Design Your Customers’ Decisions

There is a vital lesson buried in the August 19, 2009 Jet Blue announcement that they were suspending sales of the $599.00 “All You Can Jet” promotion they’d debuted only seven days before. Any student of Behavioral Economics could have predicted that an “all you can eat” approach would inspire vastly different behavior than if Jet Blue had charged a lower fixed fee plus $1 per mile. Similarly, over a decade ago when AOL switched to a usage-independent flat price, connection time increased four times more than they anticipated.

“All you can eat” is an entirely different price than “very, very cheap.”

Traditional economics says that lowering the marginal price from $2 to $1 should have a similar effect to lowering it from $1 to $0 — but experience and experiments have both shown that the traditional demand curve acts in an odd manner when we reach $0 marginal cost. Jet Blue’s executives should have known better. But the Jet Blue management team is not alone.

Many executives assume their customers are more rational than they really are. For example, most leaders believe in enhancing the options given to customers, but increased choice can actually freeze decision-making by overwhelming the shopper. Excessive options is a key reason that an average of 60% of all online shoppers abandon their purchases mid-stream.

Read more at Design Your Customers’ Decisions – Harvard Business Publishing, 26 Aug 2009

Flickr photo credit: pawpaw67

By |2012-01-05T06:58:54+01:00August 27, 2009|Blog, Marketing|0 Comments

Customer Strategy Tips from an Indie Rocker

In August 2005, Jonathan Coulton quit his job as a software developer, with the goal of conducting an experiment: over the next year, could he figure out a way to earn a living as a full-time musician, leveraging the Web and his small-but-passionate fan base?

Coulton isn’t the only artist who is trying to come up with new ways of cultivating an audience and making a living in a post-label, post-studio, post-publisher world, where big advances and development deals are essentially a thing of the past for emerging talent. For my new book Fans, Friends & Followers, I spoke with thirty filmmakers, musicians, writers and comedians who’ve been developing new strategies for building a fan base that can support the work they want to do. Many of their strategies would be equally effective for businesses trying to generate buzz and attract loyal customers – without an enormous marketing budget.

Coulton, for instance, has discovered that by giving his fans an opportunity to collaborate with him, they’re more likely to feel like active, engaged supporters – more likely to purchase CDs, merchandise, downloads, and concert tickets.

Here are just three of the ways Coulton has invited his followers to get involved with his career, each of which could be applied by many kinds of businesses. …read more at Customer Strategy Tips from an Indie Rocker – Harvard Business Publishing, published 17 April 2009.

Photo credit: Dale May Photography

By |2012-01-05T06:49:34+01:00April 20, 2009|Blog, Entrepreneurship|0 Comments

Making Small Business of Big Breasts

On the far edge of a bustling new city center, a neighborhood boutique sells intimate apparel to a dwindling, but dedicated customer base. As part of its efforts to keep customers aware of their signature advantages over the chain stores, the shop works closely with each client to ensure a custom fit, a service for which they charge a nominal fee. One day, two new potential customers arrive: young friends, one of whom is bringing the other to the shop to select undergarments for her wedding day. The visit ends in disaster, the subject of the following letter.

As a fellow small business owner, what would you advise the shopkeeper to do?

Dear Madame:

I am writing to express my distress about the encounter my friend and I experienced in your shop on Saturday, July 9. I am also writing to suggest a remedy.

My friend and I were first-time visitors to your store, but eager to shop there. I had seen your shop a number of times on my way to the city center, and a co-worker and neighboring resident had expressed her enthusiasm for it. In any case, my friend is soon to be married in September and, because she wears an usually large size, I thought this would be the perfect place to take her for a wedding gift.

As first-time visitors, we were very taken with the intimate-wear on the racks. I was pleased when a shopwoman approached us regarding a fitting, and my friend readily agreed. Not surprisingly, my friend had been too consumed with checking out your impressive selection rather than reading any wall signs. So was I. That means she received an unpleasant shock when she was told that the fitting would cost her $5.

Although my friend apologized for her ignorance and the shopwoman agreed to waive the fee, the situation still escalated unpleasantly. Indeed, both the shopwoman and you, the owner, insisted that a couple of signs stated the $5 policy. What was troubling, however, was your insistence that we should have noticed the signs, which we inferred as either (1) “any dummy could have seen it” or (2) “you deliberately chose to ignore it so you could misuse our services.” Not surprisingly, we left without shopping further or expressing an interest to return for a later purchase.

Because I have worked in customer service positions, I am not so foolish as to assert “the customer is always right.” But I do believe that customers should be given the benefit of the doubt and that deferring to misunderstanding more often than not serves to shore up good feeling and repeat business. Why did we not hear “we’re sorry for the misunderstanding, please come back again” from you or your staff?

Well, there is still opportunity for that. I would like to support a boutique shop such as yours and would like to recommend your business to my similarly-busty peers. I am enclosing the address of my friend below and I am requesting that you send a note of apology to her for yesterday’s incident and an invitation to her to return. I am certain that she would receive it well, and that she would signal to me a willingness to shop at your store again. Her name is Name Withheld and her address is 3200 Nameless Avenue, Apt. 301, Anycity, VA 12345.

Thank you for your prompt action. I look forward to hearing from you.

Sincerely,

Your Customer?

Readers, your advice for the shopkeeper?

Flickr photo credit: James@mannequindisplay.com

By |2012-01-05T06:47:35+01:00April 6, 2009|Blog, Small Business|2 Comments
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