Back to the Future

by Peter Thorpe

In real estate they talk about the three Ps – Position, Position, Position. In our marketing efforts today, more than ever before, we need to think about the three Rs – Relationships, Relationships, Relationships. If you’re not working on better ways to build meaningful relationships with your clients, then you are probably about to join the dinosaurs…

It seems like Relationship Marketing is the catch phrase of the new millennium. Everybody is talking about it. However, very few people are doing it – and even fewer are doing it well. This is surprising because today’s technology makes it easier than ever before to practice good relationship building techniques.

The ladder of loyalty

One of the most important principles I have learned in marketing, is the power of the Ladder of Loyalty. I was first introduced to it many years ago by the godfather of direct marketing in Australia, Ian Kennedy. I believe Ian got it from an American marketing guru called, Murray Raphael and it dates back to the 1930s. Hardly a new concept. However, it’s just as meaningful and potent today as it ever was. This simple but profound graphic representation, illustrates quite simply how relationship marketing really works.

It starts on the bottom rung of the ladder with suspects. Anybody and everybody is a suspect. Once you have established they have a need for your product or service, they become a prospect. And when they buy from you, they become a customer.

Unfortunately, that’s where it ends for most businesses. Once they have made a sale, they assume the battle has been won and off they go, talking to other suspects and prospects, looking for more new customers.

They miss the most important steps in the ladder – turning those customers into clients (people who buy from you over and over again). And finally, promoting as many of those as possible to the very top rung of the ladder to become advocates. These are the people who believe in our products and services so much, they actively endorse them to other people. They in effect become unpaid salespeople for our business. This is what relationship marketing is all about.

They fail to realise that the sale is the beginning of the relationship, not the end. They also miss the point that it’s much more cost effective to market to clients and advocates than it is to market to suspects and prospects. The latter are always the most expensive and difficult to reach.

Putting it to work
Recently, I have been working with a large franchise chain, helping them with their local area marketing. I spent quite a bit of time with the individual franchisees, discussing ways they could improve relationships with their clients. Naturally, this required a good deal of time and effort on their part, particularly in the initial stages.

As is usually the case, some of them embraced these ideas and will put them into practice and reap the rewards of their efforts. Others simply said they wouldn’t have the time to do it. My reply to them was simple: “If you don’t make time to do it, then you won’t have to worry about it because you won’t be in business.”

Sounds a bit dramatic and even a touch brutal. However, I happen to believe it is true. There’s an old adage that says, “If you don’t look after your customers, somebody else will!” How true.

Today’s technology, used correctly, makes it a lot easier to build relationships. And with the advent of the internet and email, we can now communicate with individuals, one on one, with amazing speed and economy.

The new technology
Without doubt, the two most important changes in technology over the past 20 years have been: user-friendliness and price.

It’s not all that long ago computers were the size of a small house and you needed a team of skilled engineers to operate them. Gradually, computers and software have become more and more user-friendly. These days, even the most technophobic amongst us can become reasonably proficient on a computer in a short space of time.

The other big advance has been in the area of price. Computers used to cost a lot of money. Now, for less than $2,000, you can buy a computer that will enable you to keep accurate records on tens of thousands of customers. We could (providing we input the data and keep it up to date) maintain a detailed record of every transaction with every customer, along with a complete dossier on their likes and dislikes, their aspirations and lifestyle, their mindsets and ultimate desires.

So, why does one of the country’s biggest banks still insist on addressing me in all their correspondence as, Dear Valued Customer? They value my custom so much they can’t even take the trouble to teach their computer to print my name! It’s just another case of poor use (or misuse) of technology.

While the technology has changed dramatically, there’s nothing new about database marketing. I recently found this quote on the internet: “Merchants kept notes on rice paper about their clients birthdays, their children’s names and the days of the week they liked to shop.” It was an excerpt from a 17th century Japanese manuscript.

It seems the more things change, the more they stay the same…