Guest Blogger David Bakken: How Far Can You Stretch a Customer Relationship?
We got an interesting piece of mail recently. The return "address" was just the logo of an upscale catalog retailer of women's clothing. "Check Enclosed" was printed prominently above our address. Opening the mailer revealed a check for $10. On the back, a lot of text above the endorsement line informed us that, by cashing the check, we were agreeing to a 30-day trial of a roadside assistance service, and that a $15.99 monthly fee would be automatically charged to the credit card that the retailer had on file unless we cancelled before the end of the trial period.
Elsewhere in the mailer, we read "_____ values your relationship and from time to time will introduce you to valuable services. So ___ asked an unaffiliated company, ____, to offer you discount and savings services." Based on a description of this "valuable" roadside assistance service, it offers much less than AAA at a much higher price. A quick Web search on the provider of these services turned up a number of complaints. In some cases, the complainants claimed that their credit cards had been charged even though they did not cash the check.
There's no question that there is a lot of "value" locked up in most customer databases, but there are costs associated with extracting that value. It's likely that in this case the retailer failed to factor in the cost of lost good will that might result from offering customers something totally unrelated to their core value proposition (which has something to do with offering fashionable clothes, not high-priced insurance policies). Throw in what is probably a perfectly legal but likely misleading marketing communication, and it seems to me that the potential long-term harm could outweigh whatever short-term economic gain the insurance company is providing.
If you're thinking about extracting some extra value from your customer database by entering into this type of arrangement, my advice is "first, do no harm." Beyond that, you'll be better off looking for ways to increase the return on the database that stay within your core value proposition--and protect the equity you've got in your brand name.
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David Bakken is author of The Customer Knowledge Advantage blog.
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- Catalog Overload: End the Cycle of Recycling
- Guest Blogger Catrina Logan Boisson: Demonstrating the Value of Customer Data
- Guest Blogger Christopher Carfi: Should Customers Control Their Own Information?
That's not a relationship, that's a travesty. It's a blatant act of insincerity -- the grounds upon which a relationship begins.
Common, Don, "track the loss of customer trust"? They don't care -- they're market leeches. They suck the blood out of a host and then move to the next one.
And for every marketing research professional who blogs about the inherent abuse in this program from someone they used to trust, there are probably 1000 or more non-bloggers who get the same creepy feeling that their relationships with ____ are not as beneficial to them as they used to think!
I scratch my head at the sheer stupidity of these programs. But hey, guess what? I'm sure the program actually turns a "profit" for ____.
Only problem is, they don't track the loss of customer trust. That cost doesn't find its way into the financial statements, and the marketing folks will get credit for this faux success. What Fred Reichheld calls "bad profits." What Martha Rogers and I call a negative Return on Customer.