Customer delight can be worse than a baby bonus

December 20, 2011 By Leave a Comment

Recently there was much ado in Australia as the Federal Government slightly reduced (less than 10%) the amount of money that it gives to new parents: the so called Baby Bonus. The reduction in this grant has caused a lot of dissatisfaction in the community. Could your customer delight program cause a similar backlash?

Customer Delight can be counter-productive

Introduced about 5 years ago the $5,400 baby bonus was given to parents on the birth of each child and was seen as a true bonus by families who had no prior expectation of receiving it. However, that was when the world economy was not on the financial edge and Federal Government finances were flush. At the time, at the Federal Government level, Australia had a net government surplus, i.e. cash in the bank. Almost unheard of in the Western world.

Well times change and in the November mini-budget the government cut the amount to $5,000 and the media was full of unhappy people: it’s just not fair they shouted in chorus. “How dare the Government take my money”. How did we go from voters delighted at an unexpected windfall to voters decrying the government taking what is “rightfully mine”?

Now it’s fair to say that there may have been a level of media beat up in the response to this announcement but it doesn’t mean that there was no impact on the perception of government.

The problem that the Government faced is very similar to the one that many customer loyalty programs suffer. One you get a customer used to a certain level of service or functionality it is very difficult to reduce that level without backlash and dissatisfaction.

If you give them a Gold Card with exclusive benefits because they travel X thousand miles a year they will love you but try taking it away when they change jobs and only travel twice a year.

What is the solution?

I think that the current mantra to delight the customer is over rated and most organizations are unable to convert the idea into a reliable process [1]. More importantly delighted customers have their basic expectations upgraded and are less satisfied and loyal if you try to return to the previous level of service.

Even though I do not subscribe to all the points made in “Stop Trying to Delight your Customers” I do agree with the concept that delivering your core offering efficiently, accurately and consistently is key to long-term success.

Why do I buy from Amazon: because they deliver on the core requirements and make it easy.

If I want a book I can be 99% sure that Amazon will have it. When I find it I know that I can buy it with one click and have it delivered in hard copy in a few days (I live in Australia) or instantly via Kindle. Total time to complete the task, maybe  30 seconds. Really, there is no delight in the process but there is loads of competent, easy to use, service offering.

Customer delight may seem like a good idea but you are more likely to generate long-term, loyal customers by consistently delivering your core offering and making it easy for your customer. Plus it is a lot easy to implement than customer delight.

More Information

Customer Loyalty Program Health Check

Even the best and most effective customer loyalty programs need to be monitored and assessed on a regular basis to ensure they are operating at peak effectiveness. See our Customer Loyalty Program Health Check for a check-up on your program.

 

 

[1] If you can’t convert an idea into a process it has no place in business. While it’s nice to believe that every employee is an individual and can star in their own right and in their own way, it’s not practical, scalable or fair. How can it be fair to exhort staff to delight customers but not give them any way to reliably to do it or measure their success?

By Adam Ramshaw

 

Filed Under: Customer Loyalty Management, Customer Strategy Tagged With:

Protecting Customers from your Marketing

September 27, 2011 By Leave a Comment

“Capturing Customers”, “Luring Customers”, “Attracting Customers” and “Keeping Customers” are all terms used daily in marketing departments.  They invoke images of carefully prepared fly patterns, practiced casts and the adrenalin of a good strike, ending with the satisfaction of a catch of the legal size, a ‘keeper’.

Many organisations view customers in the same way that the fishing industry viewed Atlantic fish stocks.  Stay with me I’ll make this work.

Some marketers, (not you gentle reader) allow various product managers to fish the same customer waters day in day out.  They use nets, lines, perhaps even explosives,in fact  any technique they can to catch all the fish they can for their product line. Large fish, small fish, dolphins and seals, no matter, the sheer weight of fish is all that matters, catch them and the folks in accounts or risk management can sort them out later.

But it can’t go on forever and interesting things happen as fish stocks deplete.

The fish get smarter, other fishermen take too many fish, whatever the reason; basically the fish get harder to catch and the expense per fish climbs. Successful fishing campaigns become rare and marketing more superstitious as ‘luck’ starts to play an increasingly important role in determining which Product Manager gets the good haul. Internal competition for access to the schools of customers increases and increasingly intense fishing worsens the yields.

Sometimes marginal species are harvested in a, short-sighted, effort to keep the canning lines busy; the aquatic equivalent of aggressive discount programs.

Product Managers lobby for increased and more elaborate fishing rigs as they range further and further, perhaps even targeting species considered commercially marginal in the past.

If we are lucky, at some point, governments, alarmed by the threat to their fishing industries, step in. They appoint a governing body to preserve breeding stocks by limiting:

  • the number of product managers allowed to chase the fish,
  • the techniques they use and
  • the times of year they can operate.

