80/20 Customers Part 2

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80/20 Customers Part 2

In part one I talked about in every customer list there are the few big spenders and most of the others range from not being very profitable to non-profitable.

You fix this by dumping them and replacing them with big spenders.

You do this by identifying them in other customer lists.

Done right, your message can be personalized on a mass scale.

Personalized messages get you heard and acted on compared to non-personalization

So let's see an example in action.

Let's take the car insurance in part one.

We got the list of those that own 3+ cars and own their own home...big insurance spenders.

Plus they are all within a 10-mile radius of the agency office.

Say you got 2,000 of them and you send out a postcard that reads something like this...

-----------------------------------------------------------
Important Notice To Del Mar Residents:

If you own your own home and have three or more cars, you may qualify for Gold Preferential Pricing for your auto and home insurance.

To see if you do, please call this hotline,
Xx xxx XXX between the hours of 8.30 am and 4.30 pm
Monday to Friday to see if this limited opportunity is still available.

Please keep calling if the line is busy.

George Orwell
----------------------------------------------------------
Note how it seems like we aren't saying they own their own home or 3+ cars...that would be too intrusive.

"May qualify" sets off the curiosity in the reader to see if he does.

It sounds valuable and exclusive by using "Gold Preferential".

It sounds like a phone number is specially set up for this special treatment.

Sounds in demand by saying "Call Back If Busy", a proven response booster.

And signed off by a real person.

There you have it, identified who are the most valuable to a business and made the personalized message valuable.

I hope this has shown you how to go for what's valuable and cut out what isn't.

Best,
Ewen.
#80 or 20 #customers #part
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  • Profile picture of the author Claude Whitacre
    Originally Posted by ewenmack View Post

    Note how it seems like we aren't saying they own their own home or 3+ cars...that would be too intrusive.
    More pure gold from you, Ewen.

    Yup, you don't want to say "I know you have three cars."

    You want it to sound like they just happen to be a perfect fit for this program. You can picture them thinking "Hey, that applies to me! What are the odds?"

    For much of the time I was selling in people's homes, we had financing through a finance company, but most of our customers didn't have credit cards with a high enough limit to just put it on the card.....

    I contacted the finance company's office manager and told him I had a great way to get his customers to get another loan, when their loan was paid off.

    Of course he was very interested.

    I told him to just give me the names and addresses of everyone that was going to pay off their loan in the next 90 days, and I would try to sell them a vacuum cleaner, financed through his office.

    I wasn't allowed to tell them that he gave me their names, or that I knew they had a loan with him. I cold called these people, and about a third of them let me show my vacuum cleaner.

    At the end of the presentation, I told them the first payment wouldn't start for 90 days. Of course, they had a loan that was going to be paid off before that. And...they were already 100% guaranteed to be approved for the new loan. Nearly all of them bought.

    And every month, I go the list of the people about to pay off their loans. This lasted for about 2 years,until the manager was transferred.

    So, yes, there are highly profitable customers out there that are highly likely to buy from you. And there are so many of them out there, there is really no reason to talk to anyone else.
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  • Profile picture of the author Kurt
    In summary...

    The issue is you need 100 customers to get the top 4 from the "20% of the 20%". That's 100 actual paying customers to get the 4 top customers.

    The strategy to overcome this issue is, as Claude points out, to come up with ways to reach the Top 4 from the results of others' marketing efforts and their 100 paying customers.
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    • Profile picture of the author ewenmack
      As Claude pointed out with the finance example, you can get a list of those that have credit cards, high net worth individuals, have a mortgage free home , borrowing ability, know when their loans are up for renewal, whom they bank and insure with.

      So you don't need to know your local finance guy to make this work.

      Best,
      Ewen

      P.S.
      So if you did home renovation you obviously would only want to put your message in front of home owners and can finance $50k or whatever number your work is.

      If you are in mortgage refinancing and you know those with Chase
      for 5 or more years can get a much better deal now and they are up for renewal this month, they are who you want to be talking to.
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      • Profile picture of the author ewenmack
        Claude, you touched on the word Program.

        Yes, we want to give it a name, instead of the plain words insurance and quote.

        These little things make a huge difference in perception of value.

        You know this, however it may be a reminder to others.

