Customer World

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.

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.

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.

Learning from Clive Dunhumby

Independent has a nice article about Clive Dunbumby, a pioneer in data-led marketing. His involvement in the success of Tesco's loyalty program is legendary.Here's a chance to learn from his experience on how to use data:

If knowledge is power then Dunhumby founder Clive Humby is a very powerful man indeed. Every year, the Londoner's data mining firm peers into a mind-boggling 100 million shopping baskets. The contents of those baskets are sorted by codes, fed seamlessly into powerful spreadsheets and analysed by a team of dedicated number crunchers.By the end, Dunhumby has an eerily complete picture of individual shoppers.

• "If you want to have a dialogue with customers, you have to have permission," says Humby, "we have permission".

• Humby says responses to tailored vouchers are far more positive than reactions to mass market campaigns, which ultimately means better value for customers.

• "Voucher redemption (for tailored messages) is 20 to 30pc -- mind-numbingly high," he says. "If something relevant is sent to customers, they're much more likely to use it.

• "Tesco without Clubcard is unimaginable," he says. "The loyalty data is such a valuable set of insights that it's used with a light touch everywhere.""

• Promotions on coffee don't work because people tend to be loyal to one brand, while beer promotions are a winner because shoppers are happy to try many varieties.

• Tesco's "Supplier Insight" programme is largely used as a bargaining tool, with the supermarket giant offering "blue data" to suppliers tracing general trends with no personal information, but Tesco also uses the scheme to encourage promotions for frequently overlooked customers like older age groups, in a nod to social responsibility.

• Humby stresses that while data mining works well in "high transaction businesses", it will never hold the key to retailing success."If you're stores aren't right, if you haven't got the prices right, then people won't shop," he says, "You can't exploit a loyalty card without the fundamentals."

My take: When you have data, you should first know what does it have as information & how to use it.Don't collect data that you don't know where you are going to use. You should also know what works & does not work - measure & understand everything that you do. Lastly, you should know it is not a magic wand for you to get customers to come back or buy more. You have to get your product right.

Inside Steve's Brain- customer-centric design thinking

Here's an overview of the new book that's just got released - Inside Steve's brain ( Nishad sent this to me a few hours ago). Personally, it tells me a lot about the way the man is thinking, pushing( the people around him), acting-on( his instincts) and executing( without being worried about what the world thinks about him). Customer-centric enterprises need to have customer-centric design thinking - the way their products need to be conceived, designed and delivered. Steve just does it with impeccable perfection and style.    Here's the preview before you rush-out to buy:

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CMO council releases study on 'Leveraging Customer Data and Analytics'

Only 50 percent of global marketers report having a strategy for further penetrating or monetizing key account relationships, reports the Chief Marketing Officer (CMO) Council in a new research study, Business Gain From How You Retain . In addition, a surprising 45 percent rate the effectiveness of customer relationship management (CRM) systems as deficient or needing more work, with only 15 percent of companies rating themselves extremely good or effective at integrating disparate customer data sources and repositories.

 

Conducted in late 2007 and early 2008, the CMO Council's Business Gain from How You Retain study undertook a wide-ranging evaluation of where and how marketers are "operationalizing" customer intelligence and insight to reduce customer churn, increase lifetime value, improve the customer experience, and increase the effectiveness and targeting of marketing spend.

More importantly, marketers are struggling to gain a true and timely view of the customer due to inadequate or incompatible IT systems and databases, siloed data in functional areas, and a limited strategic focus or management mandate on Customer Data Integration (CDI). Compounding the issue is a lack of formalized data-sharing policies and practices in the organization, combined with internal political or cultural barriers and IT obstacles and objections to data integration.

 

"We are seeing a fundamental need for marketers to be more effective at tapping the valuable vein of customer data that runs deep inside all organizations," notes Donovan Neale-May, Executive Director of the CMO Council. "Investing in integrated systems that harvest customer insight is critical to driving both marketing and business performance," he adds.

