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Ernan’s Insights on Marketing Best Practices

Monday, March 2, 2015

3 Ways to Increase Customer Retention, Boost Profits

Article by Ernan Roman
Featured on CustomerThink.com
We all know that 20% of our existing customers generate 80% of profits. However, the customer retention efforts of many companies still leave a lot to be desired.
Human EngagementAccording to a report by the Harvard Business Review/Bain & Company, "increasing customer retention rates by 5% increases profits by 25% to 95%."

Additionally in a Retention Science study it was noted that:
Advanced customer lifecycle metrics are being adopted slowly with only 23% of marketers tracking the rate at which their customers churn, and under 40% tracking customer lifetime value.
70% believe that their retention marketing efforts are only average, poor, or need improvement.
So, what should companies do to improve customer retention? Here are three actions that can help:
1. Know Your Customers
According to the Email Marketing Census three quarters of companies (73%) carry out basic segmentation. However only 22% said that they currently implement 'advanced segmentation'.
It is essential that you adopt strategies to engage customers and prospects with communications that are relevant to their individual interests. It's time to move away from "mass personalization" (an oxymoron), to true personalization driven by the needs of individual customers.
Case in point; traditionally, the Kentucky Derby was marketing based on assumptions about their customers. They knew little about their email subscriber file, people's interests and what would make them want to engage.
To turn things around, they implemented a new strategy to learn more about their fans and cultivate engagement with the race and venue. The program included:
Identifying specific fan behaviors in order to develop three interest-driven databases for targeted communications.
Creating newsletters that contained content that would speak specifically to the three identified segment audiences.
Through call-to-action clicks, they were able to ascertain what part of the Derby experience was of importance.
Based on behaviors, consumers were constantly moved into more appropriate segments so they could receive more relevant communications.

As a result of these actions, the Kentucky Derby achieved an average read rate of 37.35%, an average clickthrough rate of 19.44%, and a reduced opt-out rate of 64%.
2. Develop Opportunities to Engage
When you make it a priority to understand what your customers want from your business and what is important to their personal or business lives, you can create authentic and powerful opportunities to engage with your brand and product.
UK fashion giant ASOS, voted the Awards for Excellence 2014 winner by the Marketing Society of the UK, developed a loyal following via retention marketing campaigns on Twitter and Facebook which generated excitement about the brand and cultivated a community experience.
The company used a social app to drive users to the website via a virtual "queue" which allowed users to gain access to digital sales previews. Points were gained by users engaging with the app and sharing their experience on their social media posts.
The app received 715,745 shares and was seen more than 1 million times, resulting a 32% increase in Facebook fans and 174,000 people joining the virtual queue. This resulted in an increase in traffic and conversions on the ASOS website.
The company is also very active on another social platform frequented by their target customers, Pinterest, where they generate an average 7,202 pins a week. In 2012 the company had 8,000 Pinterest followers; that number rose to 49,458 by December 2013; and quadrupled by 2014 to 220,784 followers.
3. Prioritize Personalization Strategies and Technology
A study published the Chief Marketing Officer (CMO) Council and Tealium, a marketing solutions provider, noted a strong link between improved marketing performance and a strong digital marketing technology plan. It determined that:
"…those with a formal strategy contribute more to overall revenue and value creation. 50 percent are able to achieve more targeted, efficient and relevant customer engagements, and 39 percent achieve greater return and accountability of marketing spend."
Gilt, a top internet retailer has invested in technology to deliver a high level of personalization and relevance that drives customer engagement and retention. Results from their efforts have included increased orders, decreased email and mobile push notification unsubscribe rates and higher repeat purchase rates.
When customers return to the company's home page they are presented with highly customized content based on that individual's past history. Variables that drive this level of personalization include previous browsing, purchasing, favorite brands and wish lists. Additionally, customers receive personalized "Your Personal Sale" offers. These feature the most relevant brands and products based on their shopping patterns and self-stated preferences. This allows Gilt to further refine their personalization algorithms.
Building on this success, Gilt recently took this approach to the next level with their Concierge Service, a high-touch and personal concierge program that captures customer's preferences at every touch point (phone, email, chat). Through this Concierge program, Gilt has achieved double-digit reactivation and a 10% + increase in additional orders from their best customers.
Takeaways
Increasing customer retention rates increases profits.
Not only will you keep the customers you have but they will be more likely to refer your business to others. As reported in Luxury Daily, 20% percent of luxury sales are generated by word-of-mouth.
Understand customer lifecycle metrics.
Marketers need to have a better understanding of their customer's journey - and why customers leave. You need to track the rate and reasons for customer churn, so you can better understand what is needed to increase retention.
Don't run your marketing based on assumptions.
Through the use of well defined and accurately generated data you can develop effective segmentation strategies that will allow you to target the exact audience that is receptive to your messaging.

