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 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.

Free Shipping and Returns: Cost, Value, and ROI

The Challenge: It’s no secret that online shoppers don’t like to pay for shipping. With carrier rates on the rise, ecommerce businesses are fully aware that there is no such thing as “free shipping”, it is an expense that has to be factored into pricing one way or another.

Many successful ecommerce marketers offer free shipping, and even free return shipping, as part of a “no hassle returns” policy. Zappos is famous for offering free shipping and free 365 day returns as part of their efforts to deliver a “wow” experience. The reward and ROI Zappos receives in exchange for this policy; 75% repeat buyers, even though their products are priced higher than competitors in order to cover the costs associated with delivering that excellent customer experience.

Studies on the Benefits of Offering Free Shipping

Compete.com shows a comparison between two similar retailers and the difference between Patagonia, offering everyday low shipping and The North Face, offering free shipping for holidays.

The numbers also indicate that offering free shipping increases search traffic as well as conversions for The North Face.

The Find is an online shopping comparison site where retailers can list products and offers, including free shipping. Their Quick Promotion tool showed 23% traffic increase for retailers running Free Shipping promotions.

A ShopRunner/Harris Interactive study of over 2,800 online consumers provides the following results from offering free return shipping:

• 81% of shoppers are less likely to make additional purchases on websites that charge for return shipping

• Consumers who paid for return shipping at a given retailer decreased their purchases 75% to 100% within a two-year period.

Takeaways:

Evaluate Costs Involved in Offering Free Shipping: The question for your business is whether or not shipping costs can be factored into your margins, or if it means raising the price. Free shipping does not always have to mean a reduction in your bottom line. Consider these 10 Ways to Offer Free Shipping.

• Test Different Offers: A/B testing of different offers will provide insight into how your customers react to different models. Also compare sales and returns over time to see how the conversion rate and the bottom line are affected. A ProImpact7.com survey shows that 72% of website shoppers abandon the checkout process because shipping rate was higher than expected. The word expected is key. In many cases offering a flat rate or lower shipping might achieve the increased conversion rate you are looking for without decreasing your profit margin.

• Consider the Increased Lifetime Value of Satisfied Customers: Increased customer satisfaction often leads to repeat customers, so the lifetime value of your customer can be another factor in the equation for free shipping and returns. BusinessNewsDaily reports that companies who offer free shipping on returns can see between a 58% to 357% increase in sales in the next two years.

Online Reviews: 4 Tips for Building Customer Trust

The Challenge: Do you have a strategy for encouraging reviews? Do you monitor reviews? Are you responding to reviews and taking action based on this powerful voice of customer guidance?

Today’s educated and digitally savvy consumers search out online reviews, even from people they do not know; 69% of local consumers trust online reviews as much as personal recommendations. Less than 10% trust what companies say about themselves, according to an Econsultancy report. Studies by Saurage Research show that 84% of US shoppers rely on reviews before making purchase decisions.

The findings below are based on extensive Voice of Customer (VoC) research conducted by our firm, ERDM regarding the rapidly evolving role of reviews in consumer’s decision making process:

•  A large number of reviews with both positive and negative sentiments are an advantage and create trust.

•  Apparel and cosmetics customers want to be able to sort reviews by multiple criteria to evaluate the relevance of the reviewer’s comments to their personal situation. Criteria include; part of the country, (some feel that people from other parts of the country don’t share their fashion preferences), age, skin type, and clothing size.

•  Pictures and profiles of the reviewers are also important. Per this quote from a recent VoC research effort, “I like to see who is writing the review. It makes a difference as to how much weight I assign it.”

Case Study Intuit Quickbooks:

Adding ratings and reviews greatly increased sales for Intuit Quickbooks ProAdvisors. They are accounting service providers who have completed a comprehensive QuickBooks curriculum and are listed on Intuit’s website, which is searchable by businesses looking for accounting services.

• QuickBooks ProAdvisors® with reviews get 5X more referrals than those with few or none.

• ProAdvisors with reviews get more clicks than higher-ranked ProAdvisors.

• The number of reviews can be more important than the rating.

4 Takeaways to Help You Leverage the Power of Online Reviews:

1. Ask your customers for reviews and do not fear negative reviews: The Quickbooks case study uncovered that for US clients, 80% of reviewers give a 4 or 5 (out of 5) star rating.  UK clients’ reviews are 88% positive. A few negative reviews lend credibility to the positive ones.

2. Quantity of the online reviews can outweigh the quality. In the Quickbooks example, ProAdvisors with ten reviews averaging four stars receive more clicks than those who have a five star average, but only two reviews. Therefore encouraging customers to share information with you is imperative.

