Ticking Off Your Customers
Are bean counters, lawyers and newbies making marketing decisions?
Feb. 21, 2006: Vol. 2, Issue No. 14
IN THE NEWS
Bank Gift Cards Come Wrapped With Limits
Consumers Rankled By Obscure Charges, Rules
Visa likes to say that "finding the perfect gift just got easier" with its gift card. But recipients of those cards—or similar ones issued by MasterCard or American Express—are discovering that using them presents unexpected difficulties.
—Caroline E. Mayer, The Washington Post, Feb. 17, 2006
Rental Car Customers Chafe at Tougher Rules
It is not difficult to find a business traveler who is hopping mad at Hertz these days. Krishna Kumar, a program manager from Santa Clara, Calif., for instance, says he was taken aback by the car rental company's decision to tighten its terms and conditions. "When I saw them," he said, "I was very upset."
—Christopher Elliott, The New York Times, Feb. 14, 2006
Don Jackson—a former naval aide to President Lyndon Johnson, insurance guru and my co-author for "2,239 Tested Secrets for Direct Marketing Success"—is a street smart guy who always cuts right to the chase. An example of Don's thinking:
Don Jackson's Immutable Second Commandment
The next time some wonk at a conference starts using the current industry buzzwords, such as retention marketing, back-end marketing and customer satisfaction, let fly with a noisy raspberry cheer. This is old hat. Anybody with half a brain and half a computer can satisfy a customer. But only when you continually delight your customers will they keep coming back for more.
When non-marketers are allowed to make marketing decisions, initial results may look good but you could be sitting on a bomb with a very long fuse.
Expanding the Business
Business can grow in two ways—and two ways only:
1. Increase your share of market—find new customers on your own or acquire a company that has its own customer base that can be added to yours.
2. Increase your share of the customer's wallet—figure out ways to get existing customers to spend more money with you.
As a direct marketer, I have always operated on the rule of thumb that it's five times more costly to acquire a new customer and make a sale than to sell something to an existing customer.
Now, I think a five-to-one ratio is low—perhaps very low. With the hundreds of sales pitches consumers and business folks face in print and broadcast media, the Internet, the mailbox, billboards and skywriting, finding a new customer is a tough, very expensive and chancy proposition.
While customer acquisition—with its high-octane creative and manipulation of data—is very sexy, getting existing customers to spend more is what puts money in the bank.
The Visa Debacle
Every Christmas, my wife, Peggy, and I give my stepmother a gift card for merchandise at the Lord & Taylor department store. She can buy what she wants and if the amount on the card runs out, she can pay cash—or use a credit card—for the balance.
Plastic gift cards are slated to be a $110 billion business by the end of the decade, which is a lip-smacking statistic for the financial services crowd.
But a serious problem exists with non-store, prepaid gift cards. Let's say you give a $100 Visa gift card and the recipient spends $87, leaving $13 on the card. If the card owner tries to make another purchase using a combination of the $13 on the card plus cash, the transaction is refused by Visa for insufficient funds.
As Caroline E. Mayer writes in The Washington Post:
Lisa T. Winston of Forestville had the same problem with her $50 American Express gift card. The government employee has about $2.39 left on the card and is not sure when she will be able to use it: "Unless I buy some gum at CVS ... I guess it will just go to waste." Next time, she said, "just give me the cash."
In addition to being unable to use the balance of the card, gift recipients discover that after six months of non-use, a $2.50 per month charge may be levied until the value dwindles down to nothing.
This is hardly—in Don Jackson's words—providing "continual delight" to their customers.
In addition, go to the Visa Gift Card Web site and it's filled with tiny dense prose in light gray type with light yellow headlines. It's both unfriendly and unreadable.
It's obvious that Visa's Web designers are as mediocre as the product.
Bean counters look at "growing the business" as bringing more money to the bottom line.
This isn't growing the business; rather it's growing profits. But at what cost?
From Christopher Elliott's Feb. 14, 2006, story in The Wall Street Journal:
Among the most noteworthy changes are these: Hertz is holding its customers responsible for "any and all" loss or damage to a rental car resulting from natural disasters, from hailstones to hurricanes. If you return a rental car after hours, Hertz may continue charging you for the car until the rental office reopens (it used to consider the vehicle returned when you brought it back). And it abbreviated the grace period for returns to 30 minutes, from one hour.
Quite simply, this stinks.
Hertz gave The Wall Street Journal reporter a lot of doubletalk about how the cost of maintaining a fleet of new cars is rising, which requires a system of "unbundling" the costs—starting with a base rental price and adding individual services.
Okay, I can buy into that.
But charging for damages by hailstones and hurricanes, and charging rental fees after the vehicle is returned because the office is closed is, in my opinion, unconscionable.
I will never use Hertz—even if the rental office is open 24/7.
Incidentally, I could not find any of these caveats on the Hertz Web site. Presumably, they hit you with this in the contract mousetype you pick up at the rental counter. Yet another example of corporate sleaze and another reason not to use Hertz.
Takeaway Points to Consider
- When designing a new product or service, think through everything that can possibly go wrong.
- Then beta test the thing. Before the packaging is finalized, it's imperative to give the product and instructions to 10 or 100 people and see how easy—or difficult—it is for them to start being "continually delighted." These must be strangers—not friends or relatives—and they must have no connection to your organization and no axe to grind one way or the other.
- For example, some of the worst, most confusing prose on the planet—apart from what is being produced in academia—is found on instruction sheets that accompany new products.
- Spending a little money and time at the beginning to make sure everything is as it should be, will pay for itself many times over in the coming months and years in terms of customer delight rather than customer frustration and anger.
- Put yourself inside the head of the customer. Think like he or she thinks; feel what he or she feels. In effect, become your customer. Then look carefully at every step of the sales and fulfillment process and make sure it contributes to "customer delight."
- For example, my bet is that it was the Hertz bean counters—who get free Hertz rentals and automatic damage waivers—who decided on the "natural disasters" idea and the money clock still ticking when the car is returned to a closed office. If I were in charge of Hertz marketing, how would I handle this?
I would add a buck a day to the rental cost and then say in large type that (1) You are responsible for all damage to the car once it's in your possession with the exception of natural disasters. (2) If you return the car to a closed office, jot down the time of return on the rental form and you won't be charged for any additional rental time. This is a positive message that will make a Hertz renter feel good about the company. Chances are the extra buck a day would be unnoticed by the renter and more than pay for itself in terms of good will and hailstone damage.
- "Always try to convert a disadvantage into an advantage."
—Elsworth Howell, founder, Grolier Enterprises; publisher, Howell Book House
Web Sites Related to Today's Edition
Visa Gift Cards