Tag Archive for customer retention

Courting a Wary Customer

Deliver Magazine and Sid Liebenson suggest three ways to build and maintain loyal relationships when customers are running scared.

Consumers are retrenching, economizing and just plain scared. But as the saying goes, the pessimist sees difficulty in every opportunity, and the optimist sees opportunity in every difficulty.

The recession presents the perfect opportunity to finetune your marketing efforts that will build loyalty among your current customers. It also is the prime time to go into acquisition mode and attract competitors’ customers to your brand. Here are three ways to do it:

1. Get personal. Consumers are vulnerable in a down market: They’re rethinking their brand loyalties as they look to economize and reconsider what they value in a brand. Keeping your customers means personalizing like you’ve never personalized before.

Mine your data to let your customers know you understand what’s important to them. For example, you might send a message on a catalog overwrap saying, “In the spring, you bought this lightweight cotton sweater from us. Now that it’s fall, here’s what people who bought that sweater are buying now.” This shows you care about what they are thinking, and there’s some logic to what you’re recommending — you’re not selling them something just to sell it.

Your marketing messages need to be not only personalized, but frequent. In a tough economy, it’s common for consumers to question where every penny is going. When they do that, suddenly every relationship is a little at risk. Their question becomes “Am I really getting value from this relationship, or is there something that will satisfy my needs equally for less money?”

2. Don’t make cuts. Now is not the time to scale back on marketing spending. If you don’t stay in touch with your best customers — while they’re continuously exposed to messages from your competitors — the idea of buying your brand gets further from their mind. This is especially true when consumers are already reconsidering their brand loyalty.

In several categories, competitors aren’t marketing as much or they’re reducing campaign frequency. With these cutbacks, some marketing media have become cheaper. If you’re not afraid to spend some money on acquisition, chances are your media costs can be a little more efficient.

3. Show them you care. Empathize with customers to demonstrate you understand what they’re going through during the recession. Health care, for example, is a big concern for consumers right now.

You should always practice good marketing — personalization, appropriate messages, frequent touches — but focus on these things even more to keep your customers with you through the economic crisis. When times are better, you’ll have your core group of customers — and then some.

Restore Old Customers

Traditional customer re-activation strategies are struggling to deliver the results they once did. This has been fueled by cuts in consumer spending and communication channel fragmentation, forcing marketers to develop new approaches. A Target Marketing Magazine article told the stories of innovators who are leveraging customer data, analytical tools and new customer touchpoints to fuel their remarketing efforts with results.

Start With the Basics
The fundamentals haven’t changed. Identify your best customers and the attributes that make them the best. Analyze purchasing trends, patronage patterns and channel usage to bring to light key behavioral characteristics of the ideal candidates.

Don’t stop there. Demographics, wealth data, transactional information and other lists can be used to enrich the customer profile. This information is useful for assessing the value of former customers who had sparse purchase histories but may still be good candidates.

Last, match these reactivation profiles against dormant customer files to “pop” the segments most likely to yield a profitable level of response.

Reactivation efforts most often are targeted at customers who have not shopped or purchased in the last year or more. While these consumers may not be shopping with you, they are buying from someone.

Reactivation Rundown
Reactivation is a form of advanced prospecting. By applying predictive scores to dormant customer files before fielding a reactivation campaign, resources can be prioritized toward those households with the greatest likelihood of response.

A good reactivation strategy encompasses not only who to target, but how to target them. In today’s multichannel environment, opportunities to blend print and other media into an optimum delivery stream for each target segment exist. For example, leads might be generated via a print mail campaign. These leads might then be further qualified using lead scoring and either prioritized for rapid follow-up by phone for high potentials or routed to another channel for less qualified candidates. This blended approach can yield more profitable results. Marketers should choose the medium that optimizes reach and response, according to budget.

Using Predictive Scoring
Aim for a clear view of your best customers. While it is possible, and sometimes economical, to target all former customers, it’s more often the case that a campaign targeting high-value or niche segments produces the best financial results. Focus on predicting who will respond, and then determine the best channel and sequence for the message.

Build New Relationships
A reactivation strategy should include follow-up plans and next steps as well as an outline with how often customers would like to receive communication. Lastly, update files with new customer information and data to ensure future campaigns maximize the information available.

