How to Get More Customers Into Your Store

No-Cost Marketing for Independent Retailers

Using gift certificates is my favorite tactic for bringing new customers into your store at little to no cost. Here’s my response to a survey taken by some of our retailers about their marketing skills.

Are you struggling with getting new customers in your independent retail store? In this video Bob shares his hands-down favorite way to get new customers at absolutely no cost.

Give Gift Certificates

The marketing section of the survey really produced no surprise.

Some of you are stellar marketers you know exactly what you’re doing. You nail it most of the time. In the times that you don’t nail it you know you’re learning from it. You’re growing as a marketer. Some of you are still really struggling and one of the things that you struggle with the most is getting new customers.

In this nugget I’m going to share with you my hands down favorite way to get new customers at absolutely no cost. I’m talking about giving away gift certificates.

When I’m out on the road speaking to a group of retailers just like you I usually do a quick survey and I ask people how many of you are spending less and less money on traditional media advertising. Newspaper, television, cable, things like that. Most of the hands in the room go up and then I ask how many of you have have quit using traditional media advertising altogether. There’s typically a handful of people that say they are no longer throwing good money after bad.

Lets just recognize that traditional media advertising is not what it used to be. Your customers have lots and lots of places where they get their information. Advertising in your local newspaper for instance is no longer enough. Even though traditional media is not working like it used too you still need to get new customers don’t you?

You still need to acquire new customers and my favorite way to get new customers is to give away gift certificates. Now, I know some of you are going, “What? You’re giving away my money Bob don’t do that.” Let’s back it up. I’ll explain how it works and why it works and then give you a couple of ideas on how to use it.

First of all, you have to understand a couple of key concepts to realize that you’re not giving away money, you’re getting customers.

The first concept is the cost of acquiring a new customer. Recognize that you pay. Why do you advertise to get new customers in your store? It’s a customer acquisition cost. Your location: if you’ve got a great location it’s a customer acquisition cost. Lets just recognize that you pay and that there is a cost. That’s the first concept.

The second concept is the rule of reciprocity and the rule of reciprocity simply says givers get. When you give someone a gift certificate they feel a need to give back. So when you when you give somebody something you get a shot at their business.

The third key concept is break even on the first sale to break the bank on the back end. You know I see this all the time people get too caught up with making sure they make the margin on every transaction. I’m suggesting to you that you can give up a little bit on that first sale because you’re going to acquire a customer. You’re not going to make that money on the first sale you’re gonna break even or do just a little better than break even on the first sale and you’re gonna break the bank on the back end as people keep coming back in again and again and again and again. So you don’t make your money in the first transaction but you’re sure making money on all the subsequent transactions.

And finally the fourth key concept is lifetime value of a customer. lifetime value of a customer can be defined as the total amount of dollars that someone’s going to spend with you in their lifetime. So what we have here is a different approach you can’t buy your way into it anymore. I guess you can if you have unlimited resources but… I am suggesting that with gift certificates you can “give your way” into success You see what you’re doing is you’re recognizing that you have to pay. You give somebody a gift and they’re going to reciprocate and come in to your store. You’re not going to make that money on the first sale but you’re going to get them as a customer. Once you get them as a customer I’m going to assume you’re gonna do a great job and you’re going to get them back again and again and again You’re gonna make the money in the lifetime value.

So those are the key concepts.

Now I love gift certificates because the only time you actually pay to get a new customer, to acquire a new customer, is when people come into your store. If they don’t come into your store if they don’t use the gift certificate you’re not out any money like you are with advertising. You’re out of third of a piece of paper. You’re out a scrap of paper. So it’s very accountable as a customer acquisition tool.

Let’s stop for a second because I see this mistake made often. People give away say a hundred five dollar gift certificates, they get real freaky they get really afraid. They say to me “Bob I’m giving away five hundred dollars worth of gift certificates.” I immediately correct them. they’re not giving away five hundred dollars worth of gift certificates they’re giving away a hundred pieces of paper. They’re not worth anything until people come into the store.

Then you have an opportunity to earn their business.

You see how slick that is?

Why are they so… so very effective? The first reason is the quality of the gesture. The difference between a coupon and a gift certificate is like the difference between night and day. A gift certificate is a coupon on steroids. When you get somebody a gift… wow… they notice, they pay attention. It really is wonderful and it puts the rule of reciprocity into play.

So here’s a couple of key questions that people ask about gift certificates.

