Megatrend #3: Consumers Share Detailed Information in Exchange for Value

The Myth: Privacy sensitive consumers are unwilling to share in-depth personal information with marketers.

The Reality: Consumers, (BtoB and BtoC), are quite willing to share information with marketers -- if they believe the information they share will result in receiving relevant and valuable information and offers.

In recent blogs, I shared two megatrends of 21st century marketing: Megatrend # 1; customers expect multichannel, preference-driven communications and Megatrend # 2, that they expect us to trust their requirements for deeper engagement.

Let’s take a look at Megatrend # 3, which is also based on learnings from recent VOC research for companies such as Microsoft, HMS National, NBC Universal and Life Line Screening.

Megatrend # 3; there is a growing recognition among consumers 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 by providing significant amounts of information. We call this the Reciprocity of Value Equation: Marketers who provide increasingly relevant information and offers will in turn, receive increasingly detailed Opt-In preferences from customers and prospects.

This results in the creation of a uniquely accurate and detailed database. The unprecedented accuracy is because the information is self-profiled, not inferred as with traditional databases.

To take full advantage of the Reciprocity of Value Equation, your initial value exchange must be powerful. Microsoft’s VOC-driven Relationship Marketing (RM) program, delivered through its Business Resource Center, initially poses fourteen detailed business questions in order to deliver targeted and relevant offers and information.

Microsoft's results were unprecedented:

Opt-in rates up to 95%. Open rates greater than 50%. Response rates performing in the double-digits. Volume license renewal rate is 8 points higher than the control group. Volume license revenue from those in the Opt-In driven relationship program is 2X greater than the control group.

Try This:

Test the increase in response and revenue you can achieve by building an Opt-In driven database.

First, conduct VOC research to understand how different customer segments define the value proposition you must create to motivate them to Opt-In. Also, determine what questions are appropriate to ask, and when, in the course of their relationship with your company.

Megatrend #2: Customers Expect You to Trust Their Requirements for Deeper Engagement

The Myth: Marketers already know what their customers want and why they do what they do. The Reality: Simply relying on talking among yourselves in conference rooms, simple surveys, discussions with a few customers, or anecdotal feedback from your sales force, is often a recipe for serious competitive disadvantage. Given the new economic climate and internet empowerment of customers, in-depth discussions with both customers and prospects are now essential. In our experience, when marketers gain an in-depth understanding of the expectations of customers and re-engineer their marketing per these expectations, double-digit increases in response and revenue are the norm. This is one of several major findings based on Voice of Customer (VOC) Relationship Research for companies such as Microsoft, NBC Universal, IBM, and Life Line Screening. Other VOC findings identified four critical consumer megatrends to which marketers must rapidly adapt. The first megatrend was discussed in this blog on 11/15. We now turn our attention to... Megatrend 2: Customers Expect You to Trust Their Requirements for Deeper Engagement. Life Line Screening is an excellent case in point. They are the leading provider of community-based preventive health services and deliver affordable, high-quality screenings that are essential to the early detection of risk for stroke, heart disease, diabetes, osteoporosis and other conditions. Management's strategic priority was customer retention. The goal: Double the number of returning customers from 2009 to 2012. Initially, Life Line's retention campaign was built around the Net Promoter Score (NPS), which identifies metrics connected to consumer responses to the question "How likely is it that you would recommend our company to a friend or colleague?" While NPS was a useful tool, Life Line wanted to take its retention initiative to the next level by... Identifying why not all happy customers became returning customers. Creating a much deeper relationship with consumers. In-depth Voice of Customer interviews with key segments of the customer base provided Life Line's management with a clearer understanding of the factors likely to lead a first-time customer to become a repeat customer. Based on these detailed customer insights, Life Line was able to create strategies and action plans for increasing customer retention, including greater and more personalized multichannel touches at key points in the customer lifecycle. The Result: 40% increase in returning customers! Try This: Define the most important factors which would help you increase customer retention and renewal rates. Use these factors to design Voice of Customer research. This research will address complex customer needs, so plan on in-depth discussions with customers. In our experience, 60 minute interviews are required to adequately discuss these complex issues and gain in-depth guidance from customers.

Megatrend #1: Customers Expect Multichannel, PREFERENCE-DRIVEN Communications

The Myth: Many marketers act as if the introduction of social and digital media will suddenly "make it all better" and reverse declining response rates and customer disengagement.

The Reality: Unless we match our media and messages with the customer’s individual preferences regarding what information is relevant, and what channels should deliver those messages, all our social and digital media marketing will accomplish is add one more way to achieve more multimedia irritation!

This is one of several major findings based on Voice of Customer Relationship Research from companies such as Microsoft, NBC Universal, IBM, and MSC Industrial Direct. Other findings include:

The poor economy and empowerment of the web have significantly increased buyer expectations of relevance and value. The “center of power” has forever shifted from the marketer to the consumer. Marketers who succeed will rely less on “Spray and Pray” blasts and more on engagement and conversation, on the customer's terms.

Recent VOC learnings have identified four critical consumer megatrends to which marketers must rapidly adapt. We will discuss trends 2-4 in upcoming blogs.

