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Wednesday, April 23, 2014

SLCP: Getting More Growth and Profits From Your 'Loyal' Customers

Every brand we encounter wants loyalcan be defined in many different ways. Is a loyal customer an exclusive customer?  Does he generate the highest revenue? Does he advocate for your brand or business?  Is she less demanding of exorbitant support and resources?


You Need More than Just Loyal Customers!

With 25 years of working in the category we’ve come to understand that loyalty is not the universal panacea it’s often touted to be.  To achieve profitability and growth you not only need a precise understanding of how you're defining loyalty; you need a set of further qualifications by which to evaluate your ‘loyal’ customers.

Unless you have a very unique business model, your primary motivation for identifying loyal customers is probably the belief that the more of them you have, the more likely it is that you can operate at a profit.  We don’t disagree that loyal customers are a desirable asset, but we can offer a new paradigm for managing which of your loyal customers will lead you to greater profitability.  The crux of this identification is data.  And, in recent years, many of us are beginning to acquire more of the right kind of data to help us find the customers who, when properly treated and ‘cultivated’, can lead a business to the ‘promised land’.

Thanks to today’s acceptance of ‘big data’ we are reaching the point where most businesses can meaningfully score and segment their customers on a myriad of criteria.  We’ve developed our SLCPSM Model specifically to accomplish profit-based customer scoring.  It’s composed of four characteristics that can be observed for every customer:

  1. S - Satisfaction – Businesses continue to expand their satisfaction measurement efforts, but rarely, if ever, are the scores applied to individual customers (instead of being ‘rolled’ up to a business average).  With the proper questions, businesses have the opportunity to judge customers’ current satisfaction levels with a business.
  2. L - Loyalty – By overview of a few activities (Facebook likes, Twitter posts, direct correspondence, participation in company-sponsored events, etc.) we can start to create an emotional affiliation or loyalty score for each of our customers.
  3. C - Costs of Servicing – Each of our customers has a different cost associated with him depending upon how demanding he is of special services and considerations.  Or, she may only buy on deal or by demanding a substantial discount.  By tracking these considerations we can calculate a cost of doing business with for each customer.

  4. P - Potential – And by tracking not only what a customer buys from our brand, but the number of purchases she makes in total, we can create a ‘share of wallet’ or spending proportion for each customer.  Selecting customers with less than a 40%, 50% or 60% proportion identifies a segment of customers with upside potential to spend more.

Four Measures Offer a Better View

Through such a multi-criteria segmentation scheme a business would be in the enviable position to better manage loyal customers; allocating attention and rewards in a very strategic manner.  Not only does the scoring promise to identify logical target-customers for ‘development’, it is also capable of identifying current customers whom a business may be over-serving, costing it resources unlikely to produce increasing revenues.

A ‘pipe dream’?  We don’t think so.  It only takes a business willing to make the appropriate commitment to collecting and consolidating the information.  That does mean some additional spending, but more than that, it requires breaking through the ‘silos’ of all too many businesses in which information is hoarded by discrete departments who are loathe to share it with others.   One current initiative, Chief Customer Officer, begins to empower this pursuit.  We embrace it and look forward to seeing successful applications of SLCP!


4:39 pm edt          Comments

Monday, March 17, 2014

Do Satisfied Customers Still Tell Others They Love Your Brand?

Social media has given consumers greater opportunity to talk about the brands they know and love. That means brand advocacy must be skyrocketing, right?

Maybe not. Mindshare World has tracked advocacy-behavior through annual research in which they ask consumers’ agreement with the following statement, “When I see or hear something interesting about a brand, I like to pass it on”.  Their most recent findings serve as a harsh reminder that we can’t necessarily count on the continual growth of frequent and positive word of mouth to drive the growth of our businesses.  One might think that technology should be facilitating advocacy-behavior, but apparently more than just ample online vehicles (for posting) is needed to keep word of mouth healthy.   The trend of advocacy behavior is clearly downward:

  • In 2010 66% agreed they would “pass it on”
  • In 2011 62%
  • In 2012 53%
  • In 2013 only 47% agreed they would “pass it on”.

And, It Might Be Worse Than It Appears!

