Wastepaper baskets, the world over, are full of them.
In fact, if there were ever a competition to judge the most self-indulgent of all business communications, the newsletter would have serious competition from only the corporate video for first place!
A tragedy, when you consider that newsletters have the potential to be by far the most valuable communications tool any company can invest in.
Certainly, for most JRMA clients, newsletters are the backbone of their marketing programs.
Our newsletters generate a steady flow of new customers, unlock the ‘lifetime value’ of existing customers and position our clients as leaders in their fields.
This article explains both why and how you should establish a newsletter as the backbone of your marketing program. It all starts with a little marketing theory – an introduction to our ‘relationship-centric’ marketing model.
A ‘relationship-centric’ marketing program
We like to say that there are two types of customer in the world.
One type of customer buys a product. (They focus on product attributes and price.)
And the other type of customer buys a relationship. (They are less interested in a transaction, and more interested in a longer-term relationship.)
Most small- to medium-sized business would be wise to focus on this latter type of customer. Certainly, small businesses have a natural advantage when it comes to ‘customer intimacy’. Furthermore, relationship-focused customers are prepared to pay a premium for these relationships – insulating smaller businesses from the inevitable ‘margin shrinkage’ that efficient markets (read: their larger competitors) inflict upon them.
Smaller businesses tend to recognise this. But few have any idea how to attract, to service, or to profit from relationship-focused customers.
The solution is to turn traditional marketing methodology on its ear and build a relationship- rather than a product-centric marketing program.
Selling a relationship
If you’ve decided you’d rather be in the business of selling relationships than (keenly priced) products, here’s a three-step introduction to our ‘relationship-centric’ marketing model (click to enlarge):
Take your focus off sales. If your customers aren’t transaction-focused – you certainly shouldn’t be.
Create an automated communications program. Because a key ingredient in any relationship is ‘communication’, this system should provide your customers with regular (and meaningful) points of contact with you. Your automated communications program should be designed to exploit the value resident in the relationships under your management. However, rather than designing this program to optimise the value of individual transactions, you should design it to maximise customers’ ‘lifetime value’. ‘Lifetime value’ is a measure of the gross profit earned over the life of a typical customer relationship.
Identify potential customers and introduce them to your automated communications program. Rather than establishing a relationship with people after they make their first purchase (as is normally the case) you should establish a relationship in advance. If your potential customers are those who will buy on the basis of a relationship, doesn’t it make sense to deliver this relationship in advance? (You’ll discover, in a moment, just how inexpensive it can be to introduce potential customers to your automated communications program.)
Enter the humble newsletter!
Well, that’s the theory out of the way – and the stage set nicely for the newsletter!
Step two of our ‘relationship-centric’ model involved building an automated communications program. And, as you already know, your newsletter should be the backbone of this program.
The purpose of your newsletter should be to provide those regular and meaningful points of contact we mentioned previously. Of course, your newsletter can be augmented with other types of customer contact (outbound calls, face-to-face visits, workshops, and so on), but your newsletter is likely to remain the most important component of your automated communications program. This is because a newsletter allows you to provide your customers with a considerable amount of value, for a fraction of the cost of face-to-face (or even telephone) communications.
Now, for your newsletter to make an effective contribution to the quality of your customer relationships, it must be genuinely meaningful. Remember, if you emulate the self-indulgent style of the half-dozen newsletters that are currently providing ballast for your wastepaper basket, yours is likely to suffer a similar fate.
The best model for the editorial style of your newsletter is a magazine. The competitive nature of the publishing industry has resulted in magazine editors becoming particularly adept at producing publications that their readers want to read. (In fact, it’s worth noting that Australia has the highest per-capita readership of magazines in the world.)
You would, no doubt, have noticed the rapid fragmentation (specialisation) of magazine titles over the last few years. We suggest that your newsletter should be a ‘mini-magazine’ designed to appeal to a finely targeted group of individuals – your customers (and potential customers).
The key is to emulate the editorial style (and the look and feel) of a publication your customers are already likely to read. Your newsletter’s articles can then provide readers with more specialised, and perhaps more current, information. The test of the quality of your newsletter is to ask yourself: Would my customers be prepared to pay for this? If your answer is yes, you have a powerful communications tool.
Compelling content: four components
Once you’ve settled on the editorial style of your newsletter, your next challenge is to decide what you’ll write about. Each of our newsletters typically contains the following four components:
Feature story (or stories). To write a feature story, pick a subject of interest to your customers from within your field of expertise, and ‘empower’ your readers with a clear understanding of it. (As Queensland’s Noel Whittaker has demonstrated with his best-selling books on money, a great way to take ownership of a category is to freely share your expertise.)
Editorial comment. Typically, editorial columns are used to share company news (new employees, etc). If I were you, I’d bump this exciting stuff to your ‘news in brief’ column below, and use this space to deliver a thought-provoking (and preferably controversial) opinion piece. Where other articles in your newsletter may be written in third person, your editorial comment should definitely be written in first person – preferably by your company’s designated spokesperson.
News in brief. Here’s the spot for industry (and yes) company news.
A case study. One of the challenges you face selling relationships is that your ‘product’ is intangible. Consultants often tend to find it difficult to dimentionalise the benefits of their services. Obviously, one of the benefits of your newsletter is that it enables potential customers to experience a relationship with you prior to making a purchasing decision. Another particularly effective way to demonstrate the benefits of a relationship is to allow your potential customers to ‘walk in the shoes’ of existing customers.
A case study should introduce a customer, outline a problem they were facing, walk the reader through the steps your company took to solve that problem, and then paint a picture of the end result.
… just add people!
Once you have a newsletter that communicates meaningfully with its readers, you have your ‘automated communications program’ – the backbone of our relationship-centric marketing model.
Your next step is to introduce people to this communications program. These people should come from three sources:
Customers. Obviously, your customers have a higher propensity to spend money with you than strangers do (that is, unless you’re doing something dreadfully wrong!)
Prospects. These are people who have both the reason and the ability to become customers of yours. More importantly, they are people you feel are likely to be relationship- rather than product-focused. We’ll talk more about identifying prospects in a moment.
Centres of influence. A centre of influence is a person who is in a position to refer customers to you. He or she may not actually be a prospect. A typical example of a centre of influence is a journalist from your trade publication.
Introducing people to your communications program is as simple as adding their details to a database. You could manage this database in-house. However, our advice is to outsource it to a specialist. Most capital cities have mail bureaus that provide database management, as well as mail processing (and often list rental and telemarketing) services.
We do not recommend creating a fanfare when you introduce prospects to your communications program. A simple letter of welcome will do.
The great thing about dealing with relationship-focused customers is that you don’t have to ‘make a sale’ to have a relationship with them. In other words, initiate a relationship first, then leave the selling (or should we say ‘buying’) up to them.
But how do you identify prospects?
Well, if you sell to businesses, it could be easier than you think. You might just find that the names and contact details of your prospects are available from a list broker. For example, if your target prospect is a ‘human resource manager working in a company with 100 or more employees’, this list is available from all good list brokers. Simply buy the list and add the records to your database.
If your prospects need to be better targeted than this, it might be worth commissioning some telephone research to filter these records. For example, if you want to identify those human resource managers who operate a particular software application, it’s still cheaper to have someone ring and ask, than it is to try and strike up a relationship with advertising!
If you cannot purchase (or otherwise acquire) a list of suitably targeted prospects, you may have to resort to less direct forms of ‘lead-generation’.
Now, because you’re looking for relationship-focused prospects, the trick with lead-generation is to promote a relationship – rather than your product or service. The obvious way to do this is to offer prospects a free 12-month subscription to your newsletter. Remembering that your newsletter has been designed to be truly valuable to prospects – this is an offer that’s likely to be eagerly accepted. (About 20 people a month request free 12-month subscriptions to AdVerb via our Website.)
We recommend the following promotional mediums for your lead generation-campaign (listed in typical order of effectiveness):
Strategic alliances. Your prospects are already other business’s customers. Identify businesses that serve your prospects, and convince them to offer a free 12-month subscription to your newsletter to their customers.
Direct mail. If the lists that you can obtain from your list broker are not qualified enough to warrant the cost of telephone research, you can identify qualified prospects by offering a newsletter subscription to this list. Respondents are likely to have both an interest in your services, and a bias towards relationships.
Advertising. A successful lead-generation advertisement is little more than a good direct mail letter, reformatted for the media in which you’re advertising. Of course, your offer is still a free 12-month subscription to your newsletter. (You’ll find a couple of articles on advertising on our Website.)
Not just a newsletter. A total marketing solution.
Once you’ve navigated our three-step process, developed a relationship-focus, built an automated communications program and introduced prospects to this program, you’ve successfully converted your newsletter into a total marketing solution.
Your newsletter is now the backbone of a coordinated program that identifies potential customers, develops a relationship with them – perhaps even before they need your services – and then manages that relationship to exploit their lifetime value.
The good news is that the management of your relationship-centric marketing program shouldn’t consume a lot of resources – financial or otherwise. Key functions, including the research, writing, production and distribution of your newsletter, the management of your database, and the creation of your lead-generation campaigns, can all be outsourced.
And even if you do choose to outsource all of these functions, once it’s established, your newsletter should cost you around $4.50 per contact. That’s less than the cost of a face-to-face (and probably even a telephone) contact.
The theory is simple and, in most cases, its application is easily affordable.
Now might be the time to dust off your newsletter and see if it’s really living up to its true potential.