‘Tis the Season to Ruffle Some Feathers

September-October is typically the time that most organizations begin their strategic planning process.  Most will focus on answering the following questions:

• Where are we now? (current state)
• Where are we going? (future state)
• How will we get there? (strategy & tactics)
• What resources will we need? (people, money, technology, etc)
• Who will do what? (strategy owners, participants, etc.)
• How will we know when we get there? (measures of progress)

Many will follow a process that looks something like this:

1. Gather necessary data
2. Discuss process, expectations, and strategy prior to developing plan
3. Planning meetings or retreat to develop strategic/action plan(s)
4. Build process/reports to measure progress toward plan

Pretty standard stuff, eh?  With any process, the success of each step relies on how well you complete the prior step.  If you do a poor job of data gathering, then your whole plan could be suspect.  When it comes to gathering data about your customers, it’s not just the ‘gathering’ that is critical.  It’s also what you are gathering in the way of quality data that is most critical.

Question Your Customer Data and Definitions

Each organization has some standard customer data and metrics.  If your company has been around a while (> 3 years), it’s time to question the accuracy and source of the data, and what is really meant by all those fancy terms you use when discussing customers:

• Take the time to understand how you calculate customer growth, retention, or profitability, and to see if adjustments are needed.  Many times data sources are inappropriate or the method of calculation needs to be adjusted.
• Review your customer data to confirm that your metrics have the right mix of leading (predicting performance) and lagging indicators (measures performance).  Does an increase in satisfaction or Net Promoter score correlate to an increase in customers, or revenue, or profit? Do you know what causes those measures to go up or down, and what changes to make?
• Define those terms everyone uses, but not all agree on the definition – such as customer experience, customer insight, or social media strategy.
• Challenge widely held customer “beliefs” to see if they are true for your organization.  For example, does it really cost you six times as much to acquire a customer as to keep one?

Take nothing for granted.  Challenge your data, your assumptions, and your beliefs about customers.  It may ruffle some feathers for some people, but failing to do so can turn your strategic plan into nothing more than a 3-ring binder that serves as a hefty bookend on your bookcase.  BTW – do we still print strategic plans?

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What Divorce and Customer Loss Have In Common

Stop Believing What Your Customers Tell You

A recent article on Marketing Sherpa demonstrated the difference between what companies (vendors) believe are the reasons customers leave, and the real reasons customers leave.  While companies cite pricing as the top reason, customers say they really leave because of customer service.

Why the Difference?

The article sights two great reasons for this difference.  First, since it’s usually sales reps that report the loss, it’s easier to report price as the issue since it’s beyond their control.  Second, it’s easier for customers to claim price as the issue as it’s harder to dispute and doesn’t cast blame on sales.

Divorce and Customer Loss

I can’t find the exact study, but when asked why a couple is divorcing, an often cited reason is financial stress.  When researchers dove deeper with the individuals to get to the real reason for the divorce it’s usually not financial.  It’s just that it’s easier to say that, it’s less embarrassing than stating infidelity or abuse as the reason.  Same thing is happening here.  It’s just easier to use price as the excuse.

It’s hard for a customer to tell you straight-up that it is poor service that pushed them to leave.  It’s hard because that kind of information may lead to confrontation, defensiveness, or hurt feelings with the sales rep.  These are all experiences the customer doesn’t want to pile on top of their existing frustration with your company.

More Proof

As a customer researcher, I am often able to show companies that their beliefs around customer loss are just not real.  By conducting customer satisfaction interviews in the B2B space I have often showed clients that service and support were significant issues for clients. It can come as a shock since the company previously believed they had no problem with their sales and support staff.

In working with credit unions and member (customer) loss, you will find that many members will cite “moved out of area” as a primary reason for leaving the credit union.  Now I know the housing crunch is brutal, but there really are not that many people moving out of the service area of the credit union.  It’s just easier to give that reason when you are face-to-face with the teller when you go in to close your account.

Good News, Bad News

As the article states, the good news is that customers are less likely to leave because of price.  Also, excellent customer service can lead to stronger customer loyalty and a price premium for your company.  The bad news – if you don’t really know what your customers think of your customer service you may be headed for a trial separation or a divorce…

How to Get Rave Reviews on Your Customer Reviews

It’s no surprise that a customer will eagerly look for a review or a recommendation prior to making a purchase.  It’s not a surprise either that the Internet has made that so easy.  Nielsen tells us that consumer recommendations are the most credible form of advertising.  78% of us trust consumer recommendations above any other form of advertising.  What I find more interesting is that only 61% of us trust consumer opinions posted online – a 17% difference.

