Colorado-based Bella Luna Books offers a unique guarantee on the modern first editions it sells to collectors through its catalog. Not only do they extend a lifetime guarantee to their customers; they further extend it to their customers' heirs. When it comes time to sell any book purchased from Bella Luna, the bookseller will buy it back at the full purchase price or current wholesale value, whichever is higher. How's that for standing behind your product and your price!
STAND BEHIND YOUR SERVICE
Service guarantees are as important as product guarantees. For golfers who want to spend their time on the course instead of shopping for equipment, customer service champion Nordstrom department stores marketed Callaway Golf shoes with a unique guarantee. At the start of the 1998 golf season, Nordstrom assured its customers it would have all common sizes of "Maximus" spikeless golf shoes in stock. If not, they were special ordered and given to the customer for free. Nordstrom's promise: "These shoes, these sizes, or they're free."
Bloomingdale's made sure that it didn't ruin its catalog customers' Thanksgiving dinners
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with this guarantee: Orders for fine china sporting the "place-setting" logo and placed by November 9th were guaranteed to be in customers' homes by Thanksgiving or that merchandise was free.
Truth in advertising legislation requires that most sales be backed up with guarantees in the form of rain checks, but Sears, Roebuck and Co. goes a step further. If customers don't want to return to the store to use a rain check, they may purchase a "substitute item at the same percentage discount if the [out-of-stock] item was reduced" or "an equal or better item at the advertised price if the item was not reduced."
One more in the Who-says-there's-no-free-lunch? department: At the Piano, Texas-based Bennigan's restaurant chain, if your weekday lunch isn't on the table in 15 minutes, it's free. And, don't worry about time keeping; your server sets a timer right on the table as the order is placed. We know customers who go to Bennigan's for lunch just to try to beat the clock.
There are a lot of places to rent videos these days, but it often seems like weeks go by before you can fmd one that has a single copy left of that popular new release. Video rental chain behemoth Blockbuster Video, with over 5,000 stores in more than 20 countries, makes a strong play for customer loyalty with a unique guarantee. Each week the company creates a list of popular recent releases; and if one isn't available for rent when you want it. Blockbuster will give you the rental for free when the movie comes back in.
The critical element in selling a service comes in providing support after the sale, because, unlike other types of marketing, the customer can't really try the product until he's already bought it.
—Kay Knight Clarke,
PRESIDENT OF TEMPLETON, INC.
84 Stand Behind Your Work
Total Trust requires going beyond the realm of customer satisfaction and customer delight, to become a company that your customers believe will always act in their best interest. Customer trust is the belief, backed by experience, that your organization—and your employees—will be fair, reliable, competent and ethical in all dealings/'
—Christopher Hart, University of Michigan
PROFESSOR AND AUTHOR OF
Extraordinary Guarantees IN President
London-based advertising agenq/^ Publicis Technology makes the intangible tangible with an unusual fee structure that is helping it break into the U.S. market. Publicis knows that if its ad campaigns are successful, its customers' products or services will garner a larger share of the market, which in turn should increase the client firm's stock price. So, as one way to guarantee their bottom-line performance, Publicis bases 10 to 15% of its fee on fluctuations in the client's stock price. Either way, they share their customer's fate.
Some of the lushest, greenest lawns in our town are kept that way by Grass Roots of Virginia, LLC. The company seeds, feeds, and de-weeds its customers' lawns on a regular schedule—and stands behind its service. Service calls are provided at no additional cost and homeowners are quickly met on site by a pro if green fades to brown. Conditions related to the company's treatments are fixed free of charge and those beyond the usual service are quickly quoted.
National pest control chain Terminex International guarantees you won't be bugged when you sign up for regular-scheduled maintenance. If bugs come back between visits, so will the company, at no extra charge.
FedEx revolutionized the industry with its overnight service and set the standard for per--formance with its service guarantees. It makes two separate and distinct money-back guarantees on each and every package it ships. The; first guarantees the date and the time of delivery and will refund the cost of shipment is your package is so much as a minute late. The.
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85
second offers a money-back guarantee if FedEx cannot tell its customers the status of their packages within 30 minutes of the inquiry.
United Parcel Service (UPS) recently raised the stakes for small package shippers by extending its delivery guarantees to all the packages it handles, including ground shipments. If any package in the continental U.S. or Canada arrives late, UPS refunds the shipping cost.
Trucking company Yellow Freight used the same strategy for the heavy end of the overnight shipping market. The company's Exact Express Expedited Air & Ground Delivery takes packages over 70 pounds and ships them to their clients' exact specifications in terms of delivery date and hour of delivery if necessary. And, that service is fully guaranteed, too.
Shippers aren't the only ones guaranteeing package delivery. When Mail Boxes Etc. (MBE) ships packages for its clients, they guarantee the safe arrival of the shipment or your money back. Recently, when a package shipped by the franchise arrived at its destination in damaged condition, MBE quickly sent a letter of apology to the customer who brought in the package, along with a check for the declared value of $100 and a refund of the entire shipping charge.
Virginia-based custom builder VanKniest, Inc. provides a welcome relief from the seemingly endless stream of contraaor horror stories, largely because owner John Kniest, Jr., stands behind the homes and commercial complexes his company constructs. Kniest responds to post-construction problems in person, inspecting and establishing the proper resolution with
Exceptional Service No Exceptions
—Roadway Express' promise to customers
Stand Behind Your Work
It IS our intention always to give value for value in every sale we make, and those who are not pleased with what they buy do us a positive favor and return the goods and get their money back.
—John Wanamaker,
FOUNDER OF WaNAMAKER'S DEPARTMENT STORE CHAIN
his customers, before dispatching workers to the site. The resuk is a top-flight reputation in a demanding, competitive market.
Personal experience: We took an inexpensive junket to Caesar's Palace in Las Vegas. We didn't expect luxury, but the room was directly above the hotel's trash bins and they looked a little cleaner than the room. We called the front desk, which readily agreed to a different room. Hours went by and no new room. We called the front desk again and in the blink of an eye, a bellhop was escorting us out of the low-rent district and high up into the hotel's newly renovated tower. He opened the door to a great room with a stunning view, a huge round bed (mirrored above, of course), and a black marble bath. It was a big step up.
New Brunswick, New Jersey's Robert Wood Johnson University Hospital (RWJ) has offered a money-back guarantee to their emergency patients. After experiencing delays so long that many emergency room patients simply walked out, RWJ reengineered its entire emergency care process. Now, if patients who enter the emergency room are not seen by a nurse in less than 15 minutes and a doctor in less than 30 minutes, the care the patient finally does receive is free.
Perhaps even more welcome, given the negative reputation of the cable TV industry, is Cox Communications, Inc.'s guarantee. Cox says if its installation crew is late to install a new service, that service will be installed for free. If its employees are late for a service call to an existing customer, the customer gets a $20 credit on the next month's bill.
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Buy computer memory or a new hard drive at superstore chain CompUSA, and it may be worth it to let them do the installation, too. The stores offers their customers "upgrade installation in 24 hours or it's free."
The online economy promises to be a gold mine for credit card companies; after all, the checkout counters in cyberspace don't take checks or cash. To build its share of the market and give its cardholders the same sense of security they get in physical stores, American Express now guarantees that their customers will not be held responsible for unauthorized charges online.
American Express also protects nearly everything cardholders purchase. The company's Buyer's Assurance Plan automatically extends the product's original five-year or less warranty up to an additional year on products priced up to $10,000. And, the Purchase Protection Plan automatically protects eligible purchases from theft and accidental damage for 90 days from the date of purchase.
Sometimes it's nice to know they really are watching. VISA'S Fraud Office routinely calls cardholders to verify unusual account activity. Of course, the practice is motivated by a good measure of self-interest and a need to quickly cancel stolen cards. But, it also gives customers a sense of security. Recently, when married cardholders we know triggered a call with almost simultaneous purchases on the East and West Coasts, they expressed appreciation for the service.
Think your company doesn't make a lot of mistakes? Well, they add up fast Here's what 99.9% perfection means (courtesy o/inkj;
•22,000 checks deducted from the wrong bank accounts in an hour
•12 newborns handed over to the wrong parents in a day
• 114,500 mismatched shoes shipped in a year
• 14,208 defective computers shipped each year
• 1,314 misconnected phone calls every minute
Forget about blaming your service provider the next time you ignore that page. SkyTel
88 Stand Behind Your Work
If a company excels in making amends—that is, in recovering— when such failures occur, customers' faith in the company IS not just restored, it IS deepened.
—Thomas Jones and
W. Earl Sasser, Jr.,
discussing service in
Harvard Business Review
Corporation has created SkyWord Plus, the first national paging service that guarantees that you will get all of your messages. If the call isn't completed, the company's system stores and resends it until it is.
How does your company respond to service lapses? Torrance, California's Quatnne Furniture often has little control over the exact delivery dates of the special orders it places on behalf of its furniture and accessory customers. When a recent order to centuries-old Italian silk manufacturer, Fortuny Laboratories, went awry for an extended period, Quatrine contacted the customer with apologies, an estimated delivery date, and a glossy coffee-table book detailing the heritage of Fortuny and its products.
Merry Maids knows that house and office cleaning can sometimes result in accidents and damaged property. When a ceramic statue was broken in one home, the cleaners brought the accident to the owner's attention, apologized, and offered to take it back to their home office where it would be replaced with a new one and delivered back. They also offered alternative solutions: to repair it to the customer's satisfaction or deduct the cash value of the item from their cleaning services. The owner chose replacement; and within a week, a new statue was delivered.
Even the most fastidious credit card holders occasionally have disputes with some of the charges on their monthly Visa or MasterCard statements. Correcting such errors are the sole responsibility of the cardholder, even when the error is not—except at National City Bank, where the smaller of these disputes are quickly eliminated. For customers in good standing
stand Behind Your Work 89
with disputes under $25, National City simply and automatically removes the charge. No forms to fill out, no question of interest charges being levied, and no proof required other than a good customer's honest complaint.
Citibank credit card holders in good standing with disputes of $10 or less get the same service. When the customer service operators input the disputed charge information into their computers, the system kicks back a message to them that a aedit has been automatically issued. The credit appears on the cardholder's next statement.
Sometimes even service recovery efforts get snakebit. In the face of a written complaint fi-om a customer who could not locally resolve the problem of a new refrigerator sporting a defective door at the local store, the Sears Merchandise Group swung into action. Unable to make con-taa by telephone. Sears mailed the direct office phone number for National Customer Relations and asked the customer to call them. Not only did the call produce a fridge door that was not defective; it was attached to another new refiriger-ator that worked perfecdy right fi-om the start. #
When the nation's largest home improvement chain Home Depot repeatedly booted its delivery and installation of $1,200 in custom wood blinds and couldn't seem to make it right, the store's District Manager took a different tack. He not only got the blinds delivered and installed; the entire order was free. Says the former irate customer, "I would definitely go back to Home Depot."
Former Nordstrom exec and author of Fabled Service (Jossey-Bass, 1995) Betsey Sanders offers up these eye-openers about customer complaints:
• Only 4% of unhappy customers complain; the rest leave angry.
• For every customer complaint you hear, there are 26 you don't hear.
• If you resolve a complaint quickly, 96% of customers will come back.
• The average disgruntled customer tells nine other people. Thirteen percent tell more than 20 others.
Is a single customer worth a high-dollar hit to the bottom line? T. Scott Gross, inventor of
90 Stand Behind Your Work
Customers are like a force of nature—you can't fool them, and you ignore them at your own peril.
—Herb Kelleher,
CEO OF Southwest Airlines
IN Leader to Leader
Positively Outrageous Service, tells this story: When an order for a chainsaw part at a Coast to Coast store in Ridgecrest, California, never materialized the new manager picked out a new 14-inch Homelite saw and gave it to the customer—on the house. Later that same day, the customer returned and bought $1,200 in merchandise. In the following year, the same customer spent $4,000.
STAND BEHIND YOUR PRICE
The most impressive price guarantee we found popped up in the highly competitive market for home audio. The Tweeter retail chain keeps customers coming back with a unique twist. All receipts issued by Tweeter include the product price and purchaser's name and address. This information is fed into a product database that notifies the stores automatically if a competitor has offered a lower price on a product than its customers have already paid. The result: without any action on the part of the customer, the store issues a refund check for the difference and sends it directly to the customer.
Our local Berkeley Cleaners stands behind its own prices by standing by its competitors' prices. They honor their competitors' coupons. It's a smart move that keeps regular customers coming back instead of shopping around for the best price.
Carmaker Saturn made a name for itself by promising a different kind of car-buying experience. The sales staff is known for educating its prospective customers, but not pressuring them. And, there is no haggling over sticker
stand Behind Your Work 91
prices. All buyers know they've gotten the best price the dealership offers. The company is serious about that: When it lowered sticker prices on several models in late 1997, Saturn refunded some $7 million to car owners who had paid the original sticker price.
Richfood Holding's Farm Fresh grocery chain keeps customers using its in-store pharmacy by making them confident that they have paid the lowest price possible. Fill the same prescription locally at a lower price within 30 days and you get a refund of 125% of the difference in price.
Sears, Roebuck and Co.'s Tire America outlets don't think 125% is enough. Find a lower advertised price within 30 days and "you get double the difference back."
Tired of seeing the companies you regularly do business with offer new customers better prices than they offer you? Cellular phone service provider 360*" Communications (now Alltel Corporation) must know the feeling, because when it recently offered new customers 30 minutes of local calling free per month for one year, it extended the same free local call program to its existing customers who were ready to renew contracts.
Attention Kmart shoppers, the Troy, Michigan-based discount chain not only offers "low prices all the time," it guarantees "the lowest sale prices every time." It simply says: "If you find a price lower than Kmart, simply bring it to our attention and we will match the price for you."
Four Steps to Resolving Customer Complaints
• Get the facts and record them.
• Agree on a resolution and schedule it.
