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Marketing Strategies: Are You Creating Sales or Customers?

Updated on November 23, 2014
heidithorne profile image

Heidi Thorne is an author and business speaker specializing in sales and marketing topics for coaches, consultants, and solopreneurs.

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After attending a local annual motorcycle show, my husband was having a chat with one of the exhibiting dealers from whom he had purchased a new bike. The salesman told him that the dealership had sold 73 bikes as a direct result of their exhibit at the show. That's impressive and a testament to their marketing strategies and analysis techniques.

So should the dealer consider that a success and wait for the next trade show for another bump in sales? They'd be justified if they did. But here's the problem: A motorcycle is a "one-hit wonder" sale that may not recur for years (or ever!), limiting the actual number of potential sales from the regional market.

Yet every week my husband receives at least one or two "touches" from either this dealership or the manufacturer they represent: direct mail offers, email marketing and invitations to events. All this even though they know that it may be years before he buys another motorcycle from them.

This dealer knows that these rare sales are not the endgame... they're just the beginning of creating a "customer."

What Else Can We Sell Them?

The barrage of marketing material raining on my husband from the dealer and manufacturer has a primary goal which is NOT to purchase another motorcycle again soon. They're selling him on everything else!

That "everything else" includes winter storage service, mechanical service and repair and brand name gear, clothing and accessories.

This is a part of a larger overall marketing strategy that focuses on the long term. Adding products and services to a company's offerings can be a major investment, but one that can pay huge dividends in terms of lower marketing costs and higher per-customer return on investment. One of the ways some companies accomplish this is through brand extension.

Small businesses may have a more difficult time pursuing this marketing strategy than larger operations. But even they should consider realistic multiple revenue streams from their captured customers to help smooth out inevitable sales slumps and peaks.

The Expanded Sales Funnel

In the example discussed here, the motorcycle buyers gained from the trade show exhibit have filtered through the dealer's sales funnel and actually purchased bikes. So this has been a successful sales cycle.

But to turn these sales into long term customers, that sales funnel needs to be expanded into additional directions. In the motorcycle example here, those additional funnels could be storage, mechanical service, accessories, clothing and events.

What's interesting about an expanded sales funnel model is that a customer could fall into any or all of the directional funnels. That's why the dealer sends my husband marketing materials on all five offerings.

However, for some businesses, customers may not have potential for all of a company's offerings. In this case, the company needs to identify and promote those offerings which are most relevant for each market segment.

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Lifetime Value of Customers

The example vendor discussed here realizes that what they've gained when my husband purchased a motorcycle is not just a sale, but a continuing customer with a high potential lifetime value.

With the help of accounting software, it's usually easy to calculate the lifetime value of any customer for a business. Simply filter sales search results by customer for an extended period of time, maybe even for the entire life of the company if that data is available.

Doing this exercise for each customer can be eyeopening! While this will reveal those superstar customers, some might be surprised at what a low lifetime value other customers provide. Some businesses are so busy being in business that they don't do an analysis of how much time, effort and money they're expending chasing "one and done" customers or markets.

A variation on the lifetime value analysis is to calculate the profit margin of each customer. For some businesses this may be difficult to assess. But if it can be reasonably calculated, this can turn an eyeopening exercise into downright painful if business owners realize they're losing money on every sale to certain customers.

Additionally, this also points to a need to create separate marketing strategies for various market segments. In the motorcycle dealer example here, there may be customers that only purchase the branded merchandise. For this group, a more retail focused strategy would be appropriate. Again, using the concept of the expanded sales funnel can help organize and track these efforts.

Disclaimer: Any examples used are for illustrative purposes only and do not suggest affiliation or endorsement. The author/publisher has used best efforts in preparation of this article. No representations or warranties for its contents, either expressed or implied, are offered or allowed and all parties disclaim any implied warranties of merchantability or fitness for your particular purpose. The advice, strategies and recommendations presented herein may not be suitable for you, your situation or business. Consult with a professional adviser where and when appropriate. The author/publisher shall not be liable for any loss of profit or any other damages, including but not limited to special, incidental, consequential, or other damages. So by reading and using this information, you accept this risk.

© 2014 Heidi Thorne

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    • billybuc profile image

      Bill Holland 3 years ago from Olympia, WA

      The title points to a timeless question for anyone marketing a product...INCLUDING WRITERS!!!!!!!

      Happy Easter my friend.

    • heidithorne profile image
      Author

      Heidi Thorne 3 years ago from Chicago Area

      You got that right, billybuc! All of us in business, including writers, have one-shot type sales. It's inevitable, but shouldn't be the norm or the focus of future business. It's so much easier to have long-term customers. Hope you're enjoying your Easter!

    • flyfishmaine profile image

      Richard Scott 3 years ago from Presque Isle, Maine

      This makes perfect sense. I guide fishing trips. When I first started I spent a lot of money in trade mags and other places to get bookings. Now having been doing this awhile, I ca attest to the value of the life-long customer. I not only have the same customers return year after year, they also recommend my services to others, helping me gain new business. great stuff here and I look forward to reading more of your material.

    • heidithorne profile image
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      Heidi Thorne 3 years ago from Chicago Area

      Hi flyfishmaine! You're so right! Lifelong customers can be pure gold. I have some customers I've served for 10 to 15 years. Wish I could clone 'em. :) But one way to do that is to keep providing excellent service and encourage referrals. Thanks for stopping by and have a terrific week!

    • FlourishAnyway profile image

      FlourishAnyway 3 years ago from USA

      This is a good example of building long-term relationships with customers rather than simply selling them an expensive product and being done with it. It's interesting now that I think of it that auto dealerships remind us where we bought the vehicle by putting the dealer name on the back of the care. Free advertising and a permanent reminder to keep coming back (assuming they did it right).

    • heidithorne profile image
      Author

      Heidi Thorne 3 years ago from Chicago Area

      Hi FlourishAnyway! Agreed, this is one of the best examples I've ever seen. Auto dealers sometimes pursue a similar strategy (my car dealer is just awesome). The license plate frames are super cost-effective for them on several levels: continuous reminder of where you purchased the vehicle, promotion to drivers following on the road and it doesn't harm the paint (years ago they used to just put decals on the cars) which shows respect for the buyer's investment. And, as you pointed out, what's so interesting is that these are low cost ways to build loyal customers. Thanks for pointing out this example! Have a lovely day!

    • midget38 profile image

      Michelle Liew 3 years ago from Singapore

      Building customer relations over time is so vital for business. In writing too, we've to build relationships with our readers.

    • heidithorne profile image
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      Heidi Thorne 3 years ago from Chicago Area

      So true, midget38! Writers, I think, are especially prone to not think of their readers as "customers." Maybe it would be easier if they think of these customers as "fans" and seek to build a fan base through continued connections.

      Thanks so much for stopping by! Have a lovely weekend ahead!

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