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The Power of Communications
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Any communication, irrespective of whether or not there is a promotional offer, will increase visits.
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Judd Goldfeder, The Customer Connection
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ustomer communications work. They get people to come back, improve cross sales, and result in upgrades and higher retention rates. And now, because of the Internet, their cost is at an all-time low. To see how communications work, let s look at a few examples.
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A lighting manufacturer based in Milwaukee used a catalog to market its products to 45,000 contractors and builders. Business was both good and pro table. A consultant at Hunter Business Direct thought that sales could be made even higher through the use of customer communications. His suggestions were greeted with skepticism, but higher management was persuaded to give him a 6-month test. He took the top 1200 customers and divided them into two similar groups: a test group and a control group. The control group was given the same wonderful service that was given to all other customers: Wait for the phone to ring and ful ll the order rapidly. For the test group, the consultant set up a two-person communications team. A lighting engineer was paired with a customer service rep.
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Their job was to call each one of the 600 companies in the test group, find out who the decision makers were, and talk to them. The purpose of the calls was not to make sales. In fact, the team was not empowered to offer discounts. The purpose of the calls was to discuss the customers lighting needs. Were there new products on the market that they did not nd in the catalog What problems had they had in installations Where did they see the industry going Did they need training Did they have suggestions This went on for 6 months, after which the consultant did a complete report on the results. His ndings were truly amazing. In the rst place, during the 6 months, the test group placed 12 percent more orders than they had in the previous 6 months. The control group placed 18 percent fewer orders! The test group s average order size grew by 14 percent, whereas the control group s order size shrank by 14 percent. In total, the test group purchased $2.6 million more product than the control group did, spending 27 percent more than they had previously, whereas the control group s total purchases fell by 30 percent. The total cost of the experiment was about $60,000, including the salaries and expenses of the two communicators and the cost of their telephone calls. The increase in sales per dollar spent was a staggering $43. The heart of this test was the brilliant plan of setting aside the 600company control group. Without this group, no one would have known how successful the communications program was. This is an experiment that can be repeated in virtually any business-to-business marketing situation.
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Consumer Relationship Building
The lighting company s experiment would not have worked with businessto-consumer selling because consumer spending is Not continuous Far less predictable Much lower in volume and margins
T h e P o w e r o f C o m m u n i c at i o n s
However, consumer communications can also produce marvelous results. A chain of restaurants based in San Diego, advised by Judd Goldfeder at The Customer Connection, gave patrons a paper membership card, which was scanned when they arrived at one of the restaurants and used to award them points toward free meals. The program seemed to be working well. After the chain had issued 25,000 cards, it decided to replace the paper cards with plastic ones. When the new cards were ready, they were mailed out with a letter thanking the patron for his or her business. There was no offer or discount connected with the plastic card just a simple replacement. The results were dramatic. In the week before the cards were sent out, these customers visited the chain 1050 times. During the subsequent 13 weeks, this same group of patrons visited the chain an average of 1400 times per week. Sales to these customers increased by $12,000 per week, or $156,000 in total over the 13 weeks. The increased sales per dollar spent were $8.32.
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