        Best,
        Ewen
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      • Profile picture of the author StevenTylerPjs
        Ewen
        Do you have any suggestions on reputable companies to buy targeted lists from?
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        • Profile picture of the author ewenmack
          Originally Posted by StevenTylerPjs View Post

          Ewen
          Do you have any suggestions on reputable companies to buy targeted lists from?
          So that I can help you the best, are you wanting them for yourself or resale, are they b2b or consumer?

          Best,
          Ewen
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          • Profile picture of the author StevenTylerPjs
            Ewen,

            All of the above, minus b2b.

            So b2c for myself mostly, and then I'd like to see other lists that maybe I could resell or just find new products to sell to those lists as well.

            I've never come across a leads company that had a very stellar reputation, so I've always avoided them.

            But maybe companies selling raw data could be more reliable. Then I could add parameters to what I wanted ie. "must own a car newer than 2015"
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            • Profile picture of the author ewenmack
              Originally Posted by StevenTylerPjs View Post

              Ewen,

              All of the above, minus b2b.

              So b2c for myself mostly, and then I'd like to see other lists that maybe I could resell or just find new products to sell to those lists as well.

              I've never come across a leads company that had a very stellar reputation, so I've always avoided them.

              But maybe companies selling raw data could be more reliable. Then I could add parameters to what I wanted ie. "must own a car newer than 2015"
              Like anything, if you aren't well informed and go to those that have your best interests at the forefront, you are heading for trouble.
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              • Profile picture of the author Claude Whitacre
                Originally Posted by ewenmack View Post

                Like anything, if you aren't well informed and go to those that have your best interests at the forefront, you are heading for trouble.
                Wouldn't any list broker at any of the big mailing list companies be able to advise and get the right list?
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                • Profile picture of the author ewenmack
                  Originally Posted by Claude Whitacre View Post

                  Wouldn't any list broker at any of the big mailing list companies be able to advise and get the right list?
                  I find that if I do the research first
                  before speaking with them I can speed up the process
                  and see if the list is the right one or whether they can make
                  an existing one better.

                  Lot's of questions.

                  Are they compiled
                  What were the sources
                  How recent
                  Verification process
                  Are they responders
                  How recent did they respond
                  What media did they respond to
                  If on phone, how long were they on the call
                  What was the offer and price point
                  Are they, buyers
                  How much did they spend
                  How recently did they spend
                  Are they repeat buyers
                  What media did they come from
                  What got them to buy
                  Was there multi-channel marketing
                  Did they buy over phone or online
                  Who else is using this list
                  Are they coming back again
                  Do they have in-market lists

                  Some of these questions can be answered from your own research,
                  while others need to be answered by the list broker.

                  ExactData can be good when you are ready to talk.

                  Nextmark is a good place to do research of many databases available

                  Best,
                  Ewen

                  Added Later
                  There are 4 main categories of lists that can be rented and bought

                  They are
                  1 Compiled
                  2 Responders
                  3 Buyers
                  4 In-market

                  Compiled are those when you think of scraping your own lists off Google and directories however companies add more value to them by verifying and harder to get details.

                  Responders are those that responded to advertising but didn't buy.

                  Buyers are confirmed buyers of a company brand product

                  In-market are those that are either tracked online for their browsing history
                  or using predictive algorithms
                  based on recent purchases.

                  Added Later
                  Exact Data get much of their data from Acxiom.

                  Acxiom supplies me with their same catalog of data
                  as a reseller.
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  • Profile picture of the author max5ty
    Only thing I would add here...

    the 20% of your customers bringing in 80% of the revenue are not always the same 20%.

    Those "constant" 20% can fluctuate wildly depending on the time of year and campaign.

    During the holidays you may need to focus on a different group of 20 percenters. I.E. individual preferences.

    I completely understand the logic in the 20% hoopla...but also know it's fluid and not static.

    If you're using a good CRM it can help you track the data but still be mindful not to forget the fluid waves in customer loyalty.
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    • Profile picture of the author ewenmack
      Originally Posted by max5ty View Post

      Only thing I would add here...

      the 20% of your customers bringing in 80% of the revenue are not always the same 20%.

      Those "constant" 20% can fluctuate wildly depending on the time of year and campaign.

      During the holidays you may need to focus on a different group of 20 percenters. I.E. individual preferences.

