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Thursday, January 12, 2012
The "Dawn of a New Era". Really?
In its January
2, 2012 issue, Advertising Age, the venerable “voice” of Madison
Avenue proclaimed that we are now at the “dawn of the relationship era”.
This perplexes us
for two reasons. 1) Terry Vavra introduced the concept with a book back in 1992 titled “Aftermarketing:
Keeping Customer for Life through Relationship Marketing”. Hundreds of other books have since
been written on the topic -- so twenty years would be a very long pre-dawn. 2) While we are huge believers
in the importance of word of mouth (resulting from the Total Customer Experience), and its ability to drive brand awareness,
consideration, and purchase intention - - we also see many product categories in which the importance of advertising, product
positioning, promotions, etc. remains critically important.
Consider
this. How often do most people strike up a conversation about, or ask someone for a recommendation regarding categories like
the following?
-Toothpaste - Laundry Detergent - Orange Juice -
Breakfast Cereal - Life Insurance - Frozen Vegetables -
Magazines - Furniture - Gasoline
Probably not very often.
So It’s Not
Quite Time to Bury Traditional Marketing Tools There are hundreds of product categories, generating billions of dollars
of sales each year, which are either too private, too insignificant in price, or simply just not considered meaningful enough
to prompt recommendation-giving or searching for endorsements. Add the thousands of new products being
brought to market each year that need to reach a critical mass of loyal customers before referrals can really get under way
and you begin to recognize that advertising, promotional support, signage, couponing and many other forms of traditional marketing won’t be going away anytime soon.
New Ways to CommunicateOn the other hand,
would you consider staying at a hotel, booking a dinner reservation, or buying a car, a computer, or a smart phone today without
tapping into private or public word of mouth? Probably not. Ad
Age suggests that the traditional center of distributing marketing
messages - the ad agency media department has to be redefined. No longer are the traditional media (TV,
radio, magazines, and newspapers) the only way to spread word about one’s brand. In the world of
relationship marketing, it’s virtually “everything one does and delivers that carries the brand’s message
forward”. The challenge will be that even one’s most delighted customers won’t take the
time to learn details about one’s product, the after-sales service provided, the character of one’s employees,
one’s corporate citizenship, and so much more that can influence a customer’s relationship with a brand.
2:49 pm est
Friday, December 23, 2011
What do you think about NPS (Net Promoter Scoring)?
Some managers love the concept, and some hate it. We
think we might know why.
On the positive side NPS
has taught managers a couple of powerful lessons. First, that mean scores can mask some terrible truths.
Whether you decide it’s more important to measure customer satisfaction (the more traditional approach), or willingness
to recommend (the NPS method), in reality customers don’t keep acting loyally to a brand because they are getting average
performance. They act loyally when they are highly satisfied with the value they are getting -- and they
leave a brand behind when they don’t. Customers who give those middle, average ratings may stick with a brand as the
result of simple inertia, but with just a small catalyst they to will defect. So the NPS analytical method
of subtracting the number of low ratings (0-6) from the number of top-two-box (9-10) ratings, (while leaving those who scored
6-8 out of the calculation) is a much more realistic measure than calculating a mean or average score as satisfaction practitioners
have done for years.
A second highly
positive advantage of NPS is that simply by claiming to be “The Only Number”, or by delivering a single score,
they have brought the customer experience from the dark corridors to the center stage of the nation’s Boardrooms.
What we find damaging is the suggestion that NPS is somehow
so much more robust and meaningful in predicting future buying behavior than other measures of customer intention to repurchase
or satisfaction. We captured all three measures for a number of years and it was always our experience
that the three (satisfaction, intention to repurchase, and willingness to recommend) track in amazing parallel.
More concerning is that we have seen managers believing that a consumer’s response to the “would you recommend?”
question is a measure of word of mouth behavior. As Kumar, Petersen and Leone documented in their study published by
the Harvard Business Review 2007, intention and action are not the same thing. (68% of a financial services
firm’s customers said that they would recommend, only 33% acted. 81% of a telecom firm said they
would recommend, but only 30% did.) And as a result see reliance on NPS leading to poor efforts in managing
customer word of mouth.
