KNOCKING ON THE
HEAVENS DOOR

Let’s dream and imagine an ideal customer from the seller’s point of view.
An ideal customer

• buys what you want to sell, other words the goods with max margin or the ones you want to get rid of like shelfwarmers and things;
• buys from you even if can buy the same thing cheaper elsewhere;
• doesn’t ask for discounts on the contrary he is happy to pay more (mind it’s a dream!);
• acts as an influence agent promoting your company among his friends and literally leads them by the hand to your shop;
• in any potential conflict he is always guided by the presumption of your good faith (versus typical consumer behavior: juicy scandal in the shop-a stream of invective online — a legal claim.

The one described is all that can be desired, isn’t he?

Considering the fact that almost all the technical innovations and inventions originated from science fiction of XIX-XX century have already become true or will in the nearest future the question is whether the above described "ideal customer" project can be put into life?

It goes without saying it can.

Isn’t Army of Apple fans a perfect example? 90% of iPhone, iPod and alike dear plastic perfectly match all the ideal’s criteria.
The product range is next to nothing apart from laptops for it’s Apple who decides what people are to buy.
Therefore Apple has a commanding lead on the market in spite of no end of me-too—products for way less money.
Despite the exorbitant prices the sales are booming and running into billions capitalization goes over the top.
Dedicated Apple fans queue for the launch of new gadgets and are happy to overpay to get the awaited piece of plastic asap.
Well known quality and reliability problems in no way hamper the gadgets’ popularity though mass media tends to take particular notice of such blots on the market’s leader reputation.
And, finally, every single Apple gadget owner will talk about its advantages for hours and hours proving that it’s THE BEST FOR THE MOST CONVINIENT ONE! (leaving aside the fact that it’s regularly rather difficult to get on Apple phones and consequently the phone you can’t get on doesn’t 100% qualify for the title of a phone).
The recipe of such a result is a mixture of brilliant engineering everyway and truly great marketing strategy (in the authentic meaning of this term which in Russia is almost always reduced to direct advertising).
Admittedly, outstanding results suppose using best endeavors.

Steve Jobs like Da Vinci is one and only. For us here Apple and US are a sort of another planet.
After all Apple is both the inventor and producer of the product.

What about ordinary dull retailers? What do they have to do to create an ideal customer?

A brilliant product is essential but not enough whilst Apple has brilliant gadgets Ultima has a brilliant software solution you,retailers,should have a brilliant mixture of perfect assortment, right prices, a mix of handy implemented in-demand services and general high quality of work which cant be reached without smoothly running business processes. Read more about it here, or go to ultimaconsulting.com.

Once you have a stunning product which creating is a challenge itself demanding first-class organizational engineering and keen perception of marketing it’s going to be much easier to finally put into life "ideal customer".
The two things behind it are Ultima ERP and a perfect customer loyalty program.

In the second stage your task is to resolve or at least mitigate the basic buyer-seller face-off which the highly competitive market economy is based on a seller wants to sell at a higher price the customer buy at a lower one.

As a matter of fact all efforts aimed at creating a cutting edge product mean mitigating the abovementioned face-off through lower competition due to product uniqueness.
[Actually absolutely all successful business strategies come down to decreasing competition by some means or other. Isn’t Jack Trout’s ‘Differentiate or Die’ about rivals reduction strategy by differentiating your product from others ? Branding as well as all the rest hammers away at the same thing.]

A well-balanced customer loyalty program mitigates the basic face-off by harmonizing the conflicting buyer-seller interests.

The way it works as exemplified by Ulmart loyalty program XXLBonus (from the customer’s side is of interest to us from the internal engineering point of view.

Firstly you should fix the budget for the bonus program in percentage of gross margin e.g. you are ready to give away to your customers 10 % of the markup thus if your profit margin per unit is 100 RUR the rebate (further bonus) makes 10 RUR . The bonus rate is shown on the site in the catalogue so that the customer would see how much he’ll get for every purchase and later he is able to use his bonus points to pay for the goods.
Therefore the task of harmonizing customer-seller face-off is solved for the customer is interested in buying goods with max rebate and consequently with max profit margin. Here we’d like to emphasize that such an approach is free from the main disadvantage of traditional practices which introduce price-connected schemes whereas it’s obvious that the size of profit margin and price aren’t always linearly dependant.

