Customer defection: the leaky pool nightmare

customer defectionMany years ago, I lived next door to a guy named Wayne. Wayne had a pool. It was his pride and joy.

Trouble was, Wayne’s pool leaked. Slowly and persistently. We knew where the water was going, because the area under my deck was muddy all the time. But we didn’t know where the leak was.

All Wayne could do was run a hose to the pool to constantly replenish the water that disappeared. His water bills were outrageous.

It’s almost funny, until you realize that if you run a business, you’re in the same situation as poor Wayne. Your customers are leaking away. Slowly and persistently.

You probably don’t know where the leak is. And the cost of replenishing your pool of customers is almost certainly more than you want to spend.

We’re talking about “customer defection.”

If you’re a typical service business, you’re losing 15 to 20 percent of your customers every year. And according to a study in Harvard Business Review, ” … customer defections have a surprisingly powerful impact on the bottom line. They can have more to do with a service company’s profits than scale, market share, unit costs, and many other factors usually associated with competitive advantage.”

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Getting response in a down economy

getting response in a down economyAll of us who work in the direct marketing industry have been affected by the economy.

In fact, the economy has affected pretty much everyone in advertising, publishing, or media.

So, last year, when the pain really started to set in, I decided to write a white paper to provide my take on the situation and provide some sound advice on dealing with it.

The results was Getting Response in a Down Economy: 4 Key Principles to Boost Your Direct Mail Profits in Today’s Difficult Market.

In just under five pages, I reveal the challenge of today’s market, what’s really happening out there, 6 key truths about your customers, the hidden opportunities of a down market, how to get your mind right, and the four key principles to improve response to your marketing efforts.

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Information Overload: 5 causes and 12 cures

information overloadI like to snack on cereal. And I buy a different brand every week.

However this personal indulgence comes at a price. When I enter the cereal isle, I’m faced with a wall of boxes vying for my attention, starbursts popping off every box, coupon dispensers flashing red, sales signs waving above my head, red and yellow price tags lining every shelf, a sea of promotional decals spattering the floor.

It’s information overload at its most intense.

I’m sure I don’t have to explain information overload. You experience it every day when you open three pounds of mail, flip through 1,000 TV channels, or dive into that teetering pile rising from your “in box.”

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Free shipping: Does it actually boost sales?

Offers are an essential part of direct marketing and are at the heart of direct response advertising.

And few offers these days are as popular as free shipping.

Free shipping is often recommended by direct marketing gurus as a way to boost orders, but does this offer really work? It depends on who you ask. It seems to work for some and not for others.

A client recently ask me about free shipping, saying that it was getting harder to make it profitable. I didn’t have the answer and had a hard time finding any good data on this, but Marketing wizard Ted Grigg came through and directed me to an article about informal research on free offers from F. Curtis Barry & Company.

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Santa’s secrets of marketing success

Santa ClausWho would you say is the greatest marketer in history? Some might suggest Henry Ford or Montgomery Ward. Others would point to Ray Kroc or even Bill Gates. But I would suggest another person, someone whose efforts surpass these giants.

His name is Santa Claus. And he operates the oldest and most successful toy and gift manufacturing and distribution business in the world. I’m sure you’ve heard of him. In fact, I’m sure that you were once a loyal customer. Virtually everyone is at one point or another, which just proves how successful he really is.

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Marketing to seniors: Interview with Senior Market Advisor

seniorsSome time ago, I did an interview with Senior Market Advisor, a publication that gives advice on selling insurance, annuities, and long-term care insurance to the senior market.

The interview focused on direct marketing techniques and I thought you might enjoy reading it.

What kind of message works best when you’re trying to get prospects to fill out the reply part of a mailer?

The reply is the moment of truth, and you don’t want people to have any doubts about what they’re asking for or getting into.

So briefly restate the offer and benefits. This can take the form of a “statement of acceptance.” If you think of direct mail as a dialog between a business and a consumer, then the reply is where the customer “speaks” back to the person who sent the package.

Your statement of acceptance should include an affirmation, benefit statement, request for the item, summary of the offer, sweeteners, and a guarantee.

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FTC cracks down on endorsements and testimonials

FTC Testimonial CrackdownTestimonials have been a powerful advertising tool for generations. But now the FTC is stepping in to rewrite the rules for how you can use testimonials and endorsements.

While I’m not clear on how this will shake out, the press release issued by the FTC doesn’t look pretty.

The guidelines will not only affect the testimonials used in ads, they will also affect consumers, experts, bloggers, organizations, and celebrities who endorse products.

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Direct Marketing Glossary

Do you know what a bingo card is? How about a buck slip. Or a bangtail? (Get your mind out of the gutter!)

These terms may sound mysterious, but they’re just part of the official language of direct marketing. That’s probably why one of my most bookmarked pages is the Glossary of Direct Marketing Terms.

Here are some of the most interesting terms from the glossary:

Bangtail – Return envelope with a reply form attached to the flap. The reply form tears off and is returned in the envelope. Also referred to as a “hot potato.”

Bingo Card – Reply card in a publication offering an easy means to request information from advertisers whose ads appear in the publication. Called a “bingo card” because it is often covered with numbers corresponding to offered information, making the card look similar to a card used to play bingo.

Buckslip – Small piece of paper inserted into a direct mail package to emphasize certain information.

Decoy – Name included in a mailing list to catch people who disregard the terms of the list rental agreement.

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30 Timeless Direct Marketing Principles

Bob StoneBob Stone has been called one of the founders of modern direct marketing. He had the ability to understand both the big picture of marketing and the finer details of selling tactics.

Here are 30 timeless direct marketing principles he discovered over the course of his long career:

1. All customers are not created equal. Give or take a few percentage points, 80 percent of repeat business for goods and services will come from 20 percent of your customer base.

2. The most important order you ever get from a customer is the second order. Why? Because a two-time buyer is at least twice as likely to buy again as a one-time buyer.

3. Maximizing direct mail success depends first upon the lists you use, second upon the offers you make, and third upon the copy and graphics you create.

4. If, on a given list, “hotline” names don’t work, the other list categories offer little opportunity for success.

5. Merge/purge names — those that appear on two or more lists — will outpull any single list from which these names have been extracted.

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Direct marketing extra credit reading list

I’ve been busy recently writing articles for everything other than this blog. So here’s a short reading list for a little direct marketing extra credit.

First, Melissa Data recently published The Ultimate Marketing Survival Guide for 2009. I wrote the lead article, “Direct mail remains the king of direct marketing.” Just in case you thought direct mail was dead or that tweeting is better than mailing, this article will disabuse you of that faulty assumption.

Next, there’s a fun little article over at Copyblogger titled The 3 Secret Persuasion Techniques Every Kid Knows. You parents will relate to this one. I don’t have children, but I know they’re often tuned into persuasion better than many adults.

Feeling a little burned out? Mary Jaksch asked me to submit some tips for Write to Done in a post titled 7 Easy Ways to Energize Your Creative Powers. If you’re a professional writer, you can’t just wait for the muse to drop by. You need a few techniques for flipping the switch on creativity when you need it.

Finally, there’s one of my regular columns for DM News, one of the most recent is Problem Solver: Is it smart for an online business to use direct mail? I discuss how you can’t let a particular medium dictate your marketing strategy and ways to use direct mail to build your online business.

This should keep you busy for a while.

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