Chapter 7: Leverage Demand | How to Turn Customers into Persuaders
This chapter contains two techniques that work together like a one, two punch that you definitely need to have in your marketing arsenal. The first technique is designed to get your customers to buy more more often. The second technique takes it one step further and turns your returning clients into Persuaders. In other words your customers recruit new customers once you set things in motion, your customers will do most of the work for you. This isn't just creating demand this is leveraging demand.
The first demand leveraging technique is called recycling.
Remember when I said it's possible to enlarge your core in chapter 6, to turn light buyers into heavy buyers, well recycling is one really good way to do exactly that.
The idea behind recycling is to generate more purchases from your existing consumers, customers, or clients.
When you drive a customer into buying again sooner or buying another related product or buying a different time of day or different day of the week than she otherwise would, your recycling their customer.
To recycle your customers, you must set things up so that each purchase is not an end in itself but it's the first step for the next purchase.
When you do it right each purchase by anyone quiet is linked to their next purchase and that next purchase is linked to the one that follows it.
Before long, purchases by that one consumer are happening with increased velocity and amount. Multiply that by the number of customers you have and you're really catapulting your revenue.
Let's look at a very simple example of recycling, so you know exactly what I'm talking about. As you know nightclubs are a microcosm of society and a very visible revealment of human behaviour.
So I use them off and as examples and will do so again right now. The nightclub in this example was experiencing a great turnout every Friday evening, but our stars turn out every Wednesday evening.
A competing place not far away had some sort of promotion going on Wednesday and decided nightclub decided to implement a recycling program to get the Friday night crowd to return on Wednesdays on Friday evenings the club handed each entering patron a printed card about the size of a credit card.
Generally speaking, this is called a recycling card but the nightclub came up with their own brand name for it the VIP card.
The card entitled the supporter to free admission on Wednesdays and any Wednesday before 10 p.m.
In addition, the card could be redeemed for a free drink. The club continued to pass these VIP cards out every Friday and it only took a few weeks until they were equally crowded on Wednesdays. It works so well they went to the next logical step and printed up different VIP cards on different coloured card stock for use on different nights.
So now the people who came on Wednesday night received a VIP card good for Thursday nights and so on.
This nightclub example isn't as simplistic as it may appear, every detailed element of it was done, away it was for a specific reason.
To design an effective recycling program, you need to think through and every detail.
It is certainly not desultory. It is going to be based on your knowledge of how your customers are likely to behave when properly enticed.
The owner of the nightclub knew all too well that his typical customer usually in their 20s looking for some action, would cruise through early in the evening to see if the place was crowded enough to make staying worthwhile.
That's why the owner made his VIP cards good for free admission before 10 p.m. He needed to build a crowd early and it also headed people off whom I have chosen another nightclub initially.
In addition, the owner didn't want people to walk in and walk right back out. He needed them to stay for a while at least long enough to consume a drink. That's why the card was good for a free drink which also jump-started the bar as people would head straight to the bar to redeem their card.
Notice also that the card was good for only one free drink. Of course, people usually didn't buy one drink at a time, they bought two or more at once for their friends in addition to themselves. So the one free drink actually generated one or more paid drinks
Since recycling can take out different appearances, let's look at a few other examples.
An independent auto service centre that I go to issue me a preferred customer card with the numbers 1 through 8 on it. Each time I get an oil change they mark off another number and once I purchased 7 of them the 8th one is free.
This fosters some customer loyalty, call it pseudo loyalty, real loyalty would exist if I kept going back because I love those people haha!
The real reason I will go back is that there is something in it for me. I'm earning that free oil change.
I purchased a revolvable television stand from a home furnishings retailer through their website, along with it came a car good for £25 off my next purchase and of course, it had a use it or lose It deadline on the card.
Well, I didn't want to lose £25, so I found something else to buy within the time dictated by the card.
