Who are they and what do they want?
You may have heard the phrase “the rich get richer and the poor get poorer.” It is certainly true that the vast majority of wealth in the United States is concentrated in the hands of relatively few people. But did you know that most wealthy people are business owners?
I have always believed in targeting the higher end of the market. It is much easier to compete where there are fewer competitors than where the market is crowded with Walmarts, Sears, and the JC Penny’s of the world.
During an economic slowdown the competition at the bottom of the market becomes fierce. Consumer confidence forces a decline in spending that has everyone competing for financial scraps. At the upper end of the market, a decline in consumer confidence is less evident. The wealthy spend far less covering their overhead as a percentage of their income than the lower rungs of the market. Let’s face it – the wealthy have far more discretionary income.
I believe you can transform your business by targeting wealthy and affluent clients. The demographics of society are changing as we head towards a convergence of baby boomers retiring, more and more affluent Americans inheriting their parents’ fortunes, and dual income couples without children coming of age in occupations where they have plenty of cash to spend.
Who are the Wealthy?
It’s useful to illustrate the difference between affluent clients and wealthy or high net worth clients. If you’ve ever read The Millionaire Next Door, you know that many truly wealthy people do NOT overly flaunt their success. They remain married to their first spouse, live in older, well-established neighborhoods, and rarely buy a brand new car. They didn’t become wealthy by accident.
This type of client makes purchases based on whether it’s a good value.
Affluent clients on the other hand DO flaunt their success. They live in high priced houses in upscale neighborhoods, drive luxury cars, and dine at the best restaurants. They may have little if any real savings. While they may be high income earners, they tend to spend as much or more than they make. This doesn’t mean that the affluent are not a good target market. They are indeed beneficial to target as they are spenders.
This type of client makes purchases based on whether it will make them look good.
How much do the wealthy earn?
For simplicity sake, the wealthy can be defined as follows.
Working masses earning from $75,000 to $150,000 per year
Comfortably wealthy earning from $151,000 to $250,000
Serenely wealthy earning from $250,000 to $400,000
Ultra wealthy earning over $401,000
How many wealthy and affluent clients are there?
In terms of numbers, there are 17 million households in the United States with a net worth of one million dollars or more.
The year 1957 had the largest number of births: 4.3 million babies were born. This group turned 60 in 2014 and has significant income to spend. They are also poised to inherit a great deal of money over the next twenty to thirty years.
What are the main concerns of the wealthy?
Do you consider yourself an expert at what you do? How can improve your expertise?
Are you charging enough for your product or service to be taken seriously?
Are you willing to invest in yourself and your business in order to attract the wealthy?
Are you willing to do the work necessary to increase revenue in your business?
The most common way customers learn about a business is from word of mouth, according to a recent survey done by Verizon. Eighty-five percent of the small businesses surveyed said customers learn about them through word of mouth. No other type of marketing or advertising even comes close. Search engines came in a distant second at 59%. Everything else is far behind.
In one sense it’s striking that the method that is (a) most personal, and (b) costs the least in out-of-pocket expenditures, is the top method of attracting new customers. After all, you’d expect that by throwing money at the problem via expensive advertising, and through methods that scale to reach many, you’d get greater results. At least… that’s what you might think.
But in another sense, it’s completely predictable that word of mouth is the number one method of attracting new customers. We small businesses are all about the personalized approach. With small businesses, it’s not about casting a wide net, but rather about connecting with a select number of customers, enlisting their trust and loyalty, and having that positive impression spill over among their circle of friends and colleagues.
That said, what does it suggest about steps you should be taking to increase and leverage word of mouth? Here are four items for your To-Do list to increase word of mouth:
1. Check your business in Google and Bing at least once a month.
Even if search engines weren’t the #2 way customers have of learning about a small business, keep in mind that word of mouth spreads online as well as offline today. Your customers are online today. Even if you run a local brick-and-mortar business, chances are they check you out online. In other words, word-of-mouth today goes well beyond Mary Smith talking during exercise classes to a friend about your new restaurant.
If there is something negative online, it’s not a question of burying your head in the sand. You need to be aware, so you can fix it.
