The 97 › Strategy 33 › Week 10
The point
There is a royalty on loyalty, and most businesses pay it to precisely the wrong people.
Here is the pattern. You launch something — a product, an event, a price — and the announcement goes to the whole list at once. The person who has bought eleven times over nine years receives it at the same moment, in the same words, as somebody who joined on Tuesday and has never given you a penny.
From inside her head: she has spent nine years demonstrating that she trusts you more than anybody else does, and her reward is to be treated identically to a stranger. Worse, if there is an introductory offer attached, she is now treated worse than a stranger — she has paid full price eleven times while you discount for people who have taken no risk on you at all.
Almost every business does this and almost none of them intend to. It is not a decision. It is what happens when the list is one list and the send button is one button.
And the back end is where the money actually lives. The people who bought once and were never returned to are the largest single pool of unearned revenue in most businesses.
The mistake almost everyone makes
Rewarding loyalty with a discount. It reprices the past — every full-price purchase she ever made is retrospectively recast as an overpayment — and it teaches your most reliable revenue to wait.
The test: Is what you are offering unavailable to a stranger at any price? If a stranger could buy it, it is a promotion, not a loyalty reward.
| Who | What happened |
|---|---|
| The back end | Jay's own point: the second, third and fourth purchase are where the profit is, and most businesses are built entirely around the first. |
| Access | First sight of the new thing, before anybody else, with a sentence saying plainly why. |
| Certainty | The guaranteed slot, the held stock, priority when capacity is short. Costs nothing and cannot be bought. |
| Recognition | Being known by name and having their history remembered without them reciting it. |
| Influence | Being asked what you should build next — and then watching you build it. |
| A software business | Long-standing accounts got roadmap input rather than a discount. Renewal rose and price sensitivity fell. |
| A restaurant | Regulars got the table they wanted held, not ten percent off. The bill went up, not down. |
| A publisher | Subscribers of five years received the new title before reviewers did. The letters back were the best marketing that year. |
This week
Take your next announcement, whatever it is and however small, and send it to your best fifty clients twenty-four hours before anybody else, with a sentence at the top saying plainly why they are hearing it first.
No discount. Nothing that costs you a penny.
Then ask those fifty what you should do next — and actually do one of the things they say.