Author: Editor's Desk

Categories
Marketing

How to Create a Hook to Attract Customers

Introduction

  • Do you want to increase your sales?
  • Do you know how to create a hook to attract more customers?

As a hook is required to catch a fish, similarly you require a hook in your product to catch the customer’s attention. You require a hook in your advertising brand campaign.

Your customer is busy. If you provide him a complex and long message, he will forget it quickly. You need to grab his attention in the minimum time.

You need to create that attention grabber through which the customer is able to connect with you.

This attention grabber is the hook.

Before you get to know how to create a hook, you must know what it is.

What actually a Hook is?

A hook is any benefit or information about your product that the customer can recall.

It can be a small title or a tagline explaining what you are doing differently in your business.

It also includes a promise or commitment that your customer requires.

Your hook should be surprising, touches the extreme emotions, and exclamatory.

Use a hook in your all the communication material including your website, brochure, business

card, hoarding, lanyard, landing page, social media, email, or your corporate dress.

How to Create a Hook?

You can create a hook through six types of hooks.

Fear of Missing Out (FOMO)

Your customers should have a fear that they can miss out on your product.

Good hook sentence example:
 

’Sirf ek tapakti boond, apki kismat badal sakti hai.
’ The advertisement of m-seal created a hook by using this catchy sentence. 

Customer Convenience or Comfort

You can create a hook that promises customer convenience or comfort.

With given example let’s understand how to create a hook by using the sentences that comfort consumers. 

Good hook sentence example
: Surf excel created a hook by saying, ’Daag ache hain.’

It promises the mothers that they need not worry about the stains as it can be easily washed with the help of their product.

The feeling of Belongingness and Relation between the Company and Customer

Good hook sentence example:

The tagline of Tata Salt is, ’Desh ka namak, Tata namak.’

This creates a feeling in the hearts of the customers that this is our country’s salt.

Help your audience to achieve their goals: Your tagline should be like -you can help the customer in solving their problem or achieving their goals.

Good hook sentence example:

Big Bazar says, ’Is se sasta aur accha kahin nahi.’

This is an assurance to customers that we will help you in achieving your goal of purchasing the cheapest and best products.

How to Create a Hook by Power of Thrill and Excitement

Good hook sentence example:

Mountain dew says, ’Darr ke aage jeet hai.’

All the advertisements of mountain dew include adventure and thrill like people climbing in the mountains. This gives a feeling of thrill among the customers.

Convert Hurt, Mystery, or Disappointment into Hope

Good hook sentence example:

CP Plus is a CCTV camera brand which became famous from its hook: ’Upar wala sab dekh raha hai.’

In the advertisement, someone is stealing something but is being watched by top-fitted CCTV cameras. In the background voice says, ’Upar wala sab dekh raha hai’ referring to the CCTV cameras.

Essentials for Creating Hook

For creating a hook, you need to be:

  • Creative and think out of the box.
  • Conduct research about your competitors and the taglines they are using to attract customers.
  • Study the buying behavior of your existing customers.

Your hook should be the problem-solving USP of your product. It should be able to take out or touch the hidden emotions of your customers.

So, your hook should be like that it can enable your customers to recall your product immediately. For this, you can use the six types of hooks discussed above. 

Categories
Motivation & Mind Control

How to Control Your Mind

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Introduction

  • Do you want to learn ways to how to control your mind?
  • Do you want to improve your performance?

The mind can take you anywhere you want. You can do great things by controlling your mind. So, how to control mind?

Don’t Control your Mind, Just Engage It!

If you have a clearly defined goal statement, and you engage your mind, your mind starts absorbing the knowledge, data, and information.

Because; Mind always needs an engagement, Mind does not stay in a vacuum.

Doctors are using the Placebo Effect to control your mind and help you grow.

Let’s take forward the discussion on how to control your mind with patterns of thinking.

Two Patterns of Thinking

To know how to control your mind, you need to understand the patterns of thinking.

We unconsciously learn a lot of habits. These habits form our thinking patterns.

