How to turn that first-time customer into a lifetime buyer.
How to turn that first-time customer into a lifetime buyer.
I buy a lot of books. It's an occupational hazard, what with having to keep up with trends, knowing people in the book-writing business, and needing something to do while endlessly circling over Providence or Topeka.
But although I'm a regular buyer of books, I don't have a regular bookstore. I represent about $800 a year to somebody, but I haven't found a bookstore owner who understands that. The employees -- and by inference, the owners -- seem to view each purchase I make as a separate transaction. They don't make me feel special. They give me no reason to go back. They just don't get it.
But Leslie B. Otten does.
Otten is president of Sunday River Skiway, in Bethel, Maine, and he does everything in his power to turn first-time buyers -- especially first-time customers who've never skied before -- into lifetime customers.
"The motivating factor is greed," says Otten, 41, whose office looks out on the beginners' slope of the resort, 170 miles north of Boston. "My lift tickets cost $33 a day. If I can turn a first-time customer into someone who skis five times a year, that's $165 in revenue. Given that, I want to make the experience -- especially the first experience -- of dealing with us as pleasant as possible."
Any new experience can be unsettling (just ask a five-year-old on her first day of school), but for people learning to ski, the process can be particularly frightening. Broken limbs, plunges over cliffs, and iron-willed ski instructors are all images that might flash through a visitor's head.
Otten wants to minimize the anxiety. As customers approach the resort, signs instruct them to tune their radios to Sunday River's low-power transmitter, from which a soothing voice welcomes them and explains where various slopes and services are found.
This attention continues as the customer pulls into the resort. When Otten's parking-lot attendants see someone who looks lost, they approach them, ask what they can do to help, and hand out a map of the grounds. More important, they tell people to follow the green dots strategically placed throughout the parking lot. The dots lead to an orientation center. There, everyone is given a name tag that helps identify them as first-time visitors. First-timers also have a separate entrance to the rental shop and their own transportation to the slopes.
But the biggest thing Otten does for first-time customers is give his product away -- not just once, but four times. Here's how it works.
If a novice shows up at Sunday River wanting to learn how to ski, he or she pays $33 for a lesson. But in addition to spending two hours on the slopes with an instructor, he gets free equipment (skis, poles, and boots, which cost other customers $18 a day to rent). And once he completes his lesson, he gets a free lift ticket (which normally costs $33) for the rest of the day.
He's also given the chance to sign up for two additional lessons, which work the same way. The student pays $33 and gets free equipment and a free lift ticket.
If a student completes all three lessons -- on which Sunday River has not made a dime -- he's given a coupon for a fourth day of free skiing. And to make that visit and all subsequent ones even easier, Otten sells students poles, skis, and boots at cost.
Why would you give away your product not once, but four times? Because it's good business, says Otten.
"While it's true we aren't making any money on this guaranteed-learn-to-ski program, we aren't losing any, either. We have to operate the ski lifts anyway, and we have room to accommodate first-time skiers. On any given day, they only account for 4% of our customers.
"It's true we could get $18 a day to rent the equipment, but the real cost of giving it away is minimal." To outfit the 300 beginning skiers a day who go through the program on busy weekends, Otten needs to buy 300 sets of poles, skis, and other equipment, at a total cost of $45,000. But the equipment will probably serve 20,000 people before it wears out. "And while there's the cost of having people in the ski shop fit the equipment, the ski instructors' time, and the overhead that has to be charged to support the program, we figure the $33 covers that. Overall we come out even."
But way ahead on the long-term benefits. Before Otten started courting first-time customers back in the winter of 1984-85, only 20% of the people who initially visited Sunday River returned. Now, more than 75% do. And those repeat visits, says Otten, are a major reason that gross revenues have increased from $6 million to $18.3 million over that time and pretax income has climbed about fourfold to $4 million a year.
The explanation is fairly obvious. Look what happens if you can convert first-time customers into lifetime buyers:
* Your sales go up. They have to. The customer is buying more from you.
* You strengthen your position in the marketplace. If customers are buying from you, they're not buying from your competition.
* Marketing costs go down. You don't have to spend money to attract that repeat customer. You already have him. Plus satisfied customers will tell their friends, decreasing your need to advertise.
* You're insulated from price competition, because a loyal customer is less likely to be lured away by a discount of a few dollars.
* Finally, a satisfied customer is likely to sample your other product lines. In Otten's case, that means real estate. He sells and rents lodging on the grounds. And since he has started catering to first-time customers, real-estate income is up 52%, to $5.8 million, with pretax earnings up 40%, to $1.3 million.
Not surprisingly then, once Otten has created a frequent buyer, he fights to keep him. New skiers are sent a certificate celebrating their completion of the program. He's created a frequent-skier program -- modeled after airline frequent-flyer programs -- which rewards customers with a free day of skiing after as few as five visits, and customers receive mailings describing special promotions.
"We want to stay top of mind," says Otten. "We've worked too hard to have people forget us. When we started here [in 1980] we tried to grow by stealing customers from other ski slopes -- by featuring lower prices, longer hours, or more services. That works for a while, but this is better."
CREATING CUSTOMERS FOR LIFE
What will bring them back
Here's what Les Otten thinks are the key ingredients for turning first-time visitors into lifetime customers:
* Convenience. At Sunday River's learn-to-ski program, you show up when you want, and an instructor is found for you. Directional signs are clearly marked, and first-time customers have their own entrance to the ski shop and rental areas.
* Put your most qualified people on the case. Otten's most seasoned instructors teach beginners, and people headed for senior management slots run the orientation center. "Traditionally, your newest or least qualified people deal with new customers," says Otten. "What message does that send?"
* Offer auxiliary products. Otten wants new customers to think of Sunday River when they have any ski-related need. He offers them equipment at cost and discounts at the ski shop to keep them from going elsewhere.
* Make them feel special, even after they leave. Sunday River patrons get mailings announcing special programs and discounts. "You don't want them to forget you," says Otten.
Giving good service
To help you serve your customers -- especially the first-time ones -- consider the following:
* Minding the Store by Stanley Marcus (Little, Brown & Co., 1974). Quite simply, it was Marcus -- through his small retail chain, The Neiman-Marcus Co. -- who showed retailers how to treat customers. Pay attention to his stories. Not only are they entertaining, but they tell you how to act if you want to make customers feel at home.
* Delivering Quality Service by Valarie A. Zeithaml, A. Parasuraman, and Leonard L. Berry (The Free Press, 1990). Though too academic, the book quantifies exactly what customers look for when it comes to service. Its most important message: keep your word.
* Your airline frequent-flyer statement. Frequent-flyer programs can serve as a model for converting one-time customers into lifetime buyers.