You Know Me. Not.

So, this was an interesting one.  And kind of surprising for whom it involves, someone we've worked with before...

The numbers tell it: more than 57% of consumers prefer a personalized online experience with a brand. Results from a number of campaigns -- with personalized emails or digital commerce product selection -- support these claims, often with a significant lift

This is best practice, but legacy systems often pose a challenge for brands with established customer databases.  For example, a colleague at C[IQ] is a loyal Williams-Sonoma customer.  She buys online, from catalog, at her local downtown store, and when dispatched even on business travel.  

Her last purchase was at a Bay Area retail store, and within days she received an eMail touting a local Bay Area event.  But, she doesn’t live in the Bay Area. 

This is likely a case of the left hand not talking to right hand, whereby the eMail marketing campaigns are determined solely on the location of the last purchase.  But if purchase history was connected to the eMail marketing database -- with a layer of customer intelligence -- a more appropriate message would be sent. 

Incidentally, this is an also example of failing our SMART messaging guidance, that we discuss elsewhere.

Is it complicated?  Yes, yes it can be.  But if you are going to leverage personalization, you need to do so intelligently (and smartly). Otherwise, even loyal customers will pause and think, "after all these years, you still don't know me?"

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Maxims of Retention Marketing

We were speaking with a Client's chief executive today, an individual who we are only just getting to know, but someone who is well seasoned and whip smart.  We're a month into a strategic engagement to help them with what could be a pivotal decision point for the Brand, and this executive was jumping in to get to know us.  In the course of our chat, we were informed that (and we're paraphrasing here with some editorial liberty, but this is what we heard in essence):

Retention marketing is a broad term that means so many things, I'm not sure it means anything at all.

Well, you know what they say, "the client is always, right," right?  That's a tough one, because in many instances we're retained to help provide insight as domain experts in our field, and if it runs afoul of what the Client believes, then at best we can hope to help them on a journey of self-discovery.  So, of course we didn't dare take exception. 

However one thing stuck with us.  This executive chided that in speaking with many colleagues and friends on Boards of, and running some of the largest consumer brands on the planet that they almost uninamously agree that if they had to do it all over again, they would rather spend money they invested in retention and loyalty programs elsewhere because the programs did nothing for their bottom line by serving customers already loyal who didn't need a discount to continue buying.

Well, as you can imagine there is so much wrapped up in that comment its hard to know where to begin.  But that did get us thinking, and we decided to push this out to our readers, just in case you have someone on your own executive team who believes all this relationship and retention marketing stuff is "a bunch of hooey."

Next week we're sending one of our top analysts on a paper chase to track down the empirical data on whether, in fact, retention marketing is failing to positively affect bottom lines of the largest brands, and we promise to report back, whether buoyed or sunk by the results.  For now, we're going to venture out on the proverbial limb by betting they do, and offer 10 maxims of Retention Marketing:

  1. It is less expensive to retain an existing customer than to acquire a new one.
  2. The general definition of retention marketing is "marketing programs focused on increasing customer engagement, creating brand affinity, and fostering loyalty to a brand, company or product."
  3. In the digital Age, the consumer decides.
  4. The social web has forever redefined how brands relate to their customers certainly during acquisition, but more so in retention.
  5. Know ZMOT.
  6. Be SMART about messaging.
  7. Retention Marketing does not simply mean loyalty.
  8. Loyalty is different from affinity, but both are types of "relationships" in the world of relationship marketing/management.
  9. To manage relationships you must be able to measure retention.
  10. In the digital age, every company needs to be Facebook.

Now, we'll undertake to say more about each of these maxims in the ensuing weeks aside from other planned content we're brewing for you. 

For now, we stand by our position: pay attention to retention; its not meaningless marketing hype.  If you're concerned about cutting your marketing costs, spend your dollars on keeping your existing customers and let them help you acquire new ones.

The State of the Internet Continues to Amaze

Our parting shot for this Friday is about the state of the Internet, and it offers some food-for-thought in light of our earlier commentary this week on the United Nations Internet land grab that's underway.

For our clients and interested readers alike, we try from time to time to help you stay abreast of facts and figures about the growth, adoption and innovation of the Internet. Our CTO offers up this report today drawing from a recent presentation by Mary Meeker, a partner with Kleiner Perkins Caufiled & Byers (KPCB), a venerable leading venture capital firm based in the heart of the Silicon Valley.  Mary made her annual presentation that tracks the growth of the Internet last May and updated it during a presentation at Stanford University last week.

To summarize in a sentence: The data is stunning

And it suggests to us a couple of hallmark take aways:

  1. the Internet is assuredly on track to be your primary,and perhaps your exclusive venue for conducting business (depending on the nature of your market, product and services); and
  2. without a doubt, the connective tissue of human interaction across the Internet will be mobile in nature, or said differently, the desktop is rapidly diminishing to an inconsequential access means. 

With that let's look a litte deeper and we offer the 88 slides presentation below for you to peruse on your own.  And you should.

First, Mary's data (as well as other sources) suggest a notable shift away from Windows-powered Intel machines (so-called "Wintel" platform) in the past few years. However, another way of interpreting her graph is that the device market expanded with new mobile and tablet categories. And accordingly, it can also be argued that the new market segments diluted the Wintel segment, rather than causing a shift away.


Regardless of how you see it, Apple has managed to do what for years the pundits maintained could never happen: it has caused a fracture in the Wintel monopoly.  Although Apple may have been the first rock into the Wintel windshield, it is Google's Android OS that’s causing the riples of crack lines across Microsoft's market hold.  according to the Meeker data, since Q-4 2010, combined shipments of tablets and smartphones have exceeded the number of PCs shipped and that trend shows no sign of slowing down.

Here are some other factoids to consider when thinking about the state (and impact) of the (global) Internet:

  • There are now 2.4 billion Internet users worldwide, a number that’s still growing eight percent yearly.
  • There are more than 1.1 billion smartphone subscribers worldwide — but that’s still just 17% of the global mobile phone market.
  • 29% of U.S. adults now own some sort of an Internet-enabled tablet device.
  • Mobile devices now account for 13% of worldwide Internet traffic, up from 4% two years ago.
  • Mobile app and ad revenue has grown at a CAGR of 129% since 2008, and now has crested $19 billion USD.
  • And here is perhaps an omen of things to come:  Mobile traffic app Waze has been adding users faster than all GPS makers combined have sold personal navigation units, and it’s been that way since the beginning of 2012. (Intellectually honest disclaimer: Mary Meeker, vis-a-vis her VC firm KPCB, is an investor in Waze ;-)

The KPCB presentation goes on to detail how these device and connectivity trends are leading to the complete re-imagination of everything.  For our Clients we encourage a moment of reflection: how you create, establish, and sustain a relationship with your customers is also dramatically shifting.  We think the underlying message here is "Go mobile, young man, go mobile."

