JAN HOFMEYR & BUTCH RICE
The one-sentence summary:
The customers that your data says are your most satisfied may be the most likely to leave tomorrow, so are you asking the right questions and measuring the right dimensions?
WHAT THE BOOK SAYS
- Some customers appear to be loyal because they habitually buy a product, but does this mean they are committed to it?
- The Conversion Model allows you to segment users by commitment to stay, and non-users by openness to adopt your brand
- By applying this to your brand, and competitors, you can identify the right strategy to defend share (if you are a large brand), or steal it (if small
- Loyalty is what customers do. Commitment is what they feel
- Customers can appear deceptively loyal but actually be uncommitted (they might only use the brand because everyone else does (Microsoft), through lack of choice, affordability, or distribution
ELEMENTS OF THE BOOK I PARTICULARLY LIKE
There is a useful segmentation element:
- Users are entrenched or average (committed); shallow or convertible (uncommitted).
- Non-users are available or ambivalent (open); weakly or strongly (unavailable)
A “last straw” can make a committed user snap and switch to another. The moment is hard to predict, the decision is usually irreversible, and to cap it all they tend to become a missionary against that brand.
There is an amusing example showing the correlation between the number of lamp-posts in the world and the number of babies born every year, which shows the danger of assuming causality between variables.
There are interesting ‘common mistakes’ that marketers make:
- Unnecessary price-cutting
- It erodes the total brand equity in the market and seldom results in long-term share increases
- Too much advertising
- Advertising for small brands is less effective than for large
- Too little advertising
- Brand leaders should behave like one
- Believing that advertising can change perceptions
- Advertising works best at reinforcing current beliefs
- Spending too much on customers who are unavailable
- Trying to have a relationship with customers who don’t want one
Lots of customers simply don’t want relationships with your brand, so they shouldn’t be forced