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!
 

The impending death of voice mail

At the tone, leave a message.....When was the last time you logged into your voice mail box and checked the messages in it? Increasingly, more and more consumers rarely check their voice mail. Consumer don't have the time, it seems, to hear long voice mail messages, they would rather respond to people or friends who called instantly.  Also, it is not easy to search voice mail messages on your phone. Nobody has the patience to go through it one by one!

Here's an interesting statistic from an article that I had read:

More than 30 percent of voice mail messages remain unheard for three days or longer, according to uReach Technologies, which designs voice messaging systems for Verizon and other phone companies. And more than 20 percent of people with messages in their mailboxes rarely check them, said Saul Einbinder, the firm’s senior vice president for marketing and business development. A survey done for Sprint by Opinion Research Corporation found that with the exception of people age 65 and over, adults respond more quickly to a text message than to a voice message. Those under the age of 30 are four times more likely to respond within minutes to a text message than to a voice mail.

If you are a brand having a call center for customer service, how often do you make it easy for consumers to send text messages with their queries, if there is a huge waiting time on the call, so that you get  your service reps to either call these customers back immediately or  quickly respond back with a text message? I have rarely seen companies do so.

Remember, text message box has taken over  the voice mail box!

Learning when not use mobile for marketing!

According 1-to-1 media, the mobile industry has a lot of learning to do from email marketing industry - esp. how not use it! Take a look:

Taking into account email's bad customer experiences with spam and email address sales, the mobile marketing industry developed its channel strategy around the concept that consumers control the relationship.

"When we hear that beep, everybody looks right away," says Steve Leonard, general manager at mobile firm Motricity, speaking about responsiveness to text messages.Consumers are now more willing to respond to offers via SMS because they know that no one will sell their mobile number and they can easily get out if the relationship doesn't meet their expectations.....consumer-controlled relationship will only increase as technology advances to allow mobile banking, purchases, and other applications. And while high-tech devices like the iPhone and BlackBerry are important to drive mobile's evolution....

The key to mobile marketing's future success lies in its metrics capabilities.... Calls-to-action like mobile coupon redemption or in-venue sweepstakes allow companies to track consumer actions to specific marketing initiatives.....

My View:  In India especially, this medium already has the effect of email marketeers' misuse. The amount of junk SMSs we receive is quite high. Also, many companies have started using it for mobile alerts, mobile marketing initiatives etc. Sometimes, it is quite a pain or does not get the attention of customers as it would earlier. It needs to be used judiciously and it must move away from regular transactional messages to relationship messages too.

Ideas are welcome. Any ideas to kick-start this thinking?

Building value in mobility - Some perspective

Over the last couple of months, I have been talking and meeting a lot mobile service providers in India across many forums. While most of them are in an acquisition binge, the challenges they seem to face are similar - irrespective of the vintage of operation or subscriber size. They either talk to me of huge shift from post-paid subscribers to pre-paid subscribers, reducing revenue from voice services, increasing usage of VAS and data services, lack of differentiation in their own offerings for customers to choose or switch, customer churn and many more! To add to the confusion, there are new service providers entering the fray. How do these service providers build value for their customers and become compelling?  Visionmobile provides an interesting perspective and approach to consider - Value Quadrants:

Value Quadrants maps value creation and revenue model changes by asking WHEN and WHERE is value being created. The WHEN of value creation is function of the handset lifecycle, from design, development and production (pre-sales phase) to point-of-sale and in-life use (post-sales phase). There WHERE of value creation is either on the device (hardware, software, patents and industrial design) or on the services ‘cloud’ (for designing and delivering content and services).

In one quadrant, value is created by intellectual property, in the other value is built out of licensing and in the other one it is out of infrastructure. Many companies have started to take position in these quadrants.

The revenue models that emerge out of these value quadrants are quite different and unique:

To me this is an interesting map for mobility service providers in India to evaluate their offerings and determine what  migration and transition of services that they need to make or build  to create value and stickiness in their offerings for customers either thro' alliances, product/service development, new revenue-sharing models etc.

Guess, there's lot to think now!

In a networked world, data isn't an extrapolation

James Cherkoff had written a post a couple of months back:

"... as people increasingly lead their lives online, we have information about what is actually happening in a complex world.  So, for example, instead of mocking-up profiles of typical customers to help guide strategy - we can let the data describe the reality.  And we can see how that reality changes.  All of which, on the face of it, sounds like a good thing.  However, in fact, the move from reference to reality is tricky.  For starters, there's A LOT of this reality stuff and it's VERY messy.  But as with all technology, that bit will eventually be solved by some smart folk, a few machines and a bit of Gordon Moore's magic.  No, the tricky part is moving away from the reassuring, grand planning environment into one where you know who the customer is - because you can smell him.  It's The Cathedral And The Bazaar all over.  In the networked world data isn't an extrapolation or a sample - it's behaviour.  There's no need to second guess the market when you can just wander around it."

