Radium

Don’t tick off your customers

Thursday, 1st October , 2009

Often marketers fail to consider the ramifications that new marketing campaigns and incentives will have on existing customers. Sure, slashing the price of your offering will move a ton of units but what about those customers that paid the original price. What effect does the price drop have on them?

I recently joined a new gym and paid for a full-year membership upfront. About 2 weeks into my year membership, I walk into the gym and see a giant banner advertising a yearly membership for 62% less than I had just paid. Not 10%, Not 25% but a full 62% cheaper. To make matters worse, I provided my email address when signing up and the owner of the gym thought this would be a good time to do a little email marketing. Yes, not only was I forced to see the new lower price every time I ventured into the gym but I was reminded via email that now was a good time to buy a year package.

If this scenario sounds familiar it should. It was only a couple of years ago that Steve Jobs wrote an open letter to early iPhone adopters recognizing that they should receive compensation after Apple dropped the price of the phone from $599 to $399 only 2 months after release (wow, remember those days?) Sure it took a couple hundred complaints to get Steve to respond but eventually he did, offering a credit to the  group of early adopters.

What should marketers do?
Like any 12 step program the first step is admitting you have a problem or, more accurately, acknowledging that some of your customers are going to be angry with your new promotion. This in itself isn’t a bad thing; it’s what you do next that matters.

Determine the size of the group affected
How large is this group? How many people are affected by the new promotion?

Determine the extent of the issue
How big of a deal is this to your customers? Is it something worth tweeting/bloging/facebooking about?

Propose a solution
If the group is large enough and the issue is severe enough, you’ll need to develop a solution. You don’t have to match your current deal and I’m not promoting that you do. The customer did derive value from purchasing your offering and hopefully has been enjoying it this entire time. But understand that this value might not equal the cost savings they could have received had they waited to purchase.

What do you think? Have you been burned by purchasing at the wrong time? We want to hear about it in the comments.

BTW – email address isn’t the only field in your customer database, please use other data when deciding who to send an email to. I don’t want to be encouraged to make a purchase days after I just did. If this is confusing please read more on what Seth Godin says about friction here.