The best way to gain and keep customers is to provide them
with value. It’s really pretty simple: If the customer is happy with what they get in return for their money, they consider it value.
Get More Value from Existing Customers
Are You Maximizing Your Clients' Potential?
By David M. Fellman, David Fellman & Associates
The best way to gain and keep customers is to provide them
with value. It’s really pretty simple: They give you money,
and you give them something in return.
OK, I may have the order of that backward, because in our
business, we usually don’t get the money until we deliver
the product, but the basic principle is still valid. If they’re
happy with what they get in return for their money, they
consider it value.
This value thing should not be a one-way street, though.
It’s just as important that you get value from them. I believe
that each one of your customers provides you with three
distinct levels of value.
- First is the value of what they’re buying from you now.
- Second is the value of what they could be buying from you.
- Third is the value of influence, the ways in which current
customers can help you to develop new customers.
Are you getting all of that value from all—or even most—of
your customers?
FIRST LEVEL
The First Level of Value is all about what they’re buying
from you now. What’s important about the First Level of
Value is that you protect it—in other words, that you don’t
lose customers! The keys to protecting the First Level of
Value are customer service and customer contact.
Customer service is pretty straightforward…or maybe it
isn’t. How do you define great customer service? Wait,
that’s the wrong question! The better question is how do
they define great customer service? Because great customer
service, like beauty, is in the eye of the beholder. There
is a pretty common definition we can start with—meeting
or exceeding their expectations—but protecting the First
Level of Value requires that you fully understand those
expectations, and that you know—not just think or hope—
that you’ve met or exceeded them.
Actually, we should probably expand this discussion
beyond customer service, which to many people would be
limited to the human interaction element of the buyer-seller
relationship. Let’s think in terms of customer experience, which covers every element of doing business with you. Now
we’re talking about the quality of the product in addition to
human interaction.
So how do you know that you’re providing a great customer
experience? Some might say the proof is in the pudding,
because your customers keep coming back, and beyond
that, you’re not hearing a lot of complaints.
Those are dangerous assumptions, especially if you
assume things are good because you’re not hearing a lot of
complaints. Research indicates most unhappy customers
don’t tell you they’re unhappy. They don’t complain; they
just stop buying from you! For what it’s worth, I’ve always
felt that a customer who complains is doing you a favor by
giving you two opportunities:
- the opportunity to “make it right” and protect the First
Level of Value
- the opportunity to learn from whatever caused the
customer’s dissatisfaction
Learning from your mistakes is a very good way to improve
your business!
The key to knowing—not just thinking or hoping—is to ask.
There are a variety of ways in which you can ask your
customers if you have met or exceeded their expectations.
That can range from a question at the point of sale to a
survey conducted afterward.
The second key to
protecting the First Level
of Value is customer
contact, and by that I mean
taking responsibility for
maintaining the relationship.
Here’s a very fundamental
bit of sales/business
knowledge: It is never the
buyer’s responsibility to
communicate with the
seller; it is always the
seller’s responsibility to
communicate with the buyer.
That two-part statement has two applications, one of
which is that it’s always the seller’s responsibility to make
sure that clear communication happens, that both parties
understand what’s being said or done or bought or sold.
Many sales are lost due to communication failures, and
I think it’s also fair to say that most unhappy customer situations either result from—or result in!—broken
communication.
The application we’re discussing here, though, is more
about protecting a healthy relationship from outside forces.
What does that mean?
You know that your competitors are after your customers,
right? They are calling on them, seeking to replace you,
or at least gain some of your market share—and they are
probably using aggressive pricing as part of their strategy.
This means they are putting your customers in the position
of wondering if they shouldn’t give these competitors a try.
By maintaining contact, you can keep the answer to that
question right in front of them: I don’t need to give these
guys a try. I have a great supplier already.
There’s a principle in physics called horror vacui—nature
abhors a vacuum. The same principle applies to sales/
business. If you aren’t there, reminding your customers of
the value you bring to the relationship, someone else will
gain access to that space—and that may be all they need to
at least partially displace you.
