With the help of a minimum advertised pricing policy, you can protect your brand image and increase customer retention. It keeps rogue resellers from ruining your brand image in the eyes of your consumers. The biggest drawback of having rogue resellers carrying your range of products is that it increases customer attrition. Also known as turnover, churn, or defection, customer attrition refers to a situation where consumers end a relationship with your company. Having a large customer base is crucial to business success as it influences your ability to generate sales.
Luckily, having a minimum advertised pricing (MAP) policy in place lets you get a handle on the situation. It lets you avoid the adverse effects of customer attrition and abandonment. It lets you concentrate your efforts on growing your brand instead of putting out fires.
Safeguard your client base
Studies show that it costs as much as five times to recruit new customers to your brand than to retain an existing one. The first rule of business success is to build relationships, recruit new customers, and work toward building their trust in your brand and products. Only then do you get to build a lasting relationship with them that turns them into loyal customers.
Needless to say, this process takes a considerable amount of time, effort, and resources. Shifting your focus from customer attention to customer retention lets you lower your marketing efforts without harming your bottom line. Studies indicate that it takes a business between three to five years to create a portfolio that comprises 25 percent return customers.
These return customers can account for up to 40 percent of your total business revenue. You have a better chance of weathering economic downturns if you have a large base of return clients. Companies with a client base of 40 percent return customers can generate up to 47 percent more profit than those with a client base of 10 percent return customers.
Identify your shortcomings
Modern-day customers are quite fickle and will leave your brand in a flash if they perceive that they are not getting value for their money. Therefore, you need to zero in on the major reasons that could lead them to drop your product. In an image-conscious market, consumers are likely to drop your line of products if suddenly your products flood the market at low prices.
In the absence of a MAP policy, rogue resellers will mark down the advertised prices on the product and ruin the appeal for your loyal customers. Enforcing such a policy lets you starve off one of the most damaging threats to your brand. Such technology also lets you peek into what the competition is up to. Such competitive intelligence can help you identify business shortcomings and eliminate them.
Having a large customer base is crucial to business success. Increasing the portion of repeat customers in the client base puts your head and shoulder over the competition. A MAP policy lets you make great headway in that direction as it lets you keep rogue resellers from ruining your brand image. Haphazard lowering of prices erodes the image of your product as well as consumer confidence. If that happens, you will have your customers leaving your brand en masse, causing your sales, market share, and profits to decline. With the right technology, you get to take proactive measures to nip the problem in the bud.