell luggage, add a rack of luggage tags.

Often, these simple additional items offer a good rate of return. And these items move easily. The only requirement is that you and your staff need to make the customer aware that you carry them.

Another simple tool for increasing sales to existing customers is to remain in touch. The contact with customers can be about a new product or services they might like. These contacts also are a good way for businesses to thank them for their past business.

Of course, nothing can beat a good customer referral system where existing customers help you attract other customers. Make sure that you acknowledge or even offer an incentive for the referral.

Businesses selling to other businesses also should think about how they can help the other businesses increase their sales. One way is for businesses to work together to offer customers a combination of their products and services.

No matter what the economic climate is, getting more sales from existing customers makes good business sense, so take time to plan how this strategy can work in your business.

Photo (CC) by Ninlan Reid, on Flickr

If you’re a business owner, which appeals more: spending $20 to capture a new customer or spending $1 to retain an existing customer?

These numbers represent broad averages but reflect reality, according to research. This means developing a sustainable business requires focusing first on building customer loyalty.

Every business needs to build its customer base, but often the focus is on bringing in new customers. Perhaps the better strategy is, first, retaining existing customers because this forms a stable sales base and they become your ambassadors as you turn to finding new customers.

Retaining existing customers means providing them with what they want at a price they feel is reasonable while offering them a pleasant shopping experience, and giving outstanding customer service and support.

To do all of this means listening to your customer.

However, one difficulty business owners face is that customers will not rate each one of these items equally, and each customer will have his or her own preferences.

Understanding the customer and his or her preferences means coming up with a business strategy that will work best for your situation. To some degree, that means building around where the core of your customer base puts its values.

Yet understand that with the tools available, it is possible to have customized approaches to various groups or even individuals.

The goal is customer retention. Yes, customer retention or customer loyalty programs may have a cost, but based on the research, these programs seem like a good way to spend your money. That’s especially true when research shows that long-term customers tend to buy more and more often than new customers. So you want to keep your customers and keep them as long as possible.

Customer retention programs are not a one-time effort. Internally, the customer changes, and externally, the surrounding environment (think competition) changes. As the customers have various experiences, they will come across other business tools that they prefer. They may move, for example, from valuing price savings to valuing service.

Help your customers see how they get value from your relationship. Encourage them to tell you their ideas and thoughts for change. And then take action on what they say.

Retaining customers can have a great payoff. Making customer retention a mission of your company is well worth your time and effort.

Photo (CC) by Roland, on Flickr

When your customers want a product or service your carry, is your store the first place they go?

People use habits and routines throughout much of their life. Habits and routines make life easier and free up the brain for other decision-making tasks. We operate much of our lives on autopilot.

The autopilot mode can be of great benefit to you as a business owner. Yet you need to nurture the customer to build a habit of coming to your store.

And not only do you need to develop that habit initially, but you cannot get lax. You must continue to strengthen the relationship through time.

Customer habits are formed as consumers find your place of business, maybe just browsing the first time they enter, or perhaps some marketing effort drew them in. You want them, on that first visit, to view your store as friendly, service-oriented.

This means a smile, a friendly greeting and asking how you can help.

Building the habit can happen more quickly if, on that first visit, you get them to make a purchase, any purchase. Then you focus on having them buy something else each time they enter. The goal here is establishing the purchasing routine so you are not concerned that the purchases may have little profit for you. You want to establish repeat behavior.

Yet realize that a purchase does not need to happen each time. You also want to establish your business as the place to go.

So be prepared to search, order, offer suggestions and even mention another store that may have what the customers need. Also help them in using the product, even it if isn’t yours, and offer other tips. All of these efforts build up the perceived value of your business and the likelihood customers will come back routinely.

Building habits also can occur even when customers are not in the store. Let them know when new products they are interested in arrive. Small businesses have a big advantage because you know your customers, their needs and their wants.

Emails, cards and other communication also keep your name in front of customers. Let them know of the arrival of new products and services for them to try. Even wish them a happy birthday.

Another way to increase their perception of your business and build it as a habit is to have a conversation with them. If they say something positive about a past product or experience with your business, thank them. Even ask them if they would mind doing a short video or written testimonial. They may feel uncomfortable, but having you ask helps them realize you appreciate their business.

If they make a suggestion, again thank them and, if you use it, tell them how and what difference it made.

Finally, be known as the owner who listens. You maybe can’t change anything, but we all like to feel we have been heard.

Habits are powerful. Habits are hard to break. Making your business a habit is a big step in your ongoing success.

Glenn Muske is the Rural and Agribusiness Enterprise Development Specialist at the North Dakota State University Extension Service – Center for Community Vitality. Follow Glenn on Twitter: @gmuske