Many Strategic Marketing Plans include the classic “4P’s”, three of which are non pricing strategies: new product development, promotional strategies, and “place” or distribution strategies. However, 4 of the most effective non pricing strategies are often overlooked, yet have a very high payoff in terms of how to increase sales and profitability. These business success tips are easy to implement and will quickly have significant impact on your bottom line.
4 Marketing Strategies and Tactics Hold the Key to Effective Non Pricing Strategies: And they all have to do with maximizing customer profitability!
1. Retain more of your customers: This probably sounds like “DUH!” advice, however most companies think they lose about 7-8% of their customers per year yet research shows that it’s often 3x that. And a whopping 68% of customers leave not because of service issues, but because of indifference. Think about the times that you feel that you or your business are being taken for granted by those how should value you as a customer, and you’ll get the idea.
- Retaining existing customers for longer is a key non pricing strategy for profit maximization. How, specifically, do you retain customers now? It takes more than a few sales calls and some brochures or catalogs, so if you don’t have specific strategies in your strategic marketing plan, that’s a gap you need to address immediately!
- It requires taking the time to really understand what problem they “hire” your product or service to do, and then helping them solve that problem more quickly or easily, or with greater peace of mind. One of the best ways to do this is to treat them as if they’re a new prospect, and do a rigorous needs analysis. Look at how they use your product. Find out what frustrates them, and what they’re still struggling to do. Find out what products and services they buy from others, that you could provide. Remember, customers want the hole, not the drill! Then, take a consultative problem solving approach with them to show that you value their business – don’t just try to sell them more stuff (although when you do this well, they will buy more from you). Show them how you can save them more time, more money, solve the problems they’re still having, or give them peace of mind. Make them feel that they matter, and that you are working with their interests in mind, not just your own.
2. Regain customers you’ve lost: Did you know that 30% of lost customers will return and do more business with you if you fix the issue that sent them away? Or that you have a better chance of regaining a lost customer than closing new business?
- Diagnosing the reasons for loss and creating a compelling win-back offer is the 2nd of 4 non pricing strategies for profit maximization. Most of us tend to avoid talking to lost customers. Either we’re angry at losing business we’d been counting on to make the numbers, or we’re afraid that they’re angry at us. There’s a great win-win just by working up the courage to clear the air.
- Reach out to every single one customers of your customers who’s taken their business to the competition. Find out what drove them away from you, or attracted them to someone new. Dig deeper than “we got it cheaper from somebody else”, because price (a logical decision) is always used to justify emotional reactions – such as feeling let down or unappreciated by your company. Figure out the real cause and address it… before you lose more customers for the same reason.
- Once you know and have fixed the reason they left, apologize and invite them to do business with you again. Give them a compelling offer which does not involve discounting – provide something new and improved, a higher level or service, or more attractive terms. Again, let them know that you value them and their business, and you’ll find that more customers will give you a second chance than you think. And you have nothing to lose.
3. Reactivate inactive customers: How many of your customers are inactive or “just sleeping”? If they haven’t done business with you in a long time, how do you know if they still have new business potential or if you’re wasting your time sending catalogs, invitations, or promotional materials?
- Maybe they don’t need more of your existing products or services at the moment, or maybe their needs have changed for what they were buying from you, and as a result you’re wasting a lot of time and money beating a dead horse. But they probably still have needs in other areas that you could fill, either with existing products or services, or new offerings that are a better fit for them.
- Your first priority should be to try to reactivate them by finding out why they’re inactive and then approaching them with a compelling offer – avoid discounting, and develop an offer that maintains the brand value of your products and services, and your second priority should be to reduce your costs to serve so that they don’t become unprofitable. First, do a bit of homework to find out what business challenges they’re wrestling with, and help solve them, either with new products or services, or variations on what you already provide. Next, find value-add ways to stay in touch until they’re ready to do business again – could a series of case studies give them insights into other ways to use your products? Could you reduce your costs to serve them with periodic emails linking to a website rather than costly catalogs?
4. Regenerate profits from unprofitable customers: Research shows that the bottom 20% of your customers cost you an amount equal to the profit generated by your largest customers. So just getting your bottom customers back to break even can increase your bottom line by 100%! Figure out who’s costing you money. Develop a plan that considers their buying patterns as well as your costs to serve. And help them become profitable again.
Simple Next Steps to Activate Profit-Maximizing Non Pricing Strategies
What’s your “4Rs” Strategy for this year? As a simple next step, ask your sales team what their specific business development plans are for these 4 non pricing strategies – not generalities, specifics. Help them re-focus their customer interactions from purely “sales calls” to 2-way dialog to explore each of the 4Rs. Then help them develop and execute specific plans for how to increase sales with these winning marketing strategies, and you’ll see significant bottom line impact.