And when you look at this data, is it any wonder there is land grab food fight underway in the United Nations over control of the Internet going forward?

 

That's our Friday Parting Shot, and hopefully it will feed your CRM strategic planning.

Happy Holidays

Don't Shoot Me I'm Only the Message!

...or maybe we should say "Don't shoot me I'm only the piano player" ;-) 

Apparently, a recent comment or two by uber geek Mark Zuckerburg in his leadership of Facebook has sent several scurrying to scuttle plans for their mobile apps because the word is HTML5 was a bummer for FB mobile development.  Well, let's not shoot the message -- maybe the messenger in this case, but not the message.  In other words, we're suggesting there is no need to abandon HTML5 just because its fallen from favor at Facebook.  But on the other hand, HTML5 may not be the best choice depending on what you're trying to achieve with your mobile app. 

Um, let's back up a bit.

This all got started when a client recently complained to us,

We're so confused about mobile development for our planned CRM apps.  Should we use HTML5 or go native?  Facebook says HTML5 sucks.

We think we helped calm our client's tattered nerves by explaining this is not a conundrum of some sort, but simply a deployment question concerning user experience and the intents and purposes of an App in a mobile world.

So, in the spirit of our comments a couple of days ago, we thought we'd bring this question to the attention of our readers.

First, the fuss for this Client all began because someone in their IT department had either read or heard about the uber social networker himself Mark Zuckerburg bashing HTML5 during an on-stage chat during a technology geek-in last month in the Silicon Valley (actually San Francisco).  But we don't think they actually attended the event, or they probably wouldn't have tossed the proverbial monkey wrench in the manner they did during a marketing technology planning meeting.  The disruption was not helpful.  Here is why.  The trouble is (was) that Facebook had placed a big bet on HTML5 to achieve their mobile web experience and it gave them fits given the wide variety of user experience elements in FB.  And they finally did what they had to: they embraced native experiences and developed their latest Facebook mobile in both iOS and Android.

But just because HTML5 didn't work for Facebook doesn't mean it won't work for anyone thinking mobile.  In fact, the C[IQ] Tech Team  points out that there are a handful of factors we consider when making a strategic recommendation about deploying any CRM app in a mobile setting.  Here are five of them:

  1. User Experience.  First and foremost, consider the interaction model.  HTML5 works fine for apps that have a simple user experience, such as filling in forms or making clickable choices. However, if the user experience is more complicated say for something like a Loyalty Program (think Starbucks Awards on your phone), then going native may be preferable.
  2. Data Privacy and Security.  If sensitive data capture is involved, HTML5 may be preferred in a solution that leaves all of the data on secure servers (e.g. think anything financial services or healthcare).
  3. Connectivity.  Of course, there is always the question of dropped connections or poor reception.  In such situations, HTML5 is not a good choice over a native experience local to the device.
  4. Device Neutrality.  Until very recently the strongest argument for HTML5 was platform independent deployment -- write once deploy everywhere.  Well, "everywhere" has arguably narrowed to Android and iOS (notwithstanding whatever market penetration Microsoft may make with their new mobile device platform).  Yet, you need to consider your customers and how the majority of them are likely to interact with your business in a mobile setting.
  5. Leveraging Device Capabilities.  Finally, native apps can offer the most robust and rich user experience and capabilities if on-board services can be utilized.  For example, a native app can use the device's camera for capturing images like QR codes, product labels, etc. whereas relying on a mobile web app means confining functionality to the "sandbox" of the browser.

At the end of the day we caution clients to not stress over the mobile deployment question.  And we also think it ill advised to react based on the words of uber geeks ;-)  In our humble opinion, despite its enormous reach, technology strategy should not revolve around Facebook or whatever Facebook leaders believe is the answer or the trend.  Simply determine your customer requirements (user experience, capabilities, etc.) and the objectives of your planned app, and then make a call on whether to go native or stay nuetral. 

The message is valuable: HTML5 is not for every application instance.  The manner in which the message was delivered and the ensuing knee-jerk market reaction it engendered... calling to mind funnier moments of the Life of Brian ...was not

As to making those deployment technology decisions: Been there. Done that. And we can help.

How Not to (Ann) Tailor Your Messages

Our fearless leader, PJ Santoro, grabs the virtual podium today from the collective C[IQ] voice, to share a customer experience of her own that illuminates the importance of thinking through CRM initiatives. And it raises our favorite topic: SMART messaging.  PJ starts with an open note to one of her favorite brands, where this all began a couple of weeks ago...

Dear Ms. Dykstra-

I like your brand and love your products, but wish you would like me more back.  You see, recently I received an eMail from your Brand, recognizing me as a loyal customer.  And there was exciting news for me!  Ann Taylor is starting product ratings and reviews.  The message encouraged that if I would just click-through to try it out, Ann Taylor would register me for a shot at a $500 gift card.

Now, I admit to being an overly busy professional running a growing Firm of my own, but my loyalty to your brand led me to take a moment to click through; after all, I had recently purchased a spring skirt and several tops that look amazing and fit perfectly, so I was glad to let others know.  Well, that was until I clicked through.  You see Kristen, in a perplexing surprise, I arrived at a landing page that asked me to:

  1. find a product to review,
  2. log in (or register), and
  3. then actually do the review. 

Really?  Seriously?  “Wait a minute,” I thought, "That can’t be right.  I mean, they already know what I’ve bought.  I can look at my complete purchase history any time I want to by logging in.”  But nope, those dots weren’t connected in this case.  Although, I expected to be taken to the product page of my most recent purchase to review, that "heavy clicking" was left to me (um, did I mention “busy professional?”)  And now a perfect touch point opportunity to draw in a loyal customer had been squandered on a simple mistake to not launch reviews in a little more thoughtful (integrated) manner.

So, let’s back up and consider how Ann Taylor should have done this.

First, bear in mind, I still love the products and like the brand.  And if I didn’t, I wouldn’t have asked my team to let me take over this "virtual podium" of sorts and make this post. 

But after all, I manage a marketing technology firm that specializes in this stuff – CRM, Loyalty, and Customer Intelligence.  So, while this experience might not seem like much of a problem for some customers, I'm pretty sure this was not the kind of rich rewarding customer user experience that Ann Taylor Marketing or I.T. intended when it went live.  Where did it probably go off the rails?

I mentioned connecting the dots.  Let’s do that. 