      I completely understand the logic in the 20% hoopla...but also know it's fluid and not static.

      If you're using a good CRM it can help you track the data but still be mindful not to forget the fluid waves in customer loyalty.
      Yep, always fluid.

      Best,
      Ewen
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  • Profile picture of the author max5ty
    Another thing to consider...

    is it better to know who owns 3 cars and bought a house, or a dress or whatever...

    or would you rather be the one that sold them all that and let the sloppy seconds try and get their take of the loot?

    It's ok to target those that have bought, but I'd rather sell the big stuff and let the others try and get some scraps.

    Big data is great, but most of what we're talking about in this post is after the fact data...after they've already been sold something from great marketers.
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    • Profile picture of the author ewenmack
      Originally Posted by max5ty View Post

      Another thing to consider...

      Big data is great, but most of what we're talking about in this post is after the fact data...after they've already been sold something from great marketers.
      Great point.

      Thanks for bringing this up because I forgot to actually say
      past behavior is an indicator of future behavior

      Back in the old days before the Internet,
      direct marketers who used mail
      and rented mailing lists
      knew those that recently bought a product
      were more likely to buy a similar one again.

      They and the list brokers called them a hotlist.

      The brokers would charge more for them and the mailing list buyers would pay a premium for them.

      Direct to consumer marketers who use mailing lists
      still, today pay for these premium lists because of these buyers
      will buy more than those that haven't bought recently.

      It sounds counter-intuitive
      for those that haven't rented mailing lists and compared the two.

      Now, this isn't going to work in all cases.

      A bride isn't going to buy another dress in a few weeks.

      A burial insurance policy probably isn't going to get another one in a few weeks.

      Best,
      Ewen
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      • Profile picture of the author max5ty
        Originally Posted by ewenmack View Post

        Great point.

        Thanks for bringing this up because I forgot to actually say
        past behavior is an indicator of future behavior

        Back in the old days before the Internet,
        direct marketers who used mail
        and rented mailing lists
        knew those that recently bought a product
        were more likely to buy a similar one again.

        They and the list brokers called them a hotlist.

        The brokers would charge more for them and the mailing list buyers would pay a premium for them.

        Direct to consumer marketers who use mailing lists
        still, today pay for these premium lists because of these buyers
        will buy more than those that haven't bought recently.

        It sounds counter-intuitive
        for those that haven't rented mailing lists and compared the two.

        Now, this isn't going to work in all cases.

        A bride isn't going to buy another dress in a few weeks.

        A burial insurance policy probably isn't going to get another one in a few weeks.

        Best,
        Ewen
        Agree with you...

        but I'm the person that sells them the first time.

        Wouldn't it be better to target them before I get them? Unless you're selling a list because you're claiming you're using some type of artificial data...
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        • Profile picture of the author savidge4
          Originally Posted by max5ty View Post

          Agree with you...

          but I'm the person that sells them the first time.

          Wouldn't it be better to target them before I get them? Unless you're selling a list because you're claiming you're using some type of artificial data...
          3 cars and a house... you can sell it to them first all you want.. but I want to be the guy that sells the 3 cars after 3-5 years of ownership, how many times over?. I want to be the guy that sells the bigger house after 10 years, the AVERAGE being 2-3 homes in a lifetime... and in this type of financial bracket.. they may literally own 2 or 3 houses at once.

          As I see it data separates sales... there is the micro - who is looking NOW.. and then there is data's Macro... how will they be buying over a lifetime - what leads up to the buy?

          An example.. I cold call Satellite TV prospects. Are you interested? they respond "I already have DirecTv" I respond when is your contract up? - they give me an answer. for THAT customer - I now know that ever 2 years ( that's what Sat contracts run for ) from the end date they provided would be in the market for switching services... not just next time around.. but every 2 years for the rest of their lives at that address.

          Micro selling now, would had said "thank you for your time" Macro data now has a precise timeline when to approach this customer next, and again, and again, and again.

          Data doesn't have to be "Big" to be effective. It just has to be collected.
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          • Profile picture of the author ewenmack
            Originally Posted by savidge4 View Post


            An example.. I cold call Satellite TV prospects. Are you interested? they respond "I already have DirecTv" I respond when is your contract up? - they give me an answer. for THAT customer - I now know that ever 2 years ( that's what Sat contracts run for ) from the end date they provided would be in the market for switching services... not just next time around.. but every 2 years for the rest of their lives at that address.

