Every business needs loyal customers. Loyalty means customers choose to buy products from us rather than our competition. Promotions and discounts are universally followed to garner this loyalty – incentivizing customers to buy from us through cash value rather than creating any long term differentiation. Sometimes, and much more effective, these offers are a means to get customers to try out or test the long term differentiation claimed. In “Free: the Future of Radical Price”, Chris Anderson provides several examples of how discounts have generated opportunities to better engage customers. Is “Free” or discounted prices really the right way? What do customers want? Do discounts really generate loyalty or do they just train customers to expect more for less? Useful Nonetheless A promotional campaign strategy has great uses. Some of them are: Low hurdles to adoption – initially free with a paid upgrade (e.g. LinkedIn, PayPal, software Products, etc.) Providing a trial period for customers to experience the product or service (ISPs, fitness centers, etc) Spurring demand through promotions and often pre-empting competition (CPG) Cross sell subsidies or loss leader strategies (Google, Facebook, CPG etc.) Others The real question Our question is: How do we get customers to be loyal “despite” price premiums, and especially when it comes to a long term & profitable relationship? Years ago, working with some of the best in the loyalty field, I got introduced to these basic elements. Much has evolved since then of course and here are some foundational elements: Aspirational value: Can we set goals that our customers would aspire or journey […]

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