Sunday 29 November 2009

One man’s baggy pants is another man’s well fitted trousers

This is the wisdom of Homer Simpson shown in the episode “Homie the Clown” where Homer Simpson decides to join clown school. On trying on his clown outfit the following exchange takes place:-

imageKrusty: OK, we'll start off with the baggy -- wha? [sees Homer] Those are supposed to be baggy pants. Baggy!

Homer: Ooh. I've never had a pair of pants that fit this well in my life.

Ok, so this is just an excuse to put some Homer Simpson into my blog, however it does raise an interesting question. When we try to second guess how people will use our products and services we don’t always get what we planned.

Microsoft recently started taking action against people who have modified their consoles with this resulting in kicking them off Xbox live or rendering some of their modifications useless.

Apple similarly plays a cat and mouse game with people who jail break their iPhones, essentially freeing themselves from both the Appstore and their cellular network.

Whilst both Apple and Microsoft would claim their activity is to prevent piracy and the creation of security holes – something which has some merit given the recent worm virus issues on jail broken iPhones in the Netherlands – it does also smack of an overly controlling corporate trying to dictate how people use their hardware.

This isn’t just limited to hardware manufactures. Customers are increasing promiscuous, choosing how to use brands as part of an overall portfolio. Loyalty has never been about getting 100% share of wallet, but all retailers or FMCG companies are looking for customers to “shop the shop” or fill their needs from across the range.

Whilst it makes sense to highlight other services or departments that a customer doesn’t yet utilise, this needs to be done sympathetically -a customer may not trust you for that type of purchase or may not consider it relevant.

I’ve been working with a retailer who provides two related services which are offered in different ways. It was interesting to see the research around the audiences using these services which suggested that they were completely different and there was little or no cross-over.

Looking in from the outside you may assume there was an opportunity for cross-sell between these services but when you understand the customers, what they do and when they do it you can see that there is little opportunity.

This also applies to the recognition and rewarding of customers.

Ideally your loyalty programme should align with profitability – rewarding customers for profitable behaviours and essentially “nudging” them in the direction you want. However this can backfire if you don’t understand how customers are working with your brand.

When reviewing an airline Frequent Flyer programme it was interesting to see that some of their most profitable customers weren’t being recognised in any way by their loyalty programme.

The problem?

The programme was tuned to recognise long haul business class customers, not short haul economy. However some of these short haul customers were essentially commuting by plane – racking up more flights and hence profitability than their top tier customers – but not miles, the standard measure used for recognition.

When considering how to retain and grow customers we need to ensure that we don’t assume how customers want to interact with us or what they want to buy from us.

Instead we need to take the time to understand different customer segments and ensure products and services are aligned to these customers in the context to which they utilise them.

Just because you sell baggy pants doesn’t mean you can’t market to a segment who like how they fit.

Sunday 22 November 2009

Developing a Customer Conversation

whisper Building customer loyalty and engagement - essentially creating a relationship - is much like having a conversation, just over an extended period of time.

Whoever initiates it, whether it is the brand through communications or the customer through a first interaction, the aim is to continue the conversation.

The last thing you want as a brand is to be viewed as socially inept – a social bore - with customers looking to get away at the first instance.

American novelist Edgar Watson Howe famously said of having a conversation:-

No man would listen to you talk if he didn’t know it would be his turn next

The trick with loyalty communications is to get the customer to know it’s their turn to respond and this means creating relevant, engaging communications which demand a response – an interaction.

In order to get a response you first need to listen - no one likes to be talked at or talked over.

In a marketing sense customers are talking to you all the time – feedback in what they buy and what they don’t; when they complain, when they ask questions – in every interaction. If you’re not listening to this and simply send them the next “mass message” (or no message at all) why be surprised when 95% simply give up the conversation.

Even when you listen and respond back with something relevant, you need to consider how to keep the conversation going.

Within a normal conversation, if you answer the question “Where are you from?” with a one word answer such as “Northampton”, don’t expect much more from the conversation. People need something to build upon to keep a conversation going – giving them a reason to respond and letting them know it is their turn next.

If they’ve never heard of Northampton they will struggle to move the conversation forward and likewise for a brand if you, for example, simply say “Thank You” after a purchase, the customer will have no reason to continue the conversation.

Look at conversation experts Amazon – they lead you up to the purchase with wish lists and recommendations and after purchase make further suggestions that fit with your purchase and then ask you to review the purchase. Always looking to extend the conversation – letting you know it’s your turn.

In a white paper by Bazaar Voice they call the development of this conversation the Participation Chain, going on to say:-

[the] “participation chain” – [is] a way of cultivating user involvement so that each action builds upon the one before, building value along the way.

Going on to recommend that you “look for participation dead ends, such as thank you pages that lead nowhere [and] consider possible ways to follow up.”

This doesn’t just apply to e-commerce sites. Think about an individual you’ve spoken to who always relates the same story when you meet – would you be keen to seek out this person at a social function… probably not.

