Relationship marketing…is it relevant Strategy Magazine January 06, 1999

I get a lot of mail. Probably because I go out of my way to get mail. But, I can count on one hand the number of commmunications I’ve ever received that you might call “relationship building”. Sure, I’ve had lots of newsletters and sample packs and special offers and shiny plastic cards and mailings trying to sell me more stuff.

But, remember we’re now dealing with consumers who are reducing the contents of their wallet to one piece of plastic and spending more time thinking about how to cheat on the next round of tax grabs rather than figuring out how many points it will take to “earn” a new set of tires?  Think about it. What’s the key to a good relationship? For starters, there’s the issue of what kind of relationship the two of you want. And, isn’t it also about conducting yourselves in a way that is relevant to what you’ve agreed the relationship will be?

I’ve often used the following bell curve to illustrate the different points in the “lifeycle” of customers during their tenure with a company. The relationship they have with you depends on where they “live” on the curve at any point in time. In a multi-product or services environment, a customer could be living at multiple stages. The problem is that most companies treat all customers the same. The solid line represents the current value of customers. The dotted line represents the objectives in targeting communications to each stage.

Here are some simplified examples of customer communications that address the stages on the curve. I don’t know about you but I’ve never received letters like these:

  1. Activation–

“Dear New Customer–

Thank you for selecting your new XYZ product model. We hope it performs to your satisfaction and you enjoy it for many years to come. Please remember that if you have any difficulty of any kind all you have to do is call 1-800-###-#### at any time. ”

That’s it. No sales pitch on more products, no special offers, no envelope bulging with irrelevant paper.

  1. Grooming–

“Dear New Customer (who matches the profile of your best customers)

(Starts with the same first paragraph, as above).

It might interest you to know that, along with the XYZ product you purchased, we offer a complete XYZ family of products. We’d be happy to send you more information about them. Just give us a call any time at (the same toll-free number) or return the enclosed postage paid postcard”

This way the customer let’s you know whether they want those glossy brochures…instead of wasting money (and trees) just mailing them out.

  1. Maintenance/Loyalty–

“Dear Best Customer

Thank you! We really appreciate the business you’ve given us over the past year (or six months or five years or whatever relevant time frame). To show our appreciation, we invite you to accept the enclosed gift (no strings attached and it’s not a coupon). You’re also invited to receive the following Best Customer benefits for the next 12 months. (Here’s where you can profitably give away all those goodies you’ve been wasting on the undeserving masses–newsletters, special services, gift with purchase offers, etc.–go ahead be generous). Only people like you, who have spent $500 per month for the past five years (or whatever you calculate as the appropriate criteria) will be eligible to receive these special offers and services. Because we only want to give these benefits to customers, like yourself, who truly deserve special attention, we invite you to call 1-800-###-#### today to let us know what you think of the Club and its benefits.”

Don’t you think this might get a customer’s attention better than one more tedious points program for everybody giving away nothing but margin in the end? And, what a great way to gather positive customer comments for future use in testimonials.

  1. Retention–

“Dear Customer (who matches the profile of best customers who’ve stopped buying at this point in their tenure)

Thank you! We really appreciate the business you’ve given us over the past “x” period of time. We hope you’ve enjoyed being part of our Best Customer Club and we hope you want to keep your special privileges. Remember, only people who have spent $500 per month for the past five years (or bought from you 35 times and spent at least $100 every time–or whatever you calculate as the profitable criteria) are eligible to receive the special offers and services in our Best Customer Club. To show our appreciation for your past business, please accept the enclosed special offer (this time it is an incentive to buy again) which you can use any time before (deadline date). If there’s any other way we can be of service, we’d love to hear from you at 1-800-…”

By the way, I’m curious whether any one else out there had the same problem recently as a friend of mine. He received a fancy new plastic card in the mail from Petrocan. He promptly, cut up his old Petrocan credit card (Isn’t that you’re supposed to do?) and next day found himself in the embarassing position of trying to pay for gas with a points program card. Why would any company (unless it also likes to burn money) decide it needed a separate points card for its credit card customers?

Charles de Gruchy remembers how it was

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