Explaining The Small Business Failure Rate
Statistics about business success aren’t reassuring
Guest post by Pamela Herrmann and Patty Dominguez.
About 80 percent of new businesses fail in the first 18 months, according to Bloomberg Business research. During the economic meltdown of 2008, for the first time in decades more businesses closed than were started.
“What business owners don’t seem to understand is that what’s required, not only to survive but to thrive, is within their control,” says Pamela Herrmann, author of “The Customer Manifesto: How Business Has Failed Customers And What It Takes To Earn Lasting Loyalty.”
“The typical business owner has no idea how to create leverage, how to utilize new technologies, how to strategize to be competitive, or how to stop the hemorrhaging of cash in the form of failed online-marketing investments.”
Herrmann is co-founder with Patty Dominguez of CREATE Buzz (www.CreateBuzzNow.com), which is changing the way small businesses connect with customers – both online and offline. Dominguez and Herrmann review four business mistakes – and ways to correct them:
• Missing the biggest revenue opportunity. Much of traditional marketing focuses on attracting new customers. “But the biggest revenue opportunity is in keeping existing customers,” Dominguez says. Among the ways to keep customers loyal: Always greet them warmly. If they are waiting in line, thank them for their patience and assure them you’ll be with them promptly. Make certain your business is clean and comfortable. Use words such as “my pleasure,” “absolutely” and “you’re most welcome” instead of “sure,” “no problem” or “yeah.”
• Tracking the wrong metrics. Business owners often make marketing decisions based on short-term data, like how much money is in the bank or how many sales they made last month. This is reactive — not proactive.
Herrmann and Dominguez say the way to focus on the right metrics is to ask such questions as: How many new leads did you get this month? How much did it cost you to acquire that new lead or customer? What’s the average value of a single transaction?
• Failing to manage their message across all customer touch points. Most businesses are unaware of all the ways consumers use technology to find them. Businesses should create a Customer Journey Map so they can see all the touch points across all channels, measure how well they are doing and then identify gaps and opportunities.
• Being unaware of marketing fundamentals. Just like an archer tries to hit the bull’s-eye, an entrepreneur tries to reach customers. No matter how many arrows that may be in her quiver, if she doesn’t know how to aim, she’ll probably miss. The same is true with marketing.
“You need to know who you’re marketing to,” Dominguez says. “Why are you marketing to them? What are their wants and needs? When you do you this effectively, you shift from sinking money into fixing problems and into growing your business through strategic decision making.”
About Pamela Herrmann and Patty Dominguez
Pamela Herrmann and Patty Dominguez cofounded CREATE Buzz (www.createbuzznow.com), an online training experience that helps business owners and their employees get powerful, positive and practical customer engagement habits that build loyalty. Herrmann and Dominguez co-host the Customers For Life podcast and The Morning Would Show, providing daily motivation.