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You’re looking at the wine list in a restaurant. The list contains more expensive, mid range priced, and cheaper bottles. More often than not, we chose a middle range bottle because we don’t want to appear cheapskate.

But restaurateurs already know this, bumping up wines with the lowest wholesale price and biggest margin into the middle section of their list.

How we chose the wine involved numerical anchoring, which influences many of our buying decisions - and how they are manipulated! Cognitive bias is where behaviour and psychology collide and is used by companies to help us buy more.

If you sell a range of laptops at £750 and £500, the £500 one looks a bargain. If you then include a £1,000 laptop, the £1,000 machine might seem a too much but the £750 now looks better value.

This is also how accessorising works. Buying a £20 case for your iPad doesn’t seem so expensive when you’ve just paid £485 for the iPad itself.

It is also the reason why good negotiators never go first when talking price! They know the first price mentioned will guide where the bidding will go.

Loss aversion
People often feel the loss £50 of more keenly than the pleasure of winning £100.

If you run a subscription based service, you’ll have more success playing on what people will fear to lose from discontinuing the service than talking about what they’ll gain from it.

Loss aversion is why Free Trials work. Getting the first “buy-in” is all important. Once prospects make that initial connection you’re much more likely to go on to sell the whole package.

In your pay per click adverts, talk more about what they might miss out on rather than what they’ll gain. You'll convert more clicks.

Choice supportive bias

Over time, people convince themselves they made the right decision - even it wasn’t.

If you convince someone you’re the cheapest supplier first time around, they’ll always believe you will continue to be the cheapest - without bothering to check.

This is why testimonials are so important, representing new information that reinforces the initial decision.

I want it now!

Do you want £50 now or £100 in a year’s time?

Most people go for the £50. Instant gratification, and guaranteed. Waiting for the £100 is seen as riskier. It might never happen. This is hyperbolic discounting.

The sooner an incentive is delivered, the smaller it can be. This is why you see banks offering almost insignificant £5 loyalty gifts to keep us on board.

However, over longer periods (5+ years), the size of the incentive then becomes increasingly important, and its timeliness less so.

Incentivising customers requires taking advantage of their impatience (served by a small reward) then looking to the longer term relationship through offering more substantial incentives.

Everyone thinks like me

When people agree with something, they believe the large majority of other people will also agree with them. For those who disagree, they too will think most other people will disagree also. It’s rubbish.

False consensus means we think everyone automatically thinks like us. We know this to be untrue which is why disputes occur - but we forget those don’t we, right? Don’t we!

Summary

We think we make rational buying judgements. That we are open minded and cannot be fooled by marketing trickery.

Cognitive bias says the opposite. Our decisions seem to be based more on superstition, prejudice and illogical interpretation than we would like.

People’s psychological and behavioural responses can be manipulated by marketing to increase buy-ins and develop their long term loyalty because we are human - and to err is human!

Source: Kelvin Newman  Tricks our minds play on us and what marketers need to know,
Econsultancy, 19 October 2011

Lead nurturing is the process whereby you determine how best to engage with leads through creating a “conversation” with prospects that builds trusts and encourages them to buy.

In Part 2, we look at more elements that make lead nurturing so worthwhile. If you missed Part 1, just click that link.

 

The “forgetting you” time

The “forgetting you” time (the time taken to disappear off your customers radar) is thought to be around 21 days. If you don’t make contact within this period, other distractions will occupy their thoughts and all your marketing efforts will be wasted.

The success of lead nurturing works is all about the timing and frequency of your communications. For most B2Bs, if you’re looking to move them along the buying path (rather than just keeping them informed) making contact more than once a week is a little too often, whereas monthly is too long.

However, as the lead nurturing campaign progresses, it is important that the frequency of your communication with individual prospects is in line with the prospect's preference. At the start of say, a 90 day buying cycle, you might make contact three of four times in the first 6 weeks. By the end it might be up to twice a week.

Lead recycling

When leads are not ready to engage, they should be re-assigned, if they can’t be actioned by the sales team in a timely manner.  This requires setting up some ground rules where prospects are “kept in play” with automated communication (such as email) until the sales team can assess the strength of the lead and take it on.

Alternatively, they can be managed manually, by passing them back from sales to marketing, for more personal communication.

New customers

Once the lead has turned into a customer, it is important to send out regular communications such as a welcome note and set in motion a “staying in touch” campaign.

