Monday, 12 March 2007

Concerning customers: New vs. Old

Every business, whether operating on the internet, or out in the 'real world', should want to gain new customers. For already very successful companies who are market leaders in particular fields, this often means diversifying, or expanding their target market. This is actually the case where I work at the moment - My employers are a very successful, very large travel company. They are the market leader in the UK by quite some way. However the travel industry is such that they need to expand their target market, and try and attract more customers to be able to make the profits they need - The costs of the holiday business are so high at the moment that they need as many customers as possible, and traditional 'package' holidays just aren't sexy any more to the new generation of young, internet savvy holiday buyers.

All of this means that there is a lot going on here at web HQ - We have a number of projects going on to enable this diversification of markets, and to allow the business to attract these new customers which, until now, have been an un-tapped market for them. Today though I ran into something of a conundrum - If you're not going to use an entirely new brand to reach these new customers, how do you balance the need to attract new customers, with the risk of alienating old ones? The answer, in this case, came to me from the top of the tree - And it wasn't exactly an answer I was overly enthused with.

Allow me to give you a specific example - Take a look at some of the websites we are looking to compete with and draw these 'new' customers away from: expedia, lastminute, opodo. These are all sites used by the young, internet savvy generation of holiday goers with disposable cash to burn, and an eye for a deal. Opodo is a relative newcomer to the market, but has already started making waves, and we like it here, too. Expedia, we have to admit, are the best at what they do - Their advertising and marketing machine makes the whole experience of booking a holiday with them look positively pleasurable - Never mind the holiday itself! They want the user to feel that booking a holiday with them is part of the whole holiday experience, and to an extent, it is. We don't really do any of this as well as any of the above companies yet, but we are working on hauling ourselves into line with them, in order that we might be able to compete - Enter the problem.

If we as a company want to compete with these businesses already established in their market (Which is different to ours... We are traditionally seen as a package holiday company), we need any new visitors we get to feel instantly at home. We need to give them the things they expect from these sites. Now, on the whole, we aren't doing a bad job at this - We offer a huge amount of content and information - Resort photos, accommodation photos and videos, resort information etc. We offer them the same flexibility, too... They can select a flight and hotel combination to suit their needs.

I have some problem with our presentation of this flexibility, though. This problem has come up because the powers that be in the business have decided that it is important to them that we not alienate our traditional 'package' customers. Remember that much of our revenue comes from this market, and we need to keep this custom after we open up our target markets to include the new customers. I have no problem with this - It makes perfect sense. However, when they turn round and say "We want to have people search for 'holidays' as opposed to 'flight and hotel'", I baulk a bit.

I realise that previous customers are important to the business. Some of these customers have been coming to us for years, and we cannot afford to lose their custom (read: money). However I also realise that 'Flight and Hotel' is what every other company in the Dynamic Packaging (Expedia etc) business is calling it. The term 'Holiday' works great for our existing package holiday business... But when you present this to the aforementioned young, internet-savvy audience we are looking to attract, they will simply assume our business has not in fact changed, that we are not the holiday company for them, and they will go back to their old favorites. So it would seem that we try to attract a new audience, but in terms of actually giving them what they are looking for, we may well fall at the first hurdle.

There are ways of dealing with this new vs. old customers problem, too. As I have already said, I fully realise the need to look after existing customers who we have a relationship with already. They are a major source of income for us, and we cannot afford to lose them by alienation. One thing that the business does not seem to have thought about, though, is that we already have brand preference with these customers - Certainly those who have been coming to us for each of their holidays for years on end. New advertising campaigns and a flash new website can raise our brand awareness amongst this 'new' crowd, but versus brand preference, that counts for nothing.

The great thing about brand preference is that it means that customers want to came back to you. That means that they are (generally) willing to put in that little bit extra effort to get what they want from your business, as opposed to someone else. Customers with brand preference are generally open to re-education, and this is how I personally would have dealt with this conundrum.

If we were to put the search terms back to 'Flight & Hotel' instead of 'Holiday', it might, for a very short time, confuse our existing customers. They might look for the traditional 'Holiday' radio button on the search panel and feel confused, maybe disheartened when they did not see it. However if we took a little time to re-educate them in this new system, they would quickly understand what has changed for them is actually very little, and before long they would feel back at home again. This can all be accomplished relatively easily. A simple text link saying "Looking for holidays?" with a popup layer explaining the changeover would be highly visible, as those who do look for the radio button (Not many, according to research - Around 40% of visitors to our website actually just click 'Search' without changing any information on the search panel) would be scanning for the word 'Holiday' anyway, and our new generation of visitors would see the same thing they expect when they visit any of the other holiday sites in their favorites list.

I asked the question to a couple of colleagues, saying "Why hasn't this been done?", and the response was generally "We tried but they don't listen". It is frustrating when those people in a company making major decisions refuse to take advantage of the expertise in their staff. When user interface, usability and business experts all say that something is a crazy idea, and they are all ignored, isn't something fundamentally wrong with the decision making process?

So, to summarise - Yes, by all means, look after your 'old' customers... But don't ignore the needs of a new market you are trying to break into in preference to them. If you have a strong brand, and a good market position with your existing customers, they can be re-educated. Generally people can manage a small change in terminology if you only give them a little help through, especially when you know that they actually want to shop with you as opposed to one of your competitors. New customers, on the other hand, have no loyalty to you - In fact, you may be fighting an up-hill battle from the start, if they are already loyal to another brand. If you don't deliver what they are expecting, they will leave you as quickly as they came to you, and this is especially important on the internet.

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