• Solve the problem.
• Follow up.
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Lowe's home centers go a step further in their price guarantee. If customers find a lower advertised price, they can bring the ad to Lowe's, who will match the price and throw in an additional 10% for their trouble. If the item is found at a lower price in a competitor's store rather than in an ad, Lowe's will call the competitor to verify the price and match it plus 10%.
Office Depot, the nation's largest office-supply chain, raises the bar with its 155% Low Price Guarantee. If a local competitor advertises an identical item for less, customers who advise Office Depot within seven days receive the lower price plus 55% of the difference, up to a maximum of $55.
Now, if only they would do that for home mortgages. They did: Mortgage your house through Fairfax, Virginia's Service Saver Finance and refinance when the rates drop without paying fees or reapplying. When rates drop a half-percentage point and you've been paying your mortgage on time for at least 12 months, you can refinance on request—no new appraisals, no income or credit checks, just a lower rate mortgage.
So, why not make it automatic? They did: San Diego-based City Line Mortgage has come up with the "automatic rate reduction loan." This ingenious mortgage vehicle automatically refinances itself when the going rate for your fixed mortgage drops 1/2% below the rate you borrowed at—without any closing costs (provided the holder pays on time for at least 12 months and is fmancially sta-
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ble). The automatic refinancing helps the lender retain about 95% of their current mortgage customers.
One of the many ways Ukrop's Super Markets keeps its customers coming back is to assure them they are getting the lowest prices along with great selection and legendary customer service. Ukrop's encourages customers to "take the Ukrop's pricing challenge" to find lower prices at competitors. This is no random challenge: First, customers buy at least 40 items at Ukrop's using their Valued Customer (UVC) card. Then, within a week, they must take their receipts to any competing grocer and compare prices on identical items, writing the competitors' prices directly on the Ukrop's receipt. What do you get for your trouble? When you mail the receipt to Ukrop's, the grocer will send back a $ 15 Ukrop's gift certificate; and if the Ukrop's bill is higher, double the difference of the total grocery bill
Sneaker superstore Just For Feet offers its own "Low Price Guarantee." If its prices are beat in any local advertisement, the store will match the price.
Personal experience: We bought linens from Bloomingdale's By Mail and a couple of months later, here comes the new catalog with a 20% price reduction on the same items—a savings of several hundred dollars. We ruefully told a service rep the story the next time we bought from the company. A short wait on hold produced a credit for the full amount. Customers for life.
94 Stand Behind Your Work
Branford, Connecticut-based bicycle shop Zane's Cycles puts it all together with a host of guarantees designed to keep its customers out of the sporting goods superstores. They include a price guarantee that there isn't a lower price in the state, a free lifetime service warranty covering all repairs; giving customers any item that costs less than a dollar for free; and, a no-receipt-required return policy for all items in the store's stock database.
5
Give
IN Order TO Receive
We've all heard the admonition that "It's better to give than it is to receive." Roughly two-thirds of American adults apparently agree with the statement since that's how many of us donate time and money to charitable activities each year.
Businesses are as philanthropically active as individuals. In 1996, corporate America gave away something on the order of $8.5 billion, according to the AAFRC Trust for Philanthropy. Based on this figure, it would seem that the idea of giving is not bad business.
The late Robert Goizueta, much-respected chairman of Coca-Cola Company, said it this way in a 1994 speech: "There are plenty of examples of business doing the right thing because they know it is the best thing for their long-term success."
If two-thirds of your customers care about more than business alone, you'd better too. Understanding that customers care about the world in which they live and supporting their concerns is a wonderful way to build loyal relationships and do good at the same time.
San Francisco-based Working Assets Funding Service created a business model around the idea of philanthropy. It competes in the
96 Give in Order to Receive
If you want to lift yourself up, lift up someone else.
—Booker T. Washington
overcrowded credit card market by appealing to socially responsible consumers. The company donates a nickel of each customer's monthly charges to select nonprofit organizations.
The strategy has proven so popular that the company also offers long-distance telephone services based on the same principle of social responsibility. Sign up for the service and 10% of your monthly long-distance bill goes to a short list of good causes. Add to the payment and the company will automatically send the difference to its 50 designated charities.
Those nickels, and other corporate giving, add up. Since 1985, the company has given $16 million to nonprofits.
Marietta, Georgia's Health Education Retirement Organization just launched a new cash card called HERO. Purchases made on HERO generate a rebate that goes into a trust account in the customer's name. These accounts are periodically split and dispersed to pre-chosen charities and into designated savings vehicles for the customer, such as stocks, mutual funds, and savings bonds. In this way, the HERO card provides automatic savings along with tax-deductible donations.
Online marketer CyberGold gives its customers a small payment for browsing the advertising and promotions on its Web site. For surfers who see the bigger picture, CyberGold allows the option of donating these fees to several charitable organizations, such as the National Kidney Foundation and the Hereditary Disease Foundation.
Act locally . . . Milwaukee-based independent Harry W. Schwartz Booksellers created
I
Give in Order to Receive 97
Schwartz Gives Back (SGB) to support its community. Customers joining SGB choose their favorite charity from a list of local organizations. Whenever the member makes a purchase, their nonprofit receives 1% of the total. SGB customers also receive regular promotional mailings complete with money-saving coupons for books.
Seattle-based insurer SAFECO recently joined with Seattle Habitat for Humanity to build a home for a low-income family. SAFECO employees kicked in the labor.
Warrendale, Pennsylvania's Mitsubishi Electric Power Products, Inc. created the annual "Tour de Sewickley" to support The Early Learning Institute, serving children with disabilities. The 60-, 30-, and 5-mile bike rides through Western Pennsylvania attract over 700 riders; and over the last six years, raised $150,000 for the Institute.
In Virginia, Foot Locker recently teamed up with Ukrop's Super Markets to fund Operation Gun Drive. The program paid cash for switchblades and guns from anyone age 16 and over willing to turn them in. The cash was collected by the Essex Village Community Church and Outreach Center, and Ukrop's matched every $1,000 collected for the program. Foot Locker donated store gift certificates, which were used in lieu of cash for anyone under 16 turning in weapons.
The Freedom Ford Hampton car dealership sponsored the transformation of a plot of vacant land at a local elementary school into a garden, complete with herbs, vegetables, and
98 Give in Order to Receive
The high destiny of the Individual is to serve rather than to rule
—Albert Einstein
fruit trees. Employees spent a Saturday working on the project with parents, students, and staff; and other local merchants helped with merchandise and supplies.
"Local" for Southwest Airlines Company is
every community it serves. Each holiday season, the company runs its 'Home for the Holidays' program, which flies senior citizens who can't afford a ticket to their families. Home for the Holidays has run for 18 years and thousands of senior citizens have received free flights.
Think globally . . . After Hurricane Mitch, all 12 Peace Frogs T-shirt shops collected non-perishable food items for the Red Cross, which in turn sent the food to Central America. Customers who brought in food donations got 10% off their store purchases in return.
San Mateo, California-based Internet direct marketer. Make It So, Inc., provides customers a similar incentive to buy computers and other merchandise through their Web site. Log on to ClubMail, choose from the list of children's charities shown, and every time you make a purchase, 1% of the sale goes to the selected charities. As of November 1998, the small business had sent off over $9,000 to nonprofits.
What kid wouldn't want to go to Disneyland for the holidays? Since 1995, Kintetsu International Express (U.S.A.), Inc. has been making sure underprivileged children and teenagers in Los Angeles area get that experience with its annual "Early Christmas Party at Disneyland." Here's how it works: Travel company Kintetsu charters Disneyland for one night every December as part of a tourism
Give in Order to Receive
99
package, which attracts about 4,000 to 5,000 paying customers. It also invites over 1,000 children of LA's kids—on the house.
Amencan Airlines makes sure its air miles get put to charitable use with the AAdvantage Fund Raising program. American provides its own fund-raising consultants free of charge to help the nonprofits come up with ways to incorporate the carrier's frequent flyer miles as incentives in their campaigns. Groups as diverse as the National Kidney Foundation and the Library Foundation of Los Angeles have taken "AAdvantage" of the program.
New Jersey's Warner-Lambert Company recently supported the World Journey of Hope '99, a global effort to provide reconstructive facial surgeries to people who cannot otherwise afford the procedures. For one week, the $8 billion company donated $ 1 for every participating product—including such popular brands as Listerine, Benadryl, Sudafed, Effer-dent, and Schick—that customers purchased.
There is nothing inherently wrong with linking philanthropy and marketing. For decades, the Campbell Soup Company has been marketing to families and to children with such memorable characters as the Campbell's Soup Kids. Now, when you go into participating schools, you will see 4-foot-tall Campbell's Soup cans. The cans are the collection bins for proofs-of-purchase from Campbell's products. Schools that collect enough get free computers from the folks that brought you M'mmm Good!
I
Consumer food product giant General Mills, Inc. kept customers buying their Yoplait brand
If you don't care, your customer never will.
— Marlene Blaszczyk PARTER, Majestic Systems
100 Give in Order to Receive
yogurt with its "Save Lids to Save Lives" program. For each specially marked pink yogurt lid mailed in by shoppers, Yoplait donated 50C to The Breast Cancer Research Foundation up to a maximum gift of $ 100,000.
American Express shares the same cause. During the month of October 1998, the company teamed up with the stores that accept their card to help fight breast cancer. For every qualifying purchase made, American Express donated 25<t to the Komen Foundation up to a maximum donation of $300,000.
The Komen Foundation also benefited from the California Prune Board's "Prune the Risk" program, which mixed educational and charitable goals. The Board distributed booklets on preventing breast cancer to consumers (which by the way include eating prunes) and donated a portion of each prune purchase made between October 1998 and April 1999 up to $100,000 to the Foundation.
And to top the list. Hallmark Gold Crown
stores nationwide supported the same cause with a $1 million donation on Mother's Day 1999. Customers helped make it even larger because a portion of the purchase price of every card purchased between April 18 and May 2 was added to the gift. To encourage support, each customer also got a free greeting card.
For eight years, Maryland-based supermarket chain Giant Food, Inc. has sponsored the Apples PLUS program, which has given more than $47 million worth of electronic equipment to over 3,000 elementary and secondary schools in the mid-Atlantic region. The over 150,000
Give in Order to Receive 101
pieces of equipment includes computers, software, printers, televisions, and microscopes.
To qualify for the awards, students and teachers collect dated receipts from Giant Foods, After $30,000 worth of receipts are collected, bundled, and put on deposit with Giant, a school may begin "ordering" equipment. When Giant delivers the goods, they also bring cake for the faculty and ice cream for all the students as a celebration. Smaller prizes are regularly awarded to schools participating in the program.
Not one to be outdone, supermarket chain Farm Fresh teamed up with Miller Mart and Wachovia Bank to help customers help their local schools with the ABC'S (Audio Visual Equipment, Books and Computers for Schools) program. During the first half of 1999, register tapes from Farm Fresh and their partners turned in at participating schools earned free computers, televisions, software, books, and sporting equipment.
The Target discount chain created the "School Fundraising Made Simple" program to do just that—make it easy for customers to support the schools of their choice. Select your favorite school and 1% of all purchases made on your Target Guest Card is donated to the qualifying school twice a year. No further effort is necessary on the part of the customer. Target tracks the purchases and makes the donations automatically. So far, the program has generated over $800,000 to more than 50,000 schools.
Nor does Target's largess stop there. In 1998, every pharmacy or health product purchase generated a donation to St. Jude Children's
U.S. companies gave $2.7 billion to higher education in 1996, according to Giving USA: 1997.
Give In Order to Receive
Benchmark the Biggest Givers
Here are the 10 Leading corporate philanthropists, ranked by their total 1997 donations in cash and products by Corporate Giving Watch newsletter:
Merck & Co.: $190.3 million
Johnson & Johnson: $146.3 million
Microsoft: $107.1 million
Pfizer: $106.3 million
Eli Lilly: $102.8 million
Intel: $102.8 million
IBM: $96.8 million
General Motors: $73.2 million
Hewlett-Packard: $63.2 million
Procter & Gamble: $60.6 million
Research Hospital in support of its work in finding cures for pediatric cancer and other life-threatening childhood diseases.
Target's zeal runs in the family. Its parent, Minneapolis-based Dayton Hudson Corp. makes it a matter of corporate policy to give 5% of profits back to the communities in which they do business. That donation totaled $57 million in 1998.
By year-end 1996, Pizza Hut's Book It! program had made reading substantially more palatable for some 22 million elementary school students. In schools enrolled in the free program, teachers set monthly reading goals for five months. Every month a child hits the goal, the teacher hands over a gift certificate for a free one-topping Personal Pan Pizza. If everyone in the class meets their goals in four of the five program months, the whole class wins a free pizza party. And, since 10-year-olds probably aren't driving over to Pizza Hut on their own, we bet the chain sold a lot of full-size pies, too.
Companies can also enlist customers in their own favorite philanthropies. American Express committed to a $5 million founding sponsorship to the World Monuments Watch, which among other projects is now working to restore the earthquake-damaged St. Francis of Assisi shrine and to erase centuries of pollution damage to the Taj Mahal. The company also offered participants in its Membership Rewards program a piece of the action by allowing the conversion of reward points into cash gifts to the fund and matching them dollar for dollar.
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If corporate good deeds don't directly involve customers, tell them about it. Phillips Petroleum Company used a national advertising campaign to make sure its customers know it takes its environmental responsibilities seriously. One ad highlighted the donation of a former plant site to the Cactus Playa Lake Project, which used it to provide a protected habitat for bald eagles, waterfowl, and other species in the Central Flyway.
Water filter maker Brita Products Company
supports clean water everywhere by acting as a financial sponsor for the annual International Coastal Cleanup program. The one-day effort takes place along beaches and inland shorelines throughout the United States and in 90 countries worldwide. Over 200,000 volunteers participate in the U.S. alone.
