An organized list of your customers phone number, email addresses, or mailing addresses makes your business more robust, efficient, and valuable.
If you are a betting person, you would probably place a big bet that I believe that your brand is your most valuable asset. After all, I founded Brand Marketing Blog. However, you would lose that bet.
The most valuable asset your business has is your customer contact list, whether it be an email list, a CRM, or an old-school Rolodex.
To be valuable, your list needs to be primed for activation. The direct communication details for your top customers. These people are happy to hear from you, and hear from you regularly. The response these people can give you can literally save your business in tough times.
Social media followers do not count; you can be kept from communicating with your followers at any time. A social media following has some value, but social media accounts cannot be relied on as an asset.
There are regulations around collecting, storing and using customer contact information for promotion, but don’t let this deter you. You and your organization can easily be compliant a few simple rules (I go into below), some research, and a mentality of respect.
There are many tools that make leveraging your customer list easy. Tools like MailChimp, SalesForce, Microsoft Dynamics 365, Adobe Experience Cloud, SendInBlue, and many others. Maybe your organization is already using one of these tools for customer support or business intelligence.
So go start your customer database today! No convinced yet, or need some help? Read on.
Your list needs to be direct and primed for activation.
People need to hear directly from you and be excited to hear from your brand.
What I am talking about has the names and direct contact information for the people closest to your brand. The people who listen to your communication and are primed for activation. These people are opted into these communications, either as a subscriber or through contact with a salesperson. The people on this list are in your market; they have a need for your product and are in selling locale.
Contact with these people cannot rely on an intermediary; you have to be able to contact them directly, or through a channel where you can swap vendors in a heartbeat. It doesn’t count if you only have access to these people through social media, a retailer, an ad network, a trade show, or another intermediary.
Disintermediated channels are typically email, phone, and snail-mail. So if you should be collecting email addresses, phone numbers, and mailing addresses whenever possible, please comment below if there is another disintermediated communication channel you use.
Your customer list has Net Asset Value
You need to value your customer list as if it is an asset that can make you money.
Every entry in your customer list increases the value of your business. Companies are acquired all the time because of their inventory of hard to reach customers, especially business-to-business (B2B) companies. My friend, John Wall from Marketing Over Coffee, pointed this out to me, and he is right.
Why is a customer list have value? The ability to reach out to people and activate a percentage of them regularly makes money consistently. Just like a new tool and die may enable future business for a factory, an customer contact list does the same thing; thus it can be valued just like any other business asset.
A customer contact list also makes a company more robust. A company who has a customer list primed for future business can weather changes in the business environment.
- What if you are having a cash flow problem, and may not make payroll? No problem if you have direct contact with your customers. You can generate revenue by telling them about a sale or special offer.
- What if your product gets de-listed from a top retailer? No problem if you have direct contact with your customers. You can direct them to another retailer.
- What if you notice that your Instagram posts are receiving far less distribution and engagement? (As many people are these days.) No problem if you have direct contact with your customers. You weren’t reliant on social media anyway.
The robustness that comes from a customer contact list is akin to your professional network. If you suddenly lose your job, then a warm network of people who want to help you will help you bounce back right away. Someone happy to hear from you may know of an opportunity for you. Your network is not effective if people just hear from you out-of-the-blue, again, much like your business’ customers.
The value of an email list is increasing because of the exciting and tricky ad targetting you can do using your email list. Using your CRM audience to talk to the people closest to your brand is useful by itself; you can see a 4 to 10 times increase in clickthrough rate on your ads.
You can use your email list to find and communicate with new people who have similar interests and demographics to the people on your email list. Facebook calls this feature Lookalike Audience, and Google calls it Customer Match.
How much is a contact worth?
If a customer contact list has value, how do you calculate it?
The value of a customer contact will vary significantly based on the nature of the business. The profitability of the company is the most significant factor, but how long people stay customers and how frequently and how much they purchase are also a consideration.
