Monthly Archives: September 2012

Is Loyalty for Suckers?

A Time Magazine/Moneyland contributor posted an interesting thought last week (http://tinyurl.com/9942w2v). He titled the post, “Proof That Loyalty Is For Suckers: Best Customers Get Penalized With Higher Bills” and gave several relevant examples. What does promoting low introductory pricing for new customers say to current customers who are paying full freight? Would you do this in your business?

 

“Averaging” Customers – Necessary? Misleading? Or Both?

What’s your knee-jerk reaction to hearing someone say, “our average customer?” Mine is to wince. Describing customers according to statistical averages – age, income, net worth,  shopping trips per week, number of employees, annual revenues, number of vendors used for each purchase category and on and on – tells us something about customers. Seeing a statistical distribution across each of these parameters tells us lots more. But still not very much. We can’t understand customers without understanding their behaviors,  And you can’t average behaviors. What’s the average of leaving a restaurant angry and believing you overpaid?  Might as well average a tomato and a pork chop.

Nonetheless, we let the impracticality of assessing and responding to individual behavior dictate use of statistical averages to describe customers. Then we enhance the data by imputing behaviors to people we don’t know. Is this the best we can do?

How should we go about understanding our customers?