McDonald's runs their monopoly contest almost every year and I almost got the same winnings as last time. You know how it works, with every order of fries or drink, you get game pieces. Some are instant winners which keeps people engaged but the main customer objective is to collect sets for the big prizes. Got to keep going back to keep getting those game pieces.
Here's the real secret, when you recycle you're giving your customer an equity interest in the next purchase, this is what links each purchase to the next purchase.
When the customer buys something, they're not only getting the product or service they just paid for but they're getting some equity in a subsequent purchase as well.
Think of it this way a customer buys from you and before they walk away you ask them if they'd like to pay £20 now for their next purchase.
Well in real life they will probably decline since there is no reason for them to do so.
But pretend they said "sure, here is a £20 note", now the consumer has got an equity interest in their next purchase. £20 equity, in this case, it will now be very difficult for them to buy from someone else because they've already invested in you.
They've got skinned in the game so they speak. It would be equally difficult for them not to return and buy again soon since they'll then lose their £20 investment.
When you hand someone a recycling card, you're giving them equity interest in the next purchase, almost the same as if they put their own money into it, once they possess this equity, they are vested so to speak.
Which means they are motivated to buy again from you and soon.
Here is one important distinction before we get into the implementation steps.
Recycling is not the same thing as couponing.
First of all, couponing and recycling have different objectives. Coupons are a buying incentive for the masses, cast a wide net and see what you catch.
Hopefully, you get first-time buyers who are happy enough to become regular customers.
But if not, at least you can boost short-term revenue somewhat when the coupon is in effect.
A recycling card and equity it represents are designed to reward the buyer for making a purchase. Like giving your dog a treat right after he performs a trick.
It is positive reinforcement for buying and you ring up more and more sales and the customer continues to redeem each one in succession.
Another difference, coupons are one-shot deals. When a coupon lands in my hand, I may use it to save money or get something when I buy from you.
But it has got nothing to do with any subsequent purchase I may or not make.
A recycling card, on the other hand, gives me equity in the next purchase, which I'm motivated to make because I'm already priced in. If coupons are working for you, I see no reason to stop. Just add recycling to the hot soup and you can make your couponing pay off well into the future.
Here are the implementation steps to designing an effective recycling program.
Step #1 Determine what specific consumer behaviour you wish to occur would you like them to buy again within the next few weeks or months, would you like them to purchase of related product or service, you must be specific and objective like: I want them to come back again soon is too nebulous. I want them to buy the deluxe car wash on weekdays after 4 p.m. is more specific and more effective.
Step #2 Provide equity in the next purchase. The first thing that might come to mind is to offer the customer a monetary incentive some pounds sterling amount off, another option is to offer a free product or service or a free sample. That nightclub we talked about offered free admission on another night along with a free drink. They could have simply offered a pound sterling amount discount but that just doesn't have the allure of the free admission and drink.
And what about that auto service centre, they could have offered a pound sterling amount rebate after someone purchases 8th oil change but that's not what is appealing is getting a free oil change. Offering a bonus product or service may be better for you since it's usually cheaper than offering a pound sterling amount off.
Let's say that reward you offer is a product or service that retails for £75, your cost is of course a lot less, whereas in the consumers' mind it's equivalent to £75 cash.
Step #3 Make it tangible. A simple and actual tangible card works best but you say: "I can save money simply by emailing it to them or pushing it to a phone app" and I say that's couponing even if it said to a database of customers. Design and print up actual recycling cards in the brand with a simple name.
Step#4 Get your recycling card into the clients' hands as soon after they make the purchase as possible. If you're a brick-and-mortar retailer, put it in the bag right at the register. If you ship the product put it in the box along with the receipt. If you perform a professional service of some kind snail mail at along with a thank you note. Don't send it along with the invoice though, invoices usually end up in accounting departments and you want to reward the decision-maker, not the person that signs the cheque.
So, now your recycling program is working, your customers are buying more, more often.
Now let's take it one step further and achieve even greater results. Your customers must be happy buying from you or they wouldn't be buying from you.