How exactly do you maintain an appropriate level of
contact? Appropriate is a keyword, of course, because this
is an area where too much can be as bad as not enough.
I recommend that you start with a list of your customers,
and give some thought to the right contact interval for each
one of them; in other words, establish some number of
weeks that you will never again let go by
without either you hearing from them or
them hearing from you.
That interval might be one week or 12
weeks, or even longer. The volume they
buy from you and the frequency of their
orders are the determining factors.
Ultimately it comes down to this: you want
to make sure that they hear from you,
after each order, and before some problem
with that order weakens your relationship
to the point where they start thinking
about giving some competitor a try.
It’s important to do this right, though.
Please don’t ever call a customer and
say: “Hey, we haven’t heard from you in a while.” They will
feel like they are being accused of disloyalty!
A better approach might be to say: “Hey, I was thinking
about you, and I realized it’s been longer than normal
since you’ve ordered. So at the very least, I’m calling with a
reminder, just in case it’s something you haven’t been able to get to yet, and while I have you, I want to ask if we’ve
been meeting and hopefully exceeding your expectations
since we actually talked last?”
Do you see how this turns an interval call into a customer
service call as opposed to just a sales call? Do you also
see how this approach turns it into a customer satisfaction
survey? If there are any problems, you will probably learn
about them through this process, and hopefully have the
opportunity to resolve the problem and protect the First
Level of Value.
SECOND LEVEL
The Second Level of Value is all about what they could
be buying from you, beyond what they’re already buying
from you. That raises the question of how you describe
your product line. The last time I asked that question in
a seminar, the first answer was “any kind of award or
personalized product you might need.”
That’s a really bad answer, because it leaves it up to
the buyer to figure out what that “any kind of award or
personalized product” means. Obviously you as the seller
know, but are you 100% sure that the person you’re talking
to knows? Remember, the seller is always responsible for
clear communication.
I recommend that you break your product line down into at
least a few main categories.
Now, let’s go back to that list of your customers. Let’s create
a spreadsheet with columns and rows for the name of the
company, the name of each individual contact, the title of
each individual contact, the interval for each individual
contact, and columns for each element of your product line.
The next step is simply to check off the products they’re
currently buying from you. The next step is to talk to them
about the products they’re not yet buying from you.
This is called cross-selling. It might also be called selling
via customer education. I am not talking about pushing a
product here. I am talking about using your interval calls to
bring even more value to your relationship.
I got a call from one of my own suppliers recently. Here’s
what he said:
“Hey Dave, I was thinking
about you yesterday. I was
doing some research on
what some of our valued
customers have bought from
us in the past, and I saw
that you’ve bought a lot of
Product X from us, and a
little bit of Product Y, but you’ve never bought any Product Z. Is there any application
for Product Z in your business?”
As it turns out, I have absolutely no need for or interest
in his Product Z, but he didn’t offend me by asking. In
fact, the way he “packaged” his cross-selling effort left
me thinking that, if I did want or need Product Z, I would
probably buy it from him!
I think you’ll find that this sort of cross-selling leads to only
a few possible responses:
- No need, no interest. (Obviously, that’s not the response
you’re hoping for, but it’s a real possibility. Still, nothing
ventured, nothing gained!)
- Need and interest, but happy with current supplier.
(Again, not the response you’re hoping for, but you’ve
identified an opportunity to compete for some business
you don’t currently have. It might take a little more
selling, but great salespeople will tell you that a yes often
starts with a no.)
- Need and interest, but ambivalent or even unhappy with
current supplier. (Sometimes education is all it takes! If
they like you better than the current supplier, you might
get the business!)
- I don’t have any need or interest, but I can tell you who
might. (And that’s my segue into the Third Level of Value.)