There are two types of thinking patterns – Structured Pattern of Thinking and Accidental Pattern of Thinking.

Structured Pattern of Thinking

It helps you to get whatever you want in your life. It takes you where you want to be. In this pattern of thinking, people look for learning and edutainment.

Accidental Pattern of Thinking

It gets you what you don’t want in your life. It leads you where you don’t want to be. In this pattern of thinking, people always search for leisure and entertainment.

You are not leading your life; your patterns are leading your life.

Your unfulfilled desires and your past experiences have settled inside as patterns in your life.

How to Control Your Mind by changing Patterns of Thinking?

To know how to control mind, you need to change your thinking patterns.

Always remember, you continue with your same patterns until you create a new pattern to actually develop a pattern.

To put it another way,

You are programmed until you program a new program for yourself.

So, your psychological-neurological system is actually working with the programming that you have created.

This is called “Neurological programming” that you have developed for yourself. And, this programming is leading your life.

So, what you are looking for? Are you looking for leisure or learning?

This you need to decide to understand how to control mind.

Replace Entertainment with Edutainment

To know how to control mind, you need to replace entertainment with edutainment.

A man with a structured pattern of thinking will replace edutainment with entertainment. He will look for great learning.

Remember: “If you want to double the rate of your growth, just triple the rate of your learning.”

Iconic leadership is not about entertainment, it is about edutainment.

For making structured patterns, you just need to replace, reinforce, and reinstate your old patterns.

Meaning ABCDE model: A – Analyze | B- Brainstorm | C- Create | D- Deliver | E- Evaluate your old patterns.

According to Chapter 6, Verse 26 of Bhagavad Gita:

yato yato niscalati, manas cancalam asthiram,

tatas tato niyamyaitad atmany eva vasam nayet

It means, in an accidental pattern of thinking, your mind will go wherever it wants because it is unsettled and restless. But, you have to bring this unsettled mind under your control if you want to grow.

If you want a revolution, then you first require the evolution of your mindset. You need constant learning if you want iconic growth in your life.

Categories
Marketing

How to Build Customer Loyalty

Introduction

  • Is your customer loyal to you or feel connected with you?
  • Do you want to know formulas to calculate customer’s loyalty?
  • Do you want to know how to build customer loyalty? 

Getting a customer is easy, but getting their loyalty is the difficult part. To make your customer loyal, you first need to do his purchase analysis.

Whenever a customer comes to your store, you need to observe which kind of products he is purchasing and in which kind of products he is interested.

If you incentivize the products in which he is interested, he will buy your products and become your loyal customer.

To know how to build customer loyalty, you need to understand the customer loyalty formula. 

Following are the 5 important loyalty formulas on how to gain customer loyalty.

Formula #1: Repurchase Rate

The repurchase rate is one of the formulas to know how to gain customer loyalty.

Repurchase rate = (Number of repurchases/ Number of unique purchases) x 100

For Example:

10,000 people purchase your product. Among them, 1000 people came again to purchase something from you. In this case, your repurchase rate is 10%.

Once you got the repurchase rate, it becomes easy for you to increase it.

Formula #2: Net Promoter Score (NPS)

NPS is also one of the ways to know how to gain customer loyalty.

NPS is the rate to which your customers are satisfied with your products and services. NPS is calculated as follows:

NPS = Promoters (Highly satisfied customers) ’ Detractors (Dissatisfied customers)

You can determine your number of promoters and detractors by taking customer feedback on a scale of 1-10. Different ratings on the scale have different meanings like:

Rating 1-6
’ means customers are not satisfied with your products or services

Rating between 7-8
’ means customers are neutral about your products or services

Rating between 9-10 
’ means customers are highly satisfied with your products or services

Let’s talk about customer loyalty example:

If 100 people visit your restaurant in a month and 70 people gave you either 9 or 10 rating, 10 people gave you 7-8 rating and the 20 people gave you a rating between 1- 6, then your NPS is:

Net Promoter Score (NPS) = 70 ’ 20 = 50

Formula #3: Up-Selling and Cross-Selling Ratio

To know how to build customer loyalty, you need to first determine the up-selling and cross-selling ratio.

