Growing Profits through Habits

Using your customer’s habits to your advantage

Neale Martin has a great book out– Habit: The 95% of Behavior Marketer’s Ignore. It’s enlightening, and his research is well documented. The basic premise is that our conscious mind can only think of one thing at a time, so it hands off as much responsibility to our subconscious mind as possible. The subconscious mind then makes decisions based on cues from the environment and what was successful in the past.

As you might expect, most regular purchase decisions get delegated to the subconscious mind. Seriously, who evaluates their toilet paper purchases each time they stock up?

One particular passage in Habit really caught my attention. Martin discovers a truth explored by Steve Yastrow in his book We:The Ideal Customer Relationship: your existing customer relationships contain vast growth potential for your company. It’s all about latent profit.

“The power of advertising to maintain and strengthen the habits of existing customers is far greater than its ability to persuade noncustomers to try a product. Seeing an advertisement in a magazine or on a billboard for your brand reinforces your choice. Similarly, seeing a product you already own used in new ways can create an immediate trial opportunity. Marketers often neglect reinforcing behavior because they are pressured to acquire new customers, often at the expense of their existing, and profitable, current customers (Neale Martin, Habit, p.118).”

As we all know, buying new customers is expensive. It involves getting someone to notice your product, realize what it could do for him, trust you enough to try it, then find a channel for purchasing it. And that’s if everything goes according to plan.

But influencing a customer that already trusts and relies on you to buy more or buy other products from you isn’t expensive. Most of the work is already done for you because of your relationship with the customer.

Here’s an example. A client sent out a blanket mailing to households within a three-mile radius of their location offering a special discount to new customers only. They stuck to the standard marketing tenet of discounting to attract new customers, but they risked alienating existing customers. (Customer surveys later proved this point as current customers complained their neighbor, relative or friend got a better deal on services.)

There are several lessons to be learned from this incident.

  • First, if you are going to show an advertisement to the general population, you had better give an offer anyone can use.
  • Promotions don’t occur in a vacuum. People talk and like to compare deals.
  • Finally, it is more valuable to reinforce the behavior of a current customer by rewarding him and encouraging him to try a new product than to hope you receive a one-off visit purchase from a stranger.

The moral of the story (and point of the article) is to value your customers and realize how much latent profit exists in your current customer base.

We often call current customers, “existing customers.” That means potential customers don’t even exist yet! It takes much effort to call potential customers into existence, but relatively little effort to improve your relationship with your customers. A customer who is loyal to your company will buy more products more often and will rave about you to their friends.

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