Ernan’s Insights on Marketing Best Practices

Monday, December 27, 2010

Part 2; Top 10 Marketing Challenges for CEO’s in 2011

In our previous blog, we examined the first five marketing "game-changer" challenges that CEOs will face in 2011. Now let’s review the second half of the list.
CEO CHALLENGE #6. Re-design your web site to meet customer expectations.
Per extensive Voice of Customer research, we have learned that most customers and prospects are not satisfied with current websites. They feel that most websites are one-dimensional, corporate, “me”-oriented experiences. Websites must now provide a three-dimensional experience that provides access to, in order of importance, 1) peers, 2) content experts, and 3) the company itself.
WHAT TO DO: Re-think your entire website strategy. Learn how your customers and prospects define value and relevance. Follow their lead by connecting them with easy access to peers, subject matter experts, and your corporation.
CEO CHALLENGE #7. Give Customer Service the respect it deserves.
In 2011, the companies who thrive will be the ones who recognize that Customer Service is not an expense to be trimmed back, but a revenue contributor.
WHAT TO DO: Start an internal revolution. Abandon the view of Customer Service as an Operations expense line-item. Reposition it as a revenue center, and synchronize it with your marketing efforts. Yes, this may mean stepping on some toes. The earlier in 2011 you step on those toes, the sooner the customer-centric revolution will be completed at your company.
Additional insights are contained in Ernan's manifesto “Don't You Want To Do Real Marketing?” published by 800-CEO-Read.
CEO CHALLENGE #8. Don’t let short-term financial objectives destroy your long-term customer focused strategies.
Whether they sell to businesses or to consumers, 2011's most successful enterprises will shift their selling focus away from just “closing deals."
Teams that focus on building customer relationships over time will win market share and competitive advantage. Don’t allow short-term income targets to reinforce the old behaviors of “Spray and Pray” marketing or “churn and burn” customer acquisition.
WHAT TO DO: Use quarterly financial forecasts as…simply forecasts. Don’t become a prisoner of short-term forecasts.
CEO CHALLENGE #9: Model the behavior and the priorities for your employees.
As CEO, you are the single most important role model for your team members. Use that "bully pulpit" to show how you want both internal and external customers to be treated ... and to demonstrate the values your company stands for.
WHAT TO DO: If you haven't already done so, create an Employee Council and:
arrow Meet with its members at least once a quarter.
arrow Hear what is on people's minds.
arrow Listen openly to both criticisms and suggestions.
arrow And remember: The respect you show these people will determine the respect your front-line employees show to your customers!
CEO CHALLENGE #10. Accept that ultimately, the responsibility for moving away from "business as usual" in any and all of these areas is yours.
Adjusting successfully to a customer-driven world won't come naturally to you or your organization. In the year to come, you must be the catalyst for customer-focused change in your organization.
WHAT TO DO: Throughout 2011, champion initiatives that that tap into the Voice of the Customer as an essential source of wisdom and strategic insight.
Acting on this customer-driven wisdom will often mean altering products, procedures, and relationships that your team has grown used to...and that seem to be "working just fine.”
As you advocate for these changes, your leadership ability will inevitably be tested. But being tested is one of the things you love about this job, right?

Monday, December 20, 2010

Top 10 Marketing Challenges for CEO's in 2011 (PART 1)

CEOs surveying the 2011 landscape will face ten major challenges. In this blog, we examine the first five of these ten "game-changers." We'll look at the second half of the list in our next blog.

CEO CHALLENGE #1. Accept that the balance of power between buyer and seller has changed… forever.

Customers will call more shots and set more agendas in 2011 than ever before.

The poor economy and unprecedented consumer empowerment due to the web and social media have significantly increased customer demands for relevance and value. The “center of power” has forever shifted from the marketer to the customer.

WHAT TO DO: Identify new ways your company can provide clearly defined, competitively differentiating value both at the point of purchase and throughout the customer’s lifecycle.

CEO CHALLENGE #2. Completely re-think how you view your customers.

Abandon the old view of customers as limitless commodities that can easily be replaced. As the level of marketing “clutter” increases, it will become harder and more expensive to replace customers in 2011.

WHAT TO DO: Make Customer Lifetime Value an essential business metric.

Additional insights are contained in Ernan's manifesto “Don't You Want To Do Real Marketing?” published by 800-CEO-Read.

CEO CHALLENGE #3. Stop chasing the “quickie.” Build relationships.

The name of the game in 2011 will be customer Retention, not just customer Acquisition. The long-term relationship is what really matters. That will only happen if you use the initial sale as a paid opportunity to prove your value.

