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DETERMINING THE LIFETIME VALUE OF YOUR CUSTOMERS, cont.
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In order to ensure a steady revenue stream from these new leads and customers, we need to work consistently to build a relationship with them. Marketing 101, right? Well you'd be surprised at how many companies (of all sizes) let new leads and new customers gather dust in the marketing database.
The key to building a relationship is consistent follow up. That is how we convert prospects into customers and ensure continued business with our new customers.
So before we wrap up this lesson, let's take a brief look at basic relationship-building (we'll explore this concept more thoroughly in an upcoming tutorial).
Building A Relationship With Your Prospects
When we do prospecting, our focus should be on building a relationship, not on getting prospects to make an immediate purchase. Our offer should make it easy for our prospects to say "I'm interested in hearing more”.
Our primary goal is to add that prospect to our house file. Once we have a prospect's name in our house file, we won't need to rent that name any longer from an outside list. More importantly, once a prospect has given us his name, we will have qualified him as a warm lead.
Let’s consider a piece of furniture that costs $3000. We certainly shouldn't expect to sell such a high-priced piece of merchandise through the mail to someone who doesn’t know us yet. We first need to foster a relationship with that prospect that communicates both the quality of our merchandise and our excellent customer service.
While our prospect might not be ready to buy a $3000 piece of furniture from us just yet, we might be able to get him to respond to a smaller transaction, such as an opportunity to learn more about a sale we're having, an invitation to attend an open house, or a coupon towards his next purchase (we'll look more closely at different types of offers in an upcoming tutorial).
Building A Relationship With Your Customers
At the same time we are building relationships with the prospects in our house file, we will also be fostering relationships with the customers in our house file. However, the way we market to our customers will differ from the way we market to our prospects. In fact, the way we market to customers in different customer segments will differ.
Our house file is made up of various segments that are based on the types of transactions that each segment has had with our company. Our house file will include customers who have purchased from us many times in the past and who have spent a lot of money with us, and it will include customers who have purchased only a few times from us and who have spent very little. We’re going to want to market differently to each of these segments.
In fact, we'll want to slice and dice our house file in many different ways based on analysis of buying behavior, transaction type, and many other criteria. This is the lifeblood of our company and this is what we should be spending most of our time, money and effort doing -- analyzing our transactions and the results of each program. So few managers actually take this critical step yet it is one of the most important things we can do.
Stay tuned for next month's tutorial where we'll examine mailing lists, list segmentation and building your house file.
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