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!
 

Driving relevancy in customer communication

CMO council has come-up with an interesting report that many marketers have faced as consumers themselves - irrelevant communication!  Many of these marketers talk about it but do nothing about it for their own brands or products. Here are some startling facts to think about:

• While 64 percent of consumers say promotional offers dominate both the email and traditional mail they receive, only 41 percent view these as must-read communications.
• 91 percent of consumers who opt out or unsubscribe to emails, 46 percent are driven to brand defection because the messages are simply not relevant.
• The threat of customer churn and disconnection intensifies as 41 percent of consumers say they would consider ending a brand relationship due to irrelevant promotions.
• An additional 22 percent say they would definitely defect from the brand!
• Nearly three quarters of consumers have received promotions for products they have previously purchased from the company
• 73 percent of consumers would be open to receiving print statements if mailed materials were recyclable or part of a sustainability program
• Nine out of ten consumers open monthly bills delivered via traditional mail, compared to 72 percent who open bills delivered via email
• When given the opportunity to choose, 51 percent of consumers prefer to receive product or service promotions via traditional mail while 44 percent prefer email.

It's really true esp.for myself  as a customer(as the report highlights)- I have seen many companies calling me to buy the product when am already their customer!

There is a need for marketers to add a relevance filter to their customer management process. It's high time they start integrating the channels of customer interaction & communication to make this happen.

Data-driven advertising - How do we move it beyond the web?

I came across an interesting service platform Meme Machine which has interesting customer-focused applications using data.

Calling itself reactive advertising Meme Machine defines this platform as:

"Reactive advertising is a technology for dynamic customization how display ads look and behave in real-time based on what we know about each viewer and the surrounding factors for each exposure. So instead of one campaign having three different ads, we can run three million different ads, where each is unique for the person watching it. Real-time data and dynamic content are two of the things that makes the Internet really unique. Coming up with the basic ideas for a dynamic ad is just one piece of the puzzle and you also need an engine that can mix up the data and make sure that the right stuff is actually shown to the right people."

Meme Machine has a reaction library and has some cases like Scandinavian Airlines, Swedish Post etc. 

How do we really fuse data that's online, offline and transactional?

To make this more widespread & relevant to a consumer &  marketer, the question that came to my mind really was, how do we use offline data & behaviour for such a service in addition to online information that gets tracked. Imagine a variety of devices and vehicles that consumers today either read, watch, listen, carry along with them - radio( FM), TV, Mobile, Outdoor, Magazines, Newspapers etc.which is not tagged or data rich today.

I believe we still have a long way to go  & innovate here. Here in lies interesting opportunities waiting to be tapped. There must be different applications across devices & media vehicles that must bring this to life. The control, of course, must lie with the consumers to bring all of this together. The applications must talk to each other, pull relevant content, send proactive messages as things happen in each media vehicle or device or by interest tagged by consumers, to bring this conversation & experience to life with each consumer.

Multi-channel marketing poses new data challenges

The world of database marketing has changed since the time we knew it . There were only a few options as one knew it - lists - internal/ external, direct mail and telemarketing a decade or two ago. Today, for companies, customers come from different channels - social media, mobile, website leads thro' SEM or SEO etc. There is a need to track this customer data, organize them in a manner to know where they are coming from, is becoming increasingly critical. Before they know, many customers reach-out to companies from many channels available, in no time, which are available to them. This leads to multiple responses, follow-up and absolutely wasted marketing monies & more importantly a frustrated customer! Only when they organize and track this data across channels can companies do systematic campaigns & profiling of these customers. Not many companies are ready to handle this challenge. In my view, they are sometimes blisfully unaware of the problem and how to manage them!

It starts by building clear customer paths on how customers can potentially reach out to these companies, how they need to be tagged, scoring them by their interest and value, allocating them to an appropriate channel with clearly laid-out follow-up programs by channel. 

Deb Campbell of Clario Analytics has written a nice article on this topic:

Marketers still need to gather and keep the best data they can on their customers, understand them, segment them, track them over time, do some predictive modeling to market relevant to them and target new prospects most like them....Today, marketing channels are exploding all around us, not only with e-mail, search and display ads but also with all the social networking sites.

How does all this affect database marketing?

While the multiplication of channels can make tracking harder, and as a result make it more difficult to amend a database, you still need to know your customers’ needs and wants, and market to them one-to-one. Database marketing best practices haven’t changed as much as how you implement them.

You may have customers who are Internet-savvy and want messaging sent to them digitally. You have to target them, and those like them, in this way. Perhaps another customer segment prefers sales reps to contact them.Where database marketing pays here is that all this information can be captured.....

