| February, 2002
Increase Profits Using Existing Resources
Imagine you’re flying home from somewhere, you land at your airport, go to collect
your bags... and they don’t appear. So after you’ve waited for about half an
hour to make sure there are no more bags, you go to the airline’s service desk, they
punch a few keys on the computer, and since the bags are tracked and matched with their
passengers (this is done on domestic flights now, too), they tell you your bags did not
make it on the flight. They apologize, and assure you the bags will be delivered to your
door the next day. That’s great, but they had that information when your plane took
off (since they won’t let a flight leave, for security reasons, if your bags are on
the plane and you’re not). So why not have a flight attendant tell you during the
flight? For example, "we're terribly sorry, but it appears your luggage was left at
the airport. We wanted to tell you now so you won't wait unnecessarily at the baggage
claim. It will be delivered to your home tomorrow; and with our apology, we're giving you
a 25 percent frequent-flier mileage bonus." Instead of an angry customer, the airline
would have increased customer loyalty. And the resources to do this already exist.
Existing information can also help make marketing efforts more effective. At Bank of
America, every deposit greater than $25,000 gets examined to make sure it is kosher. That
went on for years before someone realized that the information is also a great tip-off
about a customer who's probably wealthy and might buy more banking services.
Opportunities like this usually get overlooked. They are interdepartmental and
therefore unmanaged. It's no one's job to look for them; nobody makes it easy to seize
them; and the person who sees an opportunity probably doesn't share in the rewards it
produces. A salesman hears customers ask for a new feature, but doesn't know whom to call
in new-product development, doesn't bother to call because he gets paid only for what he
sells this quarter, or refuses to call because the new-product people are snotty. Warranty
data is a seam of gold that's scarcely mined: It ought to be dug into by research and
development (so the next generation of products is more reliable), manufacturing (for
clues to defects), service (to reduce repair cost and improve technician training), legal
and risk management (to look for fraud), and sales and marketing (to kiss and make up with
displeased customers and look for new lines of business).
Companies can take advantage of these opportunities by providing incentives to
employees to share the information, and by hiring research companies (like us!) to conduct
interviews and focus groups with employees. Company employees are a valuable marketing
research resource that is frequently overlooked. The research company can also serve as an
outside destination for employees’ suggestions.
The Ritz-Carlton Hotel in Hong Kong is an outstanding example of information gathering
and management. It's old news that the Ritz tracks guests' preferences for things like
newspapers, smoking or non, and so on, but the hotel has now gone far beyond populating a
database with obvious factoids. Recently, a guest was met by the assistant to the hotel's
"customer recognition manager" -- note the job title -- who was carrying a
bottle of water, like the free one in the room next to the ice bucket. "We noticed
you drink a lot of water," she said correctly, "so we have arranged to put an
extra bottle in your room every day." How'd they do that? He never told the Ritz he's
a thirsty guy. Nor could they have learned of his hydrophilia by running his minibar tab
through a computer, because the water's a freebie. A low-level employee -- a maid or a
minibar stocker -- noticed empty water bottles, recognized that this was valuable
information, and knew whom to tell about it. That person turned the information into an
act that made the guest feel special. And he’s telling everyone he talks to.
Source: Business 2.0,
February 6, 2002
Want to figure out how to use your existing resources to increase
profits? We can conduct research with your customers and your employees and find those
opportunities. Call Jay Zaltzman at Bureau West Research Group – tel: (818) 752-7210.
Extra Tidbit:
Don’t Let CRM Take You Down the Wrong Path
A lot of attention has been given - justifiably - to the opportunities
companies miss as a result of not implementing CRM (Customer Relationship Management).
While it’s true that CRM can provide companies with great value, organizations must
be cautious in how they interpret CRM information. Many feel that the information can help
them define their "top-tier," or most profitable, customers, as well as their
least profitable customers. While it makes sense to invest more resources in your most
profitable customers, companies should look for ways to make the lower-end customers
profitable - before a competitor figures out how to do that and steals them away. Also,
companies should make sure they don’t appear to be punishing the customers on the
lower end. This can be bad public relations; and small customers sometimes have a way of
turning into large customers.
Airlines seem to have found a good way to give customers differential treatment with
their premier member programs. The preferential treatment given to the most loyal
customers is perceived as a reward for those customers rather than a punishment for the
others. And the programs serve as an incentive to customers to increase their loyalty so
they, too, can reap the rewards. |