Some universal facts in the new marketing landscape:
There is no more mass media- you can’t just buy any one media and hope to reach a very big audience (unless you buy Superbowl spots- and even then…)
Even if you can reach all of your current and potential customers- they are still being barraged with messages- making yours stand out is increasingly difficult.
And then, factor in the age old rules-
People do business with people they know,
It costs way more to get a new customer than to continue to sell to an existing one.
Put all the above factors together- and all of a sudden, handwritten notes start making sense. The “Thank You” note, long a staple of non-profit fundraisers- and boutique clothiers- is now becoming a very effective tool to implement in any business.
Here is a bit of a story from American Public Radio’s Marketplace show:
Then, a couple weeks later they both got letters in the mail from the saleswoman who’d helped them. They were thank you notes.
Siewert: It was a fully hand written note, referencing the exact bag we purchased. And on my note, she even had a nice reference to our alma mater.
Turns out they’d gone to the same school. And, I’ll admit the purse Sarah bought wasn’t exactly cheap. It was Marc Jacobs, about $400. But it’s not just pricey department stores that are beefing up their manners. When the recession hit, JCPenney started a customer service program called GREAT. It’s an acronym for salespeople: Greet. Respect. Engage. Assist. And Thank. And other retailers are following suit.
Brett Brohl: I’ve written, at least 2,000 thank yous just in the last 12 months.
Brett Brohl owns Scrubadoo.com. He sells medical scrubs. You know, those pastel-colored outfits, doctors and nurses wear. Brohl says he hand writes a thank you note for every single customer. Scrubadoo is a new company, and Brohl says there are a lot of websites out there selling the exact same products he does.
Brett Brohl: If you Google the word “scrubs,” we’re not on the front page, we’re not on the second page. And just like every other industry right now, competition’s tough and with less people buying, it’s even tougher.
Brohl says, a new company like his can’t afford major marketing like TV commercials. Instead, he says, he’s counting on thank you notes to help Scrubadoo stand out. So is this the beginning of a new trend of exemplary customer service?
Nancy Koehn is a retail historian, at Harvard. She says for smart businesses it is.
Nancy Koehn: We’re returning to civility, courtesy and a way of actually honoring customers that has seemed far too absent, I think, for the last 20 years.
Koehn says the role of the salesperson has changed a lot over the decades. Before the recession, a salesperson’s job had morphed into managing transactions: Bagging groceries, dispensing coffee, ringing up a sale. She says the more we’ve absorbed technology, like self-service check-out at the grocery store, the more retail businesses have reduced service.
Now, the role of the salesperson is changing again. I’m at a perfume counter at Saks Fifth Avenue with James McLaughlin. He works for a fragrance company called Jo Malone. McLaughlin says its sales people have been sending thank you notes for years. They’re scented. But now, he says the company spends 20 percent more time, on expressing gratitude — everything from hand and arm massages to wine tastings for customers.
James McLaughlin: We oftentimes will liken the experience as dating. You have a really great first date, and then the person calls you three months later when there’s a sale going on and says, “How about a second date?” Why would they bother? You didn’t keep in touch.
But just saying “Thank you” isn’t really enough- you need to build a customer relationship management system- one that has all their quirks, likes, dislikes- size etc. in it. Good clothing salespeople used to keep little 3×5 cards with all the data on their clientele- as did smart hair stylists- and even a few bar keeps.
The more you know about your customers- the better able you are to solve their problems and be a trusted part of their business.
Luckily, today technology offers us all kinds of tools to do this. First we had Personal Information Managers- with software like ACT and Goldmine. Then they became enterprise level- where all the data was stored centrally. SAP, Salesforce are some of the better known systems. Of course, there are also “free” Open Source alternatives- like SugarCRM and its stripped down fork vTigerCRM.
I included the intro to ACT video to introduce you to the concept of CRM systems- not as an endorsement of one over the other.
Having a lot of social media contacts might be nice- but it’s what you do with them that matters. We have lots of information- it’s how we utilize it that counts these days. Integrate a CRM tool with your website- and you have a lead collection system.
There are plenty of options out there- we’ve been using vTigerCRM at The Next Wave. We consider it, along with internal wikis, part of our toolbox for building our own media channel- and of knowing everything there is to know about our clients, to strengthen the relationships.
Sending a handwritten note is good, but making sure to follow up is even more important. Utilizing the high tech CRM systems to keep track of all our efforts gives us the best chance of keeping doing business with our existing clients- and in prospecting for new ones.
So, before you spend $3.5 million on a Superbowl spot- think about how you can build a CRM system to keep close to the clients you already have.
With Google about to spend $6 billion to buy Groupon it looks like validation of this business model. But, as a local business person, why would you choose to use Groupon in the first place- and will it be a good investment for you?