The solution is to keep your database as up-to-date as possible, with changes of addresses and e-mails, titles and positions. Track and segment your database at both levels, and target prospects with similar preferences and behaviors.

Crowdsourcing - When customers get together on unfair credit card interchange fees!

There has been a lot of talk and buzz around crowdsourcing. Social media too is shifting the control from marketers to a "network of customers" who influence product/brand preferences and purchase decisions. Many marketers have been using this power effectively. Here's an example of how customers have got together against what they believe is an unfair practice. The interesting point to note here is that 7-Eleven stores have provided the platform for consumers to get together and voice their concern. It's an example of a great platform owned by a marketer to get together with their customers'  for a cause. It drives authencity and trust between the marketer and their customers. Take a look:

" 7-Eleven has announced that its franchisees and store operators have collected more than 1.6 million signatures in the “Stop Unfair Credit Card Fees” petition drive. 7-Eleven says it believes this marks the largest number of signatures collected for a public policy issue on record.

The signature drive ran from June 22 through Aug. 10 at store counters coast to coast.

“Consumer response to this grassroots petition drive exceeded expectations,” said Joe DePinto, 7-Eleven president and CEO. “Customers share our frustration over the hidden fees that American retailers and, ultimately, consumers are forced to pay. They, too, want Congress to take action to regulate these unfair fees, which are the highest in the industrialized world.”

Interchange fees aren’t transparent to the consumer and assessed to store owners every time a consumer uses a credit card. These charges result in higher prices which are borne by all consumers, whether or not they use a card or cash. In 2008 alone, these fees cost American businesses and their customers $48 billion. According to the National Association of Convenience Stores (NACS) 2008 State of the Industry data, on average, an American convenience store owner paid 63 percent more in transaction fees than they earned in profits."

If you as a marketer genuinely believe there is a cause you can take-up for your customers, do that with conviction. Get them together, become a platform for their conversations and they will surprise you with their response overwhelmingly.

Michelin's famously anonymous intrigue misses a trick or two!

Michelin has come-up with lovely idea to connect with their customers - famouslyanonymous.com. This is a great case for open-source marketing! This is perhaps how marketing will be done in the future for many brands.

The Michelin guide was first published in France in 1900 as a free directory that offered listings of hotels to promote road travel which would in turn help sales of Michelin brand tires. By 1926, they started charging for the guide and also started rating the restaurants. Michelin has its secret reviewers going into restaurants and giving them a 3 star rating to them based on their experience. Now, they seem to be making the identity of these reviewers public and therefore giving it a lot of credibility.

Here's my experience of the customer engagement and the gaps that I saw

I had visited the website as it generated a lot of interest in me due to  high decibel PR. While the campaign seems to be at a teaser  stage just now, the website had some interesting content around the history of the guide etc. I wanted to see the interview with the inspectors section and it asked me to comeback on Oct 5th. This is where they I felt they got it all wrong and dropped the ball!

Take a look at some great opportunities to build  the depth of this engagement further with consumers:

1. Interview Alert:  They could have asked me to register for the interview alert with inspectors as and when it happens on the site. A simple and easy trail that I could have left behind - build a prospect database for the guide. I would have gladly agreed to do so. Oct 5th is quite a long way off and I might just forget to revisit the website amongst my other commitments. Hence, the engagement needs to be at the behest of the brand and not leave it to chance of my coming back.
2. E-book Track: Having come-up with a great story on the heritage of the guide, there was an interesting opportunity that seemed to be available - to capture my identity to build a dialog further. Brands need to understand conversations like this happen over multiple touches with  consumers. The heritage story has interesting levers to "extend the conversation"!
3. Leveraging the power of multi-channel for trial:  There is a huge opportunity for this campaign to use a multi-stage, multi-channel campaign approach which seems to have been missed. There is a great case for using mobile marketing by registering the vistors' mobile numbers and texting them on "interesting happenings on this website or restaurants" when they are not on the net. Also, if  consumers don't pre-book, there can be a trigger for the 'trial' of the guide. Consumers could use mobile texting(SMS) or email alerts to know more about a particular restaurant of their interest and their rating. This could act as a "sampling" for the new guide and encourage more purchase interest in the guide. This will open-up new opportunities for dialog and a continous one too.

In the world of open-source marketing and web conversations, there is a need to look at building the dialog thro' bits and bytes all the time. One must be able to link every "customer interaction chain" into a next step that can fulfil a behavioural objective - reinforce, reopen the dialog, inform, reiterate etc. and this is critical if the campaign objectives have to be met.

Passive to Active customer engagement

I have been writing about this shift for sometime now and the need for marketers to take note of this change to take action. Marketers need to evolve to what I call as "inclusive marketing" methods by involving, empowering customers & building an open channel for a conversation with them.

