Tag Archives: Customer Loyalty

Managing Customer Experience: the next big thing?

I am a big believer in management guru Peter Drucker saying “What gets measured gets managed“. When it gets down to tracking a company’s success, too many businesses tend to rely on market share, profitability, EPS growth or repeat purchases only. Don’t take me wrong, you still need to track these down, but as one brilliant Berkeley Marketing guru asked: “Do you think your partner is loyal only because he’s having diner every night at home? So, does the number of repeat sales indicates that your customer is loyal?” At least for the first one you must admit he’s got a point.

Nowadays, customer experience is one if not the main ingredient of customer loyalty which translates into market share — as loyal customers are the best brand advocates, profitability and EPS growth i.e. the way most businesses would define success. Then what are you doing about it?

If you’re still in doubt, take the coffee business as an example. Who has been insanely successful in this business? Starbucks and Nespresso success stories — follow the links for more — can attest about it.

As Shaun Smith, author of Managing Customer Experience, details in his post, there are 10 best practices to create real business value:

  1. Successful deployment requires the active and continuing involvement of leadership
  2. Ensuring cross-functional ownership is vital
  3. Focusing on your most strategically important customers
  4. Finding out what these customers truly value
  5. Being clear about what you stand for
  6. Delivering the promise at every touch point
  7. Providing branded training to ensure that employees understand the brand story
  8. Designing CEM before installing CRM systems
  9. Measuring the customer experience
  10. Aligning KPIs with the customer experience

This is heavy duty, but social media — as you can see in the Starbucks video in the link above — is becoming instrumental in that regard.

I’ll leave you with the five barriers to measuring customer experience, from mycustomer.com:

“Customer experience isn’t just about giving customers a good time. It’s about understanding just how good a time (or not) you are giving – and making adjustments”

  1. We rely on magic numbers
  2. We don’t really listen
  3. Measuring word of mouth is hard
  4. We have too much functional data – too little insight
  5. We don’t look beyond the obvious and the superficial

Unhappy Customers Can Be Won Back via Social Media

According to a report (pdf) sponsored by RightNow, Social Media is an effective way to bring back unhappy customers. Marketing Charts reports about it as well here. The research present a number of facts to support this: 

– 68% of consumers who posted a complaint or negative review on a social networking after a negative holiday shopping experience got a response from a retailer.
– 18% of those turned into loyal customers, 33% turned around and posted a positive review and 34% deleted their original negative review
On top of it 50% of consumers say great customer service/experience influences their decision to buy from a specific online retailer and after a positive shopping experience 31% purchased more from this retailer.
Finally, 28% of consumers looking for information or support with online shopping researched what other customers said on social networking and reviews websites.
In many cases, the 32% of US consumers who posted a negative review of a holiday shopping experience in 2010 and were ignored by the retailer simply had a bad impression reinforced. Six in 10 (61%) of these consumers said they would have been shocked had the retailer contacted them.
So YES social media has a growing influence on your customers loyalty and you should be paying attention to it. Actually we all know that a happy customer is the most effective sales influencer when turned into an advocate.

According to the same research, for consumers who had a positive exeprience this holiday season online, 21% recommended the retailer to friends and13% posted a positive online review about the retailer.

Customer equity to drive your marketing ROI

During my Lotus years, I’ve been given the opportunity to meet Mike Zisman our CEO at the time. One of his statement stayed with me since then: “The purpose of any enterprise is to acquire new customers and retain existing ones. Product an services are only a means to that end.” It sounded a bit simplistic initially, but my experience in several companies since then reinforced my conviction of the importance and truthfulness of this statement.

During my marketing journey, I discovered the notion of customer lifetime value (CLV), more complex to comprehend and so effective to coin what your marketing focus should be and furthermore how to present it to your team. It also allows to present to CEOs and shareholders the real value ($) of customer loyalty.

Here comes customer equity that definitely coins the term that best represent all of this. You now can think of CLV as an an additional equity to the shareholders or the brand ones.What if you could revise Marketing ROI and fine tune your marketing course of actions based on this equation coming from Roland T. Rust in Advertising Age : “The ROI is simply calculated as the projected increase in customer equity minus the discounted [marketing] investment divided by the investment.”

