Monday, July 2, 2007

Courting Your Customers

Gongol hosts this week's Carnival of the Capitalists. Naturally, the Top 10 Ways To Trash A Brand caught my eye...

Especially these points on money:
2. Constantly cutting the advertising budget. Very easy to do. And it doesn't mean that the advertising budget shouldn't be monitored and adjusted. But if it's routinely done, especially with the rationale of saving money without considering the costs, it might hurt the brand.

6. Relying on customer loyalty cards to create customer loyalty.
Don't. Loyalty cards don't create loyal customers. What you get instead are promiscuous customers. Why? Because loyalty cards offer incentives and discounts that attract customers who want a "deal". The best loyalty cards are the ones that offer benefits and value-added services that will only be enjoyed by the most profitable customers.

7. Spending more on price promotions than advertising.
Price promotions should be a part of any complete marketing program, but they can't replace traditional brand-building activities. Price promotions can be a dangerous game. Consumers attracted to your brand by a price promotion are just as likely to be lured away by a competitor's price promotion. What happens next week when the promotion is over and consumers are surprised to find that their beloved item now costs more? The "deal" doesn't seem like such a deal any more. As a result, you might be left with a bunch of people who feel ripped off. The trick is to find consumers who love your brand, ones who don't need be enticed to buy with promotions.
For those that worry that they have no/cannot afford Customer Relationship Management (CRM) software, maybe you just don't need it:
10. Installing a CRM system and expecting that will do the trick. CRM aims to give businesses the means to provide preferred customers with "value propositions" that competitors can't match. From the consulting industry's point of view, there's the beauty of the system - it means more lucre for every management consultant in town flogging similar techniques to companies and their competitors. But the problem is that these systems are often installed without thinking of how the organization can use them to attract customers, and what internal behaviors the organization needs to change. Relationships cut both ways. The company might want a relationship with a high-spending customer; but is the customer looking for that sort of relationship? Subject an uninterested customer to new product offerings and telemarketing programs and things can get ugly. Even uglier when they get a letter from their bank telling them their credit card limit can be extended by $10,000 and another telling them their mortgage payments are still in arrears. A big part of the problem is that executives do not understood what they are implementing. They often just let software vendors dictate the terms of customer management or try to fit the strategy around the expensive technology. And what you have instead is a blunt instrument that stalks, rather than woos the customer.
And, perhaps my favorite:
4. Assuming you know what targeted customers value. A variation on the previous problem. So you know who your most profitable customers. But that's only half the story. Do you know what they value? What are the five most important attributes that see them coming back or referring other customers to you? Without the answers, all you have is a pile of data without insight.
Really, if you knew your customer, your CRM system wouldn't be a "blunt instrument that stalks, rather than woos the customer"; you wouldn't train customers to be price monkeys and sales hounds; rather you would court them as you both are.

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