Why the difference you ask?  Even if you didn’t ask, here is my take:

“It comes down to trust, and the most trusted source for information about a company and it’s products for consumers comes from someone like themselves. (AdAge)”

So the key to getting rave reviews on your customer reviews rests in your ability to provide customers the ability to determine how much the review writer is like themselves.  So some do’s and don’ts:

Don’t:

• Have your marketing people write your reviews, or put up a “sponsored” review that reads like a marketing message.  Consumers can see through that “overly glowing” review and will not trust other positive reviews on your site, or any other messaging for that matter.
• Remove negative reviews from your website.  Consumers understand that not all reviews will be positive.  Have no negative reviews can often raise warning flags.  Let customers see the nature and content of the negative reviews.  Give your customers credit for their ability to discern what is fair.
• Don’t reply to negative reviews with excuses.  Instead, reply by acknowledging the customers complaint and respond with a fair solution.

Do:

• Summarize the scoring of your reviews and let customers see the distribution of reviews.  Let them see if all reviews were 5’s and 4’s or if they were all 5’s and 1’s.  These two views of customers reviews for video game consoles tell different stories.  The one for the Wii has a much higher percentage of 5’s and 4’s and a lower percentage of 1’s than the one for the Xbox.

• Let reviewers tell customers a little about themselves so the customer can know how much the reviewer is “like themselves.”  Your products/services can’t be all things to all people.  The review format from Sierra Trading Post does a nice job of letting a customer know more about the reviewer by asking them to describe themselves and their “gear” style.

• Let customers vote on reviewers content, as well a flag potentially problematic reviews for things such as profanity, spam, duplication, content problems, etc.
• Use customer reviews to improve your product/services, and let customers know it was their reviews that helped.

Remember to focus on building trust, demonstrating transparency, and being an advocacte for your customers (doing what’s best for your customers) and you’ll be well on your way to getting 5 stars for your reviews.

PR: wait… I: wait… L: wait… LD: wait… I: wait… wait… C: wait… SD: wait…

Why Customers May Never Care About Your Corporate Social Responsibility (CSR)

A few interesting studies have been released recently that look at the “Green or Corporate Social Responsibility Movement.” I like to focus on how it impacts customers. So a few recent stats to consider:

1. Your messaging isn’t memorable. Over 70% of North Americans are interested in the CSR of the brands they buy, but most can’t identify which brands are socially responsible. (The Shift Report)
2. Your messaging isn’t believable. 12% of consumers “seldom or never” believe green claims, while 65% will believe green claims “some of the time”. (Burst Online Insights)
3. We don’t know what “Green” really means. Almost 50% of us believe that products marketed as “Green” or “Environmentally Friendly” have a positive (i.e., beneficial) impact on the environment. Turns out that green or environmentaly friendly products are only about being less harmful than prior versions or competing products. Only 22% of us understand this distinction. (2008 Green Gap Survey)

So it’s still a bit early in the CSR movement and the road to success isn’t fully paved, and some confusion in the market is expected. But a general lack of trust from customers in advertising claims and corporate motivations isn’t going to help. Corporations are still focused on the single bottom line of profit, versus the triple bottom line of CSR (profit, people, and planet).

Why isn’t your messaging memorable? Beyond the general skepticism out there, CSR messaging often misses because customers “don’t get it,” as it doesn’t fit with the profile or strategy of the business. It’s what Jim Collins refers to as the distinction between “inputs and outputs of greatness” in his Good to Great for the Social Sectors. Most businesses focus on the input (“how much money do we make per dollar of invested capital?”), but to be memorable, businesses need to focus on the outputs (“how effectively do we deliver on our mission and make a distinctive impact, relative to our resources?”).

Being a good corporate citizen requires CSR efforts that typically fall into one of five areas:

1. Responsible business practices
2. Environmental initiatives
3. Cause marketing
4. Corporate giving (philanthropy)
5. Employee engagement & volunteerism.

All of these efforts impact customers’ perceptions and attitudes. But they need to fit the profile and strategy of the business. It’s not good enough to do these things just for the sake of doing them. Well, it’s certainly better than not doing them. For CSR to be sustainable it needs to be part of the DNA of the business. Drug companies need to partner with the organizations that help those with the diseases their drugs target. Auto part chain stores need to be involved in driver education so we have fewer accidents. Home builders need to partner with organizations that help the homeless. Credit Unions and banks should foster financial literacy/education in our schools and communities. It’s about making a difference at the root cause of an issue that a company and it’s employees have both the knowledge and desire to get behind. These CSR strategies fit the company profile, consumers will “get it” and feel their purchases will have an impact beyond the business’s profit motivation.

In the abscence of data, one needs discernement. CSR is a struggle, and most leaders want to see the data that tells them it’s the right thing to do. We don’t have all the data, but deep down a business leader who is any good should know it’s the right thing to do. Anyone can look at data and make a decision, but in the abscence of data, the best leaders of our time have proved their worth through their ability to discern the right decision, the best next step.

Do You Care if a Customer is Still YOUR Customer?

  It turns out that 44% of customers who stopped doing business with a teleco company believed the company didn’t even know. (Study by RightNow & StollzNow).  Turns out most of the defection is due to poor customer service, with the following list of industries as the worst offenders (no real surprises here):

1. telecommunications
2. ISPs
3. finance
4. travel & hospitality
5. online retail
6. insurance & utilities 

ARE THEY STILL A CUSTOMER?  It shouldn’t be too hard to figure out if a customer is still yours.  You have a few metrics in place, and you start looking for trends.  You can look for changes in attitudes, as these are often a leading indicator of behavior.  Look at customer survey data for those who score low.  While high satisfaction scores don’t correlate well with customer retention/loyalty, low satisfaction scores do correlate well with customer defection.

