Increase Your Profits by Using the Loyalty Ladder
By Blaine S. Greenfield
"The competition out there is fierce," says one retailer. "It will surely kill us," says another. "And," a third chimes in, "we can't do anything about it."Strong sentiments, for sure, but they are not new. Nor are they unique to our town or state. In fact, I've been hearing them ever since I was a little kid--first from my grandfather and then from my dad.
Yet what impressed me about these individuals was the fact that they could moan and groan with the best of them, yet do something about it. What they did was take action and you can, too.
Best of all, taking such action will not require enormous amounts of your time. However, it will require at least some brainwork, for I contend that it is probable you will not be able to outspend your competition; instead, you're going to have to outhink it.
To do so, one thing I find helpful to keep in mind is a concept known as "The Loyalty Ladder." Think of this as a ladder with the following six rungs:
SUSPECTS are at the bottom of the ladder. They are everybody out there. Too many businesses spend far too much time going after this group of individuals. To reach them all, if that was even possible, you would have to spend inordinate amounts of money on advertising. Yet that's not to say you shouldn't ever attempt to go after suspects. In certain industries, it might even be profitable.
My favorite example involves Joe Girard, a famous car salesperson. He would go to football games and cheer with the rest of the crowd. Yet when everybody else rose and threw confetti, Girard would throw his business card. If you were within a 10-row radius of him, you couldn't help but get his card. This then resulted in sales after the fact, as people would be cleaning out their pockets and find Girard's card. Even though they might remember where or how they met him, they might think to themselves, "Gee, I'm still looking for that car to buy." Many of them did then buy their cars from him.
Moving up, there are next PROSPECTS. There's nothing wrong with these folks, though I would still not recommend spending a lot of time trying to reach them. These are all those who may be interested in buying . . . something . . . someday. (Not necessarily today!)
When I think of reaching prospects, I think of what Willie Sutton--an infamous bank robber--once said when asked why he robbed banks. He replied, "That's where the money is." Your prospects, in general, should certainly be those who have the money to buy your product or service. One way to find this out is to ask them a question. Whatever you do, please do not ask this one: "May I help you?" Granted, something like 98% of all retail salespeople ask it; however, all it does is give the customer the chance to say "no thank you, I'm just looking." Ask, instead, questions that help get you more information about the customer. For example, "Have you seen our new line of shirts?" If the answer is "no," you can show them; even if the answer is "yes," you can follow-up with a statement such as "then let me show you our new ties which are on sale."
I prefer spending most of my time attempting to reach SHOPPERS, anybody who visits your business at least once, and those on the higher rungs. There's nothing wrong with reaching shoppers; unfortunately, they too often just visit you. What you need to do is get them to buy from you.
Here's one approach I heard about recently while speaking at a swimming pool convention. Anybody who came into this particular pool retailer received a half gallon of ice cream. Think about it. If I give you a half gallon of ice cream, you can only do one of two things with it. You can ask for a spoon and pig out on the spot. Or you can take it home with you, and that's what I want you to do. That way, you're not going to shop the competition because you have to go home to freeze the ice cream. Besides, it might be too hot or too cold to go out again, and I'm such a nice guy that if you return to my store tomorrow, I'll give you even more ice cream.
CUSTOMERS are those who buy something from your business. That's nothing to complain about, but it is only a one-time purchase. The key is to get them coming back.
Yet in the interim, it is nice to recognize them by saying "thanks." One real estate firm does something nice, in my opinion, by taking a picture of the family who makes the house purchase. Before the beginning of the new year, that family is sent a calendar with--you've got it!--their picture on the calendar. What I particularly like about this item is that you can get the customers to contact you, year after year, by simply putting the following statement on the back of the calendar: "To receive your refill, please give us a call."
Those who regularly shop your business are CLIENTS. They're certainly worthwhile folks to have around, as they will also buy everything you have to sell.
I like sending my clients gifts, every so often, but l like to make them unexpected; i.e., I don't send them when everybody else sends them. (The Christmas-Chanukah season is a waste, in my opinion, in that you won't stand out. A better time: On any day when your business is slow. Call it your anniversary. Or National Customer Appreciation Day. The name doesn't matter; the thought does.) One of my favorite examples: A temporary help firm used to give out flags on Flag Day. You couldn't help displaying the flag on your desk.
Lastly, there are my favorites and the best for you to spend most of your time reaching: ADVOCATES. These folks, bless 'em, tell everybody how great you are.
I don't even call them advocates; I call them friends. And they become just that. There are many ways to reach such individuals, yet the one approach I find most effective is what I had a client recently do--give customers everything they're entitled to . . . plus a little bit more. This person ran a pizza shop. He delivered pizza pies just like everybody else does. But when it came time to pay, the delivery person would excuse himself or herself to run back to the truck to get something else. That would typically be some zepolli, a fried donut-type item covered with powdered sugar. The gesture never failed to gain a positive reaction.
For more information on cultivating advocates, and so I can also give you a little bit more, please visit the web site of the New Jersey Small Business Development Center http://www.nj.com/marketing.html. You'll see an article there that I wrote for Mercer County Community College's Business Review, "Increase Your Business by 10% or More!" It works, as does keeping "The Loyalty Ladder" in mind as you think about your competition.
Blaine S. Greenfield heads his own East Windsor-based consulting firm, in which he works with small- and mid-sized businesses. He also chairs the statewide Advisory Board for the New Jersey Small Business Development Center network. He can be reached via e-mail, [email protected], or snail mail, Blaine Greenfield, 283 Bolton Road, East Windsor, NJ 08520. His phone number is 609-443-3781, and his fax number is 609-426-0246
Read more articles.