            Micro selling now, would had said "thank you for your time" Macro data now has a precise timeline when to approach this customer next, and again, and again, and again.

            Data doesn't have to be "Big" to be effective. It just has to be collected.
            I'm not sure if Direct TV customers up for renewal data is available but certainly a lot of bigger financial transactions are.

            It even goes deeper.

            Like identified the reasons leaving a cellphone co.

            One of the lists is because of poor coverage.

            If you had a client that had the best regional coverage, then there's your list of prospects.

            Best,
            Ewen
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            • Profile picture of the author savidge4
              Originally Posted by ewenmack View Post

              For a small business that serves their local community,
              all this is mostly irrelevant.
              Originally Posted by ewenmack View Post

              I'm not sure if Direct TV customers up for renewal data is available but certainly a lot of bigger financial transactions are.
              And this is the point I am making.. there is a lot of this "Trivial" Data that is not available.

              BUT... for a sales person that is ACTIVELY out there sourcing leads asking simple benign questions like when was your current service installed... and knowing there is a 2 year contract. Asking when did you buy your current vacuum and knowing the average life of a vacuum is 7 years. Or knowing your average life of customer for SEO is 1 year 2 months, or the average time for a site rebuild is 3 years or Social Marketing management is 1 year 8 months... THIS becomes obtainable and usable data.

              If I am on the phone and the person on the other end is going to waste my time by saying "No - Im not interested" I am for damn sure going to ask some silly question that puts a time frame of WHEN they will be interested. I've only learned this stupid trick in the last 5 years and BOY does it make a difference.

              Cold calling is one thing.. but cold calling on someone you have called in the past knowing they are NOW in a position to buy or at least at an average threshold of being at a point to buy is pretty powerful.

              Data does not have to be something you "Buy", it can be something you "Collect"
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              • Profile picture of the author ewenmack
                Originally Posted by savidge4 View Post


                Cold calling is one thing.. but cold calling on someone you have called in the past knowing they are NOW in a position to buy or at least at an average threshold of being at a point to buy is pretty powerful.

                Data does not have to be something you "Buy", it can be something you "Collect"
                On the initial calls, who do you know to call?

                Best,
                Ewen
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                • Profile picture of the author savidge4
                  Originally Posted by ewenmack View Post

                  On the initial calls, who do you know to call?

                  Best,
                  Ewen
                  I open up the phone book... LOL Just Kidding.. I don't do that. - well actually I do, not to call but to see who is spending. I do what even I highly un suggest and create my own call lists. Locally.. I look for existing paid advertising - newspapers, local mags, billboards etc business neighbors that use paid advertising. ( added this recently - can ask the business owner how he / she thinks their neighbor that has this and that advertising is doing ) New business' in general.

                  For Satellite its all about geography there is a fine line between where the cable ends ( as in cable TV and Cable Internet ) and the land of Satellite begins.

                  Get into Nationally and Internationally.. its all about ad spend.. you spend money with online advertising, I WILL find you LOL

                  But as stated above, the first call if nothing else becomes a point of data collection... So the call itself is not a waste, but possibly a setup for a better environment for my message to be heard the next time I call.
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                  • Profile picture of the author ewenmack
                    Originally Posted by savidge4 View Post

                    I open up the phone book... LOL Just Kidding.. I don't do that. - well actually I do, not to call but to see who is spending. I do what even I highly un suggest and create my own call lists. Locally.. I look for existing paid advertising - newspapers, local mags, billboards etc business neighbors that use paid advertising. ( added this recently - can ask the business owner how he / she thinks their neighbor that has this and that advertising is doing ) New business' in general.

                    For Satellite its all about geography there is a fine line between where the cable ends ( as in cable TV and Cable Internet ) and the land of Satellite begins.

                    Get into Nationally and Internationally.. its all about ad spend.. you spend money with online advertising, I WILL find you LOL

                    But as stated above, the first call if nothing else becomes a point of data collection... So the call itself is not a waste, but possibly a setup for a better environment for my message to be heard the next time I call.
                    Sorry, I'm confused.