3. Online reviews are also important for offline businesses, “Nearly 70% of US internet users sometimes compared prices or read reviews before visiting a store.” - eMarketer

4. The more detailed and personalized the reviewers are, the more successful the review will be in converting potential customers. Offer incentives for completely filling out profile details, preferences, and including a photo.

Making your App a Customer Engagement Solution

The Challenge: Businesses know mobile apps offer tremendous customer engagement opportunities—if done correctly. Unfortunately, businesses can also eat up marketing budgets--without the customer engagement payoff--if mobile apps are not planned out with customer needs in mind.

According to Forbes, the world has gone from 0 to 60 billion mobile app downloads in just the last four years. However, in a Nielsen Research Study, of the 82% of U.S. adults who are now active cellphone users, 43% now have apps on their phones. But, 56% said they delete the apps they don't use, most within two weeks of downloading them.

Don’t be “another” app. Be an engagement tool.

To avoid the dreaded deletion, it is vital to understand why people would want your app, how they’d use it, and why they’d want to return to it.

All too often esthetics or programming issues push their way front and center. But, don’t forget that the best applications do more than look good, they:

» solve a problem

» simplify life

» and engage customers

Based on customer analysis and feedback, T.G.I. Friday’s decided that they needed a way for customers to easily obtain their check, pay, and be on their way. To facilitate this amenity, they developed the “My Friday’s Tab” app that lets customers start a tab, keep track of their bill, and checkout with a click of a button. After its initial release, the company updated the app to include many additional functions that further increase customer interaction and involvement with the brand.

Takeaways: Here’s how T.G.I.Friday’s got it right and how you too can engage mobile customers:

» Solve a problem: The app lets customers pay and go without having to track down wait staff or bartenders. This eliminates customer frustration and also frees up staff for more “fun” interactions with customers.

» Simplify Life: The new app offers access to the rewards program; a “locate a Fridays” function (that also provides driving directions;) customers can get up to date on food and drink specials; and they can review the menu.

» Engage the Customer: The app enables customers to become a part of their own experience at the restaurant. They can have full control over what location they choose to visit, how to redeem reward points, earn new points, decide what to order, and pay without any staff involvement. The app puts its customers in total control of their visit.

If you are going to go through the expense, and effort to develop an app, be sure that it is an app that your customers will want and use over time. Apps are amazing customer engagement tools. (If they are used.)

Building Communities: 5 Takeaways from Frito Lay

The Challenge: Research from Forrester has found that 90% of consumers distrust brand messaging, including social media. However 70% of consumers believe in recommendations from friends or family. The opportunity for brands: build loyal social communities willing to share useful information with friends.

This trend of mistrust is increasing. Getting consumers to believe your messaging is becoming more challenging all the time. However, companies can break through the trust barrier by building social communities and sharing useful information with their followers. Switching the focus from sales promotions to posting shareable content will increase reach and trust when content is shared with 2nd tier circles.

Innovative Examples

Frito Lay is doing an effective job in building a community of followers that not only like their Facebook page, but are buzzing about the “Do Us a Flavor” contest. The campaign encourages shares and likes while building a community around those who are passionate about their favorite flavor.

They first invited people to send in new potato chip flavor nominations. Three winners were chosen, produced, and made available in grocery stores. Now you can taste the chips and vote for your favorite. Lay’s Facebook page is just shy of 6 million fans and over 40,000 people are talking about Lay’s on Facebook. In addition to the buzz that this contest has created, it is also forming sub-communities on Facebook and shows which of your friends are on each of the three flavor finalist “teams”.

MedtronicDiabetes.com, provider of diabetes supplies is blazing a trail in uncharted territory for medical companies where it is very rare to build a community of followers in social media due to the sensitive nature of the topic. Yet, in an industry that is highly regulated and monitored for privacy, Medtronics has still been able to gain almost 150,000 Facebook fans willing to share personal stories. They have accomplished this by providing information about diabetes care and creating a platform for patients with diabetes to come together and help each other.

Takeaways:

1. Don't preach to the choir, fans and followers already know about your brand; convert them into brand ambassadors.  Communications should have the goal of having your message shared with others.
2. Make your message about the consumer, not your brand.  (Frito Lay let consumers choose flavors.)
3. Listen to fans and followers and monitor comments and sentiment.

Focusing on Relationships, Not Sales, Generates Greater Revenue

The Challenge: Traditional marketing has often focused on getting the sale. Instead, marketers should focus on retention and how to keep more customers for longer periods. Customer Lifetime Value, (CLTV), is a simple equation for helping you calculate the value of increased retention.

