Not so long ago, soon after the first anniversary of her first electronics showroom in a swanky Mumbai mall, Preeti Desai, Retail Head – IndiAdvance Comp. Ltd (Leaders in IT since 1970), had coffee with her good friend Raj, a direct marketing consultant.
“Sales for the first year have been OK yaar”, she yawned. “But …”
“Not really exciting?”
Preeti nodded,“What can I do to boost sales? Clearly, the best way is to speak to prospective customers directly. I was thinking of sending out post-cards to prospectives, but I have no list! Hey, you should know where I could buy a good list?”
Raj smiled, “I can tell you where to find a list that would probably work 200% better than any you can buy.”
“Oh? Where?”
“In your own office. Build a list of your own customers.”
Preeti put down her cup, stunned. “Really?”
“Of course you could always buy one”, Raj continued. “But did you know that
your typical retail customer is likely to give you a referral within 90 days after purchase if you remind him?
“In fact, it is proven that on average, 80% of increased sales come from existing customers!”
He added, “In the direct marketing world, we know that it is hugely more cost efficient to sell to an existing customer in the first 6 months after purchase than to sell to somebody new. So it would make good business sense to talk to your own customers before talking to prospects.”
Preeti was beginning to feel less sleepy. “Hmmm … that makes sense. Say you want something to eat? Treat’s on me.”
“Well OK, one cheese patty. You know this advice would normally cost you much more than the price of a patty or two?”
Preeti seemed too busy ordering to hear him. Raj chuckled.
“And here’s the kicker: once we know what your existing customers look like, we can do a much better job of locating, or even buying, other lists.
“Lists of prospects that look like existing customers generate strong response.
“For example, if you find that a large number of your customers live in Worli and Malabar Hill, mailing to prospects in those areas will probably generate a much better response as opposed to other neighborhoods. India Post or a courier company can distribute your post-cards to targeted households in specific areas for a pretty low cost.
“Wow!” said Preeti, “Now that’s a great targeted list. And it’s so simple – I’m sure it would deliver strong returns on marketing investment.” She whipped out a little diary and made a note.
“But you know,” she murmured as the cheese patty came, “Building a list could take time. There must be other ways to get lists quickly?”
“There are many good sources of names in the market, sure” answered Raj.
“Unaddressed mail is only one option. There are clubs in the city, telecom providers, magazine publishers, airlines, petroleum companies, online portals and trade and exhibition organizers and the list goes on..! These sources may allow you to rent their lists or ride in your communication message as an insert with their mail pieces.
“The list of lists goes on and on!”, Preeti joked, delightedly making her own list in her diary.
Raj continued, “But even with this wealth of lists out there, first look to build your own customer database. They will probably give you the best return on your investment.”
“Granted. But how to start building one’s own database of customers?” she asked.
“One quick start to building one’s own database of customers is, raffle off prizes …”
Raj answered. “Yes, offer attractive prizes in your neighborhood to shoppers! But first, you have to be very clear about why you want to build the list. Just because you want to send out a brochure, is not a good enough reason. A good reason could be, you want to give your customers special deals during Christmas. Or you may want to give them a store-warranty beyond the manufacturer’s warranty.
The objective for list building has to be win-win. The customer has to benefit by being on your list and you should in turn benefit. Only then will it make economic sense for you to build the list.”
“A customer gives her contact information only if she perceives a benefit!” summed up an excited Preeti.
“Your coffee’s getting cold,” said Raj.
“One cold coffee for the gentleman!” Preeti called to the waiter. Figuring that cold coffee actually went pretty well with cheese patty, Raj continued:
“A win-win objective not only ensures cooperation from the customer in list building, it also ensures list-hygiene. Did you know that 10% of urban residents move homes every year? In other words, ten percent of names on your lists will have changed their address and cannot receive your letters. They will tell you their new address only if they have a good reason to. Alternatively, the postal department extends an address-update service that may allow you to keep your list current, though this service is a little time-consuming and may not offer you all the updates you need.”
“Great!” said Preeti. “I’m going to have my manager ask every customer to give us his name and address! We’ll tell them this will allow us to mail them special deals. Then the manager can feed this info in at the cashier’s desk into MS Access, or similar software, to save time!”
“Take a little time upfront to design the database structure correctly,” said Raj.
This will allow you to capture additional unique identifiers to let you know how frequently a customer visits you and what her value to your business is.
- Asking for their phone number or email may allow you to quickly determine if this person has been with you before by comparing the email or number with your existing list.
- Email or SMS would be a quick way to get a simple message across to your customers economically.
- Adding date and amount of purchase against every visit record allows you to aggregate customer visit frequency and total purchases made in a given time using simple tools available in any database program like MS Access. In times of limited budgets, you can then send out mailers or communication to only your more frequent customers or high value purchasers.
- Also, you can choose to speak more often with recent visitors since customers are more likely respond to solicitations while they have their shop visit experience fresh in their minds.”
Preeti doodled in her pad thoughtfully. “Hmmm … list building is a lot more involved than I imagined. But wow, it’s also a lot more productive than I thought! I guess I will have to install operating procedures for my manager to update addresses and phone numbers for my customers”.
“Exactly,” said Raj. “Which is why it is important to use an experienced friend to help you build your database structure and processes. But as you yourself can see, the effort pays rich dividends in terms of efficiency and growth, and returns against your communication investments.”
“Oh absolutely,” said Preeti. And later, she applied the truism to her retail showrooms, with much profit.
