This chapter is a discussion of how we can use effective communication to create loyalty. We have discussed effective communication as a means to establish a relationship before we do business with our customers and we have discussed the use of effective communication while we are doing business with our customers. Now let's look at the use of effective communication after we have conclude a business transaction.
How we communicate after we conclude a business transaction has the greatest impact on the relationship we have with our customers. Many businesses are focused solely on the immediate sale. Once a sale is concluded, these businesses don't do anything to maintain contact with their customers. Any effort you expend in maintaining contact will be noticed because most businesses don't make any attempt.
Newsletters, flyers, e-mail, and personalized letters are great ways to continue communicating with your customers. In general terms, the purpose of your continuing communication is to reinforce and repeat your value proposition, offer assurance, and most importantly, demonstrate your customer's importance.
Thanking your customers is the single most powerful way to communicate with them. A thank you note is tangible evidence of the customer's importance. The best way to thank them is with a handwritten note. A handwritten thank you note may seem very simple, but it is the most appreciated communication you can give. As simple as a thank you note is, it is also one of the least used methods of communicating to today's customers and clients. A thank you e-mail is better than nothing, but if you really want to get your customer's attention, send them a handwritten thank you note through the mail. The cost of the card and postage will be returned to you many times over in increased customer loyalty.
Moro Restaurant in Wilmington, Delaware, is an upscale eatery. The restaurant sends its customers thank you notes. Management says that handwritten notes go to all of their patrons who fill out a customer service card inserted with the check. These thank you notes emphasize the customers' importance and encourage them to come back.
Thank you notes should not be reserved just for thanking customers for buying something. You can send notes to thank customers for stopping in, listening to your sales story, referring others to you, and for purchases they might have made in the past. The critical factor in using thank you notes successfully is to be sincere. Sincerely thank your prospects and clients for their consideration, purchases, and whatever else is appropriate.
Traditionally, Realtors, car dealerships, insurance agents, and other professional salespeople send thank you notes after the customer makes a major purchase. Many of these businesses send their customers a tin of gourmet cookies or a complimentary dinner at a good restaurant. This is great, but it is also somewhat expected. If a thank you note is all the customer receives at the time of a major purchase, it will seem automated and sent out of obligation rather than as a sincere thank you.
Recently, I was doing some work with an insurance company in Indianapolis. I met a woman who is a vice president for the company, and she told me about her car-buying experiences. She drives a substantial distance every year and buys a new car every two years. She told me the only car she ever considers buying is a Mercury. She said, "When I bought my first Mercury, I got thank you notes from the sales department, service department, and the family who owns the dealership. I was impressed. But then I got a call from the factory. People who work in the Mercury factory regularly call customers to thank them and ask for advice in how to improve their cars. Nobody has ever called me from a car factory. They call about once or twice a year. They really appreciate my business. I wouldn't consider any other car."
Sincerely thanking your customers is the best way to demonstrate their importance. They will repay you with their loyalty.
During my career I have used newsletters to communicate with my customers on a regular basis. At times, I have used monthly and weekly newsletters. More recently I have been using a monthly e-mail newsletter, or e-zine.
My newsletters include current loyalty best practices, items from various business journals that pertain to customer relational management and customer loyalty management, and a personal observation or story.
As a writer and speaker on the subject of customer loyalty, my value proposition is quite clear. I help my clients develop activities that support the five principles that create customer loyalty. The purpose of my newsletter is to reinforce and repeat my value proposition. In addition, I use my newsletter to thank my readers.
The personal observation or story portion of my newsletter is the part that specifically reinforces one of the five principles. The following is a story I included in a recent newsletter. I hope you find this particular story interesting because first it demonstrates how casual an article can be, and second, it demonstrates how a major company is effectively communicating with their customers.
Groucho Marx once said, "I wouldn't belong to a club that would have me as a member." I feel pretty much the same way. I don't count Sam's Discount Club or AAA as real clubs. I do belong to the Tennessee Squires. The Tennessee Squires is an organization that is run by the Jack Daniel's Distillery. There are no dues or membership costs. As a member, you are given I square inch of land in Lynchburg, Tennessee, the home of Jack Daniel's. Each piece of land is given a plot number. My land holdings in Tennessee can be summed up with the plot number f22455.