By Blaine S. Greenfield
"The competition out there is fierce," says one retailer. "It will surely kill us," says another. "And," a third chimes in, "we can't do anything about it."Strong sentiments, for sure, but they are not new. Nor are they unique to our town or state. In fact, I've been hearing them ever since I was a little kid--first from my grandfather and then from my dad.
Yet what impressed me about these individuals was the fact that they could moan and groan with the best of them, yet do something about it. What they did was take action and you can, too.
Best of all, taking such action will not require enormous amounts of your time. However, it will require at least some brainwork, for I contend that it is probable you will not be able to outspend your competition; instead, you're going to have to outhink it.
To do so, one thing I find helpful to keep in mind is a concept known as "The Loyalty Ladder." Think of this as a ladder with the following six rungs:
SUSPECTS are at the bottom of the ladder. They are everybody out there. Too many businesses spend far too much time going after this group of individuals. To reach them all, if that was even possible, you would have to spend inordinate amounts of money on advertising. Yet that's not to say you shouldn't ever attempt to go after suspects. In certain industries, it might even be profitable.
My favorite example involves Joe Girard, a famous car salesperson. He would go to football games and cheer with the rest of the crowd. Yet when everybody else rose and threw confetti, Girard would throw his business card. If you were within a 10-row radius of him, you couldn't help but get his card. This then resulted in sales after the fact, as people would be cleaning out their pockets and find Girard's card. Even though they might remember where or how they met him, they might think to themselves, "Gee, I'm still looking for that car to buy." Many of them did then buy their cars from him.
Moving up, there are next PROSPECTS. There's nothing wrong with these folks, though I would still not recommend spending a lot of time trying to reach them. These are all those who may be interested in buying . . . something . . . someday. (Not necessarily today!)
When I think of reaching prospects, I think of what Willie Sutton--an infamous bank robber--once said when asked why he robbed banks. He replied, "That's where the money is." Your prospects, in general, should certainly be those who have the money to buy your product or service. One way to find this out is to ask them a question. Whatever you do, please do not ask this one: "May I help you?" Granted, something like 98% of all retail salespeople ask it; however, all it does is give the customer the chance to say "no thank you, I'm just looking." Ask, instead, questions that help get you more information about the customer. For example, "Have you seen our new line of shirts?" If the answer is "no," you can show them; even if the answer is "yes," you can follow-up with a statement such as "then let me show you our new ties which are on sale."
I prefer spending most of my time attempting to reach SHOPPERS, anybody who visits your business at least once, and those on the higher rungs. There's nothing wrong with reaching shoppers; unfortunately, they too often just visit you. What you need to do is get them to buy from you.
Here's one approach I heard about recently while speaking at a swimming pool convention. Anybody who came into this particular pool retailer received a half gallon of ice cream. Think about it. If I give you a half gallon of ice cream, you can only do one of two things with it. You can ask for a spoon and pig out on the spot. Or you can take it home with you, and that's what I want you to do. That way, you're not going to shop the competition because you have to go home to freeze the ice cream. Besides, it might be too hot or too cold to go out again, and I'm such a nice guy that if you return to my store tomorrow, I'll give you even more ice cream.
CUSTOMERS are those who buy something from your business. That's nothing to complain about, but it is only a one-time purchase. The key is to get them coming back.
Yet in the interim, it is nice to recognize them by saying "thanks." One real estate firm does something nice, in my opinion, by taking a picture of the family who makes the house purchase. Before the beginning of the new year, that family is sent a calendar with--you've got it!--their picture on the calendar. What I particularly like about this item is that you can get the customers to contact you, year after year, by simply putting the following statement on the back of the calendar: "To receive your refill, please give us a call."
Those who regularly shop your business are CLIENTS. They're certainly worthwhile folks to have around, as they will also buy everything you have to sell.
I like sending my clients gifts, every so often, but l like to make them unexpected; i.e., I don't send them when everybody else sends them. (The Christmas-Chanukah season is a waste, in my opinion, in that you won't stand out. A better time: On any day when your business is slow. Call it your anniversary. Or National Customer Appreciation Day. The name doesn't matter; the thought does.) One of my favorite examples: A temporary help firm used to give out flags on Flag Day. You couldn't help displaying the flag on your desk.
Lastly, there are my favorites and the best for you to spend most of your time reaching: ADVOCATES. These folks, bless 'em, tell everybody how great you are.
I don't even call them advocates; I call them friends. And they become just that. There are many ways to reach such individuals, yet the one approach I find most effective is what I had a client recently do--give customers everything they're entitled to . . . plus a little bit more. This person ran a pizza shop. He delivered pizza pies just like everybody else does. But when it came time to pay, the delivery person would excuse himself or herself to run back to the truck to get something else. That would typically be some zepolli, a fried donut-type item covered with powdered sugar. The gesture never failed to gain a positive reaction.
For more information on cultivating advocates, and so I can also give you a little bit more, please visit the web site of the New Jersey Small Business Development Center http://www.nj.com/marketing.html. You'll see an article there that I wrote for Mercer County Community College's Business Review, "Increase Your Business by 10% or More!" It works, as does keeping "The Loyalty Ladder" in mind as you think about your competition.
Blaine S. Greenfield heads his own East Windsor-based consulting firm, in which he works with small- and mid-sized businesses. He also chairs the statewide Advisory Board for the New Jersey Small Business Development Center network. He can be reached via e-mail, [email protected], or snail mail, Blaine Greenfield, 283 Bolton Road, East Windsor, NJ 08520. His phone number is 609-443-3781, and his fax number is 609-426-0246
Read more articles.