Extracting the Value of Your Customer Base

How many business models include the idea of getting additional revenue from customers, whether it's by cross-selling additional services, upselling, or just finding a way to use the customer database for additional revenue opportunities? It's a sound idea - if you have a relationship with a group of people and know something about them, you can use that. But tread lightly.

This morning I tried to sign up for an email list for a local arts organization. They are small and tend to fly under the radar and I often don't hear about their shows and event until they are over. So obviously signing up for their email list is smart; I'll know what they are doing before a show and can plan to go.

They're small, so they wisely decided to use a third-party service to manage the list; in this case, Topica. I've used Topica before. But I haven't had to sign up for anything in a long time.

I entered my email address in the form on the arts organization's web site and clicked submit. That took me to a Topica registration page where I had to supply more information. So far, so good.

The next screen was a selection of additional mailing lists I could opt into. I understand what Topica is doing; they provide free or cheap email services, and then supplement whatever income that generates with advertising opportunities in the form of sponsored lists. While you're signing up for the specific list that brought you there, you can also decide to get a newsletter for home office workers, small business, cat owners, amateur chefs, whatever.

I didn't want any of them so I clicked onto the next page, where I was asked if I wanted to find out about getting a degree at home. I clicked skip.

I found myself on another page, this one pitching home based businesses. I clicked skip.

The next page offered me something else. At that point it became a blur; I clicked skip. Another ad. I clicked skip. Another ad. I clicked skip.

At ad #15 I gave up and closed the browser window. Most people will accept a couple of ads like this as the price of getting something free. But there's a point where you become frustrated because the ads are keeping you from doing what you wanted to do: sign up for a specific list from a local organization. And you start to suspect that no matter what you do, you're going to start getting lots of spam.

I'm not sure whether I actually signed up for the list I wanted. I hope so. But I'm not curious enough to go back and look at the nightmarish Topica signup site again.

Net gain for Topica: Zero. And they're doing a disservice to the groups that use them for mailing lists. The director of the organization is an old colleague of mine; next time I see him, I'm making a point of suggesting that he put the list somewhere else. Somewhere that creates a good user experience and finds ways to monetize it, rather than the reverse.

Little Lessons

Sometimes you find great marketing from places you don't expect it - like small local businesses. These are people without marketing consultants (like me!), marketing budgets, or any previous experience as professional marketers. They're just smart businesspeople who instinctively understand the fundamentals of marketing: understanding the value they're offering a customer, how it makes them different, and articulating it.

I saw two of these here in Houston Heights this week.

One is our neighborhood hardware store. This isn't a great time for small hardware stores. Big chains like Home Depot and Lowe's are everywhere, and there's no way that a little store can compete with them on inventory or price. The big guys can buy in massive quantities, secure enormous spaces in highly visible locations, and run ads on national television and in the Sunday paper. How is little C&D Hardware, located off the main drag in our little Houston neighborhood, supposed to complete with the two superstores on the freeway nearby - especially in a town like Houston, where you have to get in your car and drive to go almost everywhere anyway? Why don't we just drive to the big stores?

Their sign says it all: "What You Need, Fast and Easy." Yes, everything I buy at C&D is available at the giant hardware stores, and it's probably a little cheaper. The difference is that I can pull up at C&D, park in the little lot within thirty feet of the door, and walk in and pick up a few items in minutes. If I can't find what I want, I can ask one of the friendly people who works there, and that person will actually know whether they've got what I need and where it is.

At Home Depot, I wander up and down endless aisles, trying to find things, and if I ask for help, I usually get a blank stare.

Now, C&D is not that different from any other neighborhood hardware store. But I'm impressed that they understand how they are different from Lowe's and put it out there on their sign. Come in here and it'll be fast and easy. Home Depot can't promise that.

This week I also had a new cleaning service come and clean my house. I am housecleaning-impaired. I hate it more than almost any task, so I react in the expected way: I avoid it. After a while my house becomes a nightmare of dust bunnies and cat hair, and even I can't stand it, so I clean. Halfway though I get incredibly tired of the whole thing, decide that the house has gone from embarrassing to barely acceptable, and stop.

I had a cleaning service, but they weren't very good, so I decided to go back to doing it myself. That worked wonderfully for about thirty hours. This week I surrendered, and the good folks at Maid in the Shade came to help me.

