Ray Jutkins began to learn the art of direct response in 1960. Since then, he has built his experience and expertise in marketing and sales as a corporate marketer and as a principal in his own direct marketing agency. He has supervised hundreds of projects and worked with the specifics of advertising, direct marketing techniques, and sales promotion to integrate all into a total corporate marketing program. His articles appear regularly in Direct Marketing, Target Marketing, and Direct Marketing International. Ray and his wife Nancy live in Yuma, Arizona.
Using two personal experiences – one traveling and one shopping – Ray Jutkins finds and explains some principles of loyalty and frequency.
©2017 International Society for Strategic Marketing
People Do Not Like To Be Sold, But They Sure Do Like To Buy!
Sunday night at the DMA Annual Convention in Dallas my wallet, with credit cards, money, passport, driver’s license, check book, and other papers, was stolen.
Some interesting things happened.
AT&T sent to me “overnight express” a replacement VISA card — straight to my Dallas hotel. Wells Fargo Bank ran a quick check of the greater Dallas area to see if anyone was using my MasterCard. The Dallas Police Department showed up within 20 minutes of receiving the stolen property report. Two men on bicycles came and received my first-hand story.
The US Passport Office was willing to issue me a new passport, provided I could prove who I was. It took an out of date passport, a birth certificate and the legal swearing of a friend before they believed me. They then became very efficient.
Southern Arizona Bank, my very small local bank, canceled my checking account — yet allowed me four specific numbered checks to get cash and pay some Dallas bills.
The Adolphus Hotel, where I was staying, allowed me to use their telephone, fax machine and loaned me a typewriter. All the while knowing payment would come at a later time.
The State of Arizona would not issue me a new drivers license, until I could prove I had lost it, or it had been stolen, or whatever. I went to California and got a new license. They asked fewer questions, helped me with the written test, took my money, and issued me a license — all on the spot!
A visa service agency (I was traveling Friday of that week to Bangladesh and Pakistan and was going to need visas in a hurry) really danced. They literally walked my new passport to the consulate offices — and had the passport delivered to me before departure Friday morning.
To whom will I be loyal? Whose products / services am I most likely to use most frequently?
It does not take a college education to know that of my dozen plus credit cards, I’m going to use the AT&T and Wells Fargo cards when I can. They cared about me. I now have a real reason to care about them. To be loyal to them. My frequency of use of these two cards has increased over the last 15 months.
Returning To The Scene Of The Crime
A few months ago I had reason to return to Dallas for other business. I stayed at the Adolphus Hotel. Are you surprised?
Over the last 60 days I have again used the Dallas visa service because I again needed that type of assistance. This time it was not a mad, crash-rush, it was regular service. I might have gotten it cheaper locally. I went back to the people who took care of me when I had a need.
The State of Arizona is another story. They have horrid paper-work “policies” (a word we should completely eliminate from all usage!). The drivers license experience was not my first with the state.
The living experience in Arizona is outstanding — the best I’ve enjoyed anywhere. So, I will not move. I will avoid all official contacts and do what I did this time — go outside the system whenever that is possible.
I hope I will never again have a need for the Dallas Police force. If I ever do there will be no hesitation about calling on them. (As an aside to their part in this story, they have wonderful direct mail follow-up systems. Twice I heard from them via the mail box following my report of the incident.)
The passport office staff people “followed-the-book.” Fine. That was not necessarily bad — it certainly was the horrid word “policy.” It took a supervisor to understand the situation, the needs I really had and then she did some super-human thinking to help.
It was the supervisor’s recommendation that we both apply for a new passport with a 24 hour turn-around, as well as take my expired passport and give it new life with a new set of dates. We did both and both worked! I now have two “live” passports.
His is not an unusual story these days. You have a compelling reason to be loyal to a specific source of supply. To frequent a certain retailer, an office supply house, a bank, to fly a specific airline, stay with favorite hotel chain, to use an automobile mechanic you trust, a dry cleaner, to visit a restaurant.