                    Mentioned direct tv customers and the advertisers on direct tv.

                    What am I missing?

                    Best,
                    Ewen
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                    • Profile picture of the author savidge4
                      Originally Posted by ewenmack View Post

                      Sorry, I'm confused.

                      Mentioned direct tv customers and the advertisers on direct tv.

                      What am I missing?

                      Best,
                      Ewen
                      DirecTv for me in my market is geography. I don't live in a big city.. The cable system only goes so far. In the Mid section of West Virginia.. there are more people by percentage using DirecTv and Dish Network than cable. NOT by choice, but because they have no other options for TV.

                      I have the ability to drive down the road and looking at the power lines.. tell when "Cable" ends. So I can use a reverse lookup of the white pages based on address. I also have the fortune of living in an area that aside from very defined corridors of Cell service many HAVE to have house phones. So cold calling becomes a valid method of selling what it is I have to offer.

                      The absolute turn around for me was determining the 2yr contract date on each of these calls. I am no longer wasting their time and mine, by calling when they are under contract.. I only call when its time to switch. I then basically am left with a list of people proven to buy... and I know when they are most likely to buy based on contract dates.

                      I then took this working model and applied to all of the other aspects of my business that I cold call for - Understanding what a lifetime cycle looks like.. knowing a start date of a service, I now have an idea of when to maybe make a push for a contact - vs - just cold calling to cold call.

                      In most cold call scenarios you have a Yes list, and a whole bunch of No's on a list. I now have a Yes list, and a time frame to call back when a No, may convert to a yes.
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  • Profile picture of the author max5ty
    Ok, my last post wasn't clear...

    what I'm asking is why would someone pay for AI after the fact?

    I understand what you're saying about data. But what I'm saying is I'm a major player that creates the data you use.

    Guess it's all about perspective.
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    • Profile picture of the author ewenmack
      Originally Posted by max5ty View Post

      Ok, my last post wasn't clear...

      what I'm asking is why would someone pay for AI after the fact?

      I understand what you're saying about data. But what I'm saying is I'm a major player that creates the data you use.

      Guess it's all about perspective.
      Great question.

      Take the two major online ad platforms Google and Facebook.

      As an advertiser, you don't know as much valuable information
      about them as you can get outside those ad platforms.

      You can get to put your message in front of only those that are qualified to buy.

      By that I mean they have enough credit to buy.

      We stop ad dollars being wasted on those that can't buy
      plus we can put the message when they are searching
      online using real-time bidding.

      Then there is Amex data which uses an algorithm
      which notifies when a card is about to purchase
      particular item weeks out
      based on a $trillion dollars worth of annual
      transactions tracked.

      There are now big retail brands who have formed a co-op
      to exchange their customer data in a secure way.

      For a small business that serves their local community,
      all this is mostly irrelevant.

      However, the example of identifying those that own 3+ cars
      and own their own home becomes very relevant because of
      them being better prospects than renters and one auto owners
      mixed in with the gems.

      Best,
      Ewen
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  • Profile picture of the author max5ty
    @ewenmack - I agree data is almost everything now and I'm sure you probably know more about its uses than most. It's an interesting subject.

    Persado.com claims they've assembled data from umpteen billion ads and created a system that can outperform a copywriter. Must work (maybe), they have some major companies buying into their big idea.

    Anyways, you always have great posts that I learn so much from. Thanks for taking the time to post
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  • Profile picture of the author ewenmack
    Very very few marketers will target the channel
    people buy from.

    Claude is an exception when he talks about those
    that bought a vacuum cleaner from
    an in-home salesman.

    Take life insurance.

    If you have a team of outbound phone callers
    then giving them a list of those that buy life insurance over the phone is
    going to be better than those that buy off a website.

    The same goes for if the callers who are representing one company
    or multiple insurance co's.

    If you represent State Farm you can get those that buy from a single
    insurance co-representative rather than that buy from a broker that
    represents several insurance co's.

    If your thing is direct mail, then you can get those that buy
    life insurance from direct mail.

    You can go much deeper into finding more profitable more responsive prospects.

    If you knew your coverage was superior in so many ways than
    Gerber Life, then yes you can target just those policyholders.

    Best,
    Ewen
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