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  • The hidden cost of hammering your database

    Prospects are valuable. Ask any clued-up Sales Director and she’ll tell you it costs, £30 to get someone to call on the telephone, £70 to physically cross the threshold or £2.50 to look at your website.

    Those figures are just examples by the way, so while they may be largely representative of some businesses, they are different for every business and vary for a hundred reasons.

    Once converted from a browser to an ‘adopter’ (marketing speak for someone who buys something), that spend is returned from the margin of the sale along with a nice little profit.

    Sounds like a good idea then, find a prospect and convert them first into a browser and then through merchandising and the proper application of a sales process, convert them into an adopter and in so doing make a load of profit. Put that way it demonstrates the principle that all prospects possess an inherent value simply because they cost something but can pay it all back with bells on. Now then, where do we find all these yummy (and valuable) prospects?

    It’s not unusual for businesses to buy-in lists of prospective customers. Doing so can be expensive but – like all marketing when viewed coldly – is simply an investment. The idea is that a prospect costs say, £1, that one thousand prospects cost £1,000, that they close at 0.5% generating five sales and that those five sales net considerably more than the £1,000 spent on the prospects. That being the case, why wouldn’t everyone be doing it?

    Firstly because the results can be so wide-ranging; on one occasion the enquiries and sales pour in, the next; nothing! There are so many variables even the experts find it difficult to predict the likely results. Lord Leverhulme, chairman of Unilever said, “Half the money I spend on marketing is wasted.  I just don’t know which half.” I have heard this mantra from clever marketing folks many times since.

    If predicting the performance of ‘cold’ leads is difficult, it is much less so for the customers with whom a business has already engaged. They know the business and have already taken that first big step of doing business with it. The biggest challenge is converting a cold lead – one unknown to the business – into a customer (adopter). Once that major step has been accomplished, the science of turning a one-time customer into a regular shopper (the next step in the process) is, if not easy per se, at least easier.

    Marketing departments have both options; contacting cold leads, however acquired in the first place, and contacting customers already on the in-house database. They are both ‘numbers games’, but for the latter, the numbers tend to be rather better for obvious reasons.

    At least, they can be if they are treated properly, otherwise the benefit is only temporary.

    So attractive is the company’s database that some marketing functions find it irresistible, treating it the way some people treat a tube of Pringles or peanut M&Ms; returning to the source repeatedly and greedily until it’s given all it’s got, then pouting as if they’ve been short-changed. Family size indeed! Call that a serving? Pass me another crate…

    The customers are on the database because they once bought something, small or large, recently or absolutely eons ago. Unaware they are about to be contacted by the business they have varying levels of interest in the products and services of the company, ranging from entirely uninterested to utterly fascinated and with the vast majority sitting somewhere in between. Overlaid on this matrix is another, on which people range from having a very low tolerance to contact, to a very high one. Naturally, some of the people uninterested are also the ones who have a low level for being contacted (I don’t want anything and leave me alone), and the opposite is also true, but not always. There are customers with high levels of interest who do not wish to be contacted and those with none who are happy to browse endless mailshots and newsletters and respond to customer service surveys without griping. Even with just these two pairs of polarities, it’s a complex situation ensuring that some people to whom you send a solitary piece of mail will shred it in a fury of indignation, while others will happily browse your near-daily marketing materials ad nauseam.

    So, how to know what to send to whom?

    This is where your marketing gets clever, or at least it is where it should get clever. Market intelligence (a.k.a. knowing your customers) means you know what to send to whom, when to send it and how to word it and what form it should take. Charlotte likes SMS, but is okay with email too as long as it’s interesting. Dave reads the newsletter (Dennis doesn’t) but only if it’s printed as he deletes most of his email, Debbie prefers a call on the phone (leave a message, she never picks up), while Don, Daisy and Danielle all prefer a straight email, although in Daisy’s case, keep it brief and infrequent and Don has rubbish internet so can never see the pictures he gets sent.

    Get all this right and things work beautifully.

    “Too difficult!” cry most businesses, “We simply don’t know our customers that well!” (problem #1) and it’s too labour-intensive (problem #2).

    Telephone calls are highly effective for all sorts of obvious reasons but are labour intensive and require a skill-set frequently absent (or at least weak) from both marketing and sales functions (problem #3). SMS messages currently have a much higher level of being read by the recipient and in causing a response and yet some businesses don’t have a ready way of sending SMS messages. Recent customer research suggests a trending preference for printed newsletters rather than electronic ones and at the root of the psychology is a simple principle; people like to feel that the contact is for them personally, not that they have been lazily included on the fringes of a mass mail-out.

    But none of this matters to some businesses. What’s cheap? What’s easy? What hits a mass audience with one click?
    The answer is to blanket the database with generalised and very regular contacts, gradually alienating Danielle, Daisy (she went first), Don, Debbie, Dennis and Dave to the point where your correspondence has been redirected to ‘junk’ via their filters, they no longer pick up the phone, they bin your post unopened and in some cases have asked to be taken off the database. Only Charlotte remains, because, as you may have noticed, she’s the odd one out. In desperation and blind ignorance, the marketing department refuses to learn the lesson and goes out and buys a new list of prospects. This is not a bad idea as such, but given the way the prospects are bombarded with contacts, it won’t last long, it will be plundered and burned until a new one is needed.

    At the board meeting, the marketing director is asked why marketing costs are high while traffic remains low but she will redirect the thorny problem to the sales director who surely ought to be closing at a higher percentage and cite a single example of someone not being properly dealt with as proof of an epidemic of poor sales techniques. The sales director will question the quality of the leads and the chairman will jump in before eyes get scratched out.

    The hidden cost of marketing is not the £s it takes to perform the activity, but when the marketing is so general, the cost to the business is the inevitable alienation of another handful of otherwise valuable prospects. This shortcoming is SO much worse when those people historical buyers because it took a lot to convert them the first time and now they are gone, lost, wasted through indifference. They have been made into ex-customers.

    Pity the poor customer-contact function of the business, trying to do the near impossible in order to get all this right. And how typical of a management consultant to list the many problems but be light on solutions. So, what’s the answer?
    More customer information recorded and accessible to both sales and marketing functions. Efficient sales operations that convert leads and don’t ‘burn’ them the first time they encounter the prospect (plenty of those abusive fools around) and very cautious, bespoke and intelligent contact schedules which relate to the customer’s own preferences and best of all, fit within an agreed plan in which the customer has played a part.

    We are heading towards the third decade of the 21st century and some things have changed; the internet has become the biggest method of researching products, services and vendors, websites are uber-crucial and speed of everything, response, delivery and repair, are key performance indicators of a business, but some things haven’t changed at all. We are still susceptible to human contact, we like to find somewhere which mirrors are values and we like to feel important, valued and special.
    When it comes to interrogating the database to find more business, all the evidence is there, sales directors know it, salespeople know it, the marketing department knows it and ask the customers themselves and they’ll tell you very clearly;

    Treat me like I’m the only one.

    Less is more.

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Email: geoff@geofffitchett.com

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