Another Reason for List Hygiene

Deliver Magazine told of a valid reason to regularly scrub mailing lists. Sure, mailings sent to the deceased get responses — but they’re usually from distressed family members commenting on how disrespectful and downright rude the company is for sending it in the first place.

“Not only is this a waste of a company’s time and money, it also can be extremely damaging to a brand, resulting in customers lost rather than gained,” says Kirk Schuh, vice president of marketing delivery services at ARGI, a database marketing company. “Regularly cleansing files must become part of a marketer’s regular list hygiene routine”, Schuh says. “Deceased suppression is a delicate issue,” he adds. “No matter how vigilant marketers are, their lists always can benefit from routine maintenance and enhancement.”

Media Choices

The multitude of media choices available to target and deliver  messages is amazing. And there are more options headed our way. This means that readers are strapped for time and bombarded with marketing communications, great writing alone probably won’t get your messages opened and read. Pat Friesen offered some understanding of how to deliver the message at the right time and in the right place in Target Marketing Magazine.

Tips for delivering maximum impact from a direct marketing writer.

• Don’t be overwhelmed by choices. Remember what’s worked in the past, and test new options that make strategic sense for reaching your audience and meeting your business objectives.

• Apply common sense and basic direct marketing principles. Measure and evaluate results, including initial response, closure rates, average order size (dollars and units), abandon/cancellation rates, lifetime value, etc. Remember, direct marketers track and measure the level of response.

• Cheaper on the front end isn’t necessarily more cost-effective on the back end. Track, measure and compare results.

• Not all media is direct response media … but that doesn’t mean you shouldn’t use it. Public relations, special events, and social media are marketing tools with the power to influence buying decisions. Use them accordingly.

• Don’t put all your eggs in one basket. Even with a successful 15 percent to 20 percent e-mail open rate, you still are not reaching 80 percent to 85 percent of your highly qualified buyers. Common sense dictates using both e-mail and postal mail to maximize results.

• Just because you know your offer is on your Web site or featured in your organization’s magazine, that doesn’t mean your customer knows it. A targeted phone call, e-mail, letter or even a postcard may be appropriate to communicate your offer.

• Not all messages are appropriate for all media. A letter still looks more personal, more valuable and more confidential than e-mail. It’s also less easily “trashed” by mistake or intentionally. If you offer financial services or other products of personal importance (e.g., legal, medical, upscale travel), don’t forgo postal mail for e-mail without testing.

• Put your message with a measurable call to action on your shipping box or packing materials. Create a product insert (not package) that encourages a second purchase. Be creative, be inventive and put your message in multiple places where your customer will see it.

• Some market segments respond better to specific types of media than others. For example, mature audiences 75-plus years old remain more comfortable with postal mail even if they have e-mail addresses.

• Test. Studies, case histories and anecdotal reports confirm that marketers who are most successful across the board using all types of media follow the direct marketer’s mantra of test, test, test.

• Don’t take a message written for one medium and plop it into another without careful review. Be aware that e-newsletters are different than ink-on-paper newsletters. Web ads are read differently than space ads. Readers’ expectations after opening an e-mail are different than after pulling a letter out of an envelope.

• All messages (no matter which type of media delivers them) have hot spots. Know where they are, and use them to your advantage.

• Consider the appropriateness of your media. The media you use for prospecting may not be the same as you use for communicating with your customers.

• Use different media to communicate with different customer segments. Just because you send a personal First Class letter with a 44-cent stamp to the top 20 percent of your customers who generate 80 percent of your sales doesn’t mean you have to mail First Class letters to all your customers.

• Save money; prospect within your own database. Cross-sell, upgrade, reactivate. They are very cost-effective ways to generate new business.

• If you limit yourself to using only one medium, you limit your opportunity for success. The more places consumers see you and the more ways they hear from you, the better they know you, the more they like you and the better they trust you.

• When your contact strategy includes a series of messages, have a strategy for your mix of media. Do what is appropriate for your message, audience and business objective. It could be an initial phone call, followed by a personal letter, then e-mail communications.