There is a difference between loyalty and frequency. Let’s define them according to Webster:
- Faithful to one’s country, friends, ideals, etc.
- Showing such faithfulness.
- Frequent occurrences,
- The number of times any event recurs in a given period.
Let’s keep it simple: loyalty is being faithful. Frequency is how often you use a product
The two do overlap. They overlap because frequency of a specific brand increases when there is a high degree of loyalty. When there is a benefit for frequent use of a product / service, such as the airline / hotel / rent-a-car travel programs – loyalty builds.
An example from that industry. Beginning in 1968 I started traveling on business. I did a fair amount in North America, especially from my west coast USA office to eastern Canada, where I enjoyed a nice list of clients.
At that time and until 1981/82 I flew whichever airline got me from here to there on my preferred schedule. And changed airlines for no reason at all. Schedule was the only feature I addressed. If the schedule was right — that made the airline right.
In the late summer of 1981 I had a bad experience with one USA airline. The frequent flier programs were new and that single bad experience (it took six months of negotiation and never was resolved) cost that airline 1.4 million miles of my travel between then and now. And more in the future.
Because since that time I have flown United Airlines 1.4 million miles. Airline “X” less times then I have toes on my left foot.
Why do I continue to be loyal to United which is not a five star / gold medal / blue ribbon airline on every flight? Because they recognize me, they are consistently 4 ½ stars and because they stroke me!
The United computer system tells their entire staff of people that I fly 100,000+ miles a year on United. It tells everyone: the reservation team, those that check you in at the counter, the flight attendants, even those folks who sit up front and fly the bus.
Twice in the last 10 months I’ve received a hand written note from the captain of the flight thanking me for my business. Half a dozen times, before we even get off the ground, a United staff member comes to my seat on the plane, and thanks me for flying United.
Now, these good words and 50 cents will get you a cup of coffee in a cheap restaurant. They are a non-cost item to United, and they do absolutely nothing except make me feel good!
Oh, they do do one more thing: They urge me to come back for more. And more! And, of course, I do. Over and over again and again I fly United.
Kilian, my travel agent friend, always checks United options first, second, third. Then, and only then, if there is no other way, do I go another way.
I have become a loyal customer, and a frequent user.
Why does this loyalty / frequency concept work? I think it is for the very basic reason that it is much easier to sell to and be profitable with current customers who become on-going clients. Not one-shot deals.
All kinds of numbers are bounced around about how much it costs to get a new customer vs. keeping an existing one. Regularly this number floats between five and nine times when the cost of getting vs. keeping is discussed.
Lester Wunderman stated in a recent ADVERTISING AGE interview: “90% of a manufacturer’s profit comes from repeat purchases; 10% comes from trial or sporadic purchasers.”
I do not know the numbers. And manufacturing is not service. Maybe the numbers vary among industries. In any case — in fact, in every case! — no matter the numbers, common sense tells us if we take care of what we’ve got, we can build a loyal base of more frequent users.
Non-shopper Enjoys Shopping. Almost.
Another story. This one from a top retailer, Wal-Mart. Shopping is not my favorite thing to do. It is not even in the top ten of my favorite things to ever do. I do not like to shop.
Until I moved to southwest Arizona I had never graced the floors of a single Wal-Mart anywhere. When I moved and found one of Sams’ largest stores a quarter-mile from the airport, I decided to give it a try.
Since that first visit about two years ago, I’ve been back an average of once a month. Certainly not frequent by retailers’ standards but for me it is a major lifestyle change! I actually like going to Wal-Mart.
Why? Because of the people. Yes, the people. Not the prices. Not the large selection. Not because they are open 24 hours a day. The people and their attitude.
What makes the people at Wal-Mart so special? They are nice. They are friendly. They are courteous. They go out of their way to make your visit a pleasant one. And, they are helpful.
