Posts tagged ‘customer’

Don’t choose potential customers over current customers (aka “Screw You” marketing)

Ok, I’m usually a pretty friendly, easy-going guy. But I gotta tell you… there’s a trend in some walks of life that really irks the hell out of me. Let me explain the nature of my consternation with a specific example…

My wife and I are in good shape, and like to exercise regularly. We’ve been members of various gyms over the years, but invariably return to our home gym after a while because of an incredibly annoying, insidious sales technique that most health clubs practice: the open house, followed by the trial membership. This usually takes place once a month, which means that for one week per month there are five times as many people in the gyms, and it’s virtually impossible to find an open exercise machine. What’s worse is that these trial members don’t know how to use the machines, so they take twice as long as they should. And to top it all off, they have no intention of joining the gym, but since it’s free they’ll cheerfully take advantage of the situation.

Bottom line: potential customers are provided the same privileges and accommodations as paying customers, but haven’t had to devote one dime. Conversely, current customers that are paying dues and keeping the doors open are not able to enjoy the services for which they have paid. I call this “screw you” marketing, for the obvious reason.

This is a very dangerous and inefficient practice for several reasons:

  1. You piss off your current customer base. Their experience is tarnished and they will most likely abandon the service sooner than they should. In the words of the marketer, this reduces the Lifetime Customer Value significantly. (Here’s one of Aximum’s success stories that focuses on Lifetime Customer Value.)
  2. You focus your energies in the wrong places. I imagine the conversion rate for open houses/trial memberships is very low, so it may behoove the gyms to concentrate on activities that collect customers with greater revenue potential and ROI. When you offer something free, you’ll get tons of action, but very little conversion. This is one of those undeniable truths of marketing.
  3. You don’t take advantage of repeat/renewed customers. These gyms spend a lot of time, energy, and money on developing the open houses. Curiously, not one ounce of thought or energy has been spent trying to get me to agree to a longer contract, sign up for other services, or anything else that would bring it additional revenue. This glaring deficiency in their marketing communication program shines out like a beacon in the night. If a company has proven, revenue-producing, long-term customers, it’s usually 3-5 times easier to gain additional revenue from them than it is to bleed it from the trick-or-treaters that sign up for the free stuff (sorry… I sounded a little bitter there).

When you’re seeking new customers, remember not to sacrifice your current customer base. If you abandon them, don’t be surprised if they abandon you.

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June 25, 2009 at 12:47 am Leave a comment

Leads and prospects and customers, oh my!

(Sung to “If I only had a brain” from the Wizard of Oz)
I’d could use my time much better, create a great newsletter
And plant some prospect seeds,
I could share our comp’ny vision
Help them make a ‘buy’ decision
If I only had some leads.

Yes, it’s another original adaption from yours truly. I’m willing to take full credit because, heck, nobody else wants to claim that crap as their own.

I’ve noticed a lot of people using the terms lead, prospect, and customer interchangeably, so I thought I’d take today to explain the differences between them. Once you speak the language, and understand the differences, it makes a lot more sense. It is also another way for me to build the kumbaya bridge between sales and marketing. Here we go:

  • Suspect – not a generally used term, but a suspect is defined as a person that may be in the market for the types of products and services your company (and your competition) produces. Is is essentially a superset of all your potential customers. You may not know who they are, and they may not know who you are, but they are out there, waiting to be discovered. You need to connect with suspects, or have them connect with you, in order to convert them into leads.
  • Lead – this is someone who is in the market for the types of products and services your company produces. They may specifically know about your company, you may know who they are, or both. They have expressed either a specific or general interest, and have provided contact information about themselves. Depending on their needs, budgets, and timelines, leads are traditionally classified as cold, warm, and hot.
  • Prospect – defined as a lead who has passed the initial qualification (in other words, they are a real person who exists) and is currently being engaged in some way, depending on their needs. In sales/CRM terms, if an ‘estimate’ or ‘opportunity’ is created for a lead, the lead becomes a prospect. The level of contact a prospect receives ranges from an occasional email or phone call to an in-person demo or pilot project.
  • Customer – occurs when a prospect makes a purchase decision. Once a company receives money (or, in sales/CRM terms, a ‘sales transaction’) from prospects for their products and services, those prospects are officially converted into customers. Bring the money, honey.

I’m taking some badly needed vacation time this week, so I won’t be writing any blog entries until next Monday. Until then, have a great week, thank you for your continued support and comments, and we’ll start fresh on Monday. Hasta luego.

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May 31, 2009 at 11:30 pm Leave a comment


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