Cultivating Your Customers

Nonprofit organizations have much to learn from for-profit organizations. However, one area where nonprofits excel is in donor cultivation, which is the way an organization identifies, communicates with and strategizes for ways to connect with an individual or institutional donor. While for-profits don’t have donors, they do have customers. Many of the same principles that apply to a nonprofit’s practice and system of cultivating donors can be applied to for-profit organizations that are seeking to identify new customers, upsell existing customers and grow the entire customer base.

Customer Prospecting

When a nonprofit organization wants to expand the number of donors it has, it typically starts with existing donors – those who are already aware of the organization’s mission and support it. As many for-profit enterprises know, existing customers are often the first group to approach when seeking new customers. It is important to remember that every existing customer knows about your corporation and your product or service. Moreover, each customer has his or her own network of friends, colleagues and others, many of whom may be potential customers.

In the nonprofit world, we look for people who have linkage, a connection to the organization, ability, the capacity to give time or money, and interest, a specific reason why they are interested in being affiliated with the organization. For-profit enterprises can adapt the same principles to identify new customers.

First, focus on linkage. Who are your current customers? Are you educating them about new products or services that you offer? Do you have a customer referral program that incents current customers to recommend your product to friends, family or co-workers? One good exercise is to contact your top ten customers and ask each one of them if they are aware of other colleagues or friends who would be interested in learning more about your products or services. Larger corporations, in particular, often have departments that make purchasing decisions independently of one another. If you have a current customer from a large corporation, be sure to ask if there are other offices or departments that could benefit from your product or service.

Second, to the extent that you are able, you need to quantify a person’s ability. Is the customer prospect a key decision maker who has the authority to purchase your product or service? Or will the customer prospect need to obtain approval from another worker to make a purchase? You can group customer prospects into four categories:

1. Purchasing authority – this person can make decisions about how corporate funds are spent.
2. Purchasing recommendation – this person is connected to individuals with purchasing authority and is relied up to make recommendations on which products or services to purchase.
3. Purchasing influence – this person does not have authority to make a purchase but is viewed as someone who provides insight but not recommendations for product purchases.
4. User – this person will use the product or service but does not influence the purchasing decision in any way.

Third, find out the person’s interest in your product or service. Are they currently looking for a vendor for your product or service? Are they adding this product to existing products? Is there a specific reason why they would be interested in purchasing from you rather than another vendor? For example, are you a minority- or women-owned business? Are you physically located in close proximity to the customer? Do you offer payment terms that are better than other competitors?

Potential customers will have different interests or reasons why they select one vendor over another. Because of this, it is important to ask potential customers the criteria they use to select a new vendor. Once you know what they are interested in, you can highlight how your corporation can meet their needs and fulfill their area of interest.

It is also a good idea to understand the interests of your current customers. When you call through your list of top ten customers, take a few minutes to ask them a few questions to identify their specific area of interest. These questions can also help you learn how your current customers differentiate you as a vendor or your product or services from other vendors, products or services.

1. What do you know about our corporation?
2. What images come to mind when you think of us?
3. How did you first become a customer?
4. What do you like about being our customer?
5. What advice do you have for us?

People enjoy sharing their opinion, and these simple questions can give you great insight into your current and future customer’s linkage, ability and interest.

Tracking and Cultivating Current and Prospective Customers

It is helpful to track both current customers as well as customer prospects in a database. Regardless of what type of database or CRM system you use, you will want to track points of contact, purchasing history and connections between customers.

Once you have established or reviewed your database or CRM, it is time to begin developing a system for cultivating current and prospective customers. In the same way you would cultivate a garden of flowers by weeding and fertilizing, you want to nurture our current and potential customers by keeping them updated on our products and special offerings and ensuring that they know you value their relationship with you. 

Customer cultivation, like donor cultivation in nonprofit organizations, should be a systematic and consistent process. While this resource focuses primarily on generating new customers, it is important to remember that cultivating existing customers can increase their longevity with your corporation which will increase your sales per customer. To that end, you should set up an on-going process that incorporates the following action items:

• Have coffee or lunch with your top 10-20 customers every six months. While geographic distribution may limit face-to-face time with your customers, to the extent that you are able, meet in person with key customers. This demonstrates that you care about your customers, and it gives you an opportunity to obtain on-going market research and learn why customers are continuing to choose your product or service over those of your competitors.
• Use LinkedIn as a tool to connect with your current customers and identify customer prospects. At least once a week post an update on LinkedIn, and connect with any new customer prospects you encountered that week. LinkedIn is also a great way to request an introduction. Look through your LinkedIn connections and see who they know. If they are connected to corporations or individuals that you would like to make a pitch to, request an introduction.
• Investigate, visit, and be visible at local associations such as the Rotary Club, BNI, Chamber of Commerce or other associations. Being affiliated with associations gives you the opportunity to share your product or service with a large network, and it can give your corporation added credibility, particularly if you are a locally-based corporation.
• Set a goal of identifying and reaching out to a set number of customer prospects each week. Whether this is 5, 10 or 20, you will want to ensure that you have identified key networking opportunities as well as specific industries or professionals that can provide access to potential customers. For instance, if you own an insurance company, you will want to build a network of mortgage bankers who can refer new homeowners to you for their homeowner’s insurance needs.
• Communicate consistently. As a society, we are barraged with media images and opportunities to purchase products each and every day. Because of this, it is important that current and potential customers remain aware of who you are and what products or services you provide. We recommend setting up an email newsletter that can be sent once or twice a month and can highlight new or existing products and include special offer. Email newsletters are also good because they can be easily forwarded. As you meet with current customers, encourage them to forward your newsletters to others, and also ask for emails of others who may be interested in learning more about your corporation.
• Don’t forget family and friends. While it may seem obvious, many business owners forget that family and friends can be a key referral source. Make sure that your family and friends are aware of what you do, and once or twice a year offer them an opportunity to provide referrals to you.

Key Factors to Keep in Mind

As you focus on cultivating current customers and establishing relationships with new customers, it is important to keep the following in mind:

1. Patience is key. It can take months of consistent communication with a potential customer before they purchase your product or service. Realize that budget planning processes, a corporation’s fiscal year, and a prospect’s authority to purchase are all part of the decision process when it comes to selecting a vendor for a product or service.
2. Personal relationships and networking are key. Your current customers are your best assets. If you care for them and ask them for advice and referrals, you will be able to continue building your network of current and prospective customers.
3. Beware of cultivating a customer for too long. Always go back to a potential customer’s linkage, ability and interest. If they know you through a current customer and are interested in your product but do not have purchasing authority, they may not be a good prospect. Focus on customer prospects that have linkage, ability and interest, and be willing to drop customer prospects who are missing one or two of these attributes.

In today’s competitive environment, customer cultivation can set you apart from others who provide a similar product or service. By developing a consistent way to connect with current customers and prospect for new customers, you can grow your customer base and ultimately expand your business.

Articles for Further Reading

1. How customer cultivation can increase your margins: http://www.customerthink.com/blog/cultivate_relationships_increase_margins
2. Developing a customer cultivation strategy: http://marketing-strategymanagement.com/2010/10/developing-customer-cultivation-strategy/

For more information, please visit the Giersch Group at www.gierschgroup.com or contact us at prosper@gierschgroup.com.