Customer Relationship Equity
As a follow up to my previous post on lost customers I am going to spend a few key strokes talking about building equity with customers. This is most important with "relational" customers. Very price sensitive customers are not loyal to a business, they are only loyal to low price where ever it goes. The building of equity means that one small slip in delivering a product or service doesn't result in a lost customer.
What are the factors that affect equity and how does a business build equity into the customer relationship? First, the purchase price of the product or service is an important factor. If the purchase is a 99-cent bag of chips the relationship isn't as important as it is with a $500.00 suit. The next factor is the purchase cycle. The longer the time between purchases the harder it is to build equity. With a long purchase cycle it has to become an ongoing project between purchases rather than strictly at each purchase event. The car business has known this for some time and they establish programs to contact customers on a regular basis. The third factor is how good the company is at satisfying/pleasing/delighting the customer. Obviously if you aren't even satisfying the customer you aren't building equity. The further along this satisfaction continuum your company performs the more equity you build with each purchase occasion. If you can delight customers consistently you build relationship equity faster than if you are just "pleasing" them.
My dry cleaner is an example of a business that has built equity in me as a customer. From about my third visit they remembered my name. It's consistently a good experience and it's even happened that they've seen me coming toward the store and they were searching for my clothes before I walked through the door. It makes sense to build equity to increase the likelihood that the customer will be loyal. They won't respond to a competitors temporary sale/coupon and the occasional mistake won't result in a lost customer.
What are the factors that affect equity and how does a business build equity into the customer relationship? First, the purchase price of the product or service is an important factor. If the purchase is a 99-cent bag of chips the relationship isn't as important as it is with a $500.00 suit. The next factor is the purchase cycle. The longer the time between purchases the harder it is to build equity. With a long purchase cycle it has to become an ongoing project between purchases rather than strictly at each purchase event. The car business has known this for some time and they establish programs to contact customers on a regular basis. The third factor is how good the company is at satisfying/pleasing/delighting the customer. Obviously if you aren't even satisfying the customer you aren't building equity. The further along this satisfaction continuum your company performs the more equity you build with each purchase occasion. If you can delight customers consistently you build relationship equity faster than if you are just "pleasing" them.
My dry cleaner is an example of a business that has built equity in me as a customer. From about my third visit they remembered my name. It's consistently a good experience and it's even happened that they've seen me coming toward the store and they were searching for my clothes before I walked through the door. It makes sense to build equity to increase the likelihood that the customer will be loyal. They won't respond to a competitors temporary sale/coupon and the occasional mistake won't result in a lost customer.
posted by billbergh at 3:44 PM
1 Comments:
ramblings2000
First, they must be delivering some level of success or they wouldn't continue to run. If it doesn't motivate you to purchase then perhaps you are not their target consumer. The one thing it has done is made you aware of these brands. I'm not a big fan of these commercials and I especially hate when they run them with such heavy frequency that you are driven to mute or switch.
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