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Using Cause Marketing to Better Keep Customers for Life

When I saw the cause marketing ad at the left in my local newspaper, my first reaction was, frankly, uncharitable. I thought: my golly hearing aid retailers must have gaudy profit margins! Those uncharitable feelings aside, I think there’s some lessons for using cause marketing to better keep customers for life.

Here’s the offer. When you buy your first hearing aid(s) from My Hearing Centers, the company will donate $100 to “the children’s hearing and speech center,” presumably an in-house entity. My Hearing Centers will also offer as much as $1200 towards the purchase of new hearing aids when you trade-in existing hearing aids. My Hearing Centers promises that your trade-ins will be refurbished for use by kids in need.

My Hearing Centers is a five-unit chain with locations in the Mountain West statesLink of Idaho, Colorado, Utah, and Nevada.

In a 2009 review, Consumer Reports found that the hearing aid market was fractured and that hearing aids were expensive. In Metro New York City, the research agency purchased 48 hearing aids at prices ranging from $1,800 to $6,800 a pair. Of those, Consumer Reports found that 2/3rds were a misfit for the wearer’s level of hearing acuity.

Moreover, hearing aids are almost certainly not a one-time purchase. You can reasonably expect to need a new set every 5-7 years.

Given those realities, you can see why My Hearing Centers structured the cause marketing offer the way they did. A sixty-year-old customer who wants the latest technology might buy perhaps $21,000 worth of hearing aids before dying at 81, the average age of death for women in the United States. Giving up as much as $1,200 in discounts on the purchase of, say, a $7,000 hearing aid to preserve the relationship with a customer is cheap money if the customer comes back three more times.

What the My Hearing Centers is doing with their cause marketing here is meant to tap the lifetime value of customers. Most firms ought to think in terms of the lifetime value of a customer, and cause marketing can help companies to maximize that value.

To illustrate the concept of lifetime value, let’s do a little back-of-the-envelope figuring using automobiles as an example.

Suppose that I’ve got 40 more years of automobile driving left in me before I die or otherwise no longer drive. If I buy a car every 7 years and keep going back to the same dealer or the same make of automobile then I might buy 5.7 more cars over those 40 years. If my next car costs $30,000 and prices go up an average of 4% a year then my second car would cost $37,960, my third car would cost $48,032, my fourth car would cost $60,776 and my last car would cost $76,901. My lifetime value as a car purchaser to one or more dealers would therefore be approximately $253,669. Wouldn’t it be worth it to a favored auto dealer to offer a donation to my charities of choice as an inducement to again buy my next car from them?

What we’re talking about here is investing in customer loyalty and retention, which almost always makes sense. That's because for most businesses it’s cheaper to keep a customer than to find and develop a new one.

Lifetime value isn’t just about big-ticket items like cars or hearing aids. Coke knows my lifetime value. That’s why they offer My Coke Rewards, a customer loyalty and retention program. The four or five grocers that I shop at most frequently understand lifetime value, too. That’s why many of them offer rewards cards.

My Coke Rewards has a cause component (read my August 2011 post about it here) that generates funds for schools, sorta like the label campaigns from Campbell’s and General Mills. Such efforts are a first-cousin to what My Hearing Centers is doing here.

But I think My Hearing Centers could take a page from Coke and regularize their donations to the children’s hearing cause such that trade-ins always generate a discount and a donation to the children’s hearing cause.

But if they made the choice to turn this from a one-time promotion to a long-term loyalty and retention program, then they’d have to commit to staying in regular contact with customers, highlighting their work with the cause and reminding customers that when they buy their hearing aids from My Hearing Centers good is done for children.

One of those communication efforts is a must-do. Since they can probably predict with some degree of accuracy when they project a customer is ready for a new set of hearing aids they must communicate that when they’re ready to trade-in their old hearing aids that they will end up being well-used by needy children.

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