New sales staff?

By Staffan Elinder

Staffan Elinder, consultant and doyen of relationships management and loyalty programs in Sweden. Founder and main shareholder in DM Konsult AB, Stockholm.
Develops and implements successful loyalty programs. He has a degree in Economics from the Stockholm School of Economics, specializing in Marketing and Economic Psychology. Computer studies at New York University. He was in marketing position with Sandvik AB, cooperation development at the Swedish Trade Council, marketing consultant at Anderson & Lembke, President of Blomqvist DM. Member of an advisory board for CRM in London. He was working on projects for Saab, Ikea International, Canal Digital, Svensk Fastighetsförmedling.

“Membership often provide some form of bonus. Many people think that it is the bonus that generates loyalty, but this is not the case," Staffan Elinder points out. The bonus is the price the company pays to get its customers to identify themselves. Using the information we obtain during customer meetings, we can provide customers with solutions which are better suited to them. Since competitors do not have this information, this increases the likelihood that the customer will choose us, since we have improved our ability to provide a better solution than our competitors can. If we do this, our customers will choose us more often!”

When the company has acquired a system for registering each customer contact, it builds up a new kind of database.

“The difference is that we used to select from databases using socio-demographic criteria (e.g. gender, age, residential area, profession and income). Now we can compile new types of databases – which register and process behavior. Using this knowledge, the company can supply the next element in loyalty-building: the Reward.”

“The customer is rewarded through customized offers based on individual knowledge.”

To the customer, these offers will appear better than all others, the customer will buy again, and loyalty will be strengthened. And what are the customers being rewarded for? Well, partly for loyal behavior, and partly for identifying themselves. For Staffan, these are two different things. Most people who have set up customer clubs, for example, have not understood this, and so their bonus system never achieves any real success. Instead of increased loyalty and improved profitability, the result has been higher information processing costs and bonus payments.

“On the other hand, companies who adopt this process successfully enter a benign circle, a win-win situation!”

4: Marketing and sales must be process-orientated.
Staffan Elinder sees a clear common denominator among successful companies: they treat their marketing as processes, not as short-term selective measures.

“The process involves Acquiring – Keeping – Developing – Recycling customers. The process flows are always the same for all companies, it is the skill in handling them that separates the winners and losers. Sales Managers who are aware of this ask themselves: What do our marketing and sales processes look like? How can we improve them? How can we run them with the support of better IT?”

According to Staffan, CRM is a way of handling these processes by utilizing contacts and interaction with customers better and faster.

“The fundamental idea behind CRM is to build up a marketing system which generates more customers with high life-cycle income. The type of customer who buys more often, spends more on each buying occasion and remains faithful for a long time.”

“Once a company has a clear idea of own customer processes, and has decided to run them more effectively, you have the basis to begin the CRM work. Then, and only then, I am prepared to discuss the kind of computer support and organization required,” concludes Staffan Elinder.

/Illustration page 3/

The Loyalty Escalator
(M Raphel et al)

1: No revenue
(about 80 percent of the market)

Suspects
(could be interested, but are not)

Prospects
(have shown interest)

2: Revenue
(about 20 percent of the market)

Customers
(buy sporadically)

Clients
(buy often)

Recruiters
(ambassadors, speak positively)

20 percent of your customers are responsible for 80 percent of sales. The loyalty escalator shows that the company gains all its revenue from its clients or the little group of customers we have called recruiters (clients who speak positively about the company and so recruit new customers). Activities aimed at suspects and prospects has not yet generated any revenue. Since they constitute perhaps 80 percent of the canvassed market, too high a proportion of the marketing budget is frequently used to activate individuals who are more difficult to influence.