There are tons of companies that will clean your house in any large city. They all offer the same basic service: they come in, and they clean things. Hopefully they do it well. What's their customer value? Is it a clean house? No, not really; they make your life easier and they make you happier in your home. So note Maid in the Shade's tagline: "Making people happy since 1998."

That realy sums up my experience with them. I came into the house after their visit, and it was clean. No dust. No cat hair. Clean counters. Clean bathroom. I was incredibly happy, and this morning it feels good to be here in my home office working. They did an excellent job, and lived up to their tagline: they made me happy.

I make a point of looking for businesses that express their value in smart ways that differentiate themselves from their competitors. My gut tells me that these are businesses that understand their mission better than their competitors do, and therefore are more likely to leave me satisfied. That approach has been working well for me; it certainly works with respect to these two small Houston businesses.

What's your promise to your customers? What do you do for them? Is it clear in your company's name, your signage, your web site, your brochure? Figure out what the final result of your product or service is, and tell the world. Put it on your business card. Tell your customers what you can do for them in a way that matters to them and that's different from what your competitors say, and you'll reap the rewards.

Teach Your Vendors Well

Jumping from the corporate world into consulting can produce some interesting shifts of perspective. In the corporate world, we’ve all experienced those times when we’re under pressure from the boss and shift some of that pressure onto our vendors. If we’re good, we do it by saying, “I need your help!” If we’re not so good, we pretend we’re in control and focused even as we give vendors vague, confusing, or just plain impossible requirements and hope that they’ll either work magic, or we’ll get to blame them when we have to explain why things are not as they should be. Any competent professional knows that’s not an ideal way to work; when you experience it for the first time from a potential client, it’s quite an education.

I experienced one of those moments recently with a technology client. This client was not an experienced marketer, but did not know that. So along came the RFP with a confusing list of tactical requirements for marcomm and PR work. Important details were missing. The discussion had started with the idea that we’d provide strategic consulting services to help define the product set and lay out an overall marketing plan. Then a new deadline turned it into a three week fire drill to complete some simple communications work.

The RFP, with a deadline two business days ahead, was missing key information. We asked questions. We got more vague answers. We gave partial proposals for some of the items and scheduled a follow-up call to talk about others, at which we were told “I need this yesterday!”
This was a summary of the call that I provided to a colleague not in attendance.

1. I need it all today.
2. Why didn't you include printing for the piece even though I couldn’t give you a quantity?
3. You didn't quote a brochure. You told me that was the wrong approach. I agree! But it has to be a brochure.
4. You didn't quote the other printed piece - the one that wasn’t in the RFP. And I can’t explain to you what it actually is, but please quote it.
5. I need production costs for the graphics even though I've provided no detail on what the specifications. Oh, I guess I can send specs. I need it today though. Oh, and by the way, this is just to get a budget number approved, although everything must be produced in the next two weeks. So just give me something rough, that includes exact sizes and paper stock for the printed pieces.

After a brief kibbutz after that meeting, we reached a simple conclusion; we declined to quote on the project. Yes, we may have turned off a future revenue stream. However, I think we also eliminated a future headache stream. If we were hungrier, I guess we would have quoted. If we could have charged a lot - to cover the aggravation, rush, and the extra time we’d have to spend getting the client to focus and think things through - we would have quoted. But on top of all of the confusion and the looming deadline was constant push-back about our general rates, which we know are pretty competitive.

The client was in a crappy situation. But there are good and bad ways to handle those situations. A good one is to go to your vendors and consultants, be honest, and get their help. A bad one is to push the pressure down the line to them. Because for us, it’s not our job. We can work with other clients. If you’re going to push pressure down the line and try to cut costs too, at some point the vendor will decide that the profit isn’t worth it. There are other clients. There is time better spent finding those clients.

Interestly, the client told us that others had already provided quotes. Based on the RFP it’s very tough to imagine what they looked like. My guess is that this was a bluff, or others simply padded the quotes to cover the uncertainties. I’m not criticizing that; in fact, if there’s uncertainty than can add to your costs, you need to do that if you want to stay in business.

But the end result is the same: not optimal. The vendors are will either decide you’re a problem client to be ditched when someone better comes along, someone to make a lot of extra money from, or ideally both. Is that what you want?