No matter what, you should always see each sale you make as precious, and never as just a simple one-click and done.
The single biggest news item of last week was from Amazon. The big online commerce destination actually announced a few things, including a brand new, very inexpensive, very cool Kindle called the Paperwhite. But that is not the only thing the company announced. Inside of the announcement of the Paperwhite it announced a new program called Matchbook. Coming in October, this is a way for people to go back through their buying history and buy Kindle versions of physical books they have purchased.
For example, on March 18, 1998, I purchased an amazing book called "Hamlet on the Holodeck." Bill Clinton was still president and I decided to try this whole e-commerce thing out. There is still a record of that purchase and, using Matchbook, I will be able to repurchase an electronic version of that book for somewhere between $3 and free. Assuming, that is, that "Hamlet on the Holodeck" will be made available as a part of the program.
If it is, Amazon can be assured that it will be able to get new revenue from a purchase I made more than a decade ago.
This is big news for Amazon, and I would love to know what sort of revenue spike it will get, especially on the day that this goes live. Like many others, I will go right to my list of past purchases and probably buy them all.
But, besides just a great revenue day for Amazon, why is this such a big deal? And, more importantly, what can we learn from it? Simply put: no purchase should ever be seen as complete, but rather the beginning of a relationship and a revenue stream.
The Cost and Benefit of Loyalty
I've written a lot about loyalty in the past. In fact, I think that the underlying drive of business should be creating and leveraging loyal customers. I think that advertising should focus on selling relationships as much as selling products. And I firmly believe the old saying that it is five times more expensive to get a new customer than keep an existing one.
Plus, I think that the great world of technology has done nothing nearly as valuable as create the ability to connect seemingly disparate actions and datasets to create new and more complete views of the customer. And the companies that are the smartest at using technology are using it to extend the life and revenue streams coming from individual people.
OK. Now that we have that established, let's look back at Matchbook.
The decision on my part to buy that book at Amazon rather than the local bookstore was somewhat arbitrary. I just decided to get it there, probably because of convenience. If I did make that purchase at a traditional bookstore, however, or at a different sort of retailer (i.e., one not obsessed with lifetime value), that probably would have just been a single transaction. One and done. Or, potentially, they would be smart enough to offer me additional products that were similar in theme or from the same author.
That, though, is now shown as being just the most superficial sort of lifetime valuing. Through the lens of Matchbook, we can look at each purchase as the opening up of a new channel that is specifically tied to that purchase. This is the new notion of generating revenue: never imagine that a sale is ever done. The conversion is only the start of the path.
Generating Revenue From Existing Purchases
There are a few ways that you should begin to drive increased revenue - or at least value - from a single purchase. We already talked about using that purchase as a data point to help understand what other products a consumer might be interested in, so I'll skip over that.
Advocacy. This is something that you absolutely should be doing: making sure people have the chance to tell their social circles about the purchase of an item. This is especially true of things like books or movies - they should invite their friends. But can be applied to any item, really. Put those links to social media right into the purchase funnel.
Accessorize at the right time. There is always an add-on product that can be, well, added on. If every purchase is seen as the start of a beautiful relationship, then that relationship needs new things to keep it exciting. Belts for pants, new shoelaces for shoes, and so on. You need to build a calendar into your CRM system with rules: 10 days after someone buys a shirt, you should ask them about ties.
Replenishment. This is the simple thing that I rarely see companies doing. There is a large category of items that are purchased on a regular basis. If you sell any of those things, you should be actively seeking out ways to make purchase of your products automatic. Get people to subscribe to your products, so they get new ones on a regular basis. Razors are perfect for this, and we see some good examples of brands doing just this approach.
No matter what, you should always see each sale you make as precious, and never as just a simple one-click and done. Relationships are key and loyalty is golden. Find ways to make it work for you, so that revenue just continues to flow from the work you have done.
Image on home page via Shutterstock.
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Gary Stein is SVP, strategy and planning in iCrossing's San Francisco office. He has been working in marketing for more than a decade. Gary lives in San Francisco with his family. Follow him on Twitter: @garyst3in. The opinions expressed in Gary's columns are his alone.
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Wednesday, July 23, 2014