Wednesday, July 06, 2005

When customer loyalty gets you nothin'

Recently I had an employee of one of my client's express dread that somehow, some way, some number of existing customers might get access to one of our theatre promotions, and would buy a ticket that they likely would have bought anyway.

Now, we're not talking a big 40% off discount on this one, but rather $3 a ticket...or less than 20%. Meanwhile most existing customers already get a mailer for each show offering them $2 off if they mail in their advanced order.

Now, I assured this client that the promotion wasn't just there for the taking on either the online box office site or the general theatre site. You had to get it from the blog, from an online community, or even from a cast member directly. Or sure, someone who did read the blog could tell someone else about it.

Hey, that's word-of-mouth right? Which is the goal.

I also acknowledged that there would be definitely be some existing customers...cast member family for instance...who might take advantage of the discount when they planned to come anyway.

But, I added, you accept some of that because you hope the blog and the discount feeds more word of mouth than no blog and no discount.

But I left one response completely unsaid, and that was: why are we so intent on sticking it most to the customers who are most loyal to us?

You've probably seen the cell phone commercial that has the little kids being told they pay more because they're loyal customers. Or take Doc Searls' post about the WSJ today. He learns that being a loyal, long-time customer earns him the worst price. Worse than just going online. Worse than a code he got from a promotional mailing. So ultimately he cancels his existing subscription and re-ups as a "new" subscriber.

Where is the sense in that?

Many retail establishments do quite the opposite. They establish frequent buyer programs. To inspire loyalty; to motivate people to come back again some time, y'hear? And perhaps not tops in the retailer's mind, but tops in the customer's mind: to reward them.

As I did explain in my response to the worried client: you would consider me a long-time customer. I've been coming off and on to shows at this theatre for over a decade. but I certainly don't go every time. I still need that extra push to not only open my wallet, but devote the three hours of my life. If an extra buck of a discount motivates a "regular" to become a never-miss-a-show customer, that's all good...isn't it?


This is the old "you get what you measure."

When your business claims success based on the metric of "new customers acquired," then your promotionals are structured to generate "new" customers -- whether they're old customers that re-up as new, or genuine new customers.

When your business claims success based on the metric of "sales volume," then your promotionals are structured towards generating the most sales -- loyalty programs, coupons, etc.

But, you already knew all this.
Yes, but thank you for putting it in proper marketing terminology :)
My pleasure.

If you ever come to northern New Jersey, let me know. Would love to chat.
I take it that means you're not coming to BlogHer :(

Well, northern NJ is not too far from NYC, and I do make it back there every year or two.
Unfortunately, no -- I won't be making it to BlogHer. I really wish I could, though ...
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