By understanding the lifetime value of a customer, you can determine whether you are spending enough to keep and groom customers, and what the resulting revenue will be from ongoing, repeat, purchases.

Insert actual or estimated numbers into the following lifetime value equation:

(Average Value of a Sale) X (Number of Repeat Transactions) X (Average Retention Time in Months or Years for a Typical Customer).

Kellogg Professor John Parker explains, “Organizing marketing to improve the performance of three key ingredients–lowering acquisition costs, raising total margins, and reducing the churn rate–can be an even more powerful application of CLTV for CMOs.” Research from Bain & Company shows the increased value of customer retention versus acquisition:

•	Acquiring a new customer can cost 6 to 7 times more than retaining an existing customer
•	Over a 5 year period customer attrition rates could reach as high as 50% if databases are left dormant
•	Businesses which boosted customer retention rates by as little as 5% saw increases in their profits ranging from 5% to a whopping 95%.

 
When we focus marketing efforts on customer retention rather than acquisition and engage customers throughout the entire relationship, the result is an increase in the lifetime value.

3 Takeaways for Marketers:

1. Engage with customers at 3 points in the customer lifecycle:

•	Pre-Sale: Understand their needs and preferences and begin engaging them accordingly.
•	Sale: Don’t think of the sale as a “close”. The sale is not the end; it should be the start of building a proactive, value-based, relationship.
•	Growth & Retention: The period between the last sale and the potential next sale is an opportunity for you to provide ongoing, proactive, engagement, and value. This is the time to gain a better understanding of your customers, why they purchase from you, what motivates their purchases, and how you can provide value between purchases, to keep them loyal and engaged. ERDM research shows that engaging and forming strong relationships with customers has 12 times more influence on retention and repeat purchases than customer satisfaction alone.

2. Cut down on email blasts and send only relevant, preference-based communications. A powerful way of proving that you care about your customer is to cut down on email blasts and only send targeted and relevant communications and offers. Consumers resent brands that indulge in “spray and pray” blasts of irrelevant email. This is viewed as disrespectful of their limited time.

3. You are probably not spending enough on your top customers. Identify the top producing customer segments and revise your spending accordingly. See the visual above.

Starbucks: Social Media Revenue Based on Relationships

The Challenge: How can brands turn their social media fans into revenue? For Starbucks, success through social media begins with a commitment to relationship-building, not sales.

Many companies concentrate social media efforts on getting as many fans as possible, but focusing just on the number of fans misses their true value - they are loyal customers who have raised their hands to say they want a relationship.

The real win is achieved by engaging with customers. An Ad Age study found that only 1% of the Facebook fans of major brands engaged with the brand pages in a given month. One-time promotions to increase the number of fans rarely produce long-term benefits. IBM's Yunchun Lee writes, "That isn't to say that CMOs shouldn't strive to build a fan base. The issue is how to do this in a productive way. There are no short cuts. Winning a loyal customer begins with matching a great product or service with a flawless and repeatable customer experience." Social media marketing requires a long-term commitment to enriching the customer experience.

Starbucks is a great example of a company taking the right approach. In an interview with Adweek , Starbuck’s Alexandra Wheeler said that the firm’s social media strategy “isn’t a marketing initiative. It isn’t a PR initiative. It’s cultivating and creating great consumer value and great consumer relationships.” Starbucks treats its fans to a steady stream of special deals and a richer experience than they’d get solely by going to a store, including interesting background stories on coffees and great photography of merchandise. Starbucks also encourages fans to share all of this with their friends, which spreads the good will and increases the likelihood that posts will appear more widely in newsfeeds.

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The results?

1. Starbucks continues to add 300K+ fans every week to its already huge 33 million strong base on Facebook. It also has over 3 million followers on Twitter.

2. According to a joint study by comScore and Facebook, Starbuck organically reaches more non-fans than fans with its posts on its Facebook brand page. This means that fans engaging with or forwarding content more than doubles the reach of the fanbase – a process Facebook calls amplification.

3. The same study also shows that exposure to a Starbucks post leads to 38% increase in in-store purchases.

Key Takeaways for Marketers

1. Don’t just add fans, build a genuine connection with them.
Although a large fan-base is valuable, it should be based on a genuine connection with the brand. Make it a long-term strategy to identify why consumers love your brand and use social media to build on this.

2. Make engagement worthwhile.
Deliver content that fans want and will forward to others. Great photography, stories about coffee, exclusive deals – even taking a stand on controversial issues -- are ways Starbucks does this.

3. Use the brand page as a listening tool.
Fans give invaluable information with their likes, comments and user-generated content. Respond to any complaints, or proactively offer solutions as customer needs arise.