Strategies for Leveraging Sugar Daddies (Part 2)
- Retain the good ones
- Increase their wallet share through up selling
- Use them as referral sources to get new customers
Retain The Good Ones
Customers are money machines. You make an investment to get one and the payback is the revenue they generate. When you lose one, you lose three ways. First, you lose the revenue, which immediately cuts into your profit. Secondly, you’ve got to replace the business with new business that’s more expensive to get. You’ve got to go out and buy yourself a new customer. Third, a new customer is more expensive to maintain. They require education, time and service to get acclimated to you.
Attrition rate, the percentage of last year’s business you have to replace in order to maintain your volume, is death to your marketing budget. It’s the hole you have to fill before you start to grow. If you’re in a business that requires a new customer for every transaction, you have an extremely high attrition rate and a good chance for a high business acquisition cost. So, the first thing to do to leverage your customer is to work hard to keep them. Especially the good ones.
Sometimes, attrition can be a good thing. That’s when your customers aren’t profitable. If you’re paying to keep a customer, that’s not leverage. That’s suicide. But once you’ve decided they’re worth keeping, here are some ways to keep them customers happy:
Data on the Daddio. The best way to serve your Sugar Daddies needs is to get to know them. What they’re buying, their frequency of purchase, personal information, and feedback on how you’re doing. This can be done on a website, through surveys, questions by sales people, focus groups, or smart cards. My grocer knows more about what I eat than my wife. (That’s because I eat most of the good stuff before I get home). Actually, in order to get the best price on my Altoids, I’ve got to swipe my card. They know about me and give me the coupons to prove it.
Every year, we invite 8 or 9 of our clients to an “advisory” session, to hear their suggestions about how we can improve. We get a facilitator, so they all feel comfortable speaking their mind. And they do. Just the act of expressing makes them more comfortable. And we can adapt to what they say.
Speed of Response.
The single biggest reason for customer dissatisfaction isn’t high prices. It’s not even bad quality. It’s slow response time. The easiest and best way to say you care is to respond promptly. That means returning phone calls immediately, or at least same day. It means getting quotations to a client a day early. And doing what you say. Fast.
A lawyer I know has a policy. He tells his clients that when they call, either he or his assistant will return any call within 3 hours. The effect: the focus groups we’ve had with his clients say he’s the best lawyer they’ve ever dealt with. The truth is, he admits, he’s actually not that great a lawyer. He just returns calls fast.
Sugar Daddy’s often don’t complain. They just fade away. They feel neglected. Apart from formal surveys, keeping them abreast of what’s going on through an occasional call, email, or letter gives them tangible evidence that your there, thinking about or acting on their business. Where applicable, a monthly or quarterly report gives you something to refer to when the question “what have you done for me today,” arises. A restaurant I go to had my wife and I fill out an “information” card. Every year, on our birthday and anniversary, we get a post card that says we’re entitled to a free drink, a dinner, or dessert. We know it’s a promotion. We even know the computer is handling it. But the communication counts. They’re working us because we’re customers. They want us back more frequently. And it works.
I sat next to a mother with three children on their way to Disney World. She had changed planes in Atlanta and had waited over two hours for the next leg of her journey. The curious thing was that there was another airline with a direct flight to where she was headed. Why was she willing to put up with an extra four hours and the inconvenience of plane hopping? Points.
One of our clients sells lime. Not the fruit. The mineral. Barges full of lime. Mountains of lime. The only problem is that there are plenty of other lime suppliers. It’s a commodity. A ton of lime is a ton of lime. Until one day, the CEO had an idea. He realized that every time a barge full of lime went down the Monongahela River, the captain of the tugboat had to fill out a bevy of compliance forms at every lock along the way. So they created a template on their website. Fill it out once and with every barge full of lime, you get the compliance forms for every stop along the way to your destination. An added service that comes with the lime. It doesn’t cost our client a thing. It’s automatic. But for the customer, it’s time saved, mistakes and liability avoided.
Expand Your Brandwidth