The PO Factor: Ignore It at Your Own Risk

(Editor's note: Biznik articles do not currently provide for the inclusion of photos - to view the photos originally associated with this article, see Robbin's original blog post.)

With all the articles out there about the importance of customer relationship management, it's amazing to me how companies continue to ignore the effect of poor communication.

Case in Point

I received a direct mail piece recently from my health club.  I've been a loyal customer for about 7 years, not because I think it's the best gym in town, but because it's somewhat convenient, they have classes I can't get anywhere else, and I paid a big initiation fee. That's not to say though that I don't keep my eye out for an alternative, especially considering all the mail I get enticing me to join other clubs. I could have written to them to complain, but there have been many times my complaints about cleanliness, broken hot tub, or lack of notice about cancellations have fallen on deaf ears. Yet I hang on for the reasons I mentioned. But I digress.

Tearing it Apart

I received a nicely designed 6"x9" envelope in my mailbox. The teaser read, "inside: a special opportunity for you to pass along the gift of health." Thinking that I had yet to experience consideration for being such a loyal customer and not reading the teaser as carefully as I should have, I quickly tore into the envelope. The, "...to pass along" should have been the tip-off.

The package included a letter, two "gift certificates" with envelopes and a promo piece.

The letter opens with, "...thank you for being a dedicated member of [deleted company name]." Woo hoo. I'm going to get something for free to thank me for being such a loyal customer. They continue by telling me how I'm experiencing the benefits of better health. Now this is probably due to my commitment to going to the gym every week; not anything they've done. And yes, they acknowledge this by saying, "...your hard work is paying off." Wow, they really care about me.

Then the light begins to dawn, "And now, you have the opportunity to pass along better health to the people you care about." They probably thought they were being very clever with this transition which takes them into their pitch: "Right now your friends and family can pay the same monthly dues you currently pay and get FREE initiation and pay only a $24 processing fee.*" I'm sure the copywriter was tearing their hair out over this one. Are you as confused as I am? Maybe the difference between an initiation fee and a processing fee makes sense to the people who work at the company, but $24 still sounds like I'm paying for them to set up my account. And why do I need to do that? And as I stated in the beginning, I believe the initiation fee is really designed to keep you from jumping ship.

What's the Big Deal?

The mass-mail nature of the letter required them to say, "...the same monthly dues you currently pay... ." It was either this or personalize the letter with an actual dollar figure, requiring them to use my personal payment data to achieve this feat. Either they couldn't merge the data or they thought the deal sounded sweeter without a dollar figure. Maybe they thought I had forgotten how much I pay. So I checked my credit card statement, then went to their website to see what kind of deal it really was. Looks like a comparable, regularly priced membership is about the same price -- only a difference of $2.52 per month. They removed the initiation fee as well. It seems like everyone can be a friend or part of my family. I'm not feeling special any more -- especially since they squeezed in the, "$24 processing fee." And yes, according to the letter's small print, your friends and family have to pay first and last too.

Gift Certificates

So now you're supposed to pass along these gift certificates with the nifty envelopes, but lousy offer, to your friends and family. As if I'm going to use them to pretend I'm giving something of value to them. Hey forget buying a gift this year; just give your best friend one of these! The company is basically asking you to do their marketing work for them, with no consideration given to you. I don't know about you, but I try really hard not to work for nothing.

Who's the Biggest Loser?

I love the promo piece they included, positioned as a benefit in the P.S. of the letter, "Right now, you and your friends can take the first step towards better achieving your fitness goals. Pass along the enclosed flyer on our Biggest Loser personal training programs."  Did they include any incentive to try their personal training? No. They must have thought that the original deal was just too good. Think again. You've already pissed me off; do you think I'm going to be interested in making additional purchases from you? And of course, this piece includes a partner pitch to, "...watch all-new episodes TUESDAYS 8:00/7:00c on NBC." Bet they cut a good deal with the network for this trade.

What really pisses me off about this whole thing?

Trickery: not only was I duped into opening a piece of junk mail, I was mislead in thinking they were really offering something of value. Talk about poorly managing your customer's expectations. Doesn't leave you with a good impression of the company, does it? The cutesy-ness of the gift certificates and matching envelopes really put the nail in that coffin.

No consideration: they asked me to bring them new business (from my personal network no less), and there's nothing in it for me. Where's my incentive and thanks, by the way, for being a loyal customer? And what do my friends and family get out of it? The least they could do is send me a free water bottle with their logo on it (heavy sarcasm). Plus, they wasted my valuable time opening, reading and of course ranting about it.

Make new friends, but keep the old: everyone knows it generally costs more to get a new customer than keep an old one -- especially when they're loyal. So treat your best customers very well. One thing I learned when doing tens of thousands of direct mail pieces for a huge corporation was how PO'd our loyal customers got when they heard offers made to potential customers that were better deals than the ones they received. Do corporate execs really think we're that dumb or are they just not thinking about it?

Environmental impact: what a waste of paper!

Professional Downer: this kind of stuff gives all marketers a really bad rap.

What have we learned?

1. Don't waste your customer's time with marketing messages that only benefit you.
    
2. If you want something from your customers, give something in return, especially if you want to develop long-term, recurring revenue relationships with them. It's what I call the Give to Get.
    
3. Maintain your image as a valuable asset. It can lead to greater loyalty, increased referrals and future sales. Don't sacrifice it for short-term gain.
    
4. Try to quantify the PO Factor whenever you communicate with customers or set policy. If you don't, its impact will be felt in terms of lost trust, skepticism of future communications, lost add-on sales, and customer churn (in other words, they'll head for the hills once they get a better offer from your competition).