Saturday, July 9, 2016

What Makes an Ideal Customer

Brian Woolf has authored two books on best customer marketing.  He is often referred to as the "Godfather of best customer marketing".  He says that as a general rule best customers:

1. Spend the most each year
2. Have the lowest defection rates
3. Visit the store most frequently each month
4. Buy items with a higher average price
5. Buy higher gross margin percentage items
6. Buy from more departments and categories
7. Have lower processing costs (larger order sizes, fewer questions about whre to find items, and fewer losses from bad checks).

The list is comprehensive and certainly defines the type of customer that is a good revenue source as well as a source of high margin.  It is possible that a non-loyal or unhappy customer could provide the same attributes of revenue and margin for reasons such as most convenient location, quickest shipping or the only one providing specific products or services not readily available from other sources.

This list seems to overlook a few VERY important "Rules" that in the opinion of The Customer Institute really define an ideal customer rather than a "best customer".  The following list of four customer relationship aspects do not require the previous list of 7 but, in the opinion of The Customer Institute, are sought by most companies.

1. An ideal customer will allow the company to make a mistake and understands that no company is perfect.  That customer will allow the company to correct the mistake and not penalize the company.
2. An ideal customer will recognize that ever company can only stay in business if they make a profit.  For that reason those customers will not challenge every price.   Yes, sales are important but in the long run the company can only survive by making a profit.
3. There is a bond of mutual trust between the ideal customer and the company.  Both the company and the customer know that the information shared is the truth and is accepted with that knowledge.
4. The products and services of the company fit the needs of the customer.  There is no attempt to sell either a product of service that does meet the needs of the customer.  There is no attempt to sell a product or service that does not satisfy the customer need and the customer knows that.

The bottom line is that the ideal customer is more than a source of revenue and profit.  The more important aspect of the ideal customer is one whose needs fit the products and services provided by the company.  In addition the values of the company are complementary with the customer and provides  the basis for an ethical relationship to exist.  Business is more than dollars and cents. 

Saturday, July 2, 2016

Word-of-Mouth Works - A Different Perspective

Everybody knows that word-of-mouth is a major component of customer satisfaction. Most everybody thinks that most word-of-mouth is negative. There is been some interesting research done lately that gives a different perspective of word-of-mouth.

A shopper survey performed by Brick Meets Click suggests that positive experiences may occur more frequently than negative experiences. They asked 1000 grocery shoppers about their experience shopping online. For those who shop online – those who had extremely positive or negative experiences how likely they would share them with others. The results are not what I would have expected; namely, only 60% of those who had a negative experience indicated they would share that experience with others whereas 95% of those who had a positive experience indicated they would share that experience with others.

This information suggests that online shoppers are acting differently than those who are brick-and-mortar shoppers. There is no clear research at this point in time to explain the change from what has been the belief that customers are more likely to provide negative responses from negative experiences than those customers who have a positive experience. Until we understand the components that drive these responses will not be able to construct customer models that will create positive word-of-mouth and higher levels of satisfaction and loyalty.

The bottom line is that online shopping appears to have very different characteristics than face-to-face shopping. This is an exciting time when consumers are in flux in the way they shop and the way they perceive experiences while shopping.

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