These campaigns don’t just keep your conversation going but give an opportunity to expose new customers to your range of products. This encourages cross-selling, up-selling and engagement in blogs, Facebook, Twitter and LinkedIn.

Fast and slow moving leads

Lead nurturing regularly improves the conversion of prospects by 2 or 3 times of traditional lead generation, while expert campaigners can raise this to 4 or 5 times without any additional spending on lead generation.

Fast moving leads are relatively easy to identify and manage. It is the slower moving ones that are often less well managed as they require more time and effort -plus patience.  This means potential opportunities can be lost because the lead be missed or it just goes elsewhere as you didn’t stay in touch well enough.

The difference between success and failure is often down to how well sales and marketing collaborate to keep the prospect “warm” and up to date.

Takeaway

Lead nurturing is about building relationships with a goal to getting their business - regardless of their timing to buy.

95% of website visitors are there to research only - but three quarters of these will buy a product (eventually) from you or a competitor.

People prefer not to engage with sales until the last third of the buying process making it essential that sales and marketing collaborate throughout the entire buying cycle.

 

To find out more how lead nurturing and other marketing services can help you can email us at sem@e-xanthos.co.uk or call me on 08450740068

 

Definition: A lead, in a marketing context, is a potential sales contact: an individual or organization that expresses an interest in your goods or services.

Source:  Your Ultimate Guide to Lead Nurturing- Marketo Aug 2011

We know from bitter experience just how expensive it can be to turn as many leads as you can into sales, so losing potential customers because you were ready to sell when they weren’t ready to buy can be particularly galling.

People aren't always ready for your sales pitch. They may just be researching so your approaches hit them at the wrong time. This is why lead nurturing is so effective.

Lead nurturing

Lead nurturing builds trust into your relationships with prospects over time, to the point when your prospects are ready to buy and you are ready to sell to them.

Lead nurturing involves the practices that a company establishes for dealing with potential leads through regular communication, analysis and maintaining the conversation throughout the buying process.

Preparing “Sales ready leads”

It is important that the stakeholders in your company collaborate completely to determine which leads are deemed sales ready (taken on by the sales dept) and which require further nurturing (marketing).

You can assess sales readiness by asking questions such as - has the visitor been on your website? what terms did they use to search? what pages did they visit and how long did they stay there? have they responded to your emails? and so on.

Fine tuning preferences

If you can understand what the prospects' preferences are, you can manage these.

Managing preferences is about letting them decide how often they want to be contacted, what sort of message they wish to receive, in which format (email, text, phone) and what are their primary interests and objectives.

Determining your prospects preferences often comes down to asking them through forms on websites or emails or talking directly to them.

This approach allows them to customise their communications with you which is massively important in making your marketing relevant to them.

Staying in touch campaigns

These campaigns play a significant part in the nurturing process.

Keeping in regular contact helps you move prospects further along the buying process but doing this requires understanding his/her role within the company authority structure.

There will be champions, purchasers, influencers and decision makers, whose importance to the buying process need to be understood.

Even in smallish companies 6 or more people may be involved in the buying decision, with as many as 21 for larger organisations.

It’s about People

When you know and understand your prospects better you can build content around their “personas” (their preference profile) meaning you create a relationship without ever meeting them.

Personas help you target your campaigns better by focusing on the most qualified segments.

Think of lead nurturing as more an on-going conversation, using the marketing assets you possess.

Get personal - not pushy

Make any content valuable and looked for, not self-promotional. Put their interests ahead of yours.

82% of prospects say they respond positively to targeted content, and when targeted to their job function or geography, makes it even more valuable.

As prospects move through the nurturing process, their interest will change. They become more aware of how the benefits you offer can improve / solve their situation. Employing industry oriented articles, sharing best practices, buyers guides, all help to improve your relevance.

 In Part 2, we look at how to turn leads into sales.

Definition: A lead, in a marketign context, is a potential sale contact - an individual or organisation that expresses an interst in your goods or services.

 To find out more how lead nurturing and other marketing services can help you can email us at sem@e-xanthos.co.uk or call me on 08450740068

Source:  Your Ultimate Guide to Lead Nurturing- Marketo Aug 2011

Gone are the days when your marketing focused only on sales transacted.

The importance of customer retention, satisfaction and repeated conversions are critically important to a company’s sustained profitability.

