Posts tagged: customer engagement cycle

Don’t let your brand go LeBron

In case you missed it, last week NBA superstar and Cleveland-area native LeBron James elected to leave the Cleveland Cavaliers in favor of the Miami Heat. He announced his decision midway through an hour long, nationally televised special conceived by his team of personal advisers. It all came across as incredibly self-absorbed and spectacularly anti-fan as he essentially broke up with Cavaliers fans in front of a national audience. He repeatedly referred to his decision as being about “business” and hoped his fans would understand.

But they didn’t understand.

When shown an image of fans burning his jersey, James seemed temporarily startled before stating that he couldn’t “get involved in that.” His Sports Q rating, which determines an athlete’s popularity and advertisers use to determine whom to endorse , was the highest in the NBA pre-announcement, but it’s sure to take a hit now. In fact, this post calculates a drop in Q score could cost him as much as $150 million.

But what does this all have to do with retail?

I think there’s a lesson we can all learn about dangers of making business decisions without fully considering the effects of those decisions on our customers. After all, our businesses wouldn’t exist without our customers, and we continue operations at their pleasure.

We’ve probably all been in those meetings where a suggestion motivated by self-interest groupthinks its way into a spectacularly anti-customer business decision. I imagine that’s the type of meeting that occurred with LeBron and team when they hatched the national TV special idea.

A retailer colleague of mine recently told me a story of such a session at his company. The head of the call center was complaining about volume spikes that kept hitting the call center. Her call center operations were deemed a cost center, so the metrics she used to measure her operation were all cost related. These spikes in volume were jacking up her costs, and she was making a lot of noise about it. My colleague noted the spikes in volume were following promotional email blasts that were widely considered very popular because they drove a lot of sales. No one would even consider stopping those emails, so the group began to latch on to the idea that they simply close the call center on days when the promotional email went out. Seriously. Luckily, my colleague was able to pull the group back from the brink and save them from going LeBron. But it was close.

We have to be careful that we don’t get so caught up in our own perspectives that we lose sight of our customers’ perspectives. Because we have direct control over the experience we provide, it’s sometimes easy to let that control be dominated by our own needs without considering the needs of our customers. When that happens, we’re seriously in danger of going LeBron.

Consider a few potential scenarios:

Does your company’s loyalty program makes its rewards intentionally difficult to redeem in order to reduce costs? If so, you might be going LeBron.

If your return policies make your job easier while making your customers’ returns a lot more difficult, you might be going LeBron.

If you promote a sale of up to 70% discounts and bury only an item or two at 70% off within a sea of items that are less than 20% off, you might be going LeBron.

If you choose to leave in place an onerous process for customers to check the status of their orders because it saves you time and money, you might be going LeBron.

Whenever our needs get way out of line with our customers’ needs, we’ve got a business problem that could be deadly. We provide products, services and conveniences that our customers value enough to give us their hard earned cash in exchange. But the relationships we have with most of our customers are somewhat fragile. When we make business decisions that are primarily motivated by our own self interests (especially those motivated by some subsection of our businesses and driven by short sighted personal motivation), we risk potentially fatal damage to many of those relationships. We don’t want be caught startled that our customers are burning our jerseys. We don’t want to go LeBron.

Instead, we can best succeed by regularly considering our customers’ needs and desires when making business decisions. Such consideration will help us maximize the customer engagement cycle and lead us to solid and profitable growth.

What do you think? What examples have you seen of companies going LeBron?


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?

The World’s Greatest Marketer

The greatest marketer any of us could ever have is a happy and talkative customer with lots of friends. Of course, any one customer’s reach is pretty limited compared to a TV spot, even in today’s 500 channel, multi-tasking, timeshifting, DVR world.

Wom However, she’s also infinitely more credible to her audience than any TV spot, display ad, print ad, website or sponsored search term will ever be.

When we retailers focus on the customer engagement cycle, which I’ve always defined as Awareness, Acquisition, Satisfaction, Conversion, Retention and Referral, we often spend the majority of our time and budgets on the first stages of the cycle and hope for the best on the Referral stage.

But I think there are at least two steps to actively drive the Referral stage:

1. Provide the right products and service to ensure we have incredibly happy customers
2. Ensure our happy customers have great and easy-to-use tools to tell the world about us

The good news is that the web provides us a fantastic foundation to create these tools, and some of them are so simple you can get them going in no time.

Here are a couple of quickies to start with:

Send To A Friend
Many sites have a Send to a Friend capability somewhere on the site. However, the vast majority of these capabilities are severely understated text links that are hard to find or notice. And worse, the actual email sent is almost always a boring text based email with no branding and compelling content whatsoever. Even though as the sender I’m often asked for my name and email address, the actual message frequently comes from something like sendtoafriend@company.com instead of coming from my full name, which would be far more recognizable to my friend and far more likely to be opened (I hope).

Why not outsize the Send to a Friend capability on the site itself with a fully designed email box with a sender, recipient and notes field and copy that encourages our happy customers to share our products with their friends?  Here’s an example from my past at Borders that worked really well:

Sendtoafriend

And when we send the email, why not create a nice, branded HTML template that compels our friend to click though? Why not put as much time and effort into this email template as we regularly put into our weekly marketing emails?


Social Network Sharing

Most news sites have long since added buttons to their articles that allow readers to post their articles to Facebook, digg, del.icio.us, Twitter and other social network options.

Social

All of our products should have these options as well. It never fails to amaze me how much people want to talk about products, and this is a great way to enable them to talk to all of their friends at once though social networks. These have much better reach than Send to a Friend capabilities, and the resulting post can then spread even deeper through other networks.

Those are two of the simplest ways to very quickly, with limited technical effort, give tools to your customers to help them be our best marketers. In a future post, I’ll discuss some more technically complicated but even more powerful options.

What do you think? What ideas do you have to create tools for your customers to be your best marketers?



Retail: Shaken Not Stirred by Kevin Ertell


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