The Jack Daniel's Distillery publishes a beautiful calendar every year and sends one to each Tennessee Squire. The calendar depicts scenery from around Lynchburg and Moore County, Tennessee. The best part of being a Tennessee Squire is the letters they send out three or four times a year. The following is a recent letter that came from the Lynchburg and Moore County Chamber of Commerce.
Dear Mr. Lawfer
A "weighty" issue has come up that you need to be aware of. It concerns our town dog. You see, Lynchburg has always had at least one town dog. Fritz, a very personable Irish Setter, held the honor for many years.
After Fritz passed away, we went without a unique personality until the Cone Hound showed up. She earned her name by begging ice cream cones from tourists, and she's never been above snatching a cone from a hand held too low! The Cone Hound has become a fixture around here.
Well, the Cone Hound is getting quite plump, and now she's got the other dogs begging ice cream too. This was discussed at our last town meeting, and we agreed it's time to take action! It isn't their figures we're concerned about—it's their health. It will be hard to ignore those begging eyes, but for their own good we need to ask folks to stop feeding them ice cream. Help us keep our town dogs healthy.
One of the Squires' letters talked about an old tree that was near my property that had been struck by lightning. It seems there was a huge bee's nest in the tree and something had to be done. The letters are great fun. I really enjoy getting them.
Jack Daniel's Distillery makes bourbon. I'm not much of a bourbon drinker and my wife hardly ever drinks any spirits. A few weeks ago we were hosting a dinner party and I found myself at a liquor store stocking up on libations. I specifically needed bourbon, as we didn't have any for our guests.
The first thing I noticed was how much more Jack Daniel's cost than other bourbons. Old Gargle Puss cost about $15 for a bottle and Jack Daniel's cost about $23 for the same size bottle. I don't know that I was specifically thinking about the calendars and letters I had received from Jack Daniel's over the years, but I bought the bottle of Jack Daniel's bourbon. I'm not sure I can discern one bourbon from the other, but Jack Daniel's seemed to be the right brand to buy. After all, I am a Squire.
Now for an offer you may not be able to refuse: With the powers vested in me as a Tennessee Squire I can nominate other folks for Squirehood. If you'd like to become a Squire, send me an e-mail or give me a call.
After I sent this story with my newsletter, I got several calls and e-mails. Many of my readers enjoyed the story and wanted to become a Squire. I completed the nomination forms for these readers and submitted them to Jack Daniel's. Since then, they have become Tennessee Squires, and have received the plot number for their 1 square inch of land, calendars, and the very entertaining letters to keep them informed of their land holdings in Tennessee. Every contact they receive from Jack Daniel's is a small reminder of me and how important they are to me.
I don't have any insider information about the general success or effectiveness of Jack Daniel's Tennessee Squire campaign, but I know it works on me and the many people I have told.
As a writer I have kept an inventory of stories that I can use in my newsletters. You can do the same by saving articles from newspapers and magazines that may be of interest to your customers. Use the information from the articles to make your own story. I am not suggesting that you plagiarize or violate copyright laws. For example, your industry's publications announce a new trend in the marketplace. You can use this information in your newsletter by offering how you think this trend will affect your customers or your local marketplace.
Your newsletter should be informative and if possible entertaining, but most importantly, it must be pertinent to your business and your customers. Your newsletter can include stories about how your product or service is being used. You can include success stories or testimonials from your customers (make sure to get their permission). Human interest or biographical stories about you or your staff can be very powerful in helping your customers recognize your efforts as people doing business with people.
My client Dr. Hall is a pathologist and president of a mediumsized pathology lab in the Northwest. There are eight pathologists in Dr. Hall's group. These physicians are totally dependent on other doctors in their community for work. Family practices, dermatologists, and other physicians in the community use Dr. Hall's group for lab testing. The practice is nearly 15 years old and uses only the most up-to-date equipment and practices. Because of its location and competition, this group offers the quickest turnaround time on all lab studies. But while the community it operates in has grown, this pathology practice has seen little or no increase in revenue over the last few years.
