[lead]”Even your most loyal customers always have a choice about where to take their business.” -Marilyn Suttle[/lead]
The Value Of A Loyal Customer
Recently I received 2 pieces of direct mail, both attempting to sell me a recurring service, but in different industries and taking two different approaches. One was for a new warranty service offered by a local utility carrier, the other was a mortgage brokerage selling streamlined refinances. Beyond the anticipated “sell,” both had something else in common, the offensive manner in which they treated their (prospective) loyal customer.
The utility company sent a personalized agreement stating they were going to tack on an additional charge to my usage fee as a “warranty fee” to protect my structure. It wasn’t until I read the fine print in the final paragraph there was an admission that this was an optional service, and in no way related to my regular service. And this is why I read every word of a document before putting ink to paper!
The second sales pitch headlined that the lender had received special permission from the federal government to issue sub-prime loans again. Again, in the fine print clarified that it was not, in fact, a special privilege, but a program offering ultra-low rates to those with above-perfect FICO scores, and was the bait to get leads from respondents with a mere 750+ score, who qualify for a different, much higher rate plan.
In each instance the sales material was arguably deceptive or misleading. In each instance I became the skeptic and defensive rather than enticed— a difficult barrier to breach for even the best of salesmen. Why is it, then, these businesses choose to speak to their customers in such manner? Because it works.
But, Does It Really?
While research does show that consumers are susceptible to deceptive and misleading advertising, often times practitioners of such practices are overlooking the real value of a loyal customer; a customer with whom you have built a relationship of trust.
I’m certain the large corporations involved in deceptive advertising have calculated the cost of acquisition, attrition, and depending upon regulations, risk. After running the numbers they still feel the profit margin is healthy enough to maintain such practices. But, is your business big enough, market large enough, customers distracted enough to outweigh the risks of bad press, customer attrition, or levied fines?
Better Customers = More Profit
Have you calculated your cost per acquisition for your customers for the last month? Quarter? Year? Lifetime? While the figures shift dramatically from industry to industry, the paradigm exists that the Customer Lifetime Value (CLV) will dramatically out-perform ongoing acquisition and attrition.
Ever wonder why you occasionally receive that free upgrade at the hotel, or late fees waived on your credit card? Discretionary marketing spend. Kellogg and Medill professors Robert Blattberg & Edward Malthouse published a fascinating collection of research on Customer Lifetime Value; definitely worth a look.
The goal shouldn’t be to acquire as many throw-away customers as possible, but to find and sustainably grow a solid base of loyal customers and take good care of them.
Communicate The Value
[pullquote]Living in a post-TV, post-Internet, and even post-Social Media World we can no longer effectively sell without dialogue. With that in mind, how do you speak with your customer?[/pullquote]Decades ago marketing and sales was a bullhorn, shouting claims and value of the product or service to the prospective buyers, this is no longer the case. Living in a post-TV, post-Internet, and even post-Social Media World we can no longer effectively sell without dialogue. With that in mind, how do you speak with your customer? Do you express not only the value your product or service can bring them, but also communicate the value and appreciation you have for your loyal customers?
Building lasting relationships with the customers you have today as you plan for future growth can be the difference between sustainable growth and your company’s name in the business obituaries.
If you need help in messaging, value propositions, and communication tactics across an array of mediums and mechanisms, please contact me. I’m available for individual consults & strategy planning, long-term engagement, both on and off-site throughout the Chicagoland area, and via digital and teleconference means throughout the remaining United States.
Reach me by phone at (630) 635-6015, or by email at firstname.lastname@example.org.