Ma Bell Works Here
Maximizing the use of the telephone

Recently, we had a unique store visit. We observed one employee who was on the telephone the entire time we were in the store. While all of the customers were being taken care of by other employees, we thought it odd and asked the shop owner about this. "He's hard at
work bringing back some old customers," was the answer the owner gave.

"Where had they gone?" was our question, and "How do you know they are gone?" The owner of the store explained they had made a point of tracking every customer they had ever had. Each customer was tracked by name, as well as any other relevant personal information.

"But where does the phone come into play?" we asked. "Every month, we have the computer print a list of customers who have been inactive for at least six months. The report gives us all the information we have tracked, and from there we go looking for the missing customers."

The store owner told us he had studied ways to reduce costs. In an article he read, there was a quote from John Wanamaker, the famous department store owner. Wanamaker said he knew half his advertising did not work; he just didn't know which half it was. What caught this store owner's attention was that, in studying industry reports giving the averages for businesses, he found advertising was an expense that as a percentage of sales was often equal to the net profits of the business. A second report that caught his attention said the cost of obtaining a new customer was approximately $20; yet to retain a current customer, the cost was only $4.

The idea of retaining customers seemed to be a lot more affordable and profitable than looking for new customers. The logical question in his mind was to ask where had these customers gone? To answer the question, he created a stack of names and phone numbers and began to call the customers. The list of questions asked went through several changes before it got to a sequence that seemed to work best. The surprise in the process was when he found out he was not the best person to be asking these questions.

The newest employee was given a list of 100 names. In a period of 10 days, all 100 customers were to be contacted. The phone script went something like, "Hello, Don Blair? This is Danny Lyons, calling from Cox's Store. I am the new salesperson here at Cox's; and as I was looking at our files to see who our customers were, I noticed we had the opportunity of selling you [name of item] last February. How did that work out for you?" Danny then listened carefully to what the customer had to say. Danny then said, "I also note you have not been back in the store since then. We have gotten some really sharp new accessories in since then, and I would welcome the opportunity to show them to you."

If there had been any problem with the previous transaction, it was at this point the customer usually expressed his or her unhappiness. Again, Danny listened, took notes, and said, "Well, I would really like to have the opportunity to earn back your business. Do you think we could do that?" Of the 100 customers Danny called within two weeks, only two expressed a complaint. Danny and the shop owner were not able to make every customer happy again, but Cox's Store had done what the majority of shops fail to do: attempt to gain the customer back.

Why go to all this trouble to find two unhappy customers? Actually, it is not just for these two customers. The surprising part of this attempt to have customers return is that approximately 16 of those 100 will actually show up in the shop within the next two weeks. They will have told Danny-as do the majority of the 100 customers called-that they had not needed anything of late; but these 16 will show up because the thought of shopping again with Cox's has been planted. The cost of this unique effort is minimal. The results are tremendous, especially if you think about the alternatives. If you were to utilize a newspaper ad, you would be thrilled with even a 3-percent response; and the 3 percent may only look, instead of buying from you. This group of 16 are already strong candidates to buy, as they have frequented the business in the past.

We may not have solved the problem of determining which half of the advertising works, but we have surely demonstrated a method of prospecting for customers that will work for you, too. John Wanamaker would be proud.