Don’t trust anyone over 30
By Paul Herbig
Advertisers want to be where the youth are. Advertisers are willing to pay a steep premium (sometimes two to three times as much) to have their products seen by young men and women in the ‘coveted’ 18 to 34 age group. Examine any primetime network show and you can almost see the intended audience mirrored by the show’s stars and culture. The networks cringe in horror if any show is targeted to “older” viewers (The dropping of Joan of Arcadia was because the viewership had turned old with many of the youth tuning out.). They fight one another over the average age of their viewers, dreading the ultimate insult of having the “oldest” average viewer, knowing the toll it will take on its advertising income.
Which brings us to the major question at hand: Why does Madison Avenue fight tooth and nail, court fiercely, and live and die for those youthful viewers? It can’t be for the money. Those “old folks” age 45 and over are the ones making the big bucks, have the largest disposable income, and who are buying most of the expensive products available today. The kids are either in school or just out of college, beset by huge amounts of college loans they must pay back, in an uncertain economy where any job is a good job, and living in modest digs if they haven’t already moved back with mom and dad. If the Advertisers wish to go where the money is, they have their priorities upside down.
Why then pursue the young and restless? Several reasons exist to rationalize the Advertiser’s odd behavior. The number one reason is the belief that marketers need to instill brand loyalty when the consumer is young and it will be maintained for the rest of their lives (Analogous to “Give me the child until he is 5 and he will be mine forever” School of thought). The only problem with this theory is that is it blatantly wrong. Young girls play with Barbies, that does not make them loyal to Mattel for life; as tweens (8-13) they loved the Backstreet Boys ; as teens they listened to Hip-Hop, in College young women have different tastes, and so on. Just because at one stage of their lives, they enjoy a product does not guarantee their loyalty for life; in fact, just the opposite is true, because they enjoyed a product as a high school student will almost guarantee they won’t like it as college student (because they associate it with their less mature high school life and they are now college students who must act and live like college students). This fallacy can be seen through the results of a recent survey:: males 18 to 21 are nearly four times as likely to favor apparel specialty shops than those 8 to 12 (38% to 10%) But guys lose interest in shopping at discount department stores as they get older (78% 8to 12 enjoy, compared to 57% of males 18 to 21). Perhaps as their spending patterns grows, their desire changes to more status brands.
The second reason is the “my customers are dying” syndrome whereas you fear the older average age of your product users could spell major problems in the future. Some truth may exist to this fear: the average age of Cadillac buyers have been edging up; however, Cadillac as a brand is under siege. In real life, some products are preferred by different age groups: Cruises tend to attract more seniors because they have the time and the money. To attempt to market to the young as a means of complementing your older users tends to alienate both groups: Remember “This is not your father’s Oldsmobile” commercials. They failed to attract the young and drove away their loyalty older customer. Oldsmobile has been retired from GM’s stable primarily due to this debacle.
The third and more probable reason is that the creative team at the Advertisers tend to be young and project what they like to see and what they think their peers would appreciate. It must be new, hip, faddish. Very few fifty-ish creative types exist at agencies anymore. It is a game for the young (who likewise tend to be selling to their youthful marketing peers at your company). If you do not want to lose your older users, you “senior” marketers must monitor and rein-in those runaway youth, less your product finds the black hole as did Oldsmobile.
Don’t forget the older or they will forget you.
Thursday, November 1, 2007
ओनेतूने
You to me marketing
By Paul Herbig
One-to-one marketing it is called, a radical rethinking of the way marketers treat their customers. Companies can increase their profits by selling more things to fewer customers. It is wiser to focus more on increasing sales to a smaller percentage of your existing customers than it is to find new ones (estimates are it costs 5 to 10 times as much to get a new customer as it is to retain current ones).
Getting a new customer is expensive. It takes money to get his attention and it takes continuing effort to educate him (interruption marketing is expensive, and so is the
process of winning a customer's trust). It's also expensive for the customer, who has to spend time evaluating and learning about the features and benefits of a product. Instead of focusing on how to maximize the number of new customers, the focus should
be on keeping customers longer and getting far more money from each of them over time.
