Let me ask you…Are you sold out ? If you answered “No” well, Why Not? In the words of that great philosopher, Yogi Berra, “No one wants to go there anymore, it’s too crowded” Wouldn’t you like to be one of these places where, “No one wants to go”?
What is it about certain businesses that are sold out? |
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Think about the places you are aware of that are sold out on a regular basis. Maybe it’s a nightclub or a restaurant. Or perhaps a music concert or even a college course that is constantly oversubscribed.
What do these sold out examples have in common. But more importantly what do they have that you don’t have?
Let’s take a look at the sold out phenomena and see how it works. If you look carefully you’ll see they have some common factors:
First of all, the customer experience is extraordinary. It may be something extremely creative or something based on a theme such as Disneyland.
In other cases the experience is totally unique such as a hot musical group, or the great delivery style of a professor.
Other times the experience is created by a high level of service or uniqueness, or in the case of the Durgon Park restaurant in Boston, the experience is almost abusive service but great food. They have a two-hour waiting line.
The Common Thread
Anyway you look at it the common thread is that the customer is paying for some form of experience which creates a strong bond between the company and the customer. Interestingly enough the customer will continue to pay for this experience and will tell their friends they should experience it for themselves. They do this because they feel compelled to share their experience with others.
Industries such as the movie and the book industry live and die by this process. The up front marketing cost to launch a movie or book can be astronomical.
“The relationship dynamic between a customer and a business is a constantly changing process. “
Once the product is launched, the marketing budget is slashed to almost nothing. Success or failure is then left in the hands of the customers. If they liked the product and enjoyed the experience they will tell their friends. If they don’t, there is no marketing budget large enough to drive further sales to make the project profitable.
How do you fit into this up-front marketing process?
To find out, think about using my 3R’s of business development.
- 1.Repeat sales
2. Referrals
3. Relationship
The relationship dynamic between a customer and a business is a constantly changing process. For example, think about the changes that affect parenting or friendships or the relationship between a coach and an athlete.
Making the relationship a positive one should include these points. 1. The experience must meet or exceed expectations almost all of the time. This is usually defined by the customer as a strong value for the money paid,
2. The experience should be bilateral with communications flowing in both directions.
3. The experience needs to be refreshed regularly. Innovation, change, and improvement are a must. Next, we can classify the Consumer/Business relationship into several categories:
The Convenience Relationship
Your business is frequented and products are sold because your business is at the right place at the right time. To put it simply, you are convenient.
The Emotional Relationship
This purchase is usually driven by some motivating factor such as discounts, premiums, fear of loss or pain.
The Fulfillment RelationshipThis is usually the deeper relationship based on the fulfillment of the customer’s wants, needs and desires.
This relationship is an ever changing experience between the customer and the business. |
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If the relationship or the experience is one that the customer would rather forget they probably will not buy the product again. In the case of a restaurant they will not eat there anymore. In the case of a tire store they will buy tires elsewhere. And, of course, in the case of a club they will stop going there and may resign their membership or even try to void their contract.
Most businesses survive on repeat sales for a simple reason. The cost to attain the first purchase or simply make the initial sale, is usually front-end-loaded with advertising, discounts, value added and other enticements including commissions and administrative costs. Simply put, it costs money to get the customer through the front door the very first time.
The other issue is that many times a first purchase is an emotional purchase where the customer is simply responding to a sales pitch, a discounted offer or good advertising copy. It can even be the pleading of someone else to try it out.
It is the down-line sales, or as we call it repeat sales , that works for most businesses. Think about how much your oldest customer or member has paid for your product over the last five or 10 years.
How would you be doing now if all of your repeat sales disappeared and You had to survive on new sales only? This of course is the plight of the Paid-In-Full type membership club that has low renewals.
So we see that First Time membership buyers, for which the average club’s closing rate is about 60-70%, is mostly based on emotion. The satisfied repeat buyer continues to pay you and to re-buy your product because it is perceived as a strong value.
Thus:
First purchase = Emotional Based
Repeat sales = Value Based
This of course leads us to ask the questions:
How does your customer or member perceive the value of your club?
What is their experience ?
How is it different than the club down the street?
Each month every member you have is asking these same questions. Each month they are making a value judgment based on their entire quota of personal information and experience.
As professional advertisers and quick talking sales people have proven, it is fairly easy to make the first sale of almost any product. Often even inferior products can be sold if marketed effectively.
The problem of course is, if there is no delivery and the experience is poor, the repeat sales stop right in their tracks. And, of equal importance, referral sales never happen. As a matter of fact dissatisfied people will go out of their way to tell others not to buy a particular product or service.
Think about your own personal experiences. When someone has treated you right aren’t you eager to share the news?
It’s easy to understand you can’t bribe members — no matter how big the prize — to make referrals if they are unhappy with your club. Simply running a referral program does not guarantee success because your members must be happy with their experience at your club before they will tell others.
Turn Your Members Into Zealots
You can probably see a breakdown like this within your membership based on the following categories:
One Timers
One timers purchased a membership as a one-time-only buyer. They probably don’t tell anyone about your product for any number of reasons
Occasional Tellers
will spread the word only when asked or bribed in some fashion.
Volunteer Spokespersons
Creating Volunteer SpokespersonsYour goal as club owners, of course, is to provide the ‘knockdown drag out outstanding experience’ everyone needs to move as many people as possible into the volunteer spokesperson category. Your members should be the central focus of your business because only then will they become the central focus of your marketing program. Once you accomplish this mission you must then set up the process by which interested people can market to each other. If you look at the success of multi-level or network marketing you’ll find it simply is people talking to people. |
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