"Retained customers are always far more profitable than newly acquired customers. They have a better understanding of the brand’s benefit and value, and they are easier to find and communicate with."
– Christie Nordhielm, Professor, University of Michigan Ross School of Business

Most customer loyalty programs suck.

Well, maybe I was a bit harsh. Let me restate that.

Most customer loyalty programs are backwards.

Loyalty should be about the loyalty of the company to the customer, and not the other way around. Actually, commercial loyalty is mostly reciprocal. The repeat business and loyal customers that you seek will come your way…when you put a program in place that also keeps you loyal to them. The sad thing is that most loyalty programs don’t take into account this principle of reciprocity.

More to the point, the burden of loyalty rests with the company and not with the customer. Don’t give me some program where I’m the one doing all of the work all of the time, such as clipping UPCs over the period of a year or watching for when and which points will expire so I can get enough for a pair of socks. Make it so easy for me to do repeat, rewarding business with you, that you keep track of in your own system so that all I have to do is show up, buy something and feel the love.

Better yet – make purchase an optional component in your loyalty program. Loyalty is a behavior, not a transaction and it’s about time we treated it with more respect.

Think loyalty is for "some other company"? You’re leaving money on the table. (found in the sources listed below in Where Else to Look)

• On average, existing customers spend 67% more than new customers
• Acquiring a new customer can cost up to 5 – 10X more than retaining existing customers.
• A 5% increase in customer retention results in 25-100% increases in profit.

Q&A | QUESTIONS & ACTIONS

Here are a few things that you might consider to up your loyalty to your customers, and theirs to you.

1. Think of the ways that you exhibit loyalty to your customers. Short list? Work on that first.
2. Don’t make purchase the only indicator of loyalty. Facebook recommendations, word of mouth and other non-cash interactions illustrate the loyal behavior that you’re seeking as well
3. Make it easy and keep the burden of tracking data and points on you.
4. Use the data wisely. Your loyal customers are a gold mine. Use that data strategically and you’re set for life!

Where else to look?

Customer Loyalty: How to Earn It, How to Keep It >> by Jill Griffin

The Loyalty Effect: The Hidden Force Behind Growth, Profits, and Lasting Value >> by Frederick F. Reichheld

Evidence that Facebook Works as Marketing Tool >> by Jeff Cornwall [ARTICLE]

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1. Let’s play… “How well do you know your target market”
2. Build Customers, Not Just Products
3. Failure #1: Not establishing a sense of urgency around social media (marketing)

Flash back just 6 weeks and I can envision the product manager for the now soon-to-be-in-the-crapper Kin phone (after just 48 days!).  Yep, you heard it.  Microsoft and Verizon are closing this little project down and moving all of the engineers over to the Windows 7 phone project.  Which, all things considered, is probably a good idea.  However, this is, as Andrew Hampp and Rupal Parekh of AdAge put it, likely one of the quickest birth-to-death products, with so much publicity surrounding it no less, in modern mobile phone times.

In what may be one of the fastest launch-to-failure paths ever taken by a major marketer, Microsoft’s Kin, the company’s first phone product, is being discontinued just six weeks after its May 13 launch. As first reported by Gizmodo, the phone’s marketing and product development teams are being shifted to work on the launch of the Windows Phone 7.

I can’t help but draw some similarities in the vagaries of the language on both the part of Land Rover and Microsoft regarding their respective new products.  Granted, I realize that they’re both really freaking smart companies.  In fact, MS hit up over 50,000 teens and tweens for their opinion, according to sources cited in the aforementioned article.  Yet, they still did stupid stuff like affording the Kin no ability to download apps, share media via Twitter, schedule events on a calendar or use GPS. Brilliant.  I’m sure that Land Rover did research, focus groups and went through hours of design to come up with the Evoque, but I’m nonetheless disturbed by the vague response alluding to an alleged target market that this new aged (in my opinion, furthest thing from a f-ing Land Rover/Range Rover ever conceived) vehicle that is supposedly going to appeal to so many different people than the typical LR crowd.

“Customers can be confident that the new car will be premium, luxurious and just as special as the other Range Rover models. Its sporting looks and unique qualities will open the brand to a new group of customers who may not have considered a Range Rover product before.”

The moral of the story here is this: How well, no, really, how well do you know the (your) target market? How well do you understand who you serve? Have you gone beyond the demographics and explored the psychographics and ethnography of your audience to really understand if what you’re spending your hard-won R&D and marketing dollars on is really going to hit the bull’s-eye that you’ve painted on the backs of your unsuspecting consumers? 

