Disney Finds Magic In Reciprocity Marketing

A healthy change is taking place: Consumers are demanding that brands engage them in conversations versus one-way blasts.

But for this to be effective, both consumers and marketers have to change previous behaviors.

» Consumers have to recognize that to receive more relevant and personalized communications, offers, and experiences, they need to provide deeper personal or business information.

» Marketers have to recognize that to competitively differentiate, they have to provide significantly more personalized communications, offers, and experiences. However, true personalization is based on much more than traditional transactional data. Marketers must earn the right to collect increasingly deeper levels of preference-based data.

How is this accomplished? With trust. According to the 2014 BrandSpark Most Trusted Awards, “Across categories when considering [a] purchase of a new product, shoppers consider it extremely or very important that it comes from a brand they trust.”

Trust is the basis for obtaining deeper engagement with customers. It is a cycle:

• Trust makes customers receptive to a reciprocity-based exchange of data in order to receive enhanced experiences.

• The improved customer experience reinforces trust.

• That, in turn, enhances trust.

• Now customers are more motivated to provide deeper additional information.

• Marketers can now engage customers in a deeper level of reciprocity-based interaction.

• And the cycle continues, based on ever-deepening personalization and value.

An exciting example of reciprocity-based marketing is Disney’s MagicBand bracelet app. In return for the collection of consumer data, Disney offers guests the ability to “enter the parks, unlock Disney Resort hotel room[s], and buy food and merchandise. Plus, [the] MagicBand gives FastPass+ access to all the experiences selected online.” Users of the band and app can receive an email or text message about availability of reservations or rides noted as being preferred experiences.

In terms of data collection, MagicBands link electronically to an encrypted database of visitor information. The bands contain a radio frequency identification (RFID) chip that allows for the collection of intelligence that is coupled with guest input into the My Disney Experience app and Web site (input is voluntary.) All of this data gives Disney valuable information about customer preferences, which are then used to provide high-value experiences.

The Disney value proposition is in sync with findings that have emerged from Relationship Research our firm has conducted regarding what customers expect in a reciprocity-based relationship:

Trust: The marketer can be trusted to deliver on a fundamental brand promise.

Listen: The brand will listen to customers’ needs, suggestions, and concerns.

Deliver: The brand will provide communications and experiences relevant to customers based on their individual preferences.

Key Takeaways

Following are four key takeaways for implementing reciprocity-based marketing strategies:

• It is not customers’ responsibility tell marketers what they want. Marketers must ask--and then respond with reciprocity-based customer experiences based on feedback.

• Competitive differentiation is rooted in the ability to deliver offers, communications, and experiences based on the exchange of deep customer data and preferences.

• Multichannel reciprocity-based marketing addresses the customer experience across all touch points, departments, locations, and company levels.

• A high value, reciprocity-based customer relationship needs to be maintained throughout the life cycle of the customer, not just during the points of initial sale or add-on sales.

6 Customer Experience Mistakes You Don't Want to Make

   Loyalty 360 Feature Story.

Per results from recent Voice of Customer (VoC) research, Customer Experience strategies are failing to deliver the quality of experience customers expect. Notwithstanding today's technology, tools and analytics, it is sobering that customers are not experiencing a significantly improved customer experience.

Following are the top 6 Customer Experience mistakes that emerged from our analysis of thousands of hours of VoC research our firm, ERDM, conducted for clients such as MassMutual, Norton AntiVirus, IBM, HMS National, Songza and others;

1. Customers do not feel that marketers are trying to understand the customer journey from the customer's point of view. To many, it feels like "customer journey" is another term for mapping the sales opportunity journey.

2. It is obvious to customers that companies are doing things piecemeal. Examples cited in the research include;

• Improving multichannel marketing but not fixing customer service.

• Installing CRM systems which only automate bad behaviors but don't improve the quality of communications and experiences.

• Building Preference Centers which don't ask the right preference questions. 

Thought Leader Insight:
Scott Frey, President, PossibleNow;
“Install an enterprise wide preference center. Go beyond preference centers for individual channels such as email and create an easy-to-use portal where customers can create individual profiles, select topics of interest, preferred delivery channels and pace of communications. Preference centers provide the ability for customers to maintain their preferences as their interests change over time. Connect the preference center to all customer touch points”. 

