Table of Contents
Title Page
Copyright Page
Who Should Read This Book
Who Are Bob and Susan Negen and Why Should You Listen to Them?
The Bad News
The Good News
The New Millennium Merchant
The WhizBang! Marketing System : Four Steps to Higher Sales and Happier Customers
How to Use This Book
STEP 1 - How to Get New Customers without Going Broke
Five Key Concepts for Getting New Customers
Six Low-Tech Tactics to Get New Customers without Going Broke
Six High-Tech Tactics to Get New Customers
SPECIAL SECTION - The Traditional Media
Selling Your Business versus Selling a Product
Picking the Right Advertising Media
Other Types of Advertising Tools
SPECIAL SECTION - Copywriting for Retailers
Killer Copy: How to Write Messages That Sell
Other Concepts to Consider
STEP 2 - Turn a First-Time Buyer into a Regular Customer
Two Key Concepts for Turning a First-Time Buyer into a Regular Customer
Three Low-Tech Tactics for Turning a First-Time Buyer into a Regular Customer
Two High-Tech Tactics for Turning a First-Time Buyer into a Regular Customer
STEP 3 - Get Your Customers to Shop More Often
Two Key Concepts to Get Your Customers to Shop More Often
Four Low-Tech Tactics to Get Your Customers to Shop More Often
Four High-Tech Tactics to Get Your Customers to Shop More Often
STEP 4 - Keep Your Customers for Life
Six Key Concepts to Keep Customers for Life
Three Terrific Tactics to Keep Customers for Life


With Love to
without whom this book and our business would not have been possible.
for their unfailing support, including the many “How’d you do today?” phone calls in the early days of the Mackinaw Kite Co.

Special thanks to Rich Leach, Matt Mariani, Steve Negen, Randy Gage, all the wonderful participants in the Marketing Mentor Program who let us share in the success of their stores, and most especially our children, Joe and Sam, who have been so patient and understanding while we worked on this book.

Four years ago, the phone in our office rang and on the other end of the line was a guy we’ll call Ken. Bob had met him just the day before at one of Bob’s marketing programs. Ken was drowning in debt and desperate for help.
Ken had opened his store only two years earlier: a huge beautiful space, filled with top quality merchandise and a talented, knowledgeable staff. During his first year in business he suffered from what I call the Field of Dreams Delusion, “If you build it, they will come.” Well, he built it, and he waited, but the customers didn’t come.
So the second year he bought advertising like a drunken sailor and before you know it, he had spent more than $40,000. Unfortunately, most of what he bought didn’t work. Sure, all that money had generated some sales, but not nearly enough to cover all his costs.
I could hear his pain over the phone line. And I could feel it in the pit of my stomach. You see, I’ve made all these same mistakes. I’ve even had the Field of Dreams Delusion! And I’ve felt the panic of having too many bills to pay and not enough sales to cover them.
That’s why for more than two decades I have been a serious student of marketing. Because marketing is the engine that drives massive levels of sales, builds a huge customer base, and gives you the power to immediately put greenbacks in your bank account.
A great marketing plan gives you peace of mind, which was what Ken wanted, and what I knew I could give him. A few days later, I sat down with Ken and in the next hour and a half showed him a whole new way of building his business, a whole new way to spend his money, and a whole new way to look at marketing.
Within three weeks he had launched a promotion that generated $21,788 the first week, $46,923 the next month, and $31,265 the month after that. This promotion ran three months, generated $101,259 in sales, and cost less than $5,000.
Now you know the old disclaimer, “These results aren’t typical.” But they are possible—if you know what to do. Which is why we wrote this book.
The world is changing dramatically, and many small retailers are finding it difficult to keep up with the change. Business failures for small retail businesses are among the highest of all categories.

Who Should Read This Book

If you own or manage a retail store or plan on opening one some day, this book is for you! It is a book written for retailers by retailers. This is not a generic marketing book. It was written just for you, to help you become a better marketer, build your store’s sales, and drop more money to your bottom line.
Just about all of the marketing concepts and tactics in this book can be used in service businesses, too. We have clients in the restaurant business, in the hotel business, in franchise services, and in professional practices. All have benefited from the customer focused marketing philosophy we teach.
But this book was written for retailers, out of a deep love for retail and for all the people who get out on the sales floor and make it happen every day.

