| An Introduction
to Relationship Marketing  Put your Web site to work creating
customers for life!
by Roger C. Parker I want to show you how you can use your Web site to support your existing face-to-face, retail, service, or business- to-business activities.Introduction to Part 1: A review of the contents of this and subsequent installments. Customer retention vs. customer acquisition: The
economic advantages of using the Web to retain, rather than acquire, customers. Customer Lifetime Value: The importance of focusing your efforts on identifying and satisfying your most profitable customers.
The 5-stage Customer Development Cycle: The different information needs of Web site visitors at each stage of the Customer Development Cycle.
The role of technology: The difference between open content and premium content and how e-mail can drive customers back to your Web site. Challenges:
A look at some of the challenges to overcome. Conclusion: Slow and steady wins the race. You read so much today about the
Amazon.coms, the Ebay.coms, and the "do it yourself" investment Web sites that it can feel as if everything on the Web is run by teenagers who make millions overnight.
This daily dose of unreality has the unfortunate effect of blinding most people to the relatively unglamorous, but far more realistic and attainable, ways the Web can help you be more profitable. All too often, e-commerce and the Internet are seen as an "either/or" alternative to a firm's existing marketing and
sales activities. The temptation is to view the Web as a totally new communications media that competes with, rather than complements and supports, your firm's current business processes. This is wrong. The purpose of this series is to encourage you to rethink the way your Web site serves your firm's existing customers and prospects. I want to introduce you to Relationship Marketing and show you how you can use e-mail and your Web site to reinforce your current
marketing and sales. I want to encourage you to use e-mail and the Web to build on what you've already accomplished, rather than abandon what already works and sail into uncharted waters.  Introduction
This series will introduce you to a new way of increasing profits. It's not complicated. In fact, it boils down to reselling past customers (and friends of past customers). Sounds simple. And it is—but I'll offer specifics that will help you get the job done. Customer retention vs.
customer acquisition
There can be an odd disconnect between most Web sites and the businesses they support. This is especially true in small and medium-sized businesses. Often, a firm's Web site doesn't relate to what actually occurs on the sales floor or in face-to-face sales presentations.  Satisfying your customers
Worse, e-mail and the Web are typically not used for effective customer follow-up. Most Web sites—especially e-commerce Web sites—are on a "treadmill to Hell," constantly attempting to attract new customers instead of focusing their efforts on satisfying and selling to the firm's current customers and prospects. As a result, profitability suffers and the firm does
little or nothing to cultivate a loyal customer base.Instead of focusing their efforts on those who have already "voted with their wallets" by buying from the firm, firms try to recruit a constant stream of new customers. As a result, many firms spend a lot of money attracting customers to their Web sites rather retaining the customer after a purchase. The fancy term for this form of lunacy is "churn" (or turnover—meaning customers who don't come back), and it's
what your stomach (and your investors' stomachs) do when this happens. A more sensible alternative is to retain your customers. By making your customers more loyal and getting them to become repeat customers, you lessen the need to advertise and promote your Web site. By harnessing technology to resell to existing customers, you are rewarded by higher margins and can convert your present customers into "advocates" who will do your advertising for you through word-of-mouth advertising.
Traditionally, it has been said that it costs five to seven times as much to acquire a new customer as it costs to get a current customer to buy from you again. In today's highly competitive Internet world, the figure is even higher. The best study of the economic advantages of customer retention is to be found in a book called
The Loyalty Effect by Frederick F. Reichheld (1996, Harvard University Press). Reichheld writes: "Raising customer retention rates by five percentage points could increase the value of an average customer by 25 to 100 percent."  Customer Lifetime Value
Relationship Marketing, in addition to emphasizing keeping current customers rather than getting new ones, reminds us that customers are important long-term assets that must be valued (and treated likewise) not harvested. This long-term approach puts an entirely different spin on e-commerce and the relationship between a firm's Web site
and its ongoing business. Profitability comes from making existing customers happy, so they become loyal repeat customers. Profitability also comes from identifying your most profitable customers and having the courage to focus your efforts on them, rather than trying to please "everyone" (and ending up pleasing no one).  5-Stage Customer Development Cycle
One size does not fit all when it comes to the Web. Web site visitors enter with different information needs, based on their relationship to your firm. There are five stages to the Customer Development Cycle.  |
- Awareness:
This happens even before a person's first visit to your site. Do they hear about your business from a friend? Do they see a link from another site? Do they read about your business on another site or in a
magazine or newspaper? Do they find your site on a search engine? Do they see your Web site address on your business card, newsletter, or even invoice? People don't just magically appear at your site. You have to work to get them there.
It's vital that you obtain your visitor's e-mail address. People don't usually just volunteer their e-mail address. You need to find an incentive that will motivate them to provide you with their e-mail address. One of the surest ways to get someone's
e-mail address is to give something away. That may sound expensive, but it doesn't have to be, especially if you can give away something electronic they can download.
