The Fight for Loyalty
In these fast paced and complex economic times, business owners are fighting harder than ever to maintain customer loyalty. Many forces work to deteriorate hard won customer loyalty. Stiffer competition, an expansion of choices, new technology, cheaper prices and a host of other forces are continually working to weaken the grip that business owners have on their customers. What is worse is the steep commoditization curve is turning every business, it seems, into a “me too” business. It is hard to differentiate between providers. Also, consumers are more finicky than ever before and their expectations continue to rise. “Good service” no longer good enough. Even those customers who have been loyal for years can suddenly announce that they have “made some tough decisions” and are “heading in a different direction”. What are business owners and marketers to do? How do business owners retain customer in this storm of competing forces?
Why I Love Chocolate Milk
I drink chocolate milk like some people drink wine. Although I am not a wine drinker myself, I drink chocolate milk for many of the same reasons people drink wine. For example, if you are need something to drink to celebrate a special occasion, people typically drink wine. Also, after a particularly stressful or busy day, some people enjoy kicking off their shoes and relaxing on the coaching with a nice glass of wine. I drink chocolate milk for all of those same reasons. If I have had a great day or something really good happened, on the way home I will stop by the store and grab some chocolate milk to celebrate. However, if I have had a particularly rough day nothing seems to sooth my nerves and helps me feel better than some rich, creamy chocolate milk. Crazy, I know. But it is true.
Let me share with you a story that happened to me the other day that helped answer the questions posed above regarding business owners and retaining customers.
My Fateful Choice
On my way home for work one evening I decided to drop by the store and buy some chocolate milk to sooth my nerves after a particularly busy day. As I walked up to the milk section I was greeted with a familiar scene. There were several different brands of chocolate milk resting there, trying to entice me to pick them and take them home. However, long ago, I had made my choice. Reeds Dairy chocolate milk was the only clear choice for me. It comes from a local dairy and I happen to personally know the dairy manager. I even skateboarded with the dairy owner’s son when I was a kid. In addition to these social and environmental factors, the product is terrific. They use potato flakes in the chocolate milk to make it extra thick and creamy. It is so rich that it is more of a desert than a drink. That is why I love it! Because of these reasons, I have been a die hard, loyal Reeds Dairy chocolate milk drinker for years.
Then something happened. When I walked up to the milk section that day I noticed a new comer to the chocolate milk scene. Cocoa Metro Belgian Chocolate. “Where did you come from?” I said to myself. I reached for the container and took a closer look at this stranger who was hanging out in the milk section. I read the side label, “Crafted with heaps of Belgian Chocolate. You can fire your therapist.” I smiled to myself and thought how funny that was that they are suggesting that their Belgian Chocolate milk provided better quality results than a professional therapist did. I read further, “Hi there. Thanks for reading the back of the label. We’re happy to introduce you to the result of our cravings – Cocoa Metro Belgian Drinking Chocolate. Put your feet up and treat yourself. You’re guaranteed to feel better. 9 out of 10 people who wanted to be doctors agree. – Mike & Lizzy”
I laughed to myself and thought, “Wow, these guys know exactly who I am and why I drink chocolate milk!” Chocolate milk for me is therapy. I drink it to feel better. And here they are saying that they “guarantee” that drinking their chocolate milk will make me feel better and that I can fire my therapist. Their message made me laugh. It resonated with me and I was highly motivated to try a bottle, if for no other reason, than out of shear curiosity. What did I do? I bought a bottle of Cocoa Metro Belgian Chocolate. After years of faithful loyalty to Reeds Dairy, just like that, I chose another brand and went home with their competitor.
Wow! How did that just happen? How did a strange, new comer appear out of nowhere and disrupt years of loyalty? How can you copy them and do it too? And what lessons do you and I, as business owners and marketers, learn from this experience?
I believe there are lessons for sales people, marketers, customer service folks and business owners within this simple story. I believe if more business folks applied these principles they would see an increase in their customer retention. So here are the lessons we learn from my chocolate milk experience:
Lesson #1: Know the real reason why people buy your product. People buy for their own reasons, not your reasons. Business owners cannot assume they know why their customers buy. They must know, for a fact, why they buy. When is the last time you talked with your customers about the real reasons they buy from you? Have you survey them lately? Is your customer service or sales team in the habit of really listening to your customers? Or do they just go through the motions. Good, solid marketing always has its foundation in knowing what the customer really wants.
Lesson #2: People usually buy for one of two reasons. People are motivated to take action and buy things to either relieve their pain, or to gain some pleasure. Generally speaking, people buy products and service to fix problems, issues and challenges they are having. They seek relief for pains they have. Cocoa Metro captured that aspect my buying motivation by suggesting that I “fire my therapist”. Why do people go to therapists in the first place? To solve some sort of emotional or mental problem they are having. Cocoa Metro was suggesting that whatever emotional or mental problem I was having, their chocolate milk would solve it for me. People also, generally buy products and services to gain pleasure or happiness. They want to achieve a certain emotional state of fulfillment. That is way people buy Corvettes and ski resort lift tickets. They are buying happiness. Cocoa Metro captured this aspect of my buying motivation by inviting me to “Put my feet up and treat myself.” They promised me that, “I’m guaranteed to feel better.” Cocoa Metro was suggesting that drinking their chocolate milk was the best way to treat myself and make myself happy.
Lesson #3: Do not assume your loyal customers will stay that way. As much as I love Reeds Dairy chocolate milk, their brand has never tried to connect with me. Their packaging suggests that they are award winning and are the best around. Their product is wonderful; however, they have not captured the real reasons why I drink their chocolate milk. They have not tapped into my real buying motivations. So, when their competitors comes along and correctly captures the real reasons why I buy, as loyal as I have been to them, I am willing to make a switch because Cocoa Metro seems to understand me better than Reeds Dairy does. You cannot rest on your laurels and assume that your relationship with your customers is secure. You must constantly work to deepen that relationship. You must find new ways to connect on an emotional level with your customer. You must watch your back. Your competitors are not resting. Neither should you.
Lesson #4: Price may not matter as much as you think. When I made the decision to buy Cocoa Metro instead of Reeds Dairy chocolate milk, I did not compare prices. In fact, I cannot remember how much the Cocoa Metro brand costs. My decision was not intellectual in nature. It was 100% emotional. It has been said that “People buy emotionally. They justify their decision to buy intellectually.” Once my emotional needs were met, price was no object. I did not even care about the price. All I knew was that I wanted it and I was willing to pay whatever price it took to get it. The lesson learned is, if you connect emotionally with your customers the importance of price goes down. Consequently, I learned later that Reeds Dairy costs $2.99 and Cocoa Metro costs $3.69. I was happy to pay a premium because someone understood me.
The Wrap Up
In order for business owners and marketers to insure that their customers remain loyal to them, they must know the real reasons they buy. They must understand what motivates people to buy and they must use that information frequently in their marketing communications. Business owners and marketers must not assume that once they acquire a new customer the hard part it over. On the contrary, the real work is just beginning. They must also view price as a less influential element in the buying decision. Meeting the emotional needs of customers is the real test of a business’s sales or service efforts. It is emotion that carries the day, not price. Applying the four lessons described above will help any business improve their customer retention efforts. Let us know how it is going for you.
Terry Hansen is the founder of Hansen Group Company, Inc and is regularly asked to train sales and management teams and consult with companies on their marketing strategies. You can learn more about Hansen Group Company by visiting www.HansenGroupCompany.com or by calling 208-346-1005.