A Couple Of Examples
We have two young cats who find wet food a treat. Recently we were out of the cats’ favorite, and I was elected to pick some up on the next visit to town. “Some” in this case is 40 cans of cat food.
I go to Wal-Mart, ask the greeter (the greeter is a fixture at the front door of every Wal-Mart store) where the cat food is, get directions, and head off.
It is probably fitting at this point to mention that this particular Wal-Mart is as large as a city block. Big place. The cat food is on one side of the store, close to the middle. I find it. And at the same time realize I’m a half-block walk away from the baskets, which, of course, are at the front of the store by the doors where you come in. And I had failed to pick one up.
Do I walk back to get one? No way! Of course not. That’s too sensible. And besides, I’m in a hurry. Instead I try stacking 40 cans without dropping any. Just so I won’t have to walk back to the front of the store and get a basket.
A Wal-Mart employee (His name is Gregg. All Wal-Mart employees wear name badges that are readable at 40 paces) sees me. And offers to get me a basket. He almost insists on getting me a basket. He asks three times to be 100% certain I’m going to make my way work.
When is the last time a clerk in a retail shop begged you to give some added-on service?
Same store, another time. Need a key for a lock. Have one key, need to dupe it. Go to Wal-Mart. The keysmith spends 13 minutes (I timed this one) to find a blank like the one I need, and then to make me a copy.
When he is finished he is not confident it will work, so he gives it to me. Yes, I said he gave it to me at no charge! He gives it to me with the words that if it does work he knows I’ll be back to settle with him.
No one has ever given me a product before. Even something as inexpensive as a key. This is the only time that has ever happened to me.
Here’s a guy who does not like to shop and Wal-Mart has turned me into a loyal customer. Not frequent by retail standards but against my standards far more often than even I would have dreamed. How did they do it? They took good care of their customer.
A Suitable Experience
One more loyalty story. Once a year I buy a couple of new business suits. You now know I do not like to shop. And although much of the shopping at our household is with catalogs, credit cards, and an 800 number, so far I’m not comfortable doing that with suits. So, again I must do something I don’t care to do — go shopping.
A recommendation (this says something, too, does it not?) directs me to Apparel by Johnny — a small, local men’s wear shop. I go in and tell Johnny Rodriguez who sent me. We chat a bit, and soon he learns I need blue suits, with a large jacket (I move around a lot in my seminars, and like big coats and shirts), with pants that will hang properly with suspenders.
Johnny does all the measuring, we try on various things decide the color / style / size. He does not have what I want in stock. No problem Johnny announces. He’ll call the order in tomorrow, and within three days my order will be filled. Sounds good to me.
Except, the factory does not have it in stock either. And it will be several weeks. Not good — as I leave in a few days on a five-week speaking and consulting tour. What do I do?
Absolutely nothing because Johnny had already done it for me.
Johnny calls me at the office and asks me to stop in saying he will have a suit available to me, in my size, that he will loan to me. Yes, I said loan. I do not buy it. I do not rent it. I borrow it. Not being familiar with this approach to selling clothes, I’m not sure how it works.
Let me tell you how it works: You go in and Johnny has it waiting for you. Your size. Altered to fit. On a hanger inside a suit bag. He gives it to you, and you walk out. Nothing to sign. Nothing to pay. No deposit — nothing! You walk out with something to wear.
Your obligation? To return it when you come to pick-up your order. Period. PERIOD!
Am I loyal to Johnny? Need you ask!
There is not a business on earth where all the customers are created equal. The 80/20 rule may apply — or some other rule.
For a fact, all customers are not equal. Some are worth more than others.
This is true in the restaurant trade, too. Every year through the 1980s and now into the ’90s, more restaurants have been built then there are people to fill them. Yes, more of us are eating out more often than our parents and grandparents did and still the number of restaurant seats vs. the population is increasing.
That’s good for those of us who enjoy a meal out. We have more choice / more selection. It is not necessarily good if you run a restaurant. You have more competition and proportionately a smaller marketplace. What to do?