Before you launch your next great masterpiece…ponder that.

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1. When Should Thought Leaders Play Defense?
2. The Burden of Loyalty

So what, you say? Well, you may already know that social media is outsourced far less than any other type of marketing activity. The reason is that any social media effort needs to be piloted by a true steward of the brand. The steward is someone who gets the convergence of the personal nature of social media and the cultural imperative for organizations who decide to truly engage with their stakeholders. That steward, and not the outside expert, needs to be steeped in the dog food that the organization is going to be shoveling out…

By dogfooding your social media and integrated marketing efforts, you not only become familiar with the tools and technology, but realize the desired effect of becoming a more approachable and conversational culture that drives business growth in the age of conversational marketing.

One caveat: You’re not the audience. Always keep your customer in mind. Dismissing something prematurely because it doesn’t work for you internally could just be a case of dogfooding myopia!

Q&A | QUESTIONS & ACTIONS

Are you dogfooding your marketing? Even if social media or geo-marketing efforts or that cool app you want to develop are far off, you need to be acclimating your organization today to embrace the challenges of tomorrow.

Where else to look?

So much of our work involves research and reading from a variety of different resources and if there are additional resources that went into each week’s theme, we’ll share them with you here.

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1. Random acts of social media marketing
2. NEW e-Book: 30 Marketing Ideas in 30 Days – for Entrepreneurs “Do It Yourself” Marketing Month
3. The Burden of Loyalty

How often do you see the marketing department blamed for a company that has fallen on hard times or for the closure of a tech startup? Rarely, if ever, is my assessment. Save for notable blunders like New Coke, or KFC underestimating the popularity of Oprah, marketing rarely takes center stage on the front page of the local business section.

Two articles from this past weekend, one about a company that we’ve all heard of, Harley-Davidson, and another about a startup that you’ve likely never heard of, Devver.net (maker of coding tools for software developers) converge nicely on the central issue of customer development over product development and the importance of NEVER taking your eye off of the ball.

The two cases are actually very different, in that Harley is calling for wage concessions, among other things, to keep their facilities in Wisconsin. I’m sure that there’s some part of their overall basket of issues that includes labor, but seriously, when your core customer base is aging boomers (no offense), isn’t the writing on the wall, and shouldn’t customer development be at the top of your list? I feel they they’re not addressing the right problem here.

Devver is a bit more enlightened in that they realized, albeit in hindsight, that their issue was a lack of long term customer development focus. They say, and I quote:

“Our mistake at that point was to go ‘heads down’ and focus on building the accelerator while minimizing our contact with users and customers (after all, we knew how great it was and time spent talking to customers was time we could be hacking!),” writes Brinckerhoff. “We should have [been] asking, ‘Is there an even simpler version of this product that we can deliver sooner to learn more about pricing, market size, and technical challenges?’.”

I’m not advocating the marketers take the blame for anything, or that we shirk responsibility either. If we believe Peter Drucker when he said “The purpose of business is to create and keep a customer,” then it seems logical that our focus should not be on the tactics, technology, labor or anything else that doesn’t support customer development.

Related posts:

1. Got Social Media? Ask Your Customers!
2. Let’s play… “How well do you know your target market”
3. Monday Marketing Moxie – Help Your Customers “Do Their Job”

Have you thought about personalization recently? Perhaps you just recorded and watched only the shows you wanted on your DVR, or you’re reading this blog (thank you!) through an RSS reader that brings you just the right content or you just custom-ordered something online made just the way you like it.

I was going through some email this morning and came across one from Starbucks that got me thinking about personalization. A few years back, I had signed up for the Starbucks custom card program. I put my name, the drink I usually order and a smiley face one the card. I felt good about it and used it often. Then they came out with the Gold Card program, which I happily signed up for…and then had to carry two cards, or put all my money on the gold card…so I shelved the personalized card and went gold… So much for the smiley face and all. Since their rescinding of the 10% discount benefit of the gold card, there’s no reason to have it and just this AM I switched back to my personalized card. Yeah… but so what, right? Who really gives a crap about my Starbucks card. Hold on…this is going somewhere.

Just this morning, I also read an article in the WSJ about Bank of America’s updated policy on overdrafts for their debit card customers. Basically, they are eliminating overdraft fees and will deny your purchase at the register…unless you opt in to a program that allows you to go into a deficit situation on your account.  However, this statement from the article gave me pause.

New federal rules on overdraft fees that take effect later this year will permit banks to charge overdraft fees on such transactions if a customer opts into the program. But some banks are struggling to upgrade their computer systems to adapt to different customer preferences.

