Psychological Marketing Insights

Analyzing the Psychology of Business, Marketing, and Sales ...

Posts Tagged ‘Follow-up’

 

 

How much is one customer worth to you?

Wednesday, April 29th, 2009

How much is one customer worth to you?

Let’s break it down using the example of a realtor. If a realtor gets just one half of the sales commission they will get 3.5%. Let’s be conservative and suppose that a buyer’s realtor sells a house to a young couple for $100,000. So at 3.5% that would be $3,500 in commission.

Now, according to the U.S. Census Bureau, the average person moves 11 times in their life which averages out to every 7 years if a person were to live to their mid seventies. To be conservative we will say that the young couple moved 4 times when they were children, so they have another 7 times to move in their lifetime.

Now, the smart thing for the realtor to do is stay in touch with this young couple on a regular basis. If the realtor does this the couple is that much more likely to use them again. So what if the next time the realtor not only lists the home that the couple is selling but also sells them another home.

If each home was only sold at $100,000 … (which isn’t very likely as most people progressively buy more expensive homes throughout life as they get raises, switch jobs, or both partners begin working, but this makes the math easier)… so if each home was only sold at $100,000 the realtor would get another $3500 for each of the two homes.

So, $3500 x2 would equal $7000 added to the original $3500 for a current lifetime total of $10,500.

If we multiply that $7000 x6 for the remainder of times that the couple moves and add the original $3500 we get a grand lifetime total of $45,000.

That doesn’t even take into account if any of the homes are higher than $100,000 or if the realtor is able to be both the buying and listing agent on any of the sales. That also doesn’t take into account any referrals that the couple might provide. Realistically, the couple could easily be worth well over $60,000 over their entire lifetime.

Granted, there are some expenses in doing this, but it is a heck of a lot easier to keep this person as a customer than it is to continue trying to find new clients constantly. It is just like farming. You have to keep sowing to keep on reaping.

Now think about this. What if the realtor hadn’t continued to follow-up after that first sale? They would be leaving 10’s of thousands of dollars on the table. Are you making this mistake? I know the agent who sold us our first house did send us a thank you card, but that was all. Now, 3 years later we haven’t heard another peep from him. If we go strictly with statistics we will be moving in another 4 years. More likely than not, we will be moving in the next year or two. And we’ve now become friends with someone else that we see and hear from on a regular basis and have begun to send referrals to. We weren’t really friends with our original realtor before, and he hasn’t built a relationship since, so there is no obligation to go with him.

You see the key is to create friendships and how do you do that? Constant communication is essential.

In tomorrow’s post I will tell you how to stay in touch with your clients. There are a lot of different tools and media you can use, and certain ones have more value than others.

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The Devil Is In the Details

Friday, April 17th, 2009

As I mentioned yesterday, your customers need to be hearing from you on a regular basis.  I used the example of my mortgage broker from 3 years ago never following up with me.  However, today I saw an even better example.  Matt and I showed up to our chiropractor appointment exactly on time.  Now, we drive out of our way to go to this chiropractor because she utilizes a special tool called the activator that we were introduced to while still living in Muncie that we believe is more effective than normal chiropractic methods.  Anyway, we show up today exactly on time for our 11:00 appointment, planning to be out in 10-15 minutes like normal and go on to our lunch appointment.  Normally it is less than a 5 minute wait to be seen.  Not today.  We sat  in the waiting room until 11:35.

While in the waiting room, not once did the receptionist acknowledge that we had been waiting for a long time.  We were not offered a drink or snack while we waited.  In fact we were not acknowledged at all except when we first came in.  When Matt was finally seen the chiropractor said, “Sorry for the wait,” and then proceeded with his treatment and then my treatment.

On the way out, I had almost forgotten the long wait…until I tried to get the receptionist to put our bill on insurance.  She hemmed and hawwed her way around about how sometimes the insurance co-pay is just as high as the bill.  I happen to know what my copay is and knew that if she turned the bill in I would save $20.  That is why I have insurance.  She kept making a big deal about it, but finally agreed to try to turn it in.

As I walked out the door, my eyes met Matt’s as he waited at the car.  Before I could even tell him what had just happened he said, “I have never left this place in such a bad mood.”  We got into the car and I saw that it was 10 till 12:00.  We were now late for our next appointment.

