Dan Kennedy

In SUCCESS MAGAZINE, telemarketing consultant George Walther described how U.S. West Cellular's "retention group" had turned keeping customers into an important profit center. It then cost the company about $700.00 to get a new customer, then about 7 months to recover that investment before beginning to reap profits from the relationship. But half of all new customers were dropping out before that "magic" 7th month. Analysis revealed that cutting the monthly cancellation rate by just 1/10th-of-1% would add one million dollars to the bottom-line. An elite taskforce, "The Retention Team", was created to place Welcome Calls to new customers, to explain their first bills to them, and respond to customers who wanted to cancel service. Retention group soldiers are paid bonuses on 'saves'.
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As I'm writing this, I'm particularly peeved about a jewelry store in Phoenix (Weisfields). Last year, for Christmas, I bought matching Tag Huer watches for Carla and myself there. Not a cheap purchase. On my last trip, I dropped mine on the carpet and the band broke. Carla took it in and was treated as a nuisance.....told it'll take 4 to 6 weeks to get it repaired and that she'd probably do better handling it with the manufacturer herself. If you buy a Timex at Walgreens, that kind of non-customer service would be expected and accepted. But when you buy two very expensive watches from a jeweler, that is NOT the kind of service that should exist. (It's also incredibly dumb to tee off a customer like this right before the holiday shopping season.)

The result is that I'll spend money elsewhere this year and every year thereafter, will never spend another dime there, and will give them lots of negative word-of-mouth advertising, just as I'm doing here.

Different levels of customer service are required for different businesses, different clientele, and the differing expectations established through a business' positioning, advertising, marketing and pricing. Lots of advertising dollars are wasted if not supported by congruent customer service.
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Sales Prevention Department
In every business, small or large, there is an inherent struggle between "operations" and "sales", and far too often "operations" win.
the correct process is, all operational issues and staff preferences aside, what is the best thing to do to maximize sales - then it is "operations"' job to figure out how to support that approach.
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Periodically call your own office phone, your order-taking service, your stores, etc. and "play customer/prospect".
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As a business grows, it's easy (and hazardous) for you to get distanced from the customers. I think you should read your "white mail" (customer correspondence) at least a few times every month, get on the phone or face-to-face with customers at least several times a month, and work on the front lines of your business at least one out of every 90 days.

The CEO of a restaurant chain, for example, ought to get into one of those restaurants and seat people, wait on tables, and bus tables every once in a while.
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If you have salespeople, distributors, franchisees, retail locations, etc., you should still devise means of obtaining the end users-customers' names and addresses and communicating directly with them. About 5 years ago or so, Mary Kay cosmetics convinced their independent distributors to turn over 5-million customer names and addresses so that the company could periodically mail them sales literature. Why? Because they could not rely on the distributors to do the job. I believe there should always be a direct relationship maintained between company and customer.
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Over the years, I have "fired" a number of clients - even when I couldn't afford to do so - confident that Nature so abhors a vacuum that it will quickly be filled with better clients than the ones I vaporized.

The longer you "hang on" to something/situation/person with which you are unhappy, the longer it'll be before you can be happy. A void has to be created first. You have to make room for something better.

A metaphysical example of this in action comes from my friend, Foster Hibbard: a woman at one of Foster's 6-week courses told him she desperately needed new and better clothes but had no money or credit to get them with. (She had just landed a new, good job but needed to dress sharp everyday.) Foster told her to go home, pack up at least half of everything in her closet that wasn't appropriate or that she didn't like, and take it to a charitry immediately. She feared that would double her problem; he insisted it would solve it.

Two weeks later at class she told Foster of the "amazing things" happening since she had emptied her closet. An old friend of considerable wealth had, without provocation, called her up and offered her some hardly-ever used clothes, mostly business suits and fine dresses, that no longer fit her as a gift. A credit card arrived in her mail without her having applied for it. She got lost driving somewhere, pulled over to the side of the street to get her bearings, and found herself parked in front of a very exclusive women's dress shop that was running a Going Out Of Business - Owner Retiring Sale with discounts as high as 80%. And so on. The vacuum she intentionally created filled.

The same principle applies in business. In hiring/firing, it is "hire slow, fire fast" - when you fire appropriately, as quickly as you know it is inevitable, you create a vacuum to be filled by a better person for that job. In marketing, when you "fire" a slow moving product line, a minimally profitable but very time consuming client, etc., you deliberately create a vacuum certain to be filled with something better.

You might say that we "clean out our closets" too infrequently.

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Most business owners detest marketing and do just about everything better than acquiring new customers. One approach to this is to do a lot more business with each customer, so you need a lot fewer customers. For many businesses, this is best accomplished by being a "mini-conglomerate".

I encourage carpet cleaners, for example, to consider also being in the air duct cleaning, ceiling tile cleaning, mini-blind cleaning, mobile auto detailing, pest control, dry cleaning pick-up and delivery, and new carpet sales and installation businesses. Every customer for one of these services uses and needs all these services.

The warehouse club businesses, like Costco and Sams Club, has fully embraced this idea, expanding from discount groceries and commodities in a zillion different directions, including hard products and services.
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Many businesses use variations of "Bonus Bucks". These can be given out based on formula, much like a frequent flyer program, or spontaneously, as "thank you's" for sizable orders, frequent purchases or referrals. I do NOT believe you can buy customer loyalty with this sort of thing. But I do believe in rewarding loyal customers, as one part of a complete strategy for retention, referral stimulation, and maximizing value.
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I've used this term - "expand usage" - a lot, because it is important (and often ignored) for many businesses. For example, the restaurant that has a great lunch business - what is done to get those customers to come in for dinner?

Consider a simple, mundane business like dry cleaning. We probably spend $300 a month at the dry cleaners, because most of my suits and shirts have to be cleaned after every on-stage wearing. In all the years that we've been dealing with dry cleaners, taking in shirts, suits, slacks, jackets, never once have we received a coupon for leather coat cleaning or drapery cleaning, etc.

The insurance agent who sells us business insurance has never once attempted to find out about any other insurance needs. Other than sending out the company newsletter, the State Farm guy who has my car insurance has never once, in any way, attempted to interest me in other products. Ford Motor Credit Corp. has my car loan, but no attempt has been made to sell me the Ford-branded VISA card.

Everywhere I look, I see businesses leaving lots of easy money on the table by making no attempts to expand customer usage.

Get this: it is easier to sell more and more often to a happy customer than it is to get a new customer. And, generally, profitability increases when you sell more (and more often) to fewer customers than when you sell less to more. Finally, your vulnerability to competition actually decreases when you sell more and more often to fewer customers because you will automatically be doing a better job of relationship nurturing. These three facts mandate an emphasis on deliberately expanding usage by existent customers.

A related application is to push a particular item: if you have a slow-moving product(s), then you can promote it with coupons to customers buying other products from you.

When my Ford Motor car loan payment booklet arrived, it should have come with a pitch letter, application and "thank you coupon" waiving all annual fees for that VISA. When the bill came from my doctor for the visit to get antibiotics, there should have been a pitch letter and discount coupon for a complete physical. Etc.

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