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But my customers are cheapskates

But my customers are cheapskates

Customer facing roles are among the hardest in the game. Known as the front line, these are  key positions, with the power to make or break your business – so it’s no wonder organisations invest big money to get the customer facing message and delivery spot on. We all know what it looks like when a company gets it right… which makes it frustrating when some of the biggest get it wrong.

Of course, it’s not just your front line staff on the hook. I came across this small business owner  a few days back. And while we’ve looked at this issue before, it’s still surprising a year after my initial post to see businesses fundamentally misreading GrabOne’s value offer.

In summary, the owner of a pizza shop decided to differentiate his offer for GrabOne customers. How did he do that? Well, he offered them a significantly worse service. To complicate things, he proceeded to abuse those who didn’t tell him they were on a deal – limiting his chance to switch to said lower standard of service.

Now, don’t get me wrong. Owning a business is hard. But really, let’s try not to make it harder…!

Let’s start by looking at things from pizza guy’s viewpoint.

  1. Voucher deals cost him money. He has to pay a commission to GrabOne, and also has to discount the food offer to the point it’s probably loss-making.
  2. He wants to give voucher customers a lower service experience (reduce his loss)
  3. He begrudges GrabOne’s fee

Viewed through his eyes that all seems reasonable. The problem is, his viewpoint is based on a misunderstanding. He thinks GrabOne is a direct revenue driver, something to boost cashflow and income. And if he’s correct, then it’s hard to not have some sympathy… he think’s he’s been sold a dog and is pretty peeved.

The reality is – while GrabOne gives him a cheque (deal value less commission) it shouldn’t be used as a revenue or cashflow driver, in fact with a long deal expiry he will get cash before the redemption therefore a short term cashflow boost however he still has the ongoing cost of delivering to the customers . At it heart It’s a pure marketing play, blending a traditional “cost to acquire” model with performance marketingand GrabOne’s above-the-line ATL advertising and database.

More effective than most ATL campaigns, pizza guy only has to pay if GrabOne delivers customers (and remember, GrabOne still pay him the net proceeds of any deal). When viewed through this lens, ranting at customers he’s paid good money to have delivered seems a little misguided.

Here’s the way he should be viewing this:

  1. GrabOne are providing a marketing campaign and delivering customers
  2. Unlike traditional above the line campaigns, this is much closer to performance marketing… there’s no payment unless GrabOne can deliver customers.
  3. GrabOne will deliver a mix of existing and new customers. The opportunity is converting new guys into regulars.
  4. What is the usual cost of acquisition in the business? Is GrabOne costing more or less, and how measurable are similarly priced campaigns?
  5. Once I’ve paid for someone to come to my place, what can I do to make them come back and dine at full price and here’s a couple of tips… 1, don’t yell at them on the restaurant floor, and 2, it often takes nothing more than exceptional service to convert to a regular).

So – GrabOne’s offer can be great for getting new customers. But it can also reduce revenue if you are only selling to regular customers. Like all expenditure, businesses need to watch and monitor impacts. If your mix is to skewed to regular customers, then shift to a retention and growth campaign. Here are a couple of options:

  1. Build a direct relationship with your customers
  2. Speak to them directly. Members only offers are a great mechanic for this.

Key Takeaways

  • Different marketing campaigns attract different customers. You need to understand what works for acquiring customers, what works for retaining your customers and what works for growing/transitioning your customer.
  • You have a choice, delight your customers and be successful, or treat your customers badly and…..

KS

This post was originally posted on www.theexponential.agency

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