Who Are Bob and Susan Negen and Why Should You Listen to Them?

We love retail. Both of us have spent most of our adult lives in retail. Together, we deliver a knockout one-two punch of street smart merchant and sophisticated retail executive.
Susan has worked as executive for retailing giants like Macy’s, Bloomingdale’s, and Lord & Taylor, has been on the leadership team of a small retail business, and now sees business through the eyes of an entrepreneur and business owner.
In her nearly two decades of business experience, Susan has effectively managed groups of more than 120 employees, has used her expert analytical skills to purchase inventory for both large and small stores, and has worked with hundreds of retail store owners as the leader of her Inventory Mastery Program.
Bob founded the Mackinaw Kite Co., one of the world’s first kite shops, in 1981 when he was only 23 years old. He had just graduated from college, loved flying kites, and didn’t want to get a “real job.”
He spent the next 20 years learning the secrets of successful merchants. He made more mistakes than you can shake a stick at but managed to survive and has earned the status of “battle-tested retail veteran.” Among many noteworthy accomplishments, Bob helped create a yo-yo craze that generated more than two million dollars in yo-yo sales. That’s a lot of yo-yos!
In 1999 Bob sold the Mackinaw Kite Co. to his brother and business partner, Steve. Together he and Susan started WhizBang! Training to help retailers learn the critical business skills they need to be successful.
Since starting WhizBang! Training, Bob has spoken to tens of thousands of retailers at conventions, trade shows, and dealer meetings. His Marketing Mentor Program has been hailed as “innovative,” “exciting,” “powerful,” and “outside the box that’s outside the box” by its participants.
We believe that independent merchants are the lifeblood of most small towns. Their stores are the glue that keeps downtowns together and the downtowns are the glue that holds communities together. But the landscape is changing fast, threatening the very existence of today’s independent retailer.

The Bad News

Let’s get the bad news out of the way right up front so we can spend the rest of our time together exploring the good news.
The bad news is that nobody needs your store. The fact of the matter is that today your customers can buy whatever you sell over the Internet, 24 hours a day, 365 days a year. Or by calling the 800 number from their favorite catalog and talking to a supertrained customer support person, all while sitting at home in their jammies. Or by shopping around the clock at any one of a dozen big-box superstores within five miles of their home.
It wasn’t always like this. For many of you, it wasn’t like this when you opened your business. As recently as 30 years ago independent retailers faced very, very little competition.
Thirty years ago the local merchants got almost all the dollars spent on consumer goods by the residents of a town. There were no other options. If there were three hardware stores in town, they split up the hardware dollars. If there were five florists, they split up the dollars spent on flowers. Of course they were in competition with each other, and the best merchants got the biggest share of the dollars, but it’s nothing like the competition you face today.
Thirty years ago Wal-Mart had stores in only nine states and had barely caused a blip on anyone’s radar screen. Today Wal-Mart has more than 3,700 stores in all 50 states—not to mention numerous other countries around the globe—and has sales in excess of $100 billion a year.
Thirty years ago no one had to get a bigger, sturdier mailbox to hold the 27 catalogs that arrive in the mail every day.
Thirty years ago no one had a computer—not at home and not at work.
The personal computer did not exist. It was 30 years ago that Steve Jobs and Steve Wozniak created Apple I, which was nothing more than a bare circuit board.
There was no Internet, no email, no World Wide Web. Customers didn’t have the ability to instantly compare prices, services, and products, let alone the ability to carry around a high-speed wireless connection to the entire world in their pocket or purse!
Today there’s no doubt that your online competition is fierce. Here is a partial list:
• Competitors on websites selling the same merchandise you sell at a deep, deep discount—maybe even below your cost.
• Your suppliers may also sell online. Many manufacturers and wholesalers now have an online retail presence.
• Established, incredibly sophisticated Internet merchants such as Amazon.com and Overstock.com can offer prices and selections you cannot possibly match.
• eBay offers your customers a chance to buy and sell merchandise directly to each other in what is essentially a global garage sale.
And that’s just a partial list! It’s enough to give you a massive headache.