How about a take off on what now is a “standard” – a frequency program. A frequent diner program for restaurants. So you can treat your best customers differently than others. Novel idea!
Judd Goldfeder and his team at The Customer Connection, headquartered in Escondido, California, are providing restaurant chains across the States and Canada just this opportunity. Here’s how it works.
Everyone who comes into your restaurant is offered an opportunity to register. It’s very simple. You are asked your name and mailing address, your birthday, the names of your family members who might also like to become frequent diner club members. It is painless and it works.
Immediately you have a paper frequent diner club card to use until you get your plastic card. The plastic arrives in a couple of weeks with a nice cover letter, and a complete explanation of how the program works.
Every time you eat in this restaurant you earn “X” number of points — usually one point for every dollar spent. When you reach a certain level — the first level may be $200, you earn a reward. A gift certificate or some other product or service.
Every so often — probably once each quarter — you get a statement of your usage. The dates and places where you dine, the amounts you spent, the points you earned, the gift certificates or other prizes awarded.
Your plastic card is swiped through the same equipment as your credit card, the data is captured and your account is updated daily. It allows the restauranteur to select best customers for certain offers / next best for others.
As with any membership type program, there are times when an extra incentive needs to be offered to part of the audience – those who signed up and are not participating. All this is possible with this program.
This is Customer Relationship Marketing at its best. And it is catching. Chains with as few as a dozen stores are now working with Judd to build a database — or NameBank as Judd calls his clients database. And then to work that base — that knowledge about customers.
Traditionally restaurants have relied on newspapers, penny-savers, mass co-op mail, television, and outdoor posters to bring them customers. Which is all well and good if they ever did anything about asking these same people back. They generally do not.
They spend money like water to get you to come in once and then they do it all over again. And again. Rather than capturing some basic data and treating you as a loyal customer. And building frequency with loyalty.
There are some obvious spin-off programs from a Frequent Diner Club. One is called “Neighbors.” You now know where your current customers are coming from. You have their addresses. Most often your current customers are in neighborhoods of similar people which, for a restaurant, means those living next door and around the corner form current customers are top prospects.
Mail them and invite them in, and you keep the NameBank — the database — growing.
NameBanks also allow for definition of specific trading areas. Which frequently do not follow “standard” patterns of customer flow. Not every store has a nice, round three mile radius from which they draw business.
By knowing where current customers come from it is only logical you will be more successful by searching in those same areas for others. If you do not know where your customers are located, it is impossible to make sound business decisions on where to search for more.
Another Customer Relationship Marketing benefit from your NameBank are birthday and anniversary celebration programs. More Americans eat out every year on their birthday than for any other single event. Usually the ticket average is higher and the party size is larger – both good things for restaurants.
Target marketing to specific audiences, such as seniors or families with children, can be accomplished best with a NameBank — a database.
Special events, holidays, new menu items and other activities can all be impacted positively when you know your most loyal customers and your most frequent users.
For nearly five years I’ve worked with Judd. And learned some interesting things about his clients, and their NameBanks. There is very little overlap, even when two restaurants are in the same neighborhood. There is a high level of loyalty to a particular food service style, location, staff. Something keeps the customers coming back time and again to one place and not another just down the block.
Regular mailings to those who have registered increase the frequency of visits, maintain the check average and the party size. There is no down side to reaching out to customers and inviting them for a visit again and again.
The “philosophy” that these people know me and will come in anyway, with no promotion, Judd has proven to be false. Working the NameBank with promotions on a regular basis builds a loyal base of frequent, profitable customers.
Personally, I believe that most people do not like to be sold- those same people sure do like to buy. By asking people to buy from you, you are saying, “I care about you. And when you eat out, come to my place. I want you as a customer, I care about you and I will show it.”
This is what Customer Relationship Marketing does, it works the back-end of a direct marketing program. It can build loyalty because it says “I care.” It builds frequency upon that loyalty, by making offers to people — different times for different reasons – all saying, “do business with me.”