Suppose, you have a fast food outlet and a customer buys a burger from you.

Can you sell something else with the burger like a cold drink or ice cream?

If yes, then you can create a meal for him like McDonald’s does.

If a person comes to buy a particular product but he buys some other product as well, this is called cross-selling and up-selling.

Up-selling and cross-selling ratio:

= (Number of customers buying more than one product/Number of customers who bought a single product) x 100

For Example

If 5000 people are buying 1 product from you and among them and 1000 people bought more than 1 product, then your upselling and cross-selling ratio will be:

Upselling and cross-selling ratio = (1000/5000) x 100 = 20%.

Now, you just have to increase this upselling and cross-selling ratio and your turnover will increase drastically.

Formula #4: Frequency and Recency

Frequency means how frequent a customer buys your product, whereas recency means how recently the customer bought your product.

Calculate the frequency and recency of a loyal customer.

You need to know whether the customer is coming to your shop because he loves to shop there or he is coming just because the other shop is closed.

Formula #5: Redemption Rate

Give free coupons to your customers and ask them to redeem it on their next visit. This will encourage the customer for repeat purchases.

Soon, he will become your loyal customer as he is getting extra benefits from you.

Redemption rate = (Total loyalty points issued by you/Redeemed points) x 100

For Example

If 10,000 loyalty points were issued in a month by you and about 5000 points were redeemed, the rate comes out to be 50%.

All the above formulas will help you in understanding how to build customer loyalty efficiently and effectively.

An increase in customer loyalty will not only increase your customer base but will also grow your sales and profit.

Categories
Marketing

How to Build Brand Loyalty

?Introduction

  • Are your customers not buying your product?
  • Do you know how to build brand loyalty among customers? 

’Brand Loyalty’ and ’Customer Loyalty’ are two strong points in any business. So, companies are focusing on how to retain customers and build brand loyalty.

Today, every big brand and small company is continuously creating brand loyalty to retain their customers. 

You need to have a customer loyalty department whether you are running a small business or big to retain your customers.

Now, the question arises ’what is loyalty?’ and how to build brand loyalty? 

Understanding Loyalty

To know how to build brand loyalty, you need to first understand what loyalty is.

Loyalty is a bond between you and your customers. It is different from customer satisfaction.

Customer satisfaction is more like a rating system, wherein your customer says, ’I’m 10 out of 10 satisfied’. But this doesn’t mean that he is loyal to your brand. 

This is because a satisfied customer can move to the next product or services on any day at any time.

For Example

It is not necessary Apple’s customer is satisfied with Apple mobile, but he is brand loyal and will never leave this brand.

Harley-Davidson – Customer won’t like to switch from this brand to Hero Moto Corp.

Thus, loyalty is an emotion tool which can be built step by step. Every businessman can create brand loyalty and their customers will never switch from their brand on any condition.

Loyal Customers is Your Promoter!

A loyal customer starts spreading about your brand through ’Word of Mouth’ marketing.

In effect, he is not just your customer, but he becomes a Promoter to your company and generally works like an unpaid salesman.

If you can retain 5% of the existing customers then your profit will increase from 25% to 95%.

– Harvard Business School

’Foundation of Loyalty is TRUST’, where trust is more Likelihood, Likeliness of business increases many folds. 

Thus, loyal customers:

?  Increases your brand equity.

?  Brings down your cost almost by 7X.

?  Increases Repeat and Repurchase.

Now, let’s see how to retain customers and build brand loyalty.

How to Build Brand Loyalty?

#1: Point-Based Loyalty

It is one of the ways to how to build brand loyalty.

By giving, points on each shopping one can generate online conversion and in-shop experience.

It will ’increase the engagement of your customers with your brand’ and they would like to redeem points on their next shopping. 

