Sarcoidosis Research

Due to the litany of expanded products and channels as time has progressed customers now have a greater range in choices than ever before. The idea that zero defections and lost customers will produce profitability increases overtime is invariably true. However, a goal of zero defects in your customer base is a daunting task at best as customers have almost been preconditioned to switch based on cost and variety. And, as channels increase, the expanded flavors for procurement may help drive away those once loyal. In addition, buyers’ detachment from any one particular channel of distribution creates in them a somewhat distanced sense of loyalty to any one particular product. Even the most loyal customers may be difficult to corral in order to get them to “re-up” for another dose of business from your company. This is especially true for a commodity like commercial electricity.

Sensing the need to retain customer loyalty may drive business owners to promote programs for retention, but such efforts may also be thwarted by the status quo, the products and services they provide, the distribution channels, or even the defection management itself. Certainly defection management costs must have increased parallel with increases in channel options. If this is even remotely true, then the increase in retention costs may need re-addressed. Moreover, if the defection more readily occurs as channel increases, then the cost/revenue comparison of retention versus new client acquisition per customer may not be as appealing as it was in times past.

The internet has served to help in the increase of channel number and variety, further exacerbating defection away from one particular brand offering. And while internet businesses often have the freedom of lower costs of acquisition, their lack of channel variety lessens their ability to retain customers and manage defection. For instance, can the “pure-play” internet company reach the man or woman who needs a razor immediately in order to make his/her meeting tomorrow morning? In addition, the internet as a channel sees behavior segments which would have been considered abnormal for particular customer-types if they had not been shopping online. Buyers’ reactions, behavior and overall perceived value throughout each of the steps in the buying process are altered, for both businesses and consumers alike.

The missed opportunity for the solely internet-based company is to catch the fragmented segments of buyers who may not purchase your product or service through the web. Without a diversified channel strategy, a pure-play web-based company misses revenue opportunities with existing and potentially new customers whose actions are fickle, or as the article would describe them: unfettered.

Comparing the strategies of Amazon to Barnes and Noble in light of the aforementioned analysis should give a clear indication on strategy and its effective execution. First, we know that Barnes & Noble differs from Amazon in its current method of channel distribution. While B&N distributes both online and in-store, we know Amazon has no storefront presence. This fact alone helps to shape the strategies of both companies.

Unlike Barnes & Noble, Amazon has a limited channel approach. However, they seem to make up for the limit in channels by offering more than that simply books. While books remain Amazon’s flagship product, the company is diversified as to the depth of its offerings, giving them the ability to cross-sell and upsell while people are visiting their virtual store. They intend to keep unfettered online customers engaged by giving them more options when it comes time to re-up and purchase more.

Barnes & Noble, on the other hand has a more expanded channel and a limited product offering (in this case, mostly books). This allows them to eliminate fickle online defectors by offering a physical location. In addition, the company is able to directly address the needs of its customers by having customer needs addressed by face-to-face contact at physical locations. The example given in the article of Nordstrom and their customer-focused approach is something Amazon could not even attempt to do. However, the inviting atmosphere of a Barnes & Noble store does much more for the needs of its customers than Amazon.com’s website does for theirs.

Increasing the number of channel options is a competitive advantage for Barnes & Noble as they are able to capture and corral online buyers. Both strategies are relevant given the respective companies’ core competencies. One company that would be interesting to look at, who may be doing a little of both is Wal-Mart.

The company most likely to reap the rewards of zero defections is Amazon. Amazon will be able to retain customers for longer periods of time than Barnes & Noble. Unfortunately Barnes & Nobles expanded channel approach does not make up for the grossly expanded product approach strategy Amazon has taken. Customers are much more likely to be retained and purchase additional products from Amazon because they offer such a variety. B&N, on the other hand, really is only intent on targeting those customers who are looking for reading materials which limits their retention of customers because customers are not just about reading.

Barnes & Noble, however, does fulfill more customer needs in an emotional sense than does Amazon. Amazon does not have any face time with actual customers and therefore does not fulfill some of their basic needs for human-to-human interaction. Attempting to make up for this by offering product reviews and interactive features on the website is somewhat helpful, but will never compare to a friendly in-store clerk.

However, when it comes to profitability, long-term retention is key to higher profits per customer. When it comes to the best ability for longer retention of customers, Amazon beats Barnes & Noble.