(Left to right in picture: Rozanne Brown, myself, Robert McGrath, Wendy Baker, Jim Baker)

I’ve known Jim for many years and one day recommended he write a book about how to become a successful painter. Initially he scoffed at the idea but some months later, he called me and asked for help in putting the book together. We provided the content and did the graphic design for the front cover and Jim had the book printed.

The book has been widely acclaimed by the industry and has been distributed by Dulux to apprentices. With sales both here and overseas, Jim is seen as a leader in his field for his contribution to young tradespeople.

Jim is focused on customer service and his motto is “The job isn’t finished until the customer says it is” which is a mantra many businesses could learn from.

I can personally endorse his work as he has painted two houses for me, and although we didn’t build his website, you can see it at NotJustAPainter.com.au

It discusses some of our success stories about generating leads and sales from websites, about SEO, AdWords, the use of keywords, web video and the relevance of graphics.

Your copy, entirely without obligation, is here for you to download and read.

And if you have feedback, your comments are welcome!

I was at a business networking function this week and in a light-hearted conversation amongst a mainly female group of attendees, the subject tuned to endorphins.

One of the group, Sally Symonds who is a healthy life mentor (www.sallysymonds.com), commented that chocolate is an aphrodisiac and that the same endorphins were found in bananas. Sally added that laughter stimulated endorphins and suggested laughter was also an aphrodisiac (which probably explains why women say they like men who make them laugh…). A female colleague says, “Serve me bananas with chocolate and champagne and watch out any sexy men nearby”.

Being truly masculine, I wanted my two-bob’s worth and added a typically inane male comment about how men were far more easily read than women. (You do know that men find women quite difficult to read, don’t you?) I said that men were asleep, drunk or thinking about sex so were universally predictable. As you would imagine, the barbs started to fly and I was duly condemned for my cynicism. It did serve to keep the conversation flowing though…

In jest, I challenged Sally to write a blog article about the subject and in thinking about how to write it, I decided to look a little deeper into human behaviours and our fundamental motivations.

I will always remember a conversation with my late father who, until late in his career when he switched professions and started a successful mail order book business distributing political and economic titles, was a G.P. He said his reason for retiring from medicine was that he just couldn’t help the majority of patients he saw in his surgery.

He said patients fell into two categories, those he could help medically, and those he couldn’t. Of those he could help medically, half presented with cases that would go away even if left untreated. Aliments like the common cold for which he could prescribe antibiotics so it would go away in a week; or, if left alone, would go away in seven days.

Those he couldn’t help either had problems relating to money, or problems relation to relationships with others. Most he said, were suffering from a lack of physical intimacy with their partners. Invariably that problem was caused by tension about money. Boiled down, they had issues with sex and money.

As a professional marketer, I well understand that people react far more quickly, and spend money more readily, to overcome problems than they do on things that provide pleasure.

To quickly illustrate my point, in one of my workshops I ask if, given the choice, people would spend their very last $1,000 fixing their car’s gearbox so they can get to work, or on a short holiday. The vast majority (over 80%) say they would fix the gearbox and save again for the holiday.

I know from my readings and own tests that the three most profitable market niches are health, relationships (invariably sex again) and success (almost always translated as make more money).

From a Sally’s perspective, it’s about endorphins and how to be happy and fulfilled. From a doctor, it’ about sex and money. From a marketer, it’ about health, relationships and success.

I’d say they’re all pretty much the same things!

This conclusion begs the questions: Which are YOU selling, and how can you profit from this?

Two-thirds (65%) of retailers currently lack fully automated loyalty tools at the point-of-sale, and both card and non-card loyalty programmes need to be simplified for retail employees, according to a survey of 165 retailers by Aberdeen Group*.

This inadequacy at the point of sale suggests that there is a significant gap between customer service processes and technologies at the focal point of retail customer service. Considering that the store still accounts for the greatest share of sales for the average multi-channel retailer, this gap undermines the retailer’s ability to build long-term, profitable customer relationships.

The report, entitled ‘Cutting edge customer loyalty: Retail best practices’, also found that 50% of the best-in-class retailers identified already use fully automated loyalty processes at the point of sale, which are responsible for improved performance metrics such as a 16% year-on-year increase in customer retention.
The company’s original ‘Responsive Customer Loyalty’ report in June 2008 showed that loyalty has become one of the most critical factors that impact retailers’ sales and customer retention performance. But in order to ensure effective results, loyalty platforms and points solutions need to be combined with the key loyalty-related process workflow functions: planning, implementation, evaluation, and analysis.

The focus of large retail companies has largely been on the upgrade of legacy loyalty systems that are five to ten years old, or sometimes even older. These systems require constant updates for new loyalty scenarios and business attributes and, in the past three years, both ERP and best-of-breed loyalty companies have turned their focus toward providing loyalty solutions for small and medium-size retailers. These segments are most likely to grow and adopt loyalty solutions within the next two years, while large retailers will continue to update, improve, and adopt solutions that are function-specific (such as CRM, business intelligence, personalised e-mail, gift cards, private label credit cards, and rewards cards).