  1. Ann Taylor has all of my purchase history in a database—a well thought out customer marketing database we would assume. 
  2. Ann Taylor also knows I am a registered user on their site with a fairly good RFM score and active visit and shopping history. 
  3. Ann Taylor put together a system for product reviews that simply needed to be fueled by this customer intelligence they already have.  But they appear to have fallen short; perhaps for want of time to launch or some other limiting choice or decision.
  4. Actually, it appears the ball dropped in campaign management.  This is where the initiative should’ve been better engineered to: [a] draw on their customer data, in order to [b] drive their messaging, and [c] populate the message with the appropriate links, to then [d] bring me (click free) to my most recent purchase’s product page to rate that product and hopefully write that review (for CRM and customer intel, unstructured data of free form text in the form of reviews is very useful in addition to the structured rating data... but that's another blog post). 

To put a fine point on it, this is the essence of an integrated CRM strategy: where the “system” -- comprised of the marketing database, the ratings and review system, and the eMail campaign management platform -- is properly orchestrated and fully leveraged as a unit to create mutually high value customer touch points.

Sure, it may be some quirky implementation requirement of the contest for the Reward Card, I don’t know; and if I were not a customer of Ann Taylor who just happens to have spent my last 28 years in CRM, loyalty, and direct marketing, I probably wouldn’t have cared whether it was simply a goof in implementation of the contest or messaging campaign.  In that case, all I would care about is that I just had a nearly useless customer experience.  In fact, as applied here, our tenet of SMART messaging just went down like the Hindenburg.

We’ve written lots about SMART messaging, but to review, all campaigns should adhere to five principles; that is, be Succinct, Meaningful, Actionable, Relevant, and Timely.  And you can see it: this campaign tripped, stumbled, and fumbled both action and relevance

The Ann Taylor Product Review Offer fell short on "actionable" because, well, it really wasn’t (at least not as conveniently as it could have, and for busy professionals—a fair description for a good portion of their target market—too time consuming to do so now, which is to say never.)

And the message was accordingly irrelevant because it failed to tie the action to something that mattered directly to me:  the satisfaction I had with my particular product purchase—not just any purchase I’ve made, or knew a friend who made, or a gift I had received, etc.

So, Ann Taylor very likely has the data to have done this right, but apparently that data was either trapped, or not easily (or readily) accessible, or there was some quirk in making it work with the contest offer, or (heaven forbid) no one simply thought through the solution to connect the product review opportunity with an actual product purchase (for those who had bought online anyway).

The result was largely a non-actionable irrelevant message and a huge missed opportunity to engage their customer.  And, an important opportunity this is (was) because Ratings and Reviews are a powerful way to connect your customers with your brand, build a sense of community, and provide a proverbial “Canary in the coal mine” for product development, customer service, and marketing.

So what should Ann Taylor have done? 

Not that I am suggesting they copy another solution, but let’s start by comparing how another brand we work with has pulled off product reviews.  NIKE has extensive product review and ratings capability.  Here’s how it works. 

  1. At Nike.Com a customer purchases product.
  2. 10-14 days after shipping once Nike “knows” the product has been shipped (and with the time lapse likely delivered), an eMail is keyed off of the estimated delivery date and sent to the purchaser (whose address was included as part of the transaction for notifications purposes). 
  3. The eMail content is the offer to review/rate the product(s) purchased and in a nice manner: the message includes clickable thumbnail pictures of each product purchased and the call to action. 
  4. Clicking through the thumbnail takes the recipient directly to that product description page with a prominent Rate & Review button.

Here is what C[IQ] would suggest to ratchet that process up for the Ann Taylor Ratings & Review campaign. 

I’m betting in Ann Taylor’s case, they were trying to cover a few too many bases with a single message.  You see, one can imagine that not all loyal customer eMail recipients purchase online, and some of them purchase in a physical retail store.  Fine.  What we would do is make 2 list pulls: one for those who’ve recently purchased on line, and one for those who have not.  Let’s call the latter pull a more “generic” message and the former the more personalized or tailored message for the online shopper.

For the generic message, which could largely be the creative that Ann Taylor sent in this case, language could be added that recognizes the recipient has not made a recent purchase online, but they may have bought in one of Ann’s stores or received a gift of an Ann Taylor product, and encourage them to look-up that item to review. 

Now here is another way to improve on that if there is some registration information required (i.e., the Gift Card raffle registration).  Ann Taylor’s CMDB should have a record flag set to indicate if the customer has ever activated an online shopping user account.  If they have an account, then a log-in session could be presumptively established (similar to how Amazon.com functions), so that the recipient could be logged in through the URL path, thereby avoiding the log-in step to register for the Reward drawing.  An authentication step could easily be added if necessary, again, as Amazon.com does.

The personalized version would be an elegant solution: the link would send the user directly to the product page of their most recent purchase with the review button ready (and log-in that user to a session state if authentication data were required.)  In this manner, the valuable time of the customer is optimized, the message becomes fully actionable and relevant, and the brand (in this case, Ann Taylor) delivers on its promises, catering to the customer in an appealing manner.  Now to me, that would be a well tailored message (if you'll pardon the pun).

Best,

PJ Santoro
Managing Partner

Customer Relationship Management is a Contact Sport

Our Friday parting shot (...yes we're still here but heads down on three new projects that hit simultaneously) ...our parting shot this week is, as the title suggests, a commnt about one of the best in the consumer relationship management space: Apple and how they use their brick and mortar experience to build brand loyalty.  We've said before and say again that CRM is brand engagement and management.

Yesterday, Forbes contributing editor Carmine Gallo posted an interesting article that nearly ironically coincided with one of our partner's having an Apple store experience, and separately sharing with us  consistent insight, without even being aware of Gallo's article.  In fact, we would've missed it, but for deciding on a lark to run a Google Search on the topic.

The gist of the article and our own observations is that the details of consumer experience matter big time, and every Apple retail employee knows such.  In fact, did you realize that before the opening of a Store each day the displays on all the Macs are precisely set to a certain angle?  And its not just aesthetics.  Actually, it is done intentionally to engage a visitor to adjust the display to their own best viewing position.  That's right: the intent is to engage the consumer in touching the equipment! 

Gallo writes about his one year spent researching the Apple retail experience, and this is but one of the little inside tricks he learned.

The resulting maxim is: interactive expereinces create a sense of ownership.  This is also why every machine is jacked into the Internet and loaded with Apps.   Gallo writes (we'll paraphrase here), that the idea is to engage the consumer or customer in a way that encourages direct tactile interaction.  For example, trainers who teach customers how to use Apple products never touch the device without the student's permission.  Rather,  they patiently guide customers to find the solutions themselves.

And here is a really big idea (that most retailers finance officers will roll their eyes at as nonsense, and yet if you look into any Apple Store on any day you'll see its swamped with both broswers and buyers.)   The idea is that the Apple Store was never created on the premise that people want to buy stuff.  Actually, Apple discovered that by creating an "ownership experience," customers would be more loyal to the brand.  And they would eventually buy.  In volume.  For life.

