Out of the Crisis.Org

[Bud]

Where Do 'Customer Rating Systems' come from?

They come from misunderstanding standard business principles. The main principle being misused is market segmentation, which is then falsely carried over into 'customer rating systems.'

Simply said, markets divide themselves into different categories of buyers. As examples, airlines have occasional flyers, holiday-only flyers, business flyers, and frequent flyers. Beer breweries have the same spectrum of purchasers, from light drinkers, moderate drinkers, all the way up to heavy users.

Incidentally, this is what a brewery calls a 'heavy user:' Someone that buys one case of beer daily, and two cases daily on weekends, when they have more time to drink.

But this is not to say that some customers are better than others. Obviously, some people will spend more than others do, either on plane tickets, beer, wrenches and mechanic tools, clothing, car repair, you name it. However, it is not reasonable to expect that any business will be selling only to heavy users and frequent buyers. In fact, they are relatively few in most markets and would not constitute enough customers to keep any particular firm in business.

The point of market segmentation is this: If you can correctly identify your market's segments, you can accurately tailor your products to match closely what people want to buy. On top of that, and my main interest here, is that you can precisely tailor advertising messages that appeal to each segment or group. Then, of course, you can deliver those unique advertising messages in the best formats, in the best places, at the best times to each group.

For the typical repair shop, those groups might include: customers of your competition, non-returning customers, regular customers (several segments here), and dealer customers. What other segments can you think of? [Try not to think in terms of domestic verses imports, car verses truck, or light duty verses heavy-duty vehicles.]

Many segments, to be sure. How about dividing the market by psychometrics, how people think and feel, rather than by how much they spend. Can you make a market appealing to people that are afraid and apprehensive about having their personal cars worked on? You bet you can.

Does that make sense? Is it like using the right bait for the fish you want to catch?

So that is out first lesson in advertising, match your message to your audiences for better results. One ad will not appeal to all people, not even among all that would indeed be willing to become your customers.

In conclusion, simply dividing customers into a rating system does no good. It does not reveal why they have those particular buying habits in the first place, or how you can better serve them (and increase your sales) by leveraging on those habits. A rating system also doesn't tell you how to advertise to attract more people like the ones you want more of.

[Louis Altazan]

Hi Bud,

Let me be the first to thank you for starting this forum. I look forward to reading your post and the post of others on this topic.

_________________
Louis Altazan
Owner/Manager AGCO Automotive Corporation
Baton Rouge, LA

[Dave]

Bud,
Was waiting to see if anybody else replied because this is new to me. I am not sure that I understand.

Are you saying that rating customers A, B, C, & D, is not correct? An A customer keeps their vehicle just barely below new, where as a D customer keeps theirs just a shade above disaster. With B & C being varying degrees in between.

I do understand that money can be made with customers from any level, it just has to be done differently. I also agree that one class of customer is not better than the other. I do find it easier to work with and satisfy the A or B customer.

I am finding out that there are different buying personalities. Some are fear, basic transportation, performance, simple and easy, quality. If the service writer can push the correct emotional hot button the client is more likely to purchase. If you try to sell Mr. Fear a top of the line widget because it will improve the handling of his vehicle, he probably will not buy it. Where as Mr. Performance will be very interested in a widget that will improve his vehicle.

When you are talking market segmentation, are you kind of talking about the different buying personalities?

Are you saying that each of the different buying personalities could be an A customer just as easily as a D? If so, then advertising to A customers is too broad a group. It would be better to market to just one of the segments [ buying personalities ] at a time. In other words, when trying to advertise to everybody, it does not appeal to very many people so the results are dismal.

_________________
David Wittmayer
Owner / Manager
Hansen Enterprises Fleet Repair, LLC
Camp Verde, AZ
www.hefrshop.com

[bbraun]

I THINK he's saying that different market segments have different buying patterns. What we traditionally call "A" customers are the folks who want to keep their cars maintained on a regular basis, so a seasonal "It's time for X" campaign might work. Then you have the folks who go to the Jiffy Lube for the majority of their service, but come to you because they are going on vacation and don't really trust Jiffy Lube to check it for a long trip. Different approach for your ad. Type 3 is maybe the guy who's got a friend who does most of his stuff, and it only comes to you when it's FUBAR. Different presentations for all 3. Type A isn't worried too much about your diagnostic abilities, he maintains his and doesn't need it. Type 3 could care less about maintenance, just make it run....Did I just say the same thing you did?

_________________
Bill Braun

[Bud]