But how do you calculate customer equity with real numbers? Now we’re talking 😉
Well, a number of tangible and intangible enters into this and I do not necessary agree with Roland Trust in his article. I’d refer you to Customer Equity Calculations dedicated site, and will come back on this later on. To approach it, just think of customer equity as the total of the discounted lifetime value of all of its customers. I know, not that intuitive.

To be continued …

WOMM: Marketing 2.0 lethal weapon

One of the most critical dimension of Marketing 2.0 lies in Word of Mouth Marketing (WOMM). As defined in wikipedia:

“it is a term used in the marketing and advertising industry to describe activities that companies undertake to generate personal recommendations as well as referrals for brand names, products and services.”

WOMM in my opinion was first identified by Regis McKenna when describing the market infrastructure in his aging book The Regis Touch. WOMM now has its association Word of Mouth Marketing Association and his guru Word Of Mouth Marketing: How Smart Companies Get People Talking – Andy Sernovitz. As Andy puts it, here is his WOMM Manifesto:

“1. Happy customers are your best advertising. Make people happy.
2. Marketing is easy: Earn the respect and recommendation of your
customers. They will do your marketing for you, for free.
3. Ethics and good service come first.
4. UR the UE: You are the user experience (not what your ads say you are).
5. Negative word of mouth is an opportunity. Listen and learn.
6. People are already talking. Your only option is to join the conversation.
7. Be interesting or be invisible.
8. If it’s not worth talking about, it’s not worth doing.
9. Make the story of your company a good one.
10. It is more fun to work at a company that people want to talk about.
11. Use the power of word of mouth to make business treat people better.
12. Honest marketing makes more money.” — Andy Sernovitz

Let’s make sure you’ve got a WOMM plan embedded in your coming PR activities. It is cheap, mostly effective, but terribly difficult to ramp up. Who are the individuals you’re targeting? How do you approach them without sounding too much biased? How do you recognize them? With what stories and messages do you nurture them? All these questions need to be addressed prior initiating your WOMM as WOMM is Marketing 2.0 lethal weapon.

– Image courtesy of The influencers at http://www.theinfluencers.ca

Market segmentation to increase attitudinal loyalty

I mentioned behavioral targeting recently on Marketing 2.0 as a way to increase marketing effectiveness. I wanted to come back on this topic in light of a datasheet that you can download from Omniture, to share with you a tip about successful segmentation as described in Wikipedia.

“The requirements for successful segmentation are: homogeneity within the segment, heterogeneity between segments, segments are measurable and identifiable, segments are accessible and actionable, segment is large enough to be profitable.
These criteria can be summarized by the word ADAMS:

  • A Actionable: you must have a product for this segment
  • D Differential: it must respond differently to a different marketing mix
  • A Accessible: it must be possible to reach it efficiently
  • M Measurable: size and purchasing power can be measured
  • S Substantial: the segment has to be large and profitable enough” — Wikipedia

I won’t come back on all segmentation variables (Geographic, Demographic, Psychographic and Behavioral), you can follow the links for more, but I wanted to highlight the behavioral ones: benefit sought, product usage rate, brand loyalty, product end use, readiness-to-buy stage, decision making unit as Wikipedia refers to it in the Marketing 1.0 world. This is still valid of course, but new dimensions do appear with Marketing 2.0 especially around behavioral analysis. Thanks to web techniques you can easily track, using cookies for instance, what a prospect did before landing on your web site and what retained their attention.

More interesting, in our web 2.0 world, is the way a prospect, or for that matter, a customer expresses his relationship to your brand. This has changed significantly with the web 2.0 advent. As a matter of fact, behavioral targeting and market segmentation offers a powerful way to dialog differently with each segment. Defining your segments along the lines of attitudinal loyalty — more on customer loyalty on wikipedia — and remembering ADAMS rules will guide you to the appropriate solution to improve it.