Yes, Starbucks did apologize and reverse course after first eliminating the Eggnog Latte from their holiday menu. In my last post, I hypothesized that their mistake was in making a decision based on product revenue trends without considering the preferences of their Best Customers.
Customer-centric retailers, like Starbucks, usually know better. They avoid such conflicts with their Best Customers. But even the best can miss something that looks small at the company level but is meaningful for some highly-vocal Best Customers.
So how do we marketers avoid such pitfalls? Here are five strategies that will assure your phone doesn’t ring in the middle of the night because social media has exploded in response to a change in products, pricing or promotions.
1. Figure out what makes a customer “Best” and who your Best Customers are
Before you can figure out particular preferences of your Best Customers, you first have to know who they are. As I’ve said before, Best Customers are much more than those who spend the most money. Best Customers interact with the organization on multiple occasions and in multiple ways.
For example, a customer who spends $1,000 once is a good customer. A BEST Customer spends $100 with you on 10 occasions, likes your product on Facebook, follows your company blog and tweets about your company or product. These increased touch points breed increased relationship.
2. Start a conversation
Conversation is a critical component of maintaining the Best Customer relationship. It is the the “keeping the relationship alive” part. In Starbucks’ case, they support 2-way customer communication across channels such as Twitter, Facebook, YouTube and their own “My Starbucks Idea” site. You wonder…could Starbucks have floated an idea on Twitter or Facebook: “How are Eggnog Lattes part of your holiday season?” before deciding whether or not to pull the plug?
How is your organization having a conversation with your Best Customers? You might start with surveys. Best Customer advisory councils, preferred reward programs and the ever-growing assortment of social media outlets are all vehicles for 2-way communication. Finally, Best Customers are more likely to have and use your mobile phone app. Have a conversation with them in as many channels as you can.
3. Analyze data to learn Best Customer product preferences
You will find that your Best Customers purchase many of the same products as the rest of your customer base; however, analysis has shown that Best Customers also purchase certain products that are unique to Best Customers.
By examining Best Customer purchases (“the market basket”), you discover which products with low sales volume have high importance to this segment. Knowing all the types of products that make up the Best Customer market basket helps you maintain the relationship with this critical customer segment.
Since Best Customers know your product line better than any other customers, they also are likely to be the first to create product bundles that a marketer might never have thought about positioning together. Study those bundles as they change by season and you will find opportunities to grow Best Customers out of the rest of your customer base.
4. Understand seasonal trends of Best Customers
Best Customers purchase more frequently than other customers (in general), so their transaction data lets you determine seasonal changes in the products purchased. For other segments, you may be able to see differences by season across the group. Among Best Customers, you will see the seasonal differences for most of the individual customers in the segment.
Why does this matter? Because this data permits you to speak to customers personally, based on their past transactions. In the case of the Eggnog Latte (EL), you could identify the specific customers who purchased the EL the prior year. You could then tailor your communication to those customers, letting them know about the change before the holiday season started, and getting feedback on the importance of the EL to those customers ahead of time.
Big Data, such as weather data, also can be used to understand and predict seasonal purchase trends. For instance, an anticipated thunderstorm will drive sales of windshield wipers, boots and umbrellas. Giving your Best Customers a special deal during significant weather events can be a smart marketing strategy.
5. Don’t forget the web (and mobile)!
Best Customers purchase from your company through multiple channels – stores, web and mobile. Make sure to examine purchases across ALL the channels. If you don’t combine purchases, you will miss patterns that can send your customers “off the deep end” inadvertently.
Likewise, you need to communicate to your Best Customers in the channel they prefer – NOT the one that makes life easier for you. For example, if you have Best Customers who do not open emails, you need to explore other channels – text, app, even the old standby direct mail, to reach them and get your message through.
Best Customers care for your business. They will forgive lots of mistakes – broken products, pricing problems, and so on. But what they will NOT forgive is a failure to listen to them.
As a marketer, you have to be innovating all the time. And some of those innovations are likely to ruffle a few customer feathers – you just can’t avoid that. What you want to avoid is frustrating your Best Customers.
Keep innovating, but keep listening at the same time.
For more information about Starbuck’s Eggnog Latte experience: