Welcome to the April 6, 2006 edition of The Wise Marketer!
Power supplier price changes are forcing an increasingly large number of households in the UK to consider switching supplier, according to the annual 'Service in Britain' survey from Research Now, which examined consumer complaints and churn twenty market sectors.
And, across all sectors, the study found that the average person complains about products or services 9 times a year, with those under 35 years old being most likely to complain, and those aged...
Best Customer Marketing (BCM) is, as its name implies, all about directing the major part of your marketing efforts toward your best customers - those who bring you the most profit. To many, the principle sounds obvious; too obvious to even discuss. But, in fact, few companies practise BCM effectively.
Like so many other aspects of the marketer's life, there isn't a clear cut 'right way' or 'wrong way' to conduct your BCM activities: in fact, what you do depends largely on what you want to achieve. The objective is always the same, though - to increase the number of best customers while decreasing the number of least profitable customers. Again, a simple idea, but one that hasn't yet hit home for all too many companies... which are still losing vast amounts of their profits to needy, over-demanding customers.
There are three obvious ways of employing BCM to change and re-shape the
1. A long term loyalty programme
This involves the use of a loyalty programme to identify and segment customers into groups, and then the use of different marketing strategies for each segment. This approach has the advantage that not only do you get to know your customers and your business more fundamentally, allowing targeted marketing, but you also have the information to allow you to modify other aspects of the business so that it meets the needs of the best customers more closely. However, costs are more difficult to project and, to be successful, the programme has to become central to the business.
2. A short term best customer programme
This involves a short-term marketing programme (say, 3 to 6 months) designed to appeal more to best customers than to the others. It may not lead to such detailed knowledge of the business's individual customers but it does reward the best customers most, and moves customers up from lower segments to higher segments. The great advantage of this method is that a substantial return on investment can be expected during the actual programme. Particularly if an experienced best customer marketing specialist is brought in for the task, lead-in time can be very short and the results can be quite accurately predicted in advance.
3. Use both types together
The first two methods can be piggy-backed, one on top of the other. This is probably the ultimate solution, and is used by many successful loyalty programme operators. The basic loyalty programme is the foundation, and customer data is collected and acted upon. However, in order to maintain customers' interest in the programme over time, and also to stimulate sales and profits on a regular basis, a short term best customer programme is run on top of the permanent programme. In this scenario, customers must be members of the long-term loyalty programme in order to take part in the short term programme, which in turn drives more customers to join the permanent one.
How does BCM work, practically?
Well, it's a technique that dates back to when marketing began. It was the cornerstone of the 'mom & pop' stores that were so prevalent until the 1950s. All you have to do is find a way of identifying your best customers (say, the ones who make you the most profit) and reward them for their patronage, then find ways of growing their spend with your company while reducing the patronage of those customers who cost you the most money to service. If you segment your customers into 'spending bands' before and after a successful BCM campaign, you'll see a huge shift from lower-spending bands into higher-spending bands.
And it's a "double whammy": not only do you grow your most profitable customers, but you also lose your least profitable customers... and where will your cherry-pickers and complainers go when they leave you? To your competitors. Now you can see why you should be the quickest and best at BCM in your sector: if you're not doing it already, the chances are that your competitors will do it to you first!
But, in order to identify the best customers, you need customer data. Enter
the customer loyalty programme. For supermarkets it's usually a card.
Increasingly it's becoming a mobile phone-based identity. Whatever the token or
the channel used, you'll need to identify customers at the point of sale if
you're to know who's profitable and who isn't - and then monitor how their
behaviour changes later.
Good vs. bad: the real cost...
In one example cited in The Loyalty Guide Volume II, drawn from real customer data from one of Europe's biggest retailers, the customer base was divided into eleven segments based on the average amount spent in-store each week. Almost four out of ten customers (38%) spent less than €4.00 per week and, altogether, they made up 6.51% of the retailer's turnover. At the other end of the scale the best customers spent over €150.00 per week. Only 2% of customers fell into this segment, yet they made up 10.34% of the store's turnover. A simple calculation reveals that each good customer spends about thirty times as much as each worst customer.
