To Build a Business, You Have to Build a List

As a business owner I am sure you have heard that the cost of acquiring a new customer is around 10 times the cost of retaining a customer you already have. Many businesses focus solely on customer acquisition and forget to nurture the customers they already have. By focusing on the customers you already have you can increase your overall wallet share, and create a more consistent source of revenue through repeat business and the occasional product launch.

Here is a phrase you’ll grow sick of: The money is in the list. You might get weary of hearing it, but it’s smacking you in the face for a reason – it’s the truth! First of all, let’s answer the question, “What is a list?”

A list in Internet marketing terms is a database of contact information for your prospects. So if you have a product or promote products about gardening and I sign up for your list, I’m a prospect that you can market to repeatedly until I unsubscribe.

So why is building a list so important? Let’s say you start off as a restaurant owner. You find a niche you truly enjoy (let’s assume Italian food) and you start using what you’ve learned to market your business, and turn it into some foot traffic. You did all the market research, and have chosen a prominent location where many people can see your business.

Over a period of 30 days, you funnel around 5,000 prospects off the street and into your restaurant who are interested in your niche (Italian food) straight through your door and looking at the menu.

They even buy some of what you have to offer – yea! You’ve made around 30% profit with a 50% conversion rate. That means 50 out of every 100 people who visited the restaurant bought a meal, and your contribution margin was $15.00 (as an example). You earned a cool $37,500 this month – good for you!

But you’re leaving money on the table. Those 2500 people who bought from your 5,000 prospects? They’re now back in their world, and you have no way of staying in touch with them. Thus they are not on your list. So what they are going to do the next time they want Italian food is try someplace different and new. So over the next few weeks you could be losing money.

After all, they are proven buyers. Over the next 30 days, those buyers fork over some more money for products that complement the original one they bought. That money goes to the product owner, not you – because you passed on building a list the first time around.

A better way to build a business is to start with a list from day one. Before you let a single person slip through your door without capturing their name and email address, have your system set up to build a list.

You can have unlimited lists for different niches/businesses using a simple tool like Aweber, which costs $19.95 a month. Every day you can log in and see how many people have signed up, and you can create automated messages to send out to help convert your list into more sales.

Why should the competition get to cash in on that person again and again when you’re the one who is spending resources to acquire new customers every day? Stake claim to each prospect and leverage your relationship with him/her for future sales and commissions.

If you want some ideas for how list-building can be implemented in your specific business, leave me a comment below…

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