Marketers, especially in the Direct Mail space, have to actively consider who their client's target market is and what motivates them. In good or challenging economic times, there are always people waiting to be motivated by a deal or coupon, but this is not always the ideal customer even if it results in a sale. These folks are known as bottom feeders.
I was working in bicycle sales as a young man, and my job mostly entailed selling low-margin kids’ bikes and entry level cruisers for family rides in the park. We also stocked a number of high-end bicycles for enthusiasts, athletes, and people who appreciated quality products, and these bicycles were the money makers. As a salesman, we had some wiggle room on the nicer bikes’ final price, but we had very little haggling room with the lowest cost bikes. A large majority of customers who came to our store– instead of let’s say Walmart– knew they were buying a quality product and were happy to pay the listed price, but not all of them.
One gentleman came in, and he was clearly in a rush to buy bikes for his kids and something for himself. As the two elementary age children were left to maraud the store unattended, I was engaged in my standard sales pitch for an entry level adult bike with the father. After we’d sized and adjusted the bike for him, he corralled his kids and asked them to pick which color they wanted from the cheapest kids bike option. As the two boys were arguing, I was thinking to myself “Hey, three bike sales in 25 minutes, that’s efficient.” But, I made an assumption that the customer was happy to pay the listed price.
As I was finalizing the sale, the gentleman forcefully insisted, “Well I’m getting three bikes, what sort of discount am I getting?” Calm and collected, I responded, “Well sir, as I mentioned earlier, I can get you great discounts on helmets or lights which are great additions to a safe ride.” (The father had already dismissed any extra purchases). This wasn’t received well, and he raised his already loud voice. “I AM NOT THE TYPE OF MAN THAT PAYS FULL PRICE!”. Before he got angry, there was a possibility I could convince the owner to maybe discount the bikes 10%. But I didn’t need to talk to the owner, Billy, because he was up there a flash, “Is there a problem, sir?”.
The gentleman calmed down feeling like he was talking to an equal. “Ah yes, the owner, I’m buying $700 worth of bicycles, and I think you should be able to cut me a deal.” Billy looked down at the bikes and knew there were slim profits to be had and responded that the bikes are priced as listed. There was some more posturing. The man resorted to minor threats, negative reviews, taking his business elsewhere, but Billy stood his ground smiling knowing what type of customer he was dealing with– a bottom feeder. As the man stormed off with his very disappointed kids, the business owner knew he wasn’t losing the type of customer he wants. I was sure I’d take some flak for not closing the deal smoothly, but Billy was happy to see them go and also happy I didn’t cave to the deal demanding customer.
The Fish Market
Bottom feeders exist in every industry from multi-billion dollar aerospace companies to local competition for a good lunch deal. Marketers and their clients have to always be thinking about who their customer is, and what motivates them. Although every business wants to maximize daily sales, there has to be a consideration of long-term customer loyalty and spending patterns. HBO’s "The Sopranos" captures this predicament in a humorous way as the restaurateur, Artie Bucco, is facing declining revenue, and he caves to his wife’s demand to offer two-for-one lunch specials. The scene cuts to the next day, and a long line of elderly folks are waiting at 11:00 am asking about “Low-Sodium Options” on the menu.
In the vehicle service space, there is ample opportunity to attract new interest with coupons, discounts, or other specials. What your average mechanic has to ask is, "Do I want the type of customer who only fixes their car when there’s a deal?". This calculation every business owner has to make is called the True Lifetime Value of their customers. You can sell five discounted oil changes, and two of those customers may come back for more work when needed. Or you can use other tactics like personalized brand marketing to keep your three loyal customers engaged and on their regular maintenance schedule. The reality is the person who decides to change their oil when they see a good deal is a person who might not be as steadfast with other repairs. Ultimately, a mechanic wants all the business they can get, but getting bogged down with discounted, low-margin service work can take away from the intensive repairs that both make money and build reputation.
Automotive service relies on a number of marketing tactics, and good old-fashioned mail is one of the more common ones. Now when it comes to direct mail marketing, we have a lot of tools to navigate this ‘Bottom Feeder Question’. When using targeting with quality data, we can isolate demographics based on income, home value, or even the type of vehicle they own. Now it would be easy to assume that bottom feeders are low income consumers, but that is not always the case. Wealthy individuals with expendable income can be more easily convinced to spend on a big repair, but the reality is the bottom feeder exists in all demographics. Even Warren Buffet has been known to clip his coupons. Pursuing services with a discount or haggling has more to do with a customer’s mentality and decision-making process than it does with their level of income.
Just like fishing, it’s easy to navigate around the bottom feeders, but you also might be missing some meaty catches. At Milestone Marketing Solutions, we constantly confront this question of how much salesmanship do we devote to cost-saving messaging versus the benefits of the service. The answer, like many of these questions, is “It Depends”. New customer acquisition is like throwing a big net to the bottom of the ocean– you will grab all sorts of creatures, including those at the bottom. This is especially true when you dangle the bait– coupons, discounts, flashy scratch off mailers, etc. The most effective strategy is often a little of both tactics. The important thing is to not reflexively resort to coupons and discounts at the first sign of a downturn. Once you’ve developed a customer base that’s waiting for the deals to come out, you’ve created a bottom feeder business.
Our automotive clients actively adjust their mail quantities and goals based on market trends, and we have to adjust our creative accordingly. Sometimes this means going full flashy, in-your-face, discounts, but we’ve found that subtle adjustments are the best measure when the market has an appetite for a deal. Sometimes that means targeting the bottom feeders. This is a good thing for a business pursuing growth, even if some of those customers will be one-time visitors. The most effective strategy is looking for the True Lifetime Value in your customers, though, and that comes from the right messaging and well targeted data. If you’re tired of the bottom feeders, contact Milestone and we can get your marketing strategy focused on the big catches.