Sunday, March 06, 2011

The Power Of Gifts In Customer Relationship Management

CRM programs are most of the time based on offering promotions in order to boost sales. It could be either promotions to upgrade a product, or promotions to buy complementary products. Sometimes, those promotions are even automated, as it is in loyalty reward programs, and customers clearly know they access certain discounts for a certain amount of purchases.

These principles have shown they work. No questions about it. But I always like to discuss customer relationship management on two levels:
  • The transactional customer relationship management
  • The emotional customer relationship management
Both of them are important. But in CRM programs, the focus has been set on the transactional aspect, as it is easy to measure, whereas emotional relationship is based on brand equity and a certain marketing work, which is difficult to link with the final act of purchasing. There is one way to link both the transaction and the emotion: The gift.

Indeed, most of the time the value of a gift is far bigger than the value of money you may give for discount. Indeed, there is an emotional value which is linked to the gift, which is very important.

There are two ways to conceive a gift to a customer:
  • A clear gift, which is shown as a call-to-buy: You advertize you will give a specific gift based on a certain amount of money spent in a store. This kind of gift triggers immediate sale, and don't have much power on the next potential transactions you may get. But it may provide a high return on investment, based on the high value the customer will have of it.
  • A non-expected gift which concludes a transaction, in order to strengthen the relationship and secure loyalty to the brand.
Of course, the present must be meaningful, and in connection with your positioning and offer.

Those two strategies don't really have the same outcome, but they are for sure to be considered.

What do you think about it?