Interestingly, the 2008 report indicated that the top pressure for 58% of best-in-class retailers was the need to develop Customer Lifetime Value (CLV), which was defined by the report as “the present value of future cash flow through long-term customer relationships”.

However, in 2009, year the top pressure facing 61% of companies is the pressure of survival in global recessionary conditions that have changed the consumer spending landscape and made it more unpredictable than ever. Moreover, the second biggest business challenge (for 35% of best-in-class retailers) is the need to reduce customer acquisition costs in a recessionary market that is characterised by the high cost of goods sold. Best-in-class businesses cited the following key pressures:

1. Increased competition in a tough economy: 61%;
2. Need to reduce customer acquisition costs: 35%;
3. Need to reduce customer retention costs: 30%;
4. Need to increase brand awareness: 22%.

Among the 2009 survey’s key findings and recommendations for retailers:

* 90% of the best-in-class retailers indicated some level of success from their loyalty programmes. In contrast, less than one-third of Industry Average and Laggard retailers reported success from their programmes;

* Best-in-class retailers were found to be 1.8 times more likely than Laggards to develop customer behaviour-based promotions that ultimately drive greater loyalty;

* Best-in-class companies were also found to be 70% more likely than their peers to develop multi-tier rewards plans for their most profitable customers.

* In order to achieve best-in-class performance, retailers should conduct customer wallet share and market basket analysis, measure the net profit margin impact of customer loyalty expenditure, adopt rules-based and POS-integrated customer loyalty systems, and upgrade their loyalty infrastructure on an annual basis.

The 2009 survey also found that grocery, department stores, luxury, and retail financial service institutions are particularly affected by the need to reduce customer acquisition costs. In the entire customer loyalty lifecycle process, the acquisition of a customer is the most difficult and expensive process, due largely to a fiercely competitive retail landscape. In today’s down economy, customer acquisition costs are even more risky due to uncertain consumer spending and downward pressure on both prices and margins.

Currently, with same-store sales in decline, retailers are using every possible price-based ‘customer pull’ strategy to drive incremental sales through untapped customer segments that have any amount of buying power. Such short-term customer acquisition tactics drive costs upward as retailers sacrifice their net profit margin to increase sales volume.

According to Sahir Anand, analyst for Aberdeen Group, the difference between the 2008 and 2009 customer loyalty-related business pressures is primarily due to current market conditions which have led retailers to adopt desperate, short-term tactics to survive the downturn rather than focusing on long-term customer relationships.

For more information about customer loyalty programs, gift cards and referral programs, please call us on 1300 139 467 or fill out the Contact form and we’ll discuss how you can have your own customer loyalty program, gift cards and referral program.

*Aberdeen Group

Update: May 29. For a comprehensive report on Customer Loyalty, see this article from Aberdeen Group.

Why do people continue with high-cost, high-risk lead generation when there is a better way?

Let me ask you a simple yet profound question: If I banned you, effective from today, from making another cold call, would your business survive?

A cold call is any unsolicited sales call or visit you make. In other words, where you intrude upon or interruct the prospect to make your “pitch”.

Like this one I just received…

Hello this is Gina, I’m calling from XYZ telecom. Can I speak to the owner of the business please?

(Me, knowing what was coming next) She isn’t here right now.

OK, I’ll speak with the manager then, is that you?

Yes.

As the manager then, you’d be able to make decisions about your telephone calls then. I’m calling to tell you how… (I interrupted)

Gina, I’m sorry, I’m not prepared to do business with telemarketers. I don’t know who your Company is or where you are, and I have no interest in changing carriers, thank you.

But sir, you must listen to me…

No, I mustn’t. Thank you, goodbye.

I hung up.

How many times every day does Gina get this?

What’s more to the point, how many times every day are you or your staff getting this?

Let’s assume you have a target market of 250,000 people. You employ five telemarketers to each make 200 calls per day; that’s 5,000 calls per week. In 12 months, you’ve called every prospect in your marketplace.

Let’s assume each telemarketer makes just one appointment per day. That’s 25 appointments made per week, not quite enough to keep your two salespeople busy, but too much for one.

They each make a sale for every three calls which is about four sales each per week.

Eight sales per week equates to 400 sales per year. Out of 250,000 marketing messages, 249,600 have said “No”. You’ve had a 0.15% conversion rate. Low, isn’t it? And at what cost?

Five telemarketers at $20 per hour is $100 per hour. With each working 30 hours, that’s $3000 per week in wages, or $150,000 per year. Now add call costs, rent and all the other employment overheads. This takes the total to around $200,000. That means that each of the 400 sales cost you $500 in telemarketing costs alone. Now add cost of goods sold, commissions for the salespeople and your other overheads and costs…

Not looking very pretty is it?

Let’s say your average sale is $4,000 and your cost of goods is 50% or $2000. Add 10% commission and cost of telemarketing (totals $900); add all your other costs and you’re on a hiding to nothing.

Is there another way?

Yes.

Several in fact; and they work very well. What’s more, they can reduce your cost per lead down to a few dollars or in some cases, a few cents.

If you’re in Australia and would like to know how to get leads quickly, for lower cost and with higher conversions rates than with telemarketing (or just about any other form of marketing), call us now on 1300 884 757.