As many marketers already know, the Internet has enabled companies to reduce wastage when it comes to direct marketing. Email communication, for example, is less costly than snail mail and campaigns can be tracked more effectively and wastage reduced.
However, moving from paper post to email isn’t the simple answer to reducing your marketing spend and increasing your return. Many companies still spend a fortune on buying databases from list brokers, and depending on the targeting criteria these lists can be expensive.While a marketing campaign to a purchased list may be worthwhile in some cases, there is no more efficient marketing tool than a company’s own customer database.
Build a list of loyal customers and communicate with them effectively and you will have a steady stream of repeat sales from customers that it cost you virtually nothing to talk to. Many businesses don’t have the time or the resources to invest the effort that an internal sales strategy requires, but done properly it is worth it.
A company will spend five times as much (or even up to eight times as much) on acquiring a new customer as it will to get a repeat sale from an old one, so the long term benefits of building an effective customer retention policy are clear. Before you can run a CRM process, though, you need to capture customers, and this is whe, what I call, lead relationship management comes in.
LRM is the process of turning cold leads into customers – of turning passing interest into sales and a customer for life. This may sound like an obvious thing to say but if a company doesn’t think of it as a process and plan a strategy around it, opportunities may be lost.
You can do a lot of work on data from people who haven’t yet become customers. Build a mailing list, run a Facebook page, a Twitter account, a blog or anything that encourages people to interact with you. The key aim, however, is to capture their data so you can communicate with them directly.
Common tricks by busineses include discount vouchers, introductory offers or prize draws, where a person must give up some personal data in order to participate. If you have a worthwhile newsletter, you could simply invite people to join that to be kept up to date with offers. This way, you are able to communicate with them on a regular basis. Once something triggers them to buy from you, you are moving them up the ladder to being a customer.
The staged LRM process involves an understanding of the different types of customer you have in your database. Prospects are people you get to talk to who haven’t yet bought, so you are trying to entice these people to buy. They have no experience of how you deliver. Once they move up to being a customer, they are sampling your service first hand, and perhaps you will treat first time customers with a little more attention than repeat customers, by ensuring they are happy with the service, encouraging them to give feedback on it. Make them feel as though buying from you was the best decision they made.
Once you have a customer repeat buying, it’s all about CRM, but don’t treat your best customers as more important than those who have not yet bought. Even people on your mailing list who never buy from you may still become advocates for you by forwarding your emails to friends, or telling other people about offers they have seen.
Part of the reason for planning an LRM process is to work out how you can track its success. Work out how you collect your leads, and what you do with them, and find out ways of measuring how and when they move on to being customers. See what works most effectively, and track the results.