Year of the Customer

The rules have changed. The Internet has made it easier, faster, and more convenient for consumers to compare prices, quality, features, and previous customer experiences. With a suddenly level playing field for brand comparison of commodities, what is the new differentiation? Trust, confidence, and relationships the new differentiation. How well you connect with customers in marketing, sales, and customer service excellence are the essence of success.

Relationships are most important at either end of the spectrum, high price luxury, and low cost commodity. Most organizations rapidly acknowledge the importance of relationships for high price luxury items. There is an expectation that customers who pay more will receive a better customer service experience. It is expected that marketing and sales efforts will be more selective and personalized for the discerning consumers who are willing to pay a premium for a product or service. It is assumed that the relationship is part of the total package and price of purchase. So why is it so important to focus on relationships at the low cost end of the spectrum?

A consumer electronics manufacturer conducted a survey of existing customers to gather statistical information. When the results were returned, the manufacturer discarded the initial results as unbelievable and inaccurate. The survey was modified and conducted again, but the results were the same. After the third set of results were calculated, the customer opinion could not be denied. According to the customer survey results, nearly 65% of consumers who purchased the most expensive televisions indicated that price was more important than features in determining which product to buy. At the high end of the price spectrum, where product cost the most and the gap in prices was most significant, the most significant consumer buying decision was based on price and the perceived anticipated support associated with that price tag. By contrast, 78% of consumers who purchased the low priced commodity products indicated that features and anticipated support were more important than the price. Once the average selling price eroded to commodity level, the variation in price became less significant, and the importance of value became increasingly important to the consumers. The value of relationship and support was assumed with the premium price tag, but became the primary differentiation as the prices eroded and variation in cost decreased. How often to organizations mistakenly believe that relationships mean less to the consumers who invest in lower cost commodity items?

The value of a relationship is just as important when prices erode. Perhaps this is due to the phenomenon that relationship marketing, relation ships in sales, and relationships in customer service become less evident as the price diminishes. Simply being the lowest cost commodity is not enough, and it certainly is rarely a strategy to protect profitability. To preserve profitability and combat competition, develop and sustain relationships with your most loyal customers, not the most expensive ones. Expensive customers are those consumers that cost the organization the most money that is not offset by equivalent revenue. Demonstrating appreciation and reinforcing customer relationships does not require a significant monetary investment, but it does require a significant investment in integrity, honesty, and commitment.

There is a distinct difference between loyal customers and consumers willing to pay a premium price. It is not safe to assume that a consumer who pays more is also more likely to be a repeat customer. Technology, style, fads, and limited time discounts can play a significant role in the decision making process for consumers who are willing to pay premium prices. Loyalty exists in consumers who are willing to make repeated purchases, ignoring or distrusting the competition, and continually investing in your products or services. Loyal customers create repeatable business, and typically influence other individuals to try your brand. Loyal customers can be found at premium prices, and at rock bottom commodities, if a relationship is established with the consumer.

How can you influence loyalty and create the opportunity for your customers to bring friends, family, and peers flocking to your doors? It is all about establishing and maintaining relationships through communication, and acting with authenticity as a trusted advocate. Marketing relationships, sales relationships, and customer service relationships are the keys to sustainable growth. Measure the cost to acquire a new customer compared to the cost of keeping an existing one. Identify the financial value of a repeat customer, especially one that remains loyal for a lifetime of purchases.

2008 is the Year if the Customer

2008 has been cited as the year of the customer according to the third annual New York Stock Exchange CEO Report. With this in mind, it appears essential for companies to take focusing on and utilizing customer-related metrics seriously. The following statistics illustrate the current state of attention.

• 2/3 of the 140 business executives and marketing professionals surveyed, include metrics in marketing plans
• only 8% track or measure share-of-wallet
• less than 10% measure customer lifetime value, customer advocacy or customer tenure
• 78% track leads to conversion, but only 25% track and measure rate of customer acquisition
• only 25% measure marketing's impact on business goals.
  

--VisionEdge Marketing/CustomerTHINK

Recognizing the importance of relationships is the first step to success. This is not a new paradigm shift, but it is merely a fundamental truth has become more evident with the increased consumer awareness available through Google, Yahoo, MSN, Blogs, and social media. The importance of relationships to sustain loyal customers and repeatable sales is a reality that has existed as long as sales and customer service have been around. The difference is that the value of the relationships can now be communicated, quantified and measured more rapidly than ever before.