• No matter how cheap it is, media isn’t a good investment if it doesn’t generate the cost-effective results you need. Weigh the pros and cons of any media choice including cost, open rates, security concerns, deliverability rates, recipients’ perceptions of the medium, how it supports your brand, etc.

• Timing is as important as the media and message. Factor in time of delivery, holidays, how soon is too soon and how often is too often.

Inexpensive Marketing Maneuvers

Forbes Magazine featured a story about some marketing ideas. Our favorite was to make your customer the star.

Using a classic cooperative strategy, you could create their marketing for them. If you provide services or products to other businesses, can you help them with creative marketing featuring your products. Do you sell framing materials to frame shops, create postcards featuring finished frames.

To feed egos of your customers, feature a few them enjoying your products and services. Make them look really good, help them say smart, witty things or touch on their vanity with great lighting, hair and makeup.

To draw your customers into your creative process, what about a creative writing, illustration or visual contest? The contest could be tied to something new like a product launch and the reward for submitting an entry could be a sample of the new product. Contests are also great opportunities for publicity and free media coverage. Since you really want to stay in touch with your current and past customers, sending them a postcard or letter explaining the contest accomplishes many goals at once.

Five Marketing Steps

A refresher for some of you and perhaps a fresh outlook on some basics.

Step 1: Understand your customer

See other posts about segmentation and definition

Step 2: Create value for your customer

  • Focus on product or service features
  • Enhance the social skills of your employees
  • Use price as an additional customer value
  • Provide credit or payment terms to meet the needs of your customers
  • Enhance the image of your product, service or store
  • Provide service, before and after sale
  • Think of your location as another service for your customer
  • Present convenience
  • Set a mood with the atmosphere of your place of business

Step 3: Communicate your value to your target market

  • Everything you do communicates
  • Word of mouth is critical
  • You never get a second chance to make a first impression
  • Keep it simple

Step 4: Make it easy for the customer to buy

  • Set hours of operation that are convenient for customers
  • Make credit readily available
  • Select convenient locations (for retailers)
  • Find good retail outlets (for manufacturers)
  • Deliver products to customers in a reasonable and timely manner

Step 5: Create long term relationships

Expand Markets And Optimize Costs With Segmentation Strategy Part 3

This is a continuation of Target Marketing Magazine’s article about customer segmentation.

Modeling for Performance

Behavioral models can help you refine campaigns and follow-up marketing by allowing you to predict the likelihood of profit-driving behaviors such as payment, multiple orders and renewal. Model-based, predictive segmentations can be applied in the following ways:

  • Refine descriptive segments to increase campaign impact.
  • Manage campaign costs by eliminating lower-performing groups.
  • Expand market reach by targeting the top-performing groups.
  • Segment incoming orders for fulfillment and upsell by profiling for profitable behaviors.

As an example, imagine that your descriptive Segment Y is statistically more likely to respond to a given offer, but the payment rate for the group is only 50 percent. Let’s say your business requires a 60 percent payment rate on new orders to be profitable. A net payment model can help you identify the individuals (or households) who are more likely to respond and pay within the segment. By subsegmenting the group, you can see that targeting only the top 80 percent of the file is likely to achieve your 60 percent cutoff.

Building a solid model requires that you have results from previous campaigns to that segment and that the modeler has access to a large source of relevant data. The resulting model can dramatically expand the reach of your marketing campaigns and significantly increase ROI by helping you identify and target only the most profitable groups. The result? Your overall mail costs go down because you don’t promote to the entire file, but your net response stays more or less the same and payment goes up. You deliver higher ROI.

Models also can help you expand list populations by letting you mine segments that you haven’t been able to work with before. If you’ve been using on a 60-day selection, the model should let you expand to a 90- or 120-day selection, providing larger universes.

Finally, your models also can work for you in untargeted media or other channels. Models can be applied to responders—or in real time on your site—to help you make decisions about fulfillment, upsell targeting and future marketing contact.

Brand Experience Matters to Consumers More Than Loyalty Clubs

In a recent message from the Harvard Business Review’s Daily Stat, some 52% of people in a survey said their memberships in loyalty clubs (from credit cards, banks, and other companies) influence their buying decisions; but 54% said they’d give up their memberships if they had a negative product or service experience with a brand, according to the Chief Marketing Officer Council. The average U.S. household is enrolled in 14 loyalty and rewards programs.