3. Customers want marketers to move from thinking about individual campaigns to a holistic engagement strategy with proactive value added touches at key points important to the customer, not the marketer. High quality experiences must be maintained throughout the relationship and per a quote from a VoC interview, “Not just when you are selling or renewing”. 

Thought Leader Insight:
Eric Nystrom, Dell, Director, Social Media Services Group;
“We need to think in terms of engaging customers at every stage of the customer lifecycle. This causes a shift from one-way communications to conversations and to think about content differently. Customers expect to engage with subject matter experts and empowered employees, not corporate spokespeople. Content needs to be relevant, interesting and engaging…and always on”.

4. Conflicting metrics for measuring success; Marketers are looking at short term sales and ROI from individual campaigns. Customers are judging companies based on the quality of the overall experience, over time.

5. Frustratingly poor data. Customers want marketers to improve the quality of their data and shift from transaction-based information to opt-in preference-based information which will drive truly personalized communications and offers. 

Thought Leader Insight:
Andrew Bailey, Marketing Principal, FedEx;
“FedEx has always valued the customer experience and continues to make strides in providing an optimal one. FedEx works to allow customers to tell us how often they’d like to receive email, and on which specific topics. This helps spark a dialogue that allows us to better serve our customers by meeting their individual needs with information for the right person, containing the right content, in the right place and at the right time”.

6. Viewing Customer Experience as being about a few campaigns, will ensure you’ll fail. Successful companies view Customer Experience as a transformation of their culture, impacting every business process. Culture change is hard but is the longest lasting. Individual campaigns do not result in sustained change. 

MassMutual is an excellent case study of a company which has committed to transforming the customer experience with the goal of creating customers for life. They began by conducting Voice of Customer research to understand how different customer segments define deeper relationships with MassMutual Retirement Services at key points in their lifecycle. 

Thought Leader Insight:
Kris Gates, VP Customer Experience, MassMutual Retirement Services;
"Based on the learnings from the VoC research, we have redesigned the way we look at relationships with customers. Taking a Learn – Pilot – Scale approach to our marketing efforts, we already have several VoC research-based initiatives underway. These range from redefining how we view the customer-focused value of CRM platforms and our data, to campaign targeting and preference based communications. 

One of the findings from our recent VoC research indicated that our customers wanted communications driven by their preferences and interests. We used the rollout of our new educational video series SmartView,to measure the difference in response between mass emails to an entire list versus preference-driven offers to those who had opted in and told us their preferences and interests. Results from customers who opted in to receive information versus the mass email population: 94 percent higher open rates, 1,062 percent higher video views, 100 percent deliverability and Zero unsubscribes".

8 Key Takeaways to Avoid Customer Experience Mistakes

1. “Digital has changed buyer and marketer behavior. Traditional campaigns are definitive…social is about long-term relationships…think about how to drive content streams to improve search, engagement and conversion”.
Eric Nystrom, Director, Social Media Services Group, Dell

2. “Engage your customers to provide their preferences regarding information they want to receive from you; right person, right content, right time, right place and right medium”.
Andrew Bailey, Marketing Principal, FedEx.

3. Help customers at every point of contact with your company; from information gathering, to purchasing, to ongoing engagement. Make every aspect of doing business with your company easy.

4. Communicate a consistent message and brand across all channels, and customer touch points, including customer service.

5. Constantly improve how you communicate your value proposition; this applies to your products and your company, so customers understand why they should continue to do business with you.

6. Learn the customer journey from the customer’s perspective. Know what customers want from you at each stage of their journey with your company and satisfy their needs.

7. Rethink all communications with customers to be personalized, relevant and helpful based on their individual preferences. Don’t just send transaction-based “spray and pray”.

8. Change your culture to be customer centric in all aspects of your company and unite these efforts across all departments.

Preference Centers: Are CMOs Overlooking Their Importance?

A good preference center is akin to a good first date. It is all about initial appropriateness, understanding, and communication. Once accomplished, you have earned the right to a second date and deeper levels of discussion.         

