Posts tagged: ACSI

Your moment of Venn

My friend Chris Eagle sent me this cartoon recently:

University expectation Venn diagram

Clearly, the cartoonist was frustrated with some recent visits to university websites. But it’s not hard to apply his Venn diagram to many of our retail website home pages (and many other pages as well).

If we were to diagram our own sites — breaking out our customers’ expectations and our own objectives — what would be contained in our overlap? How often during the internal battles for homepage real estate are customer expectations considered? And when they are, how quickly are they pushed aside when conflicting internal objectives over limited real estate means something has to give?

Does the merchant who’s in our face get priority over the customer who is not?

Assuming we’ve got a list of customer expectations or objectives, how were they determined? Would the items in our “customers’ expectations” circle be our perceptions of our customers’ expectations or would they be expectations gathered directly from our customers? You might say there’s no distinction between the two, but my experience tells me there is often a significant gap. This is because those of us who work on sites day in and day out are about the worst possible people to understand our customers’ perspectives. We simply know our sites and our business way better than our customers ever will, and our knowledge clouds our ability to see our sites and our businesses in the same way our customers see our sites and our businesses.

Oh, yeah. To add to it all, believe it or not, our customers are not of a single mind and a single purpose. It’s hard enough that we’ve got to deal with competing internal interests; we’ve also got to somehow provide a self-service experience for our customers that magically anticipates and responds to their expectations and objectives.

So, these are a lot of questions. What do we do about it?

  1. Objectively understand customer expectations and objectives, directly from our customers.
    This is, of course, not as simple as it sounds. We’re dealing with the human psyche, which is a complicated thing. It’s important we ask questions very carefully to ensure we are getting accurate results. For example, the Myers-Briggs test is a scientifically proven method for assessing personality. If you’ve ever taken it, you know how thorough and accurate it is. The results you get are very different than you would get if you simply asked someone to describe his or her personality. It’s also important that we collect this data properly, ensuring we get a representative sample of our customer base that is statistically valid enough that we can project our findings on our entire customer population. In other words, simply asking the next 15 customers we come in contact with is not enough. When done correctly, customer surveys can be extremely reliable, accurate, and predictive and can give us an excellent view into our customers wants, needs and expectations. It will come as no surprise that I am a huge (and admittedly, biased) fan of ForeSee Results’ ACSI methodology because it asks a series of well-tested questions that have been scientifically proven to draw precise, reliable and accurate information from respondents.
  2. Educate internal constituencies
    Once we understand our customers’ objectives — from their perspectives — we need to educate our internal partners in an effort to align their strategies with our customers’ needs. Ideally, they’re already aligned, but my experience tells me that daily internal pressures have a way of evolving (or should I say devolving) their individual strategies away from customer needs.
  3. Map out a strategy that responds to key personas and/or purposes
    Delivering on multiple objectives requires a lot of thought and planning. Meeting the needs of so many constituencies, customer and internal, can be tricky. I highly recommend reading Bryan and Jeffrey Eisenberg’s excellent book, Waiting for Your Cat to Bark, for some quality advice.
  4. Personalize and customize
    While online real estate is technically unlimited, trying to simultaneously meet too many competing objectives can lead to a chaotic mess. I won’t call anybody out specifically, but surely you’ve see the type of site I’m referencing. Companies such as Monetate and Certona have site personalization capabilities that can take what we know about the customer, where’s she’s coming from, what search term she might have used and even, in the case of Monetate, what the current and upcoming weather in her location is, to help us make some determinations about the configuration and content of the page she might see.

To be sure, filling the overlap circle of our Venn diagram is not easy. But in a world where low single digit conversion rates are all too common, focusing on discovering and then meeting customer expectations is the quickest way to improving business and gaining market share.

What do you think? What fills your Venn diagrams? How do you understand customer expectations and objectives?

