Songza: Achieving Competitive Differentiation Based on Customer Expectations

The Challenge: As an online music start up in a market crowded with undifferentiated offerings and several large, well-funded competitors, the challenge for Songza was to quickly understand how consumers defined a competitively differentiating music experience.

When Songza launched the music service last year, generating in-depth feedback regarding consumer’s preferences and expectations for a competitively differentiating music experience was essential. Without them, they could not compete against the established and well-funded market leaders.

To learn these consumer preferences, Songza conducted extensive Voice of Customer (VoC) research. They discovered that customers were looking for something much simpler than what was on the market at that time. According to Elias Roman, CEO and Co-Founder, “They found other [music] services too hard: the enormous selection they offered was lost on them, because they didn't have the time, knowledge, or inclination to navigate it.” (Full disclosure: Songza’s CEO, Elias Roman, is my son)

This discovery directly contradicted an assumption that other music services were based on: customers want infinite choice. VoC insights led the Songza team to set their old assumptions aside. Per Elias, "VoC has done many things for us over the years. Key among them was testing (and disproving) strongly-held but previously un-challenged beliefs that were keeping us from innovating."

In response, Songza launched “Music Concierge”, which provides situationally-appropriate playlists, pre-filtered based on the time of day, day of the week, user device, and observed preferences. Rather than incrementally improving on a service customers didn't want, Songza tripled retention and engagement by trusting, and acting on, customer expectations.

THE RESULTS: On June 12, Songza became the #1 most popular free app for iPad and the #2 free app for iPhone―across all categories.

TWO KEY TAKEAWAYS FOR MARKETERS

» Aspire to Have a Radical Differentiation
Elias explains the importance of using VoC research to differentiate your offering: “In crowded markets, just getting the basics right doesn’t cut it ... If a customer could say “Oh, this is like Competitor X, but better, it’s a very, very bad marketing idea!"

» Regularly Challenge Your Market Assumptions
Today’s VoC discoveries are next year's “un-challenged beliefs”. Infinite choice in music was what customers wanted in 2005, but careful curation is what they want in 2012―though it may not be what they want in 2013. Conduct VoC research annually to make sure your ideas are in sync with the rapidly changing needs/expectations of your customers and prospects.

NASCAR: The Future of Branded Hash Tags on Twitter

The Challenge: Twitter just unveiled major changes to how they handle branded hash tags. Marketers have to act quickly to keep up.

Twitter ran their first TV ad last week. Their target audience? Marketers.

The ad ran during TNT's June 10 broadcast of the NASCAR Pocono 400, and featured NASCAR's branded hash tag: #NASCAR. Viewers who searched that tag got a glimpse into the future of Twitter hash tags.

In the past, hash tag searches on Twitter simply took users to a standard search results page. With #NASCAR, Twitter has introduced major changes to branded hash tags.

UPDATES TO BRANDED HASH TAGS ON TWITTER

» Brand pages now have a new URL: e.g., twitter.com/#NASCAR rather than twitter.com/!#/NASCAR.

» Searching #NASCAR takes users to a branded NASCAR page, with brand imagery and logos.

» The new page also included a showcase of images from recent tweets, and "Top People" associated with #NASCAR.

A few days before the ad ran, Omar Ashtari, Twitter's head of sports, called the pending updates to Twitter.com/#NASCAR an "experiment." But once the changes were revealed, industry watchers came to a different conclusion. As Owen Thomas wrote at Business Insider, "We don't think this is an experiment as much as it is a harbinger for how Twitter is going to revamp its site to be a far better showcase for advertising."

The new pages promise to be a great experience for users―and great experiences for users translate to high value for marketers. They just need to make sure they're ready when Twitter unveils the update to all businesses.

PREPARING FOR TWITTER'S NEW HASH TAG PAGES:

» Select a Memorable Branded Hash Tag
Customers will talk about you on Twitter, whether or not you're involved. Select a hash tag for your brand, and it will be much easier for you to monitor and moderate the conversation about your products and services.

» Prepare to Brand Your Twitter Homepage
The new #NASCAR page includes a brand logo and a prominent background image. Once Twitter makes these new pages available to all businesses, you'll need to have these ready. (If you currently manage a Facebook Timeline page, you probably have these assets already.)

» Drive Multimedia Tweets
Twitter's new hash tag pages prominently display photos from recent tweets. If nobody includes photos in tweets related to your brand, this showcase will remain stale―or empty. Add multimedia in your own tweets, and give users a way to engage with more than just text.

» Implement a Social Media Disaster Plan
Every time you make it easier for your customers to engage, you make it easier for them to communicate negative experiences. With a social media disaster plan, you'll be prepared to deal with these situations, rather than handling them ad hoc.

Lowe's: Customers Personalize Their Experience with Cross-Channel Profiles

The Challenge: Purchase history is crucial information, but many marketers miss significant opportunities by neglecting offline purchase behaviors.

Digital advertising makes it simpler than ever to use purchase history for targeting offers. As brands like Amazon have demonstrated, personalization based on purchase history drives outsize returns. But while sophisticated marketers take full advantage of online purchase history, they often neglect offline purchase history.

