Comments for Terry Vavra's Blog http://www.terryvavra.com The Voice of Customer Loyalty and Satisfaction. Wed, 10 Mar 2010 13:31:50 +0000 http://wordpress.org/?v=2.7.1 hourly 1 Comment on When Fund-Raising Jeopardizes Donor Relationships by Doug Pruden http://www.terryvavra.com/customer-relationships/when-fund-raising-jeopardizes-donor-relationships/comment-page-1/#comment-5 Doug Pruden Mon, 01 Jun 2009 15:37:54 +0000 http://www.terryvavra.com/?p=15#comment-5 RFM has been the approach of choice for direct marketers for years and years. For catalogers, for example, it’s made great sense. After all, the customer who knows the brand name, who likes the style typically selected by the buyers, and who has had good reliable service and product delivery certainly is more likely to buy again. If you compare results from a mailing of existing customers to an outside list of “prospects”, there is little question of which will perform better. When the existing customer become overwhelmed by too much contact, and don’t care to buy again, the expense of mailing the catalog drags down the overall performance of the mailing, but little damage is done. Unfortunately that same RFM approach carried over to fundraising. To a point it works -- but it’s short term thinking. Too many calls and too many mailings eventually will get the kind of reaction you discuss. There comes a breaking point where not only will current contributors make the solicitations less cost efficient, but worse they will lead current contributors like you to feel that their previous gifts are not appreciated, or that the money the give is being spent wastefully on fundraising expenditures. In the short term the deluge of solicitations will give the fundraising project manager a lift, and allow them to meet their target for the month or the quarter. In the long term however, it will cause generous folks to question and forsake the otherwise great organizations. RFM has been the approach of choice for direct marketers for years and years. For catalogers, for example, it’s made great sense. After all, the customer who knows the brand name, who likes the style typically selected by the buyers, and who has had good reliable service and product delivery certainly is more likely to buy again. If you compare results from a mailing of existing customers to an outside list of “prospects”, there is little question of which will perform better. When the existing customer become overwhelmed by too much contact, and don’t care to buy again, the expense of mailing the catalog drags down the overall performance of the mailing, but little damage is done.

Unfortunately that same RFM approach carried over to fundraising. To a point it works — but it’s short term thinking. Too many calls and too many mailings eventually will get the kind of reaction you discuss. There comes a breaking point where not only will current contributors make the solicitations less cost efficient, but worse they will lead current contributors like you to feel that their previous gifts are not appreciated, or that the money the give is being spent wastefully on fundraising expenditures.

In the short term the deluge of solicitations will give the fundraising project manager a lift, and allow them to meet their target for the month or the quarter. In the long term however, it will cause generous folks to question and forsake the otherwise great organizations.

]]> Comment on Stop Demoting Customers! by Doug Pruden http://www.terryvavra.com/customer-recognition/stop-demoting-customers/comment-page-1/#comment-4 Doug Pruden Tue, 05 May 2009 13:08:45 +0000 http://www.terryvavra.com/?p=4#comment-4 Some companies in the consumer services arena still lack the ability to fully track REVENUE generated per each customer. Even more businesses fail to measure PROFITABILITY at the individual customer level. Harrah's seems to do a good job at both. But there's a third component that's key to managing for the growth of customer profitability - that's POTENTIAL. Like most companies Harrah's appears not yet to have a process that tells them which of their customers continues to spend (and could even spend more eith them) but simply has moved their loyalty elsewhere - and who needs further development rather than demotion. Some companies in the consumer services arena still lack the ability to fully track REVENUE generated per each customer. Even more businesses fail to measure PROFITABILITY at the individual customer level. Harrah’s seems to do a good job at both.

But there’s a third component that’s key to managing for the growth of customer profitability - that’s POTENTIAL. Like most companies Harrah’s appears not yet to have a process that tells them which of their customers continues to spend (and could even spend more eith them) but simply has moved their loyalty elsewhere - and who needs further development rather than demotion.

]]> Comment on Stop Demoting Customers! by Jon Berry http://www.terryvavra.com/customer-recognition/stop-demoting-customers/comment-page-1/#comment-3 Jon Berry Tue, 28 Apr 2009 22:19:34 +0000 http://www.terryvavra.com/?p=4#comment-3 Terry, I really like the point you make regarding the difference in actual cost to the casino vs. the perceived value, or rather lack of value that the customer is left feeling when being “punished” for not maintaining past levels of business. You really make a compelling argument to maintain levels in loyalty programs today, when the trend now is to be somewhat frugal in spending, both on the customer side and on the business side. Giving a past customer the benefit of the doubt will most certainly keep you in their good graces, and as your example shows, simply maintaining current recognition programs may actually increase customer loyalty by differentiating yourself from the competition. Great post! Terry,

I really like the point you make regarding the difference in actual cost to the casino vs. the perceived value, or rather lack of value that the customer is left feeling when being “punished” for not maintaining past levels of business.

You really make a compelling argument to maintain levels in loyalty programs today, when the trend now is to be somewhat frugal in spending, both on the customer side and on the business side.

Giving a past customer the benefit of the doubt will most certainly keep you in their good graces, and as your example shows, simply maintaining current recognition programs may actually increase customer loyalty by differentiating yourself from the competition.

Great post!

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