ACCM Speaker: Create Contact Strategies Based on Purchase Frequency

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CHICAGO - Successful business-to-business direct marketers have a strategy for retention and segmentation in place before the first contact is made with a new customer, DMinSite CEO Larry Kavanagh told attendees here at the Annual Conference for Catalog, Internet and Multichannel Merchants.

The key is to design different contact strategies based on how frequently customers buy and how much they spend, Mr. Kavanagh said. Marketers can also add another category, such as employee size, and find a group that is more responsive overall or more responsive to receiving communication from a particular channel.

Mr. Kavanagh pointed to the example of one company that reduced by 59,000 the number of catalogs it mailed to less responsive customers and increased its mailings to more responsive customers. However, it continued to communicate at the same level with the less responsive customers, albeit via less expensive faxes or e-mails.

Fellow ACCM speaker Victor L. Hunter, president of Hunter Business Group LLC, focused on managing strategic customers, which isn't necessarily defined based on how much revenue they bring in.

A recently released survey of the 50 most successful strategic account management teams by the Strategic Account Management Association found that about 30 percent of companies use revenue when measuring strategic accounts, Mr. Hunter said.

While only 19 percent of companies use margin or profit performance as a measurement, this is the fastest growing indicator of a strategic account. The second fastest growing measurement is customer loyalty, which currently stands at 14 percent. Share of market is used by 19 percent of companies and is declining, while 19 percent use new contracts as a measurement.

Willingness to refer a company to a co-worker is the No. 1 indicator of customer loyalty among strategic accounts - above willingness to repurchase, Mr. Hunter said.

In fact, there is a higher correlation between people saying they are willing to refer a company and actually repurchasing from that company than there is among people who say they will repurchase. The most predictive service model of customer loyalty is employee loyalty.

Strategic accounts can be segmented into four groups: bottom feeders that buy based on price; channel dependents that read research; brand loyalists; and feature fanatics.

While each will likely prefer a different communication medium, it is important to send strategic accounts at least 10 value communications a year that support a long-term sustainable relationship and that are not offer-based, Mr. Hunter said.

The contact medium of choice can change, so it is important to keep on top of these customers' preferred method, he said.

For example, when it comes to issues of compliance and regulatory changes, the preferred method for many companies used to be by mail. Recently, however, many companies have indicated a preference for receiving e-mail followed by a telephone call.

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