Speaking Directly: Priorities are top clients, top service

Notes from Nashville, Tennessee, site of the first Business-to-Business Database Marketing Conference.More than 500 people converged on Music City, USA, last week to learn how database marketing could improve the bottom line of their businesses.They got two clear messages.First, use database...

Notes from Nashville, Tennessee, site of the first Business-to-Business Database Marketing Conference.

More than 500 people converged on Music City, USA, last week to learn how database marketing could improve the bottom line of their businesses.

They got two clear messages.

First, use database marketing to slash front-line costs, and, second, identify priority customers and give them priority treatment.

Reduce costs

While the cost of a face-to-face sales call has increased steadily (to an estimated US$331), the importance of such sales visits has declined significantly, according to an Arthur Anderson study.

The study, which asked customers to rank the importance of several factors in the sales process, showed that, in 1970, ‘contact with an outside salesperson’ was their first priority.

But, in 1990, it had dropped to eighth, and contact with a ‘capable inside salesperson’ assumed first place.

It follows, therefore, that a change in the customers’ perception of the role of salespeople should be the driving force behind the deployment of a portion of the sales budget to other, less expensive but still efficient means of communications.

Not surprisingly, front line salespeople resist such change.

Vic Hunter of Hunter Business Direct noted that while salespeople have not changed much in the past 20 years, customers have – becoming much more knowledgable, demanding information and access to their suppliers when it is convenient for them (75% of all contacts between customers and vendors are initiated by the customer.)

Database marketing, Hunter contended, allows any company to either reduce the salesforce headcount, or freeze it with significantly higher (yet achievable) quotas.

‘I’d look for at least a 15% saving, after paying the costs associated with a database-driven program,’ he said.

Hunter pointed out the importance of involving customers in the process of deciding what information they will receive from a company, and in what form.

For instance, a single $331 sales visit could be replaced by about 14 telephone contacts or 66 mail contacts.

Thus, information that may be delivered now by the front-line salesforce could be sent by mail in the form of newsletters, new product announcements, annual reports, technical bulletins, reprints of articles, and so on.

If the customer agreed to getting information in this way, costs would be cut significantly while the volume of ‘value-based’ material being sent to the customer would increase.

This process actually increases customer retention rates and business volume from individual customers, according to Hunter.

Focus on retention

A second recurring theme is that of priority customers.

Knowing who your best customers are is important, but giving such customers priority service is essential to sustained profitability.

The tactics vary – from private 800 numbers to membership on a ‘customer council’ – but, the objective is always the same: to protect these important customers from defecting to a competitor.

An increase in the retention rate will always produce an increase in the bottom line, according to several speakers at this conference.

And, all customers should be encouraged to complain, since complaints that are promptly and properly resolved can increase the loyalty of that customer to that supplier.

A word of caution: do not encourage complaints if you are not prepared to deal with them.

More from this conference in the next column.

David Foley is a marketing consultant and an instructor in database marketing at York University in Toronto. He may be reached at (905) 940-8784; fax (905) 940-4785.