The Good News

Yes, there is good news. In fact, we believe that there has never been a better, more exciting, or more rewarding time to be an independent retailer. The good news is that even though your customers don’t need you, they want you. They want to shop with someone they know.
Your single most important, and possibly your only competitive advantage is your ability to develop close, lasting personal relationships with your customers. Your customers and your prospects crave a human connection. If you can deliver a great in-store experience and create that personal connection, the big boys and dot-coms won’t stand a chance.
Of course, they’re trying to build personal relationships, too, but in this area they are at as much of a disadvantage as you are in the low-price wars. They just can’t win.
There’s no person at Target or Amazon.com or Home Depot who can have the same kind of personal relationship with their customers as you can have with yours. The owner of PetSmart doesn’t serve on the same PTA board as their customers, isn’t a member of the local chamber of commerce, can’t speak to the Junior Achievement group at the high school, and doesn’t volunteer at the neighborhood food pantry. The head honchos at Costco can’t be out on the selling floor leading their staff and helping their customers.
You can.
You probably can’t hire expensive store designers, you probably can’t afford to manufacture your own merchandise overseas, and you probably can’t afford to buy massive amounts of national advertising. But you can pour your heart and soul into your business. You can do all the little things that make your customers feel truly special. You can have a passion for excellence that no manager of a big-box store will ever be able to match.
You can compete against the big boys and win!

The New Millennium Merchant

Although the computer revolution that started 30 years ago is still not mature, the novelty has worn off. The information age is fully upon us. The Internet is a part of everyday life for nearly everyone, from tiny children to gray-haired grannies. The dust from the upheaval of the past 30 years is settling, and everyone can see the competitive landscape more clearly.
And there is a new breed of independent retail store owners who see the opportunities that exist in this new world. We call these folks, and we hope you’re one of them, New Millennium Merchants.
These retailers are determined to keep what was best about yesterday’s mom-and-pop stores but aren’t afraid to take it up a notch. They are not intimidated by Wal-Mart, the other big-box-category killers, or competition on the Internet. They understand that there are plenty of customers to go around, and they have a plan to get their share.
They have an enthusiasm and optimism that can’t be contained. People are attracted to these folks. They want to be around them, they want to come into their stores, and they want to buy from them.
The New Millennium Merchant comes in all shapes, sizes, colors, geographical areas, and industries, but all share certain basic characteristics.

The Marketer’s Mindset

If you are a New Millennium Merchant, you understand that there is plenty of money in the economy to support the kind of business you dream about. The market is there. It’s a no-brainer. Millions of dollars are spent on what you sell every day—no matter what you sell. They just aren’t being spent with you (yet).
You know that the products you sell have value, and your staff gives good service. If you don’t believe that your store is the best for your customers, you may want to rethink your career choice. You need to be passionate about giving your customers what they want and need.
When you put these statements together—people want what you sell, and you do a good job of selling it—it all becomes clear. The only thing standing between you and the supersuccessful business of your dreams is your ability to connect what you sell with the people who want and need it. In other words, you need to be a marketer.
The New Millennium Merchant has a “Marketer’s Mindset.” Notice I didn’t say “marketing” mindset, I said “marketer’s” mindset. The difference is important. One describes what you do; the other describes the kind of person you are.
Having a marketing mindset, attending a seminar or two, and reading an occasional article will help you grow your business, but it will rarely be enough to stimulate the growth you will need to fulfill your wildest dreams. Marketing is the engine that drives sales, and lackluster marketing efforts will result in lackluster sales.
But thinking about marketing as fun and exciting, keeping your eyes peeled for the next cool idea, trying lots of new, innovative marketing techniques, and considering every part of your business from a marketing point of view—that is the Marketer’s Mindset. And that’s what will build your business.
Having the Marketer’s Mindset means being aware of what other people in other industries are doing. If your local pizza joint or beauty salon uses a marketing technique that catches your attention, ask yourself, “How can I adapt that idea to my business?” There are very few truly original ideas, but there are many, many great adaptations.
I don’t know if it was banks or fast-food restaurants that first came up with the idea for drive-through service, but clearly one influenced the other. And the flash of inspiration to adapt the idea for a completely different industry was just as brilliant as the creation of the original concept.
If all you do is the same thing that everyone else in your industry or in your town is doing, you’ll never get ahead. You need to zig when everyone else is zagging. With the Marketer’s Mindset you think outside the box, engage your brain, and most of all have fun!

