Beyond Ads: The importance of building relationships
In all businesses, relationships are important, but for those in the service industry, they are even more critical, since many competitors are capable of performing competently.
Compounding the competitive aspects of client relations and development is the crucial nature of each: If the 80/20 rule is considered valid (80 percent of revenue comes from 20 percent of clients), than each client that produces towards the 80 percent is worth 16 times those that do not. Here, an expensive branding campaign is of no use, and perhaps even a negative in client relations.
Guy Kawasaki, one of the original Apple employees responsible for marketing the Macintosh, warns, “Many companies waste millions of dollars trying to establish brands through advertising. …Brands are built on what people are saying about you, not what you are saying about yourself. People say good things about you when 1) you have a great product, and 2) you get people to spread the word about it.”
And, even with the Internet, branding campaigns and other advanced marketing techniques, the most effective and efficient way to get people to spread the word is through a personal relationship and impeccable service.
A study by the Direct Marketing Association found that when financial advisers did not contact their clients for a month, their propensity to invest with that firm declined by 10 percent. If there was a year with no contact, the “client” was as likely to patronize that firm as would someone who had never heard of that firm.
Equally important, one firm discovered that when it came to traditional marketing, such as investment seminars and economic outlook briefings, the results garnered through nontraditional events, such as a riverboat cruises and fly fishing outings, were dramatically superior for client development.
This is hardly surprising: A seminar is what you are saying about yourself, with a Power Point presentation, while at a nontraditional event you get to know the client better, which leads to better service and a satisfied customer, engendering repeat business and referrals.
Firms benefit from dedicating themselves to cultivating ties with clients, both potential and existing. One tactic here is the “backhand method.”
Scouring through blogs, annual reports, magazines, trade journals, etc., will reveal much information about clients, both the personnel and the company. From here, contact should be established through a note, always positive and never discussing business, unless raised by the other. This establishes a relationship through a mutual interest and praise. The relationship is further developed through the sharing of other articles of interest, proffering publications from those at the firm that are topical, and other actions such as inviting them to a nontraditional firm event, such as a wine tasting.
Choosing a type of nontraditional event is only limited by the imagination. Each firm has something special to offer based purely on its locale. A New York City firm could offer tickets to the theater. In Los Angeles, there could be an entertainment event. Events like these are always well-received, and they combine business with pleasure.
One of the most successful government relations events held by the American Bankers Association entailed bringing CEOs to Washington, D.C., and putting them on a bus that took them to Capitol Hill, where they spent the day, in pairs, meeting with congressional staffers (of which I was one).
By all reports, the CEOs had a great time for a variety of factors: they were away from the responsibilities of their offices; they had a great time the night before; and they spent the whole day talking about themselves and their companies.
An important thing to remember about clients who are high-ranking executives is that they are very social, as these very traits helped them ascend through the corporate hierarchy.
Effective client relations is not a function of dollars, rather that of dedication. A huge marketing budget can do severe damage, as money is wasted on foolish endeavors. But individual events tailored to meet the needs of the client are always more productive in furthering the relationships that lead to more referrals and more business.
Jonathan Yates of Stark is founder of Earned Media Unlimited, www.earnedmediaunlimited.com.