- Comparison:
Before a person can consider buying something from you, they have to compare your product or service with those from your competitors.
Meaningful content and credibility are the keys to success at the comparison stage. The more information
you can provide, the higher the likelihood you'll make the sale. The comparison stage also provides you with an opportunity to learn more about your Web site visitor's needs and, in doing so, be better able to fine-tune your offering to their needs.
- Transaction:
The transaction stage is where money (or credit card information) changes hands. Unless you are giving products away for little or no profit, the transaction stage will only take place if you have played
your cards right during the awareness and comparison stages. The transaction stage should be viewed as the beginning, not the end, of the relationship. The transaction stage sets the stage for the highly profitable stages that follow.
- Reinforcement:
The reinforcement stage is where you add value to your customers' purchases by showing them how to maximize the value and pleasure their purchases can provide. The reinforcement stage
presents you with an opportunity to position yourself apart from your competition by thanking your customers for their purchase and paving the way for future purchases. It's where you begin the process of creating word-of-mouth ambassadors for your firm out of satisfied customers. This is a big part of what eFuse.com itself does!
- Advocacy:
Advocacy is the final stage of the Customer Development Cycle. Advocacy takes place
when you provide your customers with the tools, or feeling of community, they need to become your promoters, motivating past customers to drive new visitors to your Web site and pre-selling your firm with word-of-mouth recommendations, the most effective form of advertising ever devised.
Later in this series, we'll take a more detailed look at identifying your Web site visitor's information needs at each level of the Customer Development Cycle and providing the
information that will "drive" the Web site visitor to the next level.  The role of technology
Web-based Relationship Marketing is based on
two types of content: Open Content and Premium Content. Open content refers to pages of your Web site that all visitors can access. Open content pages are linked to your home page through your site's navigation bar and the text navigation links at the bottom of each page. No registration is needed to access your Web site's open content. Premium content refers to pages with richer information content, content that visitors must be qualified to access.
Access to premium content is limited to those who have registered their e-mail address or who have purchased from you. Current technology makes it easy to provide limited access premium content. Premium content can consist of unlinked pages, password-protected pages, or downloadable files. E-mail is the "engine" that provides access to premium content and propels visitors from level to
level of the Customer Development Cycle. When visitors to your Web site register by filling out a form and sending you their e-mail address, you can respond by providing the "key" that allows them access to your site's premium content. You can send them the URLs of unlinked pages, passwords to unlock password-protected pages, or access to pages containing files they can download in
Microsoft Word or Adobe Acrobat format. Keeping it open? Some sites, such as eFuse.com, prefer to leave all of their content open. Why? Because you can lose a large percentage of viewers by demanding they "sign up," even if it's free. Instead, what eFuse.com does is make its useful e-mail
newsletter, the FuseLetter, subscription-only (also called "opt-in" because people "opt" into it). That way, if people want the latest information, tips, and
tricks, all they have to do is sign up. By doing this, eFuse.com builds value because e-mail is an important way to inform and remind customers, and you leave the site open as a kind of "web" that can attract (and trap—in a good way, of course) new visitors.  Challenges
When marketing through the Web, there are many challenges to overcome. The biggest are credibility and relevance—and both are crucial to the success of a Web initiative based on the five-stage Customer Development Cycle. To succeed, you will have to devote more time and resources to informing your customers, both through your site and via e-mail.
Another challenge is the need to develop meaningful incentives to motivate visitors to share their e-mail address with you and, at each level of the Customer Development Cycle, provide more information about their needs. The most cost-effective way is to offer incentives you can deliver on-line. eFuse.com offers free fonts and graphics to anyone who signs up for the FuseLetter,
and then even more free fonts and graphics if they refer a friend to sign up.
A final challenge is the proliferation of e-mail. Already, everyone's incoming e-mail box is filled with too many messages. The challenge is: "How can you make your e-mail stand out and be welcomed when it arrives, rather than left unopened or (even) deleted?" Since Relationship Marketing is really about building a relationship and a more personal contact, sending e-mail that's written person-to-person, rather than "business to person" is a way to start.  Conclusion
Yes, it may be fun to read about the "overnight millionaires" of Silicon Valley. But it will be even more challenging, rewarding, and fun to see how you
can use the tools of Relationship Marketing to build your existing business without taking unnecessary risks or investing the huge amounts of capital it takes to drive visitors to the Web sites of new Internet businesses.Relationship Marketing is the key. Learn from what others are doing, but maintain your focus on how you can use the Web to build closer bonds with your existing customers and prospects. The Web may be a "new technology," but that
doesn't mean you can't use it as a "classic" marketing tool to build close, loyal relationships with your existing customers. About the author 
Roger C. Parker is the author of the forthcoming Relationship Marketing and the Internet (Adams Media). Visit Roger's web site for further information.
Illustrations: Susan LeVan, Business Characters, Artville.
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