How about combining corporate support of the arts with customer perks? NationsBank (now Bank of America) does with regular sponsorships of shows and exhibits in the regions in which it does business. In 1999, the bank helped underwrite the "Art of Glass" exhibition in collaboration with the Contemporary Arts Center of Virginia and the Chrysler Museum of Art. In return, the bank was granted an exclusive showing to which it invited its Professional and Executive Banking clients.
Reynold Levy managed AT&T Corporation's
philanthropic efforts for over a decade, during which the nation's largest long-distance company donated over a billion dollars. In his book. Give and Take, he cautions charity-minded companies not to think of giving in only financial terms.
A 1997 Cone Communications' survey found that 76% of consumers are likely to change to a brand affiliated with a good cause.
104 Give in Order to Receive
Entertaining customers at arts events IS a natural, espe-dally in an environment in which the host firm is a valued contributor. Memorable evenings at the opera or theater or dance or symphony can help catalyze and strengthen customer relationships.
— Reynold Levy
f
"Companies can complement their cash giving with many other resources eagerly sought after by nonprofit organizations," Levy says. "At ATOX used and state-of-the-art equipment, telecommunications services, advertising, related-cause marketing, promotional and sales gifts, loaned executives, real estate, and use of facilities were all donated in various combinations." Does that generate an idea or two?
Charitable promotions need not be huge affairs. The Keene, New Hampshire-based Bagel Works keeps customers coming back to its seven stores by simply asking them to vote for their favorite local charity. The winning charity gets a $500 donation, space in the stores for brochures, product donations, and management assistance.
m
The West Coast restaurant chain, Noah's Bagels, communicates its charitable bent with the "Caring Is Always Kosher" program. The chain asks its customers to help it find worthy causes. Among the results: Unsold bagels are donated to the homeless; new store construction crews are paid to use their skills for community service; and underprivileged children are sent to camp.
In the just-give-us-one-good-reason department: Our local Ben & Jerry's ice cream shops promised to donate 50C to CDR (Child Development Resources), a nonprofit organization dedicated to helping children and their families, for each sundae they sold in April 1999. Of course, we only went to support CDR.
Your good deeds can also include a sense of fun. Virginia-based car dealer Oyster Point
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Dodge recently stuck its general manager in a conversion van and hoisted it high with a 50-ton crane ... for six days. During the stunt, the dealership donated $200 to a local children's hospital for every car sold.
Thrifty Rent-a-Car System, Inc. ran a
month-long promotion in September 1998 called "Neighbors Together." For each car rental that month, Thrifty donated at least 50C to local charities that specialize in helping children.
Recently all 75 Starbucks locations in and around the Washington, D.C. area gave customers a good reason to stop in for a cup of Java. The chain designed covered, reusable coffee cups to support the National Race for the Cure, which benefits breast cancer research and education, Starbucks sold the cups for $6.95 each and threw in a coupon for a free beverage. Then, the chain donated the $2-per-cup profit to the cause.
Consumer product giant Procter & Gamble
(P&G) combined coupons and philanthropy recently to help terminally ill kids and their families. The company mailed customer coupon packs; and for each coupon redeemed, it donated IOC (up to a total of $500,000) to the charitable organization. Give Kids the World.
Another P&G coupon campaign supported the Boomer Esiason Foundation for Cystic Fibrosis. The coupons came with the following message: "For each coupon below you redeem, Procter & Gamble will donate 5C (up to $100,000) to the Boomer Esiason Foundation."
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Swedish furniture retailer IKEA teamed up with two nonprofits to spread the holiday
Every man's occupation should be beneficial to his fellow man as well as profitable to himself. All else is vanity and folly.
—P. T. Barnum
106 Give in Order to Receive
spirit in 1998. Together with American Forests, it offered customers the "TREEfund Program." Those who bought their fresh-cut Christmas tree, on sale for $20, from IKEA were able to return it on two specified days in January for a $20 IKEA gift certificate. The returned tree was properly mulched and another planted locally to replace it. The furniture and housewares stores also stocked UNICEF greeting cards, the sale of which help fund UNICEF programs for children the world over. And, for every box sold, IKEA donated an extra $1 to the U.S. Committee for UNICEE
Teaming up is a great way to leverage your philanthropic might and cross-market your products. Under the auspices of The Better Homes Fund (a nonprofit founded by Better Homes & Garden's magazine), direct marketers Harry and David and Jackson & Perkins donate $5 to KIDSTART, a program that helps homeless preschoolers all across America, for every gift basket of Miracle Roses they sell. The program has yielded $1.6 million for charity since they both began selling the baskets in 1992.
Event-based programs can drive business and benefit charities. In the dog-eat-dog world of long-distance providers, 10-10-220 differentiated itself from the competition and helped a worthy cause by donating a portion of every call made using the service during the annual Farm-Aid concert.
Drugstore chain Eckerd Corporation teamed up with pharmaceutical giants Johnson <& Johnson and McNeil to support the National Safe Kids Campaign. Said the company: "Proceeds from your purchase of Johnson & John-
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son or McNeil products at Eckerd will go to support the National Safe Kids Campaign, which provides information on preventing accidental injury in children—the number one killer of children age 14 and under."
Upscale department store chain Blooming-dale's recently brought in customers and raised money for charity at the same time with a one-day "Give a Little, Get a Little Shopping Benefit." Customers bought a $10 ticket in advance. The store added $5 to the $10 from the ticket and donated the entire proceeds to a charity chosen by the customer. The ticket itself was good for a 15% discount at any Bloomingdale's register.
Bloomingdale's also gave its Northern New Jersey customers an invitation to brunch at its Riverside Square store one Sunday morning in March 1999. For $20 per person, customers got a gourmet brunch prepared by a group of area chefs. The chefs, Bloomingdale's, and fine cookware maker Calphalon didn't take a cut, so every penny of customers' $20 contributions went to Share Our Strength (SOS), an organization dedicated to fighting hunger in America. In addition, customers got a free gift and a $20 discount on every $100 worth of Calphalon they bought.
¥
SOS also attracted help from Chef's, catalog retailer of cooking equipment and accessories for the home. The company's catalog includes two pages of specially chosen products from companies such as Calphalon, Wusthof, De-Longhi, and ChefsChoice. Make a purchase from those pages and a $5 donation is made to SOS-sponsored programs.
108 Give In Order to Receive
Cooke's Greenhouse recently offered the entire community an added incentive to buy all their spring planting supplies from the privately held small business. Cooke's teamed up with Berkeley Realty Property Management and donated all the profits from selected plants sold during the weekend to the Heritage Humane Society animal shelter.
Another small business, Ken Matthews Landscape Nursery, came up with the "Mulch Madness" promotion one March weekend. In addition to "Insane Prices on Mulch," the company sponsored a hoops competition with the proceeds benefiting the Muscular Dystrophy Association. Stop in, shoot two foul shots for $2, and get discounts on products sold at the nursery.
Often, labor is as important as money The tradition of volunteerism among Northwestern Mutual Life recognizes employees with its Employee Community Service Awards program. Each year, the company awards $10,000 to the nonprofit organization represented by its Most Exceptional Volunteer and awards $5,000 each to the charities of 10 Outstanding Volunteers. By the way. Northwestern employees donate 85,000 hours annually to 200 nonprofit organizations.
A subsidiary of Japan's NEC Corporation, Santa Clara, California-based NEC Electronics Inc. created the Gifts for Giving program, which makes financial contributions to the charities its employees support with their volunteer efforts. Employees who volunteer at least 25 hours per year earn a grant from the company. And, that means grants to over 100
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different nonprofits, including Children's Home of California, American Cancer Society, Ronald McDonald House, and the San Jose Symphony.
United Parcel Service of America, Inc. (UPS) has been helping the underprivileged and building its workforce at the same time, as a founding parmer in the Welfare to Work program. Under the program's auspices, UPS hires employees from the nation's welfare rolls—at the same pay and benefits as all other employees in the same jobs. In all, the company has hired over 20,000 former welfare recipients.
In a second program, the world's largest package delivery service sends its managers on one-month paid sabbaticals to work in communities that need help. Since 1968, over 1,000 UPS managers have participated in the UPS Community Internship Program. They have worked for nonprofit agencies mentoring inner-city youth, building temporary housing and schools for migrant farm workers, and so forth. Participants are sent to one of the four internship locations run by nonprofit agencies in Chicago, New York City, Chattanooga, or McAllen, Texas.
Pet supply superchain PETsMART created PETsMART Charities, Inc. to drive its charitable aaivities. As we are writing this, pet food makers Bil-Jac and Pro Plan are donating a penny to the charity for each pound of their own dog and cat food sold at PETsMART during the month. And, Nature's Recipe is donating a $1 for every 17.6-pound bag of their Specific Formula Dog Food or 20-pound bag of their Original Dog or Cat Food sold at the chain.
110 Give In Order to Receive
Mutual fund giant Fidelity Investments is keeping customers coming back by helping them manage their charitable giving. The Charitable Gift Fund helps clients contribute to charity and take full advantage of the tax laws at the same time. Donors to the Charitable Gift Fund:
■ Receive immediate tax benefits associated with charitable giving
■ Avoid capital gains tax on appreciated and restricted securities
■ Have the potential to grow over time to increase the charitable gift
■ Are assured that Fidelity will see to it that their gift goes to the charity of their choice automatically
Sometimes just providing the opportunity for your customers to do good is all it takes to keep them coming back. Green Mountain Energy Resources buys energy from sources that produce it using environmentally sound processes and then resells it over existing utility lines to consumers who are interested in choosing the source of their energy. A Green Mountain customer can order any mix, such as 50% solar, 30% wind, and 20% geothermal energy. They are also given the option of paying bills and receiving newsletters over the Internet instead of using paper and the mails.
Retail eyewear chain LensCrafters is a major participant in the "Recycle for Sight" program. Sponsored by the Lions Clubs International the annual program runs in May and collects used eyeglasses for people in developing countries who normally don't have access to vision correction. The $1 billion chain places collec-
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tion boxes for old specs in over 700 stores, bringing in scads of old eyewear and, perhaps, people who need new ones.
Portland, Oregon's Hanna hit a stand-up triple with its "Hannadowns" program, which highlights the quality of its children's clothing, keeps customers coming back, and helps less-fortunate kids all at the same time. Customers are asked to return Hanna clothes to the company after their children have stopped wearing them. In exchange, Hanna offers a 20% discount on their next purchase and donates the returned clothes to needy children. How well does it work? The Hannadowns program receives and redistributes about 10,000 clothing items every month.
Steelcase, Inc., subsidiary Designtex keeps its environmentally conscious customers coming back by offering competitively priced office fabrics that are 100% biodegradable. In addition, the fabrics are made from organic materials and using nontoxic processes, so they don't harm the environment during their manufacture or use.
Wooster, Ohio's Rubbermaid Inc. gave customers the first environmentally sound choice with its litter-less lunchbox and was quickly rewarded with about 10% of the entire lunchbox market. Inspired by a Canadian program that required a litter-free lunch once each week, in the early 1990s, the product generated widespread publicity and heavy demand.
From the it-speaks-for-itself department: UK-based drug giant Smith Kline Beecham PLC formed a $1 billion partnership with the
112 Give in Order to Receive
World Health Organization in 1998. For its part, the company will donate the drugs needed to eliminate Lymphatic Filariasis, one of the world's six eradicable diseases and one that is currently afflicting approximately 120 million people around the world.
Tom's of Maine built its toothpaste brand on all-natural ingredients and "earth-friendly packaging." Tom's, which celebrated its 25th birthday in 1998, also donates 10% of its annual profits to environmental causes.
As Lexington, Massachusetts-based footwear maker The Stride Rite Corporation tells its customers: "There are moments when the choices you make count a little more." This is especially true of the line of kids' shoes featuring the Save the Children Federation's logo created by the company. Each time customers buy a pair of the logo shoes. Stride Rite makes a donation of 3% to 4% of the retail price to Save the Children. This program runs from August 1, 1997 through December 1, 1999 and the company guarantees a donation of at least $82,500.
Each year on cardholders' anniversaries, Discover sends off its promised "Cashback Bonus" checks, which amounts to something between .25% and 1% of annual purchases, depending on a published formula. The accompanying cover letter thanks card members for their loyalty and includes endorsement instructions and a pre-addressed envelope just in case they want to donate their checks to the Make-a-Wish Foundation. It seems that quite a few have: Since 1988, Discover cardholders have given $1.3 billion to the charity in returned checks and personal contributions.
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Ukrop's also offers a shopping cart full of philanthropic programs. Under the auspices of the Golden Gift Program, the grocer tracks total household spending at the store via the Valued Customer card. Then, a mass-customized newsletter is sent to customers with their family's purchase total included in the form of a "Golden Certificate." Customers give their favorite charity the Golden Certificate, which is returned to Ukrop's for a corresponding slice of the chain's $675,000 donation pie. In 1998, 118 groups received over $1,000 each, while the balance of the donation pool was split among hundreds of other nonprofits. Overall, the program has donated over $7.4 million since 1987.
Ukrop's also reaches out to its vendors to create charitable programs. Two recent local examples:
■ General Mills agreed to donate 5<t each on a group of select products sold at Ukrop's to St. Joseph's Villa's Helping Hands campaign, a program assisting needy children and their families.
■ Ray-O-Vac agreed to donate one battery for each one sold at Ukrop's to benefit the Broomfield Learning Center, a provider of education to some of the area's less fortunate kids.
Help can also have an individual focus, as demonstrated by this story involving corporate travel agency Rosenbluth International: During an off-site sales meeting in North Dakota, employees met a woman who needed a double lung transplant to survive. On a waiting list without much hope, the woman's plight moved
114 Give in Order to Receive
them to find a way to help. In a company-wide effort, they found the answer in Memphis, flew the woman and her family in, and stuck around as support. The operation was successful.
