Why You Should Talk To Your Top Customers or Donors

If you are a business do you know who your top ten customers are:

  • By sales volume?
  • By number of purchases?
  • By territory or store? (Does each territorial or store manager know this?)
  • By product?

If you are a nonprofit, you better know who your top ten donors are, but do you know who:

  • has made the most number of gifts over the last year, regardless of those gifts’ sizes?
  • Makes the largest gifts in each source?
  • has made more gifts in more sources?

What’s the average lifetime revenue of your top ten? How does that compare to your average customer or donor? If there’s a gap between your top ten and your average customer, do you have a plan to cultivate these customers or donors?

Most businesses have loyalty programs, but I’m not talking about those.

What sort of personal touch can you make? A phone call? A handwritten thank you? A single rose in a glass vase?

You don’t think you need to worry about that?

Then you’re sure there’s no danger of your best customers or donors leaving and going to your competition?

Don’t take anything for granted. Even now your competitors may be attempting to woo them away from you.

In sales, there’s a term called, ” Dominant Buying Motive.” What are their’s? Why do they buy from you? Or donate to you if you’re a nonprofit?

Arrange to meet them or at least talk to them over the phone. The purpose of this touch is to thank them for their ongoing support and to discover what it is they like about you and to get their input on how you could do things.

Oh, and if you walk away with some referrals, that’s alright, too.

Stop The CRM Oversimplification!

Earlier this week, another of the CRM professionals I admire, Esteban Kolsky, wrote a post entitled, “Engagement != Experience != Relationship — You Know That, Right?

I appreciate the way Esteban’s post sallies forth to slay the sacred cow of engagement. I find something in it that I agree with as well as something I disagree with. Pour yourself a beer or a cup of coffee and read on as I attempt to advance the conversation.

What I really think Esteban is talking about here is that experts in all fields, especially CRMerati, tend to oversimplify things to the point where they’re abusing terms like engagement and experience. He rightly points this out regarding Alan’s tweet.

Where’s The Pareto Principle When You Really Need It?

But, then he uses the same rationale when, further down, he paraphrases Scott’s statement that there is no engagement.

Here’s what I’m seeing in my organization; the majority of our customers don’t want us to contact them, except in exceptional circumstances, if then. The segment representing those that do want an active relationship is extremely small, but their lifetime value is HUGE in both purchasing power and influence. We’d be foolish not to create strategies aimed at furthering their loyalty. This involves both relationships and improving the experience.

At the same time, for the largest segment which is those who don’t want a relationship, we’d be foolish to try to establish a stronger one. However, we should improve the experience to encourage them to come back as opposed to interacting with our competition. Martial artist Bruce Lee once described his fighting style as, “My style is no style.” Likewise with this transactional group, our strategy is no (engagement) strategy.

Like this beautiful world we live in, this issue is not black and white. Rather, it is a complex palette of many hues and colors that make our lives more complicated because we have to deal with many different segments rather just one or two. Remember the slogan, “Know when to say ‘when?'” We need to know when to engage and when not to. The problem is, different segments require different strategies, not a single one based upon an oversimplified view of engaging or building relationships.

What Do I Mean When I Say, ‘What Do I Mean?'”

–Monty Python

Esteban also comments:

There is still room for relationship-building with customers, even in an experience-driven world, since not everyone is looking for an experience.

I agree with the first phrase and take exception with the second. First of all, people may not be looking for an experience, but to me, even a transaction at an ATM is an experience. As I pointed out in an earlier post, part of the problem here boils down to semantics; how we each define “experience.”

For example, I believe you CAN have a relationship even when the customer only wants a transaction. (If you disagree, it’s most likely because we define “relationship” differently.) Again relationships are not just black and white, on or off. I believe it’s more accurate to plot them on a spectrum from minimal to maximum. I don’t want an email every other day from my cellular provider, but I do want an email when my bill is automatically paid or I’m getting close to exceeding my minutes or data. Therefore in one month I have a minimal relationship that consists of one email about my bill. That’s the relationship I want.

I believe relationships can range from “Don’t call me; I’ll call you,” to that of a customer evangelist who goes out of her way to refer people to your organization because she thinks your product or service is the greatest thing since the invention of the automatic dishwasher. Tell me how this evangelist is not engaged with your organization or that she doesn’t want a relationship with you when she knows everyone in the store closest to her and she continually brings her friends in to buy from you.

I join Esteban in bemoaning the abuse of various words and concepts. I challenge all of those interested in this and related topics not to oversimplify, rather to embrace complexity when called for. As someone responsible for CRM/Customer Engagement strategies and tactics in my own organization I’d be better served by more writing on actionable ideas that acknowledge the difference and complexity between and among customer segments.

