I spoke recently about the notion of “Share of Customer” and I’d like to spend a little more time on the idea. I first heard of share of customer when I attended a seminar by Don Peppers and Martha Rogers, Ph. D. of the Peppers & Rogers Group. Their business stresses the importance of being customer focused and they invented the term 1to1 Marketing – a concept whereby you treat different customers differently.

Their main point is that your existing customers are the best route to improved sales. Existing customers don’t need to be convinced to do business with you like a new person or business. Thus it costs you less time and money to sell more of your products or services to them. When you do this, sell more to existing customers, you increase your share of their budget… you increase your share of customer.

Another concept that Don Peppers and Martha Rogers promote is that you treat different customers differently. Now, this isn’t to say that you give your traditional customer service to some and treat others poorly. It means that some of your customers are great customers, maybe they comprise the top 10 or 25% of your client list. Conversely there are customers that for whatever reason, maybe they buy infrequently or they require more time from you, are the opposite of your great customers. You may have only 5% of your client list in this category. Once you recognize that you have different classes of customers what Peppers & Rogers suggest is that you trim the bottom of your client list so that you can spend more time with the better customers. When you spend more time on them you can improve the attention you pay to their needs which will lead to improved sales and greater profits.

So how does this strategy improve sales? At the simplest level you are freeing yourself to spend more time with your remaining customers. This time can be spent studying their businesses and buying habits so you can suggest ways to optimize their use of your products or services. Another avenue you could follow is to study your overall sales and develop new bundles or products that are more valuable or useful to your existing customers.

We’re all in business for ourselves and our customers. The better we serve them, the better we’re able to take care of ourselves and our families.

How do you improve your business? That’s the eternal question isn’t it?

Classically there are three ways you can accomplish this goal; marketing, market share, and share of customer.

Marketing : means that you’re increasing the number of people that know about you and then increasing the number that will consider doing business with you. This ultimately means communicating with your “publics” in whatever way make sense for your business. This could be presenting at conventions, trade shows, or seminars dealing with your industry. Advertising in appropriate media such as magazines, television, or the web.

Market Share : Once you’ve stepped up your marketing efforts you next want to increase your conversion rate. Meaning you want to get more people to do business with you. This can be challenging if your products or service traditionally requires a long sales cycle to get a customer to sign off on a purchase. In this situation you must never allow your marketing efforts to slip. If your prospect list gets short for whatever reason, you must prepare your business for a slow recovery due to your long sales cycle.

Share of Customer : This option requires you to look at your business introspectively. You need to examine your products and services and your customer service (all it’s aspects) and consider what it takes to get your existing customers to do more business with you. This is important because these people already do business with you and are cheaper to maintain as opposed to the cost of gaining a new customer. Increasing your share of the customer’s budget may simply take asking a question to buy more. It may require you to analyze your sales data to see if there are bundling opportunities or other creative ways to make your products and/or services easier to buy. The end goal is to increase the total value of each sales transaction.

So how do you accomplish any or all of these tasks. Many companies can do it on their own. Sometimes though you need to bring in an external consultant who can look at your operations objectively. The biggest caveat with consultants is that many of them only recommend solutions and services that they provide. If you agree that what they’re offering will help your business, great. If however you think that there are other solutions for your situation raise that with the person(s) and see what they have to say. Your business is the most important thing – not theirs.

Business planning, specifically marketing and establishing pricing is an interesting task/challenge. I’ve worked with many clients where we toiled over competitive data, considered their positioning in the marketplace, and a host of other factors to determine how they should set their prices. Many times we establish a plan, execute and track it so that we can make intelligent modifications.

Below all of the planning and positioning is the core concept of how do you want to run your business? Put simply some business people believe in the volume model while others believe in the high margin model. Of course there is a middle ground where you increase your selling price and hopefully your profit margin as well while selling less product.

• Volume Model – Sell tons of product at a low price
• Blended Volume and Margin Model
• Margin Model – Sell few items at high profit margins

When it comes to products I tend to be a volume model person when possible. I believe in offering a valuable product or service to customers that is so compelling that high volumes are demanded and provided. In good and bad economies these products tend to survive.

What I’ve noticed lately is a trend by various marketers and Internet entrepreneurs to push people towards the margin model by increasing sales prices. Now profit margins are important. You want to maximize them as much as possible. What I have noticed is that this trend seems to be advocating that you increase your profit margin by inflating the value proposition of the product or service that you sell. They basically tell you to add a few things to your offering to make it seem “deluxe” and thus raise your price a multiple of the actual cost of the “embellishments.”

As we all know the economy is still a bit “rough.” While you might be able to increase your prices a little when you increase the actual value of what you’re selling… increasing prices over the addition of basically embellishments or fluff may actually do your business more harm than good. We all exist to serve our customers. If we damage that relationship by introducing things that don’t serve our customer’s needs they will take notice. If we do it long enough or often enough they will find other people to take their money.

Before you do anything “trendy” with your pricing or product mix really think about how your customers will react. Ask yourself, and be honest, how you would react if someone you are doing business with just raised their price(s) due to the addition of what could be considered an unnecessary embellishment?

Stan Timek

People like new things, sometimes we fall in love with the idea of “the new.” Not that there’s anything wrong or bad about new things… it’s just that society sometimes equates “new” with fun, exciting, and “good.”

Sometimes this is true. A new car (or a new-to-you car) can be fun and exciting. Depending on your sensibilities it can even be sexy! What about a new version of your web browser software? Is it sexy? Most likely not.

Now, when we talk about new marketing techniques or technologies new is something that you should approach cautiously. We evaluate new technologies on a continual basis and have a four-level ranking system to describe viability:

1. Good-to-Go
2. Tweak ‘n Go
3. Trackers
4. Filers

Good to Go products or services that are ready for use by your business today.
Tweak ‘n Go Items that can be used with just a little extra attention.
Trackers Products or services that we’d love to use a little bit in the future.
Filers These are not good enough to be used in your business or anyone else’s.

If you would like to try a technique or technology in marketing your company, try to fit it into one of these four categories. If it doesn’t fit into the first two, walk away fast. If you can’t figure out where it belongs… give us a call and we’ll help you determine the best course of action for your situation.

A testimonial is a written or verbal statement by an individual that speaks positively about your product or service. Testimonials are powerful marketing tools. It’s not always possible to get or use testimonials but if you can they tell prospects that other people have used your product or service and they like it. This simple statement by a person breaks down the barriers of resistance in your prospects. Testimonials give credibility to your sales statements.

How do you collect testimonials? It’s simple really. Look at your customer list and select a group of your best customers. Reach out to them and ask them to complete a customer satisfaction survey. Leave some space at the end for comments an be sure to ask them for permission to use their name and comments in future marketing materials.

Now that you have some testimonials how do you use them to your best advantage? Look for comments that speak about real benefits. Testimonials need to be believable. Have the comments focus on one benefit at a time. If a customer talks about three things, break the testimonial down into three. Simple comments are more believable. Try to keep the testimonials as natural sounding as possible and look for comment that are detailed in their explanation of why they like your business. Vague words of praise don’t ring true to the reader. Finally don’t forget to put in the customer’s name and location these are critical in validating the comment with your reader.

Now go out there, collect some comments from your customers, and increase your business using testimonials.