Business relationships are not that different from personal relationships because in both situations, people prefer to deal with someone they like.
However, you can't move from being a stranger straight to being a best friend or customer.
So it's important to put at least as much effort into your plans for keeping in touch with existing customers as you do for attracting new ones.
One of the main advantages of developing long-term relationships is that it's typically six times more costly to sell to someone new than to an existing customer.
But, of course, it's one thing to know the value of building long-term relationships and another to follow the steps required in order to do so.
Here are seven steps to turning one-off customers into valuable client relationships.
1. Concentrate on getting the second sale
Ultimately, people are only customers if they buy from you regularly. And many people will buy from you once and never again. So, to turn someone into a genuine client, the most important thing is getting the second sale from a new customer - and getting it as soon as possible. Following the second sale, you are more likely to keep them as a long-term customer.
2. Always act in their best interests
According to Kevin Hogan's book 'Psychology of Persuasion', people are more likely to do what you ask if they believe you have their best interests in mind. This is the 'Law of Friends'. So, to build a business relationship, you need to show clients that you are looking after their interests. You can normally only do that over a few weeks or years, in the same way as in a personal relationship. One step is to stop worrying about getting clients to like you and focus on looking after them. As 'Built to Last' author Jim Collins says: "Don't be interesting. Be interested." That helps you think of them as individuals.
3. Keep in touch regularly
You can build trust through a regular newsletter which gives valuable information - rather than simply promoting your services. You can also build regular contact through articles, podcasts and teleseminars.
4. Make your contact personal
To make your contact with customers personal, you need to learn about them. You can start by just listening to them - for example by posting a survey on your website or sending out a customer questionnaire. The more you know about their likes and dislikes, the more personal you can make your services - for example sending them clippings you know will interest them or recognizing their personal achievements and family events.
5. Recognize that satisfaction is not enough
People will not stay with you and build a long-term relationship because they are satisfied. They expect that. You need to deliver exceptional service - some describe it as 'customer bliss'. You need to go beyond what they expect - give them even more; care about them more than they are used to being cared about.
6. Ask your customers to help you
Once you have built a good relationship, you'll often get help from your customers. For example, they'll give you feedback on what needs improved or they'll provide referrals and testimonials to use promoting your services. And, not only that, the laws of psychology mean they are more likely to buy from you again after they have helped you in some way.
7. Focus on your most profitable customers
Typically you will find that 80% of your profits come from 20% of your customers. So you need to understand which 20% are most profitable by looking at the Lifetime Customer Value, which is the total amount somebody would spend with you over their time with you as a customer.
Building long-term relationships is no easier in business than in your personal life. But it can be extremely rewarding.
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Response to: The Golden Age of Digital Marketing - 23 July 2008
By: Ray | 25-07-2008
89N The Golden Age of Digital Marketing - 23 July 2008
It was with much interest that I read the report on the Netimperative Directors? Dinner discussing the golden age of digital marketing.
I completely agree that the marketing profession faces many challenges in its ambition to be taken seriously at the highest levels of business. As the various speakers highlighted, one of the key challenges is the perception of what marketing is.
Recent research carried out for The Chartered Institute of Marketing by Ipsos MORI revealed that 73 per cent of working marketers surveyed believed there was a large gap between the reality of what marketing does and how it is seen by other parts of the business.
Until marketing is recognised as a key driver of value in organisations, it will struggle to gain the respect of other professional business colleagues. However, marketing must earn that respect.
As highlighted by several speakers, marketers must reach out to colleagues in other functions and those at a senior level, and communicate clearly with them the value they create for the organisation, in terms they understand ? which in boardrooms is predominantly financial.
The Institute continues to promote the profession and attempt to change attitudes towards marketing in the wider business community. It has established links with various government departments to promote professional marketing, and has developed professional marketing standards that employers can benchmark their employees against.
The drive towards proper recognition and respect for the vital role marketing has to play in today?s organisations has to start with greater accountability and clearly demonstrating the value marketers create.
I am in no doubt that digital marketing, with its greater measurability, will be in the vanguard of marketers? increasing acceptance at the top table.
Ray Jones
The Chartered Institute of Marketing
25 July 2008
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