To understand how Groupon works- it’s a no upfront cost advertising tool. And while that sounds great, The stinger is you are going to get 25% of what you would normally make on a sale. That’s a VERY high cost of advertising. No one would jump into a deal and say spend 75% of your gross price on advertising- in fact, much over 10% and you better be selling things that have crazy markups like booze, diamonds or some professional service (I haven’t hear of a brothel using Groupon yet- but, that’s the kind of business that would do best with this marketing ploy).
The beauty of Groupon is it’s the ultimate sampling/awareness tool. The cost is the killer. Take the local Ben & Jerry’s franchise that offered $8 of ice cream for $4. I give Groupon $4, they give Ben & Jerry’s $2, and Ben & Jerry hope I don’t redeem the coupon (which is the only way they make money- unless they convert the Grouponee into a regular customer). There is also a transaction fee- which further cuts into their margins. So- since we already go to Ben & Jerry’s they just treated us to 1/2 price ice cream. We live nearby. They haven’t grown their market at all. It cost them $6 dollars to sell us $8 of ice cream- and this is a recipe for going out of business.
Now, if B&J had religiously collected emails, sms, and addresses from customers- and built a customer loyalty program- even using tools like Foursquare, they could have made us very happy with a Buy One Get One offer- and only spent 50% of their margins. Or rewarded all frequent customers with 20% off- and been ahead. No payment to Groupon, no mad rush- followed by a lull, and targeting a much more relevant demographic. Because unless you have a lot of locations- Groupon probably over delivers your market as well. While you and I live in an internet connected world, there are a lot of Americans who still by ice cream that don’t live and die by the browser. In fact, 1 in 12 can’t even get access to high speed internet in this country even if they want it.
Groupon doesn’t change one fundamental rule of business- it always costs more to acquire a new customer than to retain an existing one. Remember that.
So, when does Groupon make sense? If you have an innovative product that no one else has and you need people to sample it- this works well for professional services, hair, nails- where one fantastic job can convert a customer. It also works to introduce people to your new lasagna pizza (the “Pizzagna” - don’t say it fast) that no one else has.
Launching a brand new company- may also be a great way to minimize your initial customer acquisition time, but at a very low price. Remember, it’s always easier to drop prices than raise them- and your $4 deal on an $8 garbage burger may just end up being the most you can ever expect to charge again.
Doing a little searching- here are some recommendations from another site:
* Do the math and make sure the discount you’re offering won’t damage you financially. Don’t be bullied into offering a steeper discount than you’re comfortable with.
* Are prepared to serve a large influx of new customers; you may even need to hire more staff temporarily. If quality and/or service might suffer with more business, think twice.
* Come up with incentives for those new customers to come back at full price, or offer a more modest discount.
* Understand that many companies use companies like Groupon simply to acquire new customers and are willing to break even or even lose a little money on their offerings.
There are many people who think Google has lost their mind offering $6 billion for Groupon- this writer included. Yes, they gain 3,100 sales people- which Google is desperately in need of, but, almost anyone can build the Groupon model into their business with minimal effort. This type of deal brokering has been done by others - here’s a link to 50 Groupon like sites.
There are a lot of out of work radio, TV and newspaper account executives that Google could hire and train for a lot less than $6 billion. As it is, Google is already the leader in directing customers to business online- but, does an absolutely horrible job of teaching people how to use it’s tools effectively. Sometimes technology still doesn’t beat personal, face-to-face sales. Every city should have a Google office- just like Apple has rolled out their Apple stores- where Google can show off it’s technology, train people to use it properly- and build real relationships based on trust. Somehow, with Groupon’s huge windfall- along with their high costs, I can’t see this model staying viable for more than a flash in a pan.
If you need to devise better ways to reach new customers, look into CRM, talk to a company like The Next Wave (us) on how to market in the digital world, but, be very careful before committing to Groupon.
If there is one thing about the new media landscape that hurts the most, it’s been the demise of local radio. When done well, it’s an art form. When done by corporations- it’s a failure of magnanimous proportions.
If you listen to the gurus of our economic destiny- you’ll keep hearing that small business is our real economic engine, yet- except for the Internet and Google with their adwords, big media has pushed small business away for years.
What brought this to mind was the very first example in “The Art of Client Service” by Robert Solomon. It’s in the introduction- not even one of the “58 Things every advertising and marketing professional should know” that’s made the book a classic in the business. He describes the handing off of a client from one rep to another. In the umpteen corporate “reorganizations” and new “Sales Managers” grand plans to make Clear Channel somehow better- they forgot about the customer. The one who has a relationship- face to face with the people who buy their product.
It’s not just the radio station, the newspaper does the same thing as do the television stations and the cable companies. Some genius forgets that business is built with interpersonal relationships- and that you can’t change them without the consent of both parties. Good relationships aren’t arranged marriages, but the result of building trust over time.
Your bottom line will only be as good as your front line- the relationship between your company and your customers isn’t created in a board meeting or at corporate HQ, it’s forged by your sales people who press the flesh and write the orders and bag the groceries.
It’s in how you deliver your product or service, with a personal touch. Small business still understands- big business, doesn’t.
