Exhausted undefined person

I’ve had an exhausting week at work. There’s an exciting project that I’m trying to sell internally. If I’m successful with my internal folks, half the battle will be won. I love to be busy on challenging innovative tasks so I’m not complaining. However, my body is tired. After catching two 6.30am flights to London this week, my eyes can hardly stay open.

It’s great that tomorrow is Friday. I’ll just chill out, probably leave work early (shhh!), watch the rest of my Brothers & Sisters DVDs and sleep. Just as I’m settling into the weekend ahead, I’ve opened my email and found probably the worst ever email marketing blunder.

“Hi undefined,
We thought you might be interested in the offer of a complimentary….”

Ouch! It’s a good thing that I’ve had a relatively successful week, otherwise I meant take being called “undefined” rather personally. Needless to say, I’m not interested in the complimentary offer… I’ll lie down now.

Have a great weekend :)!

Managing relationships one concept at a time

Vector image of two human figures with hands i...

Relationships (Image via Wikipedia)

I’m interested in Relationship Marketing (RM) and I’ve read quite a bit about it. I found many of the theories rather conflicting with my status quo, depending on what areas of life and business I tried to apply it. RM is essentially about getting closer to your customers, designing ways to have 2-way communication with them and ensuring a win-win association. What is intriguing is the attitude postulated for existing customers and new customers. It’s common to walk in to a bank and find that great rate is only available to new customers or that awesome phone contract deal is only for newbies. It can be frustrating for “old” customers not getting any love (my experience still gives me nightmares). RM is very much about existing customers, engaging and retaining them. Most businesses are preoccupied with acquiring new customers and I agree with the concept that it’s not always the best to ignore existing customers. Apparently, it costs more to acquire new customers than it does to keep the folks you have. I apply my thinking to (1) Business (2) Friends (3) Church.

Business. It’s not rocket science that existing customers need to be kept satisfied. But new customers are important if you want to grow market share. Nonetheless, when it comes to RM, some customers will continue to be transactional and so will not want a close relationship with their supplier. In business, RM will be about identifying the customers that want a relationship and keeping them close. Overall, the RM concept will work very well for most kinds of businesses.

Friends. Interestingly, this concept works when I tried to apply it to friendships. It would mean focusing more on nurturing already founded friendships. Older posts on new year resolutions and the friendship grid is in line with this thinking. It’s great to make new friends (although finding trust and commitment can be hard work) and sometimes this is done at the expense of old friends who know you well and love you. So in this case, I vote for Relationship Marketing concepts!

Church. And not-for-profits in general. It all falls down when I apply it to Church for instance. Existing members of the community are important and part of the body but a Church’s main mandate is to win new people, to go out there and touch others. In other charities, it’s about rising funds and making a difference on a grand scale. Therefore, we don’t want to spend endless amounts of time chatting amongst ourselves. We need to go out and “acquire” new customers.

All very interesting (or not). Thanks for reading about what I’m reading! Ciao.

Shoot me. I doodle at meetings.

doodle v scribble or draw aimlessly; n shape or picture drawn aimlessly.

The pleasure of discovering a novel product. Not to be misconstrued as any other Kleenex moment.

Crying over split milk

Internal relationships should be the most important, no?

Market share dilemmas....

Disclaimer:
These are my doodles and do not represent the doodles that my employers may produce themselves.

Snow tyres insurance fiasco

There was a 4-hour wait at the only shop in Aberdeen that had snow tyres yesterday. Even though I got to the shop an hour before opening, I still wasn’t first on the queue. Well, I have them now and it’s great because I’ve been having very close encounters as my car dances and swinging left and right when I get into my street. People have been asking me whether the new tyres make a difference and my answer is unequivocally YES! I feel safer and most importantly, my brakes seem to work on the highway.

Snow tyres are safer! (www.fotosa.ru, 2010)

There was one thing that bothered me though. Just before I got my snow tyres, there were emails going back and forth at work that insurance companies were saying that changing to snow tyres was a change to the “standard product” and hence it would cause your premium to go up! In fact, a colleague said his friend’s wife had got into an accident with snow tyres and her insurance wouldn’t pay because she had snow tyres on during the crash! I thought it was bizarre. Needless to say, I called my insurance company to inform them that I was buying snow tyres and (thankfully), they said it was fine. So far I know two insurance companies that don’t mind:

1. Allianz Insurance
2. The guys you get through Lloyds TSB

Please feel free to add to my list.