It's back to the old days, when merchants had a limited supply of customers and worked to get the maximum revenue from each one. Except now, with technology, companies can combine this old world thinking with the ability to dramatically grow their customer base at the same time.
If MCI spends hundreds of dollars to get a new long distance customer, and that customer pays just $20 per month for MCI’s services, then they have to be figuring out other ways to generate revenue through their interaction with that customer, not spending all their energy getting yet another new customer. By selling cellular phone services, home security services and an increasing array of other items, MCI can recoup the expense of obtaining these customers.
Levi's has built the single largest brand of women's jeans in the country. And they've done so without having any jeans in the store. Instead, women have their measurements taken by a trained specialist, who sends them to a computerized factory. There, a semi-custom pair of jeans is made to order. The shopper gets custom fit for a fraction of the cost. Levi's has a huge savings in inventory risk and advertising costs. And best of all, once a customer has given her measurements to Levi's, once she's endured the hassle of all that measurement-taking, once she's worn a pair of custom jeans that fit her to a ‘T” and makes her look like she always wanted, why would she even consider switching brands to save a few dollars?
A company should focus on four things when selling to customers:
1. Increase your "share of wallet." Figure out which needs you can satisfy, then use the knowledge you have, and the trust you've built, to make that additional sale.
2. Increase the durability of customer relationships. Invest money in customer retention, because it's a small fraction of the cost of customer acquisition.
3. Increase your product offerings to customers. By being customer-focused instead of retail-focused, or factory-focused, a manufacturer or merchant can widely increase its offerings, thus increasing its share of wallet.
4. Create an interactive relationship that leads to meeting more customer needs. It's a never-ending cycle. By constantly inducing the consumer to give more information, the marketer can offer more products.
This series of techniques isn't easy, nor is it free. If it were, everyone would do it. It requires a huge investment in scaleable technology, along with the focus and the commitment to do it right. It puts a lot more pressure on your organization, as well, because as each customer becomes worth more, the cost of losing one increases. But with the risks come the rewards.
By Paul Herbig
One-to-one marketing it is called, a radical rethinking of the way marketers treat their customers. Companies can increase their profits by selling more things to fewer customers. It is wiser to focus more on increasing sales to a smaller percentage of your existing customers than it is to find new ones (estimates are it costs 5 to 10 times as much to get a new customer as it is to retain current ones).
Getting a new customer is expensive. It takes money to get his attention and it takes continuing effort to educate him (interruption marketing is expensive, and so is the
process of winning a customer's trust). It's also expensive for the customer, who has to spend time evaluating and learning about the features and benefits of a product. Instead of focusing on how to maximize the number of new customers, the focus should
be on keeping customers longer and getting far more money from each of them over time.
It's back to the old days, when merchants had a limited supply of customers and worked to get the maximum revenue from each one. Except now, with technology, companies can combine this old world thinking with the ability to dramatically grow their customer base at the same time.
If MCI spends hundreds of dollars to get a new long distance customer, and that customer pays just $20 per month for MCI’s services, then they have to be figuring out other ways to generate revenue through their interaction with that customer, not spending all their energy getting yet another new customer. By selling cellular phone services, home security services and an increasing array of other items, MCI can recoup the expense of obtaining these customers.
Levi's has built the single largest brand of women's jeans in the country. And they've done so without having any jeans in the store. Instead, women have their measurements taken by a trained specialist, who sends them to a computerized factory. There, a semi-custom pair of jeans is made to order. The shopper gets custom fit for a fraction of the cost. Levi's has a huge savings in inventory risk and advertising costs. And best of all, once a customer has given her measurements to Levi's, once she's endured the hassle of all that measurement-taking, once she's worn a pair of custom jeans that fit her to a ‘T” and makes her look like she always wanted, why would she even consider switching brands to save a few dollars?