Old and inefficient ships are mothballed, replaced with more efficient technology that reduces collateral damage to the customers.

As a group they legislate the number of campaigns allowed and the quality of the fish allowed in a catch.

Importantly they crack down on rouge product managers with “exciting new ways to catch fish” because the problem is not acquisition as much as it is sustained, quality yields. Poaching can ruin decades of planning so all parties sign treaties and help stop uncoordinated campaigns to unsuspecting customers.

They do NOT do this by relying on the self-restraint and self-regulation of individual ship-owning fishermen (product managers). Each and every one of who will insist that the other fishers show restraint first.

Enough fishing

Who “owns” the customer interactions in your company, who makes the rules that govern who does what to whom and when? Marketing? Sales? Accounts Receivables? Branch or Store Managers?

The real objective of defining customer ownership inside the organisation is to allow the enterprise to treat its customers rationally. If your answer is “all of the above”, you run the risk of looking irrational to your customers and overfishing your customer base.

There is nothing rational in offering me a credit card upgrade that is not available when I call the toll-free number provided. It is irrational to offer me a home equity loan and an increased credit card limit in the same mail delivery.  There is nothing rational about writing to me to combine my gas and electricity accounts into one with you when I already have. But I have received these within the last 30 days.

Customer Governor

So the question is; who is ensuring that you act rationally with your customer base and you don’t ruin your long term business?

One answer is establishing the role of Customer Governor, a person or team that researches your customers.  Your organisation needs to understand:

  • customer needs and behaviours,
  • the level of fishing they can sustain before costs exceed the value of the catch and
  • how to profitably sustain the long term relationship between them and your company.

And then sets rules defining customer interaction that are understood, followed and enforced within the company.

The Customer Governor takes on this role and ensures that long term value for the company is maintained and built over time, not squandered.

Customer Experience Management

If you’re looking to implement a customer experience management project why not start by downloading our free 4 Steps to Great Customer Experience Management report.

 

Filed Under: Customer Loyalty Management, Customer Strategy

Managing Customer Loyalty: It has always been about listening and remembering

September 14, 2011 By Leave a Comment

customer loyalty is about remembering“If you strip away all the hype around how to ‘do’ relationships, you are left with one simple concept. The real essence of a relationship is simply a memory of past interactions.” [1]

Learning is at the heart of customer loyalty management and has been ever since the empirical work of Reichheld [2] (and others) in the early 1990’s showed that customer loyalty is directly related to corporate profits. Learning about customers and remembering them is central to the task of managing customer relationships.

Looking back all that way to the pre-Net Promoter Score primordial haze; Reichheld found 3 loyalty effects, each highly correlated with profitability,

The relationship between Customer and Employee loyalty is particularly relevant to loyalty management success, though it takes a longer term view of customer value.

Reichheld wrote that the profit rich relationship between long term employees and loyal customers is a virtuous and self-supporting one; long term employees serving the same customers, over time grow to learn each other’s needs and preferences and establish a self improving relationship.

Just as long term friends and couples begin to intuitively accommodate each other and do not have to repeat their preferences endlessly, good companies learn and remember their customer’s needs and wants and what happened last time we talked.

If the critical ability is to learn customer needs and remember interactions, think for a moment what it means to the customer relationship when we do not know in the branch what our customer did with the call centre yesterday or on the web last night.

This is the same behaviour as a colleague who recognises you at the office but ignores you in the bar, and forgets every third conversation you have with him. It is impossible to have a positive relationship with such a person, or a company that behaves in the same way.

What should you remember?

Some simplistic thoughts on the requirements for good service “memory”; firstly, the learning process should focus on those attributes of the customer that relate to profit. This includes;

  • actual and potential values of the customer, together called the customer’s life time value. This helps you select the investment that should be made with each customer.
  • propensity of the customer to respond to your various marketing tools and channels. Knowing this customer “inclination to collaborate” helps reduce waste. ‘Response propensity models’ take time to build, especially if you have not implemented a campaign automation platform, so do not throw away any old campaign response data.
  • typical behaviour of the customer; generally the number and time between transactions, the size of the transactions.
  • financial risk; the likelihood that this customer will cost you money.

You should also learn the things that are important to the customer;

  • Knowing customer needs allows you to deliver the most valuable of all relationship values, relevance. Customer relevant marketing is more effective, less wasteful and strengthens relationships as it demonstrates you have remembered what customers have been telling you.
  • Their preferred channel of service and communication and (importantly) what the customer considers to be good service. Not all customers want personal attention, some prefer it. One size does not fit all in service any more than it does in product design or marketing.

It is during service interactions that the most learning should occur, especially since customers rate reliability as the most important factor in good service. Reliability is about keeping service and product promises and builds trust, a prerequisite for positive relationships.

