By Steve Meyer, Inside Music Media™ ContributorDuring my tenure in the industry working for two major labels (Capitol and MCA), I never once heard the words "customer retention." It was a concept already in place in many industries (airlines, hotels, restaurants, retailers, etc.) and frankly, it was a concept the music industry didn't need to employ because the existing business model back then, pre-Internet and downloading, didn't warrant it.
Obviously, times have changed. Drastically.
So what can the industry do today to create customer retention and generate new customer acquisition in light of all the problems of Internet file-swapping, downloading, and more?
The idea of customer retention is still probably alien to most labels today, but if there was ever a reason to explore the opportunities and benefits that customer retention brings, it's now. Just ask amazon.com, iTunes, or any online business.
One way to keep people buying music is via creation of consumer enhancements. The introduction of added value components that offer the consumer more for their money with promotional credits as an incentive/rewards is simple to initiate, control, and is one of the most basic enhancements used by many industries today. (e.g., credit cards that offer frequent flyer miles with purchases, hotels that offer rewards for each stay good for discounts on future stays, casinos that reward their player clientele with free meals, rooms, discounts based on how much they gamble, etc.) This simple improvement can also yield something else: data collection on consumers. Customer Database Profiles are now an elementary component in marketing at most major corporations, and the information gleaned from them, facilitates repeat business.
Other enhancements, some already in place today, include placing videos on enhanced CDs or including a bonus DVD with a CD purchase (and vice versa...again, vertical integration), providing bonus tracks and/or videos with codes included in the purchase of CDs/DVDs that allow the customer to go to a specific website and "unlock" the bonus tracks/videos. The same promotional strategy can be applied to doing national contests that offer a variety of prizes.
Opportunities abound if creative minds can be put together to provide additional enhancements and consumer benefits and of course, new revenue streams. Labels that are part of huge entertainment conglomerates could vertically integrate with corporate divisions to maximize music sales and to the benefit of all. This would make the purchase of music more appealing in the mass marketplace, regardless of what type of music it is. Everybody loves getting more for their money. It's a whole new economy out there...and price, rules. Just ask the world's #1 retailer, Wal-Mart.
You get the idea and you can see how the wheels of progress could be turning inside the offices at some labels if they were doing this more often and thinking about it as a consistent added value component to retain customers.
Steve Meyer is one of the music industry's top professionals and publisher of the new media newsletter DISC & DAT.