“Is Your Preference Center Hurting Your Customer Experience?”--the first article in this two-part series--discussed why marketing executives should be concerned about the role of preference centers in enabling their companies to capture the deep customer insights necessary to drive personalized communications.

This article focuses on recommendations from CMOs and senior execs regarding preference center functions and experiences that are critical--whether you are about to build a new center or make improvements to an existing one.

Before You Invest. . .Research When Thomson Reuters decided to build a preference center, research was its first step. “We did market research ahead of deploying our new email preference center,” said Diangelo Tyler, Thomson Reuters’ director of online marketing. “Our objective was to determine what was most important to the customer.”

Tyler offered the following tips:

• Do your homework prior to building the preference center. Refined requirements are the key to success.
• Seek answers to the tough questions.
• Keep in mind that the preference center is for the customer, and they hold the power of voice.

Don’t Be Afraid Of Opt-Outs
Tyler went on to discuss a topic noted by many of the CMOs who my company, ERDM, interviewed while preparing this article. “It’s better to be transparent and open about your intent. It was critical that we make it as quick and simple as possible for our customers to manage their preferences and [for] marketers to get access to their permissions,” he said.

Many marketers shy away from creating truly customer-focused preference centers because they fear mass opt-outs. However, giving customers the ability to provide you with their preferences regarding communications and experiences actually provides you with a powerful competitive advantage.

Per findings from our Voice of Customer Relationship (VoC) research, customers and prospects consistently stated they were willing to provide trusted brands with deeper levels of information in exchange for more personalized information and experiences.

B2B and B2C consumers cited that willingness so frequently we gave it a name: the Reciprocity of Value Equation. Following are some key VoC findings regarding Reciprocity of Value:

• Consumers recognize that to receive or access relevant information, they must provide preference information.
• If they trust the brand and receive a useful value proposition, then consumers will opt-in to sharing increasingly detailed preference information.
• Reciprocity is seen as a valuable exchange of information. This information will constantly change, grow, and be enriched through ongoing interactions with consumers.
  
• This customer-driven information exchange results in uniquely accurate databases that consistently achieve 25 percent to 50 percent increases in revenue.

“The key is to establish an ongoing dialogue with the customer. As they give personal information to you, they are building a relationship with your brand,” said Jennifer Downes, director of direct response marketing at Lenovo NA. “Critical to the learning process is the level of engagement that a customer has with your preference center. The customer must perceive value in your preference center so they proactively update their preferences as they evolve in their journey.”

Another issue marketers face in this space is compliance. “We have to comply with telemarketing regulations and the new cell phone rules, so we’ve used this opportunity to build customer preferences for phone contact,” explained Jane Bulman, VP of telesales at Comcast. “We ask them and are transparent about the benefits of future calls--special offers and notifications about new products, for example. Over 70 percent who purchased previously said, ‘Yes, contact me again.’ If we ask how customers want to be contacted--and for what purposes--we gain marketing efficiency, customers welcome the call, and we follow the law.”

Preference-Based, Not Transaction-Based, Data Is Key It is important for executives to realize that transaction-based spray-and-pray blasts are causing significant damage to their brands. Irrelevant communications are training customers to associate their e-mail and direct mail with “delete” or “throwaway” behaviors.

Per our VoC research findings, consumers believe that transaction-based data is inadequate and an inaccurate indicator of their true preferences regarding future communications they would consider relevant. They stated repeatedly that they want brands to treat them “as more than just a sale.”

Rather, they want relevant and engaging communications:

• “I want more than just buying history-based e-mail.”
• “With today’s technology, I expect the experiences and e-mail to reflect my preferences.”
• “I think being able to select just what I’m interested in would be very helpful. It would mean a lot less searching on the Web site and a lot less email I don’t usually open anyway.”

Key Takeaways

Following are recommendations regarding what you need to consider in order to develop a high-quality preference center. These were provided by Scott Frey, a preference management innovator and president and CEO of Possible Now, which provides enterprise preference management solutions.

Tip 1: Account for all of the systems currently in use to collect and store preference information from customers. There are multiple touch points--e-mail, mail, point of sale, social, and mobile--that must be taken into account to ensure the preference center is as comprehensive and effective as possible.