Be a Learner

The New Millennium Merchant is a constant learner. Life is changing at a breakneck pace, and there’s no sign of its slowing down. You have to keep up or get left in the dust. And there’s no time to re-invent the wheel. Thousands of business owners before you have made the mistakes, figured out what works, and are willing to share their hard-won knowledge with you. Take advantage of it. Work smart, not hard.
There are lots of ways to be a learner. Reading this book is a great one. You can listen to CDs while driving in your car. Your local library has books available for loan. Any bookstore will have more business titles than you can imagine. Read business magazines and newspapers. Subscribe to online e-zines. Sign up for our free WhizBang! Tip of the Week at www.whizbangtraining.com.
There are many business experts who sell learning resources that come with unconditional, money-back guarantees. Spend the money, and if the resource does not provide the value, if the ideas don’t pay for themselves almost immediately, return what you’ve bought and get your money back. You have nothing to risk and everything to gain.
Don’t be intimidated by the vast variety of choices. Ask other businesspeople whom you admire what learning resources they use, and start learning.
To help get you started we’ve put together a Retailer Resources page on our website with links to some of our favorite books, e-books, and CDs for retailers. You’ll find information on everything from getting great publicity to easy postcard mailing. As you read the book, you’ll learn more about each of the different resources we’ve found for you. Look for them in the Hot Tip! boxes scattered throughout the book.

Technology Enthusiast

One of the truly defining characteristics of the New Millennium Merchant is the enthusiasm and speed with which you embrace technology. While you are usually early adopters of new technologies, you don’t use technology just for its own sake. You understand how to use technology to truly improve your business and strengthen your main competitive advantage—your relationships with your customers. You know how to stay high touch in a high-tech world.
The New Millennium Merchant has a great website that is an effective marketing tool. It’s current, interesting, and relevant to your customers’ needs. It is not ugly, boring, outdated, or unprofessional.
The New Millennium Merchant uses email to stay in touch with customers. Emailing your customers has so many wonderful advantages that we’ve devoted a huge section of this book to the subject. It’s fast, cheap, easy, immediate, and personal.
The New Millennium Merchant has a robust Point Of Sale (POS) system and uses it to its fullest extent. This piece of technology is supercritical because it cuts across almost all areas of your business—sales, customer service, marketing, staff management, inventory control, accounting, assortment planning, and the list goes on.
For the New Millennium Merchant using technology is an exciting, interesting, and important part of building a successful business. Even if you don’t know a bit from a byte or what HTML is, you know how to hire someone who does. You understand how to use technology to your advantage.
Hot Tip!
Because having great POS technology is so important we’ve listed an absolutely topnotch e-book on the Retailer Resources page of our website www.whizbangtraining.com.
This guide to choosing the right POS software is written by a long-time colleague of ours. Many of our clients have used it and loved it. It’s filled with amazing information, comparison charts, retailer reviews, and a database of systems by industry. If you’re in the market for new POS software—or better POS software—you should definitely check it out.

The Other Retailers

So what will happen to the other retailers? The ones who don’t embrace technology, become lifelong learners, or develop the marketer’s mindset? Not to put too fine a point on it, they will simply go away.
These are the folks who sit around and whine because the economy is bad, or Wal-Mart moved next door, or the bridge into town is under repair. They’re the ones who won’t change their store hours to make shopping convenient for their customers. They complain that there’s not enough time to learn how to use their computer or put in a POS system.
These folks are largely engaged in what we call “hope marketing.” They hope that the Fed will slash interest rates to spark spending, they hope that their chamber of commerce will bring more people into town, they hope that their customers will shop with them again. Some of them hope that the weather is good so people head outside; some of them hope that the weather is bad so people head for the malls. Hope springs eternal, but hope is not a good marketing strategy.
Are you going to be a vibrant, successful New Millennium Merchant—or are you simply going to go away? The choice is yours.
We think we know what your choice is. You’ve picked up this book and are reading it. You’re not sitting around blaming slow sales on someone else; you are a learner, you’re embracing technology, and you’re developing your marketer’s mindset!

