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Six Ps of Marketing?

In a recent article found on Marketingprofs.com, Stephen Drees, President of The Allegiant Group Inc. (formerly CEO of Quantum Loyalty Systems, Inc.), explains how consumers hold the reigns of the company/customer relationship as competition intensifies among an endless choice of products and providers.  Meanwhile customer loyalty declines.

Customer loyalty is long-term commitment with many companies seeking to transform customers into their “advocates”. Company’s that are successful building “advocate” relationships will achieve enormous promotional and economical benefits.Mr. Drees briefly discusses the different eras of marketing. The 20th century facilitated customer loyalty with local production and a hands-on, face-to-face approach with highly personal customer service. At the turn of the 21st century, large consumer product, service and retail companies no longer developed personal relationships with their customers. Today, technological advancement, product innovation, and sophisticated marketing and advertising have created a plethora of choice for consumers.

In the new customer-centric environment, Drees concludes companies must introduce two new "Ps" to the original four Ps of marketing: product, price, place, promotion, people and performance to create effective customer loyalty.

The fifth P, people, may be the most difficult, but it is the most important. Companies with the lowest employee turnover have the lowest customer turnover. Quality people within the organization become the reason why customers purchase your products when competitors offer similar products at a comparable price.

The sixth P is performance. Performance encompasses the total customer experience and how product, price, place, promotion and people combine in harmony is what matters most to consumers. For example, if customer service is poor, the product/service will not have met consumer expectations. "The first four Ps are critical to loyalty but individually, they are only parts of the puzzle. When the objective is loyalty and advocacy, this can only be achieved through performance as perceived and judged by the customer" says Drees.

To create a successful loyalty program, guidelines to understand the program primary mission must be clearly defined: What customer behavior is the company seeking and will the program engage and reward its best customers? A loyalty program with the best intentions will yield little long-term benefits without a clear understanding of the consumer profitability dynamics within an organization.

Consumers have become very savvy when assessing loyalty programs. Consumers will consider how little they have to do to benefit from the program and if they will receive rewards in a reasonable amount of time.

Successful loyalty programs include a balanced combination of 'hard' and 'soft' incentives by providing consumers' multiple reasons to engage your program and produce highly loyal advocates. Hard benefits such as cash prizes can be powerfully persuasive, but may be expensive to execute. Soft benefits appeal to consumers' emotions and tend to be more relational in nature. Member-only perks and levels of recognition based on longevity can foster loyalty with little or no additional cost.

Regardless of how successful a company manages the six Ps and its loyalty program, some consumers will drop out and stop buying your product. It is important to address customer defection openly and honestly. The answers are the backbone of an ongoing research and market intelligence feedback loop. Insight from defection feedback should be used to update and refine the way organizations engage customers in the future.

Without a doubt, loyalty does matter. Drees references a study that "proved conclusively that companies that can improve the retention of their best customers by as little as 5% can increase enterprise profitability by as much as 75%."

Suggested Reading:
Customer's Define Centricity on Their Terms

Posted on July 3, 2006
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