Indeed, as Gallo explains (and we have it on independent information this is true), the Apple Store is designed to create an ownership experience from the moment a consumer walks through the door.  Devices are there to be fondled... furiously if so desired.  Our partner took special note today, the first afternoon of summer vacation, how the store flowed with kids (of all ages) many fixated and furiously mousing or tapping, or visually entranced, depending on the circumstances of their engagement.

Gallo recounts an experience with his daughters and points out something really telling: the difference betweeen an Apple Store and a Best Buy store experience.  Ironically, our partner also found himself at Best Buy at lunch today and saw this with his own eyes: the opposite is true at Best Buy.  The store is not overflowing with people, and the machines are typically in screen-saver mode with very few Apps, seldom connected to the 'Net, with many not even turned on.

The point really is, Apple learned long ago what many other businesses are just starting to realize: make it fun for consumers to connect with your product or service using all their senses, and you will quickly sense brand loyalty.

Gallo goes on to share another example to prove the point that this isn't just applicable to consumer electronics, but works for things like the Build-a-Bear Workshops -- again employing this multisensory experience paradigm. 

We note that Carmine Gallo has actually written a worth reading new book on the the Apple Experience -- "Secrets to Building Insanely Great Customer Loyalty."

So, our parting shot this week is that CRM is a contact sport.  The more you engage your customers’ senses, the more likely it is that they will engage with your product on an emotional level and reward you with their loyalty.  As Gallo suggests, and we heartily agree: the next time you wander into an Apple Store (and you know you will), pay attention to the smallest details.  You might learn something valuable about creating customer loyalty.

 

Comment

Gregory Miller, CTO

Greg has been in the tech sector as a software architect and engineer, product manager, marketing and biz dev exec., and even IP and privacy lawyer for 3 decades. He is currently on the Board of a non-profit tech foundation reinventing America's election technology, is a venture adviser in the Silicon Valley, and serves as the CTO for C[IQ] Strategies, Inc.

Typing Relationship Management Models

Last week we wrote about the confusion that seems to rage over what exactly CRM is and is not.  So, we've decided to start a little series of posts here.

First, the bad news: there is no ordained definition of what "CRM" is, but there is a fairly strong consensus among marketing strategists what the phrase "customer relationship management" intends.  So let's start by stating, as can be found in many resources:

CRM is a business strategy.  It is not a software application, platform, or system.  This business strategy is directed to understanding, anticipating, and responding to the wants and needs of an enterprise's current customers in order to grow the life-time relationship value.

A couple of points right away:

  1. Current vs. Prospective Customers. Some will argue that CRM equally applies to potential or prospective customers as it does existing customers.  We disagree.  The business strategy called CRM is really about retention marketing, not acquisition marketing.  The former is unique in that the tools of CRM focus more on the middle to late stages of the customer life cycle (i.e., selection, satisfaction, loyalty and advocacy), not the early stages (i.e., awareness, knowledge, consideration and selection.)  We'll save the nuanced counter argument about addressing the same customer in future cross-sell or up-sell opportunities as an iteration through the entire life cycle.  One could argue that a new product is a return to raising awareness and increasing knowledge, etc.  Its different. Full stop.  Please ask us to explain or watch for the book :-)

  2. The Definition of a Customer.  This is the immediate threshold element in understanding why some CRM solution providers confuse matters.  A "customer" is one who purchases your product or service.  A customer can be an individual consumer; a client; a constituent; a retailer; a distributor; a purchasing cooperative; etc.  The key is to ask: "Is the individual, group, or entity a purchaser of my goods and services?"  Next it is imperative to know whether the "customer" as you have identified it is a consumer or a "proxy" or representative of a consumer.  The former amounts to a so-called "B2C" relationship whereas the latter amounts to a "B2B" relationship.  And this distinction will be essential to determining your CRM strategy, approach, requirements, and tools.  For example, where the customer is a consumer, client, or constituent, the individual is who you are establishing the relationship and therefore addressing their individual needs (which often tend toward to emotional values of your brand promise).  On the other hand, where the customer is a business, the proxy is generally a purchasing agent (in larger enterprises) or the owner (in small business) and in any event is some decision maker with whom you are estbalishing a relationship and therefore addressing their business needs (which often tend toward the rational values of your brand promise -- remember our position that CRM is brand management?).

The challenge for us today is that the Internet has driven many Manufacturer/Wholesalers to seize the tantalizing opportunity to connect directly to consumers of their brands, often unwittingly trampling on their established distribution and retail channels.  Of course, there are some interesting solutions to address how integrated retail eCommerce can work to the benefit of both the brand and its channels. 

Nevertheless, where the enterprise is the maker of the goods and services , which they subsequently sell through channels, CRM becomes a bit confusing because they are typically looking for a solution to address both B2B (their distributors and retailers) and B2C (their ultimate consumers.)  To add some more alphabet soup to this, this latter approach to moving their products is often called "direct to consumer" (or DTC).

The Major Relationship Model Distinction

So, once you understand which kind of CRM your business requires (i.e., B2B or B2C, or actually both) and what the strategy right-sized to your enterprise will require, then comes the task of figuring out what type of CRM solution provider you may want to turn to for tools.  Some CRM experts attempt to delineate several models for academic purposes.  We're kewl with that, but think its useful at the outset to focus on just two:

  • Horizontal CRM Solutions
  • Vertical CRM Solutions

...and have an appreciation for their major differences and cost implications.

Horizontal CRM Solutions.  Horizontal CRM makers provide a non-specialized base platform intended for application across all industries.  They tend to be less expensive (up front), least common denominator solutions.  For example, an autombile manufacturer would adopt the same platform as a publisher.  Generally, although horizontal CRM solutions have a lower initial up-front cost, they tend to be more expensive in the long run because they typically require customization or tailoring to the particular industry and business model.  This tends to be similar to the great promise and paradox of earlier ERP; that is, the so-called 80-20 solution where 80% of the functionality was promised to be "out of the box" with the remaining 20% being the required customization.  In reality it was often the other way around, and certainly the cost model was more like 20-80.  Major CRM vendors offer horizontal CRM solutions.  A perfect example is Salesforce.Com.  In order to tailor a horizontal CRM solution, these companies may use industry templates to overlay some generic best practices by industry on top of the horizontal CRM solution.  And often they rely on a network of authorized resellers and systems integrators who have industry and application specific domain expertise to carry their platform into vertical markets.

Vertical CRM Solutions.  As you might expect then, vertical CRM manufacturers offer specialized, industry application-specific CRM solutions.  Vertical CRM solutions are typically more expensive up front but lower cost over the lnger term because they already incorporate best practices, specialized capabilties, and templates and tools that are specific to an industry and business model.  A good example of this would be a CRM solution where the "C" stands for "client" and the application is in the legal profession.

