Are you firing your customers?

[gripmarketing]

Too many tanning salon owners are busy firing their company's customers!

Scoring their inactive customer lists for probability of purchase, they cut from the bottom. Of course, deleting the worst performing customers from any list is always the right thing to do when done properly. It's almost certain to increase response rate and/or decrease cost.

Even so, it does not necessarily generate additional revenue, and it's a one-trick pony. Once you lop off the very bottom, you'll soon start cutting into valuable customers, past and present. And some, that have been cut, with the right treatment, could become more valuable. But at best, this is low-hanging fruit.

However, tests of mailing to customers who haven’t purchased in 13-24 months revealed that, for the tanning industry, this is bearing fruit of ½ - 1 ½% response rates.

How far back to cut your lists?

Too many are just catering to their most-demanding customers. They buy those customers' propensity to repurchase with incentives, rewards, privileges, and other benefits. Marketing has trained consumers well. A few have become quite savvy; some have become demanding. There's a large segment of customers in every category whose tendency to repurchase is for sale. What many marketers call loyalty is factually a cost of reacquisition.

It's no secret but not said often enough: The lion's share of all the billions spent on marketing is spent teaching and encouraging consumers to be disloyal.

Unless the target is a first-time buyer in a category, every acquisition campaign targets some other companies' customers and explains why they are better off switching from their current brand to some new one. For every pitch to buy the latest and greatest, one company's acquisition is some other's betrayal.

Firing the worst customers at one extreme, catering to the more demanding customers at the other, and ignoring most of those in-between: Loyalty practices are a mess. But three principles can be effective guides through any set of particulars.

"Acquire with the intention to retain, and retain with the intention to grow."

Intention over time has implications. Perhaps most relevant to this readership, patience, respect, and discretion in the solicitation and use of data are appropriate to and best practices for a relationship. They also would constrain aggressive marketers.

The second principle concerns a company's relationship-focused behaviors -- responsiveness (reactive) and attentiveness (proactive) -- to its customers. In research conducted by the Wunderman agency, responsiveness to customer-initiated contacts is responsible for the largest part of what customers score as a positive brand relationship. Those scores soar when responsiveness is combined with a small amount of unprompted and unexpected attentiveness.

Honing and mixing responsiveness and attentiveness is the path to building a relationship, one that is greater than the sum of its parts.

Third, relevance is key. This aged principle was proven (again) in the success of a loyalty program we recently engineered for a giant retail chain. No dollar-denominated discounts, high-quality rewards, or credible and entertaining information -- alone or in combination -- produced the desired results among the chain's club members. Only when a segmentation schema based on attitudinal and past-purchase data was applied to sort and parse these benefits was relevance achieved. It was relevance that drove the desired loyalty behaviors and consequent business results.

The examples are fresh, but the truths are old. Building relationships and always being responsive, occasionally attentive, and usually relevant are attributes of a company everyone likes to do business with. Such principles infuse human meaning into abstract buzzwords and gee-whiz technologies.

They bring loyalty programs to a very practical ground. In landing them there, we also hope to abolish the term. People are loyal to their country, religion, or family -- not to an automobile or toothpaste.

Let's deflate the loyalty puffery and focus instead on the more plain-spoken task of increasing propensity to repurchase.

Punch cards (business card sized) with a punch consumers can't easily duplicate -SPAM ALERT - (5000 pcs for only $195 and punch $49) and Frequent Tanner Reward Certificates (5000 pcs only $375 including design), birthday cards(5000 pcs only $375 including design), and more are proven to influence and boost repurchases.

Too few salons have loyalty programs in place that reward customers and reach out and touch inactives on a regular basis. If you want to get your customers to repurchase and remain loyal, you must reward them early and often.

[gripmarketing]

Many salon owners we talk to tell us "I used to do birthday cards", and "I've thought about doing a punch card", but don't. What are they waiting for? The Going Out of Business Sale to begin?

You must market your company as if every day was your last.