Life Style Marketing

Customer Experience Management: Loyalty of the Best Customer

Our data indicates the customer who is currently spending the most in apparel is probably the LEAST likely to change brands. Is this loyalty an effect of how they are being treated? Or, is it the result of their knowledge, experience and care in selecting brands in the first place?

The phenomenon of loyalty is so closely related to the amount of spending (in fact the tendency to be loyal INCREASES with spending) and to the number of channels used (in fact tends to INCREASE with the number of channels shopped) that we are inclined to give credit to the customer rather than to the brand or the merchant.

The best customer has educated herself through shopping (both the amount of spending and the variety of channels shopped) and knows what they want. What are the implications for CEM?

First, we would suggest, is the importance of not underestimating the best customer's sophistication. Do not attempt to sell them inferior merchandise or provide them less than perfect service. When they want to return something, accept it with a smile and learn from them what caused the problem. Fix the problem and let them know you fixed it. Learn from their learning.

Second, we recommend letting them be the first to know when one of their favorite brands has introduced a new item or has a new promotion. Do not risk them learning about it from some other channel (or see an equivalent offering first from another brand).

Third, of course, invite your best customers to be part of your learning. And reciprocate by sharing what you know. Ask for their feedback and, in trade, give them highest priority in your CEM system. Remember their loyalty is their educated decision. They can revoke it when provoked.

For more information on statistics that relate to CEM, contact info@premiumknowledge.net.

 

Customer Experience Management (CEM) for the Affluent

Customer Experience Management (CEM) is the application of familiar concepts (process control, quality management, etc.) to the experience a customer has when doing business with an organization.

There are two different ways to think about CEM.

One way is to standardize processes so that all customers have a similar and consistent experience. The objective is to eliminate error (from the customer's perspective) and waste (from the company's perspective). In the best cases the result of a this application is that overall customer satisfaction increases and overall business costs decrease. This approach is very relevant in mass market applications where companies dealing in commodities that allow little customizing and competition is based primarily on cost.

Another way to think about CEM is to tailor processes to meet the differing expectations of different customers. In this view there are different requirements for satisfying different customers. The objective is to personalize the system so it responds appropriately to each customer segment.

The definition of "appropriate for each segment" is critical. Segmentation of the customer base includes consideration of a customer's value to the company as well as the customer's expectations of the company. In this approach the business objective is to allocate resources in a way that recognizes that different customers have different value. Overall satisfaction scores are a by-product of the real emphasis: The retention of customers relative to their value. This approach is very relevant in markets in which companies compete on the basis of differentiation and personalization rather than efficiency and price.

For this reason we think companies focused on the afluent market will choose different approaches to CEM than companies serving the mass market.

Income and Wealth Inequality: What are the Marketing Implications?

http://www.pbs.org/newshour/rundown/2011/09/a-broader-view-of-americas-wealth-ineqaulity.html

Recent stories regarding the inequality of wealth (and income) in the U.S. should have profound impact on marketers. Putting aside the issues of social policy, more specific attention must be paid to marketing to the affluent versus marketing in general. The affluent buy for very different reasons than the "mass" population. And they buy in different ways

For some time this blog (and our website www.premiumknowledge.net) has pointed out that the most significant variable in the affluent consumer's decision to purchase is the semiotic (social signaling) content of the good or service. That is, the consumer asks him/herself "Does the article communicate to others (and reinforce for me) the identity that I want in this society?" Notice we use the word "identity" as distinguished from "social status" or "image."

To the person whose identity is heavily rooted in "personal frugality" it is important that the article convey (and reinforce) this image. This person will not buy a Rolls Royce motor car or a Hermes scarf even for an impossibly low sale price. It's not about price, it's about symbolism.

Likewise the individual whose identity is heavily rooted in being (and being seen as) affluent will buy a luxury car or designer purse instead of something more functional and less expensive in either category. Again, it is not about price. it is about symbolism.

Based on our research the top 25% of households (those with at least $100,000 in income) place great emphasis on the social signals that their purchases convey to themselves and others. We have identified 10 different sets of these values and identified the impact each set has on product preferences, pricing, channel selection, service expectations, etc by category (i., automotive, finance, travel, apparel, etc.). Again, these differences are WITHIN the top 25% who are responsible for the vast majority of profitable sales for today's mechant. In today's economy, instead of running sales and offering discounts to everyone, we recommend merchants understand the real value they are already offering to these afluent and price accordiningly.

For more information contact info@prmiumknowledge.net.