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OMD Sense. How to differentiate yourself with perkonomics

OMD Sense. How to differentiate yourself with perkonomics

By Ben Haley, Insight Manager OMD with thanks to

“The vision is that people should have the ultimate in convenience. Being able to get the things they care about.” Bill Gates, founder, Microsoft.

At a time where many brands and retailers seek to differentiate themselves by discounting prices, questions ought to be asked about the effect this has on the long-term health of the brand. It’s arguably wiser to add value.

One way of doing this is by offering perks – goods or services – to reward the loyalty of certain customers.

Offering perks is nothing new. As far as we can tell, the notion of offering extra goods or services to preferred customers has been around as long as goods have been traded.

What is new, is the number of brands using perks as part of their marketing strategy. That’s why we (and others) are calling this trend ‘perkonomics’.

Getting superior goods, or a better service than the next man is something that appeals to most people. It boosts status, at least in the eyes of the beholder. Failing that, providing the same service at a quicker speed is also a way to make customers feel special.

To time poor consumers, the convenience of queue-jumping is more appealing than a discount. That’s the key to perkonomics. It’s not just about discounts and special offers, it’s about adding value through status and convenience.

Airlines, hotels and banks have long offered extra services for their most valued, or valuable customers. What we’re seeing more of, however is the democratisation of perks.

OMD Fuse’s Habitat White Knights helped consumers in the run up to Christmas. Clad in white boiler suits, these concierges offered to hail taxis, carry luggage, and guide customers to the tube under umbrella protection.

For some time, Orange have been adding value to people seeking out of home entertainment. The mobile operator’s link with Gigs and Tours offered the music fans among their customers the opportunity to buy gig tickets before anyone else. Orange Wednesdays have enabled millions of cinema go-ers to take a date or mate for free.

O2 have also been making their presence felt on the live music circuit. O2 customers at the O2 Arena and Wireless festival can enjoy easier ticketing and entry, and the comfort and drinks of the O2 lounge.

In Canada, IKEA reward eco-friendly hybrid car drivers with priority parking. Lexus drivers in the US and Australia can take advantage of free parking at cultural and sporting events. Closer to home, low emission vehicles are exempt from London’s congestion charge.

The etymology of the word perk can be traced back to a Latin word meaning search diligently. Nowadays, it may seem that all you have to do is be with the right phone network or have the right type of car. Brands need to make sure their perks provide some form of exclusivity, but without being seen to penalise the masses.

Perks need to make people think “I’d like a bit of that”, not “I’m annoyed I’ve haven’t got that”.

So the perk-free standard service still needs to satisfy. Brands need to be careful not to dress up previously complimentary services as pseudo perks. Examples of this are airlines charging for checking in bags and for priority boarding, and bank managers only being available to premium-paying customers. No one likes to feel they’re being ripped off.

In tough times and commoditised markets, the ability of brands to differentiate themselves from the competition is more important than ever.

Perks provide a brilliant way of doing this, by conferring status and providing convenience. By using perkonomics, brands can increase loyalty and ‘talk-ability’, and improve their image and attractiveness to new customers.

So, what’s your brand’s equivalent of a queue jump, a priority parking space or a free

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