My initial study of this practice revealed total ignorance of the principle people do business with people. These doctors were providing a superior service but spent no time developing relationships with the referring physician who were providing them with all their work. The referring physicians sent tissue samples to the pathology group and got lab reports back. The referring physicians knew these pathologist only by their group name, Pathology Associates.
I recommended that each of the pathologists make routine phone calls to thank referring physicians for their business. We also developed a quarterly newsletter that features biographical and current information on the pathologists in the group. This information helps their customers identify these doctors on a personal and professional basis. Their newsletter includes information on new testing and lab equipment. This information reinforces the group's value proposition. As their customers got more familiar with these doctors and their value proposition, the group began to develop relationships that have led to a dramatic increase in their revenues. Central to this increase is the powerful use of their newsletter.
The point is that you can use a newsletter to demonstrate value by reinforcing and repeating your value proposition or by crafting your newsletter to address any of the other five principles that create loyalty.
There are several publishing services that offer industry-specific newsletters that can be personalized for your business. These boilerplate newsletters will keep your name in front of your customers, but they will do little to effectively communicate your value proposition or demonstrate your customer's importance. Your unique newsletter, even if it is not professionally produced, will be much more effective in telling your story. Your customers will detect your personal touch and will respond with interest and an understanding of their importance.
Thank you notes, birthday cards, and all other correspondence with your customers are more effective and therefore more valuable when they are personalized. Customers recognize your short handwritten note wishing them a happy birthday or congratulations as your personal sentiments, an expression of interest in them. Cards that have been preprinted or that offer a discount on the customer's birthday are only seen as advertisements or promotions.
Notifying your existing customers of a sale, special promotion, or the availability of a product before the public is notified is more effective than a notice or advertisement to the general public. Your customers have already demonstrated a willingness to do business with you. They will feel special and appreciated when they are the first to be notified. They are more likely to tell their friends about this insider information than they are to mention a general public announcement.
Many businesses use notices and announcements to offer a special incentive to non-customers. This is the equivalent of telling your current customers that they are not as important as non-customers.
I use Comcast as my Internet service provider. The cable modem service costs about $50 per month. Every month or so I get a flyer in the mail from Comcast that announces a special offer of $19.95 per month for the first three months for new cable modem subscribers. These announcements encourage me to cancel my current subscription and start over as a new customer.
Several years ago, a major oil company offered a 5 per gallon discount to customers who paid in cash. This was during the period when it was popular for oil companies to issue their own credit cards. People who used the oil company's credit card were rewarded with the convenience of charging their gas purchases as an enticement for their loyalty. When the oil company offered cash-paying customers a discount, the customers using credit cards felt cheated. Many of these loyal customers chose to do business elsewhere—where they would be appreciated.
Most schemes that offer preferential treatment to new customers only attract customers who are willing to switch to any company that offers a lower price or a special promotion. Preferential treatment for loyal customers not only deepens loyalty, but also gives loyal customers something to talk about. Armed with better service, a better deal, recognition, or any clear value proposition, loyal customers are delighted to tell the world about your business. Every flyer, newsletter, or any other type of communication you send needs to tell the story of how and why your customers are special.
Comcast could entice new customers to their service by using testimonials from current customers. This would reinforce their value proposition to current subscribers while introducing new customers to the service. Every communication does not have to offer a special promotion. Keeping your customers and prospects aware of your unique value proposition is sufficient reason to send ongoing communications.
Automobile dealerships are notorious for continually promoting their businesses through special sales events. Their flyers and announcements usually mirror their radio and television advertisements. It seems every sale is the biggest sale they have ever had. They are always screaming that they are overstocked. The advertisement proclaims, "We are overstocked. We don't have space for all the new cars that are arriving daily!" Well, whose fault is that? They tell us, "We will sell all new cars for $1000 below invoice." What does that mean? Are they selling cars for $1000 less than what they paid for them? Don't these guys know how to run their business? "Drag it in. Push it in. We don't care what condition it's in. We'll give you $5000 for your old trade!" No wonder they're overstocked. Who's going to buy my old clunker for $5000? And on and on it goes.
The new car business is a multi-billion dollar industry. Despite my criticism, they sure do know how to sell cars. But do they know how to create loyalty? Do they effectively communicate to create loyalty?