A company should focus on four things when selling to customers:
1. Increase your "share of wallet." Figure out which needs you can satisfy, then use the knowledge you have, and the trust you've built, to make that additional sale.
2. Increase the durability of customer relationships. Invest money in customer retention, because it's a small fraction of the cost of customer acquisition.
3. Increase your product offerings to customers. By being customer-focused instead of retail-focused, or factory-focused, a manufacturer or merchant can widely increase its offerings, thus increasing its share of wallet.
4. Create an interactive relationship that leads to meeting more customer needs. It's a never-ending cycle. By constantly inducing the consumer to give more information, the marketer can offer more products.
This series of techniques isn't easy, nor is it free. If it were, everyone would do it. It requires a huge investment in scaleable technology, along with the focus and the commitment to do it right. It puts a lot more pressure on your organization, as well, because as each customer becomes worth more, the cost of losing one increases. But with the risks come the rewards.
Celebrities
Celebrity Non-sweethearts
By Paul Herbig
Celebrities have gained deity perspective in many minds. More than ever before, Americans are celebrity smitten, if not obsessed. Some psychologists claim Americans need celebrities as much as food, water and shelter. “We need them to feel connected.” Some estimates are that one in three people are moderate to advanced celebrity worshippers. Whether the paparazzi follow celebrities because the public demands news of the stars or the celebrities and their pr machines broadcast news because they believe the public should be interested, the situation is not healthy.
It is the epitome of the infamous “Fifteen Minutes of Fame.” Celebrities are made every day. A man in California suspected of killing his wife; Smart after her kidnapping. A female American soldier captured in Iraq. (What happened to the hundreds of Americans killed in Iraq—why aren’t they celebrities; they gave the ultimate sacrifice, their life. Why was she chosen?) If they aren’t appearing, they are being invented (American Idol? Bachelor/Bachelorette, Survivor). Michael Jackson’s arrest lit the headlines for weeks, even to the point of downplaying Iran’s massive earthquake that killed tens of thousands or the Asian Tsunami. Kobe Bryant occupied the news for weeks during Summer 03 for a rape accusation (how many real rapes occur daily, what made him so special?) News networks placed this situation on par with the Iraqi war.
Oprah Winfrey tells America what books to read. Celebrities sponsor every product imaginable. What makes them an expert? Why should we buy a certain pair of shoes or apparel just because a celebrity says we should? Hugh Hefner eating a Carl’s Jr. hamburger is meant to bring throngs to the fast-food chain because Hugh supposedly eats there and says they should? Hollywood Celebrities make headlines by their political actions and comments: what makes them political experts? Why should Americans care what Jane Fonda has to say? The ultimate in hubris was when Ben Affleck made his “if Bush gets elected I am out of here.” Comment during the 2000 election. Did he really expect Americans to vote against Bush because they did not want to see him leave? He might be an excellent actor but as a knowledgeable political figure he is not credible. And finally there are those inane television shows whose very essence consists of celebrities and their status: Celebrity Poker, Donald Trump interviews, Made for TV movies about celebrities, Celebrity-Magazines fill the grocery next to check-out; Does Hollywood really believe the “little person” is so concerned about their stars they want to know every bit of gossip (affairs or rumored affairs, inside scoop on marriage difficulties, operations, etc) no matter how trivial? What is this society coming to?
Some experts say technology is to blame. Celebrities used to be larger than life and inaccessible—viewable only on the big screen or the little screen in the living room. No longer. Fans can now learn and view intimate details of celebrities practically on a minute-to-minute basis through 24 hour news channels, Entertainment cable channels, a host of available print vehicles, or online at any of the many celebrity or fan web sites. The end result is the feeling that the fan knows the celebrity, establish a relationship with them, and shares the celeb’s life. Or perhaps it is, as another expert indicates, because we, as a nation of consumers, are information hungry, about anything, including stars.
