We’ve talked a great deal about how understanding your customer makes it more likely that you’ll get conversions short term and longer term revenue from customers. The cost to keep existing customers is much lower than acquiring new ones and there is also a huge opportunity for cross-sell/up-sell to existing customers (that customer marketers such as myself can tell you is much easier than selling higher priced initial bundles to new buyers).
However, there is more value to having strong, long-term relationship, than just revenue. Being a strategic partner to existing customers means making your client’s priorities your own, the epitome of customer centricity. It means not pitching every product/service in your portfolio to the client. It means thinking about the client’s problems and how to fix them. For example, Harvard Business Review talks about how Applied Industrial Technologies takes partnership so seriously that they even trained delivery drivers to help improve customer operations in their effort to provide value to customers.
Many organizations doubt that this level of effort is worth it, though, and skip it as part of the transformations they do. In reality, however, there are many aspects of the vendor’s business that can benefit tremendously if the organization has a strong relationship with its customers. Let’s start with the most basic of additional value elements:
Customer Advocates Support New Sales
- References & Reviews – The most obvious (though, oddly, often still untapped) way to take advantage of strong relationships you’ve developed with customers is to use them as advocates for the product/service. Sellers often need to have reference accounts who potential buyers can speak to first hand before committing to a higher cost purchase. Reviews from satisfied customers also serve the same function on lower cost purchases (such as those on e-commerce sites).
- Highly Credible Content – Beyond commenting on your product/service or level of service in the Selection and Purchase stages of the buying cycle, customers who value their relationship with the vendor are also great sources of marketing materials for earlier stages. Examples include media or analyst interviews, case studies, and speaking engagements.
These each take more effort on the vendor and the client side than calling up a client and asking him to leave a product review or if he’s willing to talk to a potential buyer and spending a few minutes on the phone or at the keyboard. However, devoting someone, at least part of the time, to set them up results in content that has a great deal of credibility to potential buyers. After all, this is content directly from (or at least approved by, with case studies) a purchaser who believes it strongly enough to publicly put his organization’s name on the content.
- Referrals – In most businesses, for profit or not, referrals are a coveted source of new leads because data shows that people are four times more likely to buy when referred by a friend. And, to compound the value, consider that the lifetime value of these referred customers is 16% higher than other customers. Part of the reason for this value might be how positive the impression of you has to be for a customer to suggest you to a colleague without any promoting from you.
The underlying concept of an unsolicited referral also shows up when a contact who saw you as a strategic partner moves to a new employer and selects (or influences your selection) there. One organization I worked for was in such a hot industry that contacts at clients often changed jobs. When they did that, they often talked up our products so much at new employers that we had a built-in entry point at many more potential customers than we could have ever had if we’d just worked alone, without these strong individual relationships.
Look for part 2 of this post next week, where we’ll talk about other benefits of cultivating mutually beneficial, long-term customer relationships, such as how they can support implementation and support issues for other customers and how they can help with innovation.
In the meantime, comments are welcome, especially examples of how strong, mutually beneficial relationships with customers helped you sell to additional buyers.