What about shelfwarmers? In the bonus program setup control panel shelfwarmers are parameterized(a number of days in stock without sales and/or the estimated time of the item’s presence in stock exceeds Х days and/or number of the item’s page views doesn’t reach У a week) and the coefficient matrix of bonuses multiplying. If supply of goods in stock stays the same for three weeks running standard bonus is multiplied by 1,5 if five weeks by 2 and so on and so forth.
Bonuses multiplication principle can be as complicated as you wish for example decreasing\increasing coefficients can be set for specific groups of goods. Such options are in demand when it’s necessary to force some categories of goods sales: new products or when you get an additional back-end rebate for selling in excess of the target volume.

Ultima ERP default pricing pattern is the one where the final price is the result of percentage markup matrix overlay on current market price. Theoretically this price is the same with the real input price but practically is changed by product-managers (or by the robot in accordance with specified business rules and prices set by rivals which are imported automatically), and consequently all the prices for various categories of customers are recalculated as well. Markup in the bonus program is calculated from the current market price. This pricing pattern has a number of advantages in particular both output prices and theoretical markup used to count bonuses for each unit. However pricing is a topic in its own right.

The user can manage the amount of bonus points he gets. In the cart before accomplishing the order for each item it’s possible to increase or decrease bonus points alongside with the item’s price. In both cases recalculation isn’t on a one-for-one basis but with a decreasing coefficient set by the admin. Any recalculation results in a commission which is company’s extra profit.
This service is increasingly in demand among business customers and significantly raises their loyalty.

For the present there isn’t a better way to stimulate word of mouth than MLM so without philosophizing we are happy to introduce Ultimalife ERP (click to see the ad toon): company’s counteragents (registered customers).

Each new customer becomes the top of the pyramid with a downline of customers he involves.
For each purchase up the pyramid we assess the percentage from the total bonus (in the toon 50%). So if a customer gets 1000 RUR for his purchase his "dad" gets 500 RUR and «grandad»-250RUR great granddad- 125RURТ and so on till the transferred bonus becomes 1 RUR. The END.Simple. Visually. Efficiently.
It becomes beneficial for the customer to promote your company as the best one in all possible ways and which is nice it again harmonizes the face-off. Mostly small size of MLM bonus is in no way an obstacle as for the majority of people the concept of getting money for nothing is attractive despite how much it will be. Well-built handy MLM system will act as an additional success catalyst.
Key convenience factors: a)on completing the first stage you will become one of the best or the best company on the market and your customers won’t be put to the blush when recommending you b)extremely user friendly toolbar(we did make sure it is):on receiving an invitation a potential customer just clicks the link or enters a promo code when registering and...bingo! He is a preferred customer.

BUT: We’d like to stress once more that all these schemes only work if you have a brilliant product.
If your assortment is next to nothing prices exorbitant and a good half of clients never comes back, if you regard guarantee claims as expenses not a loyalty stimulator then unfortunately good loyalty program is the lattermost thing worth thinking about.

A few words about results.
For two years of bonus system using from December 2008 till December 2010 Ulmart business grew tree times in spite of the fact that it was growing in hardest crisis months and that computer and home electronics market experienced the worst fall (estimated 40% decline in 2009).
The results can’t be explained by low base effect for at program’s startup the monthly turnover was millions of dollars.
What was the loyalty program impact what was a normal business growth? It’s hard to estimate exactly but according to the company ours are 25-30% which sound as a good result.

СIt’s worth while mentioning that such a powerful intellectual system isn’t human-aided and after one-time-only setup (15 min) it works in the fully background mode.
Feel the difference.

Perfectly implemented great idea ensures some extra pleasingnesses.
We’ve managed to find an easy solution for gift certificates processing which is usually rather problematic: a customer simply buys a card for a certain quantity of bonus points which he gets on his account when activated(very similar to mobile operators’ scratch cards).
The one who experienced running cooperative marketing campaigns with vendors is well aware of the processing and record-keeping nightmare they cause. Jillion horror stories what a pain in the neck it is to make the warehouse dispatch say branded umbrellas when buying a monitor and a case of producer X if they aren’t shown in the invoice(of course they aren’t for it just impossible to formalize vendors’ demand in traditional systems).
Or how to terminate the campaign on time if you run out of stock or what you are supposed to tell your customer when the want to get one referring to the announcement on the site or how for god’s sake make a discount of 500RUR for the PC if there I more than one spare part of partner vendor?
But with us it’s fully and easily automated on the common denominator base: everything incl gifts works through bonuses and the recordkeeping is absolutely clear.
Any marketing campaign parameters are set in the system and ever after put the whole processing alongside with campaign reports under Ultima ERP impeccable care.

"Seek and ye shall find".
Can’t cope yourself — ask us for help.