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Customers Buy When They Get More Of What They Want

HPCL woos customer loyalty through cooking gas. Providing incentives like equipment discounts and free insurance coverage attracts new customers. Silicon India Jul 24 2003 11:25AM ET [Moreover - CRM news]

Hindustan Petroleum Corp Ltd (HPCL) is running one of the most ingenious incentive and loyalty program I've ever seen. It not only attracts new customers, but develops an ongoing buying relationship with them. With a number of firsts, I'll show you how to carry over their efforts into a business-to-business world:

1. Loyalty program offering insurance coverage against any injury due to an accident with cooking gas or liquefied petroleum gas (LPG) cylinder.

Is your product dangerous? By offering insurance on injuries due to accidents with your product you are showing customers you really care about them. At least you are interested in protecting your investment in a buying customer, the cost of a full-coverage policy is negated by the good media coverage and customer protection in the rare instance your product fails.

Say your product won't cause personal harm. How about offering a bond on the failure of your product, "if our widget fails for any reason, we'll pay you $10,000 dollars or replace it at no charge." Completely remove the risk your product will fail by offering financial assurance, that if it does, you'll quickly do something about it.

2. Launched a program to allow customers a chance to weigh cooking gas cylinders at time of delivery.

Give your customer a way to verify the quality of each delivery on receipt. With cooking gas HPCL found that 33 percent of consumers were unsure they were getting a full capacity cylinder. By providing a way to verify this they reinforce the idea the customer is getting exactly what they purchased.

A simple way to reinforce customer expectations is to include a checklist or guide with the delivery of all products. Walk your customer through your product, providing them details about product benefits as they check off a list outlining the functions they purchased. Do this in addition to bills of laden, or delivery receipts. Make it clear that if something is missing they can call customer support and have it replaced immediately.

3. In Mumbai loyalty program members are being offered discounts on household goods at ranges from 40 to 50 percent, plus accumulated loyalty points redeemable against products.

This type of program locks buyers into a particular consumable product, not only making it more affordable to acquire your products, but possibly bringing them your entire line. What does your customer need to use your product? Can you provide it to them in quantity, passing along any discounts?

Hewlett-Packard does this with printers, making their real money on consumables that over the life of the printer bring in greater profits. Whether you sell heavy equipment, computer systems, or manufactured goods, some part of what you provide is consumable.

To implement incentive programs around your own product, consider the following:

• Look for auxiliary products that enhance the service value of your own. By offering other products that enhance the value of your own (even if they are provided by other companies) you earn more from the same market share. Work with your strategic partners and make sure the customer gets more of what they want.
• Find out what else the customer wants as it relates to your product. Most software buyers want someone to call when they have trouble, so consider providing free technical support. Equipment buyers want service programs that insure availability.
• Discover what else your customer needs to have a demand for your product. Services are often derivative of solving a specific problem, package other parts of the solution with what you offer and give your customers a comprehensive choice. Often they won't even look at the competition because your solutions is so complete.
• Sell consumable items through a single purchase transaction. Just as petroleum companies sell oil through the purchase of a vehicle, once a customer makes that first purchase consumable purchases are just a matter of awareness. Are you selling services on your one-shot sales? Do customers know how to buy replacement parts through your organization?
• Remove all the risk in using your product while acknowledging the possibilities. Accidents do happen, but you can protect your own liability by being prepared in advance for them. Go one step further and describe these actions as additional value you provide to address such an event. Also, making customers aware of the dangers of your product opens opportunities for safety training, and is a responsible action that can lead to (positive) media exposure.

/ 101-strategies | profitable-customers /

By Justin Hitt at July 24, 2003 3:58 PM  Subscribe in a reader