Remembers CEO Hal Rosenbluth in his book. Good Business: "It's not every day we can help save a life, but we can make the lives we touch better, and that's an amazing way to do business."
Santa Rosa, California-based Rella Good Cheese Co. targeted sales of $4 million in 1998 and expected profits of $10,000 to $20,000. The company decided early in the fiscal year that it would donate all those pre-tax profits to charity.
And there's actor Paul Newman's Newman's Own food products company. We'll let the company say it: "Paul Newman donates all profits, after taxes, from the sale of these products for educational and charitable purposes." In fact, Newman's Own has donated over $90 million to charities to date; and the count rises every time another jar of spaghetti sauce, bottle of salad dressing, or package of popcorn gets scanned at the cash registers of the nation's markets.
6
Reward
Every
Customer
Here's an exercise that might help you understand why every customer deserves reward. Run a Hst of a dozen of your biggest customers this month, or quarter, or year, and try to track down that customer's first contact with your company.
If you are anything Hke us, you will fmd that very few of those great customers walked in the door with a bang. At our company, they usually called looking for one book they were having a problem finding. A lot of them didn't call with an order at all. They wanted to comment on something we had written or to ask for information, and they were surprised to find out we sold books.
That led us to an important lesson: Every person who calls in a small order and everyone who makes a casual request for information has the potential to become a great customer. So, why not treat them that way from the start?
All customers deserve reward from the moment they contact your company. It doesn't have to be a huge reward, but it does need to make them feel that you honestly value the fact that they chose to contact your company.
Let's start with the simplest, least expensive reward there is:
116 Reward Every Customer
If you remember my name, you pay me a subtle compliment; you indicate that I have made an impression on you. Remember my name and you add to my feeling of importance.
—Dale Carnegie
TELL THEM YOU CARE
Sam Walton was the driving force in the creation of Wal-Mart Stores, Inc. He knew darn well what customers meant to his company and he made sure employees did, too. One way is reflected in the Wal-Mart stores' employee pledge: "I solemnly promise and declare that for every customer that comes within ten feet of me, I will smile, look them in the eye, and greet them, so help me Sam."
In a world where it is not unusual to walk into a store, do your shopping, and make a purchase without a single store employee bothering to speak to you, the simple things go a long way. We know a loyal customer of Berkeley Cleaners who was pleased as punch that the counterperson remembered his name each and every time after his initial visit.
Salespeople at Denver, Colorado-based menswear store Grassfield's also make it a point to remember customers by name, a habit that automatically takes the relationship to a more personal level.
Being polite doesn't mean "yessing" customers to death. Sometimes, they need some knowledgeable advice, tactfully delivered. "If you really are the expert, don't be afraid to say 'no' to the customer when saying 'no' is to their benefit," says T. Scott Gross in his book. Outrageous! "Unlike all the other companies that will do anything just to make the sale, you are doing the right thing to make a customer."
Phone reps at business-to-business cataloger New Pig Corporation are just waiting for a rea-
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son to drop you a line. The company keeps a selection of assorted greeting cards on a shelf in their order department. When a customer mentions a birthday or other noteworthy occurrence, the reps simply reach for a card to commemorate the event, fill it out on the spot, and out it goes in that day's mail.
Just say thank you! It is amazing how often we do business with companies and never hear those simple words. Get your car serviced at Statesville, North Carolina-based Hendrick's Honda, and within a couple of days, a card arrives in your mailbox thanking you for trusting Hendrick's to work on your car. No big deal, but maybe just enough to steer you toward that dealership when it's time for another service call or the newest model.
The final day of a luxury vacation voyage on Crystal Cruise's Symphony ship is a bittersweet experience. Well, in this case, more sweet than bitter: As passengers readied for departure at the end of a recent Scandinavian cruise, they found a handwritten note in their cabins along with a box of Norwegian chocolates. The gifts were from the cabin maids, known as stewardesses, who offered the chocolates as a reminder of the time aboard the ship.
On the 40th anniversary of its card, American Express sent cardholders a personalized letter of thanks and a small gift: a phone message pad. Each time members use it, they are reminded that American Express sent an unsolicited, no obligation, no-strings-attached message of thanks. Nice.
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The sale merely consummates the courtship. Then the marriage begins. How good the marriage is depends on how well the relationship is managed by the seller.
—Theodore Levih
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Experts say that most people dedde to establish an ongoing relationship or not In the first four minutes they spend with someone. In business, the Impression you give may determine whether you get a customer. So look customers In the eyes, shake hands assertively but not aggressively, and practice old-fashioned good manners."
— Dr. Kerry Strayer, University of Tulsa
When was the last time you got a note from your hairdresser? Virginia-based Fitzgerald's beauty salons send a thank-you card to first-time customers, which reminds them of the their hairdresser's name and invites them to phone with any questions and concerns about their hair.
How about your exterminator? Terminex, the Nationwide Pest Control Experts, lets its customers know it appreciates the opportunity to wipe out their pests. After a Terminex appointment, customers get a thank you in the mail that includes a business card.
We aren't real estate moguls by any means, but we do think of local NationsBanc Mortgage Corporation account executive Kim Tahey as "our" mortgage banker. Kim is the first loan maker we've ever regularly heard from after the loan dosed. One of her techniques: "Happy Thanksgiving" cards (last time with a coupon booklet for free items at the local Manhattan Bagel restaurant) to thank customers for their business.
Cataloger Norm Thompson says thanks. Each order arrives with a thank-you card to its customers, letting them know their business is appreciated and expressing the hope that their customers call on them again soon.
Orders from Frontgate's catalog also generate a thank-you letter with a little extra. The letter reiterates their extended return policy (see Chapter 5) and includes a 15% discount certificate.
Inc. magazine clued us in on this creative thank-you idea from Omaha, Nebraska-based
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consulting firm Bass & Associates, whose 75 employees are usually working in customer's locations around the country. Every month, founder Deborah Bass sends these employees a batch of brownies to share with their customers—a tasteful way of saying thanks.
Why bother with a single customer? Southwest Airlines conducted a study in 1995 that found its flights did not break the profitability barrier until the 76th passenger. More importantly, writes executive vice president Colleen Barrett in Customer Service, "only 5 passengers per flight—or 3 million of the 40 million passengers Southwest carried that year—accounted for the line's total annual profit of over $179.3 million. So losing just one passenger per flight because of bad service would reduce our profits by 20%."
Make sure employees know how much a single customer is worth. In 1,001 Ways to Inspire, Frank Meeks, the owner of a chain of Domino's Pizza stores, explains how he adds it up for his staff: "Our customers do business with us at least once a week, spending close to $500 annually, not including your tips," Meeks tells them. "That's $2,500 over 5 years, which is what it costs us if they leave us because they are unhappy. And the unhappy customer tells about a dozen people about their negative experience, multiplying the damage even further."
Ford Motor Company combined a thank you and a coupon to encourage their customers to once again put themselves behind the wheel of the station wagon of the '90s, a new sports utility vehicle. Explorer owners were mailed a "Loyalty Bonus" worth $500 off the purchase
If s easy to take regular and walk-in customers for granted. Don't. Thank them for choosing to do business with you.
— Ron Zemke and
Krishn Anderson in
Deuvering Knock-Your-
SockS'Off Service
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A Yanketovich Partners' survey asked 2,500 shoppers what "was most important to you regarding customer service." Courtesy, knowledgeabih'ty, and fn'endliness were the top answers. Almost 66% felt salespeople did not care about them or their needs.
or lease price of its 1998 and 1999 Explorer and Expedition models.
Ford's luxury Lincoln line also uses the technique. They call it "Special Appreciation Cash." Current Lincoln Town Car owners, who bought their 1986-1998 cars new and still own them, are given $1,000 cashback on the purchase or Red Carpet Lease of a new Town Car. By the way, this is the car that ranked # 1 in owner loyalty in a 1997 Polk Company survey of high-income households.
General Motors certainly isn't going to let the competition do all the loyalty appreciating. In 1998, its Buick division offered some strong incentives to customers, including 0.98% financing and no payments for 98 days. It also issued "Loyalty First" certificates worth up to $1,000 to Buick owners who purchased new cars in the 1986 through 1998 model years.
The easiest business you can earn is the business referred to you by satisfied customers. Referral rewards make good sense since they encourage future recommendations and build customer loyalty at the same time. Diamond Springs Water, in Richmond, Virginia, thanks its customers who refer new customers with two free 5-gallon bottles of water.
When Merry Maids customers recommend a new prospect who signs up, the cleaning franchise rewards them with a $20 deduction on their next scheduled cleaning.
It's also nice to have an anniversary you don't have to feel guilty about forgetting. On the one-year anniversary of a customer's association with the company. Merry Maids sur-
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prised them with a vase of fresh flowers, along with a handwritten thank you for past loyalty and future business.
Seattle, Washington-based Cruise Specialists created the 1999 Sea Treasures Referral Program to build referrals from its existing customers. The company sent customers referral cards on which they write their own names and distribute to potential passengers. If the new customer books a cruise, the referrer gets a free gift and an entry into a drawing for a $1,000 Future Cruise Credit.
In 1997, AT&T decided to stop sending checks to competitor's customers and instead thank its own customers. The company sent out "loyalty" packages to its 20 million customers. They contained something AT&T knew their customers could use—free long distance minutes. The thank you back: 600,000 signups for additional services, according to The Journal of Business Strategy.
Big-ticket buys should generate a correspondingly valuable thank you. When San Francisco realtor McGuire connects its customers to high-value properties, it thanks them with a splendid leather gift folder embossed with the company name. Inside is a $500 gift certificate for San Francisco's own Gump's department store, a purveyor of "the rare, the unique, the imaginative since 1861."
Thanks can come in many forms. How about a special event to reward special customers? Japan's Oura Oil treated members of its "Five-Up Club" to a visit to a local orchard where they could pick their own fruit. The event drew over 300 customers.
We want customers to hear the smile in our agents' voices, which means we have to create a work environment where employees really do smile.
—Voice Services
FOR Sprint's Lori Lockhart
122 Reward Every Customer
Only if you really know the people who use your products can you win a place, respectfully and affectionately, in their lives.
— Charlohe Beers,
FORMER CHAIRMAN OF
Ogilvy & Mather in Leader to Leader
Or how about the opportunity to get into a special event? Continental Airlines recently reserved blocks of tickets at New York City's Carnegie Hall for its OnePass members. On two nights in June 1998, members got an inside line on seats to an award-winning show featuring the music of Judy Garland, staged by Lorna Luft (Garland's daughter) and an all-star cast including Robert Goulet, Alan King, and Vicki Carr.
New York City-based Amencan International Group's (AIG) Risk Management Group writes commercial insurance for businesses where the premiums alone run into millions of dollars. It thanks its customers and builds relationships at the same time with a bevy of special events year-round. As owners of the famous New England ski resort. Stow, AIG entertains clients on the slopes. It also sponsors a VIP tent for its guests at the U.S. Open at Forest Hills and regular golf outings at Westchester's Mor Far course, which the company also owns. Other AIG-sponsored events clients have enjoyed are a mystery dinner followed by an AIG product fair and, one of the favorites, a fishing excursion on a charter followed by lunch on land at a nearby restaurant.
ask for their names
You can't reward them if you don't know who they are. WestPoInt Stevens' Bed, Bath & Linen Factory Outlets reach out to people with their coupons. To take advantage of one of their 10% off coupons (readily available in area publications as well as in fliers inside the stores), you must fill out the name and address infor-
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mation on the coupon itself. The outlet shop has created a mailing list from those names and regularly sends out "Preferred Customer Coupons" to attract repeat sales.
Madison, New Jersey-based Schering-Plough Corporation makes the world's leading prescription antihistamine, but it knows that since most allergies are suffered seasonally, users of Claritin may not have had a prescription filled in nine months or more. When spring comes again, so does a full-blown Claritin ad campaign featuring a toll-free number to call to receive a $5 rebate certificate for purchases of Claritin. The rebate collects customer contact information and a short survey of symptoms, and each rebate check is sent to the customer with another rebate certificate for the next purchase.
Grassfield's, a Denver, Colorado-based men's store, well understands the role spouses play in their success. So, the store asks for the names of its customers' spouses and keeps them in the loop by sending specific mailings on special dates, such as Father's Day and birthdays. Grassfield's even suggests appropriate gifts based on the customer's history and past purchases.
One of the reasons the Atlanta-based Ritz-Carlton so often pleasantly surprises its guests is that the hotel chain's employees pursue information with quiet determination. A paragon of service, the $1 billion company asks frequent guests to complete a questionnaire of preferences. The survey is used to enhance the guest's future stays with personally picked items, such as a fruit plate, complimentary
Personal Information Is Privileged Information
If you plan to ask customers to divulge personal information, be prepared to explain your policy for its use and protection. Here at The Business Reader, we make it a strict rule never to sell or barter our customers' names, contact or sales information. Further, in an era when everyone knows that customer data is money, it makes good sense to offer something in return, such as a free newsletter subscription or discount ... on the spot.
124 Reward Every Customer
>4 Harris survey found that eight of every ten U.S. adults feel they have no control over how companies collect and use their personal information.
shoe travel bags, or a favorite magazine or newspaper. After that, as employees learn more about customers, they unobtrusively enter the info into the chain's customer database. Eventually, all the customers know is that no other hotel chain does for them what the Ritz-Carl-ton does.
There is only one valid definition of business purpose: to create a customer.
— Peter Drucker
MAKE the next SALE
One sale leads to another. Or, it better, if you plan to build your business. Drug maker Merck & Co. well knows that lesson. When customers buy a package of its new, and expensive, Pepcid AC acid reducer, it comes with an offer to get more of the product free. Buy four packages and send in their UPC symbols with register receipts, and back comes a free box containing 18 doses.