Another colleague even forwarded this link to confirm that it is indeed a real problem for car owners who want to get snow tyres in the UK. Snow tyres make your car SAFER in the winter, no? You are less likely to have a snow/ice related accident or have I missed something? How strange because the way I see it, these companies have an opportunity to REDUCE insurance  premiums when you get snow tyres. Even charging for “admin” like some insurers are doing, I still think is ridiculous. Ok, it may not part if their business model (Insurance is very transactional) but think about what one insurance company could achieve:

  1. Corporate Social Responsibility brownie points. Promoting safe driving because people will be more inclined to get snow tyres therefore reducing accidents in winter months.
  2. Potential sales volume increase. This is possible because although you are cutting prices, the NUMBER of people switching to insurance companies that reduce premium for snow tyres will INCREASE. Multiply volume by price, you could have REVENUE increase. Premiums can of course go back to normal in the summer.
  3. Steal market share. The insurance business is big business. It is largely an oligopolistic market i.e. few sellers, millions of buyers. So being the first on the scene is everything! It’s a fabulous opportunity to steal market share even just initially, before everyone copies you :-). But there’s a crown for being first. Customers are likely to come to you unless of course, the competitor’s counter-move is better e.g. even lower prices, cash back and whatever they think it takes to push back.

I’m sure there are more benefits of this approach but I have other things to do today. So if you know any insurance people, could you please ask them why they are increasing premiums for changing to snow tyres or refusing to pay out when an accident occurs (an accident that would have been fatal without snow tyres)? I’m intrigued.

What’s in the price?

It’s on countless products in the grocery store: 99p, £9.99 etc. That’s psychological pricing. They want you to think the product is cheaper so you see 99p and you think: ‘Wow, it’s less than a pound! Well, my current problem is quite the opposite.

I have been working on increasing sales of a particular software product through aggressive selling but the efforts are not equalling the results. What I’m finding increasingly shocking is that my customers think the product is too cheap and would rather buy the more expensive products! Actually, it makes sense.

Imagine that after several months of awaiting the iPad, Steve Jobs put a price tag below any net book out there, for instance. The effect would probably NOT be more sales! Loyal Apple customers want quality so a low price may well signal low quality, whether real or perceived. So this is the plight of my product. I want to take a page from other industries like gaming, retail and even the car industry. In gaming, it is becoming popular to get certain games e.g. Tap zoo or Farmville for nothing. Then if the customer wants the accentuate their experience by adding more features or add-ons, they pay. A similar structure applies in the car industry- you get your ride at a base price and then pay a premium for add-ons like sat nav, alloys and heated seats for. This structure keeps the price sensitive customer but still attracts that customer looking for quality and is willing to pay more for it. I do this myself when I go shopping. I don’t like to buy the absolute cheapest item but tend to buy the mid-range. I too associate “cheap” with poor quality. Marketers concur that,

“Many consumers use price as an indicator of quality.” Kotler (2009)

But is this always true? Can a company not enter the market selling at rock bottom prices and go on the win market share? Maybe. It depends I think on the type of market. For instance, if it is highly competitive like retail, price sensitivity becomes very high and many customers will for buy at Asda not Sainsbury based purely on price. Of course, it’s not only price that matters. One should consider customer service, quality, support, ease of returns etc. Also there’s this strange thing about wanting to do what everyone else is doing….. What brands are my friends buying?

Anyway, for my dear product, I will need to roll my sleeves up and do the following to arrive at a plausible pricing strategy.

Segmentation analysis. Classify my customers. What is their behaviour and attitude towards my product? Who among them are promoters? Are their any detractors that will not repurchase or refer others to me? Why? Does it have anything to do with price or is there much more? How can detractors become promoters?

Competition analysis. Look at what the competition is charging and then evaluate market share distribution. How low is my price compared to the average price paid by customers?  Is it really about price or is the competiton actually just…better (ouch!)?

Communication, communication, communication. I can’t increase price without telling the customers why. And it has to be done right! There are a dozen ways to do this e.g. through sales ads, conferences, press releases, exhibition, free trials etc. Most importantly, there has to be an internal positioning statement that tells employees what space in the market this product is occupying. This bit is tough. It will also cost MONEY……. There has to be a budget in place, maybe based on % increase in sales anticipated from the price increases but they are other ways (Kotler et al (2009) has some ideas).

Engaging the team. People are your assets. If they don’t engage and empathise with customers to make this happen, you’re screwed. I’m screwed. Incentivise, give bonuses whatever- just make it happen. Many times it’s a chicken and egg scenario. People don’t want to put in the effort because they don’t believe it will yield great results. But if they don’t put in the efforts, there will be NO great results!

Determining the perfect price... (freedigitalphotos.net, 2010)

Premature Preliminary thoughts are:

It may be that I need to hold back some features from the standard product and then sell them separately as add-on features like my gaming pals. This is what I’m really pondering at this moment. See? You’ve got me going on and on and on. Business addict! 😉

Related authors:

Kotler et al (2009); Marketing Management

Farris et al (2006); Pricing Strategies (in Marketing Metrics: 50+ Every Executive Should master)

Heskett et al (1994); Service profit chain

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