Comments on: High disposable passion

By: Brandhabits

Brandhabits — Wed, 20 Jan 2010 11:18:59 +0000

Thanks Denise, I had intended to mean that passion is ‘interest’ specific and that therefore can be much more brand specific than generic income. In short, the amount of time, intensity and money that a consumer might be prepared to spend on their ‘interest’. Another example (as I sit here watching the Australian Open) might be tennis. The opportunity exists for brands to align themselves with and add to the tennis experience for enthusiasts (with high disposable passion). They choose to spend money on equipment, courts, magazines, tickets, apparel and maybe travelling to watch / play. These consumers might not be on the highest income, but spend more perhaps than those with a much higher income that dip in and out of the sport because they do not share the same level of passion. So a tennis brand would look to add value and exceed expectations of the tennis experience. Rackets with unique benefits and technology, apparel that aids performance, exclusive news, information, expert tips for loyal customers. ALl things that would benefit those with a higher than average passion for the sport. Of course, that’s not to say that others will not appreciate these benefits…

Hope that makes sense? Thanks again for reading and commenting…

By: Denise Lee Yohn

Denise Lee Yohn — Wed, 20 Jan 2010 03:44:33 +0000

great post, andy — i like the concept behind “high disposable passion” because most certainly consumers are not always what they seem — but i’m not sure about the name — my understanding of the term “disposable” in “high disposable income” is that it refers to the amount of income someone has that isn’t committed to basic necessities (mortgage, food, etc.) — is there a parallel with passion i.e., passion that isn’t committed to something else? or is this just a nice turn of a phrase? i’m not trying to be nitpicky — i just want to understand your thoughts — thanks.

By: Brandhabits

Brandhabits — Tue, 19 Jan 2010 13:08:58 +0000

Thanks for your comment Marcus. I hadn’t meant to restrict the targeting to core customers. You’re absolutely right to clarify that targeting should come down to your most profitable customers. Your example is a good one.

I’ve seen many a consumer brand repositioned for an upmarket demographic because of their perceived value. However, this hasn’t been successful because the engagement (or passion) with the product / brand has been so low. The less affluent customers they already have still spend more.

The other point that can be made is the way core customers are treated. Especially brands that offer a subscription / registration service. All the new members get the introductory offers and benefits. There is often little recognition for loyalty to a brand / service, which is worsened further by being bypassed for cheaper rates / incentives.

Thanks again for your comment.

By: brandconsultantasia

brandconsultantasia — Tue, 19 Jan 2010 02:03:53 +0000

I enjoyed this article because it recommends companies focus on retention of existing customers. It also touches on how consumers are no longer determined by traditional demographics, but more by the communities that they inhabit.

Retention is key to brand building as you cannot build a brand on an acquisition strategy alone. Indeed, companies spend a small fortune acquiring a customer and yet after getting them to make that crucial first purchase, then let the customer leave with no more than a ‘thank you, please come again.’

How insane is that?

I agree that companies must engage with their customers, not take them for granted and learn about those customers, what influences them and what they require from the brand. The article says stop trying to sell something to a customer and start trying to collaborate with the customers so that they buy something they want.

But I don’t agree that it should just be core customers, I believe it should be profitable customers. According to McKinsey, up to 15% of customers are unprofitable. These need to be identified and jetisoned.

We used to use the example of an Australian heavy machinery company (I can’t remember the name and can’t find the details) that had annual sales of A$20 million but margins of 5%. Its largest customer in terms of sales was worth almost half that amount but after years of being screwed by the client, margins were so slim that it hardly made any money on the relationship. After a great deal of soul searching (and sleepless nights by the MD), the company terminated the relationship.

At the end of the next year, the company had sales of A$8 million but margins of 16% which meant it was making more on less sales and was more efficient etc.

Furthermore, other companies can duplicate every thing you do and ofteen improve on it – faster delivery, cheaper, etc but they cannot duplicate the relationship you have with your client.

So I agree, look after all your customers, the profitable ones anyway!