Think 47% still seems pretty good? Let’s take a closer look. Unless we’re missing something, the study really shouldn’t be interpreted as suggesting that 47% of consumers are currently actively advocating brands – or anything close. What the researcher’s question really seems to ask is: if a brand managed to get something before an individual and the individual considered it “interesting”,  would they then “like to” pass it on?  Do you see the tenuous connections here?   Knowing how many messages are thrown at each one of us every day, there’s a considerable challenge to be met to get any recommendations!

And, a separate recent study from EngageSciences (telling us that fewer than 5% of a brand’s fans generate all of the social media referrals for any brand), further suggests that in the real world there is undoubtedly a huge gap between those who say they would “like to pass it on”, and those who actually take any action!

So, What Does This All Mean?

It‘s clear that it’s going to take new strategies and additional executional effort to maintain (let alone to increase) the frequency, volume, and positive tone of word of mouth for your brand in the future.  Delivering good value for the money and a positive overall customer experience will continue to be essential, but even they won’t nearly be enough.

Success in engendering word of mouth will be dependent upon:

  1. Identifying the best potential advocates (those current customers who have proven behavioral commitment to a brand, have an emotional connection with the brand and, possess the 'communicator gene').  And,
  2. Providing each of them with the necessary motivation, content, and opportunity that will prepare those potential advocates to pass along their own versions of the brand’s story, both online and offline, to friends, neighbors, co-workers, relatives, and even strangers



11:23 am edt          Comments

Monday, February 24, 2014

Managing Evidence: Getting Credit for Your Brand/Product

In legal circles “tampering with evidence” is strictly’s grounds for serious penalties. But in the world of managing customers’ experiences, "managing evidence" is often not only desirable; it may be a tool necessary for survival!

 How Perceptive Are Your Customers?

Most customers fail to recognize the quality built into a product or the efforts extended by a service-provider - even though they may buy your products.  They’re generally unable to fully appreciate the differences between one company’s product and the products of competitors.  They even seldom find the time to consider or appreciate the added value contributed by the perks and niceties that accompany the products and services they buy.  That’s why it’s critical for marketers to call customers’ attention to these values after the purchase has been made.  Otherwise credit isn’t given, increased loyalty (the primary goal for offering the superior services/products in the first place) may never be realized, and positive word of mouth is less likely to be generated.
Providing a great customer experience is essential, but it requires additional effort to see that your customers understand and appreciate what’s being delivered to them.  Consider an example.  Norton, the computer security firm, (that might be protecting the computer on which you’re reading this) provides excellent protective software for computers.  But if their software is doing its job, an owner will likely never be bothered; it’s definitely a ‘low profile’ service.  Norton has apparently recognized its need to reinforce its value to customers by managing evidence. It accomplishes this with a monthly top-line report of the number of computer files checked in its latest scan; how many problems it detected; and what it has done to safeguard a computer.  And, each time the service updates its virus-detecting database it informs owners with a pop-up.  Norton is doing a great job of managing evidence to remind owners it’s more than ‘paying for itself’.

'Tootin' Our Own Horn

Most executives seem uncomfortable with the concept of managing evidence.  Given our cultural backdrop, this may be understandable.  After all, Western cultures teach the values of modesty.  Further, managers may fall victim to one of two false assumptions:  1.) Assuming customers will be insulted by having good performance pointed out to them; or 2.) Assuming that all existing customers already understand the added benefits offered by their products.  In both cases managers accepting either of these assumptions are going to be wrong.

Astute managers need to learn how much (or how little) of the value they’re delivering is actually being perceived by their customers and credited to them.  Trusting that one is receiving credit for the value actually being delivered to customers is a fool's hope.

6:18 pm est          Comments

Monday, February 3, 2014

Easy Way To Increase Your Likes and Followers

If your company has a Facebook page, a Twitter account, or posts videos to YouTube, chances are you’re measuring your ‘success’, at least partially, by counting your numbers of likes, shares, followers, or views. You may find yourself benchmarking your volume against competitors’.  But, while likes and shares may be the most obvious metrics available,  a a recent AP article by Martha Mendoza offered some startling facts and figures that give us all something to think about.


