Should Ace Toys decide in favour of reviving the Blondie Friends Club? Where did it err in thefirst place?
Certainly YES!If ace toys want to establish itself in the market and stay ahead from competition in future, then itneeds various schemes like the Blondie friends club. It is well known that the Indian toy market is in aearly stage as people are slowly changing their perception towards western world where toys are ameans for entertainment and learning. So there is bound to be tougher competition in the days tocome and clubs like these would enable ace toys in retaining customers.Although in the initial stage, the Blondie club got up to a flying start with 6000 customers inthe first year itself which by any means is a good number, but they could not maintain the synergy of the club because of lack of incentives and reward schemes that could excite the club members topurchase more and recommend others. Above all, the prime product of the club, the glossy monthlypublication providing product-related data did not come up in time which demoralised the clubcustomers. The content of the magazine did not demand a feedback or non commercial materials toexcite buying behaviour.
Is a captive group of customers a pre-requisite for the success of a relationship marketingprogramme?
The backbone of any relationship marketing programme is a customer group who are very close to itand are easily excited by the incentives and rewards. In the Blondie club, the members will demandimmediate gratification, constant attention, and perennial excitement. They will demand it now-andagain, and again. Slip up, and they will forget you faster than yesterday's school lesson. Rewards canexcite them, retain them, make them buy more and more from you, and induce their friends to buyfrom you. Make the Blondie Club a movement, make it happen. The children will be happy. And youwill profit.Indeed, the best way to expand the Club will be to focus on Customer Retention Strategy anda focused group of customers who are ready to buy its products.
Is cost a major deterrent to its implementation?
Expenditure for a programme is never estimated as a percentage of turnover, rather as a percentageof each customer's value to the company over his, or her, lifetime. It is based on the expectedpurchase value of a member over a period during which he/she buys the product.In case of toysmarket the customer has the demand for the product for almost 5-10 years till she is in playing schooldays.If we look at the issue of costs from that perspective, and work out the corresponding numbers,lack of funds would never be a problem. In fact, such an expenditure is an investment in value-addition.Further the earlier records show that the cost to maintain the club was not even 1% of thetotal revenues and in a high margin business like toys where margins are almost 35%, the companycan afford to spend at least 3% of total revenues on promotions and advertising and other suchactivities.
Is Ace Toys' business amenable to relationship marketing at all?
Toys business is one of the businesses which is amenable to relationship marketing.The Main Focushere is Customer Retention Strategy .If it wants to increase its market share and not stay stagnatedwith a 12% growth rate, it needs a real change in its core strategy and other promotions and itsrelationship programmes, not just token gestures.