Posted by: Clayton Makepeace
September 25, 2006
Issue #62

Asking These Six Simple Questions Could Easily Multiply Your Profits

Dear Biddess-Builder …

By doze is ruddy.

By head hurts, by chest aches, by skull feels packed with cottod and by siduses are od fire …

… and so, to accommodate this confounded cold, this week’s issue is going to be short and sweet.

Here’s the “executive summary”: Treat your customers like gods.

I know; you’ve had it up to here with sermons on how “the customer is king”. In fact, you’re tempted to just nod your head and move on to the next e-mail in your inbox and hope I’ll write about something more novel next week.

Please don’t. Because it doesn’t matter whether you’re a business owner, marketing pro or copywriter – the stuff we’re about to talk about will be pure gold for you … IF you begin acting on it, beginning now.

The fact is, for all the head-nodding, the customer is NOT king to most companies today. He is, in reality, a mere afterthought – or worse: An inconvenience.

Sorry – but that’s worse than idiotic. It’s downright masochistic.

A buddy of mine who owns an ad agency
had just bagged a new client…

It was a national chain of auto parts stores – and being meticulous in his research, my friend’s first act was to spend a day hanging around the most profitable store in the chain.

As the manager – the chain’s superstar – proudly showed my pal his meticulous aisles of products, his high-impact point-of-purchase displays, his well-stocked warehouse and samples of his past advertising, the telephones in the place were ringing, unanswered, non-stop. My friend could hardly hear a word he said.

At the end of the day, my buddy thanked the manager for his time and said, “I’ll have my proposals to the head office in a month. In the meantime, I want you to do one thing for me.

“Beginning tomorrow morning, I want you to make sure that every incoming call is answered before the fourth ring. Then, call me in 30 days and tell me what happens.”

The manager agreed, and 30 days later, he called my buddy in amazement. “We just had the best month we’ve ever had,” he said. “The ONLY thing we did differently was we answered every call promptly – and sales are off the charts!”

Another buddy discovered his customers
were keeping his customer service reps
on the phone ‘way too long…

My friend’s customers – most of them quite elderly – would call on some pretense having to do with their order – and then ramble on and on, telling customer service reps their life stories and the most minute and mundane details of their day.

As a result, my friend was employing far more customer service reps per customer than his competitors – and, of course, paying through the nose in overhead.

Now, a bean counter in control of this kind of situation might have simply told his customer service reps to handle the necessary business and then get off the phone and on to the next call as quickly as possible.

But my friend is smarter than that.

My friend realizes that many of his elderly customers are starving for human contact. Calling his customer service line and chatting with a friendly person is the highlight of their day. And giving his customers that small joy both bonds them to his company and helps ensure they’ll return to his products – and his friendly customer service reps – over and over again.

In short, he realizes that the personal contact his customer service reps were providing is as much a part of his product as his product itself is!

And so, instead of doing the miserly, bean-counterish Scrooge thing, my friend hired MORE customer reps. And today, he encourages them to actually take more time with their customers: To celebrate little triumphs with them … commiserate in their complaints … even get to know them (and yes, even the names of their @#$%! cats!).

Result: His core customers are stuck to him like super-glue and wouldn’t dream of doing business with anyone else.

My 2005 Electra Glide committed suicide…

Last week, I told you about my new love: Ruby – my new 2007 Harley Davidson Screamin’ Eagle Ultra Classic Electra Glide. What I didn’t say was why I decided to buy a new bike at this particular time.

See, I loved my old orange and black scoot and I had seriously planned to be faithful to her to the end of time.

But on a three-day ride up to Indiana, she began to self-destruct. The valve seat in the front cylinder literally fell out of the head and down into the cylinder. With each beat of her heart, she slammed that valve seat up against the head and tore it to smithereens.

The shop bill for a new head was, well, impressive.

“Them’s the breaks,” I figured, and prepared The Redhead for $1,400-worth of bad news.

But before I paid the bill, some guy at Harley Davidson got smart. He checked his computer and discovered that I’ve purchased seven new Harleys since 1995 – and that this bike was their very top of the line – a $28,000 dreamboat.

… And so, even though my bike was no longer under warranty – and without my asking – he quietly had Harley pay the shop bill for me.

Wow – right?

It gets better: With things beginning to go wrong with the old bike, I figured it was time to get a new one.

Now, I could have bought any motorcycle I wanted. After all – my Harley had proven somewhat undependable (virtually unheard of since they kicked the AMC boys out). Maybe this time I’d try something different. A sleek Beemer, perhaps.

But Harley’s unsolicited help with that $1,400 shop bill made any other choice impossible for me.

And so, still aglow with the unexpected pampering Harley had just treated me to, I selected the company’s NEW top-of-the-line model – with a $35,000 price tag.