Wow!  Struggling to upgrade to adapt to customer preferences.  Now, in the grand scheme of things, so what…but this is real work.  Enterprise systems don’t move on a dime (nor do the enterprises that run them for that matter) and infusing the discipline of customer preference into the inner workings of the enterprise doesn’t come easily either.  That said, aren’t we past that point already?  I mean, Neville Hobson wrote about “The age of media personalization” half a decade ago…and we’ve been advancing ever since, or so we thought.

The point here is this.  What systems, processes, sites, tools, outlets, inlets, portals and protocols are you working on now that could use a bit of ‘customer preference adaptation’? Have you considered it? Have your customers adapted and you haven’t? What if someone else adapts faster?

The Starbucks card example earlier is perhaps a quick and pedestrian example, but it’s a critical touchpoint in that it gives a customer the opportunity to take further ownership of the brand experience. Knowing just that and having that damn card in my wallet every day (which is a small bill clip and only holds a few things…so I’m very choosy about what I carry around) keeps Starbucks top of mind.  In fact, knowing that a local ATM remembers my preferences keeps me coming back to that ATM because it saves me something like 17 seconds every visit.

Take a few minutes today to rethink what you’re working on in terms of the ‘customer preference adaptability’ of it all.  Ask a few customers if you need to. Whatever it takes…but be prepared – the age of nuanced customers preference is alive and well.

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1. What’s your customer retention strategy

Focus is a discipline that many individuals and businesses struggle to maintain. Between the emerging opportunities, daily fires to douse, persistent issues and humans just being human, it’s harder than ever to stay on track. When you add in the compounding pressures of a challenging economy, we tend to lose focus chasing after potential revenue opportunities.

That’s not the case for Publix, the employee-owned grocery store chain, which opened 79 new stores in 2008 and acquired another 49 from Albertson’s. By comparison, Kroger opened 60 stores, Whole Foods opened 20 and SuperValue added 14.

Publix attributes that success to a single factor: customer service. Even though its short-term profits are down,

“Publix is staying at full staffing levels and lowering prices in hopes of keeping its existing customers happy and attracting new ones.”

The approach is nothing new. The retailer’s founder, George Jenkins, built Publix on a simple philosophy of customer service and, wouldn’t you know it, “the same relentless focus … is helping the company through the current tough market.”

That philosophy means that Publix president Todd Jones jumps in and starts bagging to keep checkout lanes moving (his first job at Publix actually was as a bagger). It means that the deli is staffed by eight to 10 people, not two (like most supermarkets). It means there’s usually a Publix employee handy to help shoppers find stuff. The Publix definition of customer service also extends to include its prices, which it has lowered by 20 percent on staple items even as its own costs have increased. Publix plans to open another 30 stores this year, and its sales per square foot ($548) is second only to Whole Foods ($820).

Action Summary:

Focus, focus, focus! Scan your operations and decide on one thing to apply relentless focus to during challenging times. Carry through with that focus as we head into an upswing you’ll leap-frog your competitors!

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1. New North Social Media Breakfast – May 18th, 2010 (Small Business Focus)

“If your customers cannot differentiate you, then they will fall back upon the one point where they can always discover distinction – price!” — Scott McKain, author of Collapse of Distinction

Distinction is in the Details

The only perception that matters is the customers’.

Price is the single worst point of differentiation for any organization in any industry. One of the great things about being a marketer is that I tend to walk around with a ‘marketer’s mindset’, looking at nearly everything through the eyes of marketing. Yes, I know, that’s limited, maybe shallow and not that exciting for many of you, but for me, it’s a blast. Last week held a special treat for me in that I made a first visit to a local restaurant that’s full of little points of distinction. In fact, I took several photos with the phone while we were there just to capture the little things that I thought were ‘distinct’. The owner clearly followed, whether by intent or by default, the laws of distinction.

In his book, Collapse of Distinction, McKain tells the story of why Roger Ebert, the film critic, gives such high marks to foreign films. Oddly enough, it’s not that they’re ‘better’ along the lines of film fundamentals that we might all judge a film on, rather, they’re simply ‘distinct enough’ from the traditional films so as to seem superior, if only for a moment. We call that “The Ebert Effect:”

“When people, from their perspectives, are inundated with indistinguishable choices, they perceive product, service, approach and experience with a specific point of differentiation to be superior.”

McKain’s four cornerstones of distinction are simply:

1. Clarity (develop clarity in who you are)
2. Creativity
3. Communication
4. Customer Experience Focus

What does this cost? Better question…what’s it costing you by NOT being as ‘distinct as you can be? Come to think of it, I can’t tell you what our bill was (and I almost always remember) because I was so enamored with all of the distinctions that everything else faded away… Will we be back… You bet!

