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Pitfall
# 1: Don’t overcomplicate 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.
RELATIONSHIP
MARKETING - A PRIMER
Relationship Marketing refers to an indirect
conversation with the customer by analyzing
their behavior over time. It treats marketing
as a process rather than single unconnected
events.
Relationship Marketing, in addition to emphasizing
keeping current customers rather than getting
new ones, reminds us that customers are important
long-term assets that must be valued (and treated
likewise).
At the heart of every learning relationship
is understanding. A relationship marketing programme
includes a rigorous examination of situations,
challenges, opportunities and environments.
The relationship marketing process is usually
defined as a series of stages, and there are
many different names given to these stages,
depending on the marketing perspective and the
type of business. As an example, working
from the relationship beginning to the end:
Awareness---->Comparison---->Transaction---->Reinforcement---->Advocacy
Using the relationship marketing approach, programs
can be customised for individual consumer groups
and the stage of the process they are going
through as opposed to some forms of database
marketing where everybody would get virtually
the same promotions, with perhaps a change in
offer.
A simple example of this would be sending new
customers a "Welcome Kit", which might
have an incentive to make a second purchase.
If 60 days pass, and the customer does not made
a second purchase, you would follow up with
an e-mailed discount. You are using customer
behavior over time (the customer lifecycle)
to trigger the marketing approach.
Although it is easy to describe how Relationship
Marketing works, in practice there are huge
obstacles since most businesses are not organized
to deliver such a strategy.
At the tactical levels sales people must begin
to adapt their methods but this will only happen
where the rewards match the objectives given
to the sales force. Similarly, training in relationship
selling must take precedence and should encompass
a broader range of people. If Relationship Marketing
is to work then the job of building relationships
must extend to all customer facing employees
- not just sales people.
Firms should consider creating "relationship
managers" or "partnership managers"
charged with developing - often through more
traditional jobs - the links with customers.
Even where such positions exist it will remain
the primary function of sales people to engage
with, enthuse and motivate the customers.
Finally, we must conclude that a Relationship
Marketing strategy starts with the commitment
of the chief executive and the board. If the
attempt at improving relationships is left to
one function within the firm - typically sales
or marketing - then it is unlikely that the
firm will realise the full benefits. Indeed,
such an approach may even prove counterproductive
as conflicts arise between parts of the firm
that orient towards internal production and
operations and a sales team encouraged to develop
relationships and partnerships. With Relationship
Marketing it is, as so often the case, a matter
of all or nothing.
Sources:
1. An Introduction to Relationship Marketing
by
Roger C. Parker
2. The direction of marketing relationships
By
Michael K. Rich
3. www.jimnovo.com
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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’. I do believe
today’s consumer 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!
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