Customer Service | Joy of Direct Marketing

Last week, with Certificates of Deposit (CD) due for renewal, I called the bank to find out the new interest rate. A woman answered, dithered a bit and then said that nobody could talk to me. They’d call back.

They didn’t.

I called again the next day. Same thing. The bank is a Florida operation with 20 branches, so I tried calling another branch that is near my office, but apparently you can’t do that.

Hmmm. I called my original branch, tapping my feet, and told whoever answered that I’d be in to close the CDs the next day. He said “okay”.

So, I drove over there and, after an hour of waiting to get approvals, I left with my cashier’s checks. The employees didn’t even pretend to try to keep me as a customer.

Later many people tweeted and emailed me that the reason the bank didn’t care about renewing my CD’s is that they really make no money on them and that they’re more interested in investment accounts or loans.

That may be the case, but aren’t I a prospect for all of those programs also? Yes, I am. Plus, I’m on my Condo Board and we have a huge sum of money in that particular branch. They made me upset because they didn’t recognize our long-term relationship. And, as a business owner, I would be so upset if any of our clients were ever treated poorly like I was.

Flash forward a day

I was talking to my right-out-of-college assistant, Rachel, about saving money and investing wisely. One thing led to another, and I called to make an appointment for her with Jack Howell at a nearby branch of Scottrade.

He was happy to meet her and spent a lot of time explaining how to trade online. He answered her questions and was so informative that I, who’ve had a Scottrade account for years, learned a few things – like how to find dividend bearing stocks on Scottrade’s website. Here’s a photo of Jack with Rachel.

Since then, I’ve told all kinds of people about how great Scottrade is, even Tweeting the company’s praises to my 17,700 followers. My cousin, Fran up in Philadelphia, just called to tell me she signed up for a Scottrade account. Maybe others did, too.

I can’t understand the bank’s cavalier approach to customer service. They weren’t always like that. My Mom and Dad banked there for years and loved it. Maybe it has something to do with the fact that a large international bank group bought them a while back and now their marketing focus has changed.

Maybe they just wanted me to leave. It’s possible. But, why? What are your thoughts?

It’s called the breakeven “allowable” and it’s handy for all kinds of things in our business.

For a brand new program we use the allowable to tell us if we have a viable business or not. That can save a lot of money up front.

When we’re considering something new for an existing program, the allowable tells us exactly how much of a lift we need from the new element.

We refer to it almost every day and we fine tune it, rework it and generally use it as our guide, our north star. We even use it to help set prices for products and services.

On one level, the marketing allowable tells you how much you can spend on marketing efforts to get one sale and break even.

The formula is deceptively simple: R-C=A, which means Revenue – Costs (not counting marketing costs) = Marketing Allowable. That means how much money you can spend in marketing to generate one order.

The reason for focusing on one sale is pretty obvious: everything is a multiple of one.

“Costs” means the cost to you to deliver one order of your product or service (and “freebie” if applicable), handle the order taking, order processing, shipping, response management, customer service, complaints, bad debt, returns and so on.

“Revenue” refers to all the money customers pay you, including shipping and handling charges, when they buy your product or service.

If your costs are $11.50 to deliver and service one order and your revenue is $23.50, then you can afford to spend $12 in marketing to get one order.

If you can afford a marketing budget of $100,000,(excluding onetime costs such as research, planning and creative development) then you must get $100,000/$12 = 8,334 orders.

You then look at media costs. Let’s use print as an example. (These numbers have nothing to do with reality. They’re just for demonstration.) Assume that an ad of reasonable size costs $20/M. You can “buy” a circulation of 500,000 with your $100,000. You need 8,334 orders. That’s 1.67%, too high for print so you look for alternatives, applying the Breakeven Allowable whenever you consider costs and reach.

After a while, using the Allowable becomes almost automatic. Which it should be.

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