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Insights
Gold Mining
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  • 15 Oct 2014

A few years ago I bought new furnishings and appliances from a large high profile retailer with branches across Australasia. The in-store experience was excellent with the staff taking considerable time to talk me through the various alternatives available. It wasn’t a short buying process. After a few visits and several changes of mind about colours, sizes, and models, the purchases were finally made with delivery taking place shortly thereafter. As one of the items was a heat pump, the retailer also had to send a staff member out to my home to assess the best installation option.

A significant investment of time and resource was invested in me as a new client. It should have marked the beginning of a beautiful relationship – but I’ve not heard from them since.

Whilst they didn’t collect much in the way of buyer behaviour information, they did have my name, address, credit worthiness, and of course the nature and value of my current purchases. In short, enough to be placed in a modest frequency customer call-back programme for up-sell and cross-sell purposes.

I’ve conducted numerous market research projects for a variety of clients across a range of industries. But be they large or small, it never ceases to amaze me how many companies don’t use the data they already have at their fingertips. In fairness, B2B businesses have vastly improved their game but many retailers have still not got the message that mass marketing has been superseded by mass customisation.

Contact or transactional data from past and present clients are nuggets of gold waiting to be mined. CRM programmes have become hugely sophisticated with increases in computing power enabling very specific and personalised messages to be sent.

Why are so many retailers that sell big ticket items not using the relational power at their fingertips? The lifetime value of me as a client (and many others like me) surely justifies that ongoing contact be a core part of their business processes.

I suggest a number of possible reasons for this buried data phenomenon.

1. A lack of understanding of Lifetime Value . A new TV used to be a once in 10 year purchase but increased consumerism and higher disposable incomes has seen the advent of a 2-4 year buying cycle. So it is worth the bother of the phone call to “introduce the latest model”.

2. A lack of understanding of the ‘cost of client’ acquisition. Businesses still tend to work in silos so sales and operational staff may view the cost of making the sale as the time they spend communicating in-store. But start to apportion costs for bricks and mortar, inventory, below and above the line marketing, purchasing, merchandising, systems, and managerial time, the total arrived at should scream that the hard won client be retained and nurtured above all else.

3. A fear of complaint. Many Kiwis still don’t bother to complain when a purchase breaks down after a couple of years. Calling the client does present an elevated risk of “something needing to be fixed”. In fact, recovering these clients is critical both in retaining their future business and their advocacy.

4. The tyranny of the urgent. Retailing, by its very nature, is both transactional and location based. Buyers are viewed as customers rather than clients. It seems easier to address the needs right in front of you than to go chasing after a previous ‘customer’ in the system. CRM protocols, systems, and training are a must here.

5. Having the systems but not the experts. It’s one thing having a state of the art CRM system but unless the expertise is in place to interrogate it, the data is likely to grow cobwebs. Rather than trying to make all sales staff database experts, investment in a labour resource to analyse and segment the data, and to generate daily leads, might be a more viable option.

6. A lack of ownership and reward. Unlike B2B, retail clients are seldom assigned account managers. Whoever is serving on the day of your first visit may not be the one who gets the sale on your subsequent visit. This absence of ownership and recognition can lead to a fragmented buying process and low motivation for follow-up.

7. Permission. Asking the client whilst making their initial purchase if they’re ok to be contacted from time to time, removes a major barrier to follow-up sales efforts.

In summary, look after new clients but treasure existing ones as there’s a lot more gold in those hills!

Author: Paul Pickering, Facilitator at David Forman