Maybe you need a stay in touch program

 The October 2007 issue of Target Market magazine (www.targetmarketing.com) has an article “Why Customers Leave…And five ideas for turning them back” by Arthur Middleton Hughes.  It is worth checking out.  Here are some excerpts and thoughts about how they apply to insurance marketing. 

Hughes cites Paul Wang, associate professor of integrated marketing communications at Northwestern University.  Wang points out there are, in general, two types of customers: transaction buyers and relationship buyers. 

A transaction buyer is someone who is interested only in price.  These buyers have no loyalty. They will spend hours comparing products before they buy. They will leave you for a tiny difference in price no matter what kind of special services you offer them. 

A relationship buyer looks for a supplier they can trust.  They are seeking friendly companies with reliable products---people who recognize them, remember them, do favors for them, who build a relationship with them. 

The article cites four reasons why relationship customers may leave a company.  The most common reason is: They are unhappy with the way they are treated. Yet most organzations focus on another reason (They are unhappy with the price), and try to retain relationship customers with discount offers and other price-directed incentives. What should they concentrate instead? Read on. 

What binds relationship customers 

It is not price alone.  It is the totality of the relationship which Hughes says includes: 

. recognition;

. service;

. information;

. helpfulness

. friendly employees;

. brand identity; and

. product quality and price. 

Reduce turnover 

Hughes says relationship customers turn away from you when you stop treating them as they want and expect to be treated.  (You need to use TLC!) 

He provides five ways to “hang on to relationship buyers.” 

. Know who they are. 

. Communicate with them. 

. Use your best customer service people with them. 

. Build equity in the process (by providing rewards for staying). 

. Don’t stress price. 

To the last suggestion, I would add “stress value.”  

---Arthur Middleton Hughes is vice president/solutions architect at KnowldegeBase Marketing.  He is the author of “Strategic Database Marketing,” 3rd ed. (McGraw-Hill 2005)