Saturday, 28 February 2009

Keeping up with the Joneses (or better still leaving them for dust)

I had my first computer when I was 11 – it was a Sinclair Spectrum 48k+ which still brings back fond memories today.

Now I knew this was good for a number of reasons. Firstly it had 48k, trumping the 32k BBC Micro and the 16k ZX Spectrum - secondly it was a "plus" version so it had to be better. For a while this was the cutting edge of home computing – until that was my friend got a Commodore 64.

A few years on and my computing needs got upgraded. Eventually I had amongst others an 8088 IBM PC with MDA green screen and a full 10mb hard disk. As I started my career in software development it was easy to understand the evolution of PC hardware – we all knew that the Intel 386 was better than the Intel 286. There was great excitement at the Intel 486 – I was working for IBM at the time and I remember getting an opportunity to use one when its price tag was over £9k! (I also remember being overjoyed at the colour printing offered by the IBM desktop plotter – essentially remote control felt tips)

The operating systems followed the same pattern. Your level of MS-DOS or more latterly Windows told you that one was better (or at least newer) than the previous one – life was simple.

Then for some reason it all changed. Intel brought out the Pentium which even I could work out translated to the "586", but giving it a name rather than a number was the beginning of the change. We now have Intel Core, Celeron, Centrino and Atom processors - now I have no idea which is better and which is worse and the name also lends little direction as to their intended uses.

Microsoft did the same – first changing from a version number to a year with Windows 95 and then to a name with Windows XP and Windows Vista (there was Windows ME in there somewhere as well – but we won't resurrect that memory).

It seems a little strange to me that both Intel and Microsoft had relied on the fact that users upgraded and this meant users had to understand that something had changed and was better. I clearly know that a BMW 8 series is better than a BMW 3 series or at least it will cost me a heck of a lot more. I can also work out that a Mercedes A Class is probably going to be smaller and cheaper than an S Class. However what I can't tell you is the difference between a Ford Focus, Fusion or C-MAX in the same way as I can't tell the difference between recent Intel processors.

I don't know either way whether the movement from a clear numbering system for Intel and Microsoft has affected their recent sales but no one can deny that Vista certainly hasn't flown off the shelves at the rates expected and many machines "sold" with Vista on have subsequently been downgraded by companies to XP.

Now this may appear as an excuse for a trip down geek memory lane (and to a point it is), but there is a link here (I'll leave it for you to judge how tenuous) and that is essentially how a product or service description can bestow status and hence motivate behaviour.

In a research report on loyalty programme tiering by Nunes and Dreze entitled "Feeling Superior: The impact of loyalty programme structure on customers' perceptions of status" they discuss the effects and benefits of loyalty programme tiers (i.e. Silver, Gold, Platinum) and begin by looking at how people perceive status. Not unexpectedly, people apparently like to compare themselves to others and where possible would rather feel superior than inferior – even though most people aren't aware that they are doing this (or wouldn't admit to it).

The research has lots of interesting information with regard to how to design tiers and what is the optimum number and size of these tiers – and I hope to touch on this in another blog. However what interested me most was how customers perceived the naming of tiers. Within their research, when they named tiers with non-status laden names (blue, red, yellow), versus names which a customer can recognise as bestowing an increasing value (Bronze, Silver, Gold), the non-status names did not provide the same benefits to the programme.

This is interesting because it suggests that it's not necessarily just the rewards that a tier brings which attract customers (i.e. lounge access or priority queuing), it's actually the fact that the tier itself bestows an element of status on the holder – a knowledge that they are in a more elite position. This is backed up by the fact that the benefits are lost when this tier is increased in size so that it becomes more "mass".

There is obviously a correlation here within product marketing – whether its early adopters paying a premium to be part of a small group of people with the latest gadget and the bragging rights it brings, or the highly priced handbag which is no different to its high-street version except for the logo and the associated "exclusivity" this endows.

It's interesting that within computing, as customers have lost the reference as to what is deemed "better" ( I can't tell if my laptop is quicker than my peers) the focus seems to have moved from the internal processor to the external product. Screens have got bigger, laptops glossier and it seems to be all about the show. I can't brag about having a "686", but I can have a 17" widescreen laptop with DVD Blu-ray – or more recently and much more in demand a slower but sleeker Asus Eee PC - and quite frankly I don't really care what the processor is.

Whether we like it or not, we all want to feel a little special some of the time and creating a means to let people set themselves apart can be a great way of gaining additional loyalty and increased motivation - whether this is to encourage an upgrade of a product or upgrade of a loyalty programme tier.

