Yesterday, through a linked posting at the LinkedIn Construction Marketing Ideas group (growing now at a rate of upwards of 50 new members or more a week), I discovered a posting from marketing consultant Tryst Anderson, based in East Norriton, PA.
In his recent Insight for Marketing blog post headlined “Leaky buckets and marketing rules still in play”, he writes:
I believe in the leaky bucket theory and 80/20 marketing rules in selling professional services.If we lived in an ideal world, all of our clients would be loyal and stay with us forever. In addition, these clients would have new projects for us every year. Unfortunately, the market doesn’t work this way.
Clients leave us for a host of reasons. Sometimes it is our fault in the delivery of services or client’s perception that we should have done more. Competition is another reason. However, most clients don’t have a project for us every year. This dynamic is the basis for the leaky bucket theory.
We must be constantly pouring new clients and projects into the bucket in order to grow the business or at least maintain equilibrium with the clients that flow out through the holes. When we understand this dynamic, we can take a careful look at the 80/20 marketing rule. The bottom line is that we need to find 20 per cent of our business each year in new clients. Since the cost of obtaining a new client is upwards of six times the cost of keeping an existing client, we devote 80 per cent of our marketing resources to obtaining new clients. Although the percentages will not be the same for every firm, it is safe to say that there are no firms using a 100/0 marketing rule.
Anderson goes on to advocate that the challenge of working out how to allocate these marketing resources relates to discovering effective processes, since individual actions or “touches” of prospective clients may seem to be futile or a waste of time. How many “touches” do you need to be successful, especially when the laws of diminishing returns apply.
Outside of the context of a strategic marketing plan a single touch doesn’t seem like an effective way to fill the leaky bucket. Combined with a comprehensive marketing plan, client research and a process, each touch brings you closer to top of mind with the client.The magic number is simply whatever it takes to win the client’s business. It might be three or it might be 23. As you extend the number of touches there comes a point of diminishing returns. First, firms don’t have unlimited resources so decisions have to be made as to the value of pursuing a particular client. When in doubt, go back to the marketing plan. Don’t forget the residual value touches have on other clients you are chasing. Most client touches impact multiple potential and existing clients.Second, there has to be a method to the madness of client touches. They aren’t included because they sounded good at the time the annual marketing plan was being developed. For example, did you know all of the potential new clients and projects that were going forward prior to completing the annual marketing plan? Probably not. Yet, the plan is flexible enough to accommodate new entries. How many marketing plans changed when the “dot com” bubble burst or the real estate bubble burst? Are you prepared for the next bubble to burst?In other words, if the mission is to keep the bucket filled, you shouldn’t spend resources chasing projects that aren’t going to happen.This is why traditional marketing theories and rules are still in play today. Social media is the great connector of people. However, it is still what you do with the connection that counts. More importantly, as far as new business is concerned, it is what you do FOR the connection that makes all the difference in keeping buckets filled, maximizing marketing resources and improving your return on investment.
WordPress Writer site by Willie Davis, who writes:
Customers come to you from two sources, those new to the market and those not crazy about your competition.Customers die or move, but most of your customers leave your bucket because they are not crazy about you.Your success is determined by the relationship of your faucets’ intensity and the size of the hole in your bucket. Your marketing regulates your faucet flow while your hole size is defined by your customers’ experience.Yesterday it was about more flow. Tomorrow it’s more about plugging your hole.Great website content goes a long way in plugging your hole. If your readers can’t get around at their reading speed…well, they’re out of there!