Roy's Blog

June 22, 2015

Marketing “specials” kill

Special marketing deals could kill customer loyalty.

Most companies use special offers or promotions to attract new customers and kick sales up a notch.

For the most part, special deals use price as the hook and are time based to encourage people to make a fast purchase decision.

“For the next three months subscribe to our wireless service and get a free LED TV” is a common promotion offered by many as a way to acquire new wireless customers.

These offers are dangled in the face of a potential NEW customer; THEY receive the free TV.

On the other hand, someone who has been a loyal wireless customer for 10 years gets NADA even though they have supported the company to the tune of thousands of dollars.

This is crazy.

Special offers should be placed at the feet of your loyal customers FIRST. It’s an awesome way to thank people for their ongoing support and return the favour with a token of your appreciation. Think about it as re-investing (in them) some of the revenue they have generously given you over the years.

But companies rarely use promotions this way.

They don’t want to take the revenue hit from current customers taking advantage of the savings; they don’t feel it is necessary to offer the promotion it to loyal customers to encourage them to stay. And if an exiting customer takes the deal they don’t believe it stimulates new sales.

Really?

These are bogus arguments for a number of reasons:

1. Offering something special to your loyal fans will surprise and delight them. They will stay loyal to you as long as you serve them well. And they will act as your best advertisers by telling the story to others about how great you are. Revenue will GROW as a result. Ever done an NPV on a customer who has been with you for 10 years?

2. If you DON’T include them they will find out. They will know that they are not included in the deal and they will be angry and feel neglected. They might leave you, but for sure they will talk you up to their friends and family as a selfish organization that does not care about their loyal customers. They will “slander your brand”; shouting out your lack of integrity and honesty.

3. If your special deal attracts someone because of their thirst for your low price, what makes you think they won’t leave you for a better offer? A special targeted at “switchers” is also fuel for more switching. Then you have realized zero return on your promotion investment AND you have given your current customers reason to leave.

4. Investing in your loyal customer base ALWAYS makes sense. You’re not reducing your margins by offering them the special deal, you’re reinvesting some of your margins in them to maintain their loyalty. Why do companies buy back their own shares?

It’s time organizations re-think the strategy behind “the special deal”.

Any way you cut it, the deal strategy for new customer acquisition is risky; go for the sure thing in the long run.

Show people why they should stay with you.

Cheers,
Roy
Check out my BE DiFFERENT or be dead Book Series

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  • Posted 6.22.15 at 01:38 am by Roy Osing
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