The golden rules from the Nunes and Dreze research would seem to be however that firstly, the product, service or tier needs to have a limited membership - at least initially - in order to command a higher price and/or increased activity. Secondly, the customer needs to be able to recognise that this is something better and more importantly know that their peers can recognise this too.

I would probably add that there is also a need to innovate – what is new very quickly becomes passé and those consumers looking to remain on top will look elsewhere. This is why many loyalty programmes have "hidden" top tiers to which they invite some of the very best customers.

By the way, if you're reading this blog you're currently part of a small and exclusive group. I hope this helps in some way to keep your loyalty – but feel free to invite selected friends – there's room for a few more ;o)

Wednesday, 25 February 2009

Lean Forward Loyalty

Just a few years ago the world was a very passive place.

You could sit and watch television – no fast forwarding of the ads! You could go about your day seeing billboards or press ads – noticing them all but not being required to do anything.

Even in the early days of the internet the web was essentially a passive experience - you could browse websites, maybe even dabble in a little e-commerce, but it really was an undemanding experience. Broadband speeds have reflected this expectation with the download speed typically 4 times as quick as the upload speed – they really weren't expecting you to give information, simply to consume it.

Not any more. The world has changed.

Passive doesn't cut it anymore – everything must be active. It comes in all forms, whether its social networking, instant messenger, twitter, mobile internet, mini-web or any other technology, they all want you to do something – to interact. It's now not good enough to simply watch television – you need to interact with the telly – pressing the red button for more information, back stage interviews or re-runs of the weather.

Steve Jobs told MacWorld in 2004 "We don't think that televisions and personal computers are going to merge. We think basically you watch television to turn your brain off, and you work on your computer when you want to turn your brain on". He may still be right to some degree about the TV and computer actually merging – but what has certainly merged is the activity of people using the TV and computer at the same time. People are in essence making the passive active.

This change has been called "Lean Forward" media, contrasting the passive nature of "lean back" media which didn't really require much from you other than sitting in a chair.

However, it's no coincidence that the top 3 website are lean forward experiences – sites like Facebook, MySpace and Twitter – people like to interact, to integrate and interrogate. As technology allows this more and more then people will take advantage of it in ever greater numbers.

This has implications though for brands.

As consumers increasingly expect a lean forward experience they will expect brands to lead the way. It's not unusual within customer services to have service levels of answering a call in 3 rings, but answering an email in 24 hours – if you even get a response!

To the lean forward generation 24 hours is an eternity.

If a consumer can interact via their many channels (and it's not unusual to find me on email, Skype, twitter, Facebook and LinkedIn within a single hour), you can bet that the longer you take to answer a query the more time they'll have to spread their dissatisfaction.

Lean Forward media works both ways – it provides an active and open channel to both create positive engagement and to fuel negative reaction. Only last week we found a negative tweet about a loyalty programme which linked to a negative blog which had been written 6 weeks ago. Who was checking the blogs for feedback? Who was checking twitter for comments?

It begs the question…. Are you listening?

If you don't make it easy for consumers to talk to you on the channels they want to use, they will simply use those channels to talk to your customers.

The great thing about this shift to Lean Forward media though is that it also provides brands with ways of creating increased engagement and building stronger relationships.

Building relationships and engagement is typically the role of a loyalty programme, but this has previously been a passive experience – apart from the initial enrolment, the interaction tended to centre around a semi-regular statement and an occasionally card swipe. If you were lucky, the really "clever" programmes might notice when you stopped transacting and ping you a DM piece to re-activate you.

Things have moved on.

Programmes now need to engage customers today and continue to engage them tomorrow. Operators are beginning to integrate Lean Forward concepts like social media, allowing feedback between customers to exchange views or rate partners and rewards. The butter company Lurpak has a site entitled "In search of good food" which allows consumers to interact around all things food in the context of the brand. This isn't another "me to" corporate site – pumping out product listings and CSR policies. It's an attempt to create an interaction between their customers and potential customers – facilitated by the brand.

Brands also realise they need to create a buzz, a reason to discuss and interact. Walkers Crisps have been doing this very successfully over the last year or so. Beginning with their Brit Trips promotion which created an opportunity for customers to register, log on-pack codes and redeem for days out. They then seamlessly moved on to their "Do us a flavour" promotion which asked customers to interact online to recommend new flavours - with the winner getting a percentage of any subsequent sales. Moving the interaction from online to offline they have gone on to manufacture the 6 finalist flavours which you can now buy in-store. Back from offline to online you can vote for your favourite flavour – via mobile web, SMS, web, Facebook or email – almost all the channels covered!

