By: Cody Russell
Throughout this Marketing course, we have examined the consumer purchase decision process. Going even further in depth, we talk about RELATIONSHIPS. The relationships between the buyers and sellers in today’s economy all revolve around the words LOYALTY and TRUST and in doing so, making the customer not only satisfied, but truly happy with their purchase decisions.
More than often, a firm is faced with the decision of taking on new marketing strategies where servicing the customers becomes the primary goal. Whether or not the business is brand new, or going through a rough financial phase, exploring new marketing techniques is no longer a thought in the back of a company’s mind, but rather the next big move it has to make. Here are some of the resolutions which paid off for a couple organizations.
If you’ve ever driven by a corn stand with no one tending to it, then you’ve seen this strategy before. The sellers put trust in their customers to pay/take what they want. In doing so, they build a small relationship. Although most people may only pay a couple dollars, you’ll find more people giving more and more money all because they support the cause. In 2013, a San Francisco e-tailer Headsets.com promoted their business using this strategy. They call it “Pay what you want” and the only restrictions for this firm are that it must be a returning customer and only for a single unit. The founder and chief executive Mike Faith said that most customers pay the full price for two units valued at $119 and $319. In the article, Mike even states “Three customers have paid $1 so far for their unit, but we figure that is the price of doing business.” For headsets.com, the return on investment has been over 30% higher than what a normal marketing campaign would generate. Even though the prices have been reduced, they receive more sales per dollar of marketing which brings a higher overall return. He is also looking to kick the strategy up a notch to what he thinks will bring an extra 6%-8% in revenue this year. Faith’s final statement was “We’ve had 48 new accounts opened under pay what you want, but we expect to open several hundred in the next quarter.”
Now comes the interesting one, “Sending your business elsewhere.” Back in 2009, a London coffee shop called Prufrock ran a campaign which confused a large group of city workers. Instead of the standard loyalty cards you see from most businesses, their method of choice was a “disloyalty card.” That’s right; by patronizing 8 locally competing coffee shops and getting a card stamped there would entitle them to one free cup of Prufrock coffee. This strategy received so much attention business revenue rose 18%-20% just in the first three months of customers coming in for the cards. Although co-owner Gwilym Davies wants to give full credit to the marketing stunt, he has to account for the publicity it caused the business.
The last marketing strategy I’m going to talk about is called “Good turns pay off.” At this point, it might as well be called trading because little to no money is involved. In these relationships, it can be between a buyer and seller or even two buyers! But if you are trading goods/services you aren’t making any money right? Wrong. There are many ways two companies can trade services. Here’s an example to show how a little service trade can benefit both parties. My dad owns a Towing company out of Oceanside, CA. He had a good friend he grew up with go into the chiropractic business. They worked out an agreement so that they only charge what is covered by the insurance companies. My dad and mom both get adjusted once a week every year. That’s 104 weeks total. The average cost for a chiropractic visit at Mr. Walwick’s is $40 dollars and my parents insurance only covers half. So in return, 20 x 104 equals $2,080. If he charged my parents full price, they might only go a few times a year but because they don’t pay anything after insurance, it’s as if it were free. Not only do my parents save $2,080, but Jon’s business gains over $1,500 which he wouldn’t get from charging us full price. It’s also the same, vice versa. If he ever needed a tow (which can total a couple hundred dollars per tow/lockout), we’ve got him covered.
Healthy relationships are not only what keeps businesses going, but what makes them thrive as well. Without relationships, a happy business trade turns into a simple and meaningless transaction. By developing these everyday bonds with one another, we make deals; Deals that not only benefit ourselves and save money, but make for easy “hassle-free” trades with good friends who are in it together for all the same reasons.