If customer satisfaction is the key to businesses increasing profits how is it that some companies are missing the boat?
It seems highly intuitive that if you understand your customer – and I mean know your customer – you will not only increase sales, but repeat sales. It costs less to market to a customer you already have but much more to acquire a new customer. There’s a direct link to higher customer retention, increased average spend, higher margins, and lower marketing costs when customer satisfaction is important to a company. But for every business doing it right, there are handfuls of others failing to see the light. So what is keeping businesses from taking a more customer-centric focus?
1. Maybe they think they are.
Companies might think they know who they’re marketing to; they often think they know us. Take Johnson and Johnson, for example. The company launched a TV ad campaign for Motrin in 2008 that was aimed at “moms who wear their babies,” referencing the growing popularity of baby carriers and the pain associated with them. The “Motrin Mom-alogue” created a nasty backlash and outraged moms vented their anger online. Johnson and Johnson found itself quickly pulling the commercial. (Check out this funny spoof. It actually got more views than the original Motrin ad.)
2. It’s expensive.
You don’t get to know your customer overnight. It takes money and resources and a long-term approach. Companies willing to make the investment – engaging in qualitative research studies and focus groups, providing online forums, monitoring social media, and encouraging customer feedback both good and bad—seem to be on the right track. Quantitative data is important but it also depends on what data you have, how you got it, and how you want to use it – all things that need to be taken into consideration before you do the research.
3. Right solution, wrong implementation.
Customer Relationship Management (CRM) solutions are one way that companies can better manage their interactions with customers, both new and existing. CRM software can be the backbone for many sales and marketing teams but just because you have it doesn’t mean you’re using it correctly.
In the technology industry, for example, a sales team should use its CRM software as a tool for recording and uncovering sales, upcoming IT projects, potential issues, key contacts, purchasing timeframes and any other insights that can lead the sales team to better position IT solutions to their customers. There are some companies out there that are simply using their CRM solutions as an online rolodex, and that’s not getting to know your customer – unless you just need their telephone number.
4. You have the wrong customer. A recent article in Time magazine, "The Rise of the Sheconomy," revealed a shift in focus for marketers in seemingly male-dominated categories like electronics and car tires. Why the shift? According to the article, women make 85% of the buying decisions in their household. Not only are more women climbing the corporate ladder and outpacing their male counterparts in the education arena, they are making money and spending it! Women are increasing their buying power – 45% of money spent on consumer electronics and 58% of money spent online came from the female market.
Studies have shown that women are also more loyal customers – win them over and you have a potential life-long customer whereas men are harder to retain. Companies like Best Buy and Midas International have started to focus their efforts on marketing to women after discovering that a lot of women were buying tires, electronics, or other products typically marketed towards men. Understand the female mind, capture her heart, and increase your sales and customer retention.
Katie Lombardi is a student in the Masters in Integrated Marketing Communications program at Northwestern University’s Medill School and can be reached at katherinelombardi2011@u.northwestern.edu .