This Lean Forward approach to loyalty sets apart the active brands from the passive.

At Carlson Marketing we are wrapping the interactivity of lean forward media into the longevity of loyalty marketing - allowing brands to start creating truly engaging and exciting programmes – essentially creating Lean Forward Loyalty.

Saturday, 21 February 2009

It's all in the numbers

There are generally only two ways of increasing customer value - get them to spend more while a customer and get them to stay with you longer.

There is however a third way and that is to reduce the cost to serve and this typically means making cuts in customer experience. Given that there's been a few surveys recently on customer experience I thought it good to just present the headline numbers – hopefully the line of influence is clear to see.

The Expectation
0.70 (Very High) = Correlation between good customer experience and a consumers willingness to repurchase, reluctance to switch and likelihood to recommend (Forrester)

The Reality
77% = Number of companies who don’t track and measure the volume and nature of customer feedback via email (CMO Council)
71% = Number of company executives who don’t rate highly their ability to handle and resolve customer problems or complaints (CMO Council)
58% = Number of companies which do not compensate employees or executives based on customer loyalty or satisfaction improvement (CMO Council)

The Results
$4000 = Average amount of business taken by a customer switching (Accenture)
74% = Number of US customers who have switched due to poor customer experience (Accenture)
40% = Number of customers who will defect where they are disappointed with their complaint resolution (Complaint Management: The Heart of CRM)
20% = Number of customers that would immediately leave a company because of a poor service experience (Accenture)

47% = The number of US customers who have switched due to lower prices (Accenture)
13% = Increase in customers intention to switch due to poor experience from the previous year! (Accenture)

Customer experience may be difficult to monetise in the short term but do you still think a drop in price financed by slashing your customer experience programmes and customer service departments is worth while?

...and a final thought - if you're one of the 77% of companies that doesn't track and measure the volume and nature of email feedback, you may not want to read my previous post on Twitter.

Sunday, 15 February 2009

twitter - The Swiss army knife of relationship marketing?

I'm increasingly amazed how quickly new technologies are becoming household names - in years past when I used to use Compuserve (remember that?) and ICQ, you'd never have seen them on the mainstream news, yet in recent years you can't move for updates on new online services.

Last year it was all about Facebook with news channels seeming to talk about it every other week – for 2009 however it has to be twitter - mainly driven by the antics of Stephen Fry (locked in a lift) and Jonathan Ross who are both avid tweeters and have made the service a household name. It is now starting to break out of the smaller eco-systems it has occupied and is becoming mainstream in a big way. DMNews points out that this time last year twitter was ranked at number 22 in terms of monthly web visits – it's now number 3 behind Facebook and Myspace and has just secured $35m in VC funding in the middle of one of the worst recessions.

People will have different opinions about what makes twitter great (or even be thinking "I don't get it") but I reckon the best thing about twitter is that with a maximum of 140 characters you're limited to short messages that are typically about the present – what you're doing right at this moment. You can't sit there and think about your tweet, planning the message you want to get across – its all about being open and telling it like it is – whether it's a status update, a comment on events or a rant, twitter allows you to get it off your chest - immediately.

People seem to tweet about anything and everything, with brands inevitably popping up in people's posts as well. In a recent article on Marketing Pilgrim the question was asked as to why Coca-Cola wasn't on twitter given that their brand pops up in tweets over 1000 times per day.

This got me thinking that FMCG brands like Coca-Cola do have one thing in common with tweets – and that is that the thought process for both is in the here and now – it's all about the present. People don't sit there and think about which brands they are going to buy – at best a customer will be considering categories – I need bread, milk, beer, pizza (you can see why my wife does the shopping) – but very rarely will a brand be strong enough that customers will consider it upfront. For brands the purchase decision is typically instant and emotional – when a customer is browsing a category they will pickup the brand they automatically recognise / is positioned in line of sight / is on special offer (tick all that apply).

The customer won't then give the brand a second thought until the time of consumption which may be days or even weeks later.