Marketing and branding gurus rate the Saturn automobile as the second most valuable nameplate in the automotive industry. Saturn dealers don't have tent sales because they are overstocked. They don't lure customers with inflated claims. Instead, they invite their customers to picnics and homecomings at their Spring Hill, Tennessee, plant. Saturn sends a message of the "Saturn Family," a positive buying experience, and most importantly, a positive ownership experience. Saturn consistently sends a message of their unique value proposition and the importance of their customers. Loyalty is the reason the gurus rate Saturn the second most valuable brand. What message are you sending to your customers?
Rick is a Realtor in Daytona Beach, Florida. He specializes in listing and selling beachfront condominiums that are located in a one-block area. Rick sends his monthly newsletter to potential real estate customers and all the people that live in the one-block area where he sells real estate. Each newsletter has a list of all the properties that are for sale in that area. He is the listing agent on some of the properties while others are listed by other real estate agents. Each newsletter features a calendar of local events, a neighbor's favorite recipe, and a short biography of someone in the neighborhood. He does not offer any special enticements to list or buy property from him; however, he is the first person people call when they are considering a condominium in his territory. They know he cares about the neighborhood and is most familiar with the people and what is going on. His newsletter effectively communicates his value proposition, assurance, and the importance of his customers.
The point: Customers become loyal if you give them something to base their loyalty on. Your communications with your customers need to recognize their importance, thank them for their continuing loyalty, and reinforce your value proposition.
The frequency of newsletters, thank you notes, and other communications should be based on the amount of customer activity. A dry cleaner doesn't need to send a thank you note every time a customer drops off laundry. However, a calendar or semi-annual newsletter to customers would be quite appropriate. A Realtor, depending on sales activity, might consider a monthly or bi-monthly newsletter. Most retail stores can effectively communicate with their customers with a quarterly flyer or newsletter.
Remember the definition of a loyal customer? A loyal customer is a customer who does business with you on a repeat basis and is your advocate in their willingness to tell others about you. It's the second part of this definition: "…willing to tell others about you," that is also capitalized on through regular communications. A clever newsletter or incentive coupons delivered by your loyal customer to their friends and family is very powerful.
I distribute my current e-mail newsletter to 250 people. One of my clients resends my newsletter to more than 400 people on her distribution list. Another client resends the newsletter to more than 200 people. I am not sure what the total distribution is for my newsletter, but I know that I hear from new prospects every week that have been developed by my loyal customers.
Using effective communication to create loyalty is a continuum. We have discussed before we talk in terms of what we do to establish a relationship before we transact business. This is not something we do only once. It is important to establish or reestablish our relationship with our customers every time we meet with them. The object of our study is creating loyalty, which is repeat buying. Every meeting and every transaction are equally important, and are opportunities to further create and deepen loyalty. Establishing the relationship we have with our customers will affect every customer encounter and, therefore, every future encounter. Establishing a relationship before we talk reminds our customers of their importance. When we reestablish the relationship, we are telling our customer that today's meeting is a continuation of all our business dealings. We are telling our customer they are important because of the total relationship we have with them. Reestablishing the relationship before we talk defines and confirms even the smallest transaction as an integral part of the overall relationship you share.
Effective communication when we talk is a strategy for creating loyalty. I have described some specific techniques that you can use to lead your customers. More important than these techniques is the philosophy that offering leadership is a strategy. By knowing and understanding your customer, you are in a position to help them by means of your leadership. This leadership isn't something we do once and it's over. We should employ the strategy of leadership every time we talk with our customers. Continual leadership makes it clear that you are helping your customer. Without leadership, you are saying, "I don't know if this purchase is important to you, but it sure is important to me." Effectively communicating leadership when we talk creates loyalty.
Effectively communicating your value proposition, assurance, and the customer's importance after we talk is a process of encouraging your customer to buy from you again. This process, whether it is a regular newsletter, thank you note, or some other communication, invites and entices your customer to continue the relationship. When they accept your invitation and enticement, you are in a position to begin the sales cycle again by reestablishing the relationship before we talk.
Effectively communicating before we talk, when we talk, and after we talk perpetuates loyalty. Effective communication is a continuous process that brings your customers back to buy from you again and again and arms them with your message to share with everyone they know.