A gift certificate is how many new customers are introduced to Ohio-based Mario's International Aurora Hotel & Spa. To keep them coming back for more, during checkout, the spa invites them to purchase future gift certificates, valid for themselves or anyone else they choose, at a 20% discount from regular prices.
Silicon Valley's Symantec Corporation, makers of highly respected Norton anti-virus software, uses a two-tier rebate program to build business and repeat business. Recently, it offered a $20 rebate on products such as Anti-Virus, First Aid, and VirusScan. The rebate check arrives with a thank-you "Gift Check" and another rebate offer—this time for a $ 10 rebate on additional Symantec products.
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The order takers at leading book wholesaler Ingram Book Company start making the next sale before they hang up on the last. Customer reps who take telephone orders from the company's bookstore and library customers are armed with a short list of recommended titles each week. Place an order that includes a group of business books, and you are sure to get politely asked if you would like to hear about this week's business pick.
Discover Card uses its cardholders' calls to customer service as an opportunity to build its business. After your business is complete, you might hear something like this: "Before you hang up, do you have any high interest rate credit card balances you would like to transfer to Discover?" Say yes and it's a case of "Let it be so." Just give the rep the name of the credit card issuer, the amount due, and the due date, and Discover takes care of the rest.
Here's an idea that is elegantly circular: Concord, New Hampshire's Bible Bookstore trades gift certificates in return for the privilege of displaying its titles to potential customers attending church events. The churches use the gift certificates as raffle and door prizes. And, the winners go to the Bible Bookstore to spend them.
I
Your repeat discount doesn't have to be open-ended. If you bought women's clothing at the Liz Claiborne outlet stores in the spring of 1998, you received a 25% Spring Fashion Bonus good on any specially ticketed sale item. The repeat business hook: the coupon was stamped with the current date and was valid for only 30 days after the initial sale.
We couldn't confirm this story, but because it makes such a good point about knowing your customer, we had to share it: A plainly dressed couple asked to see the president of Harvard University. After a long wait—they didn't look very important—they told him they wanted to create a memorial for their son, who had died after spending one year at the school.
The president quickly declined. Harvard couldn't have statues all over the grounds. How about a building? Looking over the unimpressive pair, the president suggested that they couldn't possibly afford a building. Harvard, he told them, had over $7.5 million in facilities.
On hearing the amount, the woman turned to her husband and said that perhaps a whole university would be a better tribute to their son. And so, Mr. and Mrs. Leland Stanford left Harvard and financed and built California's Stanford University.
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Think it's too expensive to convince an existing customer to buy again? Listen to Tom Petzinger, Jr., Watt Street Journal columnist and author of The New Pioneers (Simon & Schuster, 1999): "In many cases the cost of acquiring a customer began to exceed the cost of the product itself—roughly $50 in the case of the average direct-mail customer, for instance."
Eddie Bauer's outlet store chain encourages repeat business with a similar program. Customers get a point of sale coupon for a 10% discount on anything in the store for the next 30 days.
Place your first order with direct marketer Reliable Office Products, and the company sends you more than just office supplies. First-time buyers receive a certificate valid for a 10% discount off their next order.
Fort Worth, Texas-based home furniture and accessories retailer The Bombay Company, Inc. doesn't wait for customers to finish their first purchase to sign them up for more. The store offers a 10% discount on that initial purchase in return for opening an in-store charge account. The account triggers regular mailings of the Bombay catalog and special sales offers.
The chain does not stop there. It tracks the credit card's usage and if it is not used regularly, a postcard with a 10% discount offer soon arrives:
"It's been awhile since we've seen you at Bombay. Come in and see what's new in the way of furniture collections, wall decor, home accents and more! Plus, bring this card and be amazed at the savings you'll enjoy as a preferred credit card customer."
If you want your customers to come back, tell 'em so. New York City-based J. Crew Group, Inc.'s catalog division keeps track of whether or not its customers are placing orders; and if not, they send a catalog with this message on the cover, "You've been missed here at J. Crew." As a way to get reacquainted.
Reward Every Customer 127
the company also offers a $20 credit on orders ofat least $80.
Eddie Bauer misses you, too. Recently, the direct marketer sent a catalog to shoppers who haven't ordered lately that offered the opportunity to "Rediscover Eddie Bauer." To help shoppers decide to buy again, Eddie Bauer offered free delivery and free returns to those who ordered at least $ 100 from the catalog.
And, so does The Company Store, a direct marketer of down, feather, and other natural products for the home. Lapsed customers get a personalized letter and a "$20 Welcome Back Bond" good for $20 off their next order of $125 or more.
The Quality Paperback Book Club (QPB) sends customers who haven't ordered lately a greeting card with the sentiment: "It's the pits without you. Please come back!" To entice you to do just that, QPB offers four books for $4, plus shipping and handling.
QPB also uses a postcard from the vice president of Customer Service to get customers busy buying. In this case, customers may take 50% off any books in the latest QPB Review just by listing the titles and item numbers directly on the card and mailing it back by a certain date.
New York City's Crunch Fitness goes after inactive customers before their membership commitments are over with its "AWOL" clinics. The clinics are run by exercise counselors, who provide tips and instruction combined with motivational advice, giving members good reasons to restart their workouts and reenlist when the time comes.
If you're not serving the customer, your job is to be serving someone who is.
—Jan Carlzon, CEO of Scandinavian Airlines
128 Reward Every Customer
Why haven't they come back? A Harvard Business Review study found that two-thirds of customers stop doing business with companies because they feel unappreciated, neglected, or treated indifferently.
Saks Holdings, Inc.'s Saks Fifth Avenue chain used an upgrade to its in-store credit card system as an opportunity to suggest that inactive account holders "rediscover the privileges of your Saks Fifth Avenue credit card." The incentive for returning was a 10% savings on nearly all merchandise in the store for an entire day's shopping spree of the cardholder's choice betvs^een March 7 and May 31, 1999.
In the movie theater business, you are only as good as the films you run. But the Knoxville, Tennessee-based Regal Cinemas, Inc. chain makes a good play for repeat business with its Gift Ticket Books, which they bill as "Santa's Favorite Stocking Stuffer." The certificates in the books are good for movie admissions as well as for refreshments at the concession stand. More importantly, they get customers asking, "What's playing at RegalV
In a drive to build its share of its customers' air shipments. United Parcel Service (UPS) recently sent out an offer that was tough to refuse. Try the service for at least one package and fill out a short survey, and in retum, get a coupon book good for $40 in savings on UPS air services.
Here's a neat way to create the next sale: Tell your customer how to put your products to other uses. The classic example is Church & Dwight Company's Arm & Hammer baking soda. It takes a lot of baking to use a box of baking soda, but as a deodorizer in the fridge it doesn't last nearly as long.
The Procter & Gamble Company (P&G), the world's largest household products maker, is
Reward Every Customer 129
trying the same technique with its Bounce fabric softener sheets. The product was designed to be used in dryers, but the company wasn't happy about having Bounce's sales restricted to dryer loads. So, P&G created a series of ads showing consumers how to use Bounce in other ways. Among the suggestions: use them as fresheners in drawers, blanket chests, gym bags, and even sneakers.
Copier king Xerox Corporation keeps customers retuming for their replacement toner cartridges by making them members in the Xerox Green Team. It couldn't be any easier: Every toner cartridge comes with a postage-paid label and reusable packaging that customers can use to mail the old toner cartridge back to the company. The cartridge gets refurbished instead of discarded, and the customer gets a $5 check good toward the purchase of their next toner cartridge.
The Busch Gardens theme park wants you back . . . tomorrow. When visitors leave the park at the end of the day, they are automatically offered an $11 admission to return the next day. That's a pretty hefty discount off the $30+ daily ticket price.
... AND THE NEXT SALE, AND THE NEXT
Frequent customer clubs are a common way to build repeat business. There are enough coffee bars in our small town to keep most of the state revved up, so The Coffeehouse makes its bid for repeat business with its Coffee Club Membership Card. Each time the customer buys a pound or half a pound of coffee, their card is so marked and the 13th pound is free.
A salesman is one who sells goods that won't come back to customers who will.
— Unknown source
130 Reward Every Customer
In an era of relationship marketing, sales excellence is demonstrated by the number of customers who make a second purchase.
—Louis Boone AUTHOR, Quotable Business
Local competitor Williamsburg Coffee &
Tea has its own club card, which pays off with a free pound of coffee after 10 pounds are purchased. We like another perk for coffee lovers, the free cup of freshly brewed coffee (which incidentally allows the client to try any number of new flavors and come back for those).
The rewards don't have to be more of the same. ConAgra Frozen Foods' Healthy Choice purchases air miles from the major airlines to fuel its frequent buyer program. It offers customers 500 frequent flyer miles for every 10 Healthy Choice products they purchase. Customers have until year-end 1999 to request their miles, which are mailed to directly to them, and then must be sent to one of the participating airlines for deposit to their air mile accounts.
Credit cards are a common frequent buyer vehicle: The TJX Companies, Inc.'s discount chains tie their frequent buyer programs to the TJX Visa Card. The card gives buyers a 5% bonus on T.J. Maxx and Marshalls purchases, and a 1% bonus every time they use the card elsewhere. Reward certificates are sent automatically to cardholders each time they reach $15. In turn, the certificates can be used toward any purchase at T.J. Maxx or Marshalls stores.
L. L. Bean, Inc.'s Outdoor Advantage program is tied to a Platinum Plus Visa credit card that offers credit limits up to $100,000. Sign up and get free FedEx shipping on orders, free monogramming, and savings coupons with each purchase. For every $200 spent with the
Reward Every Customer 131
company, members receive a $6 coupon; and for every $200 spent elsewhere, a $1 coupon— redeemable at L. L. Bean, of course.
The Sharper Image also uses a credit card to power its frequent buyer program. The first purchase on the company's VISA earns a $10 gift certificate, and then every $2,000 charged on the card earns a $25 certificate.
BMG Music Service combined music and its own VISA card to create its frequent buyer program. Sign up for the no-fee card and earn three points for every dollar spent at BMG and one point for all other purchases. Points are redeemable toward tickets to concerts, stereo equipment, and BMG music catalog CDs and merchandise.
Musicland Stores Corporation makes sure customers get the most play from its Replay frequent buyer program by making purchases in both the Sam Goody and On Cue chains eligible. For a small fee, customers get a 15% discount on signup day and then, earn points redeemable for store merchandise. It also sends its more than 520,000 members a regular newsletter.
Borders Group, Inc.'s Waldenbooks chain designed a similar program under the name "Preferred Reader." Customers pay a $10 fee to sign up and, in return, receive a 10% discount on all their book buys, plus points that are transformed automatically into store certificates.
Padow's Hams & Deli gives its customers two reasons to keep coming back. They offer two different "Free Sandwich Club Cards,"
Compam'es spend 6 to 10 times more to acquire new customers than they do to retain existing customers. But a 5% increase in customer retention can have a bottom-line profit increase of 75%, depending on the industry.
—Don Neal, direqor of
business development for
Hallmark Business
Expressions
132 Reward Every Customer
"Loyalty" means you retain a customer and Increase the business you do with that customer, developing a relationship so this customer will not be lured away to the competition with the promise of a lower price.
—Lisa Ford in Best Practices in Customer Service
depending on their customers' appetites. One card is valid for regular sandwiches valued at $2.95 to $4.50. The other is for their elite "Mile High Sandwiches/' which cost a hefty $8.50 each. Both cards offer the customer's 9th sandwich free.
Stamford, Connecticut restaurant David's American Food & Drink created a database of their best customers and mailed them an invitation to join "David's Regulars." The frequent diner club starts by giving customers their choice of a 15% discount, a free bottle of wine, or a free appetizer on their first visit as members. After that initial offer, "David's Regulars" use their membership card to earn a free entree on their tenth visit.
The Veranda Restaurant at Fort Magruder Inn created "Brunch, Lunch & Dinner" cards to drive repeat business. Each card works the same way but may be used by only one person for only one specific type of meal. For example, after customer comes in for lunch five times, the sixth lunch is free.
Cracker Barrel Old Country Stores like feeding you, so it created a frequent diner program called the "Neighbor Reward." Each visit to the restaurant chain earns points toward gift certificates worth $10 each. And, the chain uses the program to distribute a newsletter and reward statement to each member.
Illusions Unlimited, an Ohio-based chain of full-service salons, keep customers coming back with its "VIP Program." The salon punches the VIP card for each haircut, entitling the customer to their seventh cut free. For
Reward Every Customer 133
those who would only stop in on special occasions, there is a catch: The card must be punched at least once every six weeks or it becomes invalid.
The Helpful Hardware Club is Ace Hardware Corporation's frequent buyer program. Free to all customers, the membership card-based club gives 10 points redeemable for gift certificates for each dollar spent. Ace also includes plenty of soft benefits for customers of its 5,000-store hardware cooperative. There is a special club rep in each store to assist members, an exclusive area on the company's Web site, a free newsletter, and special sales offers.
Direct marketer Eddie Bauer created a points-based reward system to keep its customers coming back. Members of Eddie Bauer's Rewards get 10 points for every dollar spent in the catalog and a bonus of five points for every dollar spent when they use Eddie Bauer's own credit card. Amass 5,000 points and along comes a $ 10 gift certificate.
Used and rare book dealer The Book House keeps it very simple. The store encourages repeat business with its "Regular Customer Card." Customers earn $10 in free books for every $ 100 spent.
Wait'll they get their Hanes on you. Sara Lee Corporation has its fingers in a lot of pies, about $20 billion worth annually It is the leading U.S. maker of intimate apparel, underwear, and socks, and owns brands such as L'eggs, Hanes, Bali, Playtex, and Champion. So, when you get your L'eggs Frequent Buyer Club card, it works at the factory outlets for all
Three Frequency Program Wami rigs
1. Don't start something you can't finish: Pep-sico offered a Harrier mih'tary jet (that your average Joe isn't allowed to own) to customers who collected enough redemption points. One did . . . and sued.