Happy customers are a leverageable asset they have the power to persuade other people to become your customers and they will do just that if you entice them. A technique called encourage endorsement. It happens as you the marketer encourages your consumers to endorse you.
When you encourage endorsement of your product, service, or business, you are empowering each consumer to assist you in the demand creation process.
It is as though you deputize your customers and make them pseudo members of your sales staff. You encourage your clients to endorse either passively or aggressively.
Each works differently so we'll discuss them one at a time starting with passive endorsement. Passive endorsement occurs when a person displays the usage of a particular product or service.
The keyword is displayed, the display of usage is noticed by others who are in turn influenced. When you encourage your clients to display usage, a good percentage of them will do so and suddenly you've got passive endorsement spreading throughout the marketplace.
One of the best examples of passive endorsement can be seen on the back of pickup trucks, just about every manufacturer puts their brand name on the tailgate and not just painted on, in bolstered metal and not in small letters either.
Some like the letters F O R D are quite large and spread across the entire width of the track on some models. When you buy any vehicle really, you're displaying the make you've chosen for all to see every minute you're on the road and every minute of the vehicle is parked in a visible location. It's a passive way for the vehicle owner to say: "I'm a discriminating buyer and I've chosen that such and such brand of car and if you were smart as me, you choose this make too".
Many clothing manufacturers encourage passive endorsement by making sure their logos are prominently visible and the outside of the clothing. Lacoste = alligator, Polo = Polo player, Levi's large tag, Nike's swoosh are all examples. Tommy Hilfiger puts his whole name in huge letters across the entire width of the shirt in some of his clothing lines.
Clothing is a great vehicle for encouraging passive endorsement even if you're not a clothing marketer.
Seems every company has custom logo shirts or caps of one kind or another, perhaps you should have them too and not just for employees to get them out into the marketplace as sports teams do.
You want your customers wearing them, I've mentioned several times in earlier chapters, that logo exposure is very important but please take note, a passive endorsement is much more than simple logo exposure. When a client displays her usage of your product or service, she's implying support. She's putting her personal stamp of approval on your product or service or company that adds power to your logo.
It's not the name BMW or Nissan or Mercedes on your vehicle that does the trick, it's you driving the vehicle in public displaying your personal support that makes the difference.
You needn't be any kind of celebrity either.
Your friends' relatives and coworkers know you personally which says enough to them. Strangers see the way you look the way you come across and that tells them what type of people to associate with their product.
Passive endorsement means customers are persuading others to buy the same products and services they buy when they're displaying your brand you win.
Now let's look at the other type of encouraging endorsement. The aggressive type, when someone deliberately recommends your product or service to another either verbally or in written a message, is what we call an aggressive endorsement.
With the passive endorsement, they don't have to say anything with aggressive endorsement they say a lot.
How do you encourage this? let's walk through an aggressive endorsement scenario.
A lawnmower marketer offered a £50 rebate on a particular model, the mower came with an eight and a half by 11-inch card with perforations near the bottom that produced two smaller postcards size cards when torn off.
The buyer was instructed to tear the bottom cards off, fill out the one on the left, include a copy of the purchase receipt, and submit it to get a rebate.
What about the other card? well here are the actual directions that appeared on that one:
Know a friend, neighbour, relative who could use a new lawnmower? Do him or her a favour, give them this card good for a £50 rebate on a brand new SHEMLON lawnmower.
Note that the directions asked the buyer to deliberately recommend the SHEMLON lawnmower by giving the rebate card to someone.
GEICO insurance based in the USA sends its policyholders a pamphlet with the headline "Why should you help your friends to save money with GEICO" then it lists the reasons why you the new policyholder should do this.
It even has a three-panel cartoon showing one person giving the pamphlet which contains an application form to a neighbour.
That is GEICO encouraging their client to aggressively endorse.
Remember the nightclub example when we talked about recycling, the nightclub created a recycling card that offers the cardholder a free admission and drinks on another night you recall.
Well, the nightclub actually used the encouraging endorsement technique as well by making each VIP card good for admission for two people, not just one.