Q&A | QUESTIONS & ACTIONS

Your mission, should you choose to accept it, is to create small, solid points of distinction that are recognizable and important from the customers’ perspective…because customers perceive that different is better.

What are you doing today to be genuinely distinct in your business?

Like this? Subscribe to Monday Marketing Moxie!

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Truth be told, the best social media strategy for your business starts out much like some of the best conversations you’ve probably had. Think about a great conversation you’ve had with someone who’s actively listening and asking questions and how you felt. You probably felt important, engaged, excited and came away with the impression that you’d just had a wonderful conversation.

You customer’s experience with your brand in social media should give them the same great feelings. Before you engage, however, you need to determine how much your customers are engaging in social media and on which sites. Here are five simple questions that you can ask your customers to determine how involved they are in social media. You can put these in a survey at the cash register, ask over the phone, put into an email, on your website or at any customer touch point.

1. Are you familiar with social media? Social media includes but is not limited to Blogs, Facebook, LinkedIn, Twitter, Podcasts, YouTube, etc.
2. If yes, which social media sites do you interact with? (List to top 10 – 12 social media sites and platforms)
3. How much time to you spend engaging in social media per week?
   For personal use:
   For professional use:
4. What would motivate you to interact with our brand in social media? (things like coupons, contests, instructional videos, helpful content, etc.)
5. What other brands or organizations do you participate with in social media? This could take the form of blogs that you read, Facebook fan pages or Twitter feeds that you follow.

The quickest path from here to being a social media superstar is to begin engaging in the conversation by asking a few important questions and then listening.  If you simply follow the 2:1 ratio of “ears to mouth”, you’ll be well on your way to being the most engaging and conversational organization in your category.

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2. Social Media Revolution 2.0
3. The Five Dysfunctions of Social Media Marketing

I’ve personally arrived at a point where I’ve gotten far enough out of shape that I’ve joined a gym, have made a concerted effort to work out when I travel and have generally tried to get in the habit of doing the activities that will put me in a healthier state. Many of us do this, join a gym, read a magazine on fitness, show up and hit the treadmill or pump some weights, all with the hope that we’re going to slim down, shape up and feel sexy again. Well, that’s all very nice, but it’s not going to do it all for you.

Fact is, diet is as more a part of the health and fitness equation than exercise and personally, I think it’s the harder part of the equation. I was reading a few accounts of how Daniel Craig tuned up for the first James Bond movie that he starred in a few years ago. Every account of his workout routine leading up to the movie stresses that his current physique is the product of 75% diet and 25% exercise. Crap. That means that I have to do the hard part. I have to eat better.

Marketers and business owners often confront the same challenge when they set out to ramp up their organizations and seek some revenue enhancement. They jump in with the exercises, the tactical stuff, like making phone calls, sending post cards, dropping emails and even jumping into social media and the like. They see the activities as being ‘productive’, they get a checklist and a step-by-step, and they feel empowered (just like those great foldouts from Men’s Health with some great new exercises that send parts of our body that we didn’t know existed into pain that we didn’t know we could have) and feel like they’re accomplishing something…but alas, it’s all only part of the equation.

Just like when I hit the gym and then come back and eat a pound of bacon (yes, of course I’ve done that…because I like bacon that much…) only to negate my efforts, hacking away with a bunch of tactical maneuvers is going to get you somewhere, but still won’t get you the results you’re seeking without the other 75% of the equation…a sound strategy and alignment between the front line and the corner office.

Let’s look at how some of the advice that I’ve been reading about keeping a healthy diet translates to marketing strategy.

Eat just enough calories…and count them – Metrics. This is all about metrics, measurement and most of all, expectations. What do you expect from your activities. If you’re not counting the inputs and outcomes, then all of the activities could be in vain. Just like those 3 sets of bent-over-rows that I just did could be all for naught if I’m not doing them in line with my calorie and protein intake requirements.

