What your business can learn from Columbia House

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When I was a kid, I was a member of a Compact Disc club. You know; the ones that sell you 10 CDs for a penny if you sign a contract.

Selection was pretty limited but membership was a volume play. I’d get three CDs I really wanted, four I thought were okay and three I’d never heard of just to round out the list.

As part of the agreement, you had to purchase something like 10 CDs at regular price over the next year. Back then, that was in the neighborhood of $20.

Occasionally, the company would send out a catalog of $1 or $2 CDs, which, again, I would horde as many as I could because they were cheap.

To a teenager in the early 1990s, a CD collection is a status symbol. Who cares if I had the largest James Taylor selection for anyone under the age of 50 in the Central Standard Time Zone? I had a bunch of CDs, and status is everything.

Eventually, I met the required 10 CD purchase that released me from my contract, and within seconds I received another offer of 10 CDs for a penny if I would renew.

No thanks.

Being a member of the club was annoying. Each month they mailed a card with my “CD of the Month.” If I didn’t return the card telling them I didn’t want it, they would ship it to me automatically. That’s right. You had to not order something or they would send it to you.

The member benefit was cheap CDs, and that was fine. For a while.

The problem was, they weren’t particularly good ones. Or they were the same ones over and over again. By the end of the 12 month contract, I had basically every CD I wanted. And several dozen I didn’t.

Customer loyalty comes in many forms, but it’s rooted in providing a real benefit to your customers. That benefit cannot and must not be cheap or free services.

There’s no value there.

The CDs I paid $20 for were the ones I really wanted. The CDs I got for a penny became a shinny irritant that suckered a teenage boy into spending his allowance on the the Steve Miller Band Greatest Hits 1974-78.

I willingly paid full retail price for the CDs I wanted and, over the course of 365 days, came to loathe the ones I was getting nearly for free.

As a customer, I underestimated the value of getting what I wanted, and the company over estimated how much I would value cheap music.

As a result, in the end I went away as a customer.

Don’t underestimate the value of how you treat your customers, and ramping that up (even if it is already excellent) is a respectable value-added loyalty option.

Do you have a large local customer that you give same-day delivery? Could you make that immediate delivery; like hang up the phone, grab the order off the shelf and jump in the delivery truck kind of immediate?

That sounds like a loyalty service that could become invaluable for your top customers, much more so than free or discounted parts. If your customers are not pushing back on price, why reduce it? Add services that make sense for both of you.

Your customers will gladly pay a reasonable price for a product or service they value.

If you’re not bundling those things into your customer loyalty program, the odds are that you’re repeatedly throwing a bunch of Michael Jackson’s Thriller albums at your customers.

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