Unique Core Differentiators (UCDs) clearly articulate what makes your business different. They are the special things about your product or service or business that compels customers to buy from you rather than your competitors. Well-formed differentiators target your customer’s ‘hot buttons,’ real buying concerns, or key frustrations. In one statement it educates them about exactly why they should buy from you.

The best sales people are ‘canned’. They know better than to wing it through a prospect meeting. They have a systemized sales process to work with. And the most effective system is relationship selling – selling based on getting to know a customer’s real needs and fitting your product to them.

Relationship selling doesn’t involve high pressure or manipulative methods. The salesperson here is a problem solver, a helper, and an advisor to the customer. They learn to identify the customer’s needs and sell them a solution that fits the need – not just a product. It moves the emphasis from price to value as a differentiator and provides a powerful advantage over competitors.

Do you know…

How to use objections to further the sales process

How to prepare a sales pitch so that saying ‘yes’ is the next natural thing to do

How to build relationships so strong that your clients won’t think of going anywhere else

Your promotions plan will keep you focused on marketing. It’s difficult to come up with marketing ideas when you are busy solving short-term business problems. So follow good time-management principles and set time aside for long-term planning. Take a global and strategic look at your business, gather all your marketing options and rough out a schedule for the year.

First look at your marketing plan and considering your overall objectives, the nature of your business and its products and services. Map out the year, with predictable and seasonal features highlighted. Then make a list of all the marketing strategies that are suitable to your business and match the strategies to the different events in your business year, ensuring that you have at least one thing planned for each month.

You then have a promotional plan. Follow it and you will have a higher and more reliable stream of revenue into your business.

Your customers are generally only interested in product features that translate into benefits. So, whether you’re developing a new product or exploring a way to repackage an old one, it is important to think clearly about the benefits you provide. Product features are not important in themselves. Great as a product may be, customers won’t love it for its own sake. They’ll only love it for the benefits it provides.

Have you ever been presented with that golden opportunity – a chance meeting with a potential big customer? Suddenly you scored one short window of opportunity to get this person interested in your products or services. And you blew it!

You need to develop an ‘elevator speech’!

An ‘elevator speech’ is a concise, carefully planned, and well-practiced description about your company that your aunt should be able to understand in the time it would take to travel a couple of floors in an elevator.

Guarantees, and especially those that are in some way even better than ‘money back’, are a proven way to attract prospects. But how to develop such a guarantee?

The best thinking on the issue of developing guarantees now involves using the concept of ‘risk reversal’.   There is no better way to change the perceived benefit of a product or service than to offer an ‘extraordinary guarantee’ that switches the risk of making a wrong choice from the buyer to the seller – risk reversal. In effect a risk reversal guarantee inspires the prospects trust by announcing: “I’m so confident in our products, services and business that I’m prepared to put my own money where my mouth is and make it impossible for you to lose out on this transaction.”

By knowing what the customer really wants, and then making it clear that they will get the result they’re after from this deal or else the seller shoulders the consequences, makes their buying decision so much easier.   And that’s what offering an extraordinary guarantee can do.

The most successful businesses are ones that recognize the value of their customer base and exploit that value most effectively.

All too often businesses, especially small businesses, spend most of their sales and marketing time and money trying to find new customers, not realizing the value of the ones they already have.

It’s important to understand the value of the existing customer base; how it can be segmented to give a profile of individual customer value and to quantify the value of different customer groups.   When it is understood that some customers/groups provide very little profitability to a business, it’s an easy step to realizing that not all customers are equal; that the different segments can be marketed to and serviced differentially to improve customer satisfaction, save the business time and money on marketing and ultimately improve profits.

It was good to meet you and learn about your business. I understand the challenges you are facing and will try to be part of the solution.

It is my experience that business challenges never have a single source and that solutions need to address several areas.

The areas that need to be addressed at first are shown below.

Industry Direction:

• What are the trends
• Is it growing or shrinking?
• Within the industry what are your company strengths and weaknesses?
• What threats do you perceive to your industry?
• Return on investment, on sales

Customers:

• Have you segmented your market?
• What is the profile of your most valuable customers?
• Why do they buy from you?
• Why do others go elsewhere?
• Why do people not use your services; what is their profile?
• What’s your attrition rate?
• What’s the lifetime value of your customers?

Competitive Structure:

• How many similar businesses in your area?
• What would happen if 20% of your competitors left?

Marketing:

• Strategy
• Advertising
• Promotions

Finances:

• Revenues and gross margins per customer and per product segment
• Net profits in total and per store
• Working capital
• Fixed expenditures

Personnel:

• Reward strategy
• Incentives

These are the issues I’d like to review with you. I don’t believe that we’ll have answers to all these items at our next meeting so the next step will be a plan to obtain these answers.