For Example

Amazon Prime has become ’King of Brand Loyalty’ through Impulsive shopping, Value for Money, Exclusive deals and Free Videos.

Nowadays, social media has emerged as a big platform to increase loyalty on Facebook, LinkedIn, YouTube, Twitter, and Instagram.

#2: Customer Referral Program

It is another way how to build brand loyalty.

If you have a platform where you can increase customer engagement then it will lead you to more customers. In this, the customer becomes your partner in the customer acquisition process.

You can give some benefits or perks to your existing customers for making new customers.

For Example

Ola and Uber give free rides to their customers on referring their App to new customers.

#3: Data Analysis

Try to analyze the data history of your customers through Electronic Virtual System (EVA). Based on this data, try to interact with your customers and make them loyal.

You can also increase involvement through Whatsapp for business, chat, messages, which could ’involve your customers emotionally’ or solve their problems.

#4: Omni Channel Strategy

It is the fourth way to how to build brand loyalty.

It is a very important and successful strategy. You just try to touch your customers emotionally by using one of the following tools-

  • Social Media
  • Mobile
  • Online Sites
  • Physical store
  • CRM and big data

You need to make them feel special by –

?  Wishing your customers on Birthday.

?  Offering coupon or discount voucher

Always follow 80:20 Rule
– It says if you send 8 messages related to awareness for customer’s benefits, then only send 2 messages to ask them to buy your product or services.

You can adopt these strategies of how to retain customers and build brand loyalty and achieve great success in business.

Categories
Marketing

10 Employee Retention Strategies

Introduction
  • Are your employees leaving your company frequently?
  • Are you unable to retain your manpower?
  • Do you implement employee retention strategies in your organization?
The two most important problems in any business are ’competition’ and ’attrition.’ Competition is outside, while attrition is inside.
Attrition means how many employees leave your company.
Usually, top companies worldwide don’t give high salaries, but ’dole-out ’Maggie’ in the form of various perks and benefits’ to retain employees.
Now, let us understand innovative employee retention strategies used by big companies to keep their attrition rate very low compared to others.
#1: Accommodation and Pick & Drop Facility
It is one of the most creative employee retention strategies to retain employees. It won’t cost much to the employer as part payment is deducted from the salary of employee itself but it ’gives a sense of pride and convenience to the employee’.
#2: Tea, Coffee and Snacks Counter
Apart from providing free tea, coffee or other snacks, some companies also provide food at a subsidized price. It also acts as innovative employee retention strategies.
#3: Timely Salary, Bonus, Appraisal and Promotion
It has been seen in various new companies and Startups that they don’t provide a salary to their employees on time.
The employer needs to understand employee’s expenses like- EMIs, Bill payments, Groceries, and Pre-planned monthly expenses.
It is also an innovative employee retention strategies.
#4: Insurance
In addition to salary, if the employer adds insurance into it then gross salary increases automatically.
Due to the sedentary lifestyle and unhealthy eating habits, every now and then new diseases come into existence.
It is advisable that employer provide health insurance of at least Rs. 1-2 lakh to its employees by selecting a good insurance company.
Again, it won’t cost much as the part premium would be deducted from an employee’s salary.
It is also one of the most creative employee retention strategies to retain your employees.

#5: Work from Home or Flexi-Schedule

Among the most important creative employee retention strategies is a flexible working environment.
There are some departments in the company where performance is easy to measure and they have less dependency on other departments.
If there is any such department in your company, you can give employees the flexibility to finish 9 hours of their shift, irrespective of check-in and check-out time.
For Example
You may allow your employees to work from home or can give flexibility in office-timings, which increases their productivity and performance.
It will decide whether your employees will live and grow, or they will leave and go.
#6: Kanyadaan or Scholarship Scheme
Another most innovative employee retention strategy is providing scholarships to children of employees. 
You may propose to your employees that if they stay for 5 years or 10 years in your company, you’ll add some specified money into Kanyadaan or scholarship fund every month, which will ’help in their child’s marriage or education in future.’
#7: Free Grocery to Blue Collared Employees
Apart from the regular salary, if you ’provide grocery bag worth Rs. 2000’, to your blue collared employees like driver, peon or office boy, it will act as a ’comfort factor’ for such employees. 
Hence, it is an easy and innovative employee retention strategies to retain blue-collared workers.
#8: Benefit against Contract
If your employee requires any expensive items like a car, bike, laptop, etc., you can give it to him/her against a contract.
Now, the item will be purchased on the employee’s name, and the company will pay the price, provided that employee shall remain in the company for next 3 or 5 or 10 years, depending upon the item purchased and policy of your company.