Number one: How much should My gift certificate be for? What’s the right denomination and although there’s no real correct answer I want to suggest to you that you look at it this way. The amount of the gift certificate should be such that when they’re averaged out the average sale represents a break even. I know you’re going… huh… what’s he talking about.

Let’s do the math quickly. So if the average sale is say twenty dollars and your cost of goods is fifty percent. That means you have ten dollars worth of merchandise (your cost) into every twenty dollar sale. As long as when you got all the gift certificates and you add up the total sales at work associated with those gift certificates. As long as that stayed at twenty dollars you are acquiring new customers at a break even and I would hope that you would say please give me as many customers as I can possibly get in the shortest amount of time at a break even because you know that when they come into your store you’re going to do a great job you’re gonna get em back again and again and again and you’re going to have a robust lifetime value of a customer.

Second key or common question that gets asked is how much fine print should I put on my gift certificate. The answer to that is as little as possible but I want you to really pay attention and I want to drive this point home because if you don’t do this you’re going to get burned. You have to have one line of fine print that says please only one gift certificate per person. If you don’t do that sooner or later somebody is going to gather up a whole bunch of gift certificates. Let’s say you give away a ten dollar gift certificate. They’re going to come into your store and they’re going to, come in with ten,ten dollar gift certificates and expect it to be treated as a hundred dollars. That’s not what you want. You don’t want to give away the store.

The third common question is, isn’t somebody going to take advantage of me isn’t somebody gonna screw me. And the answer is… of course they are. If you give away a ten dollar gift certificate some little old man is gonna walk around your store with a calculator get to nine dollars and ninety nine cents and ask for a penny back.

There’s a couple things to think about when you think about that scenario.

First of all, let it go, let it go, understand that if you’re doing business the right way your gifts are going to attract the right people. It’s a matter of perspective. Sure those people annoy you to know end but that’s okay. Let it go. Look at the numbers as long as the numbers are all working out you’re good to go. As long as, in my scenario, the twenty dollar average sale is holding up and you’re getting great new customers in your store you should be happy.

Also, understand that people are tire kickers let me give you an example. Let’s say you own a sewing center and a sewer gets a hold of your gift certificate. If a sewer gets a gift certificate to a sewing center. It’s like a fire burning a hole in somebody’s pocket. They just have to come in. They have to use it. They may not need anything that particular day, but they’re in your store. There checking you out. They’re thinking about you. If you give them a great experience they may come back in a month or a year and spend ten thousand dollars on a machine.

Is that worth it? I hope you’re saying yes.

And I also want you to think about it this way if you’re still feeling a little nervous about it. Let’s say you gave away ten ten dollar gift certificates and eight no make that seven of those people came in and each spent nine dollars and ninety nine cents. They were rude to your staff. They never came back, oh my gosh it was just a disaster. Seven were a disaster. Two people came in, they came in three or four five times and spend a couple hundred bucks so they were worth having as a customer. But you know they’re not really what you’re looking for. But then there is that one person that came into your store and became that whale. That fifteen twenty thirty thousand dollar customer I ask you. was that hundred dollars worth of gift certificates worth distribution. Again I’d hoped you’d say yes.

There are many ways, but here ara a couple of very simple ways that you can distribute gift certificates. At the most basic level when you’re talking to somebody and somebody says to you uh… “what do you do?” You say “Hi, I’m Bob. I own Bob’s bike shop” and they say “I’ve been thinking about getting a new bicycle.” Wham! right. They get a gift certificate.

So always carry around gift certificates give them to your staff distribute then in the course of regular conversation. You can also give them away at networking events, at your chamber of commerce events. You can give them away at consumer shows. For instance, we had a client who had a sewing center and she went to a quilt show. Her best prospects were at the show. It cost eight dollars to get into the show. Everybody that came into the booth wasgiven an eight dollar gift certificate and told “Let me buy your way into the show.” Eight dollar admission … eight dollar gift certificate. Of course the gift certificate had to be used in her store. Twenty percent of the gift certificates given away at the quilt show were redeemed in her store. Her hottest prospects… twenty percent …that’s huge. That’s great.

You can also do a partner pack were you and several other high-quality businesses all pool your gift certificates put it in pack. and all of you give them to your new customers. So essentially what you’re doing is sharing customers You could have another business endorse your business by sending a gift certificate.

You could have a non-profit organization giveaway your gift certificates. When their members come into your store their members will save a couple bucks with the gift certificate and then you give a percentage of the sale back to the nonprofit.

You can use gift certificate so many different ways. Even if you don’t have a penny in the bank right now a gift certificate is a wonderful tool that you can use to get new customers.