In practice, the good customers tend to keep coming back for longer, while the worst customers are less loyal, and the difference in value over a lifetime can be enormous - with some examples suggesting that the best customers can be worth around a thousand times as much as bad customers. In theory, if your customers are all identified and arranged into spend-based segments, your marketing budget can be allocated in proportion to their value as customers, maximising your return on marketing investment very quickly.
The Loyalty Guide Volume II - a 950 page guide to customer loyalty worldwide - explains every aspect of loyalty programmes, best practices, concepts, models and innovations, all backed up with case studies, original research, illustrations, charts, graphs, tables, and presentation material. Find out about the principles, practicalities, metrics, analysis, and bottom-line effects of loyalty, and gain the expert guidance of dozens of loyalty and relationship marketing thought-leaders, worldwide. Find out how to use customer data to best effect, increase customer profitability, reduce churn, and monitor and increase customer frequency, spend, and share of wallet. The whole world's major programmes are detailed, studied, and summarised: find out how others are succeeding, what works, and - more importantly - what doesn't work, and why. The executive summary, table of contents, downloadable samplers, and pricing/ordering information are available online at http://www.theloyaltyguide.com/volume2
In the world of baseball cards, it's the adult collector that has supported the category for many years, according to Upper Deck, which has launched a new 'First Kids Rewards' programme to encourage younger card collectors to enter the market.
Upper Deck's new sports trading card-based rewards programme for children is simple in concept: children buy packs of any 2006 Upper Deck Baseball product, go online and register the four-character alpha-numeric codes found on the back of the cards, and get points for each...
Almost half (49%) of adult consumers in the USA prefer a discount on specific products in-store than earning points toward a larger reward through a loyalty programme (only 34%), according to the latest 'Customer Focus 2006: Grocery' study from Vertis Inc.
The study also found that, of those who have loyalty cards, 51% of men aged 50 and over and women aged 35 to 49 said they would prefer a discount to earning points. The study also examined the use of advertising inserts (circulars) among grocery consumers, and found that nearly all grocery insert readers (84%) use them to...
At Amsterdam Airport (April 24th to 27th) IIR's "Maximising ARPU for Mobile Telecoms Operators" conference will examine strategies to increase ARPU (average revenue per user), and how operators are using innovative bundling and pricing strategies to drive ARPU. The event will also look at how the latest mobile services are impacting ARPU.
Sessions will include: 'Examining strategies to drive voice usage and increase ARPU from traditional services'; 'Increasing revenue streams from business customers and analysing new services that will drive business ARPU'; 'Driving ARPU from 3G services'; 'Assessing the potential for increasing ARPU through fixed-mobile substitution (FMS)'; and 'Optimising your pricing strategy to maximise ARPU in an increasingly competitive market'...
A new instant online rewards scheme called 'ThanksPoints' has been launched in the UK by loyalty provider @1 Limited, with a concept and design approach that focuses attention on the quality of the rewards and service, promoting the 'product as hero' principle.
According to @1, companies of all sizes will be able to use the ThanksPoints.com loyalty platform to reward and recognise customer loyalty, or for one-off promotions, incentive schemes and staff motivation programmes. The company's rewards formula seems simple enough: rewards should be the things that consumers...
Aberdeen Group has praised several companies as 'International Success Strategy Winners', based on their implementations of successful strategies for the management and analysis of customer data, application of customer intelligence, and use of 'closed loop' processes.
According to Aberdeen, its research has confirmed that selective investment in high-value customers can deliver up to three times the value, particularly in terms of increased revenues, reduced operational costs, and increased...
Hotel guests who fill out comment cards and satisfaction surveys could provide far more useful information by shooting their own pictures of anything that displeases them during their stay, according to researchers at the Cornell University Center for Hospitality Research.
