Getting people to use your service.
A recent post by Noah as well as a letter I received from American Express have been making me think about how the selling of services (rather than products) are creating new relationships between companies and their customers.
From Noah:
“Basically the story is that even though it would seem like Netflix would rather you had a subscription and never rented anything, it’s quite the opposite…Customers pay a flat monthly rate, generally $16.99 (although cheaper plans are available), to check out as many movies as they want. The problem with this business model is that new members often have a couple of dozen movies in mind that they want to see, but after that they’re not sure what to check out next, and their requests slow. And a customer paying $17 a month for only one movie every month or two is at risk of canceling his subscription; the plan makes financial sense, from a user’s point of view, only if you rent a lot of movies.”
This is why Netflix spends so much time and effort in getting you better and better recommendations. Because they realise that the more you use their service, the more likely you are to value it. And, the less you use their service, the more likely you are to ditch it.
The letter Amex sent me recently tapped into a very similar theme. It was from a personal service specialist who wants to talk to me about my card. They’ve looked at my profile and realised I don’t really use the majority of the benefits available to me and want to talk about how I can get better use out of all the services my card qualifies me for.
While it’s true that some great companies have always cared about their customers getting good value for money on an ongoing basis, I’d say that the majority of companies were, and are, much more focused on delivering value for money only at the time of purchase. It typically hasn’t mattered as much whether you actually used the product or service. However with the transition to services, as well as a growing realisation that happy customers can be beneficial in a whole bunch of ways it feels like more and more companies are now concerning themselves with customer satisfaction and more specifically with whether and how their customers are actually using their products or services.
Not surprisingly, I think this is a great thing in a whole bunch of different ways. Companies who embrace this kind of thinking can’t help but provide better service and more value for their customers and this is exactly the kind of alignment in customer and company fortunes that is missing in so many other places.
Additionally, I think this is also really good news for marketers because I believe the most innovative marketing successes in the next few years will be around creating relationships and helping customers get more out of the products and services they own; not around creating transactions and getting people to open their wallets.
Matt Daniels Says:
August 14th, 2009 at 2:29 pmAwesome pick-up on the Amex mailing. Actually, I'm rather surprised that the economics work out so that an actual person called you…I'm guessing that you have a gold/platinum card.
Amex's major goal is something called “share of wallet,” in a literal sense. Typically people have 4-5 cards in their wallet, and Amex wants you to use their card the most. You've picked up on an important point–if you're paying $500 annually for a Platinum card, you should be using all of the perks to justify the fee (just like Netflix, to justify their monthly rate).
bunny_anna Says:
August 16th, 2009 at 4:31 pmExcellent post, Amex has been a leader in their segment