Will Dunder Mifflin win?

In the most recent episode of NBC’s The Office, Michael offers to gather intelligence on a neighboring competitor by posing as a potential client.

Michael happily schemes to annihilate Prince Family Paper, but then finds himself in a moral dilemma when the rival turns out to be a family-owned Mom and Pop business. And they couldn’t have been nicer to Michael, who is posing as an interested prospect.

The owner of the business even gives Michael their client list.

After the “meeting”, Michael ends up having a problem with his car, and “Pop” fixes his car. While he waits, “Mom” brings him a cup of coffee.

Getting Personal

Now that there is a very human face on the competition, Michael doesn’t want to hurt these people by turning the client list over to his boss. Unfortunately, Dwight manages to take the list away from Michael after an amusing foot chase around the office and parking lot, which forces Michael to turn the list over to his boss.

Armed with the Prince Family Paper’s client list, the conventional thinking is that Dunder Mifflin can now put Prince Family Paper out of business.

Or could they?

It’s pretty easy to take a closer “look” at this situation for the customer experience perspective. It is highly likely that the companies on the Prince Family Paper client list are already aware of the larger company, Dunder Mifflin. Let’s say it’s common knowledge that the larger company’s prices are lower than the Mom and Pop operation.

So why would these companies authorize paying more to work with Prince Family Paper?

“People who need people”

Based on what we saw in the episode, my guess is that Prince Family Paper has a loyal following that values customer service over lowest prices. Like many small businesses that have a loyal following, highly personalized service is the cornerstone of their brand. Prince Family Paper understands that people do business with people. And as long as they adhere to this principle, their clients are unlikely to stray merely in pursuit of lower prices.

As we go about our sales activities, let’s keep this classic quote from American Business woman Mary Kay Ash in mind:

Pretend that every single person you meet has a sign around his or her neck that says, ”Make me feel important.” Not only will you succeed in sales, you will succeed in life.

What do you think – can a “Dunder Mifflin” win? Could your customers be lured away by lower prices? What are you doing to make sure your customers want to stay with you?

And, if you were armed with your competitor’s client list, what would you do?

Vanilla latte with all the fat left in it

Something really cool happened on my latest visit to my neighborhood Peet’s Coffee.

I was handed a card that entitles me to receive “any coffee drink” free. Any coffee drink!

I received a similar offer before (from another coffee place) – but it limited me to receiving only a “free small coffee.”

If I wanted a small coffee, I’ll just make it at home. It’s not enough to get my attention. I mean, I recognize they are making some sort of effort – but it’s the cheapest thing on the menu. I never order the cheapest thing on the menu.

Back to my Peet’s visit. You know why they gave me the free coffee drink card? Because they kept me “waiting” while they made my coffee. (A medium vanilla latte with “all the fat left in it, please.” This means replacing the milk with half and half.)

I didn’t even wait a long time. I waited a normal amount of time. It was a pleasant surprise to know I could come back to Peet’s anytime (before 12/31/2009) and get a free coffee drink of my choosing.

Beneath all this warm fuzziness, the marketer in me is pretty sure that everyone who “waited” for their drink that day got one of these cards. But I don’t even care! I’m just looking forward to my next medium vanilla latte with all the fat left in it.

Spending Smart: Wooing the Right Customers

A waiter has taken flak from a table of elderly ladies during a two-hour luncheon. They’ve changed their minds, complained, reshuffled their orders, and made the server’s life miserable. When they finally ask for the check, he delivers it with the question, “Was anything all right?”

In direct marketing, few enterprises understand that it’s more profitable to market to your best customers than to attract the millions of potential customers who aren’t yet buying your product or service – or even those infrequent buyers.

Let’s pop open your database and take a peek at The Good, The Bad, and The Ugly. It may not be a nice thing to say, but in truth, most of us have a mix of all three.

• Your good customers are the ones who buy your product time and again. They tell their friends, family and colleagues about you, acting as spokespeople. You love these customers. If you could, you’d clone them.
• The bad customers are the ones that buy just once; then they just disappear. They’re often cherry pickers – they change mobile services over and over, lured by cheaper rates and bigger incentives; they hop from bank to bank, chasing higher interest rates and free toaster ovens.
• And the ugly customers? Don’t get me started! They’re never satisfied. They’re never going to be. They cost more than they’re worth. Let them drift over to your competitors, and be thankful.

Successful companies identify and satisfy their ideal customers, doing everything they can to please and retain them. Simply stated, you should target most of your marketing to these best customers, developing relationships with them, bringing them closer to loyalty – and advocacy.

Example: A telecom operator in South India, struggling with high customer churn, planned to develop a blanket rewards and relationship program with mobile subscribers – but realized that rewarding all subscribers may not be the answer.

Why? The bottom 28% of their subscribers were actually eating up half the profits generated by the others, in operational and servicing costs. Another 12% did not generate any profits. And 30% were only slightly profitable.

By deciding to focus on this top 30%, the operator saved 70% of his marketing budget, and was able to retain 98% of these high end customers in a market that was witnessing over 50% churn.

Bottom Line: It can actually be more profitable to lose bad customers than to gain new ones! The Bad and the Ugly cost more money to service than they generate.

Retaining the right customers is common sense. And one day, it will be common practice.

What’s the true cost of Customer Lifetime Value?

How often have you heard the phrase Customer Lifetime Value (CLV)? According to Wikipedia, the free encyclopedia with over 1.7 million articles, it’s “a metric that projects the value of a customer over the entire history of that customer’s relationship with a company.”

But even if you’re unfamiliar with this phrase, don’t ignore the dynamics of marketing to your base. Politicians do this especially well. But no one does it better than the TV networks.
A few years ago, ABC was in last place among the big three. But now, by giving its base what it wants, Disney’s network has runaway hits like Lost, Desperate Housewives, Dancing With The Stars, Ugly Betty and Grey’s Anatomy.

In fact, many companies totally ignore the impact that loyal customers can have, when the benefits of increasing it are so dramatic:

> A 5% increase in retention can create an 85% increase in profits;

> A 10% increase can translate to a 20% increase in sales;

> Extending customer lifecycles by three years can triple profits per
customer.

As you’ve no doubt heard, it’s difficult to improve what we cannot measure. So it’s even more difficult to accurately project how much you should spend to acquire, service and keep your customers if you actually don’t know their value.

But it’s ALWAYS far less expensive to reach out and market to your current customers than to your prospective customers. That’s why tracking your CLV will help you –– and your organization –– find, keep and profit from the right customers.