Putting Down Roots

Valuing & Grooming Your Customers to Deepen Brand Loyalty

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Previously in my “Grass Gets Greener” article series, I’ve compared an equipment dealership’s customer base to a field of crops: Each customer is a plant, which must be nurtured in order for the farmer (the dealership) to reap a harvest (revenue). The bigger and healthier the field, the better the yield.

Thus far, we’ve focused in detail on the “bigger” part of that equation: Getting a sense of your customer breadth, with an eye towards expansion as well as customer variation, is crucial for the long-term viability of your field. Once wrapping your fingers around the scope of your customer base, it then becomes time to assess its vitality: Is your field big, yet vulnerable? Small, yet lush? Are some parts of the field growing faster than others?

This line of thought brings us to customer depth – a call to action to cultivate your customers to deepen and strengthen brand loyalty. The goal here is for your customers to put down roots into your business, to keep coming back for more purchases, across more product types, more frequently.

Of course, it’d be a dream to get a thriving crop simply with a little sun and irrigation. Alas, modern customers need tending, and not all are created equal: while some may be behemoth landscaping companies with plenty of space to grow, others may be homeowners or single-crew operations that may only ever grow so big, no matter how much fertilizer you put down. Equipment dealers therefore need to cultivate actively and constantly, but also efficiently, to ensure that your sales and marketing investments translate to as much loyalty-deepening as possible.

This active and efficient cultivation can be approached in a two-step process: First, to value customers according to importance and growth potential; and second, to dedicate the resources at your disposal towards Key Account Strategy – that is, targeted sales and relationship-building initiatives for high-value customers. Below, we’ll explore each step, in greater detail, offering best practices and approaches to get you on your way to greener pastures.

Step 1: Do Your Homework

As noted, the first step in cultivating your customers is figuring out who should get the most attention. Some customers may be dying but may be so small that they’re not worth the investment to save. Others may be critical to your business but are generally healthy and cruising along. We want to instead focus on the sweet spot, where a customer’s potential for loyalty-building presents a hefty enough ROI.

You can whittle down your customer list by looking at three broad measurements: (i) Your current sales to your customers; (ii) your customers’ sales to their customers, which reflects potential buying power (even if those sales = $0, as is the case with homeowners); and (iii) the whitespace between current and potential customer depth.

  1. By your Sales: How big are the roots currently?

Savvy salespeople likely know that the 80-20 rule is king – that is, the Pareto Principle, which states that 80% of outputs result from 20% of inputs. This provides a general rule of thumb whereby 80% of a company’s sales will come from 20% of its customers. When considering which customers should get the most individualized attention for loyalty-building, those golden 20% are a good place to start.

To figure out who they are, you’ll need to do a bit of analysis and data-wrangling. Work with your IT or accounting staff to get a clean list of unique customers, along with a historical database of purchase records. From there, you’ll want to calculate net sales, as well as percent-total figures, by item, revenue, and margin for each customer.

If you really want to get into things, try coming up with some creative additional metrics to differentiate customers based on how deep they’ve already dove into your brand and product offerings. Some examples include:

    • Purchase Frequency & Recency – Having lots of sales is great, but it’s even better if those sales are spread out over many transactions, and better still if the last transaction happened this season. Otherwise, they may have simply stocked up and moved on.
    • Product Categories / Customers – Lots of sales across many (and hopefully recent) transactions is great, but even better if they’re buying across your whole product line. Landscapers, for instance, should ideally be buying your trimmers, edgers, blowers, and other equipment types for their full crew. If a seemingly good customer only buys one product type, that may signal that they simply like a product-specific promotion, and they may drop off if you change your discount policy.
    • Non-sales Engagements – Do your customers sign up for your newsletter? Attend promo days? Do they usually answer your calls? Tracking these touchpoints can be very important as a last step of differentiation between two very similar-looking customers: Better to start with those who already seem interested.

  1. By their Sales: How big could the roots get?

You now know roughly how important each customer is to your organization’s sales at current. Great! Now, how big could those sales be?

To figure this out, you’ll have to make some educated guesses. Based on your knowledge of your specific market, come up with what a fully saturated customer could look like, according to a few major customer personas. Some examples include:

    • Homeowner Retirees – no crews to support but may have disposable income. Saturation might involve equipment purchases once every year or two, with occasional accessories.
    • Government Customers (Municipal, County, State) – crews to support, but wrapped up in public budgeting. Saturation would involve many product categories and large item, revenue, and margin volume, but relatively infrequent equipment purchases based around fiscal years and budgeting capabilities.
    • Large Corporate Landscaping Contractors – these would be white whales: Imagine a large, multi-crew operation that services apartment buildings, office complexes, or theme parks. They should buy across many product categories, with high sales volume and good frequency & recency.

