suggested by Inc Zine 12/14 enhanced by Peter/CXO Wiz4biz
Here are the Key Take-aways:
1) Small Biz Marketing tools don’t get or keep customers, biz “attitudes” do.
2) All business is based on “relationships”, yet in the industrial economy, we focused on “transactions” of selling products/services
3) In the new economy, we are headed back to relationships.
4) There is such a thing as the “lifetime value” of a customer, because there is so much competition and we have to continually have to earn their loyalty.
Social Business. As the dawn of an era known by early adopters as Social Business begins to spread its colors across the business horizon, a chorus of voices is already raised in praise of new tools for promoting Customer Relationships (ie, CRMs). But I believe relationships are not built by tools – no matter how helpful they are. They’re built by “attitudes” & what we “prioritize”. If we prioritize business growth, we are almost always prioritizing “transactions” rather than “relationships”. Unfairly, we compensate Sales much more highly than we compensate Customer Service. This is wrong. Anyone can bring in a customer once. But what does it take to “keep” that customer and tap into their value to you?
Customer Lifetime Value. You can’t really talk about CLV of a customer, unless you are a mature company, and have seen your customers stay with you for many years, thru thick & thin. And if you are working with their sons & daughters, then you know you have longevity. The original transactions have faded in memory, but the long-term, strong relationships remain. That’s “social business.”
History of Business. To start thinking about Social Business, we must remember the original Business Model. We went to the Bazaar with our goods, we put them in the hands of our customers, collected other goods or currency in return, and went home. The next week, it was rinse and repeat, often with the same customer. After a while, we got to know them, and inquired politely about their family, health, etc. But some customers we never knew. They came and went, and business with them was transactional — limited to a single interaction. They never seemed very important, because we never saw them again.
Time Passes. The Bazaar becomes a Store, the store becomes Virtual (as they are today), that provides products & services and if they like our offerings, customers multiply. The enterprise develops sophisticated CRM SW that alert Sales and/or Marketing to send Birthday cards to customers. Starbucks designs its Gold Loyalty program — a fully automated buy-fifteen-and-get-one-free program that sends a free drink coupon to loyal customers.
What does Small Business need? 98% of businesses are not a Startup enterprise; they’re small businesses. Their owners are not tech savvy, and even if they are, they have no time to spend learning CRM tools. They realize they need something, so they adopt frequent Contact with customers. Once they get that list entered, they feel home-free. They can mail a newsletter to it every month, or a sale notice every week. So much for existing customers. Most businesses take for granted that they will come back, especially if they have that “drip marketing” program all set up to run automatically. They concentrate on building business by getting “new” customers.
Customer Acquisition vs Customer Retention. By far the biggest share of Marketing Budgets goes to Customer Acquisition rather than to Customer Retention. This is wrong. It ignores several truths about customers. A rule of thumb says that it’s 10x as expensive to get a new customer, than “retain” an existing customer. Therefore Marketing should be putting more effort into “retention” than “acquisition”, because it is much more cost-effective.
1) Customers need to understand “what” they are buying, and “who” they are buying it from. Are they going to support them, if they need it?
2) Customers buy what they need. (ie, something “Better” in benefits, “Faster” to get more done and/or “Cheaper” – to get the best value.
3) Sharp Customers educate themselves. By knowing what Products/ Services are available and evaluating which offers the best overall value to them.
4) Product & Service comparisons are always available in the marketplace. Yelp & others – to get Customer Feedback on the Products & Services.
5) If your Product fails, he may spread the word about that. A rule of thumb is that 1 Complaint goes 10x as far in the public, as 10 Compliments.
7) If the Product/Service satisfies s/he, they will probably come back & buy more + he could tell lots of people in his network – if he is strongly impressed.
8) Your customer will keep coming back to you, if you satisfy his needs and are reasonably priced.
9) Your Family & his will become inter-dependent, and his descendants may buy your products too. He does not know the term “lifetime value of a customer.” He has no drip marketing tools. He only has his truth, his honor, his outstanding Product, that he displays and about which he doesn’t lie.
Comments: What can you add to this?