Your turn…

Three Things I Think I Think About CRM & Customer Engagement

In his post, How I Think About Things, Mitch Lieberman (@mjayliebs), one of my favorite CRM bloggers, writes about how he views customer engagement and Customer Relationship Management (CRM). He treads carefully around the “definitions,” not wanting to reopen the scrum of ’08-09 when people argued long and loudly about definitions of CRM and SCRM (Social CRM). It finally ended with a stake thrust in the ground and no one who was around then wants to revisit those days ever again.

Mitch’s post elicited cogent comments by two people I also respect, Esteban Kolsky (@ekolsky) and Graham Hill (@GrahamHill). Esteban differed with Mitch’s (let’s call them) “descriptions,” and Graham sympathized with Mitch and went on to make several points, one of which I agreed with, and one I didn’t.

I replied with my own comment, as you’ve probably read, and Mitch posed a question to me. After rereading the post and comments here are three things I think I think:

It’s not the words; it’s the definitions

Mitch’s descriptions work for me and for those in my organization. I’ve come to believe that different people, such as Esteban and others interpret the terms in a different manner. For example, there’s an old cliché that some CRM though leaders and naysayers like to quote: “Customer Relationship Management is neither about the customer, nor the relationship, nor management.”

Yea, sure. But you know what, that term works for many, many organizations, including mine. It’s how people choose to define (or describe it). Only CRM geeks care about that. Our CEO’s and sales managers don’t.

Relationships Can Matter

Graham’s comment made two points. First that the words “engagement and “relationship” “have been terribly distorted through misuse.” I heartily agree.

I disagree with his second point,

Companies routinely talk about developing ‘relationships’ with their customers, despite the overwhelming evidence that customers don’t want them with companies and that companies can’t develop them with customers anyway.

Our organization uses affinity segmentation to measure engagement over a 36-month period. The more engagements there are, the higher numerical ranking there is. We then create three categories, High, Medium, and Low, and we are attempting to develop separate strategies for each group. While the “High,” category is the smallest, it’s lifetime value (LTV) is double that of the “Medium” category and that category’s LTV is about five times greater than the “Low’s.” We believe we can move people up the pyramid or at least get them to maintain their engagement levels as opposed to dropping down or out altogether.

Even Graham’s example points to five percent of the customer base wanting relationships. By the way, would Social CRM exist without the need for relationships? (Aside: I’ll bet one reason Graham and I differ on this is in how we define these concepts. See point #1 above.)

I believe that the overwhelming majority want no or limited relationships with an organization.  However, in some professions, that small percentage of customers is responsible for an outsized portion of purchasing and referrals.

Think Like A Detective

Mitch asked me what blocks those customers who are willing to increase their engagement. Let me draw a parallel to criminal investigations. Police detectives look for motive, opportunity, and means. Those three criteria also apply when increasing customer engagement.

  • Motive—Think value. What’s in it for the customer? For the organization? Complicating matters is that the customer’s needs (that’s what we’re talking about here, really) may vary over time causing the organization to either miss an opportunity or over react with too much.
  • Opportunity—How will the customer learn about the value or that you can meet her need?
  • Means—Once the customer learns about your (additional) value, is it easy to find, afford, or purchase?

If we can provide the motive, create the opportunity, and make it easy for the customer to have the means, then I believe we can increase engagement with those who are willing. Remember Fred Reichheld:

“It’s six times cheaper to retain a customer than acquire one.”

I’ll go into more detail on motive, opportunity, and means in a future post. In the meantime, what do you think about what I think? Go ahead, challenge my assumptions. That’s what we’re here for. That’s why this blog is called what it is.

When Your Voice Is Mightier Than Your Pen

Here’s an idea that can really wow your top customers (or key volunteer partners if you’re in the nonprofit sector). Years ago, I learned an easy way to engage in relationship building that set me apart from the competition. Nowadays, you can use your CRM software to make it even easier to do that than the manual calendar entry I used in the 1980’s.

Pull a report on the first of each month that lists any top customer (or key volunteer if you’re in the nonprofit sector) who has a birthday that month along with the date and telephone number.

A Key Differentiator

Now, every morning (or the night before) look over the report and make a note of anyone with a birthday in the next day or so. As you have free time during the day, call each one and wish him or her a happy birthday. Not only is this usually faster than writing, addressing, and mailing a card, but it’s also frequently more fun for you, as well. Invariably you are going to surprise them AND you’re going to be the only nonprofit staff or sales rep to call them. People aren’t all that surprised when they receive birthday cards, but many are frequently floored when they receive a personal telephone call. I’ve had some really enjoyable conversations with people I was close to professionally and it never failed to strengthen that relationship.

