How well do you know your customers?

Ok folks, its Seinfeld time again. I told you, I love this show.

In Season 5, Episode 1 (The Mango) of the show, there’s an interesting story-line between Kramer, Jerry, George and Joe (from Joe’s the fruit store) that runs right through the episode. Here are the excerpts from the episode:

(Kramer spits out his peach)
Jerry: Bad peach?
Kramer: It’s terrible!
Jerry: Did you get that at Joe’s?
Kramer: Yeah, of course I got it at Joe’s.
Jerry: That’s surprising, his fruit is usually the best.
Kramer: You know what I’m gonna do? I’m gonna return this.
Jerry: You’re returning used fruit?
Kramer: Jerry this peach is sub par.
[location: Joe’s]
Joe: So what do you want me to do?
Kramer: I want restitution.
Joe: Restitution? You want restitution? Why should I give you restitution?
Kramer: Because it’s no good.
Joe: When you put that fruit out, that’s where it ends for me.
Kramer: It’s still your fruit, you gotta stand behind your fruit.
Joe: I stand behind my fruit.
Kramer: So…
Joe: Hey, you got a bad peach? That’s an act of God. He makes the peaches. I don’t make the peaches, I sell the peaches. You have a problem? You talk to him.
Kramer: You know this whole place is going vrrrrrrrrrrrrt, downhill. I could have come in here last week with a bad plum but I let it go.
Joe: Well let me put a solution for you: do your business elsewhere, I don’t want your business.
Kramer: Oh now you don’t want my business.
Joe: No, I don’t want your business and from this moment you’re banned from the store, you’re banned!
Kramer: But what am I gonna do for fruit?
(Kramer enters the apartment)
Kramer: Hey listen, if I give you money would you go out and get me some fruit?
Jerry: Why can’t you get it?
Kramer: Well I got banned from the store I can’t go back in there now.
Jerry: What happened?
Kramer: Well you know, we had a fight over the peach and… well Joe doesn’t want my business.
Jerry: I told you not to say anything.
Kramer: Jerry, what am I gonna do for fruit?
Jerry: Well you’ll have to go to the supermarket.
Kramer: The supermarket? That’s impossible! They don’t have a decent piece of fruit at the supermarket. The apples are mealy, the oranges are dry. I don’t know what’s going on with the Papayas! Jerry you gotta go to Joe’s, you gotta get me some fruit!
Jerry: Oh so what I’m going to buy all your fruit now?
[location: outside Joe’s]
Jerry: Why do I feel like I’m doing something wrong?
Kramer: All right now here’s the list.
Jerry: All this? It’s too much. What do you need five mangos for?
Kramer: I like mangos.
Jerry: Avocado? I don’t know how to pick out an avocado.
Kramer: Well they gotta be soft.
Jerry: How soft?
Kramer: Not too soft. Better too hard than too soft.
Jerry: I’m not going through this every week, I tell you that right now. And what are these? Plums? What is that?
Kramer: Yeah now get the ones that are red on the inside.
Jerry: Well how do I know what they look like on the inside? What do they look like on the outside?
Kramer: Oh! And get some plantains.
Jerry: Plantains?
Kramer: Yeah.
Jerry: What the hell is a plantain.
Kramer: It’s part of the banana family. It’s a delicacy.
Jerry: You’re not getting any plantains.
(Jerry enters Joe’s)
Jerry: Hey Joe.
Joe: How is it going?
Jerry: Good, just getting some fruit for myself. Gotta have fruit in the house. I like it as a snack. Wholesome, natural, chock-full of vitamins. I don’t know let’s see… mangos… four plums with red on the inside… avocado… ooo, just right… and three plantains ought to do it.
Joe: All right, all right, just hold it right there.
Jerry: What?
Joe: This fruit isn’t for you.
Jerry: What, what are you talking about?
Joe: You think I don’t know? Mangos, plantains, plums with the red on the inside, that’s Kramer!
Jerry: I can’t buy mangos and plantains?
Joe: All right, get out!
Jerry: You’re making a big mistake, Joe!
Joe: I’ll tell you something else: I don’t what your business anymore either.
Jerry: You’re saying you’re banning me from the store?
Joe: That’s exactly what I’m saying.
Jerry: I’m banned?!
Joe: You’re banned.
[location: Jerry’s apartment]
George: All right, where do you want it? (referring to the bag of fruits)
Jerry: Put it over there.
Kramer: Yes! Oh look at this, these mangos are beautiful! Oh these are beautiful, you did good George.
(Kramer leaves the apartment)
(Kramer enters the apartment)
Kramer: This mango is delicious!
George: That reminds me, I’m not getting you guys any more fruit. That guy was eyeballing me the whole time. He gave me the creeps. All right, you owe me twenty-eight sixty.
Ok, this may not be a Seinfeld classic but this episode has all the quirkiness of every other episode in the series. And from a marketing standpoint, it covers various topics such as customer satisfaction, customer loyalty, consumer decision-making process, and a vital CRM principle – knowing your customers. You might say this is a rather lofty claim. Here’s why I think it’s not.

The stage when Jerry & Kramer discuss about Joe’s fruit and express their surprise over the bad peach is a direct indication of their post-purchase behavior. In essence, (from their experience) their expectations and the perceived performance of Joe’s fruits have matched, or differ very little. Given Kramer’s attachment to the store, I’d say that Joe has over-delivered with respect to his claims regarding product quality. I would even say that Joe’s quality fruits have created customer delight (when satisfaction exceeds expectations) with Kramer so much so that he despises fruits from supermarkets, ridicules their offerings and swears by Joe’s fruits (well the ridiculing part is not new to the members of Seinfeld). If this isn’t a display of customer loyalty, I don’t know what is.