Importantly, once you determine your personas and their saturation states, assign each customer to a persona as best you can. You may be able to cross-reference publicly available data like the Census, or rely on good old-fashioned web searches to determine who fits where. As your resources permit, it’s also a good idea to do deep-dives on stand out customers, beyond general personas. For the white whale corporate contractor mentioned above, you might want to try to find out roughly how many trucks and crews they operate, what their annual revenue might look like, and the scope of their customer base.

  1. By the Whitespace: How big is the gap between potential depth and actual depth?

Finally, we compare the actual from the potential: How far is each customer from their persona-specific saturation state? Try to quantify this gap as best you can so that your team can understand the customers that present the best opportunities for individualized attention.

For instance, maybe a mid-size contractor is accounting for low revenue currently but has good purchasing patterns and room to grow across a few crews. Or, perhaps your second-largest account is humming along according to sales, but frequency and recency of trimmer transactions has waned, indicating that your competitor could have scooped you with a sale.

Step 2: Put Research to Action – Key Account Strategy

So, you’ve done your homework, and you’ve identified the top existing customers that could use some attention from your sales team this week. Now it’s time to act, through Key Account Strategy.

Essentially, this means doing deep-dives into the high-value customers on your list and reaching out to them in a targeted manner to address gaps. You can do so through (i) targeted sales engagements, or (ii) targeted non-sales engagements.

  1. Targeted Sales Engagements 

The most obvious gaps will be sales gaps: Has volume dipped? Have they never bought a certain product category from you? Whatever the gap is, you’ll want to reach out to see if you can fill it, whether by simply providing targeted product information via email, or giving them a special deal. Some example approaches are:

    • Cross-sell – A classic strategy. Try selling high-value customers on a product or service that they’ve never bought from you – or at the least, one they haven’t bought in a while.
    • Targeted bundles – This can be a great way to get your foot in the door with high-whitespace customers who’ve bought few product categories from you. Maybe convince that new contractor who’s bought three trimmers to try out a mower-edger-chainsaw bundle to round out one of his crews. If it works out, after a month or two, you could circle back about more crew-size bundles.
    • Parts & Service – Keep track of parts sales and maintenance services in your purchase record database and reach out to customers with low service frequency / recency relative to the products they’ve purchased. Sometimes a simple reminder is all they need to come in for a blade or belt replacement.

  1. Targeted Non-Sales Engagements 

Salespeople don’t just sell products: they sell brands, and they sell relationships. If important customers aren’t able to spend more money with you just yet, it’s worth checking in to see if they’ll spend some time. They’ll remember that you invested in them even without an immediate financial incentive, and hopefully perceive you as a partner with whom they’ll eventually want to do business.

Of course, if the whitespace is engagement itself – perhaps you haven’t heard from a key contact in a while, even if his crew comes in regularly – it’s all the more prudent to reach out. Some approaches include:

    • Check ins – A simple email or phone call to touch base goes a long way. Look through your notes on key contacts to ask about updates in their personal or professional lives.
    • Helpful Content (Inbound) – You can still help your customers without selling them something. Create some basic inbound marketing content (such as a newsletter) to build out your brand beyond transactions. Perhaps being your customer means being part of a lifestyle, a community of DIY folks who love the outdoors. Or, maybe you position yourself as a lawn & garden business guru, providing tips on contracting and invoicing for jobs, managing logistical issues in dispatching crews, or servicing equipment in a pinch.
    • Events – Transforming your showroom into a gathering place (whether in-person or virtual) does a lot to foster community and loyalty. Some ideas include a kid-themed Gardening 101 event (perhaps with a small potted plant as a take-home gift); or a live competition where your team members make creative mowing patterns or woodblock carvings, and customers vote on their favorites.

Now, let’s review: We’ve identified the customers most deserving of our attention by valuing their current and potential worth to our business, and taken targeted action to fill the gaps by selling products, promotions, and our brand itself.

When rinsed and repeated, week in and week out, this process of valuing and grooming your customers can have tremendous effects on brand loyalty and, ultimately, the vitality of your business. By helping the right customers put down roots where there’s room to grow, you’ll have a healthy harvest in no time.

Michael Paladino is a strategist at Black Ink Technologies, a provider of SaaS customer analytics solutions. He and Black Ink are based in Boston, MA. For more information, please visit blackinktech.com and connect  @BlackInk_Tech on Twitter, Facebook and LinkedIn.

 

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