Pretend you’re dating

Salespeople and marketers routinely make mistakes in business which they would never make in dating.  For instance, on a first date, most of us wouldn’t  think of putting our arm around someone and saying “Let’s go steady.”  Because we know that the other person doesn’t know enough about us yet.  It’s too soon to ask for that level of commitment.  But how often does a salesperson ask for a prospect’s business at their first meeting?  How often do you get blind letters soliciting an order?

If you are interested in only dating people with a college degree, or people who like to dance, you’ll quickly figure out where people in your target population congregate, and you’ll develop an approach to determine if they meet your criteria.  But how often have you been approached by a salesman who’s cold-calling, or going door-to-door?  And how often have you received an email advertisement for a totally irrelevant product (such as cat food for a dog owner)?

Most of us wouldn’t try and win someone’s affection by reciting a list of our accomplishments and capabilities, or, worse yet, by listing all the other people we’ve dated.  But we’ve all been on the receiving end of sales pitches which focus solely on a company’s accomplishments and capabilities and a list of their customers, with no interest shown in you, the prospect.  If you were dating, you’d consider someone who did this to be insensitive and ego-centric.  Is a company any different?

Most of us recognize that an interactive approach aimed at identifying commonalities of interest is more likely than a hard sell to lead to a long-term relationship.  It’s too bad so many marketers and salespeople haven’t learned that lesson.

Conclusion:  If you think of each prospect or customer interaction as a date, and react accordingly, you are likely to leverage your personal experience to make your sales and marketing efforts more successful.

Get’EmOutaHere!

A couple months ago, I talked about the cost of losing a good customer.  The flip side of this is the benefit of firing a bad customer.

 “The customer is always right” is a phrase most of us imbibed with our mother’s milk.  But it is patently not true.  The phrase should be “When the customer is wrong, put up with it until they become more trouble than they are worth.” 

So how do you determine that tipping point?  You can judge it subjectively, but it is easier and more profitable to periodically assess the following in some sort of quantitative manner:

1) What amount of sales and service time does the customer require?  You should have a certain

ratio of sales and service to revenue priced into your business model. (If not, this is a problem you need to address.)   

You need to periodically rate each customer via a scorecard so you know when a customer is exceeding that ratio.  You can put up with an imbalance in the short term, or as an investment in a company which offers significantly higher future revenues.  But those should be conscious decisions.

2) What kind of pricing satisfies the customer?  There is a big difference between someone paying list, and someone demanding significant discounting. The latter doesn’t just hurt that customer’s contribution to your bottom line—it also contributes to erosion in your overall pricing. 

3) How do the bad customers’ demands affect employee morale?  Having to smile at, and agree with, flaming jerks puts a strain on anyone’s day.  Over time, it makes your company a less desirable place to work!

4) How does the customer affect your brand?  Do they provide good word of mouth, or are they bad-mouthing you to other customers and potential prospects?

Finally, once you’ve identified a bad customer, how do you deal with them?  The first step is to try and fix the relationship by aligning expectations (which roughly translates to “Things are going to change.  If you don’t want to change, then we’re going to part ways.”  If that works, great.  But most of the time, the bad customer will quit you.  That’s GOOD!  It will improve your bottom line and cheer up your employees.  Just make sure that (1) you collect your money before they leave, and that (2) you are very professional about it, to minimize the inevitable complaining about how badly they were treated by your company.  Oh, and one other benefit—the bad customer will move to one of your competitors, and cause them the same problems they were causing you.  And that’s a win-win 

If you’d like to talk about cleaning up your customer list, give me a call!

Sez You!

The persuasive value of personal experiences can’t be overestimated, particularly since the advent of the internet.  Prior to that, people still complained, but it was usually done in fairly short-lived ways, like letters to the editor or a call to the local radio station.  Even word-of-mouth was pretty much limited to people you knew.

That was then, and this is now.  Not only can people post their experience in a wide variety of online locations today, but their submissions are readily searchable and can linger out there for years.  You can look up a product, service, or company, and within seconds be reading a twelve year old complaint from someone in Greenland. 

So what can you do about it?  You can’t stop people from searching online.   Short of perfecting your offering so that no one ever complains (not a bad goal, but hard to deliver against), your best defense is to significantly outweigh the occasional bad review with testimonials.  When people see a dozen testimonials for each bad review, you won’t have a problem. 

tes·ti·mo·ni·al/ˌtestəˈmōnēəl/

Noun:

A formal statement testifying to someone's character and qualifications. A public tribute to someone and to their achievements.