Fats, carbohydrates & proteins - This to me is a bit like mixing sales & deals, customer interaction and substantive thought leaderhship content, respectively. Sales & pricing are important, as are good fats, but too much of a good thing or a modest amount of a bad thing is detrimental. Customer interaction, staying close to your base, engaging with them in social media and networking can be easy to do and fun to do…like eating pasta and bread all day…it’s easy to fill your day with it (trust me, I know) but too much of a good thing can put you on the wrong path and won’t be productive for your business. You need to monitor you engagement and do what’s right for your business and what’s in line with your strategy. Finally, there’s protien or good content. You need it, you don’t need a ton of it and while it can cost a bit more, it is an essential building block to a solid B2B marketing and thought leadership strategy. (just as meat typically costs more than a loaf of bread…)

Drink lots of water – Remembering to always be drinking water is like remembering to stick to your plan, look at it often and adjust your course and tactics as necessary. Many people forget to drink enough water (in fact, most Americans run around in various states of dehydration on a regular basis) just like many of us stick what little planning we have done on the shelf until next year when it’s time to review it. Drink lots and drink often… Plan early, plan often and adjust accordingly.

So, how’s your marketing diet shaping up for 2010?

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Social Marketing Book

I’m in an academic mood today.

It all started with a great breakfast with my friend Randy this morning where he shared some classic articles from his father who was a marketing VP and marketing professor in Milwaukee some years ago and was highlighted by a comment in a LinkedIn group where a Shaklee representative called out the percieved “vision” of this 50+ year old company in their effective trademarking of the term “social marketing”. I don’t know, but let’s pretend that her comment was slanted to say “look, they were visionary by TM’ing this phrase well before it became so popular…potentially referring to “social media marketing” which is quite different from “social marketing”, but nevermind, it makes it look like they were smart”.

I told you that this was going to be academic.

As someone who’s a huge fan of both disciplines, let’s dig into this a bit and sort out a few details.

As I stated in my reply on the LinkedIn group, there are many nuances to this “social marketing” bit, with the advent of social media and all and people interchanging the terms, the waters have become a bit muddy. First, let’s look at the definition of “social marketing”. I’m looking straight at the definition from Kotler’s 3rd edition of the book that I have on my desk, but Wikipedia has a passable version of it. According to Wikipedia “Social marketing can be applied to promote merit goods, or to make a society avoid demerit goods and thus to promote society’s well being as a whole. For example, this may include asking people not to smoke in public areas, asking them to use seat belts, or prompting to make them follow speed limits.” Moreover, “Social marketing” was also originally defined as “the systematic application of marketing, along with other concepts and techniques, to achieve specific behavioral goals for a social good.”

While I’m not an attorney, I find it interesting that the TM (actually, they’re using an SM, though they put it on their site as a TM…interesting) was granted to Shaklee in April of ’08 where there is significant “prior art”, including a textbook by the same name “social marketing” written by Philip Kotler, (one of the gentlemen who originated the term back in 1971, in the journal “Social Marketing Quarterly“) and Nancy R. Lee. If there’s an IP or TM attorney that would like to comment on how this may have passed or on what legal nuance I’m ignoring here, I’d really appreciate that.

To muddy the waters further, Shaklee defines social marketing as “facilitating the exchange of referrals of an individual’s family and friends to our business for financial compensation, the referrals being to aid the individuals in sale of dietary and nutritional supplements, cosmetics, toiletries, personal care products, environmentally friendly household cleaners, and water and air purification products“. So, basically, they use the nice phrase “social marketing” to mask their version of the MLM game.  How touching.

On the other end of the spectrum is “social media marketing”, the “cousin” of social marketing (not really a cousin, but making them sound related is in fashion today) that’s defined as follows. Again, according to Wikipedia: “Social media marketing also known as social influence marketing is the act of using social influencers, social media platforms, online communities for marketing, publication relations and customer service. Common social media marketing tools include Twitter, blogs, LinkedIn, Facebook, Flickr and YouTube. In the context of Internet marketing, social media refers to a collective group of web properties whose content is primarily published by users, not direct employees of the property (e.g. the vast majority of video on YouTube is published by non-YouTube employees).”

So, basically, it boils down to “marketing for social good” vs. “marketing through influencers using social media platforms”, or something like that. It could be said that social marketing is best enabled by social media marketing or that you can use social media marketing to support, enhance and augment social marketing efforts. Fascinating semantics!

All this because of one little LinkedIn group entry? Yes. This is a topic worth discussing.

For example, I had a wonderful meeting with a local non-profit service organization to discuss social media marketing. Now, had we conducted a meeting about social marketing vs. social media marketing, our conversation would have been decided different and it’s a good thing that all involved understood the terms.

At the end of the day, words matter, definitions matter and the intelligent use of words (or, the “abuse” of words & terms) can precipitate lucid discussion or cause rank confusion.
Personally, I prefer the nearly 40 year old definition and not the recent incarnation, but that’s just me…

All very fascinating!!!

Related posts:

1. Got Social Media? Ask Your Customers!
2. The Five Dysfunctions of Social Media Marketing
3. Social Media Revolution 2.0