E-Class #52: Success Story: How XXX Tripled Their Profits in a Year

Note: The real names of the people and businesses in this success story have been changed to protect the privacy of those involved. All the problems, strategies and details are based on true events.

Summary of Success

Client	KSR Custom Furniture Services Ltd.
Business	Custom Furniture, Cabinetry & Repairs
Issue	Using the E-Classes in five-step program, Jordan: > took an exit survey of past clients > reviewed recent ROI of his marketing efforts > anonymously observed the new competition
Approach	Customers were taking their business to new furniture distribution companies that had opened in the area to save costs. The competition was producing an inferior product. No new marketing strategies were being implemented to attract new businesses from different market segments.
Diagnosis	An education-based strategy to encourage past customers to return. Improved marketing strategies to attract new, loyal business. Confidence and open mindedness to try new things.
Method	An education-based strategy to encourage past customers to return. Improved marketing strategies to attract new, loyal business. Confidence and open mindedness to try new things.
Business Generation Strategies	> Distribution of Intellectual Property > Powerful Offers > Customer Communication and Education > Direct Mail > Networking
Results!	1. Increased new business by 50% 2. Recovered 60% of lost customer base 3. Increased sales by 300%

Jordan had been running a successful custom furniture and repairs business for over 15 years. Suddenly, he found that he was losing his customers to the competition.

Just over a year and a half ago, Jordan had been running his mid-sized custom furniture and cabinetry business for 15 years. He had always enjoyed a diverse customer base of homebuilders, individuals, renovation contractors, developers and collectors. He offered a range of furniture products, and catered to a wide variety of budgets.

As one of the only furniture builders in town, he also enjoyed a monopoly over the business. He employed several other carpenters, and had a fairly large workshop on his property. His pieces were regularly profiled in the local magazines, and several national ones.

“Then, within two or three months, two new furniture and cabinetry businesses opened,” he wrote.“Neither business created their products on-site, but instead brought goods in from other companies in neighboring towns. None of these products were unique, but they were designed with that illusion.”

Suddenly, his customer base began to rapidly dwindle. Loyal, long-time clients were difficult to reach, and planned or promised projects vanished into thin air. Clients were switching to his lower-priced competitors, and things were dire.

“I thought, if business continued to decline this way I was going to have to start letting my staff go, and eventually close the business. I didn’t know what to do, and I was desperate.”

Before Jordan could start working to recover and grow his business, he had to figure out what was happening to his customer base.

This is when Jordan came across my site. He had been searching for profitable business ideas and advice. He wrote that

To figure out what was going on, he realized that he was going to have to talk to his old clients. Some of these people had been good friends, but hadn’t talked to him in months, so the conversation was going to be difficult.

Why were Jordan’s clients switching to the competition?

Jordan assumed that the issue was based on profit. Developers and contractors wanted to increase their profits, and so had switched to a less expensive provider to do so. They were compromising quality to infuse their bottom lines.

“I was frustrated and hurt that so many loyal clients had disappeared. I always prided myself on the good, quality work that my company produced, and felt that all our hard work had gone under appreciated.” He said.

He also said that he knew he was overreacting, and taking the loss in business personally. He decided to stop letting his emotions get involved, and get to the bottom of the problem. If his prices were too high, or if his product was substandard, he needed to hear it from an actual client.

He approached three of his long-term clients that had switched to the competition, and asked them if they would mind coming to meet him for an interview. Two of them agreed, and they set up a time to meet.

He found from both clients that:

• They were initially curious about the new wholesale furniture businesses, and wanted to see what kind of product they offered.
• The new companies offered competitive prices, and a product that was of an acceptable quality for mid-range buyers.
• The new companies did not provide a high level of customer service, or a high level of custom options.
• When they realized that they couldn’t rely on these new companies, they were hesitant to return to Jordan because they felt he would be upset.

“I was happy that some of my assumptions were true, and that I now knew for sure what I was dealing with,” said Jordan.

Why wasn’t Jordan trying to get his lost clients back?

Jordan was frustrated and hurt, and hadn’t even started thinking about how he might be able to get his old clients back. He assumed that if his clients wanted his services, they would come back. He didn’t want to go begging for business.

However, after he conducted exit-interviews, he realized that his business wasn’t just going to magically return. People are busy, and most were likely too embarrassed to come back after leaving so abruptly.

“I realized not only that I could get my clients back, but that I needed to be the one to make the effort. I had to create a proactive strategy to bring them back in a way that was comfortable for both of us,” Jordan said.

What wasn’t Jordan attracting any new clients?

Jordan said that he had relied on his long-term, loyal customers, and had never had to do much to attract new clients. The majority of new work came as referral business from his customer base.

So, when his customer base started dwindling, so did his flow of new customers. He had no idea how to go about attracting new business.

Armed with this information, Jordan needed to find a way to get his old customers back, and to go after new clients in order to protect and grow his business.

When Jordan had a monopoly over furniture and custom carpentry, business was easy and profits were high. He had a diverse customer base, and didn’t have to worry about attracting new business. When the competition came in, it shook up the way he was running his business.

Jordan needed design a strategy that would:

• Let former customers know that they were welcome to return
• Entice old customers to return
• Attract new clients
• Protect his business from future changes
• Repair and continue to grow his business

Jordan started by going back to the basics. He restructured his services in a way that would highlight his business’ key points of difference.

“I knew that I wasn’t going to be able to compete with the new companies unless I figured out what my point of difference was, and focused on that,” wrote Jordan.

He couldn’t match the new companies’ prices when it came to mid-range lines, or low-cost cabinetry. He didn’t have the manpower or the facilities to produce on such a large scale.