The second step after recognition and acceptance is to create the metrics to measure the business on acquisition, conversion, loyalty, and advocacy.

Once metrics have been established, create strategies for developing Relationship Marketing, Relationship Sales, and Relationship Customer Service for advocacy, loyalty, and sustained profitable growth.

______________________________________________________

Words of Wisdom

"Assumptions are the termites of relationships."- Henry Winkler

"Relationships of trust depend on our willingness to look not only to our own interests, but also the interests of others." - Peter Farquharson

"Quality in a product or service is not what the supplier puts in. It is what the customer gets out and is willing to pay for. A product is not quality because it is hard to make and costs a lot of money, as manufacturers typically believe. This is incompetence. Customers pay only for what is of use to them and gives them value. Nothing else constitutes quality."- Peter Drucker

______________________________________________________
Read why marketers must really tap into customer metrics.
http://www.customerthink.com/article/marketers_must_tap_year_customer

Filling the Sales Pipeline

How full is your sales pipeline? How many prospects should you be targeting? How do you know if you have the right prospects?

If you work in any profession that relies on relationship sales efforts, then you understand the importance of maintaining a healthy and active pipeline. What makes a pipeline healthy and active? You do. It is only through your own efforts that the list of prospects remains active and viable for business. As long as you are active, you have a chance to grow your business. When the competition becomes lazy and fails to nurture communication with the prospects, that is your opportunity to demonstrate your unrelenting commitment, and to win the business.
What kind of businesses rely on relationship sales? If you represent any kind of service, then you are in the business of relationship sales. Don't kid yourself, if you look for customers in any environment of industry that has competitors, then you are in the business of relationship sales. Regardless of your title or job description, you represent your organization and yourself to clients and customers, and you are in the business of relationship sales. When you fail to maintain a relationship with your client, then you open the opportunity for someone else to take the next sale. It's as simple as that.

Filling the pipeline of relationship sales implies acknowledgement that some sales happen at a different pace than other sales. The pace may be affected by the availability of product. For example, you might be waiting for the next greatest model or technological upgrade to be released. In the case of real estate, you might be waiting for the right property to become available. However, in most cases, the schedule is dictated by the pace of the client. Recognizing that the client has a budget and a schedule is critical to understanding how you fit into the pace of the client, and that helps you to adjust your communication to accommodate the pace of the client.

If your client is a buyer for an organization, then you should know the fiscal year and budget cycles for that organization. Buying decisions for organizations are often dictated by budgetary periods. Some purchases may be delayed until a quarter, half year, or annual budget is approved. Sometimes, the reserved budget may be temporarily restriction until the end of a fiscal period, and then there is a rush to "spend it or lose it". In any case, there are cycles for planning, budgeting, reserving, spending, and transition. It is incumbent upon you to understand those cycles for your client, and to adjust your communications accordingly. If the client organization is in a planning phase, then you should be providing case studies, analysis, or proposals. If the client is in a period of transition, then you should be providing interesting industry information, general communications, and meaningful updates or announcements. Use the client fiscal cycle to know when to make offers, when to offer advice, and when to simply offer interesting information as a means of maintaining a dialogue and showing your interest.

Do you think that retail sales is a relationship business? A recent study by Accenture revealed that 24.4% of surveyed consumers felt that they frequently received too little attention, and nearly 10% of the respondents felt that they were frequently treated rudely. According to that same survey, 89% to 95% of the responding consumers indicated that they were irritated by the actions of a retailer within the last four shopping experiences. Although there is little opportunity to prospect and plan a pipeline for retail sales associates, the premise of understanding consumer budget, buying cycle, and individual needs are just as relevant as understanding the purchasing cycles of large enterprise organizations. Big company or single shopper, it is equally important to quickly identify the budgetary cycle of the client and to manage communications accordingly.

To keep things simple, initiate a dialogue with your prospective customer and use a few simple questions to identify the buying cycle. Think of the buying cycle as "A-I-M". The prospects in the A category are "About to Invest", or "About to Buy". These potential clients are financially secured in the readiness, and may be considering several options before making a purchase. These prospects may know approximately what they want, or what they need, and just need a little guidance or information to help finalize the decision. The prospects in the A category are on the short list for immediate and constant attention. Make sure that you answer questions diligently. Show your commitment and ask questions that they may not have thought about, and then present them with valuable answers. You should be outwardly attentive to the prospects that are in the near term decision making process. These prospects will likely make a decision in the near future, and these are the immediate priorities in your pipeline. You should be in contact with these candidates at least once a week.