The entire way there we discussed how they could have made it so that we would not have left in such a bad mood.  (I know, we’re a bit quirky in that way.  We are always critiquing ways that businesses can improve.  It is one of the byproducts of the trade.)  We realized that we weren’t that attached to our chiropractor.  Since November we had both been to her a handful of times.  She was nice and cheery most of the time.  The office was clean.  She had helped our pain.  But yet we both felt that we would be perfectly fine never going back after today.

What could she have done differently?  Never made the mistakes?  Well, yes, but every business is going to have its bad days, as much as we try to combat them.  Some will be our fault and others will be someone else’s.  What she could have done is set the stage so that when that bad experience happened, it didn’t matter when weighed against everything else that she had done right.

For example, our first visit she could have handed us both a new client packet, complete with testimonials, as well as research for why her method of chiropractic care was the best.  She could have then sent a thank you card in the mail with a $5 gift card to Starbucks or to a local coffee shop.  From time to time a printed or emailed newsletter with tips and tricks to keep our back healthy would have been nice.  A Christmas and birthday card would have been great.  On and on it could go until we were completely loyal customers for life who referred others to her again and again.  Finally, when the bad experience happened, a better acknowledgment that something had gone wrong.  Maybe a small discount for the wait.

What if she had done all of this?  Would we have left feeling a little bit better?

Probably.

Up until now I was what you would call neutral about going to see her.  Now, I have a negative connotation and am much less likely to refer to her.

Update July 2009

Okay, so I decided that this post deserved a follow up as the story developed further.  Where I left it was the negative connotation that Matt and I had upon leaving.  Despite this negative feeling, we went back the following month.  Nothing negative happened, but nothing exceptional happened either.

But then, the next month we had a surprise.  We showed up to our appointment, expecting nothing out of the ordinary.  We said hello to the receptionist and began to take our seats.  Suddenly we saw our old chiropractor poke her head through the door.  She was filling in that day for our current chiropractor who was on vacation.  (They have a sort of joint practice, but our old chiropractor mainly sticks to the office that is much further from our house.)

That day as we were leaving Matt and I looked at each other and decided that we were going to find a way in our busy schedules to track across town to go back to our old chiropractor.  We both really like her personality and honestly felt that she did a better job of listening to us, educating us, and that she worked hard at making sure the adjustments she did were working.  The only reason we had switched in the past was because of a schedule conflict that made it difficult for us to make it to her.

However, because of the experience with her partner and the receptionist from that office, we felt that it was worth it to “inconvenience” ourselves with a drive across town.  And let me tell you, we couldn’t be happier.  We both feel that we are seeing greater improvements in our health, and we feel good about spending our money where we feel that we are appreciated.

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Getting New Customers vs. Keeping the Old

Thursday, April 16th, 2009

Most people don’t think of following up with the customers that they already have as marketing.  That is why they normally don’t have a budget for it.  They think that since a person has bought from them in the past, of course they will buy from them the next time they need an XYZ Widget.  What they don’t realize is that if they haven’t been following up with them on a regular basis, their customer(s) might have already been stolen out from under their nose without them even realizing it.

When I sit down with a new client one of the first things they always say is that they want to have a marketing campaign that will get more customers.  I respond that we will indeed get to that, eventually.  But the most important thing that we need to start with is making sure that they are keeping the customers that they already have.  In other words we need to stop up the holes in the bucket before we put more water in it.

What good does it do to keep putting water in a bucket that is full of holes?  Every new customer you bring in will  buy the one time and without a way to keep them they very well might go right on out one of your holes.  What would that customer have been worth to you had you kept them for a month?  a year?  3 years?  10 years?

An example I often use is with mortgage brokers.  The average person moves or refinances every 3-7 years.  If a mortgage broker just follows up on a regular basis they will stay top of mind and the next time that person moves or refinances, their chances of getting the business go way up.  My husband and I bought our home 3 years ago.  Since then we have not heard from the mortgage broker that did our mortgage once.  We are now in the process of refinancing that same home.  Who do you think we called?  Someone else!  I can’t even remember the name of the person who did it before, and since then we have come across several mortgage brokers.  We chose the one whom we felt the most familiar with.

But what is the best way to follow up?  How often?  In what form?  The answer to that could fill up a book, so I will break the surface of it in my next post.

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