2. Don't assume the difficult is impossible: The Chart House restaurant chain offered a free trip around the world for two to customers who ate in all 65 locations worldwide ... 41 did and collected 82 free trips.
3. Don't give away something that isn't yours: Remember that when US Air gives away a roundtrip ticket, it doesn't cost them what it would cost you to give away the same ticket (unless you have an airline of your own).
134 Reward Every Customer
Do you believe the old adage, ''The customer Is always right"? I don't—never have and never will. I do, however believe "The customer is always the customer, and I want that customer to always be mine."
— John Hartley,
Promus Hotel Corp.,
IN Best Practices in
Customer Service
those brands. One stamp is received for every $10 spent in any combination of the above stores. Ten stamps earn a 15% discount, and 15 stamps earn a 20% discount.
Hecht's department store chain also wants to get their hands on you. To help encourage return visits, Hecht's offers customers free membership in their Hosiery Club. Customers get one free pair of hose for every 12 pairs purchased, and the store gets to tempt them with all its other goodies each time they visit.
Casual Corner, retailer of moderately priced sportswear and business attire geared toward working women, wants to get their hands on you even more. It offers its customers the "Hosiery Club Card." Buy six pairs of pantyhose and get the seventh pair free, whether you buy them one at a time or in one mad fling.
Just For Feet, which bills itself as the "World's Largest Athletic Shoe Store/' gives sneaker buyers a reason to be loyal with its frequent buyer plan. Simply put, "the 13th pair is always free." Sound like a lot of sneakers to you? No kids, right?
Frequent customer programs are spreading fast in cyberspace. America Online (AOL) customers can reduce their monthly fees by earning points in the AOL Reward program. Points accumulate for making purchases at participating vendors or completing AOL opinion and feedback surveys. Recently, three online stock brokerages offered AOL Reward points to members who opened online accounts with them. Among them was E-Trade, which offered new clients 13,200 points or
Reward Every Customer 135
enough to pay their AOL subscription for six months.
Registered visitors to CBS SportsLine Web
site earn points and sweepstakes entries for simply looking over the site. Each page viewed gets an automatic entry in a drawing for a $ 1 million prize and also racks up points for the visitor. Points may be redeemed on the Web site for merchandise and special events including private celebrity chats.
Sign up and shop through the Netcentives, Inc/s ClickRewards Web site, and all your purchases earn ClickMiles, redeemable with American Airlines for free flights. Membership in ClickRewards is free; the merchants linked to the site pay the company so you don't have to.
We are fans of PETsMART even though we don't currently have pets. They know how to keep customers coming back. Get your free membership cards in the superstore's Grooming Club and after eight visits, get a complimentary groom or bath service. As an added incentive to participate, PETsMART gave two punches instead of one for groom or bath services purchased during March 1999.
Retailers who set up shop in Newport News, Virginia's Patrick Henry Mall also get the benefits of the facility's Mall X-Tras preferred customer program. Get a free membership card and purchases made in mall stores earn points that are redeemable for gift certificates for merchandise from the mall's stores.
Harrah's Entertainment, Inc. created the Total Gold Program for its loyal gamblers.
How do you keep 'em coming back online? A survey of the 100 most successful online retailers by International Data Corporation found that 92% use structured loyalty programs to promote repeat sales.
136 Reward Every Customer
Companies have discovered that the longer that customers stay with a company, the more profitable they are.
— Philip Kotler in KoTLER ON Marketing
Points are earned for dollars played at the slots as well as the gaming tables, no matter if you win or lose. When 200 points accumulate, players can redeem them at an in-house ATM for "Total Reward" vouchers at a rate of $1 for 40 points. The vouchers are good toward food, the hotel bill, Harrah's shows and vacations, or just in case they've gone bust, cash.
Go ahead, talk! New Zealand Telecom established the Talking Points program to reward frequent callers. Points are earned based on the amount of your monthly bill and can be traded for free long-distance calls, movie passes, specialty services such as call waiting, phone cards, and even faxes, cell phones, and pagers.
Buy a computer printer from College & University Computers (CUC) and it comes with the "Buyer's Club Card for Printers." It entitles customers to a lifetime discount of 10% off new printer cartridges. This simple program goes a long way toward helping CUC capture what is often the most lucrative part of an equipment sale—the ongoing need to replace regularly consumed parts.
And, what gets more regularly consumed than batteries? Fort Worth, Texas-based Tandy Corporation created a free PowerZone Card for the customers of its almost 7,000 RadioShack stores. Those who use their card to stock up on batteries at RadioShack save on each purchase: 10% off on one pack, 20% off on two packs, and 30% off on three packs or more. By making purchases with the PowerZone Card, customers may also receive up to $23 in free batteries.
J
Reward Every Customer 137
Sears, Roebuck and Company entices its Canadian customers to keep spending with its credit card-based Sears Club. Customers join free and every dollar subsequently spent earns a point. Points convert to gift certificates or air miles.
Choice Hotels International Inc.'s properties include more than 2,200 Comfort, Clarion, Quality, and Sleep Inns, and its Guest Privileges program spans all four chains. The plan gives members 10 points for each dollar they spend in any of the hotels, and the points are redeemable for free room nights. Members also get benefits such as late checkouts and room upgrades when available.
Weehawken, New Jersey-based Hanover Direct, Inc/s Kitchen &. Home catalog unit created a fee-based Buyer's Club. In return for the $25 annual fee, shoppers get immediate savings of 10% on every item in their catalog and an exclusive toll-free hotline for priority ordering and customer service. If customers are not satisfied with the program, the $25 fee is refundable within the first 30 days.
Provide for your healthy lifestyle at The Health Shelf, a single location retailer that sells natural health and food products, and for $ 10 a year you can buy Preferred Customer status. The program offers exclusive specials, but the main draw is a 21% discount on all purchases made on the first Tuesday of each month.
It doesn't have to have a card. The world's second-largest oil company Exxon Corporation
We must keep in mind that a card program, no matter what industry you are in, will not be compensation for bad service or dirty floors or dirty hotel rooms, bad pricing and so on. It's a reinforcement of the business basics. Its not a replacement for the business basics,
—Brian Woolf,
president of retail strategy
Center, in Colloquy
138 Reward Every Customer
Forget about the sales you hope to make and concentrate on the service you want to render.
— Harry Bullis, former ceo of General Mills
recently sent newspaper subscribers a free key chain adorned with their trademarked tiger. As part of the company's "This Month's Treat" program, the key chain entitled customers to a new deal each month at Exxon gas stations. For example, in August 1998, the key chain and a quarter bought a choice of a cup of coffee, a fountain drink, or a can of soda.
Baby Boomers may remember the gas station promotions of the 1960s. Free and discounted sets of steak knives, glasses, and dinnerware, completed a piece per visit, drove repeat business. The idea is still thriving at Farm Fresh supermarkets where shoppers can accumulate a discounted set of Oneida's Immaculate cookware one piece per week. Each weekly Farm Fresh ad flier features a coupon for a new pot or pan.
What about trading stamps? Recently, Ukrop's was giving away trading stamps redeemable for Roma Gourmet Cookware to build repeat sales. Customers receive one stamp for every $5 spent on groceries and each 20-stamp card earns another discounted piece in the set.
Ukrop's also uses its Value Customer card (UVC) to manage its repeat programs. This one was created in conjunction with General Mills: Buy 12 boxes of any General Mills cereal and get a $5 Ukrop's gift certificate. Sound like a lot of cereal? Customers get a full year to accumulate the total, and as always, Ukrop's keeps track of purchases and mails the gift certificate automatically.
Reward Every Customer 139
And this, too: The grocer's "Cookie Dough" program. For every three packages of Nabisco cookies, Sweet Crispers, or Honeymaid graham crackers purchased between April 1 and December 31, 1999, with a UVC card, customers get $1 in "Cookie Dough," good on any purchase at the store. All automatic.
Let's talk turkey. Many grocers use some variation of this one: Customers who spent at least $500 in a set period prior to Thanksgiving '98 at Ukrop's received a gift certificate good for a free 12- to 14-pound turkey. And there's a good twist for folks who just don't eat that much. Seniors and singles who signed up for the offer and spent $250 got a certificate good for $5 off on a frozen or prepared turkey. And, since the program was tracked using the company's frequent buyer card, it was automatic— no saving receipts, etc.
Lompoc, California-based Ml Amore Pizza & Pasta offers a club card of its own to customers. Purchase the $2 card and earn points each time you dine at the Italian restaurant. The points can be redeemed for menu items, specialty prizes, and even discounts at other area merchants.
Classy Kravet, a purveyor of decorative fabrics and furniture to the interior design trade, named its frequent buyer program "Rewards of Style." Interior designers and architects earn points for purchasing the company's products for use in their client's homes and offices. The points can be redeemed for a bevy of rewards, including a trip to a well-known spa, tickets to the World Series, and of course, designer furniture.
Do you know what it costs when your company loses a customer? The Lifetime value of a loyal Cadillac customer is $332,000. At Pizza Hut, a lifetime customer is worth up to $8,000.
140 Reward Every Customer
3M Pharmaceuticals created 3M Plus Rewards for its druggist customers in New Zealand, where the choice of drug brand is made by pharmacists, not doctors. The program gives members additional product discounts and also awards points redeemable for a wide variety of goods and money-saving coupons at area retailers.
Some products, such as earthmoving machinery, just don't lend themselves to frequent buyer cards. So, when Tokyo, Japan-based Ko-matsu Ltd. wants to encourage its customers to upgrade from iron (heavy equipment) to big iron (even heavier equipment), it puts them in the operator's seat. For example, Komatsu recently invited customers to its Chattanooga, Tennessee, testing ground. In addition to providing plenty of hands-on use, the world's second-largest construction equipment maker picked up the transportation, lodging, and meals for its customers during their stay.
Heavy equipment dealer Equipco and manufacturer Hitachi teamed up to show off their wares. They wined and dined repeat customers on a two-day junket to the Hard Rock Cafe in Las Vegas. However, the highlight of trip, according to one customer, was the opportunity to run big iron in the desert just outside a U.S. Air Force base, where jets and helicopters provided an unintended air show.
BUY IT BACK
Do you really want customers to keep coming back? Then, buy back what they purchased in the first place. Sound crazy? Isn't that how auto
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leasing works? A car buyer purchases a car for a fixed time period, and then returns it. The car company "buys" it back by discounting the payments to reflect the car's value when it is returned. Oh yeah, and see you in 36 months for a new one!
North Sioux City, South Dakota-based Gateway, Inc., the world's second-largest direct marketer of personal computers, will buy your outdated Gateway if you'll buy a new one from them. Gateway's Obsolescence Protection plan is available under their Your:)Ware program and allows buyers to trade in today's model toward a new one in two or four years. The company uses the current Orion Blue Book to determine your current computer's value and the trade-in amount can only be used toward another Gateway system. That's locking in repeat business.
Every community seems to have at least one used paperback store. In our town, that store is the Book Exchange of Williamsburg and, like similar stores, its entire business is built around a variation on frequent-buyer programs. The Book Exchange uses a barter system to keep customers coming back to the store. Customers trade in their used paperbacks and in return, get store credits equaling one-quarter of the books' cover price. The credits can be ap-plied to the store's stock, which is resold at half the cover price. The result: a profitable business built on the repurchase of "consumed" products and repeat customers.
St. Louis-based Chapter One Books sells new and used books, specializing in romance novels, westems, and mysteries. It keeps customers com-
You want your customers for life. Companies must treat their customers with that in mind.
—Allan Karl,
vice president of
PRISCOMM
142 Reward Every Customer
ing back with a buy-back program with a twist: Once customers have read the books they purchase in the store, Chapter One will buy them back for cash or store credits. An inexpensive paperback, for example, might bring 5<t cash or a 50C store credit. Not a lot, but enough of a rebate to keep customers recycling their books.
Special Customers Special Rewards
In the last chapter, we suggested you reward every customer, that you treat all of them as if they were your best customers. Now, we'll add an amendment to that rule: Figure out who your best customers are and treat them even better.
For many companies, customers' purchasing habits will follow the Pareto Principle: Roughly 80% of the revenue in any given business is generated by the top 20% of its customers. That top 20%, which represents the company's most active customers, should be rewarded for their exceptional loyalty.
Plenty of companies agree and they recognize and reward their best customers in a wide range of ways. Many say thanks with outright gifts and celebrations. Others make sure that their reward programs are geared toward higher levels of spending, and still others create special programs for the most elite of their customers.
Here are lots of good ideas to build even better relationships with I the people who are instrumental in your business success.
144 Special Customers—Special Rewards
Retailers are beginning to understand that certain customers, those who are very loyal, are worth a great deal more than just the casual customer.
— Robin Lanier,
International
Mass Retail Associahon
GIVE THEM A PRESENT
How about sending gifts on your birthday? To celebrate its tenth anniversary, Montana-based pager and radio equipment company Cosner Comtech, Inc. sent its top customers a thank-you note with their choice of four free accessories worth up to $40.
#
What do you do with the samples your vendors send you? At The Business Reader, we run a quarterly listing of customers by sales volume and pass on the advance and review copies of the latest business books the nation's publishers send us, along with a thank-you note for their patronage. It is a low-cost way to reward great customers where everyone wins: our customers get free books, publishers get advance copies of their new books to readers, and we get happy customers . . . and, when a book captures interest, additional orders!
Bloomingdale's by Mall woos its regular customers with a surprise thank you now and then. One mailing started with "A Gift for You with our thanks." It went on to explain that "you're one of our favorite customers." The payoff: a free one-year gift subscription to Food (§ Wine magazine.
Microsoft Corporation recently introduced the bimonthly Insider newsletter, a free publication that it sends to the "extremely valued Microsoft customer who has registered numerous products with us." Much more than a merchandising ploy, the newsletter thanked customers for continually choosing Microsoft and featured useful articles describing how to get the most from the company's software.
