Look After The Little Guy

01Mar06

I managed to blag myself into a market research focus group last night¹ and it was kind of interesting. I’m not sure if I can say who it was for. I signed something at the end and while they didn’t say that it was an NDA, it could very well have been. Anyway, the crux of it was that it was for a provider of services, let’s call them company X, and they were trying to get a feel for some new pricing strategies.

Now, I will be honest that my primary motivation for being there was down to footnote 1 below and I was definitely the odd-one out. I work for a small company, one that wouldn’t be a high-value customer of company X. Other people in the focus group would probably qualify as medium to high value customers and were directly involved in the relationship between their own companies and X.

Company X were testing our reaction to new pricing strategies that they presumably hope will win them some new business but, and I think this was more important, help them retain their existing customers. The problem I had was that most of the strategies they were suggesting would only be useful to high-value users of their services. There was nothing to attract, or certainly retain, the little guy like us. In fact the strategies were basically useless to us and we wouldn’t have benefitted from them at all. As for the big guys in the focus group, most of them were big enough to have negotiating power with their account managers and some were already getting the kind of discounts that the pricing plans offered. As a little guy we don’t have that kind of negotiating power.

So I think X was missing something fundamental here. Looking after your customer is key to keeping them but if you’re focusing on customer retention then you have to give people a reason to stay with you not just when they’re a big, high value customer but also when they’re a little guy like us.

Take airline miles as a concrete example. People who fly regularly and are clocking up a lot of miles will tend to stick with the same airline. It makes sense. They have to fly with someone but at least this way they get something extra out of it other than DVT. For people who fly infrequently, air miles make no sense especially given that they have a habit of expiring after a few years. So if you only fly a couple of times a year you’re going to pick the airline with the cheapest fares. Who cares if the service is a bit crappy, you only have to put up with it for a couple of hours a year.

While the comparison doesn’t strictly hold true for company X, there is the risk that if they are basing their retention plan on loyalty points system or something similar, they have to recognise that they’re excluding customers who don’t use their services that often. Their customers, in turn, won’t feel much brand loyalty and will be more likely to move to competitors.
So, the moral of the story is that if you want true brand loyalty then companies should make a better effort to include the little guy. Besides you never know, one day they may become one of the big guys and they won’t forget being looked after.

– Fintan [listening to David Kitt]

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1 – It was hardly a chore. There was free beer and €100 cash at the end.

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