It is here that Transactional NPS helps make sure your processes are implementing what you know your customers are expecting you to remember.

Getting Help

Genroe offer a Customer Loyalty Program Health Check that covers all of these areas and provides independent, practical advice on how to improve your customer loyalty program.  For more information, please contact us.

 

Net Promoter, Net Promoter Score and NPS are registered trademarks of Bain & Company, Inc., Satmetrix Systems, Inc., and Fred Reichheld.

[1] Greenberg , P. “CRM at the Speed of Light” quoting Michael Simpson. McGraw Hill 2002

[2] Reichheld, F. “The Loyalty Effect”

Filed Under: Customer Experience Management, Customer Loyalty Management, Net Promoter Score

Customer Loyalty Programs: 5 items for your next grease and oil change

August 19, 2011 By Leave a Comment

We all know what we want from our customer loyalty programs; more, and more profitable, customers.  The trouble is that customers are notoriously fickle, changeable, arbitrary, and our lifeblood.

What worked last month may not work today.

So Loyalty Programs need regular check-ups to make sure they are still achieving their objectives – in just the same way you need to regularly check and service your high performance automobile.

In fact, I sometimes think all Marketing professionals should drive old exotic sports cars, to get a feel for how much tinkering is required to keep relationship marketing initiatives on the road!

So here are five things you should check when you raise the hood of your Customer Loyalty Program;

1. Is it still mechanically sound? Brakes, steering, fluid levels all OK?

It’s easy to assume that because there are no rattles that nothing has fallen off.  However, a quiet customer is sometimes an absent customer, so regularly run through the program operations. For example, though programs vary widely, make sure you are meeting member expectations in yours;

  • Point balances accurate and timely
  • redemptions being fulfilled in a reasonable time
  • web site availability close to 100%
  • if you have earn partners, what percentage of their points are ‘missed points’ claims from customers
  • how long are welcome packs taking to get to new members
  • is my cost per point for the program steady, in my comfort range
  • are my operator SLAs all being measured, reported and met…

Make sure ‘BAU’ does mean ‘Business as Usual’, not ‘Best Are Upset’.

2. Is the ignition system still tuned correctly?

Poorly tuned programs can cost you money by rewarding the ‘wrong’ behaviours. This comes about as prices creep, or sometimes just because the program has succeeded in distilling membership to your loyal and committed customers. When this happens, tier thresholds stop becoming aspirational and start rewarding customer’s regular behaviour.  Worse still, tier advancement and privileges become an entitlement in the eyes of the member, not a thank you for a stretch.

You end up paying more for business you stood a good chance of getting anyway.

Even if your program does not have membership tiers, reward thresholds are subject to the same ‘bracket creep’, and should be reviewed regularly.

Thank Mr Pareto and plot your members into a curve by their value and the percentage of your business they represent.  Make explicit decisions about what percentage of your customers you want to reward and by how much.  Then recalibrate tier thresholds and reward point values. Build in planned value ‘stretches’ where customer types change to encourage members on the ‘cusp’ to spend a little more to achieve the next level/reward.

This is the loyalty program equivalent of the ignition timing light in that exotic sports car.

3. What is your fuel economy?

It is not always easy to measure the mileage you are getting from your customer loyalty program. Proving which action caused customers to stay and spend is difficult. But you do need a fuel flow meter on your program or inevitably the accounting types will question why you don’t take the bus instead.

For Loyalty Programs the flow meter is generally the measure of customer churn and the potential value that a customer who leaves takes with them. Customer Lifetime value measures that look at member retention, segment population and average member value allow us to take a snapshot of the current value of current & future customer cash flow (in today’s dollars), just like a Balance Sheet takes a snapshot of the companies physical assets.

These snapshots, compared over time show the impact your relationship marketing investment is having on member value.

For a more direct measure, or if customer churn is not an issue for you, calculate the sales lift that is required to pay for the program operation and relate this figure to the relative spending of customers who have redeemed in your program versus those who have not in the last X months (determined by your customers shopping frequency). If the difference covers the sales lift required, you have evidence the program is paying its way.

4. Does the car still look good? Paint and body work perfect?

The more a member has to do to earn rewards in your program, i.e. the more valuable the customer, the more important it is that the rewards include status, recognition, and exclusivity. Would your Platinum members be proud to pull your membership card from their wallet? Is your program an MG or a Ferrari? Which image would your target customers prefer; driving cap or helmet?

What others are saying about the program and its image is growing in importance, so a social media strategy is now a critical factor in Loyalty Program success for the members most interested in membership as a badge.

5. And finally, the most important question; is it still fun to drive?

Are customers actively accumulating and spending your currency, joining in your facebook discussions, redeeming  a mix of your rewards (versus cash back)?
Some measures of customer engagement are important to monitor;

  • New enrolments
  • Redemption rates and time to first redemption
  • Points breakage rates and average life of a point
  • Dead spots in the reward catalogue (if you have one)
  • Participation rates in feedback requests

If these measures are falling, perhaps it’s time to think about that super charger or more comfortable suspension?

