The Secret to Creating Valuable, Lifetime Relationships with your Customers
For companies that rely on product sales, customers are the lifeblood of the business. Or so it’s always been…up until now. Today there is someone even more important than the customer to the long-term success of these brands, and that person is the product owner.
What’s the difference between a customer and an owner? While both are buyers of your product, the brand’s relationship with a customer typically doesn’t go past support. On the other hand, an owner has an ongoing, high value lifetime relationship with your brand.
When your brand evolves from viewing the person who buys your product as a customer, to operating as if they are a cherished owner of your product, it opens the door to delivering exceptional ownership experiences that create real, measurable value for both your brand and owners.
The Changing B2C Relationships
Over the past decade, the “speed of business” has accelerated dramatically. Consumer brands are being squeezed by a number of market dynamics.
Hyper-Competitive Market – Traditional retail channels are under severe pressure, which impacts the brands that sell through them. Retailers are decreasing or, in many cases, guarding their own revenue and margin by offering additional services like Service Plans. And THEY own the relationship with your customer even though the customer bought YOUR product. The impact: upsell and cross-sell opportunities are controlled by them, not you.
Customer Expectations – Consumers’ behaviors and their expectations have dramatically changed. They want authenticity. They expect brands to recognize them and to deliver a personalized experience at every moment.And the mobile experience is paramount to a brand’s ability to connect with customers since mobile has quickly become their preferred communication channel.
Strategic Planning Challenges – Even in the current strong economy, another pressure brands face is the uncertainty of the economic and political landscape. Turmoil around global trade creates unforeseen potential obstacles. There is also a lot of confusion around how to leverage Big Data and connected devices (e.g., the Internet of Things). Most brands don’t understand how to strategically employ these new technologies in a way that makes sense for the brand and the consumer.
Obstacles to Organizational Alignment – Business leaders are being asked to drive change, embrace new innovations and deliver new strategies, while still delivering growth. A siloed organization makes that very difficult. For product brands, selling direct may be a strategic initiative, but many don’t have the expertise or experience to shape strategies, or the infrastructure needed to deliver on direct sales.
Each of these dynamics is no doubt impacting your bottom line. It’s time to change with the times! For product brands, this means going beyond simply making sales to “customers” toward an ongoing, high value relationship with your product owners.
Going from Customer to Owner
In our work with more than 300 global brands over the past several years, we have seen that brands want to engage more with their customers, but many don’t know how. They may also view it as an expense, when in fact it’s actually a new point of sale that results in higher margin revenue than sales to new customers.
Here’s the secret. Customers are never more engaged than during the moment of truth – when they first receive a product and unpack it. As such, additional products or services – such as a warranty extension, service plan, accessories or consumables – that are offered at this time are particularly well received.
Utilizing Registria’s mobile onboarding process to capitalize on this moment of truth, our partner brands are realizing significant revenue via this new point of sale. Some are even creating service lines based around post-purchase offerings, and in some cases these lines are delivering the highest growth potential in the company!
It makes perfect sense if you think about it. In today’s economy, the margin for an initial sale to a customer is extremely small after you factor in all the costs, including marketing, distribution, competitive pricing (the Amazon effect), etc. However, subsequent purchases from existing customers offer high margin revenue streams that are essential to growth for modern brands.
Many businesses are recognizing the value of ownership solutions and aftermarket services. Fifty-six percent of Apple’s growth through 2022 will come from services, not from selling iPhones. Sixty percent of Best Buy’s profit comes from services. Product brands that are finding themselves “squeezed” by competition can hugely benefit by having post-purchase revenue streams, and by making it easy for product owners to make additional purchases directly from the brand.
Of course, knowing who your product owners are and having an ongoing relationship with them also makes it easier to proactively communicate product information such as tips and upgrades for greater product usage and owner satisfaction. Product notifications such as recalls become direct, fast, more successful and more cost effective. Service and support becomes more convenient for owners, and product reviews are more positive.
These are a few of the many high value moments throughout the ownership experience as a whole. But they are all lost opportunities if the KEY moment – the moment of truth – is not leveraged.