#9: Interest-Free Loan for Emergency and Adversity

A person remembers only two types of people, one who was with him in his good times and the other, who was with him in his bad times.
Your number 1 customer is your employee; if you support them in their adverse time then they will never leave you.
? You don’t have to earn interest on that loan.
? Don’t fear that he will run away with your money.
Giving a loan of amount 3 times his salary won’t affect much, provided he spent some time in your company.
#10: Additional Week-Off with Every Year Completed
Tell your employees that:
  • If they complete 1 year in the office, they will be given 1 Saturday off.
  • if they complete 4 years in the company, they will get 4 Saturday off.
  • After 4 years, they will be eligible for gratuity.
This motivates them to spend many years in your company.
By applying these ideas you may not need to give hefty hikes to your employees as they are complacent with the security and safety provided by you.
These are the 10 employee retention strategies which will help you retain your manpower. You may think it will cost you dearly but in reality, it won’t.
Categories
Legal

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Categories
HR & People Management

10 Tips for Effective Team Performance Management!

Introduction

  • Are your employees not performing well?
  • Do you want to improve your team performance management?
  • Do you want to take your business to the next level?

It doesn’t matter whether you are a Project Manager, Departmental Head, Divisional Manager, or even the Director of a Company; everyone wants to take their Department/ Organisation to the Next Level.

And the ladder that leads to the next level is ’Team Performance Management’

What does Team Performance Management mean?

It is an ongoing process to ensure that an individual’s performance contributes to the mission of the organization.

How do we ensure it?

Here we will discuss 10 tips that will help you Maximize the Results of your team through Effective Team Performance Management.

Tip #1: Link every Department to your Company’s ’Top Goals’

It is very important for you to first identify the top 3 goals of your company, and then link every department of the organization to the company’s goals.

For Example

In a small and medium-sized organization, when the top 10 key people were asked to write three top goals of their organization, they came out with 15 different goals. An organization which is running in different directions can never achieve excellence and effective team performance management to maximize the result.

Tip #2: Determine How well your Team is Meeting your ’Organizational Goals’

Identify the past reality and the current reality of your team. This will help you in achieving your organizational goals easily.

You need to find out:

  • Your past track
  • Patterns in which your team is moving

This will enable you to plan your path ahead.

Tip #3: Create Clear Performance Metrics for every Department

There are various departments in an organization where the work is done in quality and not quantity.

These are the departments where the performance is done not to improve the results but to support the results.

Anything that you cannot measure, you cannot improve.

To ensure effective team Performance management, you require to:

? Link every department with a clear number to identify the current performance.

? Ensure clarity on current reality and outcome expected in the numerical form.

? These numbers should be connected to the top organizational goals.

This will help you in running the organization in one direction in a numerical format.

Tip #4: You have to identify the Skill Deficit of every Team Member

For ensuring the effective team performance management you need to conduct individual meetings in the organization to identify the skill deficit of every team member.

You have to meet the individuals in the organization to ’identify the gaps, and become their gap partner or skill deficit partner’.

You need to determine what changes are required in their training and what the skill deficit is at the moment.

Tip #5: Create an Individual Professional Development Plan (IPDP)

Discover opportunities and discuss with the employees their individual development plan.

Since you have identified their skill deficit, so, you are discussing their future development plans.

Tip #6: Start asking Solution-Oriented Questions

It is the sixth tip of effective team performance management.

On an individual basis, ask your team members’ solution-oriented questions.