Here is an important rule of thumb from our experience: it is 10-12X more expensive to build a vertical solution from a horizontal CRM platform  than it is to choose a vertical solution already tailored to your business model at least (e.g., B2C vs. B2B) and at best, tailored to your industry if it is vertical or specalized in what you make and how you sell and support the good or service.

This latter point is a hurdle for providing sound CRM strategy and advice.  The reason is the horizontal makers want you to adopt and purchase their CRM solution, but one type does not serve all.  For instance, we have a pair of clients right now who both are historically a product maker in a B2B business model who now desire to expand into a B2C busines model.  And they're both being vigorously told that SalesForce.Com will serve all of their needs -- they simply define customer records and set a flag for the customer type.  Nonsense. 

Clearly, Salesforce.Com is a powerful platform primarily intended to serve the B2B and customer-service models.  However, the data, information, outreach and marketing tools for serving a customer who is another business is considerably different from what is required to implement a CRM strategy for serving an individual consumer (in a B2C/DTC business model).  The former's audience amounts to Procurement Managers on behalf of their businesses.  The latter's audience are individual consumers who are buying directly from the enterprise.

Next up, we'll share some more about some of the academic model distinctions, and the challenges of implementing the best customer intelligence strategies.

 

The Call for Computer Fluency

The intersection of marketing and technology is a busy and dangerous cross-roads.  Those of us pigeon-holed as Marketing Technologists quickly come to respect our required bilingual capability.  Some of us even have gone so far as to be formally trained in both (business and computer science).  Even then our job sometimes is akin to translating between audiences with languages as different as Russian and Cantonese Chinese. 

Increasinlgy, in fact nearly daily, we witness those poor souls of marketing who have wandered into this intersection five minutes into rush hour.  We sometimes have to shutter our eyes if we are not charged with pedestrain cross-walk patrol.

We've mangled that metaphor enough.  The issue is this: in the digital age of an increasingly always-on society, there is an emerging prerequsite in digital and direct marketing to have some computer fluency.  Seriously, for those professionals who have inherited the role of CRM manager, direct or database marketer or digital commerce director, it is impossible to be effective in your position without a fairly reasonable command (or at least a modicum of understanding) of web technologies.

Many have referred to this as computer "literacy" but we think that misses the objective.  Literacy suggests the ability to read and write.  And it would be helpful to at least appreciate some basic computational principles of software programming (in fact, generations following us are increasingly being educated in computer fluency at least and literacy at best, as a matter of fundamentals like reading, writing, and arithmetic.)  But you need not take it that far to be effective at what you do in this digital age of marketing. 

We don't (yet) see the ability to write a software program (let alone read source code) as a prerequisite to succeeding as a digital marketer, but it sure can separate the "A Players" in a hurry.  Simply having some fluency should be sufficient to advance the inevitable collaborations that must occur between digital marketers, technologists, and enterprise IT. 

In other words, we think its enough for a digital marketing manager or eCommerce director to understand terms, terminology, and have a basic grasp of how the Internet works; how it scales; what comprises a web site platform, etc.  And then it would be gravy if the person also has an appreciation for how computers do what they do; that is, some basic understanding of how software works. 

That noted, we do believe it is a woeful short-coming for a digital marketing manager to assume their job is principally one of managing creative efforts in online communications, making UX/UI, or producing online brand experience.  There must be a grasp of the mechanics and technology that make all this possible, from web site infrastructure to SEO/SEM, and data analytics to know whats working and whats not.

Well, insofar as the computer fluency or literacy thing goes, it turns out we're not alone in this thinking

Randall Stross published an interesting article this past weekend in the NY Times, "Computer Science for the Rest of Us: Reading, Writing and -- Refactoring Code?" Stross is an author and professor of business at San Jose State University, in the heart of the Silicon Valley.

The gist of the article is that there is an increasing chorus of Academics and even business professionals calling for college graduates in every major and discipline to understand the fundamental of software and computation.  They are not calling for everyone to be a skilled programmer, but they do believe it is increasingly important to teach some "computational thinking" or the general concepts and principles employed in programming languages.  This approach to problem parsing and deconstruction, analyzing data, and generally understanding systems principles, they argue (and we agree) will become a skill as essential as reading, writing, and arithmetic.

Dr. Jeanette M. Wing, the head of the Computer Science Department at Carnegie Mellon University published a manifesto of sorts arguing that basic literacy should be redefined to include an understanding of computational processes.  She wrote:

To reading, writing and arithmetic, we should add computational thinking to every child’s analytical ability.

The Quick Sort Algorithm -- A Basic Computer Science Element, Courtesy WikipediaAgain, while we agree that understanding computational principles -- at a high cursory level -- is going to become imperative to navigate everything from big data (a topic we're starting to dwell on), to really "getting" how to leverage social media, we don't necessarily agree that its "literacy" we should be striving for; fluency should be sufficient.  But failure to become at least fluent could well place incumbent digital marketers at a distinct disadvantage to the upcoming digital turks graduating from "B School" today.

However, the poblem accordingy to Stross, is that there is little agreement or standards for laying out a curriculum that provides a survey level of computational thinking, introduction to software, or computer fluency.  Syllabuses are all over the board depending on which institution you're considering for an introductory or survey course.  And as Stross points out, arguably this is material that should be covered at the high school level, if not sooner.

Starting that early is possible because gaining some fluency doesn't require the rigors of computer science as many of us recall it did just a decade ago.  You no longer have to master discrete mathematics, decision theory, or Karnaugh maps in order to gain an appreciation for computer systems, networks, or basic principles of operating systems and applications software, let alone programming.

We encourage you to check out Dr. Wing's 2006 essay yourself; it better expresses the idea than we can here.  The point about her point we want to make however, is that technology is changing at an alarming rate and digital marketers must have a basic appreciation for the principles of computation, systems and networks, and applications in order to remain competent in their domains of direct marketing, social media and digital commerce.

It is a trusim that a programming language that's hip today by tomorrow will become passe.  Consider, for example, how in a matter of less than a year, HTML5 and AJAX have redefined the user experience of the Web and shoved Adobe Flash to the precipice between antiquity and obsolescence.  Keeping up is a breakneck exercise, and that's just one aspect of web technology.  Add into that the tools of data mining, analytics, personalization, and behavioral tracking.  Toss in the challenges of working with developers, Agile development principles, application frameworks, and data models.  Then simply consider the Web itself and its shift from 2.0 to 3.0; the Semantic Web, the tools of social media, and so on.

On the one hand, we gaze over this landscape and reflect on how we're going to stay busy at C[IQ] for sometime to come.  But in a sudden snap back to the present we jolt to realize that a big part of our job is helping our clients avoid becoming a grille ornament on a speeding vehicle of innovation through the near grid-locked noisy intersection of marketing and technology.  Mind the signal.

