Recently in Customer Loyalty Programs Category

Why You Have Bad Customers

Bad customers are everywhere.  Showing up with coupons, but no cash.  Wanting written estimates so they can price shop elsewhere.  Bad customers make "frugal"  a four letter word.

Even loyal and good customers are behaving badly -- how did it get so bad?  Is it just this economy or has something else gone wrong?

Imagine that you sell and install "parts".  You could sell auto parts, or you could sell specialized advice based on standard legal documents as an attorney or insurance broker.  

Any business that has a specialized service component bundled with a standard good is a "parts" business.  And most of us in North America and Europe are in this type of "parts" business.

Your Ideal Customer

Imagine your perfect "parts" customer.  Call her "Maria".  Why is Maria ideal? She is the pefect customer because;

• She showed up for her regular appointments; 
• She accepted your service upgrades without hesitation, and;
• She didn't haggle over the price of "parts" and service.

Life was good.  For you and Maria.

Now, however,  the "parts" business is getting hard.  

On one hand, there are after market stores which will sell "replacement parts", even specialized IP is not immune to being sold as a "part".  With their large, or on demand inventory, they can undercut you on the price of a "part".

The other rock, is the rise of the "do it your self mechanic", an unregulated body of individuals mimicing specialized work.  The DIY crowd can "install parts" cheaper than you, given the right diagnostic.

And now, Maria is getting wise.  She shows up, more often than not, asking only for a written diagnosis of her problem.  Or she wants you to install "parts" she has bought from a competitor.

Maria has become a bottom feeder.  Soon, you will only see her when, in desperation, you put out another ill conceived marketing offer - buy one and get one free, or a BOGO.

You don't want to turn down business.  But, you would like to fire Maria.  Except, so many of your customers are starting to look a lot like Maria.

One response is tempting.  You can raise prices and drive out the bottom feeders. This response risks alienating your good customers - turning them into Marias.  You cannot afford that solution.

What do you do with a problem like Maria?

What You Need is a A Bad Customer Detector

No, what you want is a permanent or real solution- a Maria detector if you will.

Your strategic problem is this.  You are being asked to give away confidential information - a diagnostic scan, a specialized legal opinion or insurance solution- to a user that is not yet committed as a  customer.  The user may thank-you for your valuable information and take it without paying.

You may respond by charging something for this confidential information.  And, this may work for a short period of time -but it may also turn more of your loyal customers into price conscious shoppers - on the slippery slope to being a Maria.

So, what you need is a way to detect Bad Customers. 

How Would This Work? Create A Bad Customer Training Exercise

If you knew a user was going to turn out to be a Maria, your staff could gently turn her request for confidential information down.  Staff would explain that it is policy to only give away confidential information to proven and loyal customers.

How could you get a Bad Customer detector? How could you train your staff to play "Spot the Maria Game"- staff that were top notch Maria detectors?

The "Spot the Maria" is a fairly simple variant of a well known negotiation training exercise.  The logic of this strategy can be found by googling "deterrence" or "sub-perfect Nash equilibrium".  But, you don't need to know why this games has attracted the attention of theorists; you just need to know that there is training exercise, which could be customized for your unique problem.

There are many providers of customized negotiation training exercises.  Most of these providers or their affiliates can address this strategic problem with an exercise and provide training that sticks to your staff.

Who Uses Negotiation Role Playing?

There are two top notch Universities, Northwestern's Kellogg School of Management Dispute Resolution Research  Center,  and Harvard's Program on Negotiation, each which provide standard negotiation exercises, which you can review on line for free.  Each has its own Linkedin Group,  DRRC Linkedin Group, and PON Linkedin Group.

DRR and PON have free newsletters, seminars and useful resources.  They also have for profit training seminars.

Here is a partial list of the DRCC and PON testimonials: 

Now that you know your strategic problem, know the training solution and why it works, are you ready to take the next step in seeing whether training is right for your organization?   Then sign up using the MT Notifier below the last comments.  As bonus, the IAFD will send you this training exercise for free.  (We don't ever sell, rent or give  your email address to anyone.)

Swag sells. But, why? And more importantly, can it really do much to promote your brand? This year, the U.S. promotional products industry is estimated to be a $17.4 billion market. To put that figure in perspective, American wineries have annual revenues of $14 billion, breakfast cereal manufacturers have revenues of $12 billion, and movie ticket sales are about $10 billion.

Americans will spend more on Swag this year than they do on amusement parks and arcades, more than on dry cleaning, more than on coffee shops including Starbucks and Peet’s, (see Does Swag Work?)

So does Swag really help?  We need to differeniate Swag from Promotional Marketing Items.

A Promotional Marketing Items is your overall marketing strategic plan, which relate directly to your brand and help develop a specific call to action. 

There are hundreds of thousands of promotional marketing items that can be chosen from. But, 99% of them are wrong for you and will not help market your brand. That does not mean that they are bad pieces, it is just that they do not relate directly to what you do, why you provide value in the market place and what your call to action is. 

Here is small example: a pen. There are literally thousands of types of pens you can purchase from $0.69 each to thousands of dollars. The trick is to have a pen that speaks to your market. 

Two pens, but two different restaurant stories,

The first is for a restaurant that is well known across North America. They are known for their great food and understated style. The owner is extremely eco conscious and supports publicly many eco friendly causes. When we produced a pen for him, it had to be 85% or more biodegradable and tell that story.

He gives out thousands of them and with each one, tells a bit of his story through the web link attached. 

The other is for a simple pizza joint. Not a large chain, not a fancy store, but a place with a following. The pens we produced for him simply state "Pen stolen from "X" restaurant, please return for 10% discount". People return the pens in droves and he sends them back out on the street. He figures he has given away 50 discounts for every pen he owns. 

What I am trying to say, is that they are not giving out just a pen. They are giving out something of value that relates to their brand, helps tell their story and demonstrates why people should spend money with them. 

Swag is a commodity. It is something that is given away with very little return on investment because there is no marketing plan behind it. 

Promotional Marketing items on the other hand have great value when they are designed to be part of an integrated marketing plan. 

The physical piece is usually the same for swag and promotional marketing pieces, but the messaging and the overall plan to integrate it into the overall campaign is what will turn this from being a cost centre to a profit centre, from swag to swagger.