Getting Help

Genroe offer a Customer Loyalty Program Health Check that covers all of these areas and provides independent, practical advice on how to improve your customer loyalty program.  For more information, please contact us.

Filed Under: Best Practices, Customer Loyalty Management, Customer Strategy

The 7 Critical Factors for Interactive Marketing Success

August 2, 2011 By 1 Comment

interactive marketing critical success factorsInteractive marketing is a relatively new feature on the marketing and customer management landscape.  It is only with the relatively recent advances in software tools that this dramatically more effective way to market to prospects and customers has come within the reach of most organisations.

And be assured that interactive marketing (also called trigger or event based marketing) can drive dramatic results: conversion rates of 45%, 35% reductions in direct marketing costs are just the tip of the iceberg.

However, to be successful there are five critical success factors that you need to consider.

1. Have The Right Technology

To implement trigger based marketing successfully you will require a base level of technology:

  • The ability to monitor customer behaviour via a customer database of some type
  • The ability to decide what to do; this needs a real time, rules based decisioning engine
  • The ability to execute in a timely fashion
    • Campaign management software
    • Email marketing automation software
    • Ability to input to face to face / contact centre channel
  • The ability to report on what happened

These really are the basic requirements.  With the advent of cloud based services like Aprimo, and Infusionsoft it doesn’t have to cost a fortune but you do need it.

2. Match the channel to the trigger

For instance if you are using analytics based triggers then you should use an automated channel; email or direct mail.  If you try to use a person based channel your staff will have problems believing in the trigger.  That lack of belief will impact on their ability to deliver the treatment with conviction.

On the other hand if you have a rules based trigger that can be explained to staff then they can be very passionate in delivery.

3. Inbound channels – pre-think the action

If you are using your inbound contact centre to deliver the response then you need to be “action based” in your treatment description.  You are not being fair to your inbound staff if you give them the trigger information but not how to react to the trigger.  This is because they do not have the time to review the customer record and devise a response to the trigger while on the call.

For instance, if a customer has made a large deposit in their transaction account don’t provide that information to staff.  Instead, include a note in the customer’s record that the agent should “update client on new term deposit rates.”

4. Speed / Timing

The effective lifetime of an event based marketing trigger can often be measure in hours if not minutes so you must automate the process and drive down cycle time.

When triggering an abandoned shopping cart email, you need to think about how long the person stays in the market for your product.  If you delay your treatment (email or outbound call) too long, the purchase may have already been made from your competitor.

5. Measurement

“Proving results to the executive team to garner support and budget” was the biggest challenge faced by business to consumer marketers in a recent Forrester report [1].  It just as important to measure success in interactive marketing as it is for all the rest of your marketing.

Unfortunately interactive marketing makes the measurement process harder.  This is because campaigns no longer have clearly defined launch, response and report events.  Instead a campaign may run for years with 50 executions a day.  Over a year that mounts up to almost 20,000 interactions and associated costs.

I don’t think it is any coincidence that the second biggest challenges for marketers in that same Forrester research was “Staffing marketing programs sufficiently”.  If you don’t prove the value of interactive marketing process they are not likely to continue to fund the program.

6. Dedicated Team (Update)

To improve your chances of success you should also set up a dedicated team within your organisation to have end to end oversight of the process.  From idea generation through to trigger implementation, a single team can bring focus to your efforts.

This is not to say that the team is solely responsible for success, all of the relevant functions in the organisation should be supporting the work of the trigger team and have relevant KPIs to match.

7. Focus first on the big wins (Update)

While there may be lots of trigger campaigns that you can implement, you should focus first on those that offer the biggest bang.  This ensures that management sit up and take notice of the work that is being done and support it with additional resources, as required.

You may even extend this approach to selecting opportunities that have a better big picture win if smaller ROI.  For instance choose projects that provide by revenue or gross margin gains over smaller volume but higher net ROI projects.  In terms of getting noticed, putting a big chunk of revenue on the bottom line will almost have more impact than a smaller revenue but higher net ROI project.

Thanks

Thanks go to Emilio Scatalani for suggesting items 6 and 7 in this list.

Free Download

If you’re new to trigger based marketing why not download our free “Implementing Trigger-based Marketing to Drive Customer Loyalty” presentation.  It has lots of success statistics and is a good introduction to this valuable approach.

[1] “How Interactive Marketers Should Rethink Traditional Approaches To Campaign Management”, Forrester, June 2011

By Adam Ramshaw

Filed Under: Customer Loyalty Management, Customer Retention, Customer Strategy, Marketing Automation
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