Can we help you strengthen your ties with your customers? Is there a way that we can help you strengthen your brand?

Pay It Forward

Trendwatching.com posted an extract from The Globe and Mail discussing the trend of helping consumers “feel good”.

“Paying it forward” is an old idea with new life lately. Many different major brands have launched promotional campaigns that blur the line between business and philanthropy.

Benjamin Franklin pioneered the idea more than 200 years ago when he lent a colleague some money on the condition that it be repaid not to Franklin but to someone else in need. Franklin wrote at the time: “This is a trick of mine for doing a deal of good with a little money.”

Maybe the idea caught fire because news of Feel Good Ripples spread due to what Wharton School professor Jonah Berger calls “social contagion,” a mechanism by which consumers and media decide what to pass along. “People like to talk about what is surprising, remarkable and unexpected,” Berger says. “They also like to talk about what makes them look good. Self-interest is a big driver.”

For more hedonistic brands, the experience has been mixed. Starbucks received some positive feedback in the mainstream press, but bloggers sniffed that the whole thing felt contrived. Starbucks customers reported feeling good about themselves when in 2006, news of a pay-it-forward phenomenon at Starbucks drive-throughs began to make the rounds. Customers pulled up to the window only to be told the driver ahead had already paid for their coffee. The cashier then asked if they would like to pay for the customer behind them. These chains of benevolent coffee purchases reportedly carried on unbroken for hours at a stretch (and still do, by some accounts). And that may be the real dividend from initiatives of this type. Berger’s assertion that acts of generosity are driven by self-interest may not be so cynical after all. In other words, if your company can make customers feel good–even in such an oblique fashion as facilitating their philanthropy–the customers are likely to transfer some of that goodwill back to your brand. That’s a “trick” of which Benjamin Franklin might have approved.

Here is a random act of kindness: Dean’s Mailing is offering a free marketing consultation to your favorite charity. This is valued at over $250.00 and will help save money and increase response.

What does your brand stand for?

Deliver Magazine provided some thought provoking questions for many organizations and their marketing teams.

You spend hours crashing through strategy documents, pulling out nuggets of customer insights, determining differentiators in the industry and understanding what it is that makes your corporation unique. And in the end, you have a vision of who and what your company is about. It’s that vision that helps establish relationships with customers, win over prospects and get your company noticed in this increasingly chaotic and fragmented world.

Then, after all of that strategic work, comes the execution part of the marketing plan and you decide to go digital. You send an e-mail — which looks just like any other e-mail in your best customer’s inbox.

Oh, we know, you finely tune the colors to match your brand (despite the fact you can’t calibrate how that color appears on any one monitor) or you include photography and graphics (which don’t download until the users request them) or you include the all-important link to your heavily branded Web site (although fewer than 10 percent click through).

So, maybe it’s not the optimum branding experience, but it’s cheap. Boy, is it cheap. And it’s efficient — you can reach hundreds of thousands, even millions in a single blast — and really, you’re getting the word out there.

Then the economy picks up, but your sales don’t jump as much, and at the next marketing meeting, as you’re puzzling over the numbers, someone asks why your customers aren’t so loyal anymore. What’s happened to that great relationship your brand used to have with them? And there’s a lot of this and that around the table, mutterings about “empowered consumers” and “everything’s a commodity,” and the meeting rolls on. You shrug your shoulders and concentrate on the next campaign. There’s work to do.

We understand. It’s not an uncommon problem. It’s just that, well, you could stand for something. You could put something in your customers’ hands, something branded. Imagine that: those finely tuned colors, the carefully selected images, the perfectly worded summation of what your brand is all about sitting right there in the hands of the people you most want to reach. It’s right there at their fingertips.

And inside that package, something amazing — something they could never get digitally. A sample, a tchotchke for their desk, a magnet for the fridge, a baseball bat, a brick, a salami — who knows? Something that’s amazing and brilliant and relevant, just like your brand. A piece that says “Hey, I know you,” and reminds that customer why he or she came to you in the first place and what your brand is really all about.

You could do that. But that’s direct mail, and some say that is old. No point in doing that, right?