Special Customers—Special Rewards 145
Inc. magazine reported how Leegin Creative Leather Products rewarded representatives of its top retail accounts with a business trip to the Far East. But, it was the pictures that this leather accessory maker snapped of their unsuspecting guests that made the return home so memorable. The company turned the pictures into postcards and mailed them to their guests' top 2,500 customers, generating new orders and requests for special displays and seminars.
Recognition makes a fme gift. Carlstadt, New Jersey-based gas station and convenience store equipment distributor Ten Hoeve Bros., Inc. throws an annual holiday dinner for its customers. The biggest customers are presented with plaques of appreciation. Ten Hoeve makes two of each—one for the customer and one to display in their own offices.
New Jersey-based water and soil testing service Aqua-Protech Labs celebrates the holidays and its best customers at the same time at its annual party. In 1998, customers and staff dined at the elegant Pegasus Restaurant high atop the well-known Meadowlands Racetrack. The year's biggest client was called to center stage to receive a case of fine wine as his company name went up in lights on the racetrack's big screens. Then he was summoned to the track to crown the winning horse in the next race.
The sixth largest U.S. airline, U.S. Airways Group, often goes the extra mile for members of its frequent flyer programs. In addition to deeply discounting seating upgrades at the gate, the airline is known for the free upgrades it
Men who drive sharp bargains with their customers, acting as if they never expected to see them again, will not be mistaken. They never will see them again as customers.
-^P. T. Barnum
146 Special Customers—Special Rewards
often offers. Coach passengers who ask at the gate can find themselves in first-class, compliments of the carrier.
The Crowne Plaza hotel chain offers its frequent guests a perk that is well suited to the flight schedules of business travelers. All 60 of the hotels participate in the "Your Room Is Ready" program, which allows check-ins as early as 7:00 a.m. and checkouts up to 3:00 p.m.
Not all customers are created equal.
—Dale Renner, Andersen Consulting
REWARD HIGH FREQUENCY
Frequency marketing programs can also be set to single out your best customers. Supermarket chain Winn-Dixie reached out to its best customers recently with a five-week program. Customers who spent at least $50 per week for a total of $250 in a five-week period were rewarded with a $50 gift certificate.
While many credit cards rebate a fixed amount of every purchase regardless of frequency, The Chase Manhattan Corporation's
Cashbuilder Gold Visa card purposely appeals to the high-volume user. If you charge at least $200 per month, the Cashbuilder Reward Plan automatically refunds 1% of purchases and cash advances and 10% of interest payments. The company generates a check only when the rebate amount reaches $500 or after three years, whichever comes first.
The Jones New York factory store chain invites customers to join the CAP (Customer Appreciation Program) by simply signing up on a mailing list. CAP participants receive regular mailings from Jones New York that include
Special Customers—Special Rewards 147
coupons and advise them of upcoming sales events. But, it takes $750 in purchases to trigger rewards. Once the floor is reached, customers receive gift certificates for clothing in any of the chain's specialty stores including Career, Sports, and Executive.
What do frozen cakes and plumbing supplies have in common? Vacations. If you are a sales rep at a distributor of the gourmet cakes made by the Bubbles Baking Company, you could be flying free. Bubbles uses American Airlines Something Special Flight and Gift Certificates to reward the reps who sell the most cakes. Distributors' salespeople get points, tracked monthly, for each product sold. At year-end, those who accumulate between 25,000 and 45,000 points get to redeem them for roundtrip airline tickets.
New Jersey's Palermo Plumbing also gives away vacations to its biggest customers. Rather than just offer one trip to one winner, Palermo offers several tiers of trips based on buying levels. What most of them have in common, though, is that they go to warm places during New Jersey's cold winter. Says one loyal customer, "Why should I use two plumbing suppliers when my business could add up to a free trip at Palermo?"
New York City-based Bliss has created two automatic frequency programs—one for the customers of its spa and the other for the buyers of its Bliss Out spa products division. It's a small business, so Bliss keeps it simple. They keep track of the "BlissMiles," but send no statements, etc., to the customers. Each dollar spent at the company converts to a mile, and
148 Special Customers—Special Rewards
Whafs Loyalty Worth?
• In insurance, adding just 5% in retention results in a 60% profit jump.
• In employer services, adding just 4% in retention results in a 21% profit jump.
• In banking, adding just 5% in retention results in a 40% profit jump.
—Bain & Company study
The only profit center IS the customer.
— Peter Drucker
starting at 1,500 miles, they can be redeemed for free and discounted products or services.
Given the wide availability of greeting cards in other outlets, customers who make special stops at card stores need encouragement. Hallmark recognized this and created the Hallmark Gold Crown Card. To sign up, customers are asked to fill out a short form of standard information during checkout. Subsequent purchases at the Gold Crown chain earn 10 points for every dollar spent, plus an additional 25 points for each greeting card purchased. Earn between 200 and 4,200 per quarter, and the company sends a gift certificate worth up to $20 off future purchases.
For those of us who just can't resist office supply stores, superstore chain Staples, Inc. has created the Dividends reward program. Dividends rewards customers based on the volume of their spending. It takes a minimum of $50 in purchases to activate the card, and after that each purchase is tracked. Spend between $250 and $600 per quarter and earn between 1 and 2V2% on future purchases. By the way. Staples excludes big-ticket items (such as computers, printers, copiers, and fax machines) from the program.
Fly out of the Newport News/Williamsburg International Airport (NNWl) at least six times per year, and you're qualified for membership in the Business Aviator Club. Members earn a flight credit for each time they fly out of the airport. Points are redeemable for free parking days, coffee, newspapers, invitations to quarterly luncheons, and free business services
Special Customers—Special Rewards 149
on departure day including faxes, copies, and meeting room usage.
The Hertz Corporation, world leader in the rental car industry, charges $50 for membership in its #1 Club Gold program, which takes members directly to their ready-and-running cars—no check-in, no fuss. In 1999, however, instead of a bill for the membership, select repeat customers were pleasantly surprised to get a personalized letter informing them that their membership was automatically extended for another year at no cost.
If you don't work these programs, or you ignore them, you're dead.
—Jim Laiderman, Equifax NAnoNAL Decision Systems
CREATE elite PROGRAMS
Another way to make special customers feel special is to give them their own reward programs. NationsBank, recently merged with Bank of America, created the Advantage program for clients whose combined business with the bank adds up to a total that is substantially above average. Advantage customers receive free checks, a free safe-deposit box, free access to online PC banking, and preferred loan rates. In addition, normal fees for services such as stop payments, money orders, and incoming wire transfers are waived.
Most customers join Quality Paperback Book Club (QPB) for its generous signing bonus that does not require future purchases. So why buy more? One reason is the club's "QPB Preferred Member" program, which automatically kicks in after you have purchased six books. Preferred members get double the bonus points for their purchases, an additional free book, exclusive discounts, a dedicated
150 Special Customers—Special Rewards
Here's one from the go-figure department: A survey of 11 banks in the U.K. conducted by the London publication Customer Loyalty Today found that a 5% increase in customer retention paid off with an 85% gain in bank deposit profits and a 75% rise in credit card profits. The same study found that only 44% of those surveyed thought that retaining customers was critical to their companies.
toll-free hotline, discounted rush delivery, and free gift wrap on larger orders.
Swissotel Management Ltd. created Club Swiss Gold for the top 20% of its guests— ranked by revenues. Members receive upgrades whenever available, free breakfast, and complimentary room guarantees. They are also asked to complete a form specifying any and all of their preferences, so they will be consistently well treated at all of the chain's 21 properties.
High rollers at Harrah's Entertainment,
Inc.'s Tunica, Mississippi, casino are offered membership in an elite group simply known as "Premier." Members receive all the benefits of Harrah's Total Gold Program in addition to those little extras, like a massage chair with a secure storage area for personal belongings when playing the slots in their own exclusive area. And, telephones—with speed dialing for refreshments—should they need to reach out and touch someone.
Amencan Airlines added levels to its AAd-vantage frequent flyer program with the Executive Platinum card for customers who log over 100,000 miles each year on the company's flights. These loyal customers receive special services including a dedicated customer service desk, deferred mileage expiration, fewer blackout dates, early upgrade confirmation, and several other perks.
Delta Air Lines, Inc. created the SkyPrivi-leges Plus program for businesses spending between $40,000 and $250,000 per year on air travel. Meet certain spending thresholds each quarter and there is a barrel-full of benefits
Special Customers—Special Rewards 151
that include service discounts, access to SkyPrivileges Corporate Booking (an automated self-booking service), free domestic flight upgrades and tickets, and Silver or Gold Medallion frequent flyer status for all the company's travelers.
Regular customers of Federated Department Stores, Inc/s Bloomingdale's chain who reach a certain spending level are invited to join that company's preferred customer program. The program revolves around a Bloomingdale's Premier Visa credit card that is free of charge and offers the following benefits:
■ Gift certificates are earned at the rate of 6% of all Bloomingdale's purchases and 3% of all Premier Visa purchases everywhere else
■ Unlimited complimentary gift wrap
■ Exclusive quarterly discount days offering additional discounts of 10 to 15%
■ Free shipping and handling on all Bloomingdale's by Mail, Ltd. catalog purchases
■ Free UPS pickup on returns—no questions asked
■ Seasonal private sales and bonus certificates to add to the savings
Federated also owns the Macy's chain, which created Club Macy's for its frequent buyers. All Maq^'s credit card holders are automatically enrolled at the Preferred Level of membership, but those who charge between $500 and $2,500 annually are Premier members, and those who charge over $2,500 belong to the President's Club.
All levels enjoy special shopping days, early notice of sale days and a 10% discount on their
Be it furniture, clothes, or healthcare, many industries today are marketing nothing more than commodities—no more, no less. What will make the difference in the long run is the care and feeding of customers.
—Daniel Scroggin
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The best place to learn about frequency marketing is your desk. Frequency Marketing, Inc.'s Colloquy Web site (www.colloquy.com) features hundreds of case studies, interviews with experts, book reviews, message boards and live discussion areas, article reprints. . . you name it. The free registration yields full access.
first shopping day with their new card. The Premier Level receives the additional benefits of a quarterly newsletter, three annual Premier Days with discounts of up to 15%, and a Visa card that earns gift certificates and free gift wrapping. Finally, the President's Club earns all that and more with free alterations, free local delivery, and its own toll-free customer service number.
Buy regularly from Spiegel, Inc. catalogs and the $3-billion mail-order giant automatically enrolls you in its Elite program. Elite members are welcomed with a $ 10 gift certificate good on their next $50 purchase and a supply of ''priority" stickers, so Spiegel employees easily recognize their orders. Members receive free gift wrapping, exclusive sales, one-time deals including free shipping on Christmas returns, and expedited mail- and phone-order processing.
Book your second cruise on the Holland America Line and when you arrive in your room, you will find a gift and a welcome letter announcing that you are a freshly minted member of the line's Society of Honorary Mariners. In addition, if finer accommodations are still available at cruise time. Society members are offered complimentary upgrades. The policy thrilled friends of ours, who returned from an Alaska Inside Passage Cruise reporting a wholly unexpected upgrade to one of the ship's largest staterooms complete with a private balcony, a $2,000 value.
San Francisco-based discount broker The Charles Schwab Corporation grew to over $2 billion in annual sales by offering no-frills in-
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vestment transactions, but that doesn't mean they don't recognize their best customers. Customers who make over 48 trades a year are enrolled in the "Schwab 500." Henceforth, they get treated to some of the services of full-priced, full service brokerages, such as a dedicated group of employees to handle their accounts and research services.
Buy 5,000 gallons of gas a year from Oura Oil, and you are service station royalty. These most respected members of the Japanese company's Five-Up Club get a special club card that alerts attendants to the customer's higher status. They respond with extra services, such as vacuuming the car or replacing the windshield wiper fluid, free of charge.
Pier 1 Imports maintains a three-tiered, credit card-based frequent buyer program. Any customer can sign up for the card. Spend $500 during at least two shopping trips per year and get upgraded to Gold status with a 20% off coupon. Spend $1,000 on three or more store visits per year and get upgraded to Platinum. Platinum members get discounted shopping days each month and gift certificates for 10% of their purchases beginning at $1,000.
New Jersey-based insurer The Chubb Corporation is one of only a handful of insurers in America that is pursuing the property insurance business of the roughly 6% of Americans who own assets worth $1 million or more, over and above their homes. The company has designed high-end policies that minimize paperwork, while extending limits on expenses for temporary living quarters and expanded replacement coverage for goods that standard policies limit,
Guess what? Loyal customers like dealing with the same people.
—Barry Gibbons, in If You
Want to Make God Really
Laugh, Show Him Your
Business Plan
154 Special Customers—Special Rewards
What determines how much a long-term customer is potentially worth is whether you have earned his loyalty. This loyalty is so important that it should be factored in when evaluating the true net worth of a company.
—C. BRin Beemer in Predatory Marketing
such as wine, jewelry, and collectible cars. Chubb's Masterpiece policy also offers discounts for second homes.
Professional photographers spend between $150,000 and $500,000 per year on photo finishing and Iowa-based McKenna Professional Imaging has created a series of programs designed to capture larger shares of their business. The company offers a free business education in its Management and Accounting for Portrait Studios program, teaches marketing in its Portrait Value Plan, and will even make prospecting calls on behalf of their photographer clients. All free, to customers who agree to give McKenna 80% of their processing business.
The Colonial Williamsburg Foundation
divides its donors into levels of giving, offering progressively higher thanks at each increased level. In the upper range, The Raleigh Tavern Society is itself organized into three levels: the entry is at the $5,000 mark; next is the Apollo Room Circle at $7,500; and, finally. Keeper of the Key at $10,000. All donors, from $35 in annual giving on up, receive thank-yous, such as in the nonprofit's monthly magazine.