If you're a brand manager, you'll know this and so will be doing your best to make sure consumers are aware of and reminded of your product in the hope that when a customer does think about a purchase, your brand will benefit. Building loyalty to a brand though is all about building brand equity and isn't simply brand awareness – Woolworths was a well known brand, yet it still failed. Brand equity is about what consumers feel about a brand – consumers have to understand what it stands for, what it delivers and what makes it better than a competitor brand. If these messages aren't clear then there is no reason for continued loyalty (or initial purchase).

To make matters worse, what is important to consumers today can change over time as their tastes change, their budgets change and competitor products/communications change.

Many brands have no direct relationship with consumers and can sometimes be the last to know of these changes – seeing it first in their bottom line. In an ideal scenario brands would have a relationship with their customers, allowing easy, free flowing dialogue which enables them to understand issues a customer is having and to communicate what makes the brand special. Customer care-lines and websites have helped to open up brands to consumers, but these aren't really available when customers are thinking about a brand – either at point of purchase or consumption. What is a required is a means for consumers to feedback when they want to and when it's relevant – instantly - being able to update a brand on their thoughts – good or bad – or even to rant and to be updated when they want on their terms.

Using that most pervasive of technologies – the mobile phone – seems to be key to this, but services like SMS just don't appear to deliver.

This it seems to me is where twitter really comes into its own. Unlike SMS, twitter isn't charged per message so I'm not thinking "how much is this going to cost me", nor is it such as personal relationship – I'm fine with being a "friend" of Skittles on MySpace or Bebo but there is no way they are getting into my mobile address book.

Opt-in rates for SMS are also typically very low for brands and though this is in part due to perceived costs it is also due to the "interruptive" nature of SMS – when a message arrives I'll look it at almost immediately, but if it's not relevant you'll be sent "STOP" two seconds later. Twitter manages to solve these many issues, combining the immediacy (and increasingly availability via mobile), the "free" cost (normally hidden within overall data allowances) whilst supporting loosely coupled relationships and on-demand consumption.

Could this be the perfect communications channel? - Some brands seem to think so.

In the Telegraph it was reported that Tesco owned US brand Fresh & Easy was using twitter to inform customers and potential customers of special offers and new store openings. However, much more impressive I felt was its use of twitter to build direct dialogue. In one such exchange, a customer is reported as complaining about "sparse stock levels" in his local store, only to receive a reply highlighting "that levels tend to be a bit low at the end of the year due to shipping schedules". Now I know this won't help me with the question "where the heck are the pickled onions" when I'm in store, but answers (or simply acknowledgement) to questions like "why have you stopped stocking Silverspoon Sugar" - a personal gripe of mine last year – would be great.

So it seems to me that twitter offers brands that most elusive of things – a direct two-way relationship with consumers (see previous article of the value of customer feedback).

However I feel it could also offer so much more – the tracking of customer value.

Having followers is one thing and brands like Innocent are renowned for their blogs, newsletters and surprise and delight gifts at Christmas. The issue is a follower doesn't necessarily translate into a customer – sure it helps - but it doesn't tell you how often someone is purchasing your product, or even if they are purchasing it at all. To get this kind of insight many brands choose to run some kind of loyalty scheme or frequency marketing programme so they can get to know their customers – or at least some of them.

More recently many of the programmes I have worked on have been run using unique on-pack codes making the process more immediate though online entry – codes (and more importantly interest) are captured from the first product rather than waiting for someone to stick 20 coupons onto a form and mail it back 10 weeks later! Given that typically 1 customer redeeming can represent 50 customers who started collecting – getting to know the customer upfront can be very valuable for those brands wanting an ongoing dialogue – why talk to 10,000 redeemers when you can talk to 500,000 registrants.

Whilst on-pack collection schemes can work well for products consumed in-home as the label or packaging can be retained to be captured online later, for out of home consumption this can still prove challenging - I really don't want to have to keep an empty bottle and crisp packet (or two) in my pocket for the whole day.

Brands have tried to solve this issue by allowing customers to SMS codes in - think Coke Zone or Budbucks - however it can still be problematic for both sides. For the customer they're not sure of the cost and whether they will then be bombarded with ongoing marketing – for the brand the cost is typically absorbed so each SMS eats into margin which could have been used to reward the customer.

I really think twitter seems to provide an answer here to.

Allowing me to "tweet" my on-pack code means I'm not worried about the cost (and neither is the brand) and it removes concerns about ongoing marketing - I can read it when I want and if you send me stuff I don't want I can simply block it. Not only that but it also has the potential to provide a wider dialogue as messages not sent directly will be seen by all my followers - (@brandname 56G4K62KFIG4V) - letting all my friends and acquaintances know about my purchase (and potentially my Budweiser habit)

I've no doubt revenue models will change with twitter in the future as investors look to get some kind of return, but right now twitter is looking like the Swiss army knife of relationship marketing - providing a means for promoting offers, receiving direct response feedback, building relationships and tracking purchases.