WHAT TO DO: Shift the allocation of budget and resources from the traditional focus on Acquisition to a balance between Acquisition and Retention. Change compensation plans from an Acquisition/new sales focus to reflect Retention and repeat customer purchases.

CEO CHALLENGE #4. Communicate with customers and prospects through multiple channels.

More and more customers in 2011 will demand multichannel communications that are both relevant to the customer and driven by that customer’s opt-in media preferences.

One channel will no longer be enough to ensure engagement. According to Jamie Nordstrom, President of Nordstrom Direct, they are cultivating “people who shop at Nordstrom in more than one way, since multichannel shoppers spend four times, on average, what a one-source shopper spends”.

WHAT TO DO: Emphasize the value of opting in to a relationship with your company, via all media and channels. Then personalize the communications per individual opt-in preferences, so the value and relevance is obvious.

CEO CHALLENGE #5. Create uniquely powerful Opt-In preference-driven databases.

We are seeing an important new trend: privacy sensitive consumers are recognizing that in order to receive or access increasingly relevant information, they must share increasing amounts of information about their preferences. If they trust the marketer and see a useful value proposition, consumers will Opt-In and self-profile their preferences and expectations. Clients such as Microsoft have achieved significant increases in response and revenue due to Opt-In preference-driven communications and offers.

WHAT TO DO: Re-think your marketing so that it provides unquestionable value from the consumer's point of view. Conduct research to identify the value propositions required to engage customers to Opt-In. You also need to learn what questions are appropriate to ask at different points in the customer lifecycle.

As a result of providing increasingly relevant information and offers, customers will in turn provide you with their increasingly detailed Opt-In preferences. This will result in the creation of a uniquely accurate, detailed database that gives you a powerful competitive advantage.

In our upcoming blog: The next 5 of The Top 10 Marketing Challenges for CEO’s in 2011.

Monday, December 13, 2010

Are You Going for the “Quickie Sale”…or the Relationship?

The Myth: During the holiday season, the goal of retail, online, and mail-order marketers should be to process as many sales as possible. This will help recoup some of the lost revenue due to the poor economy.
The Reality: Marketers are losing millions of dollars by going for the “quickie sale”. It’s hard to get a customer at any time of year, so when they are coming to you, driven by the holiday purchasing wave, you have the opportunity to accomplish much more than just robotically swiping their credit cards and moving on to the next transaction.
This month, millions of customers will be purchasing from an on-line, mail-order or brick-and-mortar marketer. The majority of those customers will not be engaged in any way by the sellers, who are stuck in a manufacturing model, trying to process “ holiday” transactions as quickly as possible. These blunders represent literally millions of dollars in lost opportunities to establish relationships with customers who could make multiple purchases in the future.
In a previous blog, Discounting as Addiction, we discussed the dangers of relying on discounting as the mainstay for driving customer purchases. The end result of this addiction is that the only compelling reason to visit the company’s store or web site is for another discount ”high.” This addiction by the consumer is perpetuated by the seller’s addiction to discounting, and so the cycle deepens.
Relationships based on value identified by the customer, on the other hand, carry significant long-term potential for both seller and buyer... but you can't find out what your customer considers valuable if all you are interested in is a “quickie” transaction.
Try This:
Ask each customer if you can ask a few brief questions to help provide them with ongoing value as defined by their individual needs/interests. The types of questions you should ask are intuitive. For instance:
arrowWould they like to receive information, useful tips, or promotions regarding the product(s) they just bought?
arrowAre there other products in the store/catalog/or web site about which they would like to receive information?
arrowAny other friend or family member they would like to send this information to?
arrowAnd last...as a result of offering value, you have earned the right to request their email address.
Think about it. What better time to prove your value and build a powerful database than at the point of purchase? Most customers are happy to spend the extra few seconds identifying how you can better serve them in the future. And those that don’t want to spend time can choose not to.