Here's my experience with a wireless service provider in India - Vodafone

I had this experience with my Vodafone account in India. I walked into their stores and had a query on my bill recently. As I walked out( in just a few minutes), I had an SMS requesting me rate the customer care associate. I was quite impressed with the way they managed the data and my interaction real time. Since my query was addressed well, I went to pay the bill and immediately I got an SMS thanking me for the payment. I had paid the bill fairly early - a week or ten days ahead. Just a couple of days before my due date for the same bill, I received an SMS reminding me to the pay the same bill! I was quite pissed and angry. To me it looked like one part of the organization was using the real time data for customer service & delight and the other part of the company - billing and collections department have not woken-up to this new world order. So is the case, when I go to their website and spend time subscribing or unsubscribing to specific services. They don't use this rich data of mine available online to leverage the relationship in the same manner. I think enterprises need to connect data across channels and experience and build  what I call a DUET( Data-led User Experience Testing). It will help them map the data to the user experience clearly and ensure there are sign-offs at every stage of the interaction. 

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.

Do you onboard your customers?

I am not always excited if somebody tells me I have acquired a new customer. I always look at what is in the plan of the marketing & product teams to make these customers use all the features and benefits of the product, so that these customers can be with them for life. Not too many companies pay attention to onboarding customers. They acquire and forget. Or they pay a lot of attention to how to acquire customers but not do enough review of what is done to keep and grow these customers. Kevin Zimmerman, Sr. Editor, at Peppers & Rogers writes:

Consumer electronics companies and retailers are finding out the hard way what happens when you don't educate customers. Take, for example, the recent situation involving the purchase of popular high-definition televisions (HDTVs). According to Forrester Research Analyst James McQuivey, 20 percent of the sets sold have been returned in some U.S. regions, in large part by consumers who didn't realize what they were buying. Per an ESPN/Knowledge Networks/Statistical Research Inc. study, only 64 percent of homes with an HDTV have HD programming via broadcast or cable, and 13 percent of people who own an HD set do not know if they receive an HD signal. McQuivey forecasts the 20 percent figure will drop moving forward, as more retailers see the need to educate customers about the format if they want to avoid such massive returns.

Who's responsible for customer education?

Henry Choy, senior analyst at Jon Peddie Research says ""The store should do a better job of educating customers, the documentation inside the box must be better, cable companies can get more involved,"..

For a moment, if we as marketers think like customers, then count the number of times we would have read an operating manual, the number times we would have used the features that we primarily bought the product for, the number of times a company that we bought the product from, called to tell you if you have understood the features and used them. In my case, it is close to zero. That's the opportunity waiting to be tapped - Onboard your customers and you will realize there's profits to be made for life.

Landline Vs Landless marketing thinking

Shlomi Ron has a thought-provoking article on how telco marketers' mindsets have to change in an increasingly landless telephony world.

The land-line school of thought is characterized by a localized connectivity that "chains down" device users to one place -- at a point of access -- and demands multiple charges per connection and content consumption.

In contradiction, the landless school of thought preaches convergence, or full ubiquitivity (ubiquity+connectivity): the freedom to access information using multiple devices (e.g., desktop, laptop, cellphone, PDA, videogame consoles, et cetera) anytime, anywhere without complex and multiple fee schedules.

In terms of communication, land-line thinking is typically manifested with wireless carriers that charge for voice communication, text and data services and web services separately, with additional fees for each additional family member using the service. A landless business model would factor the cost of content into the cost of the access device, thus providing consumers with unlimited access to a Universal Content Country, supported by myriad content providers.

Today marketers are faced with two distinct challenges: delivery and content. Think about land-line delivery as a physical faucet: water (content) is gushing through at pre-designated locations, and the faucet makers control both the access and quality of water. Well, consumers are starting to demand the ability to carry their own glasses and drink their smart water on the go and on their own terms. Let's make sure we are still looked upon as a reservoir where users can fill those glasses, when and where they want to. 

Outsourcing marketing to volunteers

Apple's iPhone, in my view, is a case study on marketing by buzz. There's a lot to learn from this for other brands.

Economist had this to write about Apple's iPhone marketing strategy:

The actual launch day, June 29th, became known as “iDay” among Apple cultists. Queues started forming days in advance at many of Apple's 164 shops in America. Depending on the location, the scenes had flavours of Woodstock, Mardi Gras, or—in Silicon Valley's Palo Alto, say—an Apple programmers' conference. Pizza deliverymen did a brisk trade catering to the waiting masses. Steve (“the Woz”) Wozniak, who co-founded Apple but has since parted ways with it, could have got an iPhone through connections, but waited in line just for the experience.

• The first shoppers to emerge victorious were cheered as heroes and brandished their trophies for the cameras.
• AT&T's rivals, Verizon and Sprint, issued “talking points” to their salespeople, with helpful hints for impugning the iPhone's divinity. They lost customers anyway.

Honchos in all sorts of industries have long studied keynote speeches by Steve Jobs, Apple's boss, for ways to cast spells on audiences; now they also need to work out how he outsourced his product marketing to an entire nation of volunteers.