Getting Customers to Come Back ... Again and Again HOW TO USE RELATIONSHIP MARKETING TO CREATE LOYAL CUSTOMERS by Grace Butland

Illustration by Jim Dandy

Bob Jones doesn't always remember important dates. So he is pleasantly surprised when his morning mail includes a personal note from Great Crafts Gallery reminding him that his wife, Sally, has a birthday coming up. The note invites him to stop by the gallery and select a gift that Sally will like. He dashes into the shop on his lunch hour; the sales associate points out several items that Sally has admired, and Bob makes his selection. The gift is beautifully wrapped, and Bob is on his way, with time left over to grab lunch. He's happy. The process was painless, and he knows he has a gift that Sally will love. He vows to do all future gift shopping at Great Crafts.

Bob has just experienced "relationship marketing."

As the term implies, relationship marketing is about building strong relationships with your customers. It is knowing what is important to key customers and using that knowledge to offer incentives, rewards, service and additional products. Not all of your customers will respond to the same incentives, so relationship marketing requires personalizing your approach to various market segments and even to individuals within those segments.

"I realized that the 80/20 Rule applied to my customers -- I get 80 percent of my business from 20 percent of my customers."

How to build relationships
Here are five proven ways to make relationship marketing work for you:

• Provide excellent customer service. It's almost impossible to build strong customer relationships without good service. Outstanding customer service results in customer loyalty. And loyal customers not only come back again, but they buy more, buy more often, refer new customers and are more profitable than newly acquired customers.

• Provide "value added." Set yourself apart from your competition by adding value to what you sell. Supply information on the artist, the technique and special care instructions with each purchase. Run videotapes on how to tie scarves. Offer demonstrations on how to arrange flowers (using vases from your inventory, of course) or how to vary an outfit by creative use of accessories. Do you publish a gallery newsletter? Include educational articles such as how to care for jewelry, how to recognize quality workmanship, the characteristics of different varieties of wood, etc., along with news about artists and inventory.

• Create an environment that encourages relationship building. Make customers feel as though they're part of the family. John Lindsey, owner of The Lindsey Gallery in Oak Park, Ill., serves champagne and cookies in the gallery on Friday evenings, Saturday afternoon and evening, and Sunday afternoon. Customers enjoy feeling as though they're included in a private party.

• Reward loyalty. Rewarding loyalty is a key feature of relationship marketing. But before you rush into a "rewards" program, consider this basic business truth: Not all customers are profitable. An effective relationship marketing program doesn't treat all customers the same; it focuses on the profitable ones.

  "We used to take names indiscriminately, put them in the database, and then do these big mailings," says Lindsey. "Then I realized that the 80/20 Rule applied to my customers -- I get 80 percent of my business from 20 percent of my customers." Now he is more selective in collecting customer information, adding only names of "preferred" customers (those who make a purchase in excess of $100) to the database. He has also eliminated names of one-time buyers or those who consistently spend low-dollar amounts from his database. When he collects information, he asks for the customer's birth month and, if married, anniversary month. At the beginning of those months, he sends a card containing a $5 gallery gift certificate (no expiration date). When the gift certificates are redeemed, purchases are tracked. "If they only spend $5, I take them off the list," says Lindsey.

  Lindsey also encourages repeat shopping by offering customers a Frequent Flyer card, saying, "Fly with us 10 times, and we'll give you $10." Each time the customer makes a purchase, the card is checked. A $10 gift certificate is awarded after the 10th purchase. (Lindsey points out that this approach can potentially cause a problem if customers expect to get more "checks" when they purchase higher dollar amounts.)

• Give back to the community. Local customers are more likely to support businesses whose owners are active participants in the community. Cindy Doyle, owner of Casual Cat in Amherst, N.H., says she "does lots of things with the local arts community and theater."

  Judy Summer, owner of Artworks in Park City, Utah, participates in many community activities, including making contributions to various fund-raising efforts and the public radio station auctions. At least once a year, Summer holds an event at Artworks where she contributes a portion of sales to a local charity. She also encourages the local elementary schools to bring students for tours during the gallery's off-season.

How to personalize your marketing
To take full advantage of relationship marketing, collect and use customer data. You should know who your best customers are, which ones are profitable and which aren't, what they buy, when they buy, etc. Then, use this information to personalize your marketing. For example, Ms. Jones collects jewelry boxes -- call or send her a handwritten note when a new order of jewelry boxes arrives. Mr. and Mrs. Smith need decorative accessories for their new home -- let them know when an appropriate piece comes in.

Casual Cat offers both crafts and framing, and has a mailing list of more than 4,500 customers. It would be ineffective, as well as costly, to mail to the entire list for each of the three or four trunk shows the shop stages each year. Instead, Doyle does segmented mailings based on customer purchase data tracked through her POS system. For the jewelry trunk show, she mails just to those customers who purchase jewelry. For a Christmas promotion, she limits mailings to customers within a 50 to 60 mile radius. "People don't travel as far to shop at Christmas," she explains.

With adequate information, you can reward preferred customers in a way that is meaningful to them: inviting the wearable art buyer to a trunk show with her favorite designer/artist; inviting the pottery collector to a "meet the artist" reception with a potter; inviting preferred customers to a "pre-sale" event; etc. These personalized contacts show that you know your customers' interests, which further strengthens your relationship.

You and your customers benefit
Effective relationship marketing can significantly boost profits and help create a strong base of repeat business. You give your best customers something extra -- something of perceived value to them. You customize the "extra" to make it important to the individual -- thus the "relationship" factor. In return, your preferred customers give you their loyalty and repeat business. As the relationship strengthens, you both gain.

Grace Butland owned and operated Variations American Crafts Gallery in Riverton, Conn., for 10 years. She currently resides in Musquodoboit Harbour, Nova Scotia, Canada.

Copyright© 2001

FEBRUARY 2001: TABLE OF CONTENTS