Membership has its privileges . . . and highest membership receives the highest privileges. American Express Company's Platinum Card is the creme de la creme of its offerings and comes with a hefty annual fee of $300. But, explained Amex spokeswoman Judy Tenzer to Worth magazine, "If a member uses each perk once a year, they essentially save more than $7,000." They include:
Special Customers—Special Rewards 155
a free companion ticket worth up to $3,000 to purchasers of a full-fare international ticket in first or business class free access to the airport VIP lounges of two major airlines
reservations at over 200 restaurants that are notoriously difficult to get into free subscription to glossy magazine Departures, exclusively written for Platinum cardholders
Recently, the American Express Fine Hotels & Resorts Program offered Platinum cardholder programs for members at such luxurious inns as Baden Baden in Germany and the Meadowood in Napa Valley, among others. Cardholders were treated to a complimentary room upgrade if available on check-in, breakfast for two each day, and a guaranteed late checkout of 4:00 p.m., plus an extra program amenity according to location.
They also enjoy access to the exclusive Platinum Destinations program offering exotic travel experiences and earning double Membership Rewards program points. Recently, skiing in the Canadian Rockies was offered with accommodations at the Banff Springs Hotel or Chateau Lake Louise. Goodies on the six-night trip included a $75 resort credit, five lift passes for unlimited skiing at the three area ski resorts, and firee transfers.
Special events are covered in the By Invitation Only program, which gives cardholders access to events such as Miami's Orange Bowl, along with club suite tickets and a tailgate party. There are also merchandise specials: Recently, those customers who used their Platinum cards to buy a suit at Brooks Brothers received a free made-to-measure shirt.
Treat the customer as an appredating asset.
—Tom Peters in Thriving on Chaos
8
Make It Easy
k
Here is a common-sense maxim that all vendors should adopt: Make it easy for your customers to do business with you. It sounds fundamental. It 15 fundamental. But, just because it is fundamental does not mean that everyone gets it. Think about it for a minute, and you can probably come up with a half-dozen examples of companies that are tough to work with. We certainly can.
"Making it is easy" is a wonderful differentiating factor for your business. And, you might be surprised at how high it ranks among your customers' priorities.
There are two basic principles for making it easy:
1. Simplify every customer interface.
2. Make it convenient to do business with you.
"Keep it simple" is an especially good mantra for today's high-speed world. Customers appreciate simplicity. It is more efficient, more effective, and there is an elegance to simplicity to which people unfailingly respond. Even if you make products that require an advanced technical
158 Make It Easy
education to use, anyone should be able to figure out how to order them.
Convenience counts just as much. A business that takes into account its customers' convenience keeps them coming back by giving them back more of their most valuable possession: Time. Offer your customers all the options, services, and purchasing hours you can. Give them the ability to do business where and when they want.
KEEP IT so SIMPLE
Think KISS. Polite translation: Keep it so simple. Shipping giant United Parcel Service did just that when it created the reusable overnight delivery envelope. It is an idea that businesses sending documents requiring signatures—such as banks, brokerage firms, or attorneys—have to love. With the new package, their clients simply sign the paperwork, put it back in the same envelope, reseal the special flap with a second strip of adhesive, and return it. As simple as can be, and UPS captures the return business.
UPS also offers its customers free UPS OnLine Office software. The software stores addresses, prints labels, automatically computes shipping charges, and tracks packages. Further, it will e-mail your customers with their package information, such as delivery date, tracking numbers, contents, weight, and other details.
And for the triple play, there's the UPS Document Exchange program. It will send any digital document over the Internet in a universally readable file, at the level of security chosen by the customer. And, as with anything sent by the small package specialist, tracking and delivery confirmation is available.
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Two words: Negative Response. All the mailorder clubs use it because it is simple and smart. We'll use Camp Hill, Pennsylvania-based Quality Paperback Book Club (QPB) as an example: About once a month, QBC sends out a thick envelope packed with information on new paperbacks and a recommendation for one book that they think is an especially worthy read. If you want the book, do nothing and soon it arrives at your door. In other words, the sales agreement is implied in the lack of action. That's negative response.
Of course, the problem for customers with negative response is that if they do not want the product, it requires an action to stop the automatic shipment. (It's inconvenient in a world where convenience counts.) No one has completely solved that problem, but the system used by Columbia House's Classical Club comes close. If you want their Selection of the Month, do nothing. But if you don't, forget about the time and cost of mailing a response. Members may decline selections via the Web or by calling on a touch-tone phone.
Here's a twist on negative response: Recently, Allure magazine was one of 300 publications offered to American Express customers. The first year was free, but after that, the renewal price of $12 is automatically charged to the customer's American Express account. Will subscribers find paying easier than canceling?
The Richmond Times-Dispatch offers subscribers a Vacation Pak. Let the newspaper know when you are going on vacation and it will automatically hold the papers until you
I am the world's worst salesman; therefore, I must make it easy for people to buy.
—F. W. WOOLWORTH
160 Make It Easy
Be everywhere, do everything, and never fail to astonish the customer.
—R. H. Mac/s Mono
get back and then resume service and deliver the issues in a "nice neat Vacation Pak" upon your return.
You can blame Seattle-based Starbucks Corporation for the coffee bar craze, but the $1 billion company has made keeping fresh coffee much easier with its Encore delivery service. Sign up for the program and every five weeks fresh coffee automatically arrives at your door. Freshness is guaranteed with a replacement or refund promise, and Starbucks also offers a free 10-cup coffeemaker as a signing bonus.
Des Moines, Iowa-based Gevalia Kaffe offers a similar program with limited edition coffees that are only available once a year. Gevalia sells coffees directly to their customers by subscription. The initial offer is quite tempting: Two half-pound packages of exotic coffee, free mugs, an insulated carafe in a choice of colors, and a newsletter all for only $5. After that, every three months, subscribers will automatically receive four half-pound packages of another rare coffee along with a bill for $6.25 to $6.95 per half-pound.
Salad in a bag is the best thing since sliced bread. Salinas, California's Farm Fresh Express revolutionized the lettuce business by cleaning, shredding, and bagging greens for customers. Do people appreciate it? Just take a look at how much space is now devoted to these products in your local supermarket.
American Airlines has made it easier than ever for its frequent flyers traveling on e-tickets to board their flights. Rather than waiting on
Make It Easy 161
lines at the ticket counters or gates for clearance, Platinum and Gold AAdvantage members swipe their frequent-flyer card or the credit card used to buy the ticket into the new AAccess Boarding Unit. Security clearance is processed, a "boarding entitlement" printed, and the passenger enplanes.
Capital One's Platinum MilesOn^ VISA card makes it easier to earn free tickets in the first place. It rewards customers with generic air miles that may be used on any U.S.-based airline at any time for any seat. No confining lists of partners, no blackout dates, no restrictions.
The world's leading issuer of credit cards, Citicorp gave the same idea a new curve with its Driver's Edge VISAs and MasterCards. The cards' 2% rebates on purchases can be used toward any make or model car in America. By the way, the rebate is capped at $500 per year and $1,500 on each purchase or lease.
Sometimes customers, and companies, get tangled up in too many programs. Marriott International, Inc. combined three incentive programs into one and simplified everyone's lives. The revamped Rewards program tracks room nights, vacations, etc., automatically and can be used at the 1,300 participating hotels in the Marriott family. It earns 10 points for every dollar spent, and pays out with a free room night after approximately 15 nights.
The Colonial Williamsburg Foundation (CW) makes it easy for its supporters to give with its own Platinum Visa Card issued by First USA. When CW patrons use the card, a percentage of
Make everything as simple as possible, but not simpler.
—Albert Einstein
162 Make It Easy
the charges go directly to Colonial Williamsburg at no additional cost to customers.
The Smithsonian Institution knows a good idea when it sees one, and signed up for its own Novus card. For the civic-minded, each use of the card pays cash back to the Smithsonian. And, cardholders win, too. Every $100 in purchases earns one point towards savings bonds. Customers automatically receive a $50 U.S. Savings Bond each time they accrue 50 points.
How about automatic deductions for religious donations? The Lutheran Brotherhood has created the Simply Giving program that automatically debits your bank account for whatever amount you choose to regularly give. Feel strange not pitching in during church? The program offers 1-gave-electronically stickers so you don't look less-than-generous on your day of worship.
First Union National Bank is keeping customers coming back—even when they move away. Instead of requiring customers to close their bank account and reopen them—perhaps, with a competitor—in a new city, First Union does the work itself, simply transferring the existing accounts or setting up new ones when necessary. It does the same for loans, credit card accounts, and even investments.
The American Automobile Association
came up with this fme example of simplicity. Get your cell phone service from the organization and it comes with a special "AAA Button." Forget about looking up the number if your car breaks down; just push the button and you're connected.
Make It Easy 163
It pays to call Ohio-based auto insurer The Progressive Corporation the moment you have a fender-bender. The company may well immediately dispatch an SUV equipped with a portable accident processing system. Once it arrives on the scene, a claims agent estimates the damage, arranges for your transportation, and cuts you a check—on the spot.
Smart cards are coming of age. American Express, Continental Airlines, and Hilton Hotels (there's a strong partnership bundle) are testing a frequent traveler card that holds personalized information in an embedded computer chip. In addition to being a credit card, the card "knows" and conveys such details as frequent flyer numbers, hotel room requirements, and preferred airplane seating. It can also be used in designated terminals at airports and hotels to allow the traveler to avoid ticket counters and front desks.
The traditional gift certificate has always been an inconvenience. Customers must either figure out what they can buy for exactly $50 or $ 100 or deal with the often-interminable bookkeeping. Enter the electronic gift card. Tony retailer The Neiman Marcus Group, Inc. solved that problem with smart gift cards that work like credit cards. Pay for your purchases until the credit amount is simply used up. Neiman's even offers cards specifically designed for special occasions and as corporate gifts complete with the purchaser's logo or message.
Sears, Roebuck & Co. gave the idea a creative twist when it introduced an electronic gift card for back-to-school spending. Parents purchase
9
164 Make It Easy
What Is a Customer?
A Customer is the most important person ever in this office ... in person or by mail.
A Customer is not dependent on us ... we are dependent on him.
A Customer is not an interruption of our work ... he is the purpose of it. We are not doing a favor by serving him . . . he is doing us a favor by giving us the opportunity to do so.
A Customer is not someone to argue or match wits with. Nobody ever won an argument with a Customer.
A Customer is a person who brings us his wants. It is our job to handle them profitably to him and ourselves.
—vintage sign at l. l. Bean headquarters
the electronic cards for the specific amount they want to spend and then give the card to their kids to make their own back-to-school purchases. The children don't have to carry cash or their parents' credit cards, but can still shop on their own.
Bloomingdale's picked up on the electronic gift cards and offers them in amounts from $10 to $500. Even better, customers don't have to go to the store to get them. The cards can be purchased over the phone and online.
Amencan Express Gift Cheques aren't quite as high-tech, but the folks you give them to can use them in a lot more places. Available in $25, $50, and $100 denominations. Gift Cheques are sold at American Express Travel Service Offices, AAA, banks, and credit unions. And, like the company's Travelers Checks, Gift Cheques are refundable if lost or stolen.
No matter what kind of gift certificate you create, if your customers don't know it is available, you won't sell them. You can't miss 'em at Bisbee, Arizona's Main Street Antiques. A sample of the store's gift certificates is prominently displayed over the owner's desk in full view of the customers. It's an attention-grabber and conversation-starter because it is made out in the name of the ghost that supposedly haunts the store in the historic mining town.
Customers have come to expect automated phone systems at companies that get heavy phone traffic, such as banks and software makers. Now, they're popping up in some unexpected places: Dayton, Ohio's Miami Valley Hospital (MVH) improved its response to pa-
Make It Easy 165
tients with billing questions with a voice response system. Clients call the system, enter their account numbers, and receive current balances and other account information automatically Should they need to speak with a customer service representative, the system transfers the call along with the already-retrieved account information.
The worid's largest pizza chain Pizza Hut, Inc. knows what its home-delivery customers want before they even order! The chain's more than 10,000 stores sport computer systems that recognize customers by their phone numbers, so order takers can casually ask, "Do you want the usual?" And, that's about all the information they need because your usual delivery address is also in the computer. It just doesn't get any easier.
Or does it? If you are surfing the Web in Topeka, Kansas, and feel like a pizza, you just got lucky. Pizza Hut is testing www.pizzahut.com in that area and now, with a click of the delivery button and a little info, a hot pie is on the way
Drive-thru fast food hadn't been perfected until Wendy's International improved the ordering process with a video screen. Now, when you can't understand a word the order taker is saying, you can read it instead. The technology reduces errors and makes Wendy's just a little more appealing than the competition.
But for how long? Burger King Corporation
is testing an array of improvements in a new restaurant located in Reno, Nevada. It features I automatic doors for easy carry-out, transparent 1 bags to help reduce order errors, computer-activated and controlled broilers that cook the
The annual American Customer Satisfaction Index, which measures how happy consumers are with the goods and services they purchase, has declined in each of the last three survey years. Buck the trend.
166 Make It Easy
food when it is ordered (not before), and surprise—drive-thru video screens that show the items you've ordered.
t Each holiday season, Harry & David sends out their specialty food and gift catalogs en masse—
Djust like every other cataloger. Unlike the others, : however, this company's includes an order form with a list of the orders you placed last year, r complete with the names and addresses of recip-l ients and the gifts you gave each of them. Simply : make any changes necessary and your holiday : shopping is done.
Surprisingly for a government agency, the Bureau for the Public Debt's Treasury Direct program is simple to use as anything offered in the private sector. Forget about banks and brokers: If you regularly buy U.S. Treasury Bonds, Bills, and Notes, open an account with the Bureau. Then, simply fill out a form choosing the government securities you want to purchase, and the Bureau provides them directly to you. Better yet, no money changes hands until the issue date of the security when payment is electronically collected from the customer's designated account.