Another reason is due to economic uncertainty and recessions: during economic downturns, there is a tendency for people to want to know about the rich and famous more than other times. Others say the advanced economic status of the developed countries is to blame. As all the basic needs are taken care of, more leisure time is available. When this happens, Joyce Brothers says, “We have time to fritter away on less important things.”
Stars who believe their own press . . . Jack Quigman played Quncy, MD and then for years afterwards relied on his expert presence to rally troops around medical issues.
Parade magazine sells out constantly with only stories about stars and starlets. The same goes for People,..Sports , Media, Music and Hollywood. Celebs: America’s royalty? It certainly appears so.
The demagogy of the word hero is an excellent example. In past days, the term hero was reserved for one who sacrificed his/her life or whose actions put his/her life in jeopardy. Heroes were also those who put their career, reputation, honor on the line for that they believed in. It was not a term to be bandied around lightly. Today, the term is practically synonymous with celebrity. Michael Jordan is a hero to the youth; really? When did he ever put his life on the line?
From a marketing perspective, if celebrities sell, who are we to pass judgment on the situation. Nonetheless, use of celebrities as sponsors of products must be a cautious undertaking. O.J. Simpson was the star of Hertz commercials, jumping over airport lounge chairs, and running through airports, for decades. The public indelibly linked the two. It was a huge success for years--until the summer of 1994 with the murder of his wife and her male friend. Even though eventually acquitted, the negative press and the resulting doubts have made him persona non-grata for any sponsorship role; the impact upon Hertz has had to be negative. Another prime example is the Drink Milk campaigns with celebrity after celebrity with milk moustaches. Another great success. Except with Dennis Rodman, the NBA bad boy, went too far, kicked an courtside cameraman during a game; The Agency fired Dennis and withheld those ads with his appearances.
Celebrities sell but not celebrities are created equal and stay that way. Be careful whom you choose. .
By Paul Herbig
Celebrities have gained deity perspective in many minds. More than ever before, Americans are celebrity smitten, if not obsessed. Some psychologists claim Americans need celebrities as much as food, water and shelter. “We need them to feel connected.” Some estimates are that one in three people are moderate to advanced celebrity worshippers. Whether the paparazzi follow celebrities because the public demands news of the stars or the celebrities and their pr machines broadcast news because they believe the public should be interested, the situation is not healthy.
It is the epitome of the infamous “Fifteen Minutes of Fame.” Celebrities are made every day. A man in California suspected of killing his wife; Smart after her kidnapping. A female American soldier captured in Iraq. (What happened to the hundreds of Americans killed in Iraq—why aren’t they celebrities; they gave the ultimate sacrifice, their life. Why was she chosen?) If they aren’t appearing, they are being invented (American Idol? Bachelor/Bachelorette, Survivor). Michael Jackson’s arrest lit the headlines for weeks, even to the point of downplaying Iran’s massive earthquake that killed tens of thousands or the Asian Tsunami. Kobe Bryant occupied the news for weeks during Summer 03 for a rape accusation (how many real rapes occur daily, what made him so special?) News networks placed this situation on par with the Iraqi war.
Oprah Winfrey tells America what books to read. Celebrities sponsor every product imaginable. What makes them an expert? Why should we buy a certain pair of shoes or apparel just because a celebrity says we should? Hugh Hefner eating a Carl’s Jr. hamburger is meant to bring throngs to the fast-food chain because Hugh supposedly eats there and says they should? Hollywood Celebrities make headlines by their political actions and comments: what makes them political experts? Why should Americans care what Jane Fonda has to say? The ultimate in hubris was when Ben Affleck made his “if Bush gets elected I am out of here.” Comment during the 2000 election. Did he really expect Americans to vote against Bush because they did not want to see him leave? He might be an excellent actor but as a knowledgeable political figure he is not credible. And finally there are those inane television shows whose very essence consists of celebrities and their status: Celebrity Poker, Donald Trump interviews, Made for TV movies about celebrities, Celebrity-Magazines fill the grocery next to check-out; Does Hollywood really believe the “little person” is so concerned about their stars they want to know every bit of gossip (affairs or rumored affairs, inside scoop on marriage difficulties, operations, etc) no matter how trivial? What is this society coming to?
