The Pareto Principle – 80 percent of your business will come from 20 percent of your current customers – holds true to this day especially for small businesses. The key is in knowing how to retain the profitable 20 percent without ignoring the demands of the few who are dissatisfied. Remember that it is from the discontented few that you can right the wrongs wherever possible.

To balance it out, make sure that for every minute you spend controlling the bad, spend four minutes nurturing your loyal customer. This will ensure that you are leaning towards the ones that give you the most. Identify your core 20% and profile them in order to serve them better.

The question now is how do you profile your customers? And how do you use their profile to increase your sales.

How To Increase Small Business Sales #1: Give Out Loyalty Cards

Giving out a loyalty card will give you three important things about the customer: name, contact number and buying behaviour. Once you know their name, what they buy and when they buy, you will be able to predict the products they might like and the ones they will absolutely shun.

The other benefit is psychological in nature. People see the value on the card as “free money” or “found money”. The psychological effect is similar to that of a credit card, only much, much stronger.

As a result, people spend more. Someone with a $50 restaurant card will usually indulge in a dinner for two, spending $120. Another shopper in a retail clothing store with $15 left on his or her card will splurge on an item that is $15 more than they would otherwise be willing to spend. A person who has a $5 Starbucks gift card is more likely to visit Starbucks instead of another coffee store. What’s more, they will probably use the gift card to buy an extra coffee for a friend or colleague .

There have been many things written about customers being dissatisfied about loyalty cards. This is only half true. What the customers hate are loyalty cards that don’t give them anything. If you give them a card that will require them to purchase $2,000 before they get anything in return, you will end up irritating them instead of attracting them.

I will be discussing the step by step process on how to create a loyalty in the next post.

How To Increase Small Business Sales #2: Upsell

Scott Gerber, CEO of Sizzlelt, a New York City company that produces short promotional videos, noticed that their clients keep on asking them to re-edit existing video materials so he offered to store all their media files for a fee. This didn’t only create a new revenue stream, it also motivated their customers to return to them if they want to do another edit” .

Here is another example. A carwash company in the Philippines realized that their customers spend about 30 minutes in their shop. Most of their customers buy coffee from Starbucks and hang around their shop until the car is done, the owner decided to give free bottomless coffee but he put up computer stations so customers can check their facebook and emails. Being able to do more things while they are at the shop, customers ended up asking them for additional services such as waxing instead of the traditional washing and vacuuming. Not only did it offer a new revenue stream, he also kept his customers happy.

How To Increase Small Business Sales #3: Plan For A Lifetime Value, Not A Transactional Value

Zane’s Cycles is a small bicycle shop. Chris Zane, the owner, offers to credit the full cost of last year’s bicycle toward an upgrade every year up to a 20-inch wheel to parents buying bike for their children. They said that they don’t make money until customers buy their second bike at full price but they know that customers will come back to them. While they wait for that second full purchase, customers will most likely buy new bike accessories for their growing child .

Here is another example, a customer logged on to Graham & Brown to buy wallpapers online. After a few hours of browsing, she saved all her options in her cart to check it with her husband the next day. When they opened the account, all of the items in her cart had disappeared. She called Graham & Brown customer service to tell them about the problem.

They apologized and explained that they just launched the site and may still have some bugs. They offered to send the customers wallpaper samples free of charge. The company may have spent for the free samples but they gained a customer that was so impressed, she kept on coming back .

You have to look beyond the current transaction and measure the value that you will gain from it in the long term. You may be losing money in one transaction but if it means you are gaining a loyal customer for life, that investment is well worth it.

I will be giving more tips on how to increase small business sales but those three basic principles will get you set. Remember to operate on the core principle – excellent customer service. When you have that at heart, ideas on how to provide better service while you gain more revenue will flow easily.

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