Tip 2: Understand the business rules and needs of the business owners. An effective preference center must take into account all of the existing business rules and needs of the business owners who are impacted by the data collected by the preference center. Bringing those parties together early and keeping them informed throughout the build of the preference center is crucial.

Tip 3: Start with the end in mind. Creating a plan for how the information collected through the preference center will impact marketing campaigns and customer correspondence assures that all of the right elements are accounted for in the preference center and provides a guideline for reporting.

Tip 4: Viewing from the customer’s perspective. Companies must think about building preference centers from the customer’s (user’s) perspective. Avoid internal language and make sure the preference choices are clear and descriptive. The content within the preference center is important to the center’s effectiveness in decreasing opt-outs and increasing opt-ins.

In conclusion, keep in mind that preference centers enable you to deliver truly personalized offers, communications, and experiences. These, in turn, will drive significant increases in response to cross-sell offers, new product introductions, and loyalty-building initiatives.

“As our markets become increasingly fragmented on interests and needs, delivering the right message at the right time in the right way will be impossible without a solid preference management practice,” said Denice Hasty, Comcast’s SVP of consumer marketing.

Pizza Hut: Preference Driven Communications and Pizzas

The Challenge: Many companies capture large quantities of customer data. But few use the data to deliver a competitively differentiating customer experience.

Pizza Hut is asking customers to provide their preferences and using that information to deliver preference driven communications and pizzas.

Recently, Pizza Hut shifted to more personalized customer interactions by segmenting its customer base into 6,000+ groups based on characteristics, purchase tendencies, and behavioral indicators. Juliana Lim, Senior Marketing Director for Pizza Hut, says, "We now run targeted campaigns built with intelligence around customers' preferred product categories, typical purchase times and channels of choice”. 

Here’s an overview:

	Pizza Hut provided customers with a registration process to define their personal communication and pizza preferences and delivery instructions.
	Customers can order online, via traditional call-in, via a mobile site, and even via an ordering app on an Xbox 360® system.

Online registration allows customers to get exclusive deals, save “fast favs” for quick reorders, and even set pre-orders for up to 7 days ahead.

Compared with Pizza Hut's former bulk promotions, this new preference driven communication process has generated:

	A 200% jump in average campaign hit rates across customer segments,
	A 38% improvement in Pizza Hut's customer retention rate,
	A 9% increase in customer visit/purchase frequency in just seven months,
	Up to 6% extra sales generated every month since the program started.

Findings from research conducted by our company ERDM, indicate that today’s savvy online shoppers understand that in order to receive more personalized offers and communications, they must provide more detailed personal preference information. If they trust the brand… they are willing to provide preference data in order to receive a significantly improved customer experience.

Additional research findings regarding preference based engagement and why consumers see it as a benefit:

	They receive fewer communications that are not relevant.
	Provides the flexibility to change their preferences as their needs or situations change.
	Increases their awareness of product, offer and ordering options.
	Allows them to spend less time looking for products.

Takeaways

» Personalization is perceived as a service. Customers want the ability to set personalization preferences. So, tell your customers that true personalization is available and the benefits they will experience.

» Customers want to be involved in their experience with your company. Customers want to contribute to, and define their relationship with your company. Make it easy for them to do so.

» Consumers recognize that in order to receive relevant information, they must share increasing amounts of information regarding personalization and preferences. By providing a way for customers to tell you what they want from your company they will be more likely to open, engage with, and respond to, communications and offers.

40% of Customers Buy More with Personalized Messaging

The Challenge: If you are not creating a personalized preference-driven experience for your customers, they’ll go looking for that type of experience--with your competitors.

According to a study by MyBuys , an e-tailing group, 40% of respondents stated that they buy more from retailers that personalize their shopping experience across channels. Addtitonally:

  41% buy more from retailers that send them personalized emails

  39% buy more from retailers that personalize Web recommendations.

The study noted that the practice of tailoring offers and promotions to consumers based on their past shopping or browsing experiences appears to increase buyer readiness, engagement, and sales activity. These findings are reinforced by sales data from MyBuys' database of some 250 million shoppers: Customer-centric marketing delivers a 25% increase in total online sales and a 300% improvement in customer lifetime value, according to the company.