Some experts say technology is to blame. Celebrities used to be larger than life and inaccessible—viewable only on the big screen or the little screen in the living room. No longer. Fans can now learn and view intimate details of celebrities practically on a minute-to-minute basis through 24 hour news channels, Entertainment cable channels, a host of available print vehicles, or online at any of the many celebrity or fan web sites. The end result is the feeling that the fan knows the celebrity, establish a relationship with them, and shares the celeb’s life. Or perhaps it is, as another expert indicates, because we, as a nation of consumers, are information hungry, about anything, including stars.
Another reason is due to economic uncertainty and recessions: during economic downturns, there is a tendency for people to want to know about the rich and famous more than other times. Others say the advanced economic status of the developed countries is to blame. As all the basic needs are taken care of, more leisure time is available. When this happens, Joyce Brothers says, “We have time to fritter away on less important things.”
Stars who believe their own press . . . Jack Quigman played Quncy, MD and then for years afterwards relied on his expert presence to rally troops around medical issues.
Parade magazine sells out constantly with only stories about stars and starlets. The same goes for People,..Sports , Media, Music and Hollywood. Celebs: America’s royalty? It certainly appears so.
The demagogy of the word hero is an excellent example. In past days, the term hero was reserved for one who sacrificed his/her life or whose actions put his/her life in jeopardy. Heroes were also those who put their career, reputation, honor on the line for that they believed in. It was not a term to be bandied around lightly. Today, the term is practically synonymous with celebrity. Michael Jordan is a hero to the youth; really? When did he ever put his life on the line?
From a marketing perspective, if celebrities sell, who are we to pass judgment on the situation. Nonetheless, use of celebrities as sponsors of products must be a cautious undertaking. O.J. Simpson was the star of Hertz commercials, jumping over airport lounge chairs, and running through airports, for decades. The public indelibly linked the two. It was a huge success for years--until the summer of 1994 with the murder of his wife and her male friend. Even though eventually acquitted, the negative press and the resulting doubts have made him persona non-grata for any sponsorship role; the impact upon Hertz has had to be negative. Another prime example is the Drink Milk campaigns with celebrity after celebrity with milk moustaches. Another great success. Except with Dennis Rodman, the NBA bad boy, went too far, kicked an courtside cameraman during a game; The Agency fired Dennis and withheld those ads with his appearances.
Celebrities sell but not celebrities are created equal and stay that way. Be careful whom you choose. .
Tuesday, October 2, 2007
CRM
CRM
CRM Customer Relationship Management: A big fancy word for knowing your customer. Something most good businesspersons never stopped doing. It is only new in the sense that for most of the twentieth century, mass media advertising was the norm. In the nineteen century, before the rise of the large corporation, most of America’ (and indeed the world’s) commerce was performed by small sole proprietor shops. They HAD to know their customers. But as one-to-one marketing gave away to marketing to the masses, that knowledge of working with individual customers, knowing them intimately, and working to satisfy their unique needs, dissipated. CRM is an attempt to return to what worked well in the nineteenth century and what will work well in the twenty-first century as well.
A Term that must be understood, remembered, and utilized is Lifetime value of a customer This revolves around a company’s attitude towards customer If I spend 300 dollars a month on groceries for my family, am I worth $300 to that grocery chain? No, I am worth $72,000 ($300 per month times 12 months times 20 years). The company then had better think about treating me as if I were worth $72K. Loyal customers: buy more, more often, are less price sensitive, more loyal, and will purchase higher priced options, while the cost of servicing them is much less and the profitability of a retention customer much greater than a mere acquired one Customer wants: recognition, service, information, convenience, helpfulness
Today’s marketers are being required to provide ROI forecasts as well as to provide quantitative revenue contributions of marketing activities. Marketers must have the ability to track and measure precise return of all activities down to the individual customer level.