What do you think?
11:10 am est
Thursday, November 17, 2011
Why Coke Spends So Much on the Graphics on their Cans
There’s a lot of controversy today regarding the meaning of “customer experience”.
Many retailers claim the experience begins the second the customer walks through their door (and/or enters their website)
and continues until they leave. Those that supply customer service hardware, software and support suggest
that they hold the key to retaining customers and increasing share of category spending through their management of the customer
experience. Still others suggest that customer experience and customer satisfaction
are really the same thing, and therefore explain that success comes to businesses that find the best system to incent employees
to achieve higher scores.
We believe that customers’ future behavior towards
a brand is driven by a TOTAL Customer Experience that includes every touchpoint and multi-sensory, experiential component
within those interactions. Certainly expectations for the experience and importance allocated to each component
vary, but most corporations have yet to even seek a Total and unbiased view of the experience their customers enjoy.
Question
the logic of the multi-sensory components? Consider the hundreds of millions of dollars that some savvy
marketers throw at that part of the experience each year. The feel of sheets on a Westin Hotel Heavenly
bed. The sound of a crunching Dorito. The aroma in the lobby of the Borgata Hotel &
Casino. It all counts in the customer’s Value Equation.
3:43 pm est
Tuesday, October 4, 2011
How Much Is Groupon Worth To Investors?
The long discussed IPO for Groupon seems to have been delayed again. Perhaps it will never
happen. While the concept got a huge amount of media attention at the outset, the idea of selling deeply
discounted products and services, to large numbers of individuals, using social media, can easily be copied. According to
one report there are now some 400 copycat services worldwide. But Groupon was the first and remains the
best known of the services. It has built a category and a brand, and certainly that is worth something.
But perhaps there is problem here that’s more fundamental than the IPO pricing.
Thanks to the internet, Groupon has been able to gain huge exposure. Consumers who would never think
of dining at a particular restaurant or buying an expensive item have become aware and have jumped at the opportunity.
They are buying the deals, often at half price (or better). On their part marketers
have been eager to gain the visibility and the opportunity to introduce new customers to their product or service.
Sounds like a win-win.
But now we hearing of marketers
reporting that the cost is too high, and the payback is too low. While they chased the shiny new object
with the hope of generating hundreds of new customers who would come back again and again and deliver a handsome payback on
the Groupon investment, they are getting: 1) deal seekers who enjoy the experience but don’t return (perhaps moving
on to the next deeply discounted deal), or 2) existing customers who would have been doing business with them anyway, but paying
full price.
Should anyone
be surprised?
8:47 pm edt
Tuesday, September 6, 2011
Software That Manages the Customer Experience. REALLY?
Sometimes there’s not much more that you can
do than laugh. I read an interview recently with the head of a software firm that claims to specialize
in Customer Experience. The CEO opened by taking a shot at his competition: the CRM software providers. He claimed that CRM software
has historically been about sales force automation and contact center or marketing automation. He referred to it as “an
inward-facing business application primarily focused on making company employees more efficient” but “not something
that improves customer satisfaction”.
The CEO then went on to explain how his firm has the core intellectual property that allows
it to anticipate and predict what questions people are going to ask, and how it provides the self-service capability that
allowed people to get immediate answers so they can buy more and so they are more satisfied. If they did need to do an escalation,
he continued, they also provide the agent desktop in the call center. He concluded by explaining that their contact center
solution raises agent productivity by 15%.
If it
weren’t a major corporation presented through a respected website, I would have thought he was joking. Not
that he’s wrong about the CRM software companies, but rather that he is guilty of a similar crime. He’s taken
another popular concept, “Customer Experience”, and force fit it to the software he has to sell. It’s
not that answering customer questions, and providing an escalation process it’s important, but it certainly is far from
the total interactions and experiences that a customer has with a brand.
8:54 am edt
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