Customer World

When new customers get more than old customers!

I was reading a post by Seth Godin on embracing lifetime value. He mentions in his post on the value of a two year contract for AT& T or Verizon as worth as more than $ 2000 in lifetime value of a customer to them. And he writes asking companies and professionals to embrace this thinking.

It's funny and I fail to understand how many companies don't understand this and still continue to acquire new customers by extending significantly higher promotional freebies than to their existing customers. The question really is, if am an existing customer, should I not expect better renewal privileges than a new customer rather than go to a new service provider?

This experience happened to me last week, when I tried to renew my broadband account of Tata Indicom, a leading ISP in India. I have been their customer  for over a decade now! They are currently running a new customer acquisition program, where new customers get 3 months of broadband free plus one month( T&C incl.) and a laptop sweepstake thrown in!  When I enquired, if there was anything of similar value, they did not have anything to offer for me to renew!! It made sense to let the existing relationship die and start a new relationship afresh!

The key here is designing and extending a customized tariff plan to such customers. It starts with the following steps:

1. Bring a culture a "customer-driven pricing" into the company. Rather than think pricing only for unknown customers, they should think pricing for known customers too. 
2. Banks have perfected this for years with credit scores driven differential pricing for customers. Similar thinking need to be extended to such service-driven businesses too. They should bring customer value-score driven pricing to existing customers.
3. Value scores can be built very easily.They know their vintage, usage, approx monetary value, cost-to-serve etc. to them as subscribers but they fail to take account of the relationship customers share with them. 
4. Online recharge and newer channels of customer interaction provides an excellent opportunity to bring this differential pricing to execution as they can really customize the pricing offers.

The question really is the intent and appreciation of this I presume!
 

Getting serious about digital privacy

As a consumer, I have often always wondered every time I had cleared by cache on the laptop, who is accountable or responsible for dropping all the cookies that sit there without my knowledge or even with my "soft" implicit permission - a few of the websites or brands were tracking my behavior using 'app and codes' that sit on my PC. I just hate such intrusions on my privacy for the monetization benefits of somebody else. 

Finally, there seems to be first steps being taken in this direction. The key trade groups - IAB, AAAA, DMA, BBB, ANA announced self-regulation principles. How will they come into effect is critical, what measures are being taken to punish offenders will make a big difference for consumers like me trusting any information that I provide online. Here are some principles that they have adopted:

• The Education Principle calls for organizations to participate in efforts to educate individuals and businesses about online behavioral advertising. To this end, the digital media industry intends, in a major campaign that is expected to exceed 500 million online advertising impressions, to educate consumers about online behavioral advertising, the benefits of these practices and the means to exercise choice, over the next 18 months.
• The Transparency Principle calls for clearer and easily accessible disclosures to consumers about data collection and use practices associated with online behavioral advertising. It will result in new, enhanced notice on the page where data is collected through links embedded in or around advertisements, or on the Web page itself.
• The Consumer Control Principle provides consumers with an expanded ability to choose whether data is collected and used for online behavioral advertising purposes. This choice will be available through a link from the notice provided on the Web page where data is collected.
• The Consumer Control Principle requires “service providers”, a term that includes Internet access service providers and providers of desktop applications software such as Web browser “tool bars” to obtain the consent of users beforeengaging in online behavioral advertising, and take steps to de-identify the data used for such purposes.
• The Data Security Principle calls for organizations to provide reasonable security for, and limited retention of data, collected and used for online behavioral advertising purposes.
• The Material Changes Principle calls on organizations to obtain consent for any material change to their online behavioral advertising data collection and use policies and practices to data collected prior to such change.
• The Sensitive Data Principle recognizes that data collected from children and used for online behavioral advertising merits heightened protection, and requires parental consent for behavioral advertising to consumers known to be under 13 on child-directed Web sites. This Principle also provides heightened protections to certain health and financial data when attributable to a specific individual.
• The Accountability Principle calls for development of programs to further advance these Principles, including programs to monitor and report instances of uncorrected non-compliance with these Principles to appropriate government agencies. The CBBB and DMA have been asked and agreed to work cooperatively to establish accountability mechanisms under the Principles.

