Focusing on Existing Customers Was This Entrepreneur’s Key to Success

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In 2000, Harry Wagter moved to Ontario from Alberta and like many out-of-work baby boomers, he had difficulty finding in job in spite of pundits telling us employers need to court older workers. “I was a dinosaur,” says Harry.

He began looking at purchasing a franchise. “I wanted to buy myself a job.”

Harry was interested in looking at the make-your-own wine industry; an industry not available in Alberta at the time. Doing his homework, Harry visited three head offices of three different chains, discussing his options. Rather than start a business from scratch, Harry asked if anyone had an existing franchise they wanted to sell. There was a franchise available in Owen Sound. It had been in existence for about five years and already on its second owner. Harry became the third owner and moved to Owen Sound.

A full-time employee was working in the store and Harry chose to keep him on. “He didn’t stay long,” says Harry. “But long enough for me to learn the ropes.”

The first thing Harry did was run some radio advertising. This proved really successful as his first two months as new owner his sales were the highest the store had ever seen. But Harry thought he could do even better.

He started looking at the store’s database which contained almost 1300 names. Many of these names were not really customers but names picked up at trade shows. After running the store for six months, Harry decided he needed to find out who were really customers. He hired a telemarketer to call everyone on the list. Her purpose was to introduce Harry as the new owner and to delete numbers not in service or people who weren’t really interested.

The telemarketer was really experienced and did an amazing job for Harry. She worked for two and a half months, calling every name on the list. If someone wasn’t home she didn’t leave a message; she called back until she spoke to a person. Eventually she culled the list to about 400 names. After a few months she called these 400 people back announcing a sale. These two rounds of telemarketing resulted in an increase in sales of almost 40 percent.

With the list culled to 400 names of people who are real customers, Harry could then switch to mailings. Because he new mailings were going to people who are actually interested in buying he could keep his costs down and get a good return on his investment.

After his round of telemarketing, Harry focused on the customer experience. He thought since customers are spending $100 or more each time they come in they should be comfortable and enjoy themselves. He updated the store and focused on creating an enjoyable, relaxing environment.

Next, Harry implemented a customer referral program. When an existing customer refers someone new, they both get a discount. The more someone refers, the more of a discount they get.

Not every marketing attempt has been successful however. Harry tried print advertising. “It doesn’t work for me at all,” Harry said. “I think of it as a colossal waste of money.”

Networking doesn’t work for Harry’s business either. Attending the Chamber of Commerce monthly breakfasts has resulted in one or two sales over four years. “You’d think in a small town it would work but it hasn’t.”

On several occasions Harry also tried creating a newsletter. The professional, glossy newsletters were distributed to 20,000 households. Very few new sales resulted.

One thing Harry has avoided was having sales or competing with other wine-making establishments on price. When you discount you have to work harder for the same money. Instead he focuses on his existing customers, and never offers something to new customers that he doesn’t also offer existing ones. “Why should I offer a discount to someone waling in for their first batch of wine when I have someone coming in for their 15th batch that year?”

Buying an existing business was really the right decision for Harry. “I didn’t have to reinvent the wheel. I just had to do it better than anyone else.” And clearly he has done it better. Since buying the store Harry has grown the business to 900 regular customers and does double the business he did in the first year.

Andrea J. Stenberg

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