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The 74-Cent Customer Retention Plan

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The buzzword for this week is Customer Retention Management. Last week it was Brand Loyalty. Do the new guys on the marketing block think nobody knew how to keep a customer until now?

You want to see a good example of CRM? Take a look at L.L. Bean. They’ve been around forever and they keep their customers–for life–without all the new buzzwords.

Shamefully, most big companies today actually do need to study CRM because they don’t know anything about keeping customers happy. Just take a look at Sprint, or AT&T, or any of the other big phone companies. You get their worst prices if you’re a loyal, long-term customer. Exactly what were those connivers thinking to concoct that plan? And when you call them with a quick question, you get 20 minutes of voicemail. Finally, they blow you off to their Web sites so you can spend four hours looking for something it would have taken them 30 seconds to tell you on the phone. (I wonder if there’s a secret publication called Anti-CRM Magazine that only the phone companies receive. And credit card companies. And banks. And…)

Common Sense About Keeping Customers

The phone companies lose so many existing customers that they have to continually market to prospective customers to stay ahead. I guess they haven’t figured out that it costs about one-fifth as much to keep a current customer as it costs to acquire a new one.

If you ask me, and some firms do, the way to keep customers is with good old-fashioned honesty, and some good old-fashioned service.

You build a brand by providing good value: first-quality products and services.

You build customer retention by asking customers whether there’s anything else you can do for them–and then doing it.

You create loyalty by thanking them–sincerely–when they buy something from you.

And of course you make sure a real, live person answers the phone when it rings and you don’t spew any garbage about “to give you better service this phone call is being recorded.”

Do all this consistently and Presto! Customer Retention. You’ve developed a customer who keeps buying your goods and services. Poof! Brand Loyalty: a customer who keeps coming back and looks for your brand. And Bingo! Company Loyalty: you get a customer who tells friends about your firm.

Here’s the Plan

What mechanism is the easiest to create and use for accomplishing all these things? It’s a letter.

A letter is the most effective single sheet of paper in direct marketing. It has been since I started my direct marketing career way back in, well, never you mind; and it will be long after this article appears, long after Jay Leno goes off the air, and long after The Simpsons shows its final episode. Well, maybe not The Simpsons.

What makes a letter such a powerful tool? And how do you create one

that lives up to its potential power? It’s easy. I’ll show you.

Sincerely Saying Thanks

In direct marketing, a letter isn’t a real letter. A real letter is something you write to Aunt Bertha at Thanksgiving so you’ll get a nice gift from her at Christmas. In direct marketing, when a letter is sent to 10 or 10,000 people, it is a one-page, highly stylized ad designed to look like a letter. Any arguments?

To create this sort of letter, the first thing you do is write down your objective. What do you want the letter to accomplish? If all goes perfectly according to plan, what will the immediate result be? That’s the objective; you now need to draft your whole letter around this statement.

And when the objective is keeping a customer? You want that letter to build loyalty, trust, and friendship. Yes. All rolled up in a single sheet of paper. It’s actually the easiest letter to create, because you don’t need to make the reader actually do anything. Just say thank you.

“Thanks for your past business–I appreciate it.”

Instead of trying to sell something, take a minute out–spend 37 cents on building a customer relationship. It’ll be the best 37 cents you’ll ever spend.

Let me ask you: When’s the last time you received a thank-you letter? That long ago, huh? No, I’m not talking about the preprinted junk card your accountant buys from a catalog and sends you each year at Christmas. I’m talking about a letter from a real person, that said your name right there, up at the top, without looking like a mail-merged mass message. And that continued, “Thanks, thanks so much for your business this past year–I appreciate it. ”

Call me old fashioned, but I still believe it’s a privilege to serve your customers. I’ll bet they could just go elsewhere to buy products like the ones you sell. But they don’t–they get them from you. When’s the last time you thanked them for that? That long ago, too, huh?

Do you know what other companies call your best customers? They call them valuable prospects.

With a single thank-you letter, you can encourage your best customers to do even more business with you, and feel better about doing it. Thanks for the business you give us–we appreciate it. We’re always ready to answer your questions and to assist you in any way we can, at any time. Thank you.

With two well-written and personal “Thanks for your business” letters a year, you can endear yourself to a customer for many years. You can plug that hole in the bottom of the customer bucket–you know, the one they keep falling out of. And that’s the best 74-cent customer retention plan I’ve ever heard of –plus you don’t need to read a fancy new magazine or learn any new buzzwords to implement it.

Jeffrey Dobkin, author of How to Market a Product for Under $500! and Uncommon Marketing Techniques, is a speaker and a specialist in direct response copywriting who also analyzes direct marketing packages, ads, catalogs, and campaigns. For free samples of his work, call 610/642-1000. For additional articles, visit www.dobkin.com.

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