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Is it Unethical to Gouge our Best Customers?

February 8th, 2011 · No Comments · Ideas

Big Idea: Rather than trying to maximize profits from our best customers, what would happen if we converted them to our ‘best marketers’ instead?

The people most likely to buy your premium products and services are also likely to be your biggest fans. It always struck me at wrong to charge these people high prices for ebooks and membership programs. Shouldn’t you be rewarding your best supporters rather than trying to squeeze as much profits as you can out of them?

This is what Seth Godin has to say in his article, How should you treat your best customers?

Here’s what most businesses do with their best customers: They take the money.

The biggest fan of that Broadway show, the one who comes a lot and sits up front? She’s paying three times what the person just three rows back paid.

That loyal Verizon customer, the one who hasn’t traded in his phone and has a contract for six years running? He’s generating far more profit than the guy who switches every time a contract expires and a better offer comes along.

Or consider the loyal customer of a local business. The business chooses to offer new customers a coupon for half off—but makes him pay full price…

If you define “best customer” as the customer who pays you the most, then I guess it’s not surprising that the reflex instinct is to charge them more. After all, they’re happy to pay.

But what if you define “best customer” as the person who brings you new customers through frequent referrals, and who sticks with you through thick and thin? That customer, I think, is worth far more than what she might pay you in any one transaction. In fact, if you think of that customer as your best marketer instead, it might change everything.

Virtually every author in print or online will give free copies of their books to influential bloggers. How many will offer free copies to loyal subscribers or the readers who leave the highest number of comments? I suspect that it is not that many. Most of us operate with a scarcity mentality, trying to extract as much profits as we can.

What if we took Seth Godin’s advice and treated our best customers to exclusive and free products? I am willing to bet that our best evangelists will become even more supportive.

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