Megatrend 1: Consumers, (BtoB and BtoC), are shifting from being passive recipients of marketing messages to creating and managing their own networks of multichannel, value-added sources.

The Challenge: How do you gain entry into their online and off-line worlds?

The answer is based on relevance and preference-based opt-in relationships. Once consumers have opted into a relationship and self-profiled, and once they experience messaging relevance, they often develop surprising levels of interest in receiving or accessing deeper levels of information ... via multiple channels!

Becoming one of those trusted multichannel sources is now a critical priority.

Jamie Nordstrom, President of Nordstrom Direct, notes that the store is carefully 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.”

Try This:

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. This will encourage deeper levels of on-going self-profiling.

What Don't You Know About Customer Expectations Between Purchases?

Most marketers don’t know enough about what goes on with their customers during the periods of silence between purchases.

This is because information about customers is often limited to the transactional: Did they buy, and if so what...or, no, they did not buy.

This lack of customer insight becomes even more dangerous when the re-purchase or renewal periods span long periods of time, say one to two years.

How can you provide useful, relevant information during those long intervals of silence between purchases…information that helps you create deeper engagement with customers and achieve competitive differentiation?

The only way is to develop a better understanding of your customer’s true needs. And the only accurate way to do that is to ask them.

The current cover story of Target Marketing magazine features a detailed case study of how HMS National increased renewal rates by over 20%, by implementing “voice of the customer” driven strategies that asked customers directly for greater insight regarding their needs and expectations.

Here are some highlights from the article:

All marketers think they know what their customers want. How many of them are wrong? How many lose sales because they're not hearing the "voice of the customer"? Can you be sure your customers are satisfied with the experience you think they want?

Tasked with raising renewal rates on home warranties, Doug Stein, president of HMS National, was faced with those questions. He turned to a process of in-depth customer interviews, called "voice-of-the-customer" research, for answers. The strategies and tactics HMS drew from that research measurably increased customer satisfaction, lifted renewal rates 20 percent across the board—75 percent in some segments—and helped the company chart a new course with the customer as its "North Star."

To read more click here.

Try This:

Ask yourself how much you could deepen customer engagement and revenue if you had direct “voice of customer” insight into your customer’s needs during those long silences between purchases.

In addition to in-depth voice of customer research, consider building one simple question into every customer or prospect related contact, across all media.

The question should be asked of prospects, purchasers, and customers with product or service issues.

The question might go something like this:

Can you please tell us your primary interests and needs related to our product or service, so we can provide you with relevant and useful information? (If it's not relevant to your needs, we won't send it to you.)

Capture the responses to this question in a contact management system and use the data to drive increasingly relevant and targeted communications which your customers and prospects will perceive as value based, not sales focused.

"Close" and "Win" Are Deadly Terms

The terms “Close” or “Win” are age-old Marketing and Sales terms for a new sale. They are also key performance metrics. They are also deadly, because they move our organizations in precisely the wrong direction when it comes to dealing with customers.

We need to move beyond just hunting for “closes," “kills," “scores,” and so on, as these terms perpetuate the traditional Acquisition focus of Marketing and Sales.

What happens as a result of this “hunting” orientation? Per our Voice of Customer research, this is how customers of many Fortune company clients feel:

“The fastest way to be forgotten is to buy from you.” “Relationship? You guys are about ‘buy and die’!” “We buy. You disappear without a trace. Oh, except for the monthly bills.”

The combination of a tough economy and Internet-empowered customers requires that companies focus on Retention and create deeper customer engagement. The “Close” should be re-conceived as the beginning of a relationship, where the company has earned a sale and now has the opportunity to provide increasingly greater value as it better understands the needs of that customer.

Recently, I had a conversation with Matthew Schwartz, Editor of ZoomInfo and “Follow the Lead”, about this issue. Here is a snippet of the conversation:

“...the ‘close’ should be looked upon as the beginning of a relationship, not an end …This is as opposed to a life-time value oriented point of view, which says I have earned the right to drill deep into problem-solving, needs-assessment for the customer, which will make me a much more valuable resource and will drive, incrementally, significantly more revenue.” To read more, click here.

To change our view of customers, to shift from short term “Wins” to long term relationships, we have to recognize that people are “coin operated.” Therefore, unless compensation plans for Marketing and Sales are changed, people’s behavior will not change. As a mentor of mine once said, “Pay them, and the heart will follow!” I’m conducting an ExecSense webinar on November 4th at 12 EST, titled: “The Best Tips & Techniques for Voice of the Customer Marketing for 2011: Guaranteed Ways to Increase Sales 20% to 30% Using Relationship Marketing Best Practices” Hope you can attend!

Try This:

What would happen in your company if Marketing and Sales had common metrics?

What if a portion of compensation for both groups was driven by factors such as: customer lifetime value, cross-sales, up-sales, and customer satisfaction?

Wouldn’t that drive deeper engagement and stronger relationships?

FYI, unrelated to the specific story above, but relevant and deeply gratifying, last week NPR.org highlighted an excerpt from our new book, “Voice-of-the-Customer Marketing”, as a blog post by 800 CEO Read. To see the story, click here.