Few marketers take active steps to protect their online reputation.  Here are three steps to get started: 

1) Monitor what people are saying about you.  Search your company/product/service name online on a regular (preferably daily) basis.

2) Work at providing a good customer experience.  When people complain, take immediate steps to eliminate the cause of the complaint—then tell the complainer what you’ve done.

3) Make it easy for people to post testimonials. A bad experience provides its own incentive to “vent.”  Customers have to be encouraged to take the trouble to post testimonials.  Ask every customer if they’d write one.  Tell them how and where to do it!  Provide links to online review sites (particularly ones where complaints about you reside).  It is a good investment to reward people with a discount or gift card for posting comments (you can always suspend or discontinue the reward once your “inventory” of testimonials reaches the desired size).

One other thought:  Feature testimonials prominently on your website. Solicit them directly or copy them from online review sites.  Ideally, rotate them through a space on your homepage.  People are much more likely to believe good things about you when they’re said by someone who isn’t drawing a paycheck from your company!

Uncommon Content

It is very easy to become so consumed by how you’re going to communicate your marketing message that you pay insufficient attention to the message itself.  [Just for perspective, consider that professional speakers usually spend over an hour of writing for every minute of their speech.]  Here is a checklist that may help you fine-tune the content of your marketing message:

1) Know what action you are trying to provoke.  How do you want your audience to react?  Does your content request and enable this reaction? [ie, if you ask them to call you, have you provided a phone number?]

2) Envision your audience.  Is your message sufficiently customized to them?  Are you using the kind of structure, words, and images they will understand and empathize with?  Are they capable of doing what you are asking of them? 

Even more important, are you communicating what you want to say, or what they need to hear?  [Hint: it should be the latter.]

3) Have you kept your ego out of the message?  Does it contain unnecessary company history, product facts, company mission statements, or other content that make you feel good, but mean nothing to your audience. 

4) Is your message consistent with your brand?  Are you using consistent selling points, language and imagery across all your messaging?

5) Are you talking generalities or specifics?  People respond more favorably to specifics.  Saying Krazy Glue was strong wouldn’t have impressed them nearly as much as the commercial where a dab on a hard hat allows someone to dangle by their head from a girder. [http://www.youtube.com/watch?v=SXZv2KZKCCo]

6) Have you passed your content through “beta readers”?  You may think your content is the most cogent, understandable, brilliantly creative thing ever created.  But no matter how little you want to hear criticism, you should run your content past other people before you publish it—preferably people who are as similar to your target audience as possible!  Your content will almost invariably improve as a result—and they might just catch the kind of mistake that could have you calling your lawyer down the road.

What does a lost account cost?

Too many complaints, slow or non-payment, excessive service demands, and other factors can push any company to "fire" a customer. And this is usually a good thing. But you want to make it a conscious decision.

Because losing a client unintentionally has severe repercussions. Let's see what needs to be calculated to estimate the cost of a lost account:

Lost Lifetime Value: The profit on what the customer would have bought if they stayed with you. Don't forget to add future lost up-sell and cross-sell revenue, which probably represents a 30-40% increase over the customer's current revenue contribution.

Lost Acquisition Cost: This is what you spent to acquire the customer in the first place.   It is your marketing and sales "prospecting" expenses for a specific period divided by the number of customers added during that period.

Replacement Cost: Now take the acquisition cost and add it in again. Because you need to replace the lost customer.

Referrals: Next think about referrals you'll lose. A good sales force will obtain at least 2-3 referrals a year from each account. Add the cost of acquiring these (superior quality) prospects from another source. Then increase this number significantly, because each of these referrals, if they had become customers, would have produced second and third generation referrals.

Negative Advertising: Remember, a lost account isn't going to be saying good things about you. They're going to spread the news of any bad experiences they've had with your company. This will make it harder to convert prospects into customers, increasing your sales and marketing expense (particularly if the complaints "go viral" via social media).

I'm not quoting specific costs as they will differ significantly from one business to the next. But trust me, they are substantial. For that reason they need to be understood from the boardroom down to the sales force; and from accounting to the service department.

One of the better services you can do your company is to quantify these figures, and communicate them to every employee of your company.