Building Customer Relationships is the Key to Successful Branding

Building Customer Relationships is the Key to Successful Branding

by Jeff Hilton

Of all the latest marketing "buzzwords" to enter into the corporate dialogue over the past few years, probably one of the most valuable and insightful is the concept of relationship marketing. This terminology certainly reflects the changing nature of the consumer in general ... smarter, more selective, more suspicious and with more purchasing options than ever before. Particularly in today's natural lifestyle marketplace, there's no question that the consumer is calling the shots. So in order to be effective, marketers are approaching this consumer in new ways.
The hard lesson learned over the past 20 years of transactional marketing is that the customer universe is finite. It has also become much more segmented and therefore more difficult to effectively reach with any reasonable efficiency. So existing relationships have emerged as the key to long-term business success and growth. It's all about Lifetime Customer Value (LCV). In other words, what revenue and, more importantly, what profit will a customer contribute to your company over the course of his relationship with a given product?
In short, managing customer loyalty or LCV is critical to the success of your business. Common sense tells us that it's easier to generate additional business from an existing customer than it is to convert a new one. Statistics agree. Consider the following:

The Cost of a Lost Customer. For every customer you lose, you lose not only the next sale but the one after that, and the one after that, and on and on. You get the picture. A disgruntled or dissatisfied customer will stay with you for a long time. Kind of like gum on the bottom of your shoe, except a lot more expensive. In addition, with word of mouth playing the critical role that it does in influencing purchase behavior, you can't afford to have someone out there proselytizing against your product.

The Cost of Acquiring a New Customer. Research shows that it is eight times more costly to find a new customer than it is to maintain a current one. While brand loyalty may be at an all-time low, the average consumer now has more brands to choose from and more places to shop for those brands. Regardless, it is always more difficult to lure customers away from other brands, particularly now since many of your competitors are also working actively to build LCV.

The Value of Loyal Customers. Ninety percent of profit comes from repeat purchases. Each time a customer buys product from you, your cost of maintaining that customer decreases and your profit on that same customer increases. Plus, long-term customers are willing to pay higher prices and refer your brand to their friends. Product referrals are, of course, the jackpot since you then obtain two customers for the price of one.

The Increased Cost of Reaching Customers. Ask anyone who negotiates and buys media, and they will tell you that the days of reaching a mass audience consistently on a limited budget are long gone. As natural products shoppers diversify in terms of demographics and psychographics, they are increasingly difficult to reach efficiently and in great numbers. Media options will continue to become more segmented and more costly, and your existing customers will start to look better and better to you.

The Changing Nature of the Self Care Consumer
Chances are that the consumer who purchases your product has changed dramatically over the past few years. While the self-care movement is alive and strong in the hearts of natural products shoppers, they are evolving daily. Specifically, they are:

• Getting older,
• Increasingly interested in health issues,
• More focused on indication-specific products,
• Not loyal,
• Looking for information from a wide range of sources, and
• Suspicious of your product quality and your motives.

Clearly, it pays to build customer loyalty on many levels. So how do you go about building that relationship from a marketing perspective? There are several things you should be doing if you're not already.

Use Your Web Site. Permission marketing. Viral marketing. Use these types of programs to your advantage. Remember that the Internet is a huge mass of interrelated conversations. Turn your site into a resource for the visitor. Give them a reason to come back or send a hyperlink to a friend. Don't let them leave your site without connecting with you in some way. Then stay in touch. Don't be a pest. Be helpful. Offer solutions. Be sincere. Loyalty will follow.

Add to Your Database Every Day. In order to talk to your customers, you need to know who they are. Record their interactions with you. Rebates. Coupons. Product samples. Literature requests. Sweepstakes. Contests. Customer service inquiries. Web site visits. Every day you should be able to add new names to a growing database. Then develop a program to reach out to them and build an ongoing relationship of trust.

Reward Their Loyalty. Everyone wants recognition. Your most frequent customers are no exception. What have you done for them lately? Points for purchases. Free product. Samples. Rebate offers for providing you with some basic demographic information.
Money-saving coupons. A logo hat or shirt. As I have always said, it's amazing what someone will do for a T-shirt. Small incentives have tremendous impact.

Educate Them at Every Opportunity. One thing about this market will never change: the customer is hungry for information. And he who educates and informs will win the sale. Labels. Seminars. Brochures. Advertising. Direct mail. Merchandising. Health food retailers can't reach everyone. Mass retailers either can't afford it or don't care. It's up to you. Despite what you may want to believe, no one will do that job for you. And it's a job that must be done.
Your current customers are not only why you are in business, they are also what will keep you in business. Respect them. Care about them. Give them a reason to remember you. And never forget, you need them more than they need you.

Jeff Hilton is president of Integrated Marketing Group; he can be reached at (801) 538-0777 or visit www.imgbranding.com. 

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