Managing Profitable Customer Relationships will be a key success factor for most Companies as we move into the 21st century.
However, many Companies are taking pre-mature decisions of starting ‘loyalty or frequency’ programs for their customers.
Because Relationship Marketing requires a considerable investment of time, talent and rupees, it’s vital that we take care to avoid some of the pitfalls we may encounter on the road to a successful Relationship Marketing Program.
Pitfall # 1: Don’t over complicate your Relationship program
Overly complex, difficult-to-figure-out awards and rewards schemes are bound to turn people off. Customers are less likely to participate in programs where the rules are too complicated or the response mechanism is too long-drawn.
If you’ve seen the membership/profiling forms of some of the credit card companies, you would think they represent the Income tax authorities. The objective seems to be to gather as much information as possible about the prospect, in the first contact itself.
RELATIONSHIP MARKETING PROGRAMS MUST HAVE SIMPLICITY BUILT IN THEM. DON’T MAKE THE LIFE OF THE CUSTOMER MORE COMPLICATED THAN IT ALREADY IS!
Pitfall # 2: The law of the last transaction
What is uppermost in the customers’ mind is their last experience with your product/service. They may have had a positive experience the last ten times, but if the eleventh experience with the brand has been a negative one, it will subsume all the good ones that came before. That terrible meal you had last night at your favorite restaurant will make you forget the twenty excellent meals you have had there previously. What’s more, a dissatisfied customer will tell as many as 15 others about this negative experience.
But still, don’t make the mistake of ignoring or writing off this dissatisfied, complaining customer. The very fact that he has taken the trouble of complaining means he is a loyal and concerned customer.
One of my Clients in the automotive segment realized this and, more importantly, had the courage to acknowledge it and today, we are working on an elaborate plan to reduce dissatisfaction by significantly enhancing customer service.
A DEMONSTRATION OF GENUINENESS WILL, ALMOST ALWAYS, HELP TO CEMENT A BOND WITH LOYAL CUSTOMERS.
Pitfall # 3: Feedback surveys showing ‘satisfied’ are just not good enough
Most Companies are extremely happy if more than 60% customers say they are satisfied with the relationship program. But a rating of ‘satisfied’ can lull us into a misplaced sense of complacency.
All ‘satisfied’ means is that - you’re doing okay! We need to redefine norms in today’s competitive world and strive for customers who are ‘very satisfied’.
THOSE COMPANIES WHO WILL BENCHMARK THEIR CUSTOMER FEEDBACK UP FROM ‘SATISFIED’ TO ‘VERY SATISFIED’ WILL SEE THEIR RATES OF CONSUMER ATTRITION DECREASING SIGNIFICANTLY.
Pitfall # 4: Avoid the temptation to segment without intelligence
It is true that a good database allows companies to identify those valuable customers who account for the majority of profits and to launch relationship programs directed at them. However, the temptation is to segment and then super-segment – like introducing a silver card, and then a gold card and then get tempted to launch a diamond card and then, hey, how about a platinum card!
WHILE CREATING SPECIAL TIERS IS FINE BY ITSELF, BUT IF WE ARE NOT ABLE TO OFFER BENEFITS COMMENSURATE WITH THESE TIERS, THEN WE ARE BOUND TO INCREASE DISSATISFACTION AMONGST CUSTOMERS.
Pitfall # 5: Don’t reward customers for what they would do anyway
This is crucial, particularly from a profitability standpoint. You need to ask yourself whether you are truly achieving ‘incremental’ results overtime with your relationship program. Your program has to either get you more customers or increase usage. If, for example, a segment of credit card owners are using that card 4 times a month, there is no point in rewarding them for using it 3 times a month. And this is quite likely if you are not collecting and analyzing your customer transaction history.
A REWARD PROGRAM WHICH DOES NOT DIFFERENTIATE REWARDS DEPENDING ON ITS USER SEGMENTS CAN RUN THE RISK OF A ZERO-SUM GAME.
Remember the famous quote of David Ogilvy – ‘the Consumer is not a moron…she is your wife’- she is not just a statistical artifact but a person with a mind of her own and, thankfully, blessed with an imagination. Respect the relationship and she will be with you forever…take her for granted and be ready to lose her!