Hard to find the contacts in niche verticals are more valuable than a general audience. That is another reason BMB loves to see people start niche businesses.
An email address can be worth less than a dollar for an ad-supported media website like BMB, but I have heard an email address in the financial services industry is over fifty dollars.
The value of a customer contact list is a portion of the lifetime profit generated from all the people on the list. How much is each contact going to predictable spend with the brand? How profitable is that?
Another way of looking at it is: how much would you pay to acquire a customer before it would be unprofitable? To answer that question, you would need to know:
- The dollar amount people on the list spend, on average
- The global profitability of the company
- The average amount of time people will stay as engaged customers (the inverse of churn)
Here is a helpful article from Smile.io called The Easy Way to Calculate Customer Lifetime Value.
Automating or regularly calculating the value of your list is ideal, but even trying for a rough estimate will help you make better business decisions.
You can now evaluate opportunities to grow your customer contact list or people selling leads to you. You also know the actual value your customers bring to the table in cross-promotion or co-branding opportunities.
Direct contact information is much more valuable than social media followers.
You do not own your social media following, but you do own your customer contact list.
When I talk about customer contact information, I mean communication over direct channels. Any channel is direct when you can directly send a message, or use a partner business that you could easily swap if they could not effectively communicate your message. Direct channels are the phone, text messages, email, or postal mail. Some channels like podcasts also count because there is no intermediary.
Social media doesn’t count.
Let me say that again: social media followers do not count towards the value of your customer contacts.
I wish I could say social media followers have no value, but they can drive some business and keep a brand top-of-mind. However, the value of a social media follower is so small that it is incomparable to a piece of direct contact information.
The reason is simple: at any moment, for nearly any reason, a social media platform can cut off communication channel to your followers. It is unreliable, and thus, we cannot treat it as if it has long term value. You would not build a business around a piece of equipment on a factory floor which you knew one day was spontaneously and without reason going to stop working.
Social media platforms have been changing the rules throughout their lives, and they have to. There are now so many pieces of communication coming at every user that the platforms need to algorithmically rank them, so people have a chance to see what they want. If they showed everybody everything, the platforms would lose their value.
Branded communications are on the bottom of the list when social media platforms are sorting communications to show to users… unless you pay, of course.
Social media platforms are also getting less and less willing to send people off-platform. I wrote a piece about this trend on BMB called “Is the Website’s Era Comming To An End?” So if you are linking to your blog post or e-commerce store, good luck.
Social media sites also come and go. Email, phone, and mail are enduring. You can easily waste time, resources, and money building a following on a social media network to have the network collapse.
While Facebook, Instagram, and Twitter seem essential now, let’s remember the social media platforms we have seen come and go: MySpace, Friendster, FriendFeed, Google Plus, Digg, Vine, Yik Yak, and the list goes on.
The people running social media understand the value of direct contact information. What is the first piece of information they ask for you when you sign up? An email address.
Social media platforms do not rely on their platform to communicate about their product; they send personalized emails to drag people back onto the platform. The collection of direct contact information also builds the social media company’s valuation. (This point was made so well by WPBeginner in the post: Revealed: Why Building an Email List is so Important Today)
Tools To Manage And Leverage Your Customer List
Welcome to the world of Customer Relationship Management (CRM).
Thankfully, there are many great platforms to store and use customer information. This tool is called CRM: Customer Relationship Management.
What CRM tool you use is entirely up to you. What is important is that you own the information and you can export it, back it up, and move platforms if necessary.
MailChimp is full-featured CRM that take pride in making sophisticated marketing tactics simple enough for small business owners and sole-proprietors to do themselves.
The enterprise default is Salesforce. The first thing a young salesperson will ask for after they are hired is their Salesforce login. Organizations of all sizes can benefit from Salesforce.
Microsoft Dynamics is an all-encompassing platform that can store all data from finance to HR. It includes a robust CRM as well.