The WhizBang! Marketing System : Four Steps to Higher Sales and Happier Customers

Most marketing by independent retailers today lacks focus. It’s usually a scattershot approach—a little bit now and a little bit then—mostly driven by advertising salespeople. Newspaper, radio, cable TV, yellow pages. When they come and make their sales pitch, the store owner buys an ad. When they don’t, not much marketing happens.
If this sounds like you, you’re probably spending lots of money on advertising but not getting much in return back at the cash register. You’re starting to think of advertising and marketing as an expense, but it’s not. It’s an investment.
Great marketing is an investment in building your business that pays you back big time. Without great marketing you don’t have the engine that drives sales and keeps your company thriving and growing year after year after year.
WhizBang! Marketing is a focused, systematic approach with four steps that will lead you to higher sales and happier customers. And it will cost you a lot less than the scattershot approach.
With this system you will think about the life cycle of your customer—kind of like the butterfly life cycle diagram you drew as a kid. Remember the circle with the arrows?
Well, with this system you’re going to start at the beginning of your customers’ life cycle with your business and try to keep them alive and buying from you over and over for as long as you possibly can.
Different kinds of marketing work best for customers at different stages in their relationship with you and your store, different stages in their customer life cycle. You need to use some of each kind for your marketing efforts to be the most effective and give you the biggest bang for your buck.
There are four steps to the system.

Step One: How to Get New Customers without Going Broke

Every business needs a steady stream of new customers. This is where most people focus the majority of their marketing attention and spend the majority of their marketing dollars. They buy ads because they don’t know what else to do or how else to reach out to their prospects. We think there is a better way—a much cheaper way. In this book we give you six low-tech tactics and six high-tech tactics for getting new customers.

Step Two: Turn a First-Time Buyer into a Regular Customer

This is a critical stage in your relationship with your customer. If you could insure that every first-time buyer turned into a long-term customer, what would it mean for your store? We show you how to get the job done with three low-tech tactics and two high-tech tactics.

Step Three: Get Your Customers to Shop More Often

Now the fun begins! This is the stage when you can take full advantage of your number one competitive advantage—building great customer relationships. Step Three is where the big money is! We’re offering you four low-tech and four high-tech tactics to keep the money flowing into your business.

Step Four: Keep Your Customers for Life

And we do mean life. Wouldn’t it be great if all your customers continued to buy from you until they died or moved away? Of course, there are other reasons customers stop shopping with you. The trick is to keep them with you as long as possible. You’ll find three terrific tactics to help keep them coming back year after year.
When you approach your marketing systematically you’ll be able to create a plan that fits your budget, works for your business, appeals to your customers, and targets all four of the stages in your relationship with your customers, not just buy some ads from the most persuasive salesperson.
In other words, you’ll have a plan that works.

How to Use This Book

First and foremost, we hope you’ll read this book with pen in hand and highlighter at the ready. Scribble notes in the margins, underline the parts you like, highlight stuff you want to try in your store. Nothing would please us more than to see your copy dog-eared, tattered, and well-worn. The more you get physically involved by writing or underlining, the more the ideas will cement themselves in your brain.
We’ve organized this book into four major sections, one for each of the Four Steps. In each section you’ll find:
Key Concepts—These are some basic marketing philosophies we think will help you better understand the tactics that follow. This is our way of helping you be a learner.
Low-Tech Tactics—These are the what-to-do ideas for each stage in your relationship with your customers that you can do without any New Millennium technology. Everybody can use these ideas starting today.
High-Tech Tactics—These are the what-to-do ideas using the Internet. Each tactic explores how to use e-marketing to create closer, more personal customer relationships.
Second, because we’ve been in your shoes, we understand that you have limited time and money with which to accomplish your marketing goals. So we’ve rated each of the tactics on how much time and money it will probably take and how good it is at relationship building. Here’s our scoring system:
For each tactic in the book we give you a combination rating that will show you what you can expect from that tactic. Like this:
Newspaper Advertisement 005
At a glance you can see that a newspaper ad doesn’t take much time, but can be pretty pricey and doesn’t deliver much in the way of personal connections with your customers—only half a smiley face!
You’ll find a Hot Tip! box wherever we have an outside resource we think every retailer should know about. You’ll get a short description so you can decide if it’s something you want to investigate further.
Hot Tip!
Learn more about great resources for retailers.
When you see the They Did It box, pay close attention. These are true stories about real retailers (names changed to protect the innocent) who were successful using the ideas and techniques in that section. We’ve tried to include as many of these stories as possible, figuring that nothing is more inspiring than real-life success.
They Did It ...
Owners of an Indiana ice cream parlor started a Celebrity Scooper program. Each Monday, from the time they opened in the late spring until school let out, teachers, coaches, and principals from local schools came in and helped scoop behind the counter.
Each school got its own Monday, and 10 percent of that day’s sales went back to the school. The owners report that they doubled their Monday sales from the year before, and they donated $4,500 back to their community schools. Plus they report that “more important than the sales increase, which was significant, was the amazing goodwill and publicity it generated.” After the school year ended, they continued the programs for other causes with other Celebrity Scoopers including local law enforcement officials, prominent businesspeople, church leaders, and the mayor. This program helped this business grow more than 25 percent last year!
. . . You Can, Too!
In some instances we’ve created fictional businesses to help explain how certain tactics might work. We’ve tried to use types of businesses in these examples that are very familiar to most people—florists, bike stores, gift shops, clothing stores, garden centers, shoe stores, ice cream stores, and so on. We tried to pick the kinds of stores that many people would have had experience with, to make it easier to understand how the tactics we describe would work.
That doesn’t mean that these ideas aren’t good for all the other kinds of retail stores out there—and most service businesses, too. It’s just that if you’re not an equestrian, you probably haven’t visited a tack shop, so it might be harder to follow an example using that industry.
We’ve also included two special sections—one on advertising in the traditional media and one on copywriting for retailers. These two extra sections will make all the other tactics we explore even more powerful.