With availability of customer purchase information, marketers now have access to critical data that can be combined with demographic and historical information that a company has on its customers. Using that combination, marketers can then determine more precise market segments and customer characteristics and thus deliver more effective marketing.
The objective is to provide the information and marketing offers to the right people at the right time. When this is done, consumers see the effort as valuable to them and appreciate the responsiveness. It provides the company a significant competitive advantage.
Through a CRM system and the availability of customer data, marketers can finally see clearly who their customers are, what they are purchasing, when they are purchasing it, and where it is being purchased at. Marketers can then apply statistical analysis to predict future purchase behavior. CRM systems also calculate the lifetime value of customers which can then allow Marketers to categorize customers and pursue the high value segment. Through CRM systems, marketers can better understand and shape the customer experience in all phases of the relationship—from leads to prospect to customer to (worst case) former customer. Marketing and CRM work so well together because they basically have the same mission: to identify, acquire, foster, and retain loyal, profitable customers.
Through CRM, the company will know more about what the customer might be interested in and will send specific offers only to those with the highest possible interest and readiness to buy. CRM has had mixed successes. Less than 30 percent of CRM adopting companies report achieving the expected return from their CRM investments. The problem all too often is not the program but the company (29% failure from organizational change, 22% from company politics/inertia; lack of CRM understanding 20%)
Perhaps not CRM but CMR (Customer Management of Relationships).
CRM Customer Relationship Management: A big fancy word for knowing your customer. Something most good businesspersons never stopped doing. It is only new in the sense that for most of the twentieth century, mass media advertising was the norm. In the nineteen century, before the rise of the large corporation, most of America’ (and indeed the world’s) commerce was performed by small sole proprietor shops. They HAD to know their customers. But as one-to-one marketing gave away to marketing to the masses, that knowledge of working with individual customers, knowing them intimately, and working to satisfy their unique needs, dissipated. CRM is an attempt to return to what worked well in the nineteenth century and what will work well in the twenty-first century as well.
A Term that must be understood, remembered, and utilized is Lifetime value of a customer This revolves around a company’s attitude towards customer If I spend 300 dollars a month on groceries for my family, am I worth $300 to that grocery chain? No, I am worth $72,000 ($300 per month times 12 months times 20 years). The company then had better think about treating me as if I were worth $72K. Loyal customers: buy more, more often, are less price sensitive, more loyal, and will purchase higher priced options, while the cost of servicing them is much less and the profitability of a retention customer much greater than a mere acquired one Customer wants: recognition, service, information, convenience, helpfulness
Today’s marketers are being required to provide ROI forecasts as well as to provide quantitative revenue contributions of marketing activities. Marketers must have the ability to track and measure precise return of all activities down to the individual customer level.
With availability of customer purchase information, marketers now have access to critical data that can be combined with demographic and historical information that a company has on its customers. Using that combination, marketers can then determine more precise market segments and customer characteristics and thus deliver more effective marketing.
The objective is to provide the information and marketing offers to the right people at the right time. When this is done, consumers see the effort as valuable to them and appreciate the responsiveness. It provides the company a significant competitive advantage.
Through a CRM system and the availability of customer data, marketers can finally see clearly who their customers are, what they are purchasing, when they are purchasing it, and where it is being purchased at. Marketers can then apply statistical analysis to predict future purchase behavior. CRM systems also calculate the lifetime value of customers which can then allow Marketers to categorize customers and pursue the high value segment. Through CRM systems, marketers can better understand and shape the customer experience in all phases of the relationship—from leads to prospect to customer to (worst case) former customer. Marketing and CRM work so well together because they basically have the same mission: to identify, acquire, foster, and retain loyal, profitable customers.