 

Comment

Gregory Miller, CTO

Greg has been in the tech sector as a software architect and engineer, product manager, marketing and biz dev exec., and even IP and privacy lawyer for 3 decades. He is currently on the Board of a non-profit tech foundation reinventing America's election technology, is a venture adviser in the Silicon Valley, and serves as the CTO for C[IQ] Strategies, Inc.

Social Media is a Good Thing, Until its Not

Last Fall the British government established an independent panel to try to make some sense of what happened during that fateful five days of riots 06.August to 10.August.   They looked at all aspects of the social phenomenon of lawless havoc.  One of the more interesting elements they considered were charges that social media may have been largely responsible or at least a catalyst. What caused our tail to straighten and ears to perk was the notion that the government might need a "kill switch" of some sort for social media services including texting and Twitter to prevent a recurrence of this scourage of illegal assembly (or disassembly as the case may have been.)

In particular, reported the Guardian newspaper, Steve Kavanagh, the deputy assistant commissioner of the Metropolitan Police charged that "Inflamatory and inaccurate messages on Twitter were the primary culprits of the melee."  

"Social media and other methods have been used to organise these levels of greed and criminality."

Our Take: Sure, social media is to blame in exactly the same way flyers, banners, telephones, fax machines, and bull horns were the principal culprits behind riots of the industrial age.  We're going to go out on an intellectual limb here and suggest that if you're going to blame the tool, you're unlikely to be very successful at quashing a riot.  If people want to speak out, they're going to speak out; whether they charge up the battery and speak through a bull horn, or charge up their phone and let their thumbs do the talking. But that's not really our point today.

Actually, our Friday's "Parting Shot" is about to be fired, so read on.

You see, this independent U.K. panel recently published an interim report, and their response to the social media question (also reported in the Guardian) is eye widening:

On the role of social networks, the panel concluded that rioters were aided by instant messaging services but warned against plans to shut down websites such as Twitter and Facebook. They pointed out that the UK has pledged support for the open use of social media during the Arab spring uprising across the Middle East.

"Mobile communications technology is continually evolving and new developments may benefit the police and authorities rather than rioters," the panel concluded. They added that some mobile networks have installed systems to detect crowds and the direction they are moving in so they can manage congestion.

"In the future, it may be possible to use cell congestion monitoring as a tool to tackle rioting," the report found. "What is clear from the riots is that there is no simple 'switch off' solution. Viral silence may have as many dangers as viral noise."

To us, the highlight is the naked comparison to the Arab spring riots. That's a disruptive topic, with many people vigilantly defending rioters in a stable democracy (United Kingdom or here at home in the USA) as fundamentally different than those in living under an oppressive government (Syria).  While we understand how people have less sympathy for the former, this argument should be concerning because it is used as justification for stronger methods of stopping riots (e.g., a "kill switch" for Blackberries and Twitter).

We think that produces an unsettling paradox: the idea that oppressive measures are acceptable, but only for non-oppressive governments.  While it's simple to look at some of the London rioters and see spoiled kids acting like thugs, we should be careful: Bashar al-Assad views the rioters in his country the same way.

And by the way, in as much as rioters used digital media (perhaps Blackberry Messenger more than Twitter from what is being learned), Twitter and other social media tools were also used to organize clean up efforts and emergency medical assistance.

So, we applaud the London investigative panel in their acknowledgment of the double-standard that could emerge as quoted above, because it raises a serious paradox (not to mention the trouble with blaming the tool).  It provides this unsettling notion of recognizing that...

Social media is a good thing... until its not.

It shouldn't take too much noodling to apply the learning from this to your own social media strategy for customer relationship management in general, and brand management in particular.

Its About the Data Stupid

The White House Office of Science and Technology Policy (OSTP), together with the National Science Foundation (NSF) and several other Federal 3-lettered Agencies will hold an event in Washington, D.C. this coming Thursday to address the challenges and opportunities related to “Big Data.” The event will be webcast live from 2:00pm to 3:30pm EDT.

According to their media advisory:

Researchers in a growing number of fields are generating extremely large and complicated data sets commonly referred to as “Big Data.” A wealth of information may be found within these sets with enormous potential to shed light on some of the toughest and most pressing challenges facing the nation. To capitalize on this unprecedented opportunity to extract insights and make new connections across disciplines we need better tools and programs to access, store, search, visualize and analyze these data.  To maximize this historic opportunity — and in support of recommendations from the President’s Council of Advisors on Science and Technology — the Obama Administration is launching a Big Data Research and Development Initiative, coordinated by the White House Office of Science and Technology Policy and supported by several federal departments and agencies.

In addition, they're going to trot out a panel of thought leaders from academia and industry,  moderated by the New York Times' technology writer Steve Lohr.

And you, our trusting reader asks, "OK, and I should care because?"  Fair enough.

Its not so much that C[IQ] is about data, lots of data, data for customer intelligence... as it is about the implications in play here that sorta link back to our prior blather about the Semantic Web and the larger points about, well, the data. 

We'll leave aside the amusing query whether the Administration's announcement has any link to their likely play on the importance of innovation, the Tech Sector, and the Internet in their re-election campaign.  After all, once before, the tag line was "Its about the economy, stupid."  And it is again, albeit perhaps said differently.  So, here's the short of it (as short as we can make it):

The amount of data in our world has been mushrooming (um, that is a word, right?), and analyzing large data sets, the so-called big data will become a key basis of competition, underpinning new waves of productivity growth, innovation, and above all consumer insight.  And here are four big ideas we think you should consider:

  1. Data has flooded into every industry and business function and is now a critical factor of production, next to labor and capital. Researchers at McKinsey & Co. report that by the end of 2009, nearly all sectors in the U.S. economy had at least an average of 200 terabytes of stored data per company with more than 1,000 employees.
  2. There are at least five ways to leverage big data: [1] Big data unlocks value by making information transparent and usable at much higher frequency. [2], Compiling more transactional data, they create more accurate and detailed longitudinal performance information on everything, thereby unlocking competitive advantage if applied. [3] sophisticated analytics can substantially improve decision-making. [4] Big data allows finer segmentation of customers and far more precisely tailored products or services. [5] Big data can improve development of the next generation of products and services.
  3. The use of big data will become a key basis of competition and growth.  See #2 for details.

  4. Several issues need to be addressed to leverage the potential of big data. Policies related to privacy, security, intellectual property, and even liability will need to be addressed. Companies need to find and leverage the right talent and technology.  They also need to (re)configure workflows and incentives to optimize the use of big data.  Access to data is critical, and companies will increasingly need to integrate information from multiple data sources, often from 3rd parties.

OK, so the last point may have been a shameless self plug for a Firm whose brand echos the point -- customer intelligence for smarter marketing.  But it really is about the data.  And the government appears to get it; let's hope to the point of making innovation easier and not necessarily over-burdening us immediately with more regulatory schemes.  That said, we take the privacy and integrity issues seriously.  And you should too.

