It’s an interesting thought isn’t it… imagine having insurance for your business relationships.
OK – so an *actual* insurance policy doesn’t really exist. However, systems and strategies to protect (and grow) the critical relationships with the most important people to your business do… and just like insurance policies, the details are really important.
Understanding how much your business relies on a few key customers, employees, referral partners & suppliers can be quite confronting and the first step is identifying who are your VIP’s. Most business leaders we talk to have never taken the time to sit down and work it out. When they do – the results are often a total surprise and a little scary just how important they are to their bottom line.
OK – let’s do some simple math…
- Think about your top 5 VIP’s right now. They might be customers, employees or referral sources.
- Estimate the approximate net profit one of them creates for your business annually.
- Consider how many years do they typically stay connected with your business?
A x B x C = a quick guide to the lifetime value these 5 individuals bring to your business.
Surprised? Now think about doing this in some detail. What about your top 10 customers, referral partners, key staff members? Even critical supply partners. Some may not create income, instead save significant operating costs. You quickly realise that having an ongoing plan to protect and grow these connections is just smart business.
So what systems and strategies can you use?
The fact that we’re dealing with real people here with different personalities, values, beliefs, hobbies and interests. It can’t be a ‘one size fits all’ approach.
Some business leaders spend BIG $$$ on taking VIP’s out to experiential events (nice dinners, sports events, a game of golf, etc). There’s certainly a place for this sort of relationship strengthening for some VIP’s, but not all. If you analyse this approach from a ‘cost per impression’ style measurement, it’s really expensive. Often they are ‘one off’ activities. That’s not keeping you top of mind all year – which is one of the main goals when it comes to strengthening relationships.
Corporate gifts can certainly be a ‘secret sauce’ if done the right way and it’s our recommended approach.
However, lets clear one thing up first. We’re not talking about sending branded water bottles & a bottle of plonk once a year. It has to be done the right way with a well planned strategy.
Often businesses do what is commonly termed the ‘ABC’ corporate gift approach. Sending gifts at Anniversaries, Birthdays and Christmas. Typically, everyone gets the same hamper style gift filled with consumables like wine and chocolates… and a company branded element. From a relationship building standpoint, I think this is a complete waste of time and money.
Why? Firstly, if they’re sent when others are also gifting, you’re just lost in the noise of every other gift. They’re also not memorable. Food and wine don’t leave a lasting impression for years and years (another goal of strengthening relationships). But most importantly, it’s not a distinct, clear message of thanks for the incredible contribution they make.
In all our research and experience, going ‘BIG & PERSONAL’ with gifts can return incredible ROI multiples like no other approach. If you gift something premium, personal, useful and as a complete surprise, it (a.k.a. your business) really stands out. That’s when authentic relationships truly strengthen and grow at light speed. They cannot ignore the clear message that they’re really, truly valued and important to you (winner!).
The importance of being personal could not be clearer from the Global Culture Report for 2021, a study of over 40,000 employees across 20 countries showed that 70% of employees say recognition is most meaningful to them when it is personalised. 70%! So a gift for a VIP that’s NOT personally targeted is completely wasted.
The myriad of stats are undeniable just how important a focus on retention has for a business
- Increasing customer retention rates by as little as 5% can translate to 25%-95% increase in profits.
- The likelihood of selling more to existing customers is 60%-70%.
- It costs 5 x as much to attract a new customer, compared to keeping an existing one.
Therefore, your most valuable customers are exponentially more important to protect and grow than anyone else.
John Ruhlin is the author of “Giftology” and founder of US company – Giftology Group. He’s an internationally renowned leader in the field of strategic gifting for VIPS and his consulting and fulfilment business operates with similar principles that we follow at Troppolicious here in Australia.
John says: “It’s all about using gifts to cut through the noise, increase referrals and strengthen client retention”
It’s worth noting that some businesses using this strategy are re-investing anywhere from 5-20% of the net profit created by their VIP’s every year. Clearly it’s working for them.
Our top 10 tips for strengthening your VIP relationships using gifts
- Gift’s should have usefulness in mind. Think practical luxury items so they use it a lot and ultimately recall your business favourably.
- Only send gifts to surprise, delight or appreciate VIP relationships. Nothing else.
- Focus on a select list of VIP’s, not every customer or every employee.
- Send multiple gifts, not single gifts. It increases the likelihood of giving a gift they (or their partner) love.
- It’s not about the most expensive gift… but don’t be afraid to be RIDICULOUSLY generous. If you’re authentic, it’s well suited & you expect absolutely nothing in return, it will pay off in the long-term.
- Send gifts when no one is expecting it to happen. You’ll really stand out from the crowd.
- Try to avoid ‘one use’ gifts & never send just food and beverages. They’re too forgettable.
- Cash or gift cards are complete no, no’s. Frankly – it’s just lazy…
- Never put your logo on gifts. No VIP wants a gift with an advertisement on it.
- ALWAYS include handwritten cards with a personal message (your logo can go here). It’s more meaningful than you think.