by Colin Jowell

(Why giving away money won’t buy you love)

As fellow survivors of the GFC, you will no doubt be accustomed to some version of the term “the new normal”: the commonly held belief that after having experienced such hardship, Australians adjusted to more spendthrift, value-seeking experiences.

There are two things wrong with this theory.

The first is that this trend originated in the US. And as much as we might like to think we were as badly affected by the down turn, we simply weren’t.

The second problem is that when we look at a customer’s willingness to recommend a brand, in category after category, a low price is simply not enough.

Take the airline industry as an example: our study showed Singapore Airlines and Emirates customers were some of the most likely to recommend their brand choice, not just in the airline industry, but of any of the 200 brands we measured! Not so for Tiger or Jetstar, with customers recommendation for Jetstar almost 40 per cent lower than recommendation of Singapore airlines (the story is worse for Tiger, almost 65 per cent lower!).

Experience clearly beats out price as a driver. And while you can prop up sales with low prices and constant promotion of those low prices, those tools are hungry beasts that must constantly be fed.

Heavy price-based promotion is like heroin - pleasurable at first, and highly addictive, but requiring more and more just to stay in the same place. 

Taking the resources required to feed the habit and investing it in creating a better experience may hurt in the short term, but the long term may well be more sustainable.

Things to think about

  1. Are you discounting your services before you’ve been asked - just to remain competitive? It may not be giving you the returns you think.
  2. Can you outline how your customer experience is better? If you can’t do so clearly in two or three points, it’s unlikely your customers can do it either.
  3. Can you think about ways in which to improve your customer experience if you weren’t always pricing as keenly? And if you’re not sure, asking a good spread of loyal and lapsed customers might be a great way to start.