According to a recent study by Nielsen Catalina Solutions (NCS), consumer packaged goods (CPG) brands achieve Return on Ad Spend (ROAS) of 3x or higher when they use offline "purchase-based information".

Marketers cannot leverage retail purchase information without collecting it. To do so while maintaining a positive customer experience, businesses need to create incentives for customers to link their online and retail purchase behaviors. Home-improvement retailer Lowe's has some innovative ideas.

Late last year, Lowe's Chief Information Officer Mike Brown led an effort to help customers manage home-related data, including receipts, appliance manuals and service warranties. According to a report in Bloomberg, "Customers will be able to scan a special card to monitor transactions, create room-by-room profiles of their homes and plan projects with store employees".

MyLowe's saves every member's in-store purchase history. This creates immediate value for customers: they can look up previously-used paint colors, track long-term renovation projects, and much besides. Most importantly, they can do this in-store or online.

Important new workshop Customer Experience Marketing: 5 Steps to Ensure Success developed by the DMA & Ernan Roman. Click to learn more.

The system also provides valuable data to Lowe's employees. At retail locations, sales associates can use MyLowe's profiles to provide superior customer service based on each customer's specific needs. And on Lowes.com, users who log into their MyLowe's accounts will immediately be reminded to take the next step on their home improvement projects.

With a simple set of tools linking online and offline purchase behavior and project planning, Lowe's has given customers a reason to maintain brand loyalty. Tom Lamb, Lowe's senior vice president of marketing and advertising, explained the value: "There's one part Home Depot loyalists, one part Lowe's loyalists. Everything in between ― and it's a big in-between ― is a jump ball. ... This is a tie-breaker."

TWO KEY TAKEAWAYS FOR MARKETERS:

» Link Online and Offline Purchase Data
Many businesses treat their online and retail businesses as separate silos. But without linking purchase data from both sources, marketers lose a significant opportunity. Build data stores that correlate shopping behavior across channels―including retail.

» Incentivize Customers to Consolidate Purchase History
Lowe's employees don't ask customers to enter their phone number or address at every trip to the check-out line. MyLowe's gives customers reasons to login to their accounts as they stroll the aisles. It's a win-win: customers have access to valuable data, and Lowe's consolidates purchase history across channels.

» Personalize Your Customers' Online Experience with Offline Purchase Data
Once you've collected offline purchase data, use it to create a highly-personalized online experience. Among other features, MyLowes sends seasonal purchase reminders―creating value for customers while driving revenue.

Sephora: Succeeding Where Others Fail; Integrating Offline into the Digital Mix

The Challenge: To engage increasingly multichannel customers, businesses need to integrate their digital and retail experiences.

Today's customers expect businesses to personalize their experience across channels. And as Urban Outfitters CEO Glen Senk explained, multichannel customers are the most valuable customers: “Multichannel customers spend two to three times more than single-channel shoppers ... Consumers who engage with the company across three or more channels spend six times more than the average customer.”

To take advantage of this value, many businesses are integrating their digital presence: Web, mobile, and tablet. But, many businesses fail to integrate offline experiences into their multichannel mix.

Global beauty retailer Sephora is taking the lead in integrating online and retail shopping experiences. As Sephora Direct senior vice president Julie Bornstein told Forbes last month, "lots of retailers are hesitant to bridge the online and offline world," but Sephora is embracing the opportunity. Recently, they've put iPads in 20 stores, so customers can read product reviews and look up their own purchase history.

While in-store iPads bring digital convenience to retail stores, updates to Sephora's online presence are bringing the full retail experience online. Sephora's new search capabilities allow online customers to ask many of the same questions they ask at retail locations. "Is this product right for my skin type?" "What's the SPF?" "What should I use for fine lines and wrinkles?"

Bridget Dolan, Sephora's VP of interactive media, described the value of these website updates: "We have all the expertise of Sephora's staff built into a web interface, and that's extremely powerful.”

Important new workshop Customer Experience Marketing: 5 Steps to Ensure Success developed by the DMA & Ernan Roman. Click to learn more.

Similarly, Neiman Marcus recently launched a new app - NM Service - that allows customers to interact with sales associates remotely, and alerts sales associates when customers who have the app walk into a store. As Jim Gold, Neiman Marcus' president for specialty retail explained, "The NM Service app allows us to take our service philosophy into the digital era." In the latest phase of our digital era, the integration of digital and retail experiences is crucial.

TWO KEY TAKEAWAYS FOR MARKETERS:

» Use Your Retail Staff as a Source of Online Intelligence
The convenience of online shopping is old news. Today's customers need online intelligence. Your retail staff know what questions your customers ask, and what criteria they use to shop. Collect this intelligence, and put it online.

» Use Mobile to Keep Customers Digitally Engaged at Retail Locations
Use creative solutions like Sephora's in-store iPads or Neiman Marcus' iPhone app to keep customers engaged online while they're in your stores. Sephora's Dolan explains: "There's a lot of rich information you have access to on the web. Why not leverage that in stores?”