Marketing is defined as the total of activities involved in the transfer of goods from the producer or seller to the consumer or buyer, including advertising, shipping, storing, and selling.
The first marketing mistake I made was marketing haphazardly.
Jennifer, Stacy and I would look at each other over the morning Dr. Pepper and discuss our daily plan of attack.
I recall one specific morning when Jennifer suggested, "Let's call our customers that have home insurance but not auto insurance. We can try to cross sell them." Stacy said, "No, it's only been 6-8 weeks since the last time we did that."
Our marketing plan does not include the processes we work every day (i.e. direct mail, telemarketing and internet leads). It is designed for the campaigns that we work at different times of the year (i.e. flood letters go out right before hurricane season starts).
A successful business owner in casual conversation mentioned, "Wait until you have been in business for a few years. One day you will have 3,000 accounts and be losing 300 a year. Then you will work hard all day long just to break even."
I went into shock. I knew that an average business in my industry had 90 percent retention. I had never thought about the cold hard fact that if I had 3,000 clients, that meant I would be losing 300 of them a year. I felt as I had been verbally slapped.
I went back to my business and looked at our retention number for the first time. It was below the industry average. By focusing on and measuring sales only, I was leaving a lot of money on the table. Yes, we had a "sales machine," but we were not playing the right game to build the business.
A small increase in retention drastically increases the value of the business, whereas a small increase in production is barely seen.
Now I understand that sales are important, but growth is everything. If your business is not growing, you are working really hard to break even. Retention keeps you in contention.