Cartoon: XKCD

Bought Loyalty vs. Earned Loyalty

Earned loyalty vs Bought loyaltyAcquiring new customers is hard work, but turning them into loyal customers is even harder. The acquisition efforts can usually come almost solely from the Marketing department, but customer retention takes a village. And all those villagers have to march to the beat of a strategy that effectively balances the concepts of bought loyalty and earned loyalty.

I first heard the concepts of bought and earned loyalty many years ago in a speech given by ForeSee Results CEO Larry Freed, and those concepts stuck with me.  They’re not mutually exclusive. In the most effective retention strategies I’ve seen, bought loyalty is a subset of a larger earned loyalty strategy.

So let’s break each down a bit and discuss how they work together.

Bought loyalty basically comes in the form of promotional discounts. We temporarily reduce prices in the form of sales or coupons in order to induce customers to shop with us right away.

Bought loyalty has lots of positives. It’s generally very effective at increasing top line sales immediately (especially in down economies), and customers love a good deal. It’s also pretty easy to measure the improvement in sales during a short promotional period, and sales growth feels good. Really good.

And those good feelings are mighty addictive.

But as with most addictions, the negative effects tend to sneak up on us and punch us in the face. The 10% quarterly offers become 15% monthly offers and then 20% weekly offers as customers wait for better and better deals before they shop. Top line sales continue to grow only at the cost of steadily reduced margins. Breaking the habit comes with a lot of pain as customers trained to wait for discounts simply stop shopping. Bought loyalty, by itself,  is fickle.

But it doesn’t have to go down that way.

We can avoid a bought loyalty slippery slope when we incorporate bought loyalty tactics as part of a larger earned loyalty strategy.

We earn our customers’ loyalty when we meet not only their wants but their needs. After all, retail is a service business. We have to learn a lot about our customers to know what those wants and needs are so that we align our offerings to meet those wants and needs. Which, of course, is easy to say and much more difficult to do. But do it we must.

To earn loyalty, we have to provide great service and convenience for our customers. But we have to know how our customers define “great service” and “convenience” and ensure we’re delivering to those definitions. Earning loyalty means offering relevant assortments and personalized messaging, but it’s only by truly understanding our customers that we can know what “relevant” and “personalized” mean to them. And a little bit of bought loyalty through truly valuable promotions can provide an occasional kick start, but we have to know what “valuable promotion” means to our customers.

We earn loyalty when the experience we provide our customers meets or even exceeds their expectations. As such, our earned loyalty retention strategies have to start before we’ve even acquired the customer. If we over-promise and under-deliver, we significantly reduce our ability to retain customers, much less move them through the Customer Engagement Cycle we’ve discussed here previously.

But earned loyalty can’t just be the outcome of a marketing campaign. It’s much bigger than that, and it doesn’t happen without the participation of the entire organization. Clearly, front line staff in stores, call center agents and those who create the online customer experience have to be on board. But so too do corporate staff, including merchants for assortment and marketers for messaging. And financial models for earned loyalty strategies inevitably look different than those built solely for bought loyalty.

Since customer expectations are in constant flux, we have to constantly measure how well we’re doing in their eyes. Those measures must be Key Performance Indicators held in as high a regard as revenue, margins, average order size and conversion rates. (Shameless plug: the best way I know to measure customer experience and satisfaction is the ACSI methodology provided by ForeSee Results). Our customers’ perceptions of our business are reality, and measuring and monitoring those perceptions to determine what’s working and what’s not is the best way to determining a path towards earning loyalty.

Earning loyalty requires clear vision, careful planning, a little bought loyalty, lots and lots of communication (both internally and externally), and some degree of patience to wait for its value to take hold. But when the full power of an earned loyalty Customer Engagement Cycle kicks in, its effects can be mighty. The costs of acquiring and retaining customers drop while sales and margins rise. That’s a nice equation.

What do you think? Have you seen effective retention strategies that build on both bought and earned loyalty? Or do you think is all just a crock?

Retail: Shaken Not Stirred by Kevin Ertell


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