Given the current cash-strapped climate and the phenomenal growth twitter is seeing, I think any marketer would be mad not to be looking at the benefits twitter can offer today.

PS. If you're still trying to get your head around Facebook – go check out the twitter help for a crash course

Thursday, 5 February 2009

Snow? When all about you is white – where is the purple cow?

For those that don't know, we've had snow in the UK - and not just a dusting, we've had inches of snow – and inevitably it has made the country grind to a halt with schools closing and roads un-passable. Now we're told that local authorities are running out of grit and salt for keeping the roads clear. We're simply not used to having severe weather in Britain – everything is normally middle of the road – not too hot, not too wet, not too cold, not too windy.

Now generally we're quite happy with middle of the road – it's normal, it's unsurprising, it's comfortable. When the weather does change though we get excited about it – we like things that are out of the ordinary. When we get snow, the TV news seems to dedicate 90% of their time to it and if it's hot for just a few days the newspapers are full of headlines like "Britain Sizzles in Heat Wave". However, give it a week and everyone is fed up – the snow becomes an inconvenience and we just want things back to normal. When it's too hot we dream of a little cloud just to cool things down a bit and maybe some rain to save the lawn.

Things that are out of the ordinary catch our attention but can then very quickly become everyday and passé – we become comfortable with them and don't even notice they are there.

Marketing guru and blogger Seth Godin discusses this subject in his new book Purple Cow: Transform Your Business by Being Remarkable. He describes a situation where when driving through France they saw field upon field of picturesque cows grazing by the roadside – saying it was like something out of story book. Now ignoring the obvious question this raises about the UK dairy industry and where the heck did all our cows go, he then writes that within 20 minutes this once fascinating scene became common – boring even. You've seen one cow you've seen one hundred – however what would have been interesting he states would have been a Purple Cow.

Now you can almost picture this – driving along seeing field upon field of brown cows and then suddenly a Purple Cow appears – that would capture your attention – it may even make you stop what you're doing. Seth describes this as the new marketing "P". Previously marketers were dealing with Product, Price, Place, Promotion (and a host of other P related words for 5 Ps, 7 Ps, etc.) but he argues that the Purple Cow "P" represents something "Remarkable" – going on to argue that Remarkable Marketing is the art of building things worth noticing into your product or service. He says "Something remarkable is worth talking about. Worth noticing. Exceptional. Interesting. New. It's a Purple Cow. Boring stuff is invisible. It's a brown cow."

In a small way I thought I spotted a Purple Cow today. I received an email from UK clothing brand Next with the title "Snowed In? Shop Men's New Arrivals" and this really peaked my interest – it seemed relevant – it was snowing outside and they knew this and had seemed to have quickly made their communication relevant to me. Unfortunately on opening the email it fell down completely – the content was obviously not themed around the title and I very quickly lost interest. Now I know that typically email campaigns are planned weeks ahead and the content needs to be developed and approved before it can finally arrive in my in-box, however what it showed me was that to really peak someone's interest a communication needs to be relevant and quite often relevance will be time related – what is relevant today (a snow related email) will not be relevant next week when it has all melted (I hope).

Slapping a last minute "Snowed in?" at the front of a standard email isn't relevance – it made me open it I grant you – but it actually disappointed me more as it smacked of "lipstick on a pig" – not that their overall email was that bad, it just wasn't what I was expecting and wasn't relevant.

Standing out from the crowd can be a scary prospect though - it may require risky and new approaches - dare I say... innovation - and in these uncertain times this is something many brands are shying away from. Instead they are going with the tried and tested methods they have used before.

Tom Fishburne picked up on this theme in his blog entry "Blend into the herd" where he said that the first projects to get cut are the speculative ones - the innovative ones - as brands attempt to batten down the hatches. Instead though he points out that forward thinking brands should see this as an opportunity - as all around are trying to blend into the herd the ones which can react the quickest and offer something truly unique have the potential to not only survive but to thrive.

If marketers want to gain attention at a time when people are increasingly overwhelmed with information and are filtering out messages more and more then the message needs to be remarkable – it needs to stand out from the crowd – it needs to make me stop what I'm doing - it needs to be a Purple Cow.