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You like the product? — don't pay for it

If an item is cheap I assume that I ought to pad out my order to make it worthwhile for the supplier and so I "wait" until I can bundle my requirements together. I then usually forget that I ever wanted the product.

Conversely if something seems to be expensive I need a nudge to make my mind up and that extra nudge rarely comes from a web site. Either way the supplier loses a sale that might be the first of many.

Things are changing however, and that change is sweeping the Internet.

Everybody happy

A novel and imaginative approach is establishing a new concept of marketing whereby the customer can get a chosen item free, but there is a catch. The customer undertakes to buy and pay for something from a quite different supplier in the near future.

This novel approach is designed to make everyone a winner. The customer gets a desirable free "gift" rather than the ubiquitous pen or timepiece of the insurance ads.

The advertiser and their agency obtain reliable information on the kind of products that interest the customer. Carefully targeted advertisements to eager customers lead to "action this day". The supplier of the product that the buyer receives free makes a "sale" that would have a 60 per cent probability of being lost. Two merchants may gain a customer for life. Finally the creative individual behind the idea, Alex Rampell, no doubt makes money.

Alex Rampell, you may remember, was the fifteen-year-old with considerable "smarts" that developed the programme that stopped AOL subscribers from losing their connection. His latest brainchild is called Trialpay.

How it works

A web site attracts customers that are "hot" to buy. To date 5.2 million customers have visited the site. Interest can be in the products of one or more of literally thousands of merchants. If customers dither as I tend to do they are given the opportunity to get their chosen product free by signing up for an offer from any one of a range of "premium merchants".

The merchant that now has the sale and a new customer has two products, but what about the merchant that is supplying goods free?

Cost per acquisition

That merchant could console himself with the thought that having lost money he might have a delighted and loyal customer that will return again and again with cash in his or her hand. Such consolation is real, but unnecessary. Advertising is costly and many are approached, but few buy. The acquisition of a customer is expensive. The supplier that gave away his product is paid through a CPA (Cost per Acquisition) that can equal or exceed the value of the product. Both merchants are now able to spend their marketing budget more productively.

Some brief facts

Mr Rampell's company has been in business for two years. During that time it has grown to employ more than 60 people. More than 3,000 companies have joined the scheme as "merchants" and more than 2,000 companies use the approach to be able to advertise to hot prospects.

"The price of fish?"

I do not care make the talented Mr. Rampell richer. What is important to all businesspeople, however, is to have an opportunity to assess any truly creative approach to building and sustaining business. Often one excellent idea is a platform for others. We should constantly be looking for opportunities to "adapt and adopt".

The fact is that customers, loyal customers, are our only guarantee of prosperous survival. What works online may not provide a template for success from "bricks" rather than "clicks", but it emphasises again the need to know the customer, find ways to communicate with them in a relevant "conversation between human beings" and, having created a loyal customer use that loyalty in your company's interest. What Mr. Rampell's clever idea teaches me is to make sure that what might have been a mere transaction becomes a partnership.

Self-evident and important

For many years books were written about "delighting the customer". The economic recovery of Japan after World War II was largely based on Deming's idea of "delighting the customer at the end of every transaction". Recent research shows that customer delight is important, but insufficient.

Attention now focuses on actively building, sustaining and applying customer loyalty.

Current research shows that customer loyalty is no longer enough. Loyalty is not merely built, it is used. Your most loyal customers must become your best salespeople.

Psychology

Professor Bob Cialdini in a series of fascinating experiments showed that people's self-image was a strong motivating factor in influencing their behaviour. In one experiment researchers approached householders with the suggestion that road deaths would be reduced by erecting a billboard on their lawn. The billboard carried an advertisement that exhorted drivers to slow down. Needless to say the householders rejected such a stupid idea.

Another group of researchers visited similar homes with a different initial request. They asked the householders to deliver a few leaflets to their neighbours with "information that can save lives". Since saving lives is a matter of urgency the researchers visited in appalling weather conditions and asked the subjects to leave what they were doing and venture into an inclement night to distribute the leaflets. Subsequently the research team made the request to be allowed to erect the atrocious billboards. A majority of householders who now saw themselves as making sacrifices to save lives agreed. The billboards were still ugly. The message was still puerile, but people agreed in effect to deface their expensive property.

Your loyal customers must be encouraged to see themselves as true stakeholders in your business.

The takeaway

Research shows that customer loyalty, if directed, makes the customer a fully committed member of your team. It is self-evident that if customers act on your behalf to bring to you other customers you will prosper, but as Mr. Rampell's clever idea and psychological research show, there are new ideas to be brought together and used. My team find that ideas without a direct relationship build prosperity when brought together.

You need to have a similar attitude. When Toyota speaks of "Value Innovation" they deliver added customer value at lowest possible cost and delighted customers brag to others about their beautiful cars. But the "win, win" of customer loyalty must be fostered and directed by you. Where will you start? When will you start? Proven ideas are all around you. Find them, combine them, adapt them and prosper.