Get The Word Out! Marketing

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Occasionally when I talk to people about sending out announcements and newsletters, they ask me about spam.  They are concerned about their messages coming across as spam, being perceived as spam or worse, being reported as spam. We’ve all gotten our share of obvious spam (think viagra or a plea to help someone in a distant country recover millions of dollars), but where do legitimate business communications fit in?

Most companies assume that their customers are highly price sensitive. They design their marketing program with that idea in mind. When they have sales, more people buy. When they are not on sale, less people buy. What more proof of price sensitivity do you need?

Transaction vs Relationship Buyers

Actually, you need a lot more proof, because the response to discounted sales is usually quite misleading. As Paul Wang, Professor at Northwestern University points out, there are, in general, two types of customers: transaction buyers and relationship buyers. A transaction buyer is someone who is interested only in price. These buyers have no loyalty. You can keep your warehouse open on a Saturday afternoon to meet some special need that they have. The following Tuesday when they have another requirement, they will bid it out. These people will leave you for a penny’s difference in price. They have all the catalogs and know all the competitor’s prices. They spend hours on the Internet researching before they buy. They can afford to wait. They take pride in getting the best deal.

The other type of buyers are relationship buyers. These are people who are looking for a supplier that they can trust. They are seeking friendly companies with reliable products – people who recognize them, remember them, do favors for them, who build a relationship with them. Once they have found such a supplier, they tend to give them all their business. They know that they could save a buck here or there by shopping around, but they find the process wastes too much of their time and emotional energy. Relationship buyers, if properly cultivated, will stay with you for a lifetime.

Brian Woolf, President of the Retail Strategy Center and author of Customer Specific Marketing, said this: “For years, retailers have argued that having regularly advertised, deeply discounted prices brings price-oriented customers into their stores but that over time, these customers convert into regular, profitable customers.

Research at the Retail Strategy Center shows that this widely held belief is a myth. A handful of these customers do convert into “good” regular customers, but the majority actually defect within twelve months of their first shopping visit. I have yet to find a retailer anywhere in the world whose investment in this type of shopper has yielded an attractive return on investment.”

Mercer Management consulting research shows that for hotels, gas stations, drug or food stores, only 15% to 30% of customers are price sensitive. The other 70% to 85% are loyal customers who provide most of the profits. In fact, if you could take an Olympian view of the situation, it might look something like this:

Each company has a base of relationship buyers. When the products are on sale, they attract a small additional group of transaction buyers. When their competitors products are on sale, this same group jumps ship to take advantage of the discounts. In a few days, they move on when they hear of another price advantage somewhere else. Meanwhile, of course, the management of each company is telling themselves that their customers are all very price sensitive, and they have the sales figures to prove it!

Transaction buyers give you very little profit. Since they only buy discounted items, the margin on their sales is much lower than the margin on relationship buyers sales. In fact, you may find that your relationship buyers are subsidizing the sales to your transaction buyers. You provide special express lanes for people who buy less than ten items. Your regular customers with a loaded shopping cart have to wait in long lines.

What is wrong with assuming price sensitivity? By having sales, you gradually convert your relationship buyers into transaction buyers. Instead of thinking about recognition, service, helpfulness, and relationships, you gradually train them to think only of the price of your product. You train them to check the prices of competitors and to use the Internet. You ruin perfectly good relationship buyers by the way you treat them

1. They die, or are no longer buying in your category
2. They are unhappy with the price
3. They are unhappy with the product
4. They are unhappy with the way that they are treated.

Managements always focus on reason number two. “If we just cut our price below Company X, and let everyone know it, our customers would never leave.” But research in a wide variety of industries shows that reason number four is the most common. Why is this so? Because what binds relationship buyers to your company is not the price alone, it is the totality of the relationship which includes:

• Recognition
• Service
• Information
• Helpfulness
• Friendly employees
• Brand identity
• Product quality and price

Relationship buyers stop buying when you stop loving them, and stop treating them as they want and expect to be treated. How can you hang on to relationship buyers?

• Know who they are. Keep track of them in a database. Let your employees at every branch, or on the telephone, who your gold customers are. Be sure that they are treated as Gold.

• Communicate with them. Find special ways to build a relationship with them. Thank them for their business.

• Use your best customer service people with them. Some banks segment their customers by profitability. When the phone rings from a profitable customer, their ACD uses ANI automatically to shift these calls to a specially selected Gold customer service team.

• Build equity in the process. Provide rewards for volume business and for length of service. Make it expensive to leave.

• Don’t stress price. If your neighbor helps you carry a heavy item of furniture upstairs in your house, you would never think of offering him money. You will supply a beer or a cup of coffee and conversation. This is what your relationship buyers want. They want to be treated like a good neighbor – a good friend.

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Arthur Middleton Hughes is Vice President/Solutions Architect at KnowledgeBase Marketing in Richardson, Texas, which maintains databases, provides prospect names, and conducts data processing, analytics and marketing strategy for clients.  Arthur is the author of Strategic Database Marketing 3rd ed. (McGraw Hill 2006).  You may reach Arthur at arthur.hughes@kbm1.com or at (954) 767-4558.

