How does your marketing react to the economic crisis?

At one of our catalog companies, we're reacting as you might expect - better deals on shipping, more sales, and, though we think our service is exceptional, we're cranking it up a notch.

This seems like the logical reaction - along with trying to lock down special deals with vendors, landlords, and others - as well as volume discounts for big customers.  And there is an interesting question.

I think it's fine to reward good customers for volume, but you walk a thin line.  As long as you do not disadvantage smaller customers, and your "smaller customer" offers are competitive, it seems ok.  But if you disadvantage smaller customers to reward big ones, you risk your smaller customer's business.  This is problematic, especially, in businesses that have small customers who give you virtually all their business but they're just, well, small.

I flew Frontier Airlines the other day and their reaction to the current situation is counter intuitive to me.  Since October, they've reserved all of the seats in the front half of the airplane for their high mileage frequent fliers, begun selling tickets at high markups if you want to check baggage, and penalizing changes at twice their level of last October if you aren't in the club.  In other words, because of the nature of their product, they are disadvantaging smaller customers in order to reward the big ones. 

It's the retail equivalent of "if you don't spend a lot with us, you can only buy the outdated leftovers."

To me, a small customer of Frontier, the message is clear - we don't want you - go somewhere else.

And I will.

But, the point is, they had better be sure that the big spender will carry them and those they drive away won't be needed to bolster their business in the coming recovery.  We'll see.

Comments

[Brian Weidner]

I see both sides of this issue. You never want to penalize small customers and I agree that the pricing should be equitable.

However, the 80/20 rule applies to most sales models. 80% of the sales come from 20% of the customers.

If I can create a solution acceptable to the important 20%....it will consume less resources and take less of an effort to achieve success. Perhaps Frontier is adopting a similar strategy.