For example, how are they planning to contribute to the main organizational goals?

Enable your employees to make individual plans. This will give top bosses of the company an idea about how employees will contribute to the organizational goals. You have to inspire them to think.

Tip #7: Inspire your Direct Reports to come up with Game-Changing Ideas

This is an empowering, employee engagement and retention activity. People start feeling involved in the organization. It is also another tip of effective team performance management.

Involvement is directly proportionate to commitment.

The more they become involved, the more will be their commitment towards the organization.

Committed employees are the real resource.

’Take away my entire organization. Take away my all machinery. Take away my entire plant. But, give my top people to me. I will come back in 5 years. I will bounce back even better.’

-Henry Ford, Founder, Ford Motor Company

Tip #8: Give the Feedback in Future Tense

It is one of the tips for effective team performance management.

Never ever repeatedly talk about the past mistakes of your team members. This is damaging and will decrease the initiative, ownership, and responsibility of an employee towards the organization.

?  Never repeatedly talk about the past mistakes of your team.

?  Reduce the offerings of corrections.

?  Correct them in the future tense.

?  Ask solution-oriented questions.

?  Give them a future action plan.

?  Talk more about future improvements.

’It is not Performance Appraisal; it is Performance Management.’

Tip #9: Measure Self Performance

Help your employees to create their own visible and compelling scoreboard for their performance management process. It should always be visible to them and you.

They should be maintaining a scoreboard. When your team starts maintaining their scoreboard, they would know where they are.

So, they do not have to wait for the month or year-end to know their performance. Once they know their scoreboard, they can work hard and focus on their performance.

Tip #10: Maintain a Great ’Deposit Withdrawal Equation’

Your deposit withdrawal equation has to be very good.

A lot of managers, department heads, and entrepreneurs are not able to maintain this equation.

You have to invest your confidence and trust in them. To gain trust, you have to extend trust.

So, 40% extend trust, 20% offer correction, and 40% glorify them by actually inspiring them.

Deposit Withdrawal Equation= 40 Deposits: 20 Withdrawals: 40 Deposits

For effective team performance management you should follow below tips:

? Don’t correct your employees in a team meeting.

? Don’t demotivate your employees by yelling at them.

? They should be going out of meeting with lots of energy and enthusiasm.

These 10 points can help you in Managing Performance & Maximizing Results and take your company to the next level.

Categories
Motivational

How to Achieve New Year Resolutions?

Introduction

  • Are you not able to complete your New Year Resolutions?
  • Does your resolution break easily?
  • Are you looking for ways on how to achieve New Year resolutions?

New Year is an amazing opportunity for people to make personal resolutions for self-improvement. You must have made different types of New Year Resolutions till now.

Example: I will save more money this year (or spend less); I will start reading one book every month, or I will quit smoking.

How many New Year Resolutions you have completed? Your answer may be a few or none.

More than 95% of people broke their New Year Resolutions latest by 15th January.

Have you ever realized why we fail to achieve these goals despite so much conviction and clarity about it?

The reason is quite simple!

We make Multiple Resolutions in our mind because we want to improve everything in our life in the coming year starting from our health, finances to our relationships.

The reality is slightly different. Many Resolutions can never bring many revolutions but One Focused Resolution can certainly bring Revolution.

Following are the powerful tips to make your New Year resolution successful:

Tip #1: One Focused Resolution will Bring Revolution

It is one of the tips on how to achieve New Year resolutions.

❌ Do not make multiple resolutions.

❌ Do not change your resolutions again and again.

✅ Make one focus, steel strong, powerful, unshakable and unbreakable resolution.

✅ Make a resolution that brings a major shift and success in your life.

Now, how will you make it Steel Strong?

Simple! You can do this by consciously holding on to your resolution. You need to give yourself auto-suggestions and create a Recall Support Mechanism around it because, “anything that gets out of sight, gets out of mind.”

Ensure that your goal never goes out of your sight. Place your goal on your television, laptop, mobile phone, the dashboard of your car, the main door of your house, at your workstation, study room, etc.

