In Business, Relationships Matter

by francine Hardaway on January 24, 2012

As the dawn of an era known by early adopters as social business begins to spread its  colors across the business horizon, a chorus of voices is already raised in praise of new tools for promoting customer relationships. But I believe relationships are not built by tools, no matter how helpful they are. They’re built by attitudes. And by what we prioritize. If we prioritize business growth, we are almost always prioritizing transactions rather than relationships.We compensate sales teams much more highly than we compensate customer service teams. Or marketing teams. This is wrong. Anyone can bring in a customer once. But what does it take to KEEP that customer and unlock his value?


You can’t really talk about the lifetime value of a customer unless you have reached my age and have seen your customers stay with you for thirty years, through several different businesses of theirs and mine, through thick and thin. And until you are working with their sons and daughters, who are also your customers. The transactions have faded in memory, but the relationships remain. That’s “social business.”



To start thinking about social business, we must remember when we went to the bazaar with our goods, we put them in the hands of our customers, collected other goods or currency in return, and went home. The next week, it was rinse and repeat, often with the same customer. After a while, we got to know her, and inquired politely about her family, her health, her cows. But some customers we never knew. They came and went, and business with them was transactional — limited to a single interaction. They never seemed very important, because we never saw them again.


Time passes. The bazaar becomes a store, the store becomes virtual, the produces and services and customers multiply. The enterprise develops sophisticated CRM (Customer Relationship Management) software that alert sales and marketing teams to send  birthday cards to customers. Starbucks designs its Gold Rewards program — a fully automated buy-fifteen-and-get-one-free program that sends a free drink coupon to loyal customers.


But 98% of businesses are not the enterprise; they’re small businesses. Their owners are not tech savvy, and even if they are, they have no time to spend learning CRM tools. They realize they need something, so they adopt Constant Contact. Once they get that list entered, they feel home-free. They can mail a newsletter to it every month, or a sale notice every week. So much for  existing customers. Most businesses take for granted that they will come back, especially if they have that “drip marketing” program all set up to run automatically. They concentrate on building  business by getting NEW customers.


By far the lion’s share of marketing budgets goes to customer acquisition rather than to customer retention. This is wrong. It ignores several truths about customers that all marketers need to work on elevating to their front burners.


1)Customers need to understand what they are buying, and who they are buying it from. That’s how the bazaar came into existence. In 2006, I went to a cow auction in Bihar, India. All the cows for sale from the area  were on a dusty field, accompanied by their owners. You could see the sick looking cows, and the healthy ones. The cow auction aggregated the available merchandise so a farmer without much time to spare could make a choice. He could bargain.


2)Customers buy what they need. They don’t buy a cow unless their old cow died, or they are planning to expand. When a customer shows up at the auction, he’s “in the market.” You can’t bring a farmer who doesn’t need a cow to the cow auction.


3)Good customers educate themselves. What makes a good cow? How did you set the price on your cow? A customer will ask to educate himself. He will go from cow to cow to compare. He may need help evaluating things he cannot see (what is the lineage of this cow?).


4)Product and service comparisons are always available in the marketplace. It’s difficult to disguise a sick cow at a cow auction. Don’t bring your sick cow.


5)Your customer would probably rather not have to buy a cow. But his old cow died, so he has to. He trusts you to sell him a healthy cow.


6)If you don’t do that, if the cow dies next week, he will come with his relatives to your village and demand his money back. He will never buy from you again.


7) If the cow you sell him makes him wealthy because he has created an antibiotic from its urine (yes, that’s how it all starts), he will come back and buy another cow.


8) You won’t have to bring your cow to the auction to find this customer: when he needs hie next cow, he will find you.


9) Your family and his family will become interdependent, and his descendants may buy their cows from your descendants. He does not know the term “lifetime value of a customer.” He has no drip marketing tools. He only has his truth, his honor, his healthy cow that he displays and about which he doesn’t lie.


OK, so it’s a long story. But here are the takeaways:


1) Small business marketing tools don’t get or keep customers: business attitudes do

2)All business is based on relationships, yet in the industrial economy we focused on transactions

3)In the new economy we are headed back to relationships.

4)There is such a thing as the lifetime value of a customer.

5)And that’s they only metric that matters.












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