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Driving Repeat Business Part 2: Direct Contact Tactic

August 2002 Marketing

Business-to-Business companies are increasing their focus on repeat and referral business. While this may represent a sound strategy, the devil is in the details. In this second installment on driving repeat business, we will explore the direct contact tactic.

Directly contacting past customers is one of the most readily identifiable methods of communicating with a portion of the company’s market. The target audience for the communications is well defined. The contact details, such as name, address, phone, and email can be determined. And, the audience is usually receptive to company marketing coEditormmunications.

For this well defined audience, the company must select the contact method and likewise the message. While it has been said that the medium is the message, this mantra doesn’t apply to many business-to-business firms. To address these questions, let us first consider the message then select the medium.

Message

What does company have to say to its old customers? Why is it contacting them? Sure, the company wants past customers to purchase again or refer business its way, but bluntness is more appropriate for analysis articles than customer communications. Some routine messages include: “We are still open for business.” “Our product line has been improved.” Or, “We have a new product or service offering.” Alternatively, these messages could be stated with a stronger customer focus such as “Thank you for being part of our 9 years of successful business.” “Isn’t it time to re-do your XXX”, or “Have you out grown your XXX” where XXX reflects the value-offering. These types of messages are most useful with point-solution products or services.

For more complex value-offerings that address core issues of the target customer, a less direct but more involved message may be necessary. For example, case studies of recent work, market research that indicates increased value from increased involvement with the value-offering, or industry news that is tangentially related to the value-offering. These lengthier messages are appropriate when the buying decision requires the participation of multiple organization levels.

There are many other messages that the company may determine to communicate to their current customer base. To increase the interest of the audience, the message should provide benefits to the customer base. At the same time, marketing communications are conducted only with regards to their ability to increase revenue to improve profits. Each communication should be associated with a call to action. This call to action can have a direct revenue impact such as asking customer to purchase now, or they can be less direct and request customers to investigate or call the firm to take the next steps toward closing another piece of business.

Medium

The selection of the message appropriate to the customer audience, value-offering, and sales-process, will greatly affect the selection of the medium. Many managers would like to see their sales force pick up the phone and make more phone calls to drive repeat business. Yet this medium isn’t always the best selection. Nothing is more destructive to a good revenue generating engine than forcing a powerful direct sales force to do low value-add work. Brute force can always be executed, but the key to profits is finesse. Hence, use the direct sales force only if it is prudent; otherwise, let the marketing portion of the engine accomplish the task.

Direct Postal Mail or e-mail are two of the most inexpensive means to contact past customers. Currently, businesses are moving away from postal mail and towards e-mail as a means to contact their customers. The US Post Office reported that overall mail volumes dropped 1.6 billion pieces, or 3.4 percent below the same quarter last year for the quarter ending June 2002. This trend can be expected to continue in the future as the number of customers prepared for e-mail continues to increase. However, e-mail remains a questionable communication medium for a number of markets, such as small manufacturers, restaurants, or other old-economy small businesses. Furthermore, e-mail has some constraints in relation to the problem of spam. If a company selects to use e-mail in a direct contact campaign, it should be careful to gauge the audience’s receptiveness and preparedness to this medium. For many businesses, postal mail represents a safer investment

Regardless of the selection of the message and medium, companies should not expect that a single distribution will bring dramatic and immediate results. Rather, driving revenue with repeat business through direct contact tactics requires an ongoing effort. Multifarious effects lower the return to a single broadcast communication. From timing and budgeting, lost messages, and the insufficient creation of the impetus for action, to writing that didn’t quite hit the head of the nail, there are many reasons to make direct marketing communications part of a continued revenue generating campaign and not a one-off effort.

Directly contacting past customers can produce significant revenue within the fiscal year. It relies upon the reformation and strengthening of customer relationships that may have lied dormant. It also benefits from having a more receptive audience that is readily identifiable.

The May Report, TECH BUSINESS BRIEFS, Aug 9, 2002



About the author

Tim J. Smith, PhD is the Managing Principal of Wiglaf Pricing, and an Adjunct Professor at DePaul University of Marketing and Economics. His most recent book is Pricing Strategy: Setting Price Levels, Managing Price Discounts, & Establishing Price Structures.

Tim J. Smith, PhD
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