Loyalty or Defense
By John Hennessy, Vice President, Concept Shopping, Inc.
In the pursuit of loyalty, lots of databases full of customer information have been created. An article by Jill Griffin on MarketingProfs.com suggests some ways to use that information to gain lessons on loyalty by identifying and understanding “problem” customers.
Some of Ms. Griffin’s suggestions are:
- Detect fraud. Shoppers who take advantage of generous return or other policies can be identified and encouraged to play by the rules. This may require combining data from several sources. For example, a high spending customer looks good in sales data alone but might be identified as a return problem only when that sales data is combined with returns data.
- Identify flawed business practices. If you’re rewarding for new customers more than selling to existing, high customer churn and low retention rates will indicate this problem.
- Beware of the fickle factor. Customers who can be bought by the lowest price — their loyalty is price deep. Sometimes a longer sales cycle is a good thing. In the end, you’ve truly earned the customer’s business.
- Identify variety seekers. These customers quickly tire of the old new and move to the new, new – skipping from brand to brand in the process. Their loyalty is fierce but temporary. It’s possible to use their enthusiasm while you have it, but understand that they will soon be gone and are not worthy of lots of your attention.
Moderator’s Comment: Are most retailers using the shopper data they collect for offense or defense?
This article got me thinking about balance in the use of customer information.
It’s certainly important to detect and eliminate fraud, but it’s also important to pay attention to your better shoppers and shoppers with the potential
of becoming your better shoppers. Shopper information should be used to answer the question, “What can I do to earn more of their business?”
My concern with a lack of balance in approach is that it can invade how the company interacts with its customers. If the tools, practices and polices are
on defense, customers are viewed as suspects and treated as such. If the tools, practices and policies are on offense, customers have high value and are pampered accordingly.
There’s probably room for a little more emphasis on the latter. –
John Hennessy – Moderator