It’s best to concentrate on customer behavior data for the real insights.  A few that have served me well in the past include:

• Changes in RFM (recency, frequency, monetary) patterns
• Customer service usage – frequency of contact, number of complaints, satisfaction with result of contact.
• Product or service usage – changes in usage patterns, using most recent version, contract renewals, service usage vs. payment (using much less than what one is paying for may indicate pending defection)

Companies spend signficant dollars on acqusition, yet for many, customer churn rates remain high.  There may be some customers you no longer wish to keep.  That’s fine, but you need to know how to identify the ones to keep and the ones to “let go,” and the metrics above will help. 

WHAT’S MORE PAINFUL?  The study also found that “almost one third of Australians would rather go to the dentist for a tooth extraction than suffer a poor customer experience!”  Either they have some wonderful dentists in Australia, or really poor customer service…

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Starbucks Has a New (Old) Logo! Will Customers Care?

  I have been participating in the Re-Experiencing Starbucks Project, and this had pushed me to keep a closer eye on the company and the strategy being put into play by returning CEO Howard Shultz.  I was in Starbucks the other day – doing some research – and noticed they have a new logo!  Well, it’s an old logo actually, and you can read more about the Starbucks logo transition here. 

Why the new logo?  The new logo appears to be put into play to match Shultz’s strategy of returning Starbucks to the good ol days of a never-ending focus on the customer.  The strategy is great, but I can’t say the same for changing the logo. 

Will customers care?  Is a logo really that important to customers?  I say, heck yea!  The logo is a graphical representation of the brand.  The brand is a roll-up of everything that creates the customer relationship.  More importantly, a well-executed brand is really just a short-cut to the purchase decision.   Changing the logo can alter the relationship with the customer, and can therefore short-cicrcuit that short-cut to the purchase decision.

For me, seeing that familiar green and black logo triggered a response in my body that told me the rush of caffeine was on it’s way.  I associated the logo with the sensation.  It was recognizable from afar.  I only needed to partially see the logo on a cup to get me thinking about purchasing a Starbucks beverage.  Now the changes to the Starbucks are not huge – a second or two was all it took to know it was still Starbucks, but it just didn’t have the same effect on me.  The all brown logo is just not appealing.  It’s “what brown can’t do for me.”  (P.S. – They also have a new look to their website, and yes, it’s brown)

I think it was a mistake to make the change.  Starbucks is now forcing customers to make a new association in their brain and in their psyche.  It’s not a death sentence to Starbucks by any means, I just think it’s a change that slightly confuses customers.  Really, does any company ever need to add confusion to the customer relationship?

15% of Companies Don’t Want You on Their Email Lists

  As you can see from my last post, I am in the process of changing my email address.  I get emails from about 100 providers – from major and not-so-major online retailers, to industry news providers, to advisory services, to stuff I just find interesting.  It’s been an interesting, enlightening, and at times, a downright scary experience having to make this single change with all these providers. 

Here are the results of my very, very informal tracking of having to change my email address over the last 3 weeks with these 100 service providers:

• 20% are easy and allow me to get to a page to change my email address with one click.  I like this and it’s a pleasant experience.  For many I also noticed that on the same page they have other content I want to know about so I subscribe to more lists.  Nice!
• 25% force me to go through 2 -3 clicks to get to a page to make the change.  Not bad, but I’m getting tired of this.
• 40% require me to logon with a username (often different than my email address) and password. I’ve been on some of these list for 3+ years and I really have no idea what I should use to logon.  So I try some standard combination that works about half the time.  For the other half I need to request my logon info, but it turns out they don’t have me in their database to send me my logon info.  They are happy to send me emails, but have no way of telling me how to continue getting thier emails.  At some point it gets so frustrating I give up and bid them farewell.  It was surprising that some big name retailers and content providers fell into this category.
• 15% don’t even give me an option to change my email address.  It’s either unsubcribe or nothing.  These 15% just don’t want me on their email list.  For 50% of these If I click “unsubscribe” at the bottom of their emails hoping that it might lead me to a page to change my info, the single click results in a real unsubscribe.  For the other half of these, I can’t figure out how to subscribe again so I just give up.  It’s just too much work.  If their content is so good that I feel I am missing it in a month or so I will search them out.  But I have found that those with really good content also have a really good process to manage subscribers.  They have looked at the entire process from their customers point of view.

Lessons Learned:

Test your business’s email subscribe and profile change processes.  Don’t take this asprect of your business for granted.  Make it easy for your subscribers to see how to do it, and get it to one click.  It’s all part of the experience of doing business with you. Many business have significant budgets dedicated to “email marketing” and building their email lists.  Many can do a much better job maintaining their lists and overall customer retention.

One other lesson to note – don’t change your email address… 

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