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Montana Mountain Biking Company has been in business for 16 years providing guided mountain biking trips at four locations in Montana. The success of the company is linked to retaining its customers. Eighty percent of the customers who sign up for the one week guided mountain biking expedition are repeat customers (University Of Phoenix, 2007). An important part of any marketing plan is to understand the customer relationship because ultimately, all profits come from the customers. The challenges facing the Montana Mountain Biking company is not only retaining customers but to attract new customers. The advances in e-marketing have given Montana Mountain Biking some alternatives to traditional marketing plans.
The Five Stages of Customer Loyalty
Customer loyalty comes from the personal relationship that is developed between the customer and the business. One method used to understand the customer relationship is called customer relationship intensity and Life-cycle segmentation (UOP, 2007). This process includes classifying all the customer relationships into one of five groups.
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The five Stages of MMB Customers
The success of the Montana Mountain Biking (MMB) Company is based on repeat business from current customers (UOP, 2007). Increasing awareness and moving more customers into the committed stage can only be achieved by understanding where the customers are today. Awareness is the first of the five stages. One could estimate the size of the customers in the awareness stage is relatively small in comparison to the market size. It could be estimated that five percent of potential customers are aware of the business. This is based on the fact that MMB logo is recognized in the mountain biking industry but the company is not actively marking the company outside of operating a web site. The number of customer in the familiar stage could be estimated to be between 5 and 10 %. This is base on the number of e-mails received by the company from customers requesting additional information about the services provided by MMB. As mentioned earlier, 80% of all the customers are repeat customers (UOP, 2007). These customers would fall in the familiar or committed stage. The final stage is the separation stage and MMB will have to allow for a 5% or so of customers who will end their relationship with MMB for one reason or another.
E-Mail Marketing Strategy for MMB
Companies are in a constant battle to gain new customers. E-mail marketing is a relative new e-business tool that makes it easy to keep in touch with existing customer and can be used to find new customers. E-mail marketing involves sending e-mails to potential customers. This method can be broken down into two categories; random and permission marketing. E-mails that are unanticipated by the receiver or e-mails that are just randomly sent by the company to an e-mail address. The conversion rate is very low and most of the e-mails are deleted or blocked before they are read. Permission marketing consists of sending e-mails to people who have expressed interest in receiving information about the product or service (UOP, 2007). Permission marketing usually involves purchasing a mail list from a company. This method is less costly then traditional advertising methods.
Montana Mountain Biking Company is trying to find ways to attract new customers. MMB has tried advertising in several outdoor interest and sports magazines in the past without much success. MMB is currently working with a marketing consultant about buying a address list and sending out a promotional mailer. The cost of this type of program is approximately $246,000. The cost includes $0.10 per name and $4 per mailer for the 60,000 names on the list (UOP, 2007). MMB should consider a permission marketing program. The cost per person is much more affordable and could be handled by the internal staff. Companies that can provide a list of interested customers include Post Master Direct and Yesmail.com. The cost can range from $0.02 to $1 per e-mail. If the task of managing the e-mailing process is too much for MMB, they can always outsource the e-mailing process to a third party company. There are companies out there that specialize in managing e-mail list and the associated software (Ferraniti, 2007). Companies that use this type of e-mail marketing program report a response rate of 10% to 30% (UOP, 2007) This Type of program could help MMB reach its goals of attracting new customers.
MMB and Viral Marketing
Viral Marketing can be described as the word of mouth marketing technique that uses pre-existing social networks to increase product awareness (Heath, Heath, 2007). An example of this type of online viral marketing is hotmail.com. This was one of the first free web-based e-mail services. With every free e-mail sent there was a message at the bottom promoting hotmail.com. As people received the e-mail they were offered a free e-mail account. The use of the free hotmail continued to spread as people sent e-mails. MMB can use this same type of approach to promote the business. MMB has received a surprising number of e-mails expressing interest in the photos posted on line (UOP, 2007). MMB could offer to take free digital photos of the customers and post them on their web page. The MMB or the customers can send out e-mails to their family and friends to share their experience and invite them to view the photos online. As people see the photos, MMB can send them an advertisement inviting them to participate on an upcoming event and create their own memories. This is an example of how viral marketing could work for MMB.
Understanding the five stages of customer loyalty can help companies retain customers. MMB has experienced a high level of success by creating intense customer loyalty. Eighty percent of its customers are repeat customers. MMB is also interested in finding new customers to help the company continue to grow. There are several new e-business tools available that can reduce the cost and improve the success rate over traditional marketing programs. The new e-business tools include permission e-mail program and viral marketing. Both of these programs use web-based marketing techniques to find new customers. These programs can help MMB reach its goals of finding new customers.