Apart from satisfaction and loyalty, we can also see the operation of cognitive dissonance. Let me try explaining that. Cognitive dissonance is a post-purchase dilemma (more like trauma for many) in the consumer decision-making process wherein, consumers try to reduce dissonance by justifying their purchase decision. In a sense, they frantically try not to “second-guess” themselves about their purchase and look for reason(s) that would uphold their purchase decision. (I still wonder if my decision to plump for the iPhone was worth it. Anyways, let’s save that discussion for later.)

Consumers typically reduce their dissonance through a number of ways such as: seeking more information and doing more research that might comfort them of their purchase, avoiding information that contradicts their decision, downplaying – more like ridiculing – other product options that they had in their consideration set (somehow the debate between a Mac and a PC user crosses my mind), turning to their support groups (such as owners of the same product – Harley Owners Group?), and so on. Why, even companies help consumers reduce their dissonance. Have you received a note within the package of the product you’ve just purchased that says something like, “Congratulations on your new purchase! We’re glad that you’ve made the right decision in buying this product. And we assure you of the highest quality products at all times. Should you have any questions or concerns about this product, please feel free to write to us at…..”? Well, that’s the company playing your therapist and alleviating your concerns. After all, they do want you to come back and buy the “Acme Super Glue” that promises to even hold your roof from falling apart, don’t they?

Anyway, in this case, after getting banned from a fruit store (it hasn’t happened to me, but I can see that it can be nasty), Kramer feels that his decision to buy from Joe’s may not have been the right one. But Kramer wants to convince himself that his decision to go to Joe’s was indeed the correct choice. The rationalizing personality that Kramer is, he turns down Jerry’s suggestion to go to the supermarket. He doesn’t just turn it down. He goes one step ahead and ridicules the products at the supermarket. And he doesn’t even stop there. He convinces Jerry to buy his fruits, and when that fails he asks George to get them. In effect, he does everything Kramerly possible to get the fruits, and more importantly, reinstate him and his good judgment in that store. I don’t know about you, but I feel that’s a really long way to go just to make yourself feel better. And boy did he feel better. I meant with the mangoes.

Finally, the CRM principle I referred to. Knowing who your customers are, what they buy, and how they buy is, according to me, the highest point of CRM. And Joe here, was able to quickly identify that Jerry was actually buying for Kramer, just based on the type of fruits he picked and how ripe they are. What’s more, he even gave the creeps to George when he finally bought Kramer’s fruits. That’s how much Joe knew about Kramer’s fruit purchases. That’s CRM at work (sans all that systems, technology & processes). How cool is that! Agreed, Joe’s is not the only fruit store in all of Manhattan’s Upper West Side, and his clientele does not run into the millions. But still, keeping track of his customers and their individual purchase behavior is truly remarkable.

But if Joe knew Kramer so well, why was Kramer banned from the store, you may ask. I think we can find the answer in profitable CRM (or at least, that’s what I’ve been told). And it does make sense. When Joe knows everything about how & when Kramer buys, he would also have an estimate of how valuable Kramer is/would be to his store. Well, maybe not in dollar terms, but with his business judgments he would’ve somehow estimated Kramer’s business value to him. And if that potential is minimal or negligible, it only makes sense to “ban” such customers. And am sure Joe would’ve factored in how much Kramer buys, the number of complaints he’s made, and the number of product return requests he’s made before deciding to ban him. And if Joe weeds out such customers and retains only those who would provide value to him in the future, he is sure to maximize his profits.

But isn’t this approach of “firing” customers taking the concept of CRM too far? Maybe. Maybe not. However, there are companies that have “fired” customers in the past. Yes, I’m talking about Sprint when they fired around 1,000 customers in the summer of 2007. The reason – the fired customers used too much of Sprint’s resources. And between the revenue those customers were contributing and the cost of servicing their requests, Sprint was making a loss. So, Sprint let go of these customers to competition and even offered to cover the costs of moving to the customers’ choice of service provider! I think Sprint’s approach here was – if you can’t help us grow, go hurt our competition. So effectively, Sprint benefited from the 1,000 customers (indirectly) even after firing them. I think that’s a smart strategic move. But I’m not sure about the word-of-mouth repercussions of this decision. Well, Sprint’s not alone here. Other companies too have done this (see here for more).

Now, I’m not intending that the only solution to deal with unprofitable customers is to let them go. Companies have to be objective about this and ascertain why these customers are not profitable. Maybe they’re using a product category that is not suitable for them. One way to deal with such customers would be promote appropriate products/services to up-sell and/or cross-sell. Another way would be to revisit the choice of communication channels used. So, all I’m saying is that an unprofitable customer should be let go only when companies know with a fair amount of accuracy that (a) he/she does not have a sufficiently sized wallet to back the purchases, and (b) his/her lifestyle is not likely to change in the near future that could make the customer profitable.

So, did Joe know about his customers too well? Yes. Was he right in banning Kramer from the store? I don’t have an answer for that. For one, Kramer identified an alternate way to get fruits from Joe. So it was not a prudent decision by Joe (of course, this happening in Seinfeld land overrules the necessity of prudence). Further, given Kramer’s irate nature, Joe runs the risk of negative word-of-mouth regarding to his policies of banning customers. Additionally, the banned customers may take other customers with them when they leave, who may actually be profitable for Joe! So, considering Joe’s scale of operation and the nature of business if I were to pick one, I’d say Joe was probably not right in banning Kramer from the store. But hey, that’s just me. And I think, the jury’s still out there on this issue…

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