Monday, December 6, 2010

Megatrend #4; Consumers Demand Three-Dimensional Website Experiences

The Myth: The primary purpose of your web site should be to serve as a combination brochure and on-line ordering portal for customers and prospects.
The Reality: Consumers (both BtoB and BtoC) now expect far more than product information and convenience in ordering from on-line resources.
In recent blogs, I shared three megatrends of 21st century marketing: Megatrend # 1, that customers expect multichannel, preference-driven communications; Megatrend # 2, that they expect us to trust their requirements for deeper engagement; and Megatrend #3, that consumers are willing to share significant amounts of information about their preferences in order to gain valuable information or resources.
Let’s take a look at Megatrend # 4, which is also based on learnings from recent VOC research for companies such as Microsoft, HMS National, NBC Universal and Life Line Screening.
Megatrend # 4; Websites must now provide a three-dimensional experience that engages the customer and abandons the current one-dimensional, corporate, “me”-oriented Web experience.
Per VOC research, the three dimensions of experience, in order of importance, are:
1. Provide access to peers, for the most trusted information and recommendations,
2. Provide access to relevant subject matter experts, and
3. Provide easier and faster access to the corporation before, during, and after purchases.
Examples of companies who do this well:
arrow Amazon.com, now allows shoppers to connect to their Facebook accounts. As a result, Amazon can now display their friends’ favorite books, films, and so on. Amazon also provides access to both expert and amateur reviewers (via its main site) and to a wide range of peers and content experts (via its Omnivoracious interactive blog site).
arrow TunerFish, a start-up owned by Comcast, lets users share TV shows and movies they are watching…creating a real-time "TV guide" of programs for friends.
arrow Loopt, a location-focused social network with over 3.4 million registered users, recently began showing them which of their friends liked a particular restaurant.
Megatrend #4 carries broad marketplace implications likely to play out for decades. According to the New York Times (9/13/10), on-line social networks of friends and colleagues are now a more trusted source of purchase recommendations than traditional search!
arrow “The trust factor of friends' suggestions can make a big difference...Loopt's users are 20 times more likely to click on a place their friends liked...than a place that simply ranked higher in search results."
Sam Altman, Co-founder of Loopt
Try This:

Take a fresh look at your site. Identify how you can provide a three-dimensional experience which provides, in order of importance, better access to:

arrow Peers
arrow Subject Matter Experts
arrow Your Company.

Wednesday, December 1, 2010

Discounting: A Dangerous Addiction

My wife and daughter no longer shop at certain stores unless there is a major sale. Their reason: it would be foolish to pay regular prices, since huge discounts are offered so frequently.

Clearly, discounting has been around a long time and the rationale is obvious. In poor economic times, it seems all the more imperative. Also, if competitors are discounting heavily, how can a marketer not offer discounts?

All that makes sense. The problem, however, occurs when discounting, like an addiction, becomes a dependency. The end result is that the only compelling reason to visit the company’s store or web site is for another discount ”high.” This addiction by the consumer is perpetuated by the seller’s addiction to discounting, and so the cycle deepens.

Based on over 100 Voice of Customer Relationship Research studies we have conducted for companies such as
NBC Universal, Microsoft, IBM, Life Line Screening, and others, a consistent pattern has emerged:

  • If a company or product is viewed as a commodity, price will always be cited as the #1 variable driving purchases.
  • Conversely, if a company or product is viewed as a source of value, then price is consistently ranked as variable #3 or #4, after product or service quality, customer service, and other factors such as value-added information or access to a community of people with similar interest or needs. This holds true regardless of the price of the purchase, or whether it is a BtoB or BtoC purchase.

So, with discounts, discounts everywhere, what’s a poor marketer to do?

The answer...break the cycle! Do not allow your company or brand to become, or remain, a discount addict.

Yes, you have to offer discounts at times, but this cannot become the main reason customers buy from you. Build value around your company, brand and products. Create a value-added experience for customers so your store and/or site become a destination and worthy experience, not just a place for transactions.

Also consider that many people think about what they buy in terms of what it says about them as people. If discounting is the main draw, it says they are good shoppers, which has a very low switching cost relative to defecting to other brands (part of being a good shopper is being shoppertunistic). If buying from a company says you are smart, hip, responsible, etc., you can create cognitive dissonance by switching to a competitor just because they have cheaper prices, because you could be invalidating the good things you thought about yourself by having bought from the first company. The stronger your engagement with a company, the less likely you are to switch just because of price.

A case in point is Threadless. They have taken the act of selling T-shirts, which could have been a simple, commodity-driven sales experience and transformed into something very special. They are a community-driven online marketer specializing in T-shirts designed by members of the community. This community is made up of 3 groups; purchasers, designers and reviewers. According to the Sloan Management Review, the community and customer experience is so compelling that 95% of those purchasing from Threadless.com have voted and posted comments...before making a purchase.

Yes, Threadless uses discounts and has sales, but these are just an occasional element of a much broader, more compelling customer engagement strategy. And, the results of this strategy go straight to the bottom line:
  • Over 1.4 million members.
  • Over 1.8 million Twitter and Facebook followers.
  • Approximately $30 million in annual sales.

Our advice is not to follow the flock of discount addicts. This diminishes the value of your brand and can only result in ever-shrinking margins and loss of competitive differentiation.

Instead, build value around your product or service. Make the experience of doing business with you exciting and fun. Learn from innovators like Threadless, NikeiD, and Starbucks, who have created powerful customer experiences in product categories that less innovative competitors have marketed as discount-driven commodities.

Author: Ernan Roman, President of Ernan Roman Direct Marketing