compelling case for the existence of a group of thought leaders who have a disproportionate power to persuade the masses.
A research study on customers’ attitudes toward innovative product concepts conducted in Canada, France, and North Africa classified roughly one-third of the population as innovators—those very open to new products and services. Two-thirds of the population was classified as imitators—those content with following the innovators.
In general, the research indicates that those most likely to try new ideas tend to have higher self-esteem, are better educated, and are more informed than the average customer. The good news, according to Keller and Berry, is that when you make an impression on influentials, they are prone to vigorously spread the word about your product’s virtues.
You have limited sales and marketing resources. If you’re not careful, you can use them up trying to sell to those who, frankly, no matter how hard you try, are not likely to purchase in the beginning. An important part of sales and marketing effectiveness is knowing when to stop chasing the prospect who asks lots of questions and uses lots of your energy yet is highly unlikely to buy in a reasonable amount of time.
PRACTICAL IDEAS
Focus on Whom Your Difference Means the Most To: Step back and consider what type of customer can realize the greatest benefit from your offering. Who will see your difference as the most Meaningful? Identify them and write them a one-page letter proclaiming the good news of how you can make a real difference for them.
Leverage Your Fanatics: All business categories have fanatics. In the case of technology, it’s user groups. With celebrities it’s fan clubs. With restaurants it’s their most frequent diners. Identify and then leverage this group by giving it the first opportunity to experience your newest product or service. Afterwards, seek its help in spreading the word.
Fuel Influentials’ Passion for Being Smarter: Influentials, fanatics, and other thought leaders have a natural passion for in-depth understanding. The masses are content with simple understandings of your technological wonder. Influentials love to be seen as smarter. Fuel this passion with detailed test results, technical schematics, and perspective on your development pedigree. Empowered with knowledge, influentials will spread the word to others.
Follow the Historical Thought-Leader Patterns: Research indicates that high-performing salespeople tend to focus their attention on those customers with the ability to influence others. The quickest way to identify the thought leaders among your existing or potential customers is to research when they bought the most recent big innovation in your category. Those who led the last time are the most likely to be the thought leaders with your new offering.
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SCIENTIFIC
ADVICE
FOR FAST PROFIT GROWTH, TARGET FIRST-TIME AND ONE-TIME CUSTOMERS
A common marketing strategy mistake is to focus all energy on loyal customers. Against conventional wisdom, research finds that on average, loyal customers actually pay a lower mean price than do first-time or one-time customers. Loyal customers often represent a healthy percentage of profits because of the volume of their purchasing. However, on a profit-margin basis, they are often the least profitable customers.
If you focus 80 to 90 percent of your energy on your loyal customers, the odds are you’ll lose sales and profits. To grow your business, you need to use a portfolio approach to marketing where you invest in the core as well as in helping short-term/one-time customers become loyal customers.
In most cases at least one-third of sales and profits come from non-loyal customers. This finding is confirmed by two separate studies.
The Scanner 9000, a data set of 9,804 brands that have been tracked by UPC numbers in grocery stores, mass merchants, and drug stores, found that 62 percent of the average brand’s customers and 34 percent of annual volume came from those who made only one purchase during the year.
A two-year tracking study of a mail-order catalog found that 47 percent of its customers and some 38 percent of its profits came from short-term, non-loyal customers.
NET: Not only is growing customers 2.8 times more important than growing loyalty (see Marketing Strategy Advice No. 9), new customers are often MORE PROFITABLE. And first-time customers are also the source of all future loyal customers.
Many short-term customers are mindless buyers; they’re attracted by a promotional offer or simply an impulse desire to try something else. Our challenge is to be sure they are aware of our Meaningful difference so that they fully notice and appreciate it, thus laying the basis for developing a Meaningful connection with our brand.
PRACTICAL IDEAS
Make It Easy for Customers to Impulse Purchase: Make purchasing for new customers as easy as possible. If you have a Web-based business, remove lengthy sign-in processes. If you offer a product or service, streamline paperwork and remove credit checks on small orders. The benefits in increased sales and profits will more than make up for the few losses from fraud.
Continually Test New Customer Segments: Dedicate a portion of your time and resources to discovering unexpected customer segments and business opportunities. When you do direct-mail programs, test new mailing lists. When you work a trade show, focus extra energy on those who don’t currently buy from you. Place your products in unexpected retail locations and track the resulting reactions.
Issue Direct Marketing Challenges: Overtly challenge non-buyers to give you a try. Communicate your advantages persuasively through side-by-side demonstrations and testimonials from customers who’ve recently switched to buying your brand.
Celebrate the Arrival of New Customers: Define special methods for handling new customers’ needs. Provide special instructions, guidance, and help with their “rookie” needs. Warmly welcome them to your brand and your people.
Create Special New Customer Follow-Up Systems: Have a defined follow-up process to learn your new customers’ satisfactions and dissatisfactions with your product or service experience. Overtly ask for another sale, and if it’s not appropriate at that time, define when in the future you should contact the customer again—then do it.
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SCIENTIFIC
ADVICE
STEALING YOUR COMPETITORS’ CUSTOMERS OFFERS A GREAT OPPORTUNITY IN HEAVILY PRICE-PROMOTED CATEGORIES
Just as occasional customers represent a significant amount of sales and profits, so too do your competitors’ customers. They can be shifted away from their current choice when provided with a Meaningful difference or when presented with an even easier and more mindless option: a discounted price.
Mathematical modeling was undertaken on the source of weekly sales increases for various brands of coffee among one hundred households over a two-year period. The results indicated that more than 84 percent of sales increases were due to brand switching (non-current customers switching to the promoted item), 14 percent from purchase acceleration (current customers repurchasing sooner than normal), and 2 percent from stockpiling (current customers buying more than normal at one time).
Clearly,