Moral: Harley’s gesture cost it a fraction of the $1,400 that shop bill would have cost me. It demonstrated that at Harley, I really am king … saved one of their best customers … and helped them make an immediate $35,000 sale – with many, many more to come!

My new EasyWriters™ Marketing Club
had its first monthly live event last week…

It was a webinar: Members logged onto a website, then called a toll-free number and listened and watched as I took them through a 56-slide PowerPoint presentation on the process of writing winning promotions for financial products.

I had promised members a one-hour live event with me each month. By the time we finished, we’d been online for more than twice that long: Two hours and ten minutes. And of course, the fee we pay the web conferencing company for each attendee was double what we budgeted.

And that’s nothing compared to the opportunity costs involved: When I’m working for my agency, Response Ink™, my consulting time goes for $3,000 and hour. It took me me three working days –24 full hours – to prepare for that event – plus a half-day for Martha to scan all the promotional examples I included in it!

Now why in the world would we put so much time, effort and opportunity cost into something like this?

Simple: In addition to being my friends – the “inner circle” of Total Package readers – EasyWriters™ members are gods to us.

Their membership dues let us continue publishing two world-class business-building e-letters each week … building a website packed with free tools to help you build your business … and inviting thousands more business owners, marketing pros, copywriters and designers to join us in these pages each week.

And so, every month, we sit around trying to figure out ways to blow their minds with membership benefits that go far beyond what they think they signed up for!

Way I figure it, doing less would be just plain dumb.

Creating first-time customers
is one of the costliest things
– and the riskiest –
any direct response business does.

Consider the costs involved in creating a new-subscriber acquisition piece for a health or investment newsletter and testing it to 100,000 prospects …

Item	Cost
Copy	$25,000 advance
Design:	$12,500
Printing, List Rental, Postage & Mailing:	$70,000
Total:	$107,500

Now, consider the fact that the publisher’s overhead isn’t even factored into this equation …

… Or that he’ll probably have to test two, three, even four or more new DM pieces before he hits upon a powerful new control.

… Or that he’s going to continue testing NEW DM pieces against his control every six weeks or so to make sure he’s not caught flat-footed when this promotion peters out!

Bottom line: All told, the publisher is probably risking $1 million or more a year just to make sure he has promotions to bring in new customers. And that’s for each publication in his stable!

Yeah, I know. That’s direct mail – the costliest medium there is. But even at the other end of the spectrum – on the ultra-cheap Internet – there are also very definite costs … and therefore risks … associated with acquiring leads and new customers.

Before a single new lead or customer is acquired, money must be spent to pay AdWords and pay-per-click costs, create and run banner ads, rent e-mail lists, write and design e-mail blasts, write and design landing pages – and more.

… And because there are no guarantees that any campaign will work efficiently, every test of each new campaign carries with it a very definite capital risk.

Making Secondary Sales to Existing Customers Is One of the Cheapest Things
– And The Lowest-Risk –
Direct Response Companies Do

Typically, response on promotions sent to existing customers is six to eight times higher (sometimes more) than promotions sent to cold prospects.

Average sale is substantially higher, too: Sometimes as much as two to three times higher.

And so, compared to the break-even Return on Investment most marketers get when creating new customers, ROI on promotions to existing customers is off the charts.

In short …

It’s ALL About Customer Lifetime Value!

It amazes me when I see companies that seem oblivious to this simple fact of life.

They risk alienating new customers with endless upsells on the initial inbound call, then utterly abandon them; failing to follow up with direct mail and e-mail promotions to those customers …

… Or they ship faulty, shoddy products that blatantly underdeliver on the benefit promises made in their customer acquisition promotions.

If they only knew how much money they’re leaving on the table, they’d turn over a new leaf in no time flat!

I mean – what would you rather have – a 50% net profit on one sale to one customer …

… Or SEVEN FULL YEARS of sales to each customer … making four to five or more sales to each every year … and, because there’s a cost involved in delivering world-class products and stellar customer service, settling for a slightly smaller net on each sale?

It’s a rhetorical question. We both know the answer.

So the Question of The Week is …

What can YOU do in the next five days
to begin treating customers like gods?

Some questions to ask yourself …

1. “Do my promotions tell the truth, the whole truth and NOTHING BUT the truth?” Ask any soft-offer marketer and he’ll tell you: Promotions that create unrealistic expectations for the product invariably result in lower pay-up on the back-end.

Hard-offer marketers know that over-the-top promises result in much higher cancellation rates and much lower response to secondary sales and renewals.

What can you do to narrow or better yet, eliminate the gap between your promotional promises and the reality of the benefits your product or service delivers … or even better yet: Deliver MORE than your promotion promises?

