Click image to enlarge

A few years back a great book was published, The Ultimate Question by Fred Reichheld. He explains how several well known leaders in their industries leverage customer loyalty to drive profitability. It makes so much sense. If customers love your product and feel unique and special, they will recommend you.

Think about your marketing budget. What if you could get rid of the budget because prospects keep knocking on your doors? Enterprise Rent-a-car™ is praised in their industry for profitability and embracing the concept of customer loyalty. It is no surprise they have become the #1 rental business in the world.  Their advertising budget is a fraction of their competitors’.

What does this have to do with the printing industry? The best run printers have lower marketing budgets and leverage referral programs to keep customer’s promoting. This doesn’t happen overnight, but is part of their long term strategy.   ABC Printers tracks performance, reads customer comments daily, sets up teams to correct problems, engages the customer with this first hand feedback, sets up referral programs, and promotes customer loyalty.   They know when loyalty is dropping, and more importantly they address the issues immediately.  The operation remains customer focused and it pays off.  

We changed the name of the real printer to ABC Printers to protect identify.

How do you know if your customers are promoting you? The best way is measuring sources of incoming business. Recently one printer measured that 17% of their customers came from referrals while another was over 40%. What a difference. What a great way to save marketing dollars by having prospects knocking on your door. It is not surprising that the printer with 40% is growing during the recession while the 17% printer is hanging on.

How do you measure the customer referral factor in your business? There are two ways. First, any good CRM (Customer Relationship Management) system has fields to flag the source of new customers. Measure both internal referrals within your larger shared accounts and external referrals or new business relationships. Second, printers should ask after orders are delivered if the customer will recommend you to colleagues and friends. Do this on a continual basis, but respect your high volume customers. Surveying once a month is acceptable if the survey is short and done professionally. Only the highest ratings should be considered promoters of your business. Based on our print buyer surveying the average printer receives an 82%. This means that 82% of their customers are very likely to recommend. The best printers are above 90% and the lower tier is just north of 70%. The fascinating thing about the concept of creating raving fans or delighted customers is that major corporations such as Enterprise Rent-a-car, Southwest Airlines, and Intuit continue to grow profitably by viewing the long term value of a customer and measuring their referral scores.

In the printing industry we offer printers a program, CustomerPulse, which calculates the industry referral index on a monthly basis.  Frankly the bar is higher for the printing industry than just about any industry out there.  The ability to move to another printer is easy in many instances and most print buyers already buy from multiple printers.  Also, the Business to Business dynamic needs to be taken into account.

Be truthful with yourself when measuring customer loyalty or tendency for customers to refer you.  One printer shared that their score was over 90%, but it was based on 50 surveys a month out of the 4,000 individual businesses buying from them monthly.

Start measuring referral sources and measure your customer loyalty and referral index on a continual basis.  It will help your long term profitability.

During the month of May, 2008 Survey Advantage conducted a pilot with four Sir Speedy franchise owners as part of a corporate pilot program with franchisor Franchise Services. After this successful pilot, Survey Advantage’s three print buyer feedback and benchmark programs have been adopted by Franchise Services and will be rolled out at the upcoming national convention to be held in Fort Lauderdale, Florida July 10th and 11th, 2008. Programs will be demonstrated during the exposition.

By Mike Casey
Quick question:  How many of you are continuously, deliberately mass e-mailing to your customers?  Many printers feel that either e-blasts are an annoyance to customers or it cuts the grain with what they do best, printing on paper.  Well, a recent survey showed that 58% of print buyers prefer e-blasts from their print suppliers “IF” they are informative.  If you have a seasonal plant vacation or other planned event coming up before the holidays, have just released a new capability, or have an educational message of any kind to help you serve customers better, why not send it?    You must have seen some value in this e-blast because you are reading it!  Why?  Because of the content!   In another study a printer asked their customers directly if they wanted to continue to get the e-blasts.  Over 85% said yes and the funny thing is that the print buyers who said no did not opt out.   In many cases they shared what they would like to see in future e-communications.  Keep content relevant, know your customer’s interests, and e-blast at their desired frequency.

Keep an open mind when thinking about how to reduce costs of marketing and also when thinking of how your customers want to be treated!