Although hoteliers regularly ask guests to fill out comment cards that indicate whether or not they were satisfied with their hotel stay, the motivations and dissatisfaction drivers behind their comments are still not always clear. But a technique called "photo-elicitation" could make it possible for guests to show hotel managers exactly what they...
cards are still the best present, survey says
Eight out of ten American consumers say they would rather receive a gift card redeemable at their favourite retailer than any other kind of gift, according to a new ... more
sports fans rewarded for good behaviour
A sports fan rewards programme with a difference has been launched by the Chicago White Sox, Major League Baseball, Miller Brewing Company, the Illinois Department of ... more
Express expands rewards for 2006
American Express has expanded the list of retail and travel partners for its Membership Rewards loyalty programme, including the option to redeem points for Apple ... more
newspaper brands can benefit from taxonomy
The newspaper publisher Rupert Murdoch said last year that online publishing is the future, so newspapers worldwide have stepped up their efforts to analyse reader ... more
Africa: Cell C to reward prepaid users
The South African mobile telephone service provider Cell C has followed in the recent footsteps of competing operator Vodacom to launch its own loyalty programme for ... more
opens new 'test lab' supercentre
Wal-Mart has opened a whole new concept store - a Supercentre in Plano, Texas, USA - which features new ideas in store layout, merchandise selection, and customers ... more
Southern becomes Marriott Rewards partner
Members of the Marriott Rewards frequent guest loyalty programme can now earn China Southern Airlines' Sky Pearl Club frequent flyer miles when staying at the ... more
launches Discover Promotions brand
In the UK, Landround plc (operator of the Buy and Fly! travel incentive and rewards programme) has rebranded its promotional travel voucher business, which now offers ... more
to open nine new concept stores
OfficeMax is trying to say goodbye to the standard office supply warehouse store design, and is opening nine new stores in Minneapolis and Minnesota, USA, providing a ... more
and Transax integrate gift/loyalty card processing
Givex Corporation and Transax Technologies have integrated the Givex Gift and Loyalty solutions into the host-to-host KwikX platform. This allows Givex gift and ... more
the 'golden demographic' really being replaced?
For almost 40 years marketers have been obsessed with the 18-49 age demographic, with many even ignoring the 50+ category altogether. But, according to an analysis of ... more
adds more new partners and products
KidsFutures Inc. has added over 200 consumer products to its grocery programme. Included are national brands such as Heinz Jarred Baby Food and Baby Cereal, Wonder ... more
Melia joins Aeroplan as points-issuing partner
In Canada, Sol Melia Hotels and Resorts has joined the Aeroplan programme, allowing Aeroplan members to earn Aeroplan Miles at any of Sol Melia's properties in 30 ... more
metrics not so satisfying, study finds
VisionEdge Marketing has announced the results of its fifth annual Marketing Performance Management Survey , in which marketing professionals revealed that measuring ... more
to give away 25 million Mileage Plus miles
United Airlines' Mileage Plus frequent flyer loyalty programme is celebrating 25 years with 25 sweepstake prizes of 1 million miles each. Entries for the sweepstakes ... more
Canada and Aeroplan launch rewards programme
Bell Canada and Aeroplan have introduced an enhanced rewards programme that allows Bell Canada customers and Aeroplan members to earn extra Aeroplan Miles. Aeroplan ... more
to award points on Chryslers and Jeeps
The American mothers' community and rewards programme, ClubMom, has partnered with Chrysler Group to include the Chrysler, Jeep and Dodge brands. Chrysler and Jeep ... more
'voice of the consumer' web site opens
A new consumer web site, ShoutBack.com, has been launched by Shoutback Concepts LLC, aiming to give consumers another channel for their voice to be heard, and ... more
bank uses EMV to add loyalty
The Kazakhstan-based Kazkommertsbank has adopted the XLS software platform from Welcome Real-time for its new GO!Card loyalty rewards credit card offering. The ... more
points programme targets independent retailers
The UK-based travel reward programme buy and fly! (operated by Landround Plc) has teamed up with brands such as Jordans Cereals, Shop Equip, and Charles Wells to ... more
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Keep well, and market wisely.
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