From a brand perspective, if every time someone comes to your site they see the same content do you really think they’ll want to continue the conversation? Are you actually enabling them to have a conversation or simply talking over them every time they come with the same old message (or a message you want to talk about regardless)

Building a conversation with customers is critical to building engagement; and increased engagement leads to increased customer value. As Bazaar Voice points out:-

Time and money are two sides of the same coin. In general, the more time a customer spends with you – assuming a positive experience – the more likely they are to spend money with you.

As a brand it might be worth brushing up on those social skills to develop a customer conversation – learning how to be a social more, not a social bore.

Friday 13 November 2009

Creating a Loyalty Flash Forward

ff-promo-1 New TV series Flash Forward presents an interesting plot whereby the whole of mankind loses consciousness for 2 minutes 17 seconds and in that time sees events 6 months ahead of time.

Apart from the initial chaos and destruction that ensues – i.e. planes dropping out of the sky and cars running off the road – it’s how people react to knowing their future which is interesting.

People seeing themselves as married or pregnant for example, or worse, seeing nothing at all and what exactly that may signify.

Within the plot there seems to be two main types of reaction to this event:-

  • Wait and See– these individuals saw nothing worth getting anxious about or felt powerless to affect what they did see and so just accept it.
  • Positive Intervention - These people saw something in the future they didn’t like and so try to change it.

Whilst each reaction depends on the individual personalities of the characters, it is largely driven by what they saw in terms of whether this was positive, negative or just every day.

Interestingly, while this is obviously science fiction, as loyalty marketers we can make it science fact and actually have the ability to provide a Flash Forward on consumers - seeing what they may be doing in 6, 12 or 18 months time - through predictive analytics.

Looking at a consumers behaviours and those of other consumers who have previously demonstrated these behaviours can provide a real indication of future behaviours.

For example:-

  • A credit card customer’s balance at 90 days is indicative of their balance at 14 months
  • A new frequent flyer member going long haul in the first 30 days is 6 times more likely to become a premium customer.

Knowing this information provides you with a choice.

Do you take the “wait and see” approach – monitoring their ongoing behaviour but essentially doing nothing more or take the “positive intervention” approach and use marketing tools to try and change or maintain the behaviour.

Whilst the approach you choose will depend on the actions you’re looking to develop, the key is actually having this choice.noh

Unlike the character Special Agent Demetri Noh who says “There is nothing you, I or anyone can do to escape what's coming”, a shrewd loyalty marketer actually can.

Putting in place an early life communications programme for example can create a significant lift in transactional activity – now if after 90 days that’s indicative of activity at 14 months that’s a insight worth having.

Without the “Flash Forward” that predicative analytics brings you're essentially walking in the dark - taking one day at a time – and in marketing terms spending money today in the hope it might result in a later return.

In contrast, being able to glimpse the future of every individual customer allows you plan ahead, surprise and delight your (potentially) best customers and maximise your marketing spend – focusing precious funds on those customers with the best propensity to return value.

Creating your own Flash Forward is definitely worth the investment - Flak jacket, FBI badge and large gun are purely optional.

Friday 6 November 2009

The success of (personal) brands

brand me I was at Loyalty World 2009 this week and saw an excellent presentation by Alex Hunter – former Head of Online Marketing at Virgin but more importantly a really engaging speaker who knows what he’s talking about.

His presentation centred around the shift in relationships between the brand and the consumer; the focus though was slightly different from the usual discussions.

When marketers discuss loyalty it’s normally about creating and deepening the relationship between the brand and the consumer.

However Alex argued - citing examples like Steve Jobs who almost personify the brands they represent - that people build relationships with other people, not brands.

I thought this was a really interesting insight as there is an increased focus on “personal brands” – individuals building up their own brand and profile based on their thoughts and ideas almost independent of their employer.

I think this really show’s how things have changed and how social technology like blogs and twitter are helping to accelerate this.

Previously a companies value was measured on its fixed assets with its quality and reputation coming from it’s raw materials and how they processed these into goods and services.

The new raw materials are information, knowledge and creativity and these aren’t assets a company can own or process – these come from individuals.

The best companies have the best talent and so it makes sense that consumers will want to engage with these individuals and feel they have some form of relationship. The opportunity for brands is to harness and enable this – not to try and own or direct it.

Best Buy is a great example of this and Barry Judge, CMO is leading the charge. Not only does he have a personal blog which discusses what they are doing, but also uses other social tools like YouTube to put across his thoughts.

The obvious danger here is that with a relationship being built between the consumer and the individual, what happens when the individual moves on – and this was exactly a question posed to Alex during his presentation.

The answer is really the democratisation of knowledge.

Individuals move on, but a company is more than just the single individual - it’s the combination of individuals working as a team and so exposing a wider variety of team members, whether this is the CEO, a developer or a marketing exec ensures that the consumer get’s a balanced view and a real insight into the brand.

Best Buy is another great example of this with employees encouraged at all levels to interact – take a look at Best Buy Connected – in their own words “a new way for you to engage with the actual people, real behavior and unedited perspectives of those who power Best Buy”.

This combination of view points across many different individuals and roles is in essence what makes up the brand - so the relationships the consumer builds with the brands employees actually becomes the relationship with the brand.

This level of openness and perceived lack of control can be a real challenge for many brands, but the opportunity to engage consumers at a more emotional level has got to be worth the effort.