Could you, for example, add extra undavertised premiums to your welcome packages or product shipments?

Promise 12 issues of your newsletter a year, but include last month’s issue – a 13th – in your welcome kit … or schedule a timeless “Gala Bonus Issue” to hit new customers’ mailboxes two weeks after they come on board?

Maybe insert an unadvertised gift certificate offering a substantial “welcome aboard” discount on something your prospect wants?

Perhaps just send an unexpected free report or other inexpensive gift to every subscriber or customer before Thanksgiving “just because” you’re thankful for them?

2. “Do my promotions begin the bonding process with the new customers they create?” Do you position yourself or your spokesperson as an advocate who has a greater, higher vision for your prospect than he has for himself?

Do you demonstrate this by giving away valuable, actionable information or advice in your promotion?

What insights into your spokesman’s life can you give away that make him feel more human, more like the prospect in his harmless little foibles, loves and values, therefore creating a friendship right off the bat?

When selling newsletter subscriptions, I avoid saying things like “When you subscribe …” Instead, I say something like “When you join me in …” On the order form, instead of calling my product a “subscription,” I call it a membership.

What could you do to position this initial sale NOT as a sale, but as the beginning of a beautiful friendship?

3. “Does my product overdeliver on the benefit claims made in my promotion?” Goes without saying: If the product is faulty, fix it. If it can be improved, improve it.

Then, do this: Order a product from yourself, for yourself. Do it by phone so you get the live experience of dealing with the customer service rep. Throw up roadblocks.

I once called a client’s toll-free number and said I wanted a three-year subscription to his letter. “We don’t sell three year subscriptions,” they said. “Just one-year and two-year subscriptions.”

So I asked if I could buy a one-year subscription and a two-year subscription and have them run consecutively. That really pissed her off. “I’ve never heard of such a thing!” she said.

It was all I could do to resist crawling through the phone and slapping her silly.

So challenge the operator and take notes. Then, when the welcome kit or first shipment arrives, note how long it took to receive, then go into a room alone. Get yourself into the frame of mind of a new customer who has been anxiously checking his mailbox every day, hoping to get your product. Then open it.

How do you feel? What are your first impressions? Are you bowled over by the quality and quantity of what you see inside? Do you feel closer to the company and/or its spokesperson? Does the experience leave you looking forward to your next contact with the company?

Then, even if you answered “yes” to every question above, get your best people together and spend a day brainstorming how you can make that experience a truly memorable one – in a good way.

4. “Do my people go the extra mile to make customers feel like part of the family?” Time for some more fun. Try calling customer service. How many times does the phone ring before someone answers? Are you put on hold? (Scribble, scribble!)

Have a complaint. Be angry. Be insulting. Take copious notes.

Then call back with a gazillion questions. More notes.

Try telling the rep about your cat. Still more notes.

Then, call with a big complement. You guessed it – getting writer’s cramp yet?

Then, have a “come to Jesus meeting” with your reps and set them on the straight and narrow.

5. “Does each customer file-promotion contain a component that strengthens the bond with your customers?” I tell my clients that every promotion sent to existing customers must do two things: 1) It must, of course produce profits, and 2) It must make the customer feel greater allegiance and loyalty to the company and/or its spokesperson.

More importantly, no promotion should ever produce profits at the expense of the relationship we worked so hard to establish with our customers. When max short-term profits and max bonding go head to head, bonding must always win.

6. “Am I doing everything possible to retain customers that complain or cancel?” A client of mine spends $24 to generate each new customer. Does it make sense to spend less to keep one?

That $24 could buy a LOT of tender, loving care for an irritated or disappointed customer! It could easily cover an outbound telephone call, a Fed Ex package with a $10 “I’m so sorry!” gift enclosed – the sky’s the limit!

Take a look at the process canceling customers go through and brainstorm everything you can think of to keep them in the fold. Think outside the box.

How about a “Hell NO!” letter to canceling newsletter subscribers: “Hell NO, I won’t cancel your subscription – the help I have for you in coming months is far too crucial to you! I’ve already refunded your subscription – that’s one thing. But denying you the critical guidance in XYZ newsletter is another. So please accept the next three months with my complements …” You get three more months to win your disgruntled customer over.

OK. So dow, I’b goig back to bed. Hobe this helbs …

Yours for Bigger Winners, More Often,

Clayton Makepeace
Publisher & Editor
THE TOTAL PACKAGE

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No Comments »

1. Comment by Joan Huyser-Honig — June 7, 2007 @ 8:43 am

   Clayton,

   Wow, how do you manage to write so well even when you have a horrible cold?

   Thanks for another insightful piece with excellent examples…and get well soon!

   Joan