Join Jill Griffin for an in-depth discussion in this video Why you need to identify your best customers, part of Building Customer Loyalty.
"Inside of every old customer is a new customer waiting to break out and spend more money with you." That's a teaching from my early mentor, direct marketing guru, Murray Raphel. Murray would quote a retail client who'd tell him, "But Sara Rosen just bought a lot of clothes from me; she can't afford to buy any more." Murray would smile and say, "Really? What does she have in the giant shopping bag "that she just brought home from your competitor?" Here's the thing, your customers are not all equal. Some are much more valuable to you than others. You need to identify your best customers, and what they value most, and then use that knowledge to grow them into even bigger customers. Perhaps the most groundbreaking work on how to maximize value delivery to best customers comes from Dr. Noriaki Kano, a renowned Japanese professor and customer value thought leader. Dr. Kano developed the thinking that not all service and product performance is equal in the eyes of best customers. Some performance creates higher levels of loyalty than others. His research suggested there are three performance levels that form a pyramid. At the lowest level in the value pyramid is basic value. This is least must-have performance. For an overnight shipper like FedEx for example, accurate billing, prompt service assistance, are examples of basic service. Failure to deliver these basic services will result in customer dissatisfaction, but doing them well will not increase loyalty, because customers perceive them as minimum requirements. At the middle level is expected value. These are the performance factors that the leading suppliers in an industry provide. Delivery by 10 A.M. on next business day is an example of expected value. As a market leader, a company must do these things to simply stay even with competition. At the highest level of the value pyramid is unanticipated value. FedEx was the first to offer online customer tracking via computer. Customers would track where the package was in transit and when the receiver accepted a delivery. At the time of its introduction, this was considered a major unanticipated service perk. Since first introducing its tracking system, FedEx is continually adding other tools to improve tracking effectiveness. It was the first to provide drivers with a handheld computer and transmitting device. This was years before iPads were available. Generally speaking, the more unanticipated value a company provides a customer, the deeper the loyalty. FedEx chairman Fred Smith explained it well when he said, "You know, I don't think we understood our real goal when we first started FedEx. We thought we were in the transportation of goods. In fact, we were selling peace of mind." Know your best customers. Think deeply about their unspoken value needs. Drill down there. That's where you'll find your fresh new marketing opportunities for building loyalty. As we wrap up, do this: consider the product or service you sell most to your best customers. Now think about that product's basic value delivery. What are must-haves? These are not loyalty builders, but if you do them poorly, you'll be penalized. Next, think about the same product's expected value. What is it you deliver that keeps you at least even with your competition? You must be proficient here or you risk losing your customer. Finally, and here's where you can win big, what is it about your product right now that delights and often surprises your best customers? We're looking for the value that you deliver today that they're not getting from your competition. Expound on that. What are fresh new ways you can deliver more unanticipated value? That's the question that builds deeper and deeper loyalty with your best customers.