I am delighted to be working with you on the development of your business. I will call you Monday to set up a meeting

• Sensibly financed (with prudent mix of equity and debt)
• Strong cash position (with access to follow-on or contingency funds)
• Offers above-average profitability (in terms of return on capital invested)
• Aims for rapid growth in revenues (with profits lagging but in prospect)
• Targets expanding, or otherwise attractive, market segments
• Develops a strong franchise or brand
• Devotes substantial resources to innovation (R&D, offerings or market)
• Competes on non-price issues (e.g. quality, service, functionality)
• Very close to customers and responsive to their needs
• Seeks specialist/leadership image with superior offerings
• Well managed with high-grade staff & good people-management

As you are no doubt only too well aware, some customers buy only once and disappear forever. You could say that their lifetime as a customer with you was just that one transaction. So their lifetime value to you was just the profit on that one transaction.

But other customers keep coming back. Their lifetime value mounts and mounts with each return to purchase from you. To give a simple example here, a pizza shop may have a group of customers who buy there at least once a week over a period of years. The lifetime value of a customer like that can be substantial. Or, think about how much a business that regularly ships its products with a particular courier is worth to that courier over a period of years.

Put that idea together with the commonly held belief among marketers that it costs five times as much to attract a new customer than to keep an existing one satisfied and you’ll see why extending the lifetime of your customers is a profitable strategy.

So today, recognizing that you do have to advertise, I will be discussing first, a particular metric that marketers use when they are developing their marketing programs. It’s known as Customer Lifetime Value, or CLV.  It can be used to predict if a campaign is going to bring in more than you spend on it and also to evaluate how well your marketing initiatives are working out. You should never lay out big money on marketing until a CLV analysis shows there is a potential for it to succeed.

Secondly I’ll talk about ways you can work to improve the loyalty of your current customers so as to maximize their lifetime with you and consequently their lifetime profitability to your business. This means working on a range of retention and customer value improvement strategies.

Finally, we will spend some time considering how to segment your customer base according to their value to you. When you do this you may find there is a group of customers who actually cost you more to service and maintain than the revenue they bring in to your business and we’ll discuss strategies for dealing with that.

Let’s start by looking at the concept of Customer Lifetime Value, or CLV.

CLV is a metric developed by marketers to assess the viability of their marketing strategies, that is, to see if they have the potential to return a profit over their actual cost. They do that by estimating how a customer’s spend with the business might change if the marketing changes – for instance by introducing a loyalty scheme or a special offer.

Chasing vs. Retaining Customers

Of course businesses always need to be attracting new customers. Even in the best businesses the customer attrition rate can be up to 20% per annum. That doesn’t sound too bad – each year you retain 80% of your customers. But over 5 years that rate of churn means you have lost the equivalent of an entire customer base. Can you imagine how more prosperous your business could be by reducing the attrition rate and keeping on selling to those customers?

Even though studies often find that the average spend of customers declines with time, you’d still have them there to market to and to cross and upsell to; and you could reduce your spend on advertising and promotions aimed at replacing those who would normally have left.

So what are the best customer care principles for retaining customers?

Improve Customer Service

The first thing is to ensure that you are providing quality customer service. This doesn’t need to involve a significant spend. Small things can make a difference – sending thank-you notes, for example, or simply by making follow-up telephone calls.

The basic tactic here is to have a customer centric approach. For instance, complaints should be seen as opportunities to improve the business and the relationship with the client – not as a nuisance to be dismissed. If you recall that pizza example you’ll understand why in that chain, if a customer doesn’t like a pizza, its policy is to offer a replacement no questions asked. That policy leverages what they know about their customer’s CLV– the average customer spends $1000 with the business. Replacing the odd pizza is worth it to retain the trade.

Which brings up another point – take the time to train your employees in how to provide service and why it’s important to the business that they get it right. They’ll be more effective when they feel they know what to do and why it’s important to do it.

There are a lot of dimensions to quality customer service. It pays to sit down and look at every area of your business and see if there’s room for improvement in any operation that touches on service to your customers.

It’s a much more profitable strategy in business to retain customers and to use your marketing budget to increase sales to them than to go spending money constantly chasing new customers. That’s why thinking about customers in terms of their lifetime profitability is important.

But not all your customers are now, or ever will be, equally profitable.  Segmentation of customers into profitability bands is a very useful way of looking at just which ones are providing what percentage of your profits. And with that knowledge you can start considering which ones to market to and the sorts of marketing that would best retain their loyalty to you. You might even decide the very bottom group is not worth pursuing to hold their custom at all.

Finally, when you are considering developing loyalty schemes, or advertisements, or in fact promotions of any sort, you need a tool to allow you to test the validity of the strategy and monitor the actual results against expectations and that’s the role of CLV analysis.