BY JACK WARKENTHIEN
When I follow my book around the world, “Life’s A Sales Call: How To Succeed In the World’s Oldest Profession”, and am asked to deliver a keynote speech, I share my Five Part Code of Sales. The first item covered is always the name of this article: A sale is a relationship and not a transaction. In fact, given a choice, I’ll always choose a relationship over a sale, since business relationships tend to move around nowadays – from company to company – and you never know where your friends will end up. Even more important to understand: there’s huge equity in client relationships!
The primary asset of any business is its customer base. Only recently, firms are waking up to the power of customer relationships, thanks to the enormous capacity of computers. Last month, Facebook streaked past one billion users, worldwide. One billion users! That’s approximately equal to one-sixth of the world’s current population. Though the (now) publicly-traded company stock’s value does not necessarily reflect the value of that enormous database, I’d like to have Mark Zuckerberg’s earning power. Tomorrow morning, he may wake-up and decide, “Maybe I should just charge all users a dollar a month.” Nice cash flow, eh?
Even though many customers in the database are infrequent users, one billion individuals serve as a strong base for building deeper relationships. The intensity, reach, and breadth of our business relationships determine the true significance of this most valuable asset. Even though few business owners would argue the premise, most do not formally put “relationship marketing” at the top of their strategic agendas.
The One-to-One Future is Still Here
Do you need further convincing? One of the best reads of the last decade is “The One-to-One Future: Building Relationships One Customer at a Time,” by Don Peppers and Martha Rodgers. Guess what? The messages still resonate today – louder and stronger than ever! Among the most tantalizing morsels dished up by the duo:
- The goal of business competition will soon be customer share, not market
- Instead of selling one product to as many customers as possible, we’ll be selling a single client as many products as wanted/needed.
- Mass marketing has been replaced by niche
- We’ll want to continue to find ways to engage our customers in dialog. Instead of “reaching our target audience” we’ll think of ways to “converse with our customers.”
- The Pareto Principle will still apply: 80 percent of your business will come from 20 percent of your customers. You will find out which customers are most valuable to you.
- Finally, instead of measuring success by the number of sales transactions, we’ll gauge success by the increase or decrease in our customer’s expected lifetime value to our firm (LTV or lifetime value – learn what your customers are worth, over the length of their relationship with you).
If the objective is to increase the magnitude of our relationship with each individual customer, while becoming one-to-one marketers, we need a way to put our new insights to work.
Direct Response Marketing Still Works
What is direct response marketing (DRM)? In essence, it’s being able to identify and market to individual customers. DRM is providing the right product to the right person at the right time. The Five Keys for Effective DRM:
- Start with clearly defined objectives: Before you can map out a successful direct response marketing route, you must determine a destination. Who are you trying to reach? Are you targeting consumers or businesses? What is your primary goal and expected results?
- Build a manageable database of information: What drives your customers’ actions? To find out, look at their purchases, inquiries, demographics, performance, and history. Determine what those elements tell you about their purchasing behavior and preferences. Then, and only then, can you make relevant compelling offers.
- Check and clean your list before sending out your mailing: Hello? Direct Mail still works. According to the United States Post Office (USPS), over 33 percent of all mailed pieces are undeliverable due to address deficiencies. That results in wasted time, paper, and postage, with lost opportunities for revenue. While you’re at it, purge your email lists as well.
- Personalize your offer for maximum impact: Today’s direct mail recipients are more discriminating about what gets opened and what gets tossed. Develop strong customer relationships by personalizing information for one-to-one marketing, including the use of the recipient’s name in the opening of the offer.
- Understand Customer Lifetime Value (LTV): What is the potential worth of a customer and how much is he or she willing to spend on your products in a lifetime? Once this value is known, you’ll realize the investment you’ve made in Direct Response Marketing is a solid one.
Even in these fast-moving, hard-charging times, a lost relationship is typically lost for a long time. Treat your customers as if each one were a fine jewel, because there are very few things more precious to your business.
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Jack Warkenthien, CEO, NextStep Solutions. Email him at
jwarkenthien@nextstep-solutions.com or call him at 832-344-6998
