Mind your Business

May 01, 2008 9:30 PM  By

Granted, it’s not the sexiest product line. But Klein Tools has in 150 years built a solid business selling pliers, screwdrivers and other tools used by electricians and construction workers.

The only problem was that the marketer didn’t have much of a database — until 2003. That’s when it started the Klein Tradesman Club, a loyalty program designed to pull in both prospects and customers.

Klein promotes the club through distributors, online and at more than 20 trade shows a year. It also sponsors racing cars and runs contests like the Great Klein Giveaway Extravaganza.

What do prospects get by joining? One offering is the Klein Tradesman Club newsletter that can be read online or in print. It features contest advisories and product updates.

“Tool guys are interested in the latest and greatest,” says Matt Sonnhalter, president of Sonnhalter, a marketing firm that works with Klein.

The results speak for themselves. Since starting the club, Klein has added about 10,000 names per year to its file. It now has more than 40,000, says Abbey Ceppos, the firm’s associate director of marketing.

That’s one way of building up a business-to-business database. But there are many others, and it’s not easy to choose the right one in a time of flat spending and proliferating channels.

“You have to take the same budget and slice it a million different ways,” says Pierre Charchaflian, vice president of retail services with Epsilon Data Management LLC.

Here are some tips on how.

Keep track of your customers.

What to enhance your list? Start with your clients. The cost of acquiring a customer is four or five times that of keeping a current one, studies show.

“Make sure you’re retaining as many customers as you can,” says Mary Ann Kleinfelter, director of marketing with b-to-b cataloger L-Com Connectivity Products.

The most valuable buyers are the ones who have purchased from you within the past 12 months, Kleinfelter adds. By identifying the traits they have in common, you can target the most likely prospects.

Firms with a multitiered distribution system need even more data.

Take Demeter’s Pantry, an importer of Greek foods. Esther Psarakis realized when she started it in 2004 that she needed to reach business and consumer clients, track prospects and monitor the effectiveness of her marketing materials.

A tall order. But she also needed to identify which brokers and distributors worked with which grocery stores. And she had to use what she knew to develop personal relationships with the big store owners.

“You have to shake hands, form a relationship and convince them to work with you,” Psarakis says. And for small delicatessens and specialty stores? She builds sales via e-mail and phone calls.

None of this is haphazard — Psarakis carefully tracks whom she’s contacted, when and how. This information is contained within an application called Vertical Database. She can click on a name or group of names and send an e-mail to them, or scan in business cards she picks up at trade shows.

Psarakis also manually logs phone conversations and client meetings within the system, and records which products different customers are purchasing.

All this has enabled her to chop about 20% off the time she spends maintaining contact with smaller prospects. And she’s boosted sales from these clients by 15%.

Don’t rent just any old list.

You may think you know how to select lists. But times have changed.

“In the traditional approach, the direct marketer gets the list, throws it against the wall and sees what sticks,” Charchaflian says.

Not any more. Smart mailers now evaluate just what they are getting out of a file. For example, they track how many times they contact a prospect before obtaining a response. They also combine information from several lists in order to reduce their costs.

CDW, the IT equipment purveyor, uses external lists to garner insights into its customers. For example, it has found that trade magazine subscriber lists often provide more precise information on a company’s size and IT infrastructure, says Jim Garlow, CDW’s director of marketing operations.

Why is this important? Because a five-person firm and a 100-person firm could both be considered medium-size. Yet a $15,000 server that’s a reasonable purchase for the larger firm would be beyond the needs of the smaller.

“We take that data, overlay it with ours, and we know how to market to the individual,” Garlow says.

CDW also relies heavily on modeling. For example, it will estimate its share of wallet with different customers. But this isn’t as simple as it seems.

A company that’s purchasing $1 million worth of equipment annually would seem like a good customer. But what if the firm’s annual budget for hardware and software is around $20 million? That means there’s more business to be had, Garlow says.

But watch out for inaccurate data. It’s not unusual for 30% to 40% of the information to be incorrect, claims Kathy Rizzo, vice president of marketing with Telenet Marketing Solutions, a marketing consulting firm.

Pull them in online.

What’s more valuable than a prospect who responds to a mailing? One who seeks you out. That’s why more than one-third of the firms surveyed last year by MarketingSherpa said they boosted their search engine optimization budgets by at least l1% in 2008.

In business, “people are always searching key words to help them do their jobs better,” says Loren McDonald, vice president of industry relations with e-mail service provider Silverpop.

Ninety percent of the people doing a search will click on a result within the first three pages, according to a 2006 study by Jupiter Research and iProspect. But getting your company positioned up there can take several months, says Doug Garfinkel, vice president of media and acquisition services with data services provider Epsilon.

The first step is to develop a portfolio of keywords, Garfinkel says. The words chosen should include the company’s brand and product names.

And it should contain terms that reflect the way that customers think about your firm and its offerings, he notes.

For example, they may be more likely to use the term “CRM software” than “enterprise-level software.”

Similarly, it pays to use more targeted terms — like “trigger-based e-mail” instead of “e-mail marketing,” Garfinkel continues. These words appeal to a narrower segment and are thus less expensive. In addition, they are more focused, so the people using them are likely to be more serious about their searches.

But here’s the rub: The landing page should reflect the search terms they used, and it should be tailored to those interests.

For example, a prospect who types in “e-mail marketing” is not as far along as someone searching for “enterprise e-mail marketing.” He should land on a page that provides basic information.

White papers can also bring visitors to a site. “People love white papers,” says McDonald.

Yes. And you can capture contact information from the people who download them. But don’t serve a product brochure in disguise.

“That will leave a sour note in the prospect’s mind,” McDonald says. They want information that will help them do their jobs, such as best practices, surveys or data on new legislation.

Another turn-off is requiring potential readers to submit a great deal of information, such as their address and phone number, before they can download a paper, adds Sean Whitely, director of marketing applications with Salesforce.com, San Francisco.

“People drop out,” he says. To keep prospects engaged, requests for information should be limited to the nuts and bolts, such as the visitor’s e-mail address and the size of his or her business.

To be sure, some people who download are only looking for information, and aren’t ready to make a purchase. That’s where marketing comes in.

McDonald argues that about 70% of prospects don’t make a purchase immediately. Merchants need to methodically maintain contact with them.

But that means segmenting prospects and reaching out to each group separately. As CDW’s Garlow notes, “You need to be fishing where the fish are.”


Karen M. Kroll is a freelance business writer based in Chanhassen, MN.