Metzner Schneider Associates, Inc.

The Struggle of Good vs. Evil -- the Customer in the Balance

The battle for the heart and mind of the customer is one of good versus evil -- what works to your advantage versus what works to your competitor's advantage. The same forces can be both good and evil, depending upon whether you are trying to acquire or retain a customer. Although he may not realize it, the customer is at the center of this struggle, and your company's success or failure can lie in the balance.

The forces of good include brand, experience, customer knowledge, habit, vested interest (e.g. a structured or hidden loyalty program) and perhaps the greatest of all, inertia. These, combined with opportunity cost for failure to remain loyal, are all forces that work to your advantage in retention. They are also those that work against you when trying to acquire a competitor's customer.

To overcome the forces of evil, there are a number of temptations that can be put forth. The inducements include promotional offers, discounts and other pricing plans, sampling (free trials), and member-get-a-member opportunities. But no matter what temptations are proffered, they will go for naught if targeted at the wrong customer.

Some "wrong customers" offer no potential, because they have no ongoing interest in or need for your product or service. Offering inducements to them would be a waste. Equally wasteful, customers that are already fully committed will likely happily partake of your offerings, but yield nothing incremental; the result is simply dilution of your profits.

Potentially more damaging, putting too much temptation in front of someone that is already on the side of good may turn them to the dark side. Too many marketers ply their faithful with offers designed to attract new customers, and nothing damages a relationship more than failing to recognize its existence. So before you go off and try to turn the evil to the good, make sure that you are not already preaching to the converted.

Structured loyalty programs, with rewards and benefits -- like most frequent flyer programs -- grew up in an environment where many companies had no other way of identifying their customers and providing incentives to allow tracking of behavior. While clearly serving a need, by their nature they offer the same benefits and rewards to all who qualify. Therefore, some people receive inducements that they would earn anyway, or that are not actually influencing behavior. Others who are not interested in the structured offerings never participate, and become lost opportunities. The good that comes from these programs can therefore be lessened by the evil of wastefulness or ineffectiveness.

Inertia works against you when you are trying to get trial and repeat purchase. It's as if someone is skiing, and needs a tow-rope to get up the hill. The greatest force has to be exerted to get someone started moving at all. Once climbing, gravity continues to pull them backwards, and if they let go, they will fall back. Your rewards and benefits have to first overcome inertia, and then continue to pull until the target makes it to the top of the hill. At that balance point, the customer is in equilibrium, and perhaps indifferent, from going one way or the other.

This can be the point of the customer's greatest vulnerability; it is also the point where the greatest opportunity exists to turn the forces of evil to your advantage. Once he starts down the hill, the natural force of gravity pulls him down, and you do not need to do as much to overcome any friction. Because he is moving in the direction you desire, it is that much harder for the competition to get him back up over the top of the hill and down to the starting point. You only have to worry that the cycle starts over again, and otherwise you have achieved the maximum return on the effort you have expended. The amount of force needed to keep them moving down the hill is significantly less than the amount needed to pull them up. You just need to get them to the top, and give them enough of a nudge to push them over in the direction that you want.

By using the tools at your disposal with the technology available today, you can determine the appropriate forces to apply to any given customer or customer group to move them in the direction you want and get them to the balance point. The process is also iterative; as you try certain appeals to particular audiences, you can determine which ones work most effectively against customer characteristics and continually improve your results, while reducing your costs of acquisition and retention.

All the while, the customer remains the focus. As the forces of good and evil continually battle, it is the appropriate application of available tools that will determine your ultimate success.

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