Result: Retail Success

Make absolutely no mistake about it: Building the business of your dreams is possible. Your store can reward you with financial security, an outlet for your creative energies, and the deep sense of personal fulfillment that comes from creating a successful business.
But success doesn’t happen by accident. It has nothing to do with luck, and while it may have worked 30 years ago, today sitting around hoping your store will fill up with people is an activity for the soon-to-be-out-of-business.
Success comes from being proactive about building your business, from understanding your competitive advantages, kicking them into high gear, and making something happen.
Let’s get started!

How to Get New Customers without Going Broke

Five Key Concepts for Getting New Customers

These five basic marketing ideas are important to understand because they are the foundation for all the tactics that follow. In fact, these five concepts will come into play again and again as you go through this book.

Key Concept #1: Be Willing to Pay to Get New Customers

Unless you’re counting strictly on word of mouth or your good looks to bring you business, you’re going to have to pay to generate a steady flow of new customers.
If you buy an ad in the yellow pages, in a coupon pack, or in the local newspaper, you are spending money to acquire new customers. If you send a postcard to hot prospects, the cost of the card and the postage buys you new customers. If you’re paying big bucks for rent at a high-traffic mall, you’re spending money to get new walk-by customers.
Even if you’re banking on your good looks to get you new customers, you’ll probably have to spend on gym membership, tooth whitening, hip hairstyle, and stylish clothes. They’re all costs of acquiring new customers using the good looks tactic!
Here’s an example of how much it’s costing two fictional store owners to buy new customers.
Money Bags Mark
Gets new customers using
regional magazine
Cost of Magazine Ad
Ad Design—$250
Cost of Ad—$1,250/month
On average Mark gets three
new customers
from each magazine ad.
Total Cost to Acquire a New
Customer: $500
Savvy Sam
Gets new customers using a
referral system.
Cost of Referral System
Post card—$.75 per prospect
25% off first purchase—
Avg. $7.50
Thank-you card for referrer—
Free gift for referrer—
$5.00 Blockbuster card
On average Sam gets one new customer for every 15 postcards sent.
Total Cost to Acquire a New Customer: $51.75
So which business owner is doing the better job of buying new customers? Well, at first glance it sure looks like Savvy Sam has the best strategy (which he probably does), but if the lifetime value of Mark’s customers is $27,000 then spending $500 to get a new one sounds like a great deal to me.
And if the lifetime value of Sam’s customers is only $63, then paying $50 for a new one seems way too steep. Remember the old adage you get what you pay for? Cheapest is not always best. You are sometimes better off spending a little more and getting better customers (those who will spend more and continue to buy from you again and again) than spending less and getting low-quality customers (one-time buyers of your lowest-priced products or services).
The trick, obviously, is to buy the most good quality customers for the least amount of money. Just because you can afford to spend $500 to buy a customer doesn’t mean it’s not better to spend less. And there’s no doubt that most of us can’t afford to spend that much. That’s why the next section of the book is focused on lower-cost, highly targeted ways to acquire new customers.
Check out Figure 1.1. This gives you a visual frame of reference for thinking about your marketing tools.
Everything in the lower left section is low-cost and very personal. For an independent retail store these tactics are most likely to give you the highest ROI (return on investment). The upper right section is most likely to put you in the poorhouse—very expensive and very impersonal.
Take a look at the four Xs and see if you can figure out which one is:
• A billboard.
• A referral.
• A bag stuffer.
• An endorsed mailing (more on this later).
Figure 1.1 Bob’s Marketing Matrix.
You might want to take all your marketing tools and plot them on this grid. Do you have too much expensive, impersonal stuff?