It starts with checking out their webcast this Thursday.  We'll give you our take afterwards.

 

Comment

Gregory Miller, CTO

Greg has been in the tech sector as a software architect and engineer, product manager, marketing and biz dev exec., and even IP and privacy lawyer for 3 decades. He is currently on the Board of a non-profit tech foundation reinventing America's election technology, is a venture adviser in the Silicon Valley, and serves as the CTO for C[IQ] Strategies, Inc.

Semantically Speaking, This Changes Everything

Week before last you may have heard that Google is readying the next major refresh of its search engine.  We spent some copius spare time reflecting on that, mostly because a couple of our clients inquired.  So here is what we thought you should know.  Refinements have been nearly continuous for Google, but this next step reported over the course of the week of March 12th begins a shift that will impact the very foundations of how you start and sustain conversations with your customers.

In the ensuing months, using Google search will net you more than just links to their best shots based on ranking.  Gradually, results will also include more pertinent data and direct answers to queries that can be formed more like natural language questions.  Industry experts agree, this will mark the greatest change (and improvement) in Google history and could affect tens of millions of web sites that depend on page ranking.

To put a fine point on this, Google isn’t replacing its keyword search process, which determines the importance of a site based on its textual content, the frequency other sites link to it, and several other metrics.  Actually, Google is refining its engine to deliver more relevant results by integrating “semantic search” technology.  This means Google is adding the capability of its search engine to comprehend the actual meaning of words.  “Semantic search” uses semantics; that is, the science of meaning in language.  This will produce even more relevant search results.  In most cases, the goal is to deliver the information queried by a user rather than have a user sort through a list of loosely related keyword results. 

For digital marketers, semantically speaking (sorry, we couldn’t resist), this changes everything.  And that’s because Google search will begin (and do better over time) to look more like how we humans understand the world.

Some observe that this is the first real movement toward “Web 3.0” or from a content or knowledge stand point the Semantic Web.  Think of it this way:

  • Web 1.0 was the linking of pages
  • Web 2.0 is the linking of people; and
  • Web 3.0 will be the linking of data

This will empower an even more personalized experience for the individual user.   But a personalized experience is only part of this.  From our perspective, this model presents the Web through the lens of knowledge.  There is also the lens of utility.  That is to mean, if the first generation of the web was content-centric, and the second generation is social-centric, then the third generation will be services or utility-centric.  Utilities (i.e., applications or “apps”) are made possible by APIs and web services that enable machines to interact with machines (and not just people) to deliver information management tools.  Both models are creating a more delightful, meaningful, useful digital resource.

Just to frolic and detour a little further, the utility potential is enormous.  Consider apps today like online reservations (e.g., United.com, which will have more to say about at some point, post Continental merger); logistics services (e.g., FedEx.com); bookkeeping (e.g., Intuit.com Quicken online); or emerging utilities like Yakima Racks online “rack configurator” (e.g., Yakima.com).  And that is definitely only the tip of the proverbial iceberg.  To this end, the ‘Net is completely re-inventing the applications software industry (really: when is the last time you went to a store and purchased software in shrink-wrapped box?)  We’ve digressed enough.

Back to the higher quality of knowledge consumption, the personalization of experience in the process of search is already happening.  Consider that Google actually personalizes search results.  We mentioned earlier that Google utilizes several variables to determine the importance of sites in ranking.  Similarly, Google personalizes search results based on some 57 different factors or signals that is collects users, including the browser that they are using, where they’re located, keyword searches and browser history.  Two people can each enter the same search term today, but will be presented with entirely different results.  Some suggest that over time, this may not be that good of an idea (to see just how bad, you should definitely view this link when you have a second).  Regardless, tailored search combined with recommendation engine technology and emerging tools such as attention analytics are certain to change the personal experience of the Web, and more importantly here (re-grouping with the point of our post) will forever reshape digital marketing—whether for acquisition or retention.

In short, the Semantic Web (3.0) will be able to compile information for a specific user in relation to specific requests, interests and needs based on a vast data set that could span multiple sites, domains and service providers.  In effect, Web 3.0 will offer true utility to consumers by “knowing” almost precisely what you want.  And it is forecast Web 3.0 will understand the meaning of content and data and relate that to the user’s specific inquiries.  This third generation of the Web presents three issues for digital marketing:

  • More data and more information
  • More consumer-controllable filtering; and
  • Less reliance on brand sites

This means Brands will need to determine their enterprise data, brand data, and other information to be shared in the semantic web.  And it will be necessary to figure out how this data and information can help build, establish, and sustain customer relationships.  The trick here is to recognize how this data can be useful to customers in different contexts. 

In other words, in the 3rd generation of the Web context will be king.  At the risk of falling into another rabbit hole, we defer that discussion for another post.  Just margin note this for now that understanding context will be essential effective brand management, which is saying “relationship marketing.”

Several years ago, doing a fine job of sensing the future, Scott Brinker of Ion Interactive, another one of us marketing technologist types, wrote a fabulous article on the future of semantic marketing.  We offer that assessment, because despite having posted 4 years ago, with the news of Google's infusing semantic search capabilities, we were able to successfully dust off the article and find it 100% spot-on.  For those lacking time right now to surf our reference links, we’ll try to do some justice to his work in summary here.

First, as we suggested at the outset, The World Wide Web Consortium (WC3)—a governing body for standards in building the Web, describe the “semantic web” as being about common data formats that simplify combining data from diverse sources.  (At C[IQ] we’re all about that!)  In other words, this amounts to mapping ideas expressed in human language such that it facilitates automatic processing, where software can automatically comprehend how different pieces of data are related.  And we agree with Scott’s immediate assertion that such sounds a bit too geeky for marketing folks to handle.  And yet, query just who is going to make this happen?  To explain, Brinker poses a bit of a conundrum (quoting from his post):

  1. If the semantic web is successful, it will unleash an enormous wave of information exchange between organizations and individuals, empowering a new level of discovery and compelling knowledge sharing;
  2. In order for the semantic web to be successful, enterprises, institutions and organizations must assign responsibility for their participation in it to someone who will drive it — otherwise the semantic web will settle into semantic soup;
  3. For someone to assume that role, there's must be incentive; in the commercial world, incentive translates directly into acquiring and retaining customers — which begins as a function of some form of discovery and compelling knowledge sharing.

Who is best suited to take on that roll?  Consider that “discovery” as the term is used above is about awareness raising tools, including advertisements, articles, blog postings, interviews, press releases, search engine optimization, etc.  And “knowledge sharing” as used above refers to case studies, white papers, feature comparisons, pricing, product reviews and critiques, etc.  And now you know who, from the enterprise perspective, is going to have that responsibility.  Marketing.

