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It’s not fair! | B2B Marketing

Remember Harry Enfield’s Kevin character?  For this belligerent child, life was never fair if he didn’t get his own way.  I get this emotional statement thrown at me by my children too.  It’s not fair – to which I respond, well or course it’s not because life isn’t fair.  I go on to explain how we are all different have individual strengths and weaknesses, skills and aptitudes – all of which falls on stony ground.  Frustratingly, this mindset has become prevalent in the commercial world.  Everyone believes that fairness, or more accurately equality, is a rite of passage – an entitlement for all coming of age businesses.   This extends to how businesses are looked after, the discounts or services they expect regardless of the level of business or relationship.  Attempts to drag fairness into the frame, under the pretence of equality for example, doesn’t actually result in fairness being achieved.  This was recently highlighted by Esure’s Sheilas’ Wheels car insurance whose business focus was to provide a better deal for women drivers who represent a lower risk group.  The infinite wisdom of the European Court of Justice, however, ruled that the price discrimination based on gender breached EU rules on equality. As a result of having to change the model to include men the premiums went up.  So, fairness and equality were certainly uncomfortable bed partners in this case.   At a more granular level, customers do cry equality and cite fairness in defense of their position.   My view is crystal clear on this issue. There is no place for equality in business but fairness is something we need to define and develop.  Let’s see why.

Customers are not a homogeneous mass.  In many cases they are as different as chalk and cheese. What I believe they all have is a belief and acceptance of fairness.  This may be distorted in some cases but by and large most people accept proportionality of service and value.   The fact that customers are allowed to adopt the ‘Kevin’ ‘it’s not fair’ position and behave like demanding teenagers is a reflection on customer engagement thinking – and to my mind not a logical one.   Customers are fundamentally like children.  If they can get away with something by playing up they will.  This is because, in both scenarios, the ground rules have not been established so nobody knows where they stand.   Likewise, children and customers are most happy when they understand the framework within which the relationship operates.  So, how do we approach the issue of fairness in customer relationships to make an improvement in both profit and retention?   A good start is to accept the fact that your customers are all different.  You may think this is blindingly obvious but the reality in the division of importance is often not borne out in customer relationships.  Instead, the idea of equality creeps in.  We try to deliver a consistent service to all our customers.  They are all important to us!  Do these sentiments hold to true for you?  Let’s look at both points and assess the reality.  Delivering a consistent service is often interpreted as providing the same level of service irrespective of who the customer is.  Why should that be?  This makes the assumption that all customers have equal importance to you when in most cases this isn’t true.  By attempting to follow this need for equality once again the result will often be a lowering of overall standards and consequently customer satisfaction.  It’s almost inevitable unless you have endless resource at your disposal.    Secondly, all customers are important to you.  This generalisation takes us into uncharted territory.  We would like to think that the more customers we have the better the shape the business will ultimately be in. Again, this presupposes a number of factors including cost to service, profitability and so on so more may in fact reflect a weaker position. The likelihood is that a percentage of customers may be losing you money and you may well be better off either without them or by engaging with them in a different way.  It is this differentiation of customers based on their real monetary worth to your business which is the crux of fairness in customer engagement.  Putting aside the emotionality of customer relationships, how can we build a picture that reflects this stark reality?  The answer lies in, can I say, clever segmentation analysis.  We call it Money Mapping and it works like this.

By taking all the relevant customer information and combining this with external sources to enrich its depth we are able to use sophisticated analytics to crunch the data.  We broadly categorise the outcomes into four discrete quadrants which represent the monetary value of the customers ranging from the Treasure Accounts at one extreme to your Avoid Accounts at the other.  These titles clearly represent the focus that should be given to these groups in a logically determined way.  Avoid customers typically are those customers that order very infrequently from you, have limited capacity to ever be a significant money spinner and may also be very high maintenance.  They could actually be losing you money.  The other benefit of this precise segmentation exercise is to determine what profiles represent your best customers, i.e., your Treasure Accounts. With this information at your disposal you can accurately target other prospective customers that share the same or similar characteristics.   I recently read an article about a mobile phone operator that ran a marketing campaign based on the Smartphone.  The response was huge, around 800,000, but due to the terms and conditions attached to the promotion (which were obviously not clear), over 300,000 applicants were turned down.  My first observation was, why attract these 300,000 in the first place? Wouldn’t it have been a better marketing exercise to have targeted more precisely based on the type of customer they wanted to attract?  This would have reduced the overhead (cost to acquire), and reduced any impact on the brand having rejected so many people?  In B2B the same principles apply.

When people say that life’s not fair, what they are actually referring to is equality.  Equality applies to human rights and political rights in the UK, thankfully, but it does not sit well in business.  We need to move our mindset from the concept of equality to the reality of fairness.  The danger of not doing so is the inevitability of dilution of customer engagement whilst attempting to keep everyone happy.  Customers will generally respect being treated well in a proportionate manner to the level of business they present.  My advice is look after you Treasure Accounts well and you will be rewarded with loyalty and long term, profitable relationships and scrutinise your Avoid Accounts before they drag you down to mediocrity.   I think that’s fair enough, what do you think?

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