Make no mistake, you can fix many negative impressions, such as customer complaints or negative reviews. But first you have to know about them — and not be blindsided or ignore them because they’re too painful to confront.
Once you know about them, you can contact the customer, leave unemotional explanations if the information looks incorrect, or seek out more positive reviews to convey a more balanced impression. Read more on when to respond to negative reviews, and about how to handle bad online reviews.
2. Conduct a regular customer survey to learn what your customers really think.
The Net Promoter system is right on point here. The Net Promoter scoring system asks on a scale of one to ten, “How likely is it that you’d recommend us to your friends and colleagues?” The ones who are very positive are called Promoters. The ones who are negative are called Detractors. Net them out, and you have a Net Promoter score.
Today, with online survey tools (some of which are integrated with the software that manages your house email list), it’s not hard to discover and keep track of your Net Promoter score. Increasing your Net Promoter score gives you something for your team to rally around and set improvement goals. So by all means, start measuring and analyzing. Discover what is making Detractors out of some, and Promoters out of others.
Not only do you want to eradicate what’s turning people into Detractors, but more importantly you want to understand what your customers value so much that they are wildly enthusiastic about your business. When you figure out what turns customers into raving fans, then you know what to do to get more of them talking about you, more often.
3. Communicate and reinforce to employees the value of raving fans.
You might think it’s obvious to your employees that they should be trying to make customers ecstatic. But I’ve been in business long enough to know that employees take their cue from the top. If you spend a lot of time focusing on solving negative complaints, you may be inadvertently sending signals that customer service only matters when there’s a complaint.
Instead, you should be sending signals to get ahead of the curve. Customer service matters BEFORE someone gets upset, when you have the opportunity to turn someone into that raving fan of your company.
Spend some time explaining to employees where most new customers come from and how valuable it is to have existing customers who love your company. Don’t assume that your employees actually pick up on that. Show your appreciation publicly when they go “above and beyond” to delight customers.
I used to think it was corny when companies had mission statements that said “we delight our customers.” I would think, ‘Everyone knows that you should be delighting customers!’
But then I realized that everyone doesn’t necessarily believe that — unless you talk the talk and walk the walk. The reality is, your employees at all levels need to hear the message repeatedly. They need to believe that YOU believe it.
4. Create easy ways for customers to share word of mouth.
This is where traditional marketing and advertising can support and amplify customer word-of-mouth.
Consciously develop initiatives that get happy customers talking. Make it easy for them to share their positive impressions. Also, make it easy for existing customers to refer their friends, family and colleagues. Some tactics that can help are:
Remember: while word of mouth is something your customers share, it’s not out of your hands. What you do and don’t do, has a huge impact on word of mouth.
Money is the lifeline of any business, so whether you’re starting a business or running an existing one, securing financing is a major factor, especially for small businesses. Many budding entrepreneurs find the task daunting and don’t even know where to begin.
Here’s a simple yet practical guide on how to go about preparing to apply for a small business loan.
1. What criteria do banks look for in making small business loans?
Different banks or lending institutions may have different standards, but in general, in order to consider your application for a small business loan, banks will require:
Different lenders may require more or fewer documents, but in general, you will need:
Be prepared; be thorough; be truthful.
4. What is the typical size of a small business loan?
Small businesses come in many sizes, from a start-up of a one-person company to hundreds of employees, and their financial needs vary accordingly, so “typical” also varies. That said, in the banking industry the median small business loan is about $130,000 - $140,000 with highest around $250,000. SBA small business loans range from about $5,000 (microloans) to $5 million (largest guaranteed) with the average loan around $371,000.
5. How can you get financing to start a business since many banks want to fund growth?
Start-ups are probably the most difficult ventures when it comes to securing financing. Many start-up businesses seek financing from family, friends and credit cards. If the credit is sound, the business plan strong and you have enough personal resources to invest and collateral to guarantee, smaller, community banks and other community financial institutions and Credit Unions may consider lending you money.
Your best bet by far is SBA assistance. Begin by visiting SBA's website , where you will find a wealth of information not only on how to secure a small business loan but equally importantly, other services and training opportunities to help you succeed.
6. Are there associations that can help?
The SBA works closely with a large network of partners that leverage SBA resources and are just one phone call away and ready to provide extensive help.
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