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How to Use Customer Loyalty to Crowdfund Your Business Growth

(Photo via squeezein.com)

Often times when we learn about marketing, we hear over and over again that the most important thing to do is build your list. Creating a database of your customers or clients and then marketing directly to them is the lowest hanging fruit in the marketing world, and goes a long way in helping you sustain and grow your business. It’s far easier to get an existing customer to spend more money than it is to attract brand new customers.

Turning Customer Loyalty into Crowdfunding

This simple fact alone makes building your list a crucial component of your marketing directives, but it is not the only gold you can mine from your list. What you might not know is that your database can literally help fund your future growth without having to stretch your personal finances or borrow money.

When we were ready to expand our business in 2010, we explored traditional forms of funding. With the economic times the way they were and our own portfolios still recovering from our two previous expansions, we got creative and decided to take a killer offer to our best customers in hopes of raising some upfront capital.

We knew there was value in having a database of our guests so that we could maximize our relationship with them in terms of the service we already offered. What we hadn’t yet realized was that because we’d spent time, money, and energy developing a relationship with our guests, they were emotionally invested in our business, thus priming them to financially invest in our expansion. Not for equity. Not for interest. Not to become a partner. They did it for free food! Here’s how it worked.

How to Crowdfund your Business Growth

We offered our top 10% of guests a special offer to become a “founding member” by buying a one-time large gift card to our restaurant at a 20% discounted price. They could purchase a $1,200 gift card for just $1,000 and we threw in all kinds of freebies, parties, extras, and value-adds. Our hope was to raise $5-10k to help us finish opening our third location.

What happened was astounding. The demand and the responses were overwhelming, and we ended up raising $36,000 from that promotion. Talk about easy money! Our customers got a great deal, and we got the capital we needed upfront without maxing out credit cards or leveraging any personal favors.

When we opened our fourth location two years later we did it again, this time raising $32,000, and since then have continued doing the sale because our guests love it that much. In fact, we’ve added higher packages and even more levels, and we get a loyal following every year clamoring to buy. This year we’re even offering a $10,000 VIP package. We’ll see if anyone buys it, but just having it out there helps the other packages look more reasonable. And hey, if even one person buys, I’m not going to say no to a $10k advance!

When it comes to growing your business, make sure you’re growing your list of customers first — and make sure you are actively engaging with them so that when it’s time to make them a killer offer and get some upfront capital, they’ll be beating down your door to help you out.

Read Misty Young‘s thoughts on franchising and company culture in our free Credibly Business Journal: Grow Your Business Through Franchising.

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