 

Download Ven-principles-07-01-09

What's your company's listening quotient?

Best Buy recently launched Idea X - a platform for customers to comment, express and share their ideas to help Best Buy get more customer-centric.

I quite love the transparency and openness of Best Buy folks to admit that this is a learning phase which will evolve, for the better, over a period of time. Here's what they say about this initiative:

"We're new at this. Its probably going to be messy for awhile. We'll probably miss stuff. We'll probably screw up. But we'll learn and get better as fast as we can. We'll blog every two weeks with updates at first. Then we'll build in new and better ways to talk to you about your ideas - when we're reviewing them, or implementing them or when we decide we just can't do anything with them. We'll always be honest. We can promise we're all going to do our best. That means listening closely, talking openly about the ideas that you've shared. And trying our hardest to make it happen."

The most interesting comment regarding this, is of Barry Judge, CMO, Best Buy - " Robert Stephens, the founder of Geek Squad, once told me “the easier you make it for customers to complain, the better your product will become...These days, it’s easy to be more accessible. Truly, the only limitations are cultural. We are doing a lot of experiments in being more accessible. Our latest test, Best Buy IdeaXchange, is a web site that is intended to enable consumers (and employees) to give us feedback on what they would like to see us do to make Best Buy a better place to shop."

Results: Over the last 2 weeks, Best Buy seems to have received over 200 ideas!

My view

Engagement is the new branding. The more companies become accessible to customers, the more customers will trust them. Opening-up newer and newer channels is critical. It is important to behave openly and be able to let your customers know that as a company you are trying your best and there will be mistakes but you will definitely improve as you go along.

Remember, customers only punish indifference but they forgive mistakes.

Some questions you may want to ask yourselves to increase your Listening Quotient:

1. Are you as a company accessible to millions of your customers and do you have channel to start a dialog and hear them?
2. Do you as a company and management team have the maturity to listen to customer problems, new ideas and learn from them?
3. What's your company management team's Listening Quotient? Do you measure them?
4. How do you convert the Listening Quotient into top priority for action across the company? 
5. Is there one member of your company's various departments in charge of taking action on these priority areas?

From product conversation to passion conversation

It's always interesting to see how marketers struggle to gain the attention of customers. Even after spending big bucks on marketing/promotions, some products catch the attention and some don't . This led me to think what makes customers lap-up certain product concepts even if they don't buy it the first time but how does one create a buzz that goes around it which enables others to make their decision faster. Here's an interesting perspective on the same topic:

If you want people to talk about your product or service, you need to ratchet up one of these three traits. Consider a 360-year-old Finnish company named Fiskars, which makes orange-handled scissors. If ever there was a viral-marketing challenge, it's scissors -- a product with all the sizzle of a RAM upgrade. Brains on Fire, a brand-identity firm based in South Carolina, helped Fiskars find the emotion. "We knew we had to move from a product conversation to a passion conversation," said Spike Jones, the firm's "firestarter." Jones and his colleagues realized there was one community that was indeed passionate about scissors: arts and crafters. They found four arts-and-crafts zealots and christened them "Fiskateers." Then Brains on Fire asked the Fiskateers to select additional compadres who would support other people in their crafting hobby. (Notice the added public-service element.) Since the project launched, there has been a 600% increase in online mentions of the Fiskars brand. (I had covered this in my previous blog post)

Start thinking about emotion, public service, and triggers.

Step # 1: People are emotional. If you can get them to either agree/disagree, love/hate, join/oppose your messages they tend to get involved. Your marketing efforts need to appeal to them to do that. Also, you need a method to know your believers and disbelievers by name and contact - a database. Then, build a one-to-one dialog with them.

