What Have You Done For Me Lately?:
Building Customer Relationships
As appears on the Healthwell Exchange
February, 2001

by Jeff Hilton, Integrated Marketing Group

Of all the latest marketing "buzzwords" to enter into the corporate dialog over the past few years, probably one of the most valuable and insightful is the notion of relationship marketing. This terminology certainly reflects the changing nature of the consumer in general...smarter, more selective, more suspicious and with more purchasing options than ever before.

The hard lesson learned over the past 20 years of "transactional marketing" is that the customer universe is finite. It has also become much more segmented and therefore more difficult to effectively reach with any reasonable efficiency. So existing relationships have emerged as the key to long term business success and growth. It's all about Lifetime Customer Value (LCV). In other words, what revenue and, more importantly, what profit will a customer contribute to your company over the course of the product's lifecycle? In short, managing customer loyalty or LCV is critical to the success of your business. Common sense tells us that it's easier to generate additional business from an existing customer than it is to convert a new one. Statistics agree. Consider the following:

The Cost of a Lost Customer. For every customer you lose, you lose not only the next sale but the one after that, and the one after that, and on and on. You get the picture. A disgruntled or dissatisfied customer will stay with you for a long time. Kind of like gum on the bottom of your shoe, except a lot more expensive.

The Cost of Acquiring A New Customer. Research shows that it is eight times more costly to find a new customer than it is to maintain a current one. Plus it is always more difficult to lure customers away from other brands, particularly now since many of your competitors are also working actively to build LCV.

The Value of Loyal Customers. 90% of profit comes from repeat purchases. Each time a customer buys product from you, your cost of maintaining that customer decreases and your profit on that same customer increases. Plus long term customers are willing to pay higher prices and refer your brand to their friends. Product referrals are, of course, the jackpot since you then obtain two customers for the price of one. Clearly, it pays to build customer loyalty on many levels. So how do you go about building that relationship from a marketing perspective? Here are a few things you should be doing if you're not already:

Use Your Web site. Permission marketing. Viral marketing. Use these types of programs to your advantage. Remember that the Internet is a huge mass of interrelated conversations. Turn your site into a resource for the visitor. Give them a reason to come back or send a hyperlink to a friend. Don't let them leave your site without connecting with you in some way. Then stay in touch. Don't be a pest. Be helpful. Offer solutions. Be sincere. Loyalty will follow.

Add To Your Database Every Day. In order to talk to your customers, you need to know who they are. Record their interactions with you. Rebates. Coupons. Product samples. Literature requests. Sweepstakes. Contests. Customer service inquiries. Web site visits. Every day you should be able to add new names to a growing database.

Reward Their Loyalty. Everyone wants recognition. Your most frequent customers are no exception. What have you done for them lately? Points for purchases. Free product. Samples. Rebate offer for providing you with some basic demographic information. Money-saving coupons. A logo hat or shirt. Small incentives have tremendous impact. Your current customer is not only why you are in business; they are also what will keep you in business. Respect them. Care about them. Give them a reason to remember you. And don't forget, you need them more than they need you.