Tuesday, February 24, 2015

Why You Need Human Data For Real Customer Engagement

Forbes
Article by Ernan Roman
Featured on Forbes.com

A cataclysmic shift is occurring in BtoB and BtoC marketing. Customers are ignoring generic messaging and demanding personalized and relevant communications based on their individual preferences.

Human EngagementBased on research findings, the good news is that customers and prospects are willing to provide personal or business information in exchange for more personalized offers, communications and experiences.
Marketers must meet these consumer demands by transitioning from impersonal transaction-based marketing to highly personalized, preference-based, experiences.
The Reciprocity of Value Equation
A profound finding has emerged from more than 12,000 hours of Voice of Customer (VoC) research our firm has conducted for companies including MassMutual, IBM, Norton AntiVirus, QVC, NBC, Microsoft and Songza. Notwithstanding privacy concerns, BtoB and BtoC customers are willing to provide detailed information in exchange for increased value and relevance.
To satisfy these demands, marketers must adopt transformational strategies that recognize the value of human data; true personalization of communications, offers and experiences driven by deep opt-in individual preference information provided by customers in exchange for receiving unprecedented levels of preference-driven personalization.
We call this the Reciprocity of Value Equation.
Customer Reciprocity: Recognition by customers that to receive more relevant and personalized communications and offers, they need to provide marketers with personal or business preference information.
Plus
Business Reciprocity: Recognition by marketers that they have to provide significantly more personalized communications and offers. To be truly personalized these have to be based on more than just transactional, overlay and inferential data.
Plus
"Human Data:" BtoB or BtoC opt-in self-profiled information regarding key issues, needs and expectations; decision-making process, messaging and media preferences; self-described personality types/attitudes/life stages.
Equals
Customer Experience Transformation.
But, Marketers Have to Earn the Right to Request Human Data
By earning trust through value propositions that motivate customers to opt-in and provide deep preference information, marketers will create a high quality database of responsive customers who truly want your messages.
Based on the VoC research findings, customers (BtoB and BtoC) confirmed that human data has to be earned by going through specific steps that comprise a Pyramid of Trust:
Do what you promised: Deliver on your fundamental brand promise.
Treat me fairly: Fair pricing and customer service policies.
Protect my information: Explain the reasons for the opt-in information requests and assure me of the privacy and safety of my data.
Improve my experiences: Use my stated preferences and aversions, to significantly improve my experiences.
Gilt Earns Trust and Engagement
Gilt, a top internet retailer, has used high levels of personalization to deliver relevance and drive engagement for both new and existing customers. Results of these efforts have included increased orders, decreased email and mobile push notification unsubscribe rates and boosted higher repeat-purchase rates.
According to Welington Fonseca, VP of marketing and digital analytics, “Gilt’s commitment to a personalized experience is evident when customers return to the home page of the web site or mobile app. Sales within the store (men, women, kids, home) with the highest affinity to a consumer’s past behavior and preferences (browse, purchase, favorite brands, wish list) are presented at the top of their home page with all other sales ranked according to relevance based on previous shopping behavior and collaborative filtering.”
Another example of personalization is “Your Personal Sale,” which displays the most relevant brands and products based on shopping patterns and self-stated preferences and provide Gilt with another way to interact with the customer to understand preferences in order to further refine their personalization algorithm.
According to Fonseca, “All communication is personalized, with the company sending [more than] 2,500 versions of personalized emails and mobile push notifications on a daily basis, eight times per week. Results have been a double-digit increase in orders and reduction in email and mobile push notification unsubscribes.”
Five Takeaways:
1. Differentiate your business by providing highly personalized communications, offers and experiences.
2. True personalization must be based on preference-based “human data,” not just traditional inferred or transactional data.
3. The right to ask for increasingly deep levels of preference-based information is not a “given.” It must be earned.
4. Deliver clear and obvious value based on preference information.
5. Customers see reciprocity as a valuable exchange of information that improves their experience.