Previously names Adobe Marketing Cloud, this platform specializes in online marketing and analytics. However, it also has a CRM that can connect customers to salespeople and customer support specialists.
SendInBlue is the platform I use. It started as an email and SMS communication tool but is growing to be a one-stop CRM. They offer a generous free option where you can send up to 300 emails per day.
Regulations Around Email Lists
You need to be a good steward of personal information if you are collecting it.
The European Union vastly updated the regulations around personal data with the General Data Protection Regulation (GDPR). Also, California followed suit with the California Consumer Privacy Act (CCPR).
There was a big reaction in the media about these regulations, so you might be scared about getting into legal trouble if you start collecting personal information. That is reasonable.
You can still collect information as long as you respect the trust that people are placing in you when they give you their personal data. You do not want to do anything to break that trust.
Understand that transactional emails and promotional emails are treated differently in terms of the laws.
Disclaimer: I am not a lawyer, and this is not legal advice. Do your research and talk with a lawyer who represents you.
Most of the regulatory burden will be taken care of my your CRM software provider, especially the more technical aspects.
However, there are some things you should be concerned with:
1) Always Opt-In (Never Opt-Out)
If you collect information for any reason, like delivery or sending a receipt, then you CANNOT use that information to market to or sell to people unless they opt-in. They need to check a box or give verbal consent to be added to a marketing list. That checkbox cannot be pre-checked or have a checkbox to opt-out.
When someone opts-in to your communications, then you need to be explicit about what exactly they are signing up for. What they are consenting to needs to be explicit. If these policies ever change, then you need to send a dedicated email about the nature of the change and allow them to remove themselves.
3) Make it easy for people to remove themselves.
People have the right not to hear from you ever again. You need to have an “unsubscribe” link visible on every automated communication. If someone opts out, you need to keep their contact on file flagged as “opted out” in case they get re-added some other way. Modern CRMs will take care of that.
4) Have a path for people to be removed from the database entirely.
The European Union has codified the “right to be forgotten.” This means that someone can request to be removed entirely from the databases of your product or marketing engine. You need to have a process to make such requests in your policies. An email address for someone to can do this will suffice.
5) Encrypt backups of the database.
It would be best if you were regularly downloading your customer information off your CRM or marketing platform. You need to store these conscientiously, meaning peoples personal information would not be stolen if your computer hardware was stolen or hacked. A password-protected computer with an encrypted hard drive will cover your legal obligations. Thankfully, this is built into Windows PCs with a service called Bit Locker, and on Apple Macs with File Vault. You can use TrueCrypt to lock down the file further.
6) Limit the number of employees who have access to customer data.
Access to customer data should be on a need-to-know basis. This information is sensitive and valuable, so you should treat it with respect. The people who do have access should practice what I call security hygiene; use unique passwords, don’t share passwords between sites, don’t share passwords with other people, and be mindful when clicking links or opening attachments in email.
7) Publish your contact information and business address on your communications.
Your communications to your list need to include a business address. It proves your company is a legitimate enterprise, and allow people to contact you in person or by mail for removal requests.
8) Don’t share your list with other organizations, or send messages on their behalf.
Just don’t be a <expletive>.
Do right by your patrons.
You know the scummy behavior of illegal email marketers. I am sure you have accidentally had your information sucked up by one of these people, and are cursed with junk mail until the end of time.
Don’t be that person, or let your patrons information get in the hands of those people.
People are bestowing much trust in you when they give your organization their contact information. Respect that they want to hear from you in a mindful and targetted way. Don’t spam them. Don’t advertise to them. Give them messages that have value, and don’t trap them if they decide there isn’t enough value in your notes.
Start building your list today.
You can make your brand more efficient, robust, and valuable by building a database of customer contact information. You will be far better off than investing the same effort in getting social media followers.
If you have a lot of social media followers, try to incent them to move up the communication hierarchy. We explain that ladder in the post Classes of Marketing Communication.