THIRD LEVEL
The Third Level of Value is all about influence; the ways
in which current customers can help you to develop new
customers. Here we’re taking about two things: referrals
and testimonials.
In order to fully appreciate this opportunity, let’s
understand that there are referrals and then there’s
something called word of mouth.
Often, word of mouth is used to describe the phenomenon
by which one of your customers says something nice about
you to a friend or colleague or family member, and that
person in turn initiates contact with you. Word of mouth
is really more of a testimonial than a referral, but more
importantly, it’s mostly a passive strategy. By that I mean
you’re probably appreciative when you get a new
customer through word of mouth, but you don’t
do enough to encourage it.
Encouraging it is simple. Just add an element to
your “if you want to know, ask” practices. When
you ask a customer if you’ve met or exceeded
his or her expectations, and the answer is yes,
go the extra step and ask your customer to tell
someone else about the experience of doing
business with you. It’s been proven that it might happen if you say nothing. Doesn’t it make sense that it
might happen more often if you encourage it?
Now let’s go back to “I don’t have any interest, but I can tell
you who might.” This is a real Third Level opportunity, but
that won’t get you maximum value.
Here’s another question I often ask in seminars: “Is there
anything that’s even better than a referral?” The answer is:
“Yes, an introduction!”
Let’s consider word of mouth, referrals, and introductions
in order of value potential.
- Word of mouth: This is, as we’ve discussed, essentially
passive. Yes, you can encourage word of mouth, but
you still have no guarantee that the person who’s been
“referred” to you through word of mouth will take the next
step and contact you.
- Referrals: Referrals put you in a more proactive position.
If you have the referral, you have the opportunity to reach
out and make contact. The only negative here is that this
usually puts you in the position of making a cold call.
Many salespeople have argued this point with me, telling
me it’s not cold at all to be calling someone and telling
them that you’re calling because So-and-So told you to.
I think it’s cold, though, any time you appear out of the
blue, whether it’s a phone call or an e-mail or in person.
And I think cold is always bad in selling, at least to the
degree that warmer is always better.
Let’s consider the relative temperatures of a referral vs.
an introduction, and let’s set the baseline as a “pure”
cold call—no referral, no previous contact—and set that
temperature at 32 degrees Fahrenheit.
“Hi, my name is Dave Fellman. John Smith gave me your
name and number. He told me that you’re the person who
buys Product Z for your company, and I’d like to talk to
you about that.” That’s a referral call, right? But I’m still
rating the temperature of that call pretty low, maybe 45
degrees. It might be higher if John Smith is a good friend
or a valued colleague. Don’t forget, though, it might also
be lower if John Smith is not one of those things.
- Introduction: “Hi, this is John Smith. I want to
introduce you to someone. His name is Dave Fellman. I buy a lot of Product X from him, and he also sells Product
Z, which I know you buy a lot of. I think it would be good
to get the two of you together. Can I have him call you?”
That’s an introduction. It can be delivered by phone or
by e-mail—or even in person, which is probably the best
of all possible worlds. Now, who would you rather be, the
person making the “John Smith gave me your name” call
or the person calling to follow up on an introduction after
the referee expressed interest or at least willingness to talk
to you? I think this brings the temperate up considerably,
maybe to 65 or 70 degrees. You haven’t made the sale yet,
but you are almost certainly starting from a better, warmer
position.
MAXIMUM VALUE
Let me end this by asking you a question: What percentage
of maximum value do you think you’re getting from your
customer base right now?
If your answer is 90% or higher, you still have some
opportunity here, but you’re doing a really good job of getting
value from your customers. If your answer is 70% or below,
you have a lot of opportunity, and depending on how well you’re
protecting the First Level of Value, you may have a lot at risk.
Please give some thought to where you should go with that
knowledge!
Dave Fellman is the president of David Fellman & Associates
in Raleigh, NC, a sales and marketing consulting firm serving
numerous segments of the graphic arts industry. Visit www.
davefellman.com or e-mail dmf@davefellman.com for more
information.