Companies Creating "Loyal" Customers with Low Prices

Written By Ted Grigg

For the company, a customer loyalty program strives to retain existing customers and increase the profits they bring with repeat purchases. The customer wants to save money by purchasing from the same company over and over again.

At least that is the primary and growing customer motivation according to a 2007 research study conducted by Forrester Research.

In the report entitled “Building Lasting Customer Loyalty,” Lisa Bradner writes:

“Fifty percent of consumers say that price is more important to them than brand. Retail customers asked to cite why they are loyal to their chosen retailer put price ahead of all other metrics.”


The research indicates that this customer behavior means that they endorse private label products across many categories because they are cheaper than national brands. National brands must work harder to build sufficient trust to counter this movement.

In other words, brands no longer automatically own quality. Product parity reinforces the customer’s attention away from quality concerns to price.

If you’re like me, you have noticed continuing improvement in private label products putting further pressure on brands in virtually all product lines.

My interpretation of this Forrester report: customers sign up for loyalty programs primarily for lower prices.

So for those companies wanting loyal customers, understand that these customers are trained or naturally inclined to want a share of the profits you get from them for themselves. In the end, the plan requires that both the customer and the company win. The prize? Why money, of course.

But are these truly loyal customers?

We know that competing on price alone has no future. Or does it? Does this mean the eventual death of the brand? What advice do you have for companies as they face this new, sophisticated buyer? How can a company differentiate itself in the face of this reality? How do companies engender true loyalty instead of focusing primarily on price? Is that even possible in today's market place?

Ted Grigg

Ted Grigg is a direct response strategist who helps growth-focused companies reduce risk by identifying weak assumptions before they become costly mistakes.

Over the course of his career, Ted has evaluated several hundred million dollars in direct response testing across direct mail, digital, print, television, telephone, and other channels. His work combines direct response strategy, acquisition economics, customer analysis, creative evaluation, offer development, and disciplined testing.

Ted has worked on both the client and agency sides of the business. That experience gives him a practical understanding of the pressures facing executives, marketing teams, agencies, and service providers—and of the problems that arise when activity, media volume, or creative preference replaces a clear economic objective.

His consulting work helps organizations examine such questions as:

  • Are acquisition goals economically realistic?

  • Is the allowable Cost Per Sale supported by customer value?

  • Are targeting, offers, creative, media, and response paths working together?

  • Are tests structured to produce reliable business decisions?

  • Are unproven assumptions being treated as facts?

  • Is the organization measuring sales outcomes rather than convenient proxies?

Ted’s experience includes the development of direct mail and multichannel acquisition programs for insurance, healthcare, financial services, technology, nonprofit, manufacturing, retail, transportation, communications, government, and business-to-business organizations.

For a national direct-to-consumer insurance company, he developed a direct mail format that defeated established controls and helped expand the productive use of compiled prospect lists from less than 10 percent to more than 30 percent of total direct mail circulation within one year. He also planned Medicare lead-generation programs for more than 60 regional and national HMO and PPO organizations, with some programs exceeding sales projections by as much as 60 percent.

Ted founded Wyse Direct, a direct marketing division of Wyse Advertising in Cleveland, where he developed acquisition programs and helped launch a new technology product for Seiko Instruments by generating a predictable flow of qualified sales leads for its national sales organization. As vice president of new business development for the Grizzard Agency, he helped broaden the agency’s strategic capabilities and pursue new commercial and fundraising opportunities.

He is the author of The HMO/PPO Marketing Plan—A Step-by-Step Guide, published by Executive Enterprises, and has written numerous articles and conducted webinars on direct response strategy, testing, creative development, and marketing economics.

Ted earned a Bachelor of Arts degree from Abilene Christian University and completed two years of graduate study at Texas Tech University. He is the founder of DMCG, LLC.

http://www.dmcgresults.com
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