Once you’ve made a Steel Strong Resolution, make sure that you practice it consistently because only Consistency can bring Progression. This is our second tip to how to achieve New Year resolution.

Tip #2: Consistency can Give you Progression

Consistency is the key in making and achieving New Year resolution.

✅ Follow your resolutions consistently.

❌ Do not change your resolution, if you are facing challenges in achieving it.

✅ Change your strategy, if you are facing challenges in achieving your resolution.

Remember, there is no way to get overnight success. You have to work consistently and improve yourself to get success.

If you do not show consistent improvement, then there are lots of people who can replace you anytime from your job, position, or your business.

For Example

In 1916, the average age of a company was 70 years and it has been reduced to 7 years in 2016. This is because replacement is taking place at a high speed. So, you need to improve yourself with the help of your resolutions otherwise you will also be replaced.

Tip #3: Recruit Support

Sometimes, we all need a push from someone and it is alright to take support to complete your New Year resolution.

✅ Identify a super-specialist in the field in which you have taken a resolution. Take his/her support to achieve your resolution.

The super specialist can be a like-minded friend, relative, or mentor. They will give you a continuous hand-holding and implementation support to hold on to your resolution.

For Example

An athlete grows only in the company of other experienced athletes.

Remember, this is going to bring a great shift in your life and will make you succeed with your New Year Resolution.

Categories
Marketing

Is Cost of Customer Acquisition Eating Away Your Business?

Introduction

  • Are you facing a problem in calculating your Cost of Customer Acquisition(COCA)?
  • Do you think that your margins are low because of High COCA?

Many businesses fail because they spend too much on acquiring a client without calculating the cost.

This impacts their margins and profits that hit the company despite the best strategy.

So, it is important to understand and calculate customer acquisition costs.

What is COCA?

The full form of COCA is the Cost of Customer Acquisition. It is the customer acquisition cost, which means the cost of convincing a potential customer to buy/use a product or service.

In simple terms, the company incurs a lot of expenses on marketing & advertising its product to reach out to the potential buyer along with the salary of its employees. The total amount spent in this process is called the Cost of Customer Acquisition (COCA).

Once COCA is calculated, we can arrive at the actual Average Cost per Customer.

Calculating COCA

Let us take an example to understand how to calculate customer acquisition cost. 

A businessman spends Rs 1 crore on ’Marketing + Advertising + Sales’ and acquires 100 new customers.

Now, Cost of Customer Acquisition or COCA can be calculated as:

COCA = (Sales and Marketing Expenses)/New Customers Acquired

COCA = Rs 1 crore/100

            = Rs 1 lakh

That is, Rs 1 lakh is spent by the businessman to acquire one additional customer, which is the customer acquisition cost.

Now, your next step is to analyze whether you can afford 1 lakh rupees to add one more new customer or the Cost of Customer Acquisition.

If you have a business of repeat sales i.e. recurring revenue model business, then a new customer can give you good business in the next 5 years.

If a customer is buying only once and cost to add a new customer is more than what you get by selling your product, in that case, it is not a good idea to invest so much in acquiring a new customer/client.

Points to Remember

Business Loss = COCA > Business Expenses

COCA < Expected COCA, here you consider your friends, family & relatives as your customers and once they go away, you find yourself in a tough situation. So, it is important to make some budget for bearing cost of customer acquisition without plunging into the negative margin.

It is important to understand the long-term relational value while acquiring a new customer.

You need to identify those behaviors that are indicative of a loyal customer. And then you need to hold your customers for repeat business.

Retention marketing is a new battleground in the business, where tracking is compulsory.

Categories
Finance

How to pay loan faster in 8 Easy Ways

कोरोना काल में बदला उपभोक्ताओं का व्यवहार
कोरोना काल में बदला उपभोक्ताओं का व्यवहार

Introduction

  • Are you facing problems in paying off loans?
  • Are your loans taking away all your savings?
  • Do you want to know how to pay loan faster?