What is the cardholder likely to do when it comes time to use the card, since it represents free admission for two, he or she is going to recruit a friend to go with them.
Do you see how both the recycling and encouraged endorsement techniques can work together? Why would a person want to endorse or recommend a particular product or service? Ask another way what incentive is needed to get your client to passively or aggressively endorse your product or service.
You might be thinking well that's obvious, they do it for the monetary incentive. Actually, the financial reward is only part of it and if that's the only thing they gain, they may hesitate to endorse it. You need to provide added incentive and what might that be, it will be one or more psychological gains.
Here are three you might find useful.
A person will endorse a product or service to gain higher status, by displaying his or her allegiance to a particular brand the consumer feels the brand status transfers to him or her. It elevates them like what happens when he whips out a 24-carat gold cross pen in front of everyone in the meeting or when she enters the room slinging a COACH pocketbook around or when he uses his iPhone in public or when she leaves the Cuisinart blender and a kitchen counter for any visitor to see.
Also, a customer may rise and status by appearing knowledgeable and experienced, and active aggressive endorsement often puts the endorser in an elevated position in the eyes of the person is talking to.
Another reason why someone would endorse is to share experiences and the natural human trait is to share experiences we find pleasurable. That's another reason why your buying experience needs to be really good.
The third reason why someone will endorse is to gain reinforcement, people don't always feel confident with every purchase decision they make, one way the customer gains confidence in their purchase decision is to recommend the item to others. When they see other people choosing to purchase the same thing, that makes them feel better about their decision to buy it.
You will want to keep these consumer desires in mind when you design your encouragement design materials. You can use wording that plays on these desires like GEICO does when the words "help your friends" appeared on their encouraged endorsement pamphlets.
That is the sharing of experience motive.
Let us walk through the implementation steps, starting with: Passive encourage endorsement.
Step#1 Attached your logo to your product in a conspicuous way, remember you want consumers to display usage. Other people need to see the brand name.
How do you attach a logo to a service, it's obviously more difficult than attaching it to a physical product but in some cases, it can be done.
Construction companies put a sign or two in front of the project there working on.
Lawn maintenance or food delivery companies park their flashy trucks in front of the property for all the neighbours to see.
Schools sell all kinds of logoed items for their students or alumni to probably display.
Step#2 Get your logo out there. When you buy an Apple product you will find one or two logo decals in the box. They have been supplying these decals to customers for years and those things have been ending up on vehicles, backpacks, windows, office filing cabinets, lunch boxes you name it. I won't work for a radio station that bought 30000 logo imprinted t-shirts and pass them free at a single concert.
Remember you want to encourage people to display usage or allegiance, you want to turn customers into persuaders and they need some visible logoed item to do that.
Another option is to pay a highly visible person to walk around in public with your logo emblazoned on their person as you see with Football players, Domino's SpiderMan or poker players.
Now here are the steps to implement aggressively encouraging endorsement.
Step #1: Create an endorsement card or pamphlet. An endorsement card is similar to a recycling card in fact they can be one and the same as long as the card contains both recycling and endorsement elements and like recycling endorsement occurs much more often when you use a physical tangible card or pamphlet.
Step #2: Use wording that inspires the recipient to deliberately inform others about your product service or business. Touch on one or more of those incentives we talked about, suddenly suggests that by telling others the customer will rise and status, share a great experience or feel better about their own purchase choice.
I repeat you need to hint at this not overtly mentioned them for example if you wanted to play on the status motive you might say "help others by telling them what you've experienced as a business owner". You would not want to be so blatant as to say: "gain status by showing off your knowledge as a business owner"
Step#3: Get your encouraged endorsement card, this can be a recycling card into the buyers' hands as soon as possible after they make the purchase. When you implement a recycling program and encouraged endorsement program, you'll have your clients not only buying more often but spreading demand throughout the marketplace on your behalf.
In the next chapter, I will introduce you to a new way how to attract consumers to your product or service and it really does work like magic.