Key Concept #2: Understand the Lifetime Value of a Customer

The “lifetime value” of your customer is the total dollar amount they will spend with you before they take their business somewhere else, move away, or die. Customers are not “one-shot wonders.” They are the lifeblood of your business. A good customer will use your services many times over the course of many years and will refer their friends, family, and business associates to you.
Shortsighted businesspeople like to make the fastest possible dollar in-and-out. Smart businesspeople do everything they can to nurture relationships and increase the lifetime value of their customers.
You may not have the sort of detailed records you need to determine the actual average lifetime value of your customers. Most businesspeople don’t. But that shouldn’t stop you from building long-term, even lifelong relationships with your new customers and perhaps starting to keep track of that information.
Eventually you’ll be able to figure out a dollar amount value that an average customer spends on your services over a period of years. Remember: It’s the average that’s important. Some customers may be worth only $50 to your business over their lifetime, but some may be worth $5,000. It’s the average that’s important.
Once you know how much each new customer is worth to you, you can decide how much you are willing to spend to get a new customer.

Key Concept #3: Break Even on the Front End, Break the Bank on the Back End

If you put the first two concepts together—you have to pay to acquire new customers and there is a lifetime value to your customers—you come up with this third concept.
Although you still want your overall marketing effort to have an immediate return, acquiring new customers at a breakeven, slight profit, or even a slight loss is now part of your game plan. You’ll break the bank on the back end through the lifetime value of that customer.
If you know that your average customer is worth $500 a year and you’ll be able to hang onto them as customers for at least five years, you have an average customer whose lifetime value is worth $2,500 (500 × 5 = 2,500).
It comes down to this: What are you willing to give up to get that person as a new customer? Twenty dollars? Fifty dollars? One hundred dollars?
Because most retailers don’t look past the first transaction, they aren’t willing to give anything up on the first transaction. They think they are “giving it away” and they hate giving it away.
Once you understand that the real value in the customer comes after the first transaction, it just makes sense to make some sacrifices to get the first sale. You can shift your thinking from “Get a customer to make a sale” to “Make a sale to get a customer.”

Key Concept #4: Apply the “Rule of Reciprocity”

In the following sections that describe some of our favorite tools to get new customers, you will be hearing a lot about giving gift certificates, giving to charity, and giving gifts to your customers, so I am addressing the giving concept right up front.
An incredibly wealthy and wise man, who is also a supersavvy marketer, once shared his life philosophy with me, and I am going to share it with you. “Givers Get.”
This is due, in part, to an unwritten social rule called the “rule of reciprocity,” which says that we should try to repay what another person has given us; in fact, we feel almost compelled to do so. If we do something good for someone, they want to do something good for us. If we give something to someone, we will get something in return.
This is why when two people walk through two sets of doors and one person holds the first door for the other, that person will in turn hold the second door for the first person. It’s also why a grumpy guy doesn’t want you to do him a favor because he’ll feel like he owes you.
There is probably a larger metaphysical influence at work when you put the law of “givers get” into play, which some may call karma, some may call God, or some may call “The Force.” But that’s a much bigger subject than we are tackling today. Just know that it works.
When you deeply and truly understand this concept, you will realize that being an honest, caring businessperson who puts the needs, wants, and desires of the customers first is the only true way to succeed in the long term.
As businesspeople, this means that we don’t look at our customers like they are a piece of fresh meat with a checkbook. We look at them and think, “If I do my absolute best for this person, they will reward me for it.”
Sure there are businesses out there screwing their customers right and left, and they appear to be successful. Treating customers poorly may result in great short-term business performance, but never in long-term success.