Saturday, May 1, 2010

Butterfly Customers

I recently found a book published in 1997 titled "The Butterfly Customer - capturing the Loyalty of Today's Elusive Customer." The authors Joan A Pajunen and Susan O'Dell describe what now appears to be a very different customer. They describe butterfly customers as customers who flit from one store or supplier to another with the intent of finding a lower price or some other feature. They have no loyalty to any particular company and are always in search of a better deal or a new inducement.

The reason I am attracted to this concept is that I believe I am a butterfly customer. According to the authors butterflies have developed from the proliferation of shopping environments such as shopping malls and the Internet. The small company or retail store might offer convenience but cannot match the pricing of large companies. (When I worked in industry I worked for a division of a company that held 3rd place in market share. The two companies that fought out the 1st and 2nd place could sell products for less than our manufacturing cost).

The authors provide eight characteristics of butterflies.
1. They will readily accept offers to be loyal customers.
2. They move across market segments. They will buy a luxury item and then go to a discount store to save a few dollars.
3. They are intelligent, educated and informed.
4. They are cynical and skeptical, and always read the fine print.
5. They would rather switch than fight - which may be a reason for the decline in customer complaints.
6. They consider word-of-mouth as the most reliable source of information.
7. They are not embarrassed to be butterflies.
8. They know their own worth.

The authors describe a butterfly that can be loyal. The "Monarch" is a butterfly who will return again and again once he/she trusts the company. There are five characteristics of Monarchs.
1. Monarchs always return sooner or later.
2. Monarchs often send someone in their place.
3. Monarchs always have an opinion which they will share if asked.
4. Monarchs share their homework and may share their information on what the competition is doing.
5. Monarchs are very forgiving and giving. They have elasticity in their transactions which translates that they will overlook a mistake or bad transaction.

The solution offered for building an environment to create Monarch butterflies has three dimensions; namely media, physical (bricks and mortar) and people. When these three dimensions are working together the customer can develop trust in the company. If any of these dimensions are out of sync, the trust may not develop. For example, a company that provides a media image of high quality and provides a quality product but has surly personnel will create dissonance in the mind of the customer. Loyal Monarchs can be found dealing with companies that provide consistency in these three dimensions.

The bottom line is that customers may, in fact, be changing as a result of the media. The concept of butterflies resonates with me. The concept of butterfly customers has not taken off in terms of the literature. It is always surprising how many creative ways are being developed to describe customers and segment the market and butterflies may be a new segment. It will be interesting to see whether or not butterfly customers do become a segment. In any case, the butterfly customer just may require a new definition of loyalty.

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