Why Only the ‘Right’ Customers Are Right
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In emergency rooms across the country, triage is a common practice. Patients in dire need are treated first, and those with less severe injuries just have to wait.
On a brand’s Twitter account, it’s a different world. Even the slightest hiccup (“My shipment arrived late!”), and your social media experts and customer service reps are ON IT.
What if I told you that not every customer is deserving of immediate, special care?
To me, this concept is a no-brainer. Companies that treat every customer the exact same are wasting precious time, expensive resources, and are missing out on huge opportunities to reserve exceptional treatment for the customers for whom it’s really worth it.
Why only the right customers are always right
I think we can all agree that the ultimate goal for every commercial entity is to make the company profitable for as long as possible.
Then a funny thing happened about 20 years ago: We collectively decided “the customer is always right.”
And so here we are two decades later, and we’ve created a monster: An army of spoiled, entitled, pampered customers — most of whom may literally be eating into our collective bottom lines.
How do these monsters wreak havoc? Every business has its own special kind: The serial shop-and-returners. The ones who threaten to cancel their service unless you lower their rates (and then leave two months later anyway). The ones who win your giveaway but then never shop with you again.
Companies spend millions of dollars and countless hours caring for these customers through social media and customer service call centers. They spend millions on brand campaigns aimed to “surprise and delight” random customers with a free hamburger or a chance to become a millionaire in the checkout line. They offer every single customer the same generous return policy, no matter what.
Of course, businesses should never outright ignore a customer or treat them badly. Good, basic customer service is essential to the success of any business. But while these companies are out there lavishing support, surprise gifts, and “no questions asked” refunds on every customer, their most valuable, long-time customers are often left waiting in the wings.
It’s crazy to me.
Instead of expending so much time and energy on low-value customers (who constitute the majority of any firm’s customer base), brands should instead focus on identifying and rewarding their best customers. You know, the ones who have spent and will most likely continue to spend money with them for a long time ahead.
Here’s an idea: If you’re planning a “surprise and delight” ad campaign this holiday season, why not first determine everyone’s Customer Lifetime Value (CLV) and then, after the campaign, see what impact it had on their future value? It’s a way to turn a clever stunt into meaningful, measurable financial value.
Use the right incentives, and profits will follow
In April, Starbucks announced that loyalty program members would earn reward points based on the amount of money they spend, not how often they visit.
At first, customers were skeptical, but then quickly adapted. Why? Because Starbucks’ incentive program was finally based on something that is actually relevant to predicting the true value of their worth over time.
Sure there was a lot of kvetching on Twitter, but Starbucks was wise to stick to its principles and not overreact to a few unhappy (and likely low-value) customers.
Fear of the unknown
It’s refreshing to see more companies like Starbucks adopting a truly customer-centric approach. Yet most companies — from telecom conglomerates to major retailers — remain paralyzed. They live in mortal fear that if they try anything other than a one-size-fits-all customer strategy, they will be punished.
Their worst fear? A customer complaint going viral. One wrong move, and they could have a reincarnation of the 2009 “United Breaks Guitars” video on their hands (which now has had more than 15 million views). In my opinion, these fears are overblown. It’s extremely rare for one video to drastically impact customer behavior in one fell swoop.
Slowly but surely, I predict most companies will become more comfortable segmenting their customers based on value. Soon, every customer — even the bad ones — will adapt and aspire to be better ones. Instead of “Why not me?” they’ll be asking “What do I have to do to get this kind of treatment?”
The best part? A little bit of effort goes a long way. Profitable, loyal customers don’t need a ceremonious handshake from the pilot or an embarrassing red carpet treatment.
Most of the time, all these high-value customers need is a simple reassurance that they’ll get immediate, special treatment when they experience a hiccup along the way.
Source: AdAge September 9, 2016