Your Facebook Friends May Live in Dhaka!

  • While you may not be personally familiar with Dhaka, Bangladesh, the city of 7 million is an international hub for click farms.  These ‘boiler rooms’ of workers generate millions of fans and followers for websites around the world, all for pay.
  • Thanks to low labor costs, companies in Dhaka like Unique IT World can find all the literate workers they need to create phantom social media accounts (difficult to actually distinguish them from real followers) and then manually click on clients' social media pages. 
  • Skeptical?  It could be coincidence that Dhaka is the home city of the greatest number of fans of highly ranked celebrities(like soccer star Leo Messi who has 51 million likes) – but probably not.  
  • Even stranger Dhaka, Bangladesh happens to be the most frequent geographic home for likes of Facebook's own security page (among the 7.7 million likes), and Google's own Facebook page (15.2 million likes).

So, How Big is the Click Farm Business?

Surely this activity has to be an exception, rather than the rule....

  • Italian security researchers Andrea Stroppa and Carla De Micheli estimated in 2013 that revenue generated by creating fake Twitter followers has reached between $40 to $360 million for the supporting click farms.  Similarly, fake Facebook activities produce $200 million a year in revenue for these click farms!
  • Attention US taxpayers.  In 2013, the State Department, which has more than 400,000 likes, agreed to stop buying Facebook fans after its Inspector General criticized the agency for spending $630,000 to boost the numbers.  (We wonder why no one noticed the fans were coming from foreign countries!)

How Much Does a Click/View/Fan Cost?

  • For those seeking to inflate their numbers to please their management or earn a bonus tied to measures of “popularity”, hits, fake fans and followers really aren’t expensive.  Companies like BuyPlusFollowers sell 250 Google+ shares for $12.95. InstagramEngine sells 1,000 followers for $12. AuthenticHits sells 1,000 SoundCloud plays for $9.
  • It’s a very open business, especially offshore, with firms bearing names like In Jakarta, Ali Hanafiah will deliver 1,000 Twitter followers for $10 and 1 million for only $600.

It’s an amazing story.  We won’t try to be ethics cops here, but all this does have to make you wonder what some of those astronomical social media numbers we see bandied about really mean.  And, why are companies trying to game the system?  In the end, they may only be fooling themselves.  That’s why in the case of word of mouth we believe it’s dangerous (and incomplete) to focus on quantitative measures (followers, likes, etc.) alone. Qualitative measures incorporating the ‘energy and attitudes’ of true fans have to be more important.




5:43 pm est          Comments

Sunday, January 26, 2014

Research Suggests Word Of Mouth Declining - We Need To Act

If you believe that advocacy is important to your business, then several research studies released recently suggest you have your work cut out for you. 

First, Mindshare World has reported on response to the statement, “When I see or hear something interesting about a brand, I like to pass it on”.  The percentage of positive responses shows a continually declining trend:

  • In 2010, 66% agreed

  • In 2011 62%

  • In 2012 53%

  • In 2013 only 47% agreed

Let’s be careful with the takeaway.  The study shouldn’t be interpreted as  suggesting that 66% or even 47% are advocates, but only that if a brand managed to get something before them that  the individual considered  “interesting”,  then they “like to” pass it on.   Knowing how many messages are thrown at each one of us every day, that’s a big “if” to be overcome. 

Secondly, we note that EngageSciences reports that only 4.7% of a brand’s fans generate all of the social media referrals for the brand.

When those two studies are considered together,  it‘s clear that it’s going to take special effort to produce the frequency, volume, and positive tone of word of mouth that most brands would like to be receiving.  Delivering good value for the money and a positive overall customer experience are essential, but even that won’t be enough.

Success will be dependent upon:

  1. Identifying the best potential advocates (those current customers who have proven behavioral commitment to the brand, plus an emotional connection, who possess the “communicator gene"), and

  2. Providing each of them with the necessary Motivation, Content, and Opportunities that will prepare those potential advocates to tell the own view of the brand’s story, both online and offline, to friends, neighbors, co-workers, relatives, and even strangers. 

10:37 pm est          Comments

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Customer Experience Partners, LLC
Measurement, Management, Optimization
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