“I knew that unique, custom, high-quality designs were what we do best. It’s really what our customers have relied on us for for years.” He said. “I needed to narrow in on that part of my business, and communicate this service to our former and future clients.”

Jordan decided to eliminate mid-range furniture creation, and instead focus only on high-end design and repairs. He also decided to increase his prices to reflect the increase in value, which was a risky move, but one that he felt was essential to the image of his business.

Then, he used a personal customer relations strategy to earn back his customer base.

“I needed a highly personalized strategy to win back by old customers, and I needed to give them a reason to stick with me.” Jordan wrote.

Jordan decided to hold a customer appreciation evening. He sent out invitations to his entire customer base, and included personal notes on each one. He said he wanted to show appreciate for all former and existing clients, and that he wanted to make some announcements about his business.

At the event, he gave each of his customers a handcrafted gift that was personalized to the type of business that person was in.

“I chose the customer appreciation event to announce some changes that I had made to the business. I announced the change in offering – from a wide range to a limited range of custom furniture design – as well as the increase in prices,” he explained. “When I was finished, I told the room that they would be grandfathered, and continue to pay the old prices for the remainder of the year.”

Jordan said that he wanted to acknowledge the patronage of his old client base, as well as give them an incentive to bring their business back within the next few months.

Then, Jordan created a new strategy for attracting new clients to his business, starting with some thorough market research.

Since Jordan had never had to attract new business, he really didn’t know where to start. He relied on the weekly E-Classes to teach him what he needed to know.

Like many of you, he started by figuring out who his target market was. As I mentioned above, he served a wide variety of customers. From individuals to developers, each had different needs, different budgets and different priorities.

With the introduction of competitive businesses, Jordan also realized that he needed to focus on his point of difference – what made his business unique – in order to survive. He couldn’t compete with big distribution; his business was about custom, quality pieces.

So, he decided to focus on the people who would be most interested in – and who could afford – high quality, custom carpentry: wealthy individuals, high-end developers and architects who designed custom homes.

Jordan had a professional photographer take photos of his best pieces, and he put them together in a high-quality, glossy brochure with very little text. He then mailed the brochure with a sales letter to a list of the top 100 developers and architects in the area.

On top of his niche market outreach and relationship-based marketing, Jordan also created an offer for his prospective clients that he hoped they wouldn’t refuse.

In the furniture business, a happy, loyal customer has a very high lifetime value.

Historically, Jordan’s loyal clients had spent anywhere from $50,000 to $200,000 in his business over the course of several years. On some of his high-end kitchen restoration projects, clients had paid $100,000 for the single project.

With this in mind – and after reading the E-Class on customer acquisitions – Jordan created a very generous offer for his prospective customers.

Once they had used his restoration services, he was sure that the quality of his work would speak for itself, and he may be able to attract more work from his customer’s friends and family members.

He made this offer to new developer clients – not individuals – who would be building large subdivisions and high-end apartment buildings. He offered to create an exclusive furniture line for each development, and give them a 15% discount on the usual cost of the service. They could then include the exclusive furniture line in their marketing, which would contribute to the value of the unit.

“I build a lot of mark-up into my custom lines, because it helps to enhance the image of exclusivity and quality. Sometimes, I mark up the lines by 50%, so the 15% discount was minimal,” Jordan wrote. “I also wasn’t compromising the image of my business because developers are construction guys – they’re looking to get a deal on anything. The fact that they can market to the product their clientele as a high value addition was huge for them.”

Jordan was consistently surprised by the results he got from trying these new strategies; they challenged his understanding of what marketing and customer relations really are.

Jordan’s email to me was full of enthusiasm and excitement. Here’s what he told me his results were:

1. Earned 40% then 60% of his lost customers back.
2. Generated a 50% increase in new business
3. Attracted a new group of affluent clients who could afford his “custom” line.
4. Tripled his sales revenue in less than 12 months.

“It took a lot for me to go back and approach the clients I had lost. But once I started talking to them, I realized that our relationships were preserved and they realized that I could offer them what my competition couldn’t,” said Jordan.

The majority of clients he approached took him up on his offer on the spot. They had been concerned about coming back to use his services, and were thrilled by the generous offer he made them. Within three months, he had earned 60% of his old business back.

The shift in marketing also had a huge impact on the profitability of his business, and also offered further protection against the competition. Marketing and catering to a high-end customer allowed him to serve a niche market, one that the discount furniture stores couldn’t touch.

“I realized that with a small business like mine, customer relations are an essential part of my success. Without that, I’m just another furniture maker or distributor. It’s the foundation of my marketing strategy.”

Every business has the potential to generate the same results that Jordan did by following the advice in this program. It’s proven and it works.

In Jordan’s case, and in the case of most small businesses, the key to success is a really well researched and smartly executed marketing strategy that is based on the five-step process.

An increase in any of the five factors (lead generation, conversions, average dollar sales, average number of transactions and profit margin) requires a strong and intimate knowledge of your target market, and of their unique emotional triggers and motivators. As you have seen in these E-Classes, nearly every strategy requires this knowledge as its foundation. Failing to do this will have you shooting blind.

Accurate tracking systems, and clear testing and measuring processes are also vital to the success of your marketing efforts. How will you otherwise know if and when you are successful? How will you know what exactly you’re doing right, and what you may be doing wrong? You need to make sure that you’re seeing an ROI on every strategy you implement or execute.

Please, as always, let me know if you ever have any questions about the five-step process, or if you have one of your own success stories to share. I look forward to hearing from you.

Wishing you every success!