Davide Raab has provided a very interesting perspective on this change. He writes about the power of social media getting more importance when it comes to active customer engagement as compared to search marketing as these are an 'explicit group' of customers wanting to be involved and engaged in a particular topic, issue or cause. He has provided a brilliant summary of how the marketing focus needs to change. Take a look at the table on various dimensions:

medium	consumer engagement	authority	post-sale relationship	marketing focus
mass media (broadcasting)	passively exposed	conferred	service / support	brand message
database marketing (narrowcasting)	targeted	relevance-based	cross sell / upsell / retention	segmentation
search marketing	activity-triggered	implicit group	Web self-service	content
social marketing	consumer-controlled	explicit group	public engagement	empowerment

Going beyond transactional data to predict sales in retail - Tesco shows the way

I have often found a lot of interesting case studies and  lots of content around using a variety of internal sales & transactional data in retail stores to manage category, assortments, inventory planning and customer cross-sell and up-sell opportunities. What these data always many a time miss or don't factor is the external variables that account for customers to make decisions to buy or not buy. This could play a critical role in driving sales.These in fact play an important role in customer shopping behavior.

Some customer or environmental behavioral drivers like  whether it is a cold or a warm or a rainy day( and hence a decision to want to go to shopping or not), or sudden change in prices/promotions of specific products across categories in nearby shopping areas or stores, new choices of shopping destinations around the store, sports season etc. affect footfalls and purchases.

UK based Tesco has decided to use weather as an input to predict demand and therefore sales.After over 3 years of research, they have a software that identifies how shopping patterns change with every degree increase in temperature or every hour of sunshine! More here

My View: If information based decisions have to be made by marketers, the 'surrounding factors' around customers needs to be taken into consideration. It might well include traffic patterns, weather, attitudinal factors like health and welleness, enviromental concerns like green agriculture/organic farming etc. Marketers need to find methods to factor all these data into their analysis to forecast customer shopping behaviour.

Which media forms will grow and engage consumers?

VSS, a leading PE firm that invests in media, communication & information industries released the next 5 year forecast of the communications industry. It has interesting trends on where consumers are expected to spend more time and therefore engage with marketers' brands. This has a direct impact on the kinds of media, investments & marketing programs that are expected to grow during the coming five years.   

What's expected to grow and shrink?

Here are some of the segments and sub segments of the communications industry which are forecast to grow over the next five years and those that are forecast to shrink over the next five years

"VSS reported that direct marketing benefited from the same trends as branded entertainment as marketers increasingly opted to reach their target consumer with one-to-one messaging as opposed to one-to-many. Digital technology has enabled marketers to perfect their techniques in targeting customers. While direct mail and telesales spending declined due their reliance on such stressed industries as automobiles and financial services, direct marketing still registered a 3.2% increase in 2008 to $106.52 billion, and is forecast to achieve a 5.6 % CAGR during 2008-2013. E-mail marketing performed even better, and continues to expand at double-digit rates because it offers a low-cost alternative to direct mail and other marketing strategies"

What is Growing?
Internet Media	Word-of-Mouth Marketing
Professional Information	Subscription Television
Business Information	Mobile Advertising and Content
Education	Videogames
Direct Marketing	Business-to-Business e-Media
Event Marketing	Tradeshows
Public Relations	Digital Out-of-Home
e-Books
What is Shrinking?
Newspapers	Yellow Pages
Consumer Magazines	Business to Business Magazines
Broadcast Television	Home Video
Radio	Recorded Music
Traditional Out of Home	Traditional Consumer Books

Bye Bye Barcodes. Welcome Bokodes.

Bokode is expected to be the tagging technology of the future.

Barcodes may have been extremely useful to us over years but what it provides is just information to the person who uses the scanner. But in the new era of technology enviroment that we live in, customers  expect tons of information and help about the brands or products that they use. For example - from the exact place they came from, to how safe they are and their carbon footprint.

See how Bokode works:

Bokeh-code or Bokode for short is a barcode design which is has lenses over the pattern. This new development is going to be presented by its developer, MIT, next week at the Siggraph conference in New Orleans. One of its developers, Dr. Ankit Mohan, is very enthusiastic about the Bokode because of its potential to open up a new way of tagging. The Bokode can be used to set nutrition data on food packaging, and even in developing gadgets to be used in video games! The possibilities are endless. This potential alone makes it very different from the conventional barcode being used now in various products.

As mentioned previously, the Bokode is made up of a LED that is enclosed in a tiny mask and lens. The light within the mask contains the information, and this light can appear either dark or bright. And the Bokode can be read even up to a distance of 12 feet!

Looks like there can be interesting customer applications over this to me right from Auto, FMCG, Healthcare brands.