Advantaged and disadvantaged customers

What is it about?

Many firms use customer tiers to prioritise those that yield the most profit – think about your mobile phone plan or satellite TV package. Have you found yourself in a conversation with a colleague only to find they got a better product selection than you, despite paying the same price? In today’s age of social media, price comparison sites and blogs, it’s very straightforward to compare yourself to other consumers. By comparing yourself to others, you will either feel satisfied, “I’ve been treated well”, or you might feel you’ve been treated unfairly. This study investigated the impact of those feelings on the perception of the company in question. The study found that the customers who perceived themselves as advantaged (they got a good deal) were mostly concerned with levels of service and communication, feeling they received a responsible and reliable service with regular useful updates from the company. They had no issue with different offerings for different customer segments. Those customers who felt they’d been treated unfairly were more concerned with price and reputation – they value quality products at a reasonable price, sold by an ethical company. They felt treating customers differently was wrong. This suggests that segmenting customers and tailoring products or offers to different groups is a strategy that could backfire, and marketers should be aware of what’s important to each group. The researchers suggest firms identify whether customers feel advantaged or disadvantaged by doing regular surveys or focus groups. This may help marketers identify what can be done to maintain and enhance existing relationships.

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Why is it important?

Previous research has suggested that segmenting customers by potential profit is a sensible way of assigning resources. This may have adverse effects on those customers who are disadvantaged by this grouping however, as they are left feeling negative towards the company and will respond by becoming more price-conscious. This suggests customer relationship management should be applied carefully with strategies for each group, not just those customers that have the most potential.