Monday, April 18, 2011

Make Deposits with your Customers' Bank Accounts

Your intention is to run a profitable business, so it makes sense that each transaction you have with customers should be profitable, right? Well maybe, but here's where many businesses go wrong. If you think about the profitability of each transaction, the tendency is to scrimp on value while extracting a maximum price from the customer. But does that make them want to return? Are they going to be blown away with the quality and/or customer service? Do they feel compelled to tell their friends how impressed they are with your business? And most importantly, does it maximise the lifetime value of this customer? No, no, no, and NO!

It's about the Lifetime Value of the Customer

In almost all businesses, customers should be seen as an investment. Yes, they're the source of your income, but if you view your potential income over the next year (or even 5 years), then you'll easily see why you should forget about maximising the return on each transaction.

These types of surprise gifts are often more powerful than incentives as they show genuine care, and encourage the customer to feel favourably towards you and your business. Remember, the lifetime value of your customers comes from;
  • the average size of their order
  • the number of times per year they purchase from you
  • the number (and quality) of the people they refer to you
  • the length of time they remain loyal to you
But how? (Go out of your way to be nice)

Instead, do something your competition is too scared to do. According to, you should surprise your customers and make their day with something:

  • Free – it isn’t a surprise if you have to pay extra for it
  • Unexpected – surprises come out the blue without warning and without high expectations (they are not an incentive for doing something, they're a thank-you)
  • Exclusive – is your surprise a special gift for the customer that non-customers can’t get?
  • Relevant – your surprise should be a good match, companion, or accessory to the main purchase.
Go out of your way to find a reason to give your customer something extra. How about;
  • You are the nicest customer I've had today, please take this as a token of my appreciation.
  • I love helping parents/students/pensioners - here's a small gift.
  • Hey, you're the 50th customer of the week.
  • Thank you for being the first/last customer of the day.
  • Because it's your first time here, please take this to remind you to come back.
  • I know it's your birthday this week - please have this on us.
  • Thank you for trying us out, it means a lot to us.
But what can you give away? Something that means something to your customer - enough to make them remember you - without sending you broke. Some examples of surprise rewards could be;
  • Free shipping, delivery, gift wrapping etc
  • Vouchers for return visits to reward loyalty - e.g. 20% off on your next visit
  • Vouchers to give to a friend - invite a friend for free
  • Secret sales - for members/email subscribers only
  • Privileged information - for customers only (eg industry insights, fashion tips, secret recipes)
  • Thank you notes/calls/emails - done soon after the purchase, perhaps checking up to make sure everything is O.K
  • Christmas & birthday cards/small gifts (eg flowers, chocolates, movie tickets, book vouchers, bottle of wine, nice pen, dinner voucher, etc)
  • Surprise gifts tailored to individual customers. Watch this for an extreme example, but if you've got high-value customers, you probably should tailor some gifts specifically for them. It's not that hard to pick up on their hobbies and passions and find a gift that is relevant and hand-picked for them.
Harness the Power of Reciprocity

Social psychology tells us that it's human nature to respond to a positive action with another positive action. So make sure you leave your customers thinking that they owe you something - because you've gone out of your way or given then something extra. If you consistently give more than is expected, you'll be amazed at how customers will respond.

Go on, make an unconditional deposit with a few of your customers today.