Keep your customers happy and coming back for more
No doubt you've heard something about the 80/20 rule. Originally devised by a nineteenth-century Italian economist named Vilfredo Pareto, the law grew out of his keen observations about the trivial many and the critical few. Pareto noticed that 80% of the possible value of business activities tends to come from only 20% of the effort put into it.
Why should you care?
The 80/20 rule means that if you can define your critical few customers and target marketing directly to their needs, it's likely to pay off big time. The cost of acquiring new customers, according to many surveys, runs eight to 10 times more than the cost of keeping existing ones. So you get a stronger return on your marketing dollars and better sales by focusing on 20% or so of your top-tier prospects. Usually, that requires three steps:
• Identify and characterize your key customers.
• Target messages in suitable media to hit nerves among the important customer segments.
• Build in a payoff that rewards customers for giving you time and attention.
Here's how to stay connected to customers who count.
1. Identify Your Best Customers
First, find out more about your customer. You need to learn details about their habits, profiles, and preferences before you can characterize them. In technical terms, that translates into creating a customer database that can be conveniently accessed and manipulated by the staff, including sales, marketing, customer service, and billing.
Information most helpful to collect (with the customer's permission, of course) includes:
• Name, full address, phone number and/or e-mail address, including the names of all family members or company title and department.
• Date of birth, so you can send out cards or e-mail with birthday discount offers or gifts.
• Annual amount spent with your company.
• Products purchased and past history.
• Dates or schedule of purchases.
• Special offers acted on.
• Customer service history.
• Special requests for products or service.
• Participation in any loyalty clubs or events.
Business Contact Manager (BCM) can both capture customer intelligence and provide the easy access you need to effectively mine customer information. BCM is part of the Outlook e-mail program in Microsoft Office 2010 . It has pre-formatted Account reports that give you immediate information about who buys what, how well they pay, and more.
Business Contact Manager lets you go beyond simple contact information to consolidate all interactions for a given customer or account, including e-mails, tasks, appointments or sales calls, notes and other documents. Further, you can easily create customized reports with criteria of your own choosing or, if needed, export those reports to Excel for further analysis.
2. Monitor That Data
Using those tools, get into the habit of consistently updating customer information. At every customer touch point, try to learn a little more or verify your existing information. For instance, ask why the customer is buying the larger size rather than the small one. Why choose blue rather than gray?
Has he or she been promoted, with a new title and responsibilities? Note any responses to marketing efforts. Keep adding details and making sure the customer profile is up-to-date.
After a half-dozen interactions, you'll not only have an individual account's purchasing history and proprietary profile, you'll have it captured in a centralized location for every customer—no more outdated sticky notes or multiple folders with conflicting information. Plus, all the actionable information will be easily accessible.
Armed with this information, you can categorize customers into four target groups—from highest to lowest spenders. Then, analyze which products or services grab the most attention or sales.
Next, start reviewing your list and segmenting customers. Pruning your client base of low-margin, high-demand and time-consuming customers lets the sales and service staff focus on key customers: loyal, repeat buyers and worthy new prospects.
3. Target Your Messages
When you're clear about the target customer and you can rely on smart, centralized customer information, you can send specialized offerings to selected customer segments. Use Publisher part of Office 2010, to create flyers, postcards or other mailings that send news of customized offers.
• Cross-sell or up-sell additional offers and products.
• Provide well-timed rewards or discounts.
• Communicate with customers in the medium they prefer—direct mail, postcards, e-mail, phone, letters, flyers, or, in some cases, simply an annual thank-you note.
• Create insider or time-sensitive deals.