Relationship
Marketing – Back to the Future
by
Peter Thorpe
In
real estate they talk about the three Ps – Position,
Position, Position. In our marketing efforts today, more than
ever before, we need to think about the three Rs – Relationships, Relationships,
Relationships. If you’re not working on
better ways to build meaningful relationships with your clients,
then you are probably about to join the dinosaurs…
It seems like
Relationship Marketing is the catch phrase of the new millennium.
Everybody is talking
about it. However, very few people are doing it – and
even fewer are doing it well. This is surprising because today’s
technology makes it easier than ever before to practice good
relationship building techniques.
The
ladder of loyalty
One of the most important principles I have learned in marketing,
is the power of the Ladder of Loyalty. I was first introduced
to it many years ago by the godfather of direct marketing in
Australia, Ian Kennedy. I believe Ian got it from an American
marketing guru called, Murray Raphael and it dates back to the
1930s. Hardly a new concept. However, it’s just as meaningful
and potent today as it ever was. This simple but profound graphic
representation, illustrates quite simply how relationship marketing
really works.
It starts on the bottom rung of the ladder
with suspects. Anybody and everybody is a suspect. Once you
have established they have a need for your product or service,
they become a prospect. And when they buy from you, they become
a customer.
Unfortunately,
that’s where it ends
for most businesses. Once they have made a sale, they assume
the battle has been won and off they go, talking to other suspects
and prospects, looking for more new customers.
They miss the
most important steps in the ladder – turning those customers
into clients (people who buy from you over and over again).
And finally, promoting
as many of those as possible to the very top rung of the ladder
to become advocates. These are the people who believe in our
products and services so much, they actively endorse them to
other people. They in effect become unpaid salespeople for
our business. This is what relationship marketing is all about.
They fail to
realise that the sale is the beginning of the relationship,
not the end. They also miss
the point that it’s much more cost effective to market
to clients and advocates than it is to market to suspects and
prospects. The latter are always the most expensive and difficult
to reach.
Putting
it to work
Recently, I have been working with a large franchise chain,
helping them with their local area marketing. I spent quite
a bit of time with the individual franchisees, discussing ways
they could improve relationships with their clients. Naturally,
this required a good deal of time and effort on their part,
particularly in the initial stages.
As is usually the case, some of them embraced these ideas and
will put them into practice and reap the rewards of their efforts.
Others simply said they wouldn’t have the time to do it.
My reply to them was simple: “If you don’t make
time to do it, then you won’t have to worry about it because
you won’t be in business.”
Sounds a bit
dramatic and even a touch brutal. However, I happen to believe
it is true. There’s
an old adage that says, “If you don’t look after
your customers, somebody else will!” How true.
Today’s
technology, used correctly, makes it a lot easier to build
relationships. And with the
advent of the internet and email, we can now communicate with
individuals, one on one, with amazing speed and economy.
The
new technology
Without doubt, the two most important changes in technology
over the past 20 years have been: user-friendliness and price.
It’s not all that long ago computers were the size of a
small house and you needed a team of skilled engineers to operate
them. Gradually, computers and software have become more and
more user-friendly. These days, even the most technophobic amongst
us can become reasonably proficient on a computer in a short
space of time.
The other big advance has been in the area of price. Computers
used to cost a lot of money. Now, for less than $2,000, you
can buy a computer that will enable you to keep accurate records
on tens of thousands of customers. We could (providing we input
the data and keep it up to date) maintain a detailed record
of every transaction with every customer, along with a complete
dossier on their likes and dislikes, their aspirations and lifestyle,
their mindsets and ultimate desires.
So, why does one of the country’s biggest banks still insist
on addressing me in all their correspondence as, Dear Valued
Customer? They value my custom so much they can’t even
take the trouble to teach their computer to print my name! It’s
just another case of poor use (or misuse) of technology.
While the technology has changed dramatically, there’s
nothing new about database marketing. I recently found this
quote on the internet: “Merchants kept notes on rice paper
about their clients birthdays, their children’s names and
the days of the week they liked to shop.” It was an excerpt
from a 17th century Japanese manuscript.
It seems the more things change, the more they stay the same…
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