Guitar Center, the world's largest retailer of musical instruments, not only understands the value of personalized customer service and engagement marketing, they’ve actually won the “Customer Engagement Award” from Retail TouchPoints, for embracing customer engagement and implementing solutions and services that are actively getting customers involved in their own experience and buying process, while improving their bottom line.

In addition to allowing customers total access to all instruments in the store, the ability to interact with industry professionals, and a chance to take their amateur talents to the next level, to the company also endeavored to improve the in-store customer experience even more by introducing, the “Find an Expert” profile pages. On these web pages customers can search for employee/experts online by location and store to develop dialogs and working relationships with these Guitar Center, (GC), experts based on similar musical tastes and interests. Customers can regularly engage with GC experts via email, through their blogs, and in-store. Additionally, in 2012 the company introduced a Music Mentor Series, an unprecedented company-wide platform that gives customers the ability to advance and enhance their musical pursuits, right in their own communities. Activities for the Music Mentor series included free music lessons.

Key Takeaways:

•	Differentiate your company by providing personalized experiences, communications, and offers.
•	Provide clear ways of showing customers that you're listening to their feedback and creating personalized experiences. This will reinforce ongoing participation by customers.
•	Personalized follow-up emails that detail items or events specific to the customers’ interests and buying history are value-added triggers that are welcomed by customers.

4 Tips for Earning Consumer Preference Data

The Challenge: Marketers everywhere are fighting an uphill battle: trying to deliver more personalized communications but lacking the accurate data to do so. Without that information marketers are still stuck sending ‘Spray and Pray’ blasts of email.

According to Toronto-based anti-spam filtering and web security services provider, Perimetic, “roughly 130 billion spam emails are sent, worldwide, per day, accounting for roughly 70% of global emailing activity.”

The goal of consumer-provided preference data is to deliver personally relevant offers, communications, and experiences. However instead of making consumers comfortable with sharing personal information, the ‘Spray and Pray’ practices of marketers have caused consumers not to trust them. This certainly applies to providing them with personal information.

Based on Voice of Customer research conducted by our firm, we have learned that there are 4 ways that brands can earn consumer preference data. These findings were consistent across B2B and B2C research.

4 Key Takeaways for Marketers:

1. Demonstrate to Consumers That You’ll Safeguard Their Information and Use it in a Responsible Way.
Successfully doing so requires that you follow two important steps:

•  One, promise consumers that you’ll safeguard their personal preferences by assuring them at each stage of the sign-up process and in all subsequent messages.

•  Two, follow through on that promise.

Violating these steps can do serious harm to brands. Conversely, demonstrating that you’re trustworthy will only help to strengthen the consumer-brand relationship.

2. Assure Consumers That “Responsible” Means That You’ll Never Rent or Sell Their Information to Third Parties.
This assurance cannot be subtle: it must be undeniable.

Email Marketing Services Provider, MailChimp, offers a great example of this. The message on their website support page is plain and unmistakable: “MailChimp does not provide, sell, share, or rent lists. Ever.”

It’s that kind of conciseness that puts consumers’ minds at ease. Do it.

3. Honor Consumer Expectations That Preference Data Will Be Used to Drive Increasingly Targeted Offers.
Aligning your brand with this expectation requires that you demonstrate your commitment to honor expectations from the outset of a relationship.

Boston Store’s Fashion and Sales News email sign-up form requests customers to provide the store with 10 essential preference criteria, thereby assuring customers that they’ll only receive relevant offers.

We applaud Boston Store for using detailed preference criteria to deliver a more personal experience.

4. Clearly Demonstrate to the Consumer That You’re Working to Provide an Improved Experience With Their Preference Information.
If value is not obvious, consumers will assume that you’ve betrayed their trust.

This expectation of relevance applies to both online and offline experiences and communications. Be sure that you’re demonstrating the value to the consumer consistently and over time. There’s a lot of bad history you need to overcome.

We urge you to test these 4 Tips. Per the experience of our clients, your customers will reward you with increased loyalty and sales.

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.