In This Issue

My adventures on a narrowboat

I left my able team of experts in charge of the 4R shop for two weeks recently to fly to the UK with my husband Skip for a working vacation. "Working" in the double sense that (1) I was checking out a venue for the writing retreat I will be offering every spring starting next year, and (2) we worked our way through a small portion of the canals that abound throughout England. We motored our way to Chester, starting the trip on one end of the Trent & Mersey Canal and wending our way through the Cheshire countryside to the small walled city with a bunch of history that sits on the River Dee just south of Liverpool.

As you may know, Skip and I are sailboat people, and we love the camaraderie and community of the waterfront. We found that same kind of thing along the canals we traveled; boat people are boat people, I guess. We were far from the standard foreigner tourist track, among some of the most friendly Britons I've met in many years of visits.

I am looking forward to offering "A Slow Boat to Chester" next May: a floating retreat that will take participants on the same track that we followed for a week's rest, relaxation and writing. I will definitely let you know when it will take place, and hope that you can join Skip and me!

Leveraging the Pareto Principle for Fun and Profit

By Trish Lambert

Though it may not be referred to specifically by business and marketing experts, the Pareto Principle plays a significant part in the advice they impart. The Pareto Principle says that for many phenomena, 80% of the consequences stem from 20% of the causes.  Also know as the 80-20 rule, it gets cited in all kinds of business media. Interestingly, and in spite of its trendiness, the Pareto Principle really is a useful concept for a service business.

One of the applications of the principle says that 80% of a company’s revenues come from 20% of its customers. In other words, all customers do not have the same amount of impact on your bottom line.  Some small portion—20% for example—are far more significant to your firm than others.

This insight can drive a large part of your marketing program.  The ways in which you care for the few customers who spend the most dollars will vary based on your particular style and the type of business you own, , but no matter what the business, creating a marketing program that targets the top 20% of your list will generate new revenues in all kinds of ways from increased purchases themselves to sending more referrals your way.

But here is an interesting number: In a survey of U.S. corporate marketing managers, slightly more than half of respondents said that they do not segment according to customer value. This implies that around half of American corporations don’t recognize that their customers are not all of equal value to them. I’ll bet that if we move down into the small-to-medium business sector, that portion increases by a lot.

That’s not good. Customer value needs to figure prominently in marketing strategy, especially in smaller companies. Resources are spread wider and thinner in small to medium enterprises, and every single marketing dollar has to produce the right result. Paying more attention to that top 20% of customers will produce far more right results than treating your list as one homogeneous audience.

Some corporations have mastered the art of cultivating their top customer echelon. Airlines are a prime example; their frequent flyer programs reward the people who buy from them the most, and go one step further by motivating these buyers to continue buying by offering attractive incentives for accumulating more miles with them. They also negotiate special rates with large corporations with vast travel budgets to motivate continued patronage.

How can you leverage the minority of customers who account for the bulk of your revenue? Here are a few ideas to spark your thinking: 

Cafe Press

Speaking of small gifts and tokens of your appreciation, you can get custom merchandise created in small quantities by opening an account at Cafe Press. This innovative site allows you to upload your own artwork (a logo, a photo, or any other image) and apply it to a variety of goods including t-shirts, mugs, caps, mouse pads, and calendars.

Trish Lambert has been on the business beat for absolute ages, as an employee, a manager, and a business owner. After running a successful marketing firm in the 1980s and a ten-year stint in the Fortune 500 world, Trish is back doing what she loves most: Running her own business--4R.  The 4R team helps clients get the most out of their marketing programs through top notch content and unparalleled project management. 4R has attracted service businesses around the world that need the focus and results that Trish promises.

If you like GM4C, you will enjoy working with Trish. Her sensible approach and drive for results are of great benefit to small and medium service businesses. A nonconformist who questions many of marketing's "sacred cows," Trish thinks in terms of sales and revenues, and focuses on how the marketing investment will help realize business goals.