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16-Nov-2004, Vol 7.22
CONTENTS
You've Got New Customers. Now What Do You Do?
What's the Latest in Loyalty Programs? No Program at All
Leverage the Marketing Power of Customer Advocacy
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Earn Your Customer's Trust and Keep at It
Forget rewards like free plane trips. They're not going to build loyalty. Instead, focus on delivering your promises, gaining customer trust and finding an emotional tie to your customer. Those are some of the insights you'll find in this week's Advisor, as we round out our look at customer
loyalty.
Guru Graham Hill offers some advice for turning your new customers into long-term customers; Howard Schneider and Richard Metzner look at how airline frequent-flier programs are changing; and Michael Lowenstein argues that until your customer is an advocate, you can't count on a tomorrow.
What does loyalty mean to you? Have you ever stopped using a product or service? We'd like to know why. Click here to take a one-minute survey. We'll publish the results in a couple of weeks.
Gwynne Young
Managing Editor, CRMGuru.com
[EMAIL PROTECTED]
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You've Got New Customers. Now What Do You Do?
By Graham Hill, Sophron Partners
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Times are definitely hard for your typical marketing man or woman.
Marketing isn't working the way it used to. Sales is working--but often only by giving the shop away in discounts and rebates. Budgets are being cut back, yet the CFO is demanding even more month-on-month growth. Attracting customers is no longer enough. You need to keep them, as well--and not any
old customers. Ideally, you want only those customers with high value, a long lifetime of buying in front of them and a tendency to stay loyal. Times are definitely hard.
So what can you do you with the new customers you have so expensively acquired, to grow their value and keep them coming back for more?
Treat new customers with kid gloves
As the old saying goes, you only get one chance to make a good first impression. That is particularly true for new customers. The first few touch-points set the customer's expectations for all future dealings with the company. Treat them well, and they will reward you with more business. Treat them
badly, and they will punish you by defecting to a competitor and telling a lot of people about it. Once set in this way, expectations are notoriously hard to change.
Unfortunately, most companies routinely over-promise in their marketing communications. That attracts customers with high expectations that are hard to meet while still making a profit. And most companies routinely under-invest in putting the business basics in place: sales partners that know what
they are talking about, products that do exactly what they promise and customer service that answers the phone when you have a problem. We have already seen what that leads to.
Don't be afraid to talk to new customers. Or to make smart offers
Once you have attracted a new customer, the real work starts. And it starts with talking to the customer. By that, I mean engaging customers in a dialog so that you can understand their needs, requirements and expectations better. There are many ways to do this without it costing a fortune. Some
companies ask customers to fill out an "early satisfaction" questionnaire. Some simply call customers to thank them for their business and to ask them if there is anything else they can do.
Without this understanding, it is difficult to offer the right new products, to the right customers at the right time. Paradoxically, often that time is straight after attracting them as new customers. As any mobile telecoms marketer will tell you, the best time to sell a customer a new value-added
service is often straight after she has bought a new handset and rate plan.
Customers are creatures of habit. Once they start to use your product in a certain way, they often stop thinking about the product, itself. Once that happens, it is hard to get them to change their habits--by buying, for example, a complementary product that might make their life just that bit
easier. But that doesn't mean just selling them anything. Research shows that selling customers the wrong product can have a big negative impact on their future purchases. The next product you sell them really does have to be the "next best product".
Learn about customers continuously
Talking with customers is a great way to uncover their needs, wants and requirements. But you also need to complement it with continuous collection and analysis of the customer's transactions. Done properly, customer analytics provide the foundation for all planned customer contacts and
communications. It is essential in making the right offer, to the right customer at the right time to grow the customer's profitability. It is also essential in knowing how to manage customers during those first few touch-points when you don't really know much about them.
This sort of approach has long been in use in data-intensive industries to pro-actively manage new customers, e.g. Austin Logistics' Early Detection System for credit card companies claims to be able to reduce credit risk and increase marketing efficiency within days of a new credit card customer
starting to use the card.
Pulling it all together
As we have seen, the real work starts once you recruit new customers. Treat them with kid gloves to ensure that you deliver against your promises. The ones you set in your marketing communications. Talk to them to find out their needs, wants and expectations. Use this insight to set up your
business basics to deliver them profitably. Use every opportunity to gather customer information and then use analytics to develop insights that you can turn into profitable action, such as offering the next best product for a particular new customer, or limiting your financial exposure to
high-risk customers in general
Oh and one final thing. No matter how perfect your customer information and how clever your analytics, you will never really know what the customer will do next. That is even more true for a new customer. All the activities discussed here will help you do the right thing, but you will still never
really know. That's what makes customer management such a challenge.
Graham Hill is a principal at Sophron Partners, a specialist customer value management consultancy based in London. He has more than 20 years experience in all aspects of customer-driven change program for clients in the automotive, telecom, financial services and aviation industries, and in the
public sector. He is also the customer value management guru at CRMGuru.com. Hill can be contacted by email at [EMAIL PROTECTED].
Airlines are finding a limit to the effectiveness of the traditional loyalty programs. Today's smartest marketers, write Howard Schneider and Richard Metzner, are beginning to use the strategies and technologies that power loyalty programs, without incurring the expenses associated with full-blown
"membership" programs.
No matter how well suppliers believe they understand their customers' needs and their behaviors on an individual basis, says Michael Lowenstein, they must have both a strategy and an array of tactics to turn customers into advocates.
EVENTS
On-demand Webinar--
Rev Up Sales Using CRM as Your Growth Engine
Join us for this free archived webinar, as NetSuite CEO Zach Nelson and Erin Kinikin, vice president, Forrester Research, demonstrate how powerful CRM tools that are geared to a customer-centric mode of operation can dramatically improve your bottom line.
On-demand Webinar--
The Next Step in CRM: Building the Real-Time Integrated Enterprise
View this free archived webinar and learned how the integration of front- and back-office, combined with real-time information, helps customer-centric organizations perform at the highest level.
NEW B-to-B Lead Generation Summit - 2004
Want to generate more sales leads? MarketingSherpa's new two-day intensive seminar helps business-to-business marketers improve DM, search marketing and email lead generation results. Register and you'll receive the Top 10 B-to-B Marketing
Mistakes report.
CRMXchange Webcasts
Check CRMXchange's schedule for upcoming free online webcasts and debates on critical issues facing the CRM/Contact Center market sector.
CRM Talk Radio
Tune in every Wednesday at 10 a.m. PT as we take on the key issues and innovative ideas affecting the implementation, maintenance and management of customer relationship management as a best practice and a technology. Listen to this free, weekly Internet-based program live, or
explore our archives for great shows featuring industry notables and experts.
To learn how to get your event listed in CRMGuru's newsletters,
which reach 200,000 people worldwide, send an email to
events@crmguru.com.
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