Customer Discrimination is Risky Business
A recent posting on Adrants featured a bank promotion that’s getting some bad press in the blogosphere. It’s one of those promotions that offers a great premium to (attract) new customers, while offering ‘bupkis’ to existing customers. A great lesson in How to Alienate Current Customers 101.
It’s a business development dilemma for most companies — how to recruit new customers and not alienate current customers in the process. The challenge is current customers are likely to notice ads from companies they deal with, and when they see a promotion for new customers, they’re likely to ask the company “So what have you done for me lately?”
Delivering customer value on an ongoing basis is key. The smart companies are driven to continually ask: “How do our loyal customers know we value their relationship?” and they focus on delivering that value.
Ah, but they’re offering this iPod to their current customers as well;
I don’t know if this is changed, but for the last month at least I’ve seen that logo as I logged in to EasyWeb…
It says “Whether you’re a current TD Canada Trust customer or someone looking for a more comfortable banking experience, switch your main chequing account to TD Canada Trust by August 12, 2005 and we’ll give you a FREE iPod shuffle – Apple’s smallest MP3 player yet.”
I called the toll free number and asked how I could qualify for this… it’s easy; I use the EasySwitch feature to close another bank account somewhere else, and voila; iPod. The big catch is that you should not use the online form to initiate the process; call the toll free number or go to your bank. Tell them that you’re an existing TD customer and you’re sick of your secondary chequing account that you setup 10 minutes earlier at the bank across the street and that you’d like to use EasySwitch to move that other account…
Then all you need to do is setup those auto-payment things.
It’s 10 minutes of leg work, and you have an iPod shuffle.
In unrelated news on bad customer service in car rentals;
Most business people are inept, greedy, and stupid.
Renewals of current customers are far more cost-effective and inexpensive, yet due to arrogance and a male chauvinist “conquer all, then dump them” mentality, businesses put more money into attracting new customers.
They treat prospects and new customers better than they treat current and long-time customers.
Don’t you women see what this is?
Wives neglected and unappreciated.
Male domineering jerks flirting with women who might be lousy in bed and worthless mothers, yet since they’re new and unhad, they attract the affections and attention of the male slob.
Same with companies.
A little Freudian theory, which of course, business hates. They hate truth.
I love this post! It is so true. So many companies focus on market share, and forget all about customer share. Most companies, like retail and business banks, are getting most of their dollars from the customers that are already under their management, and with a little extra effort mangement could get so much more of their wallet than they have. And these numbers can be huge! But instead they dream up cooky acquisition programs that are full on heavy lifting – and often the budgets are too small to accomplish much, and the programs that the “marketing” team concocks are frequently ineffectual by design – so everyone gets disappointment.
The goal once a customer is acquired should be to maximize the overall value of that customer over their lifetime. I would be interested to know if the marketing team in your example can produce a Lifetime Value metric for what their existing customers actually mean to their revenues. I doubt it though because it sounds like they are leaving the door of their safe open.