Because of the lack of enough knowledge on how to pay off a loan early, many businessmen in India plunge into long-term debt due to lack of calculation and financial planning.  And due to debts, businessmen develop various health issues like hypertension, anxiety, blood pressure, stress, and depression.

To be happy, you don’t need a piece of finance, you need financial peace. 

You just need to know how to pay loan faster without disrupting your day-to-day functions. 

In this article, we are discussing 8 effective ways of how to clear loans faster that will help you to get rid of life’s tension.

1. List your Debt by Interest Rate

Following significant steps will help you know how to pay loan faster than usual time span:

? List all your loans along with their interest rates either in ascending or descending order.

? Do not give equal EMI in all the loans.

? Complete the loan first that has the maximum interest and pay minimum EMI of other loans.

For Example

The interest rates of different loans are: Home loan – 8.3%; Car loan – 9%; Education loan – 10%; Personal loan – 12%; Unsecured loan – 20%; Credit card loan – 32%.

As the interest rates of credit card and unsecured loans are higher than the other loans, so, first complete these two loans. Keep the payment of other loans at a minimum.

2. Pay Incremental Gain Exponential

Let us know how to pay loan faster by paying more or double EMIs on the loans whose interest rate is high and get exponential gain.

Take the following example to understand how to pay off a loan early.

Parameters
 Scenario 1
 Scenario 2
 Scenario 3
EMI 5,000 10,000 20,000
Time Taken for Closure 41 Months 13 Months 6 Months
Payment – 2 times 4 times
Benefit Nill 3 times 7 times
Total Amount Paid 2,05,000 1,30,000 1,20,000

In the above table, you can observe that if we increase the amount of EMI, then the total amount to be paid decreases. In this way, you get the exponential benefit through incremental payment.

3. Sell Unnecessary Items for at least 2 to 4 EMIs

Selling unnecessary items is another way to how to clear loans faster.

If you buy a product but not use it from last one year, then it is possible that it is your depreciating asset and useless for you. 

For example, unnecessary furniture, old mobile phones, bags, books, and apparel.

You can sell the unnecessary items on OLX and Quikr. You can take out 4-5 EMIs of your loan by selling these things.

4. Temporary Downsizing

Temporary downsizing is one of the ways to how to pay off a loan early.

An intelligent person will buy an appreciating asset while a low IQ person will buy depreciating assets or liability or unnecessary objects.

  • Identify your unnecessary monthly subscription services, depreciating assets, and non-value adding objects.
  • Control these unnecessary expenses so that you can make some extra saving, for say 30%. You can use this saving to pay your EMIs.

5. Pay Loans with the Second Income

To know how to pay off a loan early, you need to analyze the total amount of income you have.

? If you have two earning members in your family, then use the income of one member to meet the family expenses and use the income of the other member to pay off your loans.

? If you are the only earning member in your family, then you should plan additional income through part-time jobs like freelance photography, content writing, LIC agent, catering, etc.

  • Identify your passion that will help you to get an extra income.  
  • Use the additional income to pay off your loans.

6. Have an Emergency Savings Fund

You should consider the following pointers to understand how to pay loan faster:

? Maintain some emergency savings fund so that you need not take loans.

? Invest in equity and liquid debt funds that will help you to takeout funds easily.

7. Habit of Budgeting is an Extra Blessing

You need to adopt the following points to understand how to clear loans faster:

? Have a data-driven approach to your spending.

? Keep your intelligence above your emotions while spending.

? Make a budget to control your emotional spending.

Those who don’t manage their money will always work for those who do!

8. Throw any excess cash on your debt

Spend the extra money obtained from any source like tax refunds, bonuses, incentives, etc. to pay your debts.

Do not take loans in a hurry. Maintain your CIBIL score. Spend only when it is necessary.

At last, even if you know the strategy of how to pay loan faster, but you are not implementing then you are deliberately letting your loans eat all your savings and financial growth. 

Hence, implementation is the key to pay your loans off swiftly.