Constant Contact, by far the leading email marketing service for small businesses and nonprofits, held a webinar yesterday for Constant Contact partners — people like me who provide email marketing services to their own clients, using Constant Contact. Gail Goodman, the CEO, knows more small business people and more about how things go for them than almost anyone else in the country. She should; she built an Inc. 500 company on catering to their needs. She brought up one statistic that was quite a mind-blower, so I thought I’d pass it along.
I’ve known for a long time that almost all of our business comes from happy clients who keep coming back, or from the friends, colleagues or associates they have recommended. I like it that way. It keeps things friendly, and I don’t have to take a lot of time off from designing wicked-cool stuff to do a lot of “selling.” We’ve seen double-digit growth every year since we started (in the teeth of the recession — take that, Wall Street!) so I’ve seen no reason to change things. What I hadn’t quite grasped was how much this is not peculiar to my line of work (or my almost non-existent personal marketing).
For successful small businesses generally, including retail stores and restaurants, business comes in exactly the way mine does: a full 99% of their sales fall into two categories: repeat business (90%) and referrals (9%). New business, then, comes 90% from referrals.
It’s the people who keep coming back, and the people they refer or bring with them, who make up almost all the sales of any small business. A measly 10% of new business comes from other sources, but that 10% gets almost all the budget and attention when it comes to marketing.
The killer follow-on was that most businesses put very little attention or effort into their existing customers, even though they are responsible for almost all of the sales. Makes you think, doesn’t it? (At least, I hope it does.) This is the starting point for her new book, Engagement Marketing, and its companion website (which is excellent, by the way).
Any honest marketer will tell you that word of mouth is, hands down, the finest marketing there is. Addy and Cleo awards don’t mean a thing if people aren’t recommending their friends to your products or service. Social media marketing works because it is word-of-mouth in a slightly new form. Internet marketing and email marketing follow the same laws. (And, while I’m on this subject, these are not complicated. I’ve seen small and medium-sized businesses pour money and time into online ads, elaborate “social media” plans and “Search Engine Optimization strategies” that don’t work or actually reduce sales, all because they miss this crucial point.)
Great products and fantastic, over-the-top service build loyal customers who know they can trust you and who keep coming back. Almost all your new business comes in from the people who trust them; people who were thrilled and passed the word. All the search engine optimization and advertising in the world won’t compensate if those two factors are missing; in fact, they’ll probably backfire. Social media, in particular, can backfire.
What I liked about Gail’s presentation was that she really gets it when it comes to small-to-medium business, and has the creative imagination to come up with simple, usable answers to the question, “So what do I do about it?”