•       Only 15 percent of marketers say their companies are doing an extremely good or effective job of integrating disparate customer data sources and repositories; 55 percent note there is room for improvement or a deficiency in this area.
•      More than 31 percent of companies surveyed had customer churn rates of more than 10 percent and 32 percent reported turnover of five to 10 percent. In comparison, more than 62 percent said they desired or expected a churn level of less than five percent.
•      Respondents believe customer churn significantly impacts business performance through revenue loss (59.9 percent), reduced profitability (39.6 percent) and greater marketing and re-acquisition costs (36.3 percent). 
  
•      While churn is a big issue, nearly 67 percent of those surveyed say they have no system for re-activating dormant or lost customers, while just over half of respondents have a strategy for further penetrating or monetizing key account relationships.

•       While more than 35 percent of respondents report that the CMO or marketing department (38.9 percent) has primary responsibility for the customer analytics function, they are not leveraging its value. Over 31 percent of those surveyed do no data mining at all and 63 percent are only doing moderate levels of data mining for intelligence and insight.

•             The top six strategic applications of customer information by marketers include:

                        - Up-selling and cross-selling
                        - Segmenting and targeting
                        - Driving retention, loyalty and promotional programs
                        - Identifying new opportunities and unmet needs
                        - Improving customer service
                        - Shaping personalized and customized communications

•      Key initiatives to increase customer retention include improving customer communications (65.2 percent); addressing complaints, problems and pain points (51.8 percent); and enhancing the customer experience (54.8 percent). Unfortunately, fewer marketers noted their companies' willingness to modify business practices and policies to accommodate customer needs.

What are the icons of your customer service?

If you are obsessed with customer-centricity in your organization, it make sense to have some icons that serves as a benchmark for the organization to emulate and live-up to. CRM Buyer has an interesting article on how Lands' End did it:

Motivation can take many forms. At Lands' End these days, it has taken the shape of a London taxicab parked in front of the company's headquarters, its black paint buffed to a mirror-like shine, its grille festooned with a Christmas wreath.

Historic Return Policy

Lands' End, now a division of Sears, has built a reputation for 44 years on customer service. The London taxi, returned by a customer in 2005, has become Lands' End's version of a well-known Nordstrom legend, in which a customer was allowed to return tires even though Nordstrom never sold tires.

However, in this case, Lands' End really did sell the car, back in 1984. The London taxi was featured on the cover of Lands' End's holiday catalog that year as a special luxury item. The cab, complete with a right-side steering wheel, and filled with classic English cashmere clothing and gifts, was sold for US$19,000 to a Kansas native. The woman bought it as a gift for her husband, who was a car collector.

In 2005, the man called Lands' End and invoked the company's unconditional guarantee policy that allows customers to return any item that they are not satisfied with for an exchange or refund of the full purchase price. He got the $19,000 back, and Lands' End got the car.

The taxi would be worth between $10,000 and $12,000 now, according to Richard Lentinello, editor of Hemmings Motor News, a monthly publication for car enthusiasts based in Vermont.

It's more than a cab. McCreight says the taxi is a valuable symbol.

"For thousands of employees, or new employees, to say, if you're designing a product, and you're going to need to stand behind that product 21 years later, how dearly and how much attention do you take to design it," McCreight(President of Lands' End) said.

I personally think this is a lovely quote from McCreight and one that is extremely relevant. Many companies develop products or policies, sell or run it for sometime, only to later revoke it! Companies need to realize that such revoked products or policies leave customers confused, frustrated and miffed. It pays to plan just in case your customer returns after 21 years!

Open Source organisation design

Reading the article in Wired about Kidrobots written by Alissa Walker, I felt there are some very important implications about how corporations need to redesign their business models for a successful future. Specifically on how organizations have to structure themselves towards customers, product design and internal working methods came to my mind. Here are my thoughts:

CEO  as Chief Engagement Officer: The job of person on the top of such organizations is about having a loose control of various functions and people in the organization.His/her ability to bring together multiple talents either from within or outside will become increasingly important. His/her job is to drive active engagement across functions and people. There is a nice quote in the article by the owner Paul Budnitz where he says "You need someone with a very clear vision holding everything together, and frankly that's what I'm exceptionally good at..."

