October 2006 - Global Outlook: Latin America

Winning Back Customers in Latin America

By Ricardo Alonso

The market is changing: How do you re-engage the customer? Why do companies operating in the same markets, competing for the same consumers, and selling the same products deliver drastically different results?

The answers are many and complex; however, the root cause can be traced to knowing who your customer is and what he or she wants.

Latin America is a heterogeneous and diverse market with contrasting economies and cultures, different languages and customs. With every passing day, the region is integrating with the global economy, signing free trade agreements, while its consumers are more informed, sophisticated and demanding than ever before.

Two decades after the arrival of DRTV in Latin America, the classic “call now” format is starting to show its age. Consumers have seen thousands of infomercials, and have been sold products that promise to change the world at incredible, never-before-seen prices.

How can we re-engage these customers? This is a challenge considering the credibility that has been lost in certain Central and South American countries. Some players employed tactics that have resulted in lost consumer trust, as a result of low quality products, and productions, inefficient call centers, poor logistics and lacking or deficient customer service.

Even after accounting for the mistakes the DRTV industry has made, consumers show an interest and enthusiasm for DRTV, its value proposition, and the convenient and innovative products they sell.

Direct sales channels, especially with the growing penetration of the Internet, are changing the habits and purchasing patterns of consumers. Television and mobile telephony provide new tools to facilitate interaction between businesses and consumers about new products and services. Markets are evolving rapidly, requiring retailers to be nimble in the face of increasingly sophisticated consumers.

Putting aside the nuances of each channel, the fundamental value proposition that motivates consumers to purchase a product remains constant. It’s here that many errors are committed. Consumers want to improve their standard of living, purchase products tailored to their respective needs and shop with confidence.

Success is achieved by incorporating the variables previously discussed and applying them to product selection, all the while delivering a unique value proposition. Sometimes this involves difficult choices, such as discarding products from certain markets, investing resources into localized productions, listening to customers, educating operators about the products and continually optimizing the supply chain.

As an industry, we need to rebuild trust with our customers in which ethics and customer service play a central role. This is both urgent and necessary to ensure the long-term viability of DRTV as a sales channel.

Ricardo Alonso is executive vice president of FalabellaTV, a division of Falabella Inc., a leading retailer in South America. He can be reached at +5623802089, or via e-mail at [email protected].


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