Step # 2: People want to contribute Remember, people always want to give back something to the community. When you let them know you are the catalyst for the same, they tend to align with your products or brands. Include that in your marketing efforts, they tend to feel good and talk about their contribution to others and hence about your product or brand.

Step # 3 People want the right triggers  Not always, everybody wants to do the talking. But they definitely do so when there is a trigger. For example, green and energy efficiency, acts as triggers to get people to talk to each other about their contribution to this environment by buying products that are energy efficient. Or getting somebody to use or try your product before others( a preview) or a test your product before the launch encourages chatter as a trigger.

If you don't treat customers as " transactional" elements of your marketing efforts but as "emotional" absorbers of your messages, it can work a long way in gaining a passionate dialog about your products/brands leading to higher conversion and market share.

Typealyzer analysis of my blog - It's quite cool - Is this the future of customer profiling?

Imagine a time when you were busy taking the help of somebody to do mind reading, handwriting analysis etc. which would tell you more about the kind of person you are or the person who you are going to meet, - to know what your or their strengths and weaknesses! Or doing a detailed profiling research to know more about your customers' demographics and psychographics.

Here, it's happening to the online world too but with a difference. With typeanalyzer,  you can know the person a lot better( - What personality is your blog?)! Here's an analysis of my blog!

INTJ - The Scientists

The long-range thinking and individualistic type. They are especially good at looking at almost anything and figuring out a way of improving it - often with a highly creative and imaginative touch. They are intellectually curious and daring, but might be physically hesitant to try new things.

The Scientists enjoy theoretical work that allows them to use their strong minds and bold creativity. Since they tend to be so abstract and theoretical in their communication they often have a problem communicating their visions to other people and need to learn patience and use concrete examples. Since they are extremely good at concentrating they often have no trouble working alone.

Looks like this is will be one of the many ways by which customers on the web will be profiled!  Hence, this could become one of the ways to target or pull them to products or services basis their interests and personality!

 
 

Why Retail loves email?

Many retailers seem to think so. During this past holiday shopping season, e-mail marketers were out in full force.

According to the “Retail E-Mail Year-End Trends for 2008” report, from Smith-Harmon, promotional e-mail volume accelerated in October and reached a peak in December when retailers sent consumers a monthly average of 14.6 e-mails.

Smith-Harmon’s analysis of the top 100 retailers revealed that 90% of them increased the number of e-mails they sent during the holidays.

“Retailers ratcheted up their e-mail marketing campaigns to aggressively compete for consumers’ dwindling spending dollars,” says Jeff Grau, eMarketer senior analyst and author of the new report, Retail E-Mail: Online Marketing Strategies. “That was due largely to the fact that e-mail is cheap to administer and delivers an ROI far superior to paid search, catalogs and other marketing media.”

Nevertheless, for retailers with large advertising budgets, e-mail campaigns represent only a tiny fraction of their marketing budgets

“E-mail marketing still accounts for only 1.5% of direct marketing budgets in the US,” says Mr. Grau.

Reinventing direct marketing

In an interesting article written by Alan Mitchell, Iain Henderson and Doc Searls, they argue that direct marketing is facing endemic crisis. I can't agree with them more as there's a tectonic shift in the way customers have to be reached in the future. Direct Marketing needs redefinition. It needs a new approach and a re-jigged business model. It needs to 'co-opt' customers rather than 'target' customers. And the time to do it, is now. If direct marketers don't change, they would become extinct soon. Take a look:

Three core characteristics of direct marketing are responsible for these problems; (1) Data management: all responsibility for data management (collection,storage, analysis, usage, etc) lies with the seller; (2) Information flows are almost wholly ‘ top down ’ from sellers to buyers in the  form of selling messages; (3) Metrics: success is defined in seller-centric terms — costs versus benefits to the seller.