Posted by Editor – Get The Word Out! Marketing

I just saw this over at Jordan Adler’s site:

Why Customers Leave

1% Death 
3% Move
5% Buy from a friend
9% Sold by a Competitor
14% Product Price
68% Perceived Indifference

I’m not sure where the source of these stats came from, but from my experience, this would seem fairly accurate.

Do your customers know how much your care?

You can’t control all of these variables, but you can control how much appreciation you show.  If you could lose up to 68% of your clients because they think you don’t care, wouldn’t it be worth a few bucks to stay in touch?

If you’re overwhelmed with contact information and need an appreciation system, we can help.  Quickly, easily and affordably. Contact us today!

Ricci

Did you know that your clients and customers are getting hit with approximately 3,000 advertising messages a day! This barrage of advertising noise is making it increasingly difficult for prospective customers to hear what your business has to offer.

So, what can a business do to break through this noise and actually have their messages heard by their targeted customers?

Many businesses have just simply started to advertise more and louder…which simply compounds the overall problem. Some have tried gimmicks and sales. Still others have simply accepted a stagnant business growth model.

However, a few have begun to see huge success with a 2,000 year old tool that has none of the sexiness of a celebrity endorsement or the award winning graphics of a Madison Avenue Advertising firm. That tool is a simple handwritten note.

• A Midwestern restaurant owner sent out a series of handwritten notes to his customers and had a 20% response rate.

• A financial planner in the Northeast sent out just 80 handwritten notes to touch base with prospects and had 6 people call him and 2 set appointments.

• A non-profit was able to get 51 donations by simply sending a handwritten note to warm list of 100 people.

Why?

Handwritten notes are special. Clients cannot throw them away without reading them.

I dare you to try and throw out a handwritten note without reading it the next time you get one. Believe me, I’ve tried. I recently received a handwritten postcard from the hair studio that I had abandoned 6 months earlier for one closer to my home.

I knew it was probably just them asking me to come back as a client, but did I read it even though I knew it was a prospecting piece? Yes. There is a magnetic feeling that handwritten notes create that draws you in every single time.

Would I have read a prospecting form letter or an advertisement from the same studio? No.

So is it worth it to spend the time sitting down to write handwritten notes to your clients and prospects? When was the last time you have had a 6%, 20% or 50% response rate on a mailing?

Here are some tips on how to get a 50% response rate on your next handwritten note mailing:

1. Each piece should begin with your client or prospects name not a generic greeting
2. You should hand write the piece yourself or utilize some of the technology now available that will duplicate your handwriting accurately and easily – Computer generated font, while easier, will NOT get you a 50% response rate
3. Give your client or prospect a reason to call you – “I just thought of an idea that might really cut your tax bill, give me a call so we can get together before you do your taxes this year! Talk to you, Mike”
4. Put it on a card that will get their attention – Cute, unusual, beautiful, historic, children, animals…they all work but use a picture that catches their eye
5. Hand address their address, Do NOT use labels – Labels tell them that you sent the same card to hundreds of other people. You have to keep it personal, even if you are sending it to hundreds of other people!

If you follow these few, simple and easy guidelines, you will be surprised at the huge response rate you will receive. It will also be the last time you’ll want to flush good money down the drain sending out generic form letters or invitations. A little elbow grease or a little smarts (using technology) will go a long way when it comes to direct mail response rates.

*Editors note – Our system allows you to utilize the handwriting font that Michael talks about in this article!  It even allows you to print your own signature into the card.  Contact us for more information!

If you’ve been in business any length of time, you have more than your share of business cards.

They might be neatly organized, thrown into a drawer or *gasp* even  thrown in the trash…

So, what’s the best thing to do with business cards?  As you collect them, drop them a personal note.  At the end, mention that from time to time,  you’ll be sending them email updates and invite them to do the same.  Then, add them to your update list.

You have two options.  Let your contacts rot for fear of “spamming” or actually send them some communication.  Make it valuable, make it about relationships and why wouldn’t they want to hear from you?

Look, people aren’t going to swarm to you, begging for you to send them email updates.  Somebody has to take the initiative.  Take the first step.  You might be pleasantly surprised if you do!

Ricci
PS – need help organizing all of those business cards and developing a communications system? Contact us to find out more!

Our team uses iGoogle to manage our internal documents, spreadsheets & calendars.  If you need a way to collaborate with your team, you must check out iGoogle.  The documents & spreadsheets area has just been updated to include folders.  I knew for sure I was a geek when I awoke and exclaimed excitement and emailed my team at 5 in the morning after I opened up my docs and was rediculously elated by the new feature.   We work on so many different projects, just having a listing of 20+ documents was just getting a bit overwhelming.

Another crazy good feature is the ability to text message an appointment to your calendar.  I’m at the car wash and remember that I need to get an appt with my stylist.  I call her and set an appt, but I don’t have my laptop and there is no internet anywhere….I could write it on the back of a receipt in my purse (hope I don’t lose it!)….or, I could write it in a binder and hope I remember to put it on my calendar when I get back to the office….or better yet, I could just text message my google calendar.  Ya, it’s that easy.  Thursday at 10:30am stylist.  I get a confirmation message that it was accepted and now my entire team can see my new appointment, instantly.  And I don’t have to remember to enter it later.

A remarkable feature.  And it’s all free.  You can’t beat it.  When you get some time, check out iGoogle and see what it can do for you.  Just go to www.google.com and create an account.

Ricci

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