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Refocus Your Investment – Less is More
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In fact the key audience isn't half of the customer base – it's actually a single digit percentage. The Ogilvy Loyalty Index demonstrates consistently that very few customers get to the level of 'bonding' with a brand; on average just 5%. But this 5% can make all the difference to your ROI. Revenues from these customers can be up to 20 times the average (if you look at some categories such as the coffee category in France).
These few customers who reach the 'bonding' level are also those you are most likely to retain, even when times are tough; your truly recession-proof customers.
On average the Ogilvy Loyalty Index shows that 90+% of customers that reach the level of 'bonding' with a brand will be retained. This compares with a retention rate of only 20 – 30% at lower levels of the emotional loyalty pyramid
The other side of the equation: How should you talk to them?
We all know that numbers are only one side of the equation. How you talk to your customers is ultimately what keeps them recession-proof. Here are three useful pointers to get you started:
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3 ways to talk to a recession-proof customer:
1. Price/Promotion is not always the driver.
2. State of the Art technology is not the answer.
3. Personal recognition and involvement is a great start.
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1. Price/Promotion is not always the driver
The tendency in challenging times is to drive short-term sales via price promotion, yet we need to ask ourselves if this is really the most effective approach for customers either at or close to the level of bonding? Are these customers really 'bought' that easily?
Further investigation into the data underlying the Ogilvy Loyalty Index has revealed some clues as to what drives bonding and the findings are clear. It's rarely about price, more often it is linked to 'brand affinity' – an identified set of needs that the brand can satisfy.
A great example of this can be seen with Chivas, the premium whisky brand. During a number of pilot relationship marketing programmes to high-value consumers, we discovered that although some of these redeemed money-off coupons, there were twice as many who subsequently doubled their purchase levels without redeeming the coupons provided. So money-off incentives proved to be less effective than the core communication message which leveraged the core values and heritage of the brand.
2. CRM technology is just an enabler – not the answer
Technology is often viewed as a universal panacea we can rely on. But all too often we see the 'means' being confused with the 'ends', with little thought being applied to how enabling technology will be actively managed and applied to deliver the desired impact. Yet so often we hear comments like, "We invested millions to upgrade our CRM systems last year – where are the results…?"
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