The I category stands for "Investigating", "Interested", and "Information". These prospective customers are not ready to make an investment now, but may be seriously considering options for the near future. These potential customers may need to save, or plan, or budget for the investment, and they are interested in gathering more information so they can be prepared for an informed decision when the time is appropriate. You should be attentive, answer questions, and offer advice. These prospects will not want a "pushy" salesperson to try expediting a purchasing decision that they are not prepared to make at this immediate time. Attempting to force a faster decision indicates a selfish attention to your own desired revenue cycle, and openly demonstrates a lack of interest in appreciating the budgetary constraints or purchasing cycle of the client. Rather then alienate the client, be direct in asking the intended budget and investment cycle, and be open about sharing your interest in matching the pace of the client. Then, show your commitment with continued and consistent follow-up. Give advice, information, and updates on changes in technology or the industry. Reach out to the client every three to four weeks with relevant communication, and ask about the current status of the financial cycle. This demonstrates your dedication, and enables you to stay alert as the client moves closer to you in the sales pipeline.

The M category means that the client is interested in "Meaningful Maintenance", so "Maintain" your dialogue, but do not invest too much time. The prospect may be interested in the new technology, service offering, or in maintaining a relationship, but is unable to make any commitments in the foreseeable future. Maintain these relationship, but understand that the budget or financial situation may preclude any activity. You should reach out to these prospects at least every other month, or keep them engaged with a periodic newsletter and an occasional email or phone call. You cannot pressure a prospect to spend money that they do not have, but stay within reach and show your interest, so you will be aware when the financial tides have turned for your future customer.

How do you determine if the prospect belongs in your pipeline? Actually, that is very simple. Do you want the business from this prospect? If the answer is "yes", then that prospect should be invited to become part of your pipeline, and that invitation consists simply of an invitation to maintain communication. As indicated previously, the level of communication may vary based on the buying cycle of the prospect. Short term prospects will be contacted frequently, and longer term prospects may be very infrequently, and with varying types of communications. In either case, if the prospect accepts the invitation to maintain a dialogue and relationship, then they belong in your pipeline. If either you, or the client, determine that the business is not appropriate, then the decision to cease communications and gracefully exit the prospect from the pipeline should be politely understood.

The right prospects are those clients or accounts that are willing to invest in what you have to offer, now or later. You may desire the prospect for a single sale, ongoing revenue, or as a strategic relationship, based upon your business. Ultimately, the business decision is based on the goal of a mutually beneficial exchange. As for the number of prospects that this applies to, and how many you should have in your pipeline, the answer is based on your personal ability to maintain relevant relationships and meaningful communications. How many prospects can you manage in a day, and in a week? How much research and preparation do you need to do to prepare yourself for meaningful conversations, whether in person, by phone, or by email? How much time do you need to dedicate to each prospect? How many prospects are near a purchasing decision in their budget, and in your pipeline, that you need to talk to once a week? How many prospects only need communication once a month, or every other month? Measure your time for preparation and response, so you can give each prospect the appropriate level or your dedication. Your time, and your commitment, have real value, so spend yourself wisely.

______________________________________________________
Words of Wisdom

"Finance is the art of passing money from hand to hand until it finally disappears."- Robert W. Sarnoff

"Everything is worth what its purchaser will pay for it."- Publilius Syrus

"You can only cure retail but you can prevent wholesale."- Brock Chisholm
______________________________________________________


"John is the greatest sales person I have ever worked with, yet in reality, he is not a sales person at all. His ethical, honest, caring approach allows him to find areas that he can help you, while not asking for your business, you just want to work with someone like him. His business development skills are impressive, with him utilizing his diverse work history to understand all angles of the situation. His communication skills are some of the best I have seen. These skills and values have served John well, allowing him to have success at every company and level he has worked at. At DEX, I saw John bring on more new business than anyone has that new into his position. I have yet to meet anyone who has a bad thing to say about John. He spoken of in such lofty regard that you would think we are speaking of a "C" level dynamic leader. I consider it an honor to have worked with someone of John's caliber."
Michael MooreRegional Sales DirectorData Exchange Corporation

The Trusted Advocate: Accelerate Success with Authenticity and Integrity is available now online in hardcover and paperback from www.Amazon.com (Hardcover), www.Amazon.com (Paperback), www.BarnessndNoble,com, www.Borders.com, www.Target.com, www.Buy.com, ,www.iUniverse.com, and many other fine booksellers.