For relationships that are less important, you can of course, automate the process so that customers receive an email, e-card, or direct mail piece. But this tip is for those who are really important to you.

One More Thing, Don’t Do This…

It’s okay to leave a voice mail. Most likely that’s still going to set you apart from your competition, but if you do wind up talking to him or her live, don’t do anything more than wish them a happy birthday. First of all, they might be busy, but more importantly, this is not a call where you ask for their business. This is, as they say in major gifts fund raising, a “move,” it’s neither a request, nor an attempt at discovery, nor a close. In this respect, it’s purely social. Now, if they want to talk business, that’s different. Respond to their request as if it were any other contact.

You’ll need to create the habit of reviewing the list each morning or the afternoon of the day before. Don’t call after the birthday. You’ve missed your opportunity then.

Try it for a month. I’ll bet you discover it’s not only well worth the professional ROI, but frequently it makes your day as well.

What Your Customer Strategy Can Learn From New Coke’s Failure

One of the best known product launch failures occurred in 1985 when the Coca-Cola Company, in an attempt to gain back market share, launched New Coke. Even though it happened nearly 30 years ago, there is a lesson to be learned for those involved in planning and executing customer strategies today.

Shortly after World War II, Coke’s market share was 60% of the soft drink market. But according to the book, Secret Formula: How Brilliant Marketing And Relentless Salesmanship Made Coca-Cola The Best Known Product In The World, by Frederick Allen, it had fallen to less than 24% in 1983. Not only was this attributed to the rise of Pepsi, but also to the emergence of other soft drinks as well, segmenting the market.

Aggravating this was the ongoing ad campaign launched by Pepsi called “The Pepsi Challenge,” first begun in 1975, which showed customers taking blind taste tests and picking Pepsi over Coke.

Faced with the declining market share, Coca-Cola executives began looking at reams of market research data, including their own taste tests which failed to show a clear preference for Coke. According to Allen,

Ray Stout, the scholarly director of the company’s market research department, piled up a small mountain of graphs, charts, computer printouts, and other data, all of which suggested that taste was the lone plausible reason for Coca-Cola’s stagnation in the market.

The analysis of this data pointing to taste quickly became the conventional wisdom in the company’s senior ranks and the search began for a new formula culminating in the launch of New Coke. Of course, you know the results. Disaster ensued leading to the reintroduction of “Coca-Cola Classic,” some months later and the eventual decline of New Coke to three percent of the market share before it exited the stage.

What Went “Worng?”

How did Coke misread its customers’ preferences when it had a mountain of data showing otherwise? Allen points to customers’ emotions and their relationships with Coca-Cola.

Pepsi could say it tasted better than Coca-Cola, but actual consumers could never make a fair, clinical determination of the accuracy of the claim—they couldn’t decide for themselves—because their taste buds would always be compromised by the thoughts and emotions and associations that the name of the product conjured up in their minds.

Perhaps you think the entire New Coke debacle could be traced back to the incompetence of senior Coca-Cola executives. Yet, Allen shows that they had data that actually led them to the conclusion that the only way to gain back market share was to change the formula of the iconic drink. These same executives had also launched the wildly successful Diet Coke several years earlier which soon became the fourth most purchased soft drink. Sales would also rebound after the reintroduction of the original formula and shareholder value would actually increase.

The Data, By Itself, Was Correct

It wasn’t incompetence, nor was it faulty data. The problem is that the data, as they knew it, only took them so far. They were still missing an important piece of the declining market share puzzle. Namely, the role emotion played in what is now known as the Customer Experience. Allen writes:

All across the country, and especially the South, people responded to the change in formula as if the company had committed an act of parricide, killing off a beloved member of the family. The surge of emotion over old Coke defied all reason. Hundreds and then thousands of angry callers began inundating the company’s 800 number in Atlanta, and the remarkable thing was that many of them weren’t Coca-Cola drinkers at all. They were simply American citizens, upset and feeling a profound sense of loss.

Even though it was years before Customer Experience was defined as a strategy and Voice of the Customer Software became available, Coca-Cola executives understood that drinking Coke was an emotional experience. But in those days defining emotions was not something that would result in credible data. More importantly, they had “a small mountain” of empirical data pointing to taste as the culprit. That data, by itself was correct. But had they factored in data on the role emotion plays in drinking a soft drink, they’d have realized that their “small mountain” of non emotional data was giving them a false conclusion.

Today “Emotional” Data Is Crucial

Your product, service, or organization may not command the same widespread loyalty Coke does. But the lesson still holds. Ignore the impact of the role emotion plays at your own peril. Make sure you’re looking at the complete picture.