Employees as artists: The ability to embrace ideas and suggestions across the board will become important for the success of the corporation. As mentioned in the article, "When there's no sense of possessiveness or ownership in the artistic process, great things happen,.." Employees must understand and practice this approach across markets, departments and offices.

R&D as open source: Product development wil get more collaborative and hence  they need to understand talent always may not reside inside the company. Like mentioned in this article, "ideas for new Kidrobot products are coming at Budnitz fast--from friends, musicians, fashion designers, graffiti artists, animators, even suggestions from Kidrobot's message boards..", R&D will be a lot more open than closed.

Products to extended experiences: Companies have to learn to work with alliances beyond their categories. It's no more just about the product but about the experiences in places where customers never expect them to be present. Like how the article mentions "Budnitz has overseen the design of a wildly successful tie-in with a shoe by Nike (NYSE:NKE) and exclusive apparel for Barneys. Then Volkswagen came knocking, with a plan to bring to life another bunny-inspired character, the Dunny, in a signature version of its new Rabbit. Budnitz was able to completely customize the vehicle, from interior textiles to the paint job..."

From retail to playtail : If an organization's customers have to interact with them at the retail level, it is no more about product placement and availability. It's the ability to provide an environment for customers to come-in and play with their imagination around products. The article goes on explain - "He transformed the spaces from toy galleries to lifestyle stores that feature a new limited-edition line of apparel." 

Corporation as a network: The corporation of tomorrow must not structure itself as head offices, corporate offices and regional offices but as a network of excellence across the globe. As mentioned in the article "Budnitz lets that sort of fluidity permeate the entire company. With so many projects in motion, it's impossible for him to provide all the direction himself, so he divides his staff of about 45 into small groups, letting important decisions fall to anyone from an intern to a visiting artist."

Customer focussed companies - Businessweek's list

Businessweek has come out with first ever ranking of the best customer service companies in the US. There are a few things to learn from them. Here's what I found interesting about these companies:

• They emphasize employee loyalty as much as customer loyalty, keeping their people happy with generous benefits and perks. Since 1984, No.5 Wegmans has given away $59 million in scholarships to 19,000 employees.
• Senior management logs hours on the front lines, listening in on phones in the call center or working by staffers' sides. At No.15 Cabela's Inc. (CAB ), for instance, Vice-Chairman James W. Cabela spends hours each morning reading through the retailer's customer comments, and hand-delivering them to each department, circling the issues he'd like to have addressed.
• Apple's customer service shows its bruises--device problems frequently erupt just after warranties expire--the in-person support offered at the "Genius Bars" in the electronics maker's more than 170 stores sets it apart from its peers.
• Low-cost brokerage firm Vanguard, whose top executives are each trained to man the phones during heavy call periods.
• Four Seasons Hotels & Resorts (No. 2) has been trying to enhance the check-in process for customers, a service that's in little need of improvement. "We call it having a healthy paranoia," says Craig Reid, senior vice-president of operations for the Americas. So over the last 18 months the hotel has been quietly extending curbside check-in. It aims in advance to identify customers who've stayed at the hotel as infrequently as five times and literally hand them their room keys as they step out of the car.

To me what what was interesting was the passion these brands demonstrate in 'bringing alive' the philosophy. The common thread of taking the credo seriously across the company and seeing it through all the way is something all these service brands seem to have done.

Building a customer-centric culture

Someone asked me the other the day, if I have been talking and spreading the philosophy of the ideal work culture that our office should practice, the need for extreme customer-centricity amongst employees, a passion for the work one does etc. for so many years now, why is that there are only a few people around me who seem to get it, do it, practice it and spread it.

Here are my answers:

• Building an organization is an evolutionary process. Keep doing it.
• Change management is a continous job. Keep attempting it.
• There's no perfect answer. Keep trying.
• Don't worry about results. Remember, culture & habits can't change overnight. Keep up the pressure
• Identify evangelists. Keep working on them to spread it across the organization.

It's interesting that on the same topic I just got a reference of a 1972 McDonald's Training Video.The content and the message of the video is still relevant after 35 years! Take a look:

So, don't lose hope. Remember, the 35 year McDonald's Chant!