NASHVILLE MARKETING BLOG: Insights on strategic branding, marketing management, general business and Nashville marketing topics. By Monica Powers, Vanderbilt MBA and marketing consultant in Nashville, TN.

Wednesday, June 14, 2006

How Loyal Are Your Customers?

Ever have the sneaking suspicion that your best customers are having a torrid affair with *gasp* another brand? Or perhaps not a long-term passionate relationship, but just a little fling?

Should you have the chance to press for an explanation, it would go something like this:

Great Expectations Customer: "But you weren't there when I needed you. I was looking for something you couldn't give me, something more."

Exasperated Customer: "You're too complicated--I'm tired of jumping through hoops for you."

Opportunistic Customer: "Brand X was just there, looking so good that I couldn't help myself... but it didn't mean anything, I promise."

Fickle Customer: "Well, I'm not really a "'til death do us part" kind of person."

Relevance-Hungry Customer: "I'm bored to death with you." (Isn't that the most painful one to hear?)

Do you know why your customers have strayed, or who they've been seeing when you're not around? The answers to these questions are more important to your business than you may realize--they could shed light on missed opportunities to build your brand and your profits.

Some thought leaders have posed the question of whether brand loyalty is dead. If loyalty exists, how much does it matter to you? How do you track the impact of high loyalty and retention--or its flip side, customer attrition--on your revenues and your bottom line? Does loyalty make your brand stronger, more valuable?

Better still, what practices do you follow to ensure you're making the most of that precious 20% of your customer or client base that offers 80% of your opportunity?

Keep your brand alive. Do what it takes to exceed expectations, offer a better value, a more satisfying experience, deeper market penetration, more convenience, or greater meaning and relevance in response to your market's needs and aspirations.

5 Comments:

Blogger argos said...

Thanks for bringing this subject to light. I perceive this very issue as the most challenging.

Often with attrition one never truly gets to the bottom of the issue, they have migrated away with little investment toward helping you understand.

In addition, we are all human. "Fickle" is most common. What is one to do? Only your very best, with little expectations.

You can nuture relationships towards relevance but, as in real life, they are never static.

June 17, 2006 8:33 AM

 
Anonymous Ann Handley said...

I agree with this, Monica: "Do what it takes to exceed expectations, offer a better value, a more satisfying experience, deeper market penetration, more convenience, or greater meaning and relevance in response to your market's needs and aspirations...."

But at the same time, it's okay to recognize those types who really DON'T want a long-term relationship. You really can't make everyone happy, especially those types who are always looking for an excuse..."Listen, it's not you, it's me..."

Anyway, great concept...love it.

June 21, 2006 11:12 PM

 
Blogger Monica Powers said...

Absolutely, Ann, the flip side of wowing that top tier of customers is knowing how to weed out and "fire" the bottom 20%, or whatever that number may be for you---those which are not profitable or beneficial for you to serve. I think it takes a special skill to walk confidently away from business (a client or market segment) that is not the right fit.

June 22, 2006 7:36 AM

 
Blogger Michael Nurse said...

I agree wholeheartedly with this. The trick is in identifying who those most valuable customers, most growable customers and value destroying customer are...

This requires being able to track an individual customer's behaviour. Loyalty programs do a good job of tracking purchase behaviour and in some cases customer service behaviour. Once you can assign a unique identifier to each customer and you have identified which are most profitable, the next step is treating your most important customers differently (ie better.)

This is where you basically need to understand what those most important customers value and provide it for them at a reasonable cost. of course, this is easier said than done...

thoughts?

July 29, 2006 7:23 PM

 
Anonymous monica powers said...

Very good way to sum it up. I think the holy grail for some companies is to get a better handle on how to measure the value of their customers. Online retailers and direct mail companies have it particularly easy, while brick-and-mortar retailers have certain opportunities to create two-way relationships with their core customers...which they don't always make the best use of.

July 31, 2006 7:38 AM

 

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