Many businesses now extend communication beyond intrusive advertising and sales promotional messages (using social media, video, blogging) to develop mutually beneficial relationships with customers as a serious tool against competitors.

With new customer acquisitions costing between 5 and 10 times that of retaining existing ones, there is a balancing act between marketing to new and existing clients as you can’t do both (effectively) in one go.

And the payback?

With their Loyalty Business Model, Reichheld and Sasser, reported that for certain industries, improving customer retention can increase profitability by between 25% and 85% (in terms of NPV). 

Long term customers are more satisfied, less inclined to switch, less price sensitive, happy to spread the gospel for you (word of mouth & social media), and are more likely to buy ancillary and higher margin supplements.

Regular customers are less expensive to service requiring less education and are consistent in their  order placement, plus your employees prefer to deal with them - the so called virtuous circle.The cost of acquisition falls the longer the relationship lasts.

The ladder of retention

The ladder of retention and customer loyalty is laid out as:
• Partner
• Advocate
• Supporter
• Client
• Customer
• Prospect

The role of marketing and sales departments is to move the “prospect” up the ladder, as high as possible with in the most appropriate timescale for each customer, and this is where social media’s “personal” touch has such importance and meaning for any company wanting to be more competitive.

Stopping customers leaving

Look at the reasons for defection - the root causes not just the symptoms. Analyse complaints and use competitive benchmarking. Count the cost.

Create and action a corrective plan - benchmark employee practices; with visible support from management at all levels; use recognition/reward systems and employ recovery teams to reduce defections.

Use strategies to discourage customer switching - such as product bundling, cross-selling, develop loyalty programmes, and ensure you keep in regular contact with mutually beneficial outcomes.

The more points of contact you have with a customer the stronger the bond and the longer lasting, more secure the relationship.

You rarely lose customers from cock-ups. They usually go because you didn’t pay them the attention they thought they warranted.

Source: Reichheld and Sasser, Loyalty Business Model

Companies constantly seek to achieve the best ROI by divining who their customers are; where they are; what goods they purchase; and when they purchased them.

This all seems a quite sensible basis to work on but in fact these questions miss the most fundamental question - why did they buy the product? Why did they convert?

Man has developed over time a “time perspective”, the ability to learn from past decisions and experiences, coming up with coping strategies whenever he/she faced similar situations, and today, research has identified that different people display very different behaviours when it comes to buying.

The research revealed that time perspectives divide into three distinct thinking styles: Past, Present and Future.

So what differentiates these groups?

Past thinkers want verification and place a high value on customer testimonials, a proven track record, credentials, or the research that went into creating something.

Present thinkers are more interested in how a product or service can help them solve or manage a problem they're dealing with now.

Future thinkers look at a product or service and imagine the possibilities it opens up, and how it might impact their life or work moving forward.

The buying personality

Now, we probably think we display a bit of each of these groups depending on the situation, but it is at the point of engagement or decision where our dominant style influences our play. Think of it as your “buying personality”.

When companies fail to recognise their customers “buying personality” and proceed with “one size fits all” advertising, they’ll turn off significant sections of their buying audience - not because that audience is uninterested - but because they’re being addressed in the wrong time perspective.

To work effectively in your marketing, advertising or social comment, ask yourself “am I addressing all these groups, at the same time,” because if not, you’re effectively ostracizing a large part of your prospect pool who will not be satisfied with what they see.

People with different thinking styles react differently to the same sales message. Optimising your content to appeal to all the styles must be carried across web pages, social media, video, email and CRM. Do your web pages currently address these groups or are they more about what you do?

Thinking styles should be built into the design for communicating brand values in a product; effective messaging to mainstream and outliers in any graphic group and redesigning the marketing and advertising of products that are useful across a wide range of graphics.

Avoid narrowing the prospect pool

This is important because you can segment your market without narrowing your prospect opportunities. By focusing on their preferences, deepest needs, resistances and learning styles allows you to anticipate likely responses to your messages and determine your best course of action.

How do you find this out? By asking them! Surveys, forums and the like. When people share similar thinking styles, their minds and decision making processes work in similar ways. And what is the best vehicle for sharing? Social media!

Source: Jason Burnham is president of Telepathy Inc.                                                                                                                                                                                                     John Furey, The MindTime framework, MindTime Ltd.