Through CRM, the company will know more about what the customer might be interested in and will send specific offers only to those with the highest possible interest and readiness to buy. CRM has had mixed successes. Less than 30 percent of CRM adopting companies report achieving the expected return from their CRM investments. The problem all too often is not the program but the company (29% failure from organizational change, 22% from company politics/inertia; lack of CRM understanding 20%)
Perhaps not CRM but CMR (Customer Management of Relationships).
Saturday, September 22, 2007
RealityofBranding
The Reality of Branding
Reality shows are all the rage. Rumor has it next year the Survivor franchise, having run out of exotic places to televise from is going to run an experimental Survivor: South Central LA hour long show: Contestants will be parachuted into that part of LA and any that survive until the end of the show wins a chance to return the following week to try again. Of course, show business execs are complaining that an hour might be too long and difficult to fill with the rate of expected attrition. Nonetheless . . . one has to view these reality shows with a cynical outlook; after all, how “alone’ can you be with twenty camera crews and fifty overhead cameras recording your every move and thought?
Of all the reality shows, the Apprentice comes closest to real world value. It teaches concepts such as leadership, teamwork, competition and customer centric that this here prophet has always thought worthy of dissemination. However, one can also watch the show and pick up such non-desirable traits as finger-pointing, sabotage, autocratic behavior, bullying, and pure stupidity. But it is fun to watch and probably more of a learning experience than all the other Survivor series combined (ad infinitum).
Nevertheless, I must comment on some aspects of the series. The format typically has two teams competing against each other on a particular assignment. They have 24 hours (or less sometimes) to complete a business assignment. Of course it is “staged” but often fun to watch. Here’s my beef: in less than 24 hours the team are challenged to create a new brand or branding position for a particular product and present their findings to corporate head honchos.
Wrong. Wrong. Wrong. This is teaching America that all it takes is 24 hours and a Power-point presentation and you have established a brand that you can sell by the millions.. This is an entirely wrong notion of how to brand and what brands are. Brands are not created overnight and come into the world fully formed and ready for consumer consumption. Brands are an emotional shortcut between the product/company and the customer and provide valuable information to customers regarding quality to customers. Brands identify, differentiates, minimizes risk to the customer, reduces search cost to the customer, and provide meaning to the customer. It is basically a promise: ”You continue to buy from me and I will continue to provide the same high quality product to you.”
1) Branding is a multi-year phenomenon. Some experts indicate it could take as many as 5-7 years to firmly establish a brand in the mindset of your customers. It takes time and multiple purchases to gain credibility and trust among customers. You cannot merely tell them once and it is a done deal.
2) Consistency in the message is a necessity. All forms of marketing media must contain the same branding message and position. Otherwise, your customers will be confused about what you stand for . . . if anything.
3) Brand message and position must be reasonable and rationale with the product or service you are marketing and the company mission/reality. A Tiffany store in Walmart may not do well. In other words, you can’t make pearls from swine. You can always get them to buy once but it takes a good product to get repeat purchases.
4) Provide a simple, realistic, relevant message. All the branding advertising in the world is not going to make up for a poor product. The product must be a quality, usable, understandable and relevant.
So next time you watch The Apprentice, enjoy the show, watch the business banter but understand reality is much more subtle (and less forgiving than The Donald).
Reality shows are all the rage. Rumor has it next year the Survivor franchise, having run out of exotic places to televise from is going to run an experimental Survivor: South Central LA hour long show: Contestants will be parachuted into that part of LA and any that survive until the end of the show wins a chance to return the following week to try again. Of course, show business execs are complaining that an hour might be too long and difficult to fill with the rate of expected attrition. Nonetheless . . . one has to view these reality shows with a cynical outlook; after all, how “alone’ can you be with twenty camera crews and fifty overhead cameras recording your every move and thought?
Of all the reality shows, the Apprentice comes closest to real world value. It teaches concepts such as leadership, teamwork, competition and customer centric that this here prophet has always thought worthy of dissemination. However, one can also watch the show and pick up such non-desirable traits as finger-pointing, sabotage, autocratic behavior, bullying, and pure stupidity. But it is fun to watch and probably