Direct marketing’s single most compelling USP is ‘ relevance'.  If a  buyer and a seller can connect about the right thing at the right time  via the right channel, a powerful win-win is unleashed. Both sides can reap significant value by using and exchanging the right information. Unfortunately, these win-wins are massively undermined and  sometimes obliterated by the industry’s seller-centric history and operation.

The industry's current modus operandi goes something like this. Organisations harvest as much data as they can about customers —  primarily transaction and behavioural data supplemented by data from other sources such as purchased lists, market research and so on. They ‘ mine ’ and analyse these data, looking for trends and patterns. Then they use the insights generated to create profiles of likely customers, distinguish highly profitable customers from less profitable ones, and  identify which customers are most likely to be open to up-selling, cross-selling or (perhaps) defection. They then target these customers with appropriate messages, designed to get them to respond in some way, such as take up an offer.

Data-driven marketing is still guesswork

....If they could then eliminate 10, 20 or 30  per cent of non-responders from this mailing, then their costs would go down and their response rate would go up. This is the central agenda  of data-driven ‘ insight ’ today: to reduce the wastage generated by guesswork.

Welcome to the world of reverse direct marketing - VRM

By empowering individuals to collect, store and share rich, up-to-date personal data with suppliers, vendor relationship management (VRM) offers a way through direct marketing ’ s current impasse. To realise the new win-wins made possible by VRM, the industry needs to start adjusting now.

...With VRM, the customer becomes the holder of his own master data. VRM tools enable organisations to access these data (on terms agreed on with the customer) to check and update their own files.With VRM, customers not only replicate vendor-side data, but also back it up and improve on it. They also possess means to organise a superset of data that, with the customer’s permission, can be accessed to improve vendors ’ product development and offerings to market.

Read more

My View

Direct Marketing has been broken in its old model and methods. Customers don't want to be disturbed, they care for their privacy more than ever before and new media is a lot more punishing than old media. When was the last time you ticked-off spam emails from brands that you  have done business with before and deleted them? There are millions in my email box and I don't care about them. So is the case with SMS( mobile) and other media. If old media created ' clutter', new media 'blinds' your messages very fast as customers shut their in-box or mailers or inserts even before they have seen the message. The new direct marketing mediums might cost brand marketers lesser to reach  the customer  thro'  many of these mediums  but they produce diminishing returns too fast. The only way is to co-opt customers, get them to share their interests, information & needs and collaborate with them. Direct marketing needs to become collaborative marketing to survive.

The conversation prism

Overall last couple of years, I have been writing about the seamless boundaries or should I say vanishing boundaries between various media. If you are in marketing, communication, media and the like there seems to be thin lines dividing marketing, technology and media/publishing. This has led to the need of host of new areas like Marketing Metrics - marketing accountability, marketing ROI, Conversation Media - Blogs, Social networks etc. Marketing technologies - Cool marketing apps, CRM, campaign management tools, analytical applicatons etc. There is an increasing need to connect them together and see them feed-off one another. Here's a nice post by Brian Solis on the same:

As a communications or service professional, you'll find yourself at the center of the prism - whether you're observing, listening or participating. 

As conversations are increasingly distributed, everything begins with listening and observing. Doing so, will help you identify exactly where relevant discussions are taking place, as well as their scale and frequency. This dialog can be charted into a targeted social map that's unique to your brand.

How could we leverage those patterns from a marketing and experience perspective?

Here's an interesting perspective on relationship visualization by threeminds.

The key point that's being made is that now-a-days data, files, transactions, access and usage by customers is a lot more real time.  How can one get to know the behaviour and relationships between various dimensions to take action faster then ever before.

Use of all this information & data has to to get a lot more simpler, easier and flexible. That's where execution will move & get focussed in the next couple of years.

code_swarm - Eclipse (short ver.) from Michael Ogawa on Vimeo.

Transforming marketing data to enable decision management

Here's an interesting presentation by Jamet on using marketing data for decision management. Take a look:

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