Yet, before everyone dives into semantic marketing, we need to understand that marketing in the semantic web will be very unlike marketing in the Web today, principally based on visual brand engagement.  Of course, marketing (e.g., branding, advertising and promotion, etc.) will continue in a similar manner as does today, but it will be accelerated and powered by semantic technology in areas such as search engine marketing.  

So, what will semantic marketing, or marketing in the semantic layer of the web amount to?  Scott suggests seven areas to be addressed.  We agree, and are already working with clients on these tasks today as a nearly inherent extension of customer IQ work.  Let’s summarize, and again encourage you to go see his article when you have time.

  1. Becoming the champion of data; not just regular old-school product and services data, but deep enterprise data that products and services are built on (without giving away IP assets of course)
  2. Managing data curating; the process of information architecture, structuring, sequencing, and organizing data including its (meta) tagging to maximize its combination, mashing, and discovery.  This is akin to having a “Chief Ontologist.”
  3. Setting distribution strategy; something akin to an SEO+ or perhaps SWO (semantic web optimization)
  4. Structuring incentives; necessary to convert semantic web interactions into real business objectives. This could be the greatest challenge in semantic web marketing, because there is a natural tension between openness and incentives. Achieving the right balance is part of the Enterprise’s marketing strategy. We think (as does Scott) that this is analogous to the dynamics of open source software.
  5. Tracking and attributing distributed data; this includes measuring the impact of the different content elements that contribute to customer and partner relationships. This is likely to be the toughest technical challenge.
  6. Leveraging external data; specifically applying data in your own data mash-ups. For consumer-facing apps, this is where your organization's data inputs and outputs surface into digital brand experiences. This next generation of apps and services will directly serve a highly engaged human audience.  And they will also serve market research, customer intelligence.  
  7. Data governance.  An entirely new level of data governance will be required to protect the integrity of your semantic presence in the Web.  This will require managing (if not policing) all aspects of data use from broken links to mishandled intellectual property.  On the one hand it might be argued that such governance needs to be handled by an audit-class element to ensure checks and balances.  On the other hand, marketing may well be in the best position to manage this because semantic quality control runs to online reputation management—clearly the responsibility of brand management.  And there is no more certain way to slow a process that—because of the speed of the Internet—absolutely must avoid bureaucratic overhead.  And Scott’s article suggests some other reasons.

Of course, at this point, we fear we may have overwhelmed you with a considerable amount of complexity in an emerging CRM and customer IQ issue.  However, the Google news about their search engine evolution triggered our internal revisiting this issue (the semantic web) on behalf of our clients.  And with a little research, we were compelled to bring this to our readers here. 

So consider this:  when Scott’s article first appeared four years ago this month, a Google search of “semantic marketing” produced 665 results.  Performing that same keyword search 4 years later, today produced 11,400,000 results.

In a shameless plug, if any of this has you thinking, perhaps in a semantic sort of way, we humbly suggest you might want to get in touch with us.

In Hopes of Avoiding a Mayan Sunrise

We're going to try to start a Friday habit of what we'll call our "Parting Shot" for the week.  Here is our first of hopefully a regular series of Friday Parting Shots...

During a lunch break today, someone reminded us about the forecast of Earth's impending doom.  And it got us thinking.  So, if you believe the Mayan Calendar, on 21 December 2012 the Earth's polar caps are going to reverse polarity tossing the Earth out of orbiting the sun, and send us all hurtling into outer space. 

In such case, having a strategic plan in place for how you will extend your customer relationships through the holiday season is probably useless. 

Of course, should the sun happen to rise on the morning of the 22nd, then having such a plan in place might be a very good idea.  Your choice.  But if you happen to be one of those who believes the Mayans seriously goofed their calculations of that date, we hope you remember our parting shot...

...which is to remind you we're here from sun-up to sun-down (and often times in between) to help you with your strategic plans to extend your customer relationships through the holidays and beyond.

Have a great weekend of March Madness :-)

Comment

Gregory Miller, CTO

Greg has been in the tech sector as a software architect and engineer, product manager, marketing and biz dev exec., and even IP and privacy lawyer for 3 decades. He is currently on the Board of a non-profit tech foundation reinventing America's election technology, is a venture adviser in the Silicon Valley, and serves as the CTO for C[IQ] Strategies, Inc.

Loyalty Isn't Bought... It's Built.

One of our areas of focus is loyalty management.  We will spend some blog bandwidth covering this topic because it's a common inquiry in our work.  And turns out, "loyalty" seems to be something often confused in its application. 

A common mistake is mixing up "loyalty" with "rewards."  Wherever possible we believe loyalty should be about commitment, not points.  In our 7-stage model of the customer life cycle (not unique to us; many marketing experts have suggested a similar thinking), "loyalty" is the sixth of seven stages. And while tracking loyalty should begin from the very first moment a consumer becomes a customer, we believe there is a distinct "loyalty" phase of the customer relationship life cycle that deserves particular treatment in retention marketing.  Depending on the brand position and a foundation concept set out below, "loyalty" may be addressed by a specific set of marketing initiatives, programs, and investments, or simply managed inherently to the on-going brand-customer conversation.

[NOTE: "Advocacy" is the seventh and final stage in our model, which we talk about elsewhere.  Some marketers prefer to model loyalty as a combination of advocacy and commitment; we believe advocacy is not an ingredient of loyalty, but rather a distinct stage of the life cycle, and commitment is a characteristic of both stages.]

Over the course of blogging we will share more thoughts about loyalty marketing, but let's start here with (in our model) a foundation concept.  We encourage you to think of Loyalty Management as Brand Management.

The first step in thinking about loyalty is understanding your brand positioning.  What your brand is about and how it is positioned almost dictates the kind of loyalty program you can institute to ensure success while not diluting your brand.  Before we drop into a rabbit hole about loyalty as a directive of brand, let's conisder the driving principle for this assertion, which we suggested above is the foundation concept.

We believe that loyalty marketing is required to drive retention, and retention is a function of several things, but for loyalty, the primary driver is (wait for it)...

Switching Costs

 

Yup, it depends on how easy it is for your customer to simply switch to your competitor (e.g., assessing the alternative goods/services opportunity).  Here is a high-level test you can use to determine right away the potential value of a loyalty program to your brand and business (notwithstanding what kind of program would work best for your brand).  The test is based on this principle:

There is an inversely proportional relationship between the potential value of a loyalty program and the customers' switching costs of your product or service.

So the test simply is to ask what the "switching costs" are for your customers to leave your brand for an alternative. 

And the potential value of a loyalty program then is measured this way: as switching costs decrease, the value (and importance) of loyalty programs increases, and as switching costs increase, the value (e.g., return on investment or "ROI") of loyalty programs decrease. 

Next up on this topic, we'll look at some of the fundamental concepts of loyalty marketing programs.