MindValley Labs Internet Marketing Blog

If you remember, I shared with you a few days ago Brian Tracy's words: successful people are always learning and trying new things.

Brad Antin said something similar, this was the second insight he shared. Our customers are people who have self-selected to make their lives better, and people who want to make their lives better don't just stop buying.

Such people don't think that because they've bought one product, they're done and they're set for life.

Not at all.

They're going to keep learning and trying new things. Now, where do you think they're going to keep on learning, and what things are they going to keep on trying?

Well, if they know your company, and know your products, if they're already delighted and already love what you have done for them, are they going to try your next product, or somebody else's?

Things have never been more obvious to me. It's obvious, for example, that Centerpointe has such huge back end profits because they really, truly delight their customers, and they do so way above and beyond what anyone else on the market is doing.

When people buy our products, as soon as they've finished checking out, there's a page telling them that they're getting a surprise bonus gift. In my opinion, I think this is ok but it doesn't make people feel nearly as special as what Centerpointe does. One hypothesis I have is that perhaps the gift is too immediate?

Remember, I got the book 2 weeks later, and the CD 2 weeks after I got the book. At that point, I didn't expect anything anymore from the company. But, they kept delivering. And just to further point out their business and marketing smarts –when they sent me the CD, they also sent 4 extra CDs to hand out to friends, and that's obviously where a lot of their referrals come from.

Why does this work?

Because at this point, they've done 2 things in a row that have absolutely floored you, so when they ask you if you could pass on the CDs to a few friends if you've enjoyed their products and services, it's very powerful reciprocity in play.

I don't think you'd have to follow their example exactly and send physical products, but perhaps you could look into that. Maybe you should. I really don't know the answer to that question at this point.

Let me explain their reasons for sending out physical products. They used to have free downloadable resources –their free demo used to be available online, and they gave me a few reasons for killing that. I can't say I remember the reasons exactly, but…

1. You need to wear a headset to hear Holosync®, their special bineural beat sound (that's what makes Holosync work). When they allowed people to try it online, they realized that too many people were not doing it correctly. Perhaps it's because they don't have a headset on their computer, or they're just lazy. However, chances are if they do it on the stereo, they're more likely to do it correctly.

2. They can include their sales letter when they send their CDs. Their sales letter is more likely to get consumed under these circumstances.

3. Physical products have a higher perceived value, which works well for them because their customers appreciate them more.

Of the many things to be learned from Centerpointe, another is this: 100% of their new customers are acquired online. Although they send out direct mail, they only do that on the back end, to their list of existing customers.

Offline Follow-up?

Most of Centerpointe's follow-up is offline.

Why? Because according to Centerpointe, the offline communication response rate is 10:1 compared to online follow-up. That means, when they get 4-5M in sales from an offline promotion, they believe that the online equivalent would only be half a million. The economics are the reason why they do it.

When Vishen was in Florida, he talked to Jimmy Vee and Travis Miller, the guys behind Gravitational Marketing. Over dinner, they told him the same thing: the key is offline follow-up, where they said their response rate was 10 to 100 times more.

The recipe's becoming more clear as to what we need to do to close the gap, and it isn't difficult to do.

Some people do counter-intuitive things, and it works.

Centerpointe, for example, loves offering phone support. They do it just to stand out –it's customer delight in action.

When someone buys their product, they ask them to call them immediately if they have any problem or they get stuck. They say, "We will help you. We are here for you." This builds Centerpointe's customer delight , because today, most companies don't do that.

You should start thinking about customer call support, too. For the sites you have the capacity to offer extra services, you should make it available.

There's another reason for increasing your customer support and follow up: At least 50% of all people who buy your product will most likely never really use it if there's no follow-up. This illustrates the value and importance of follow-up.

If these people they don't use your product, is it likely that they'll buy from you again? Not really. And are they going to refer your product? No.

Therefore, it is in your interest to drive up consumption, and to help people to consume your products. Remember, Centerpointe's CLV is $800, of which $620 is from back end sales. You have to fight for this.

If you don't drive up consumption and people don't consume your first product successfully, you've lost $600 or more.

One thing to be mindful of is that what Centerpointe is doing is costly. It costs money to deliver good customer support and it costs a lot of money to send out direct mail via the postal service instead of emails.

The equation only works if your offline sales convert very well and if you have already build a big back end and get a lot of repeat sales. The good news is that this is relatively easy to test since you can start by sending mails to a smaller sample of your customer base and then testing the follow up response.

Those are the economics for Centerpointe and hopefully, one day it will be the same for us. We need to get to the next level for all our products, whichever product it is.

There's not much new  in the key lessons from Centerpointe, but we're still not doing it. However, we'll start doing it now, because it is so important. Now, how do you intend to implement all these things in your business system?

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About the Author

Prior to MindValley Media, Mike was the Head of New Ventures Strategy at eBay where he conceived of the strategies that led to the investment in Craigslist, the launch of Kijiji.com and the acquisition of Skype. Mike has an MBA from Stanford and previously worked for the Boston Consulting Group. He is also a certified Google AdWords Professional.

Check out other posts by Mike Reining

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