Tuesday, February 17, 2015

Free The Children Co-founder Answers 4 Questions for Marketing Innovators

Craig Kielburger, who at the age of 12 co-founded the remarkable charity Free The Children, now a worldwide organization, will address these 4 questions;
  1. What is one marketing topic that is most important to you as an innovator?
  2. Why is this so important?
  3. How will the customer experience be improved by this?
  4. How will this improve the effectiveness of marketing?
Please send your feedback and ideas for people you would us to interview to ernan@erdm.com.

Craig Kielburger
Craig Kielburger is a social entrepreneur and NYT-bestselling author. He is the co-founder of the children's charity Free The Children, the youth empowerment event We Day, and the social enterprise Me to We.
Free The Children is an international charity and educational partner that believes in a world where all children are free to achieve their fullest potential as agents of change.
1. What is one marketing topic that is most important to you as an innovator?
Cause-related marketing, linking your product to an organization or cause that customers care about, so that buying your product has a tangible, positive social impact.
2. Why is this so important?
Consumers are increasingly seeking a sense of purpose in their purchases. The millennial generation, in particular, is highly aware of social causes and more likely than any previous generation to actively look for companies and products that make a positive social impact.
We also live in an age of parity. The marketplace is filled with similar offerings that start to blur together on retail shelves and online. Consumers are looking for a true differentiator and asking, what's unique about this product? Social impact is an under-tapped way to make your product stand out among the crowd.
At the same time, consumers are growing cynical of donating a dollar at the check-out. They're looking for some accountability on where their donation is going. As we say, they want to track their impact.
We've seen this phenomenon with our Me to We products, which include artisanal items handmade by women in Africa, sweatshop-free clothing, eco-conscious school supplies, and a recycled stationary line. Each item has a unique Track Your Impact code printed on the tag. With that code, we promise a specific impact to a community overseas, such as clean water, a vaccination, or a financial literacy class to empower a person in a developing country. Customers can enter their code online to see precisely where their gift is making an impact. Track Your Impact is cause-related marketing with an unprecedented level of transparency‹, a specific purchase linked to a specific outcome.
3. How will the customer experience be improved by this?
People want to feel and be seen as being socially conscious. They want the emotional attachment and empowerment of knowing that their shopping choices benefit someone else's life. Buying a product they need, and then seeing that purchase deliver a tangible outcome for a better world, fulfills a basic human need we all have to do good.
4. How will this improve the effectiveness of marketing?
It's the future. People want to know the story behind their product to track where it was made and its social impact. Consumers are also parents, grandparents, siblings, real people who care about making a difference. They rarely have a strong emotional resonance with a deodorant, or a can of soup. But if you attach your product to something that people care about enormously, you differentiate your product. If a consumer knows their gift planted a tree, their shirt provided seeds for a family to grow their own food, or their kid's lunchbox gave another child a year of school supplies, then they feel empowered and good about their purchases. Suddenly, they have an emotional attachment to your product ‹that's marketing gold.
Track Your Impact has been so successful that we've been approached by other companies that want to attach impacts to their products, and we'll soon license the system. It's the future of marketing.
What is your favorite activity outside of work?
I love to travel and explore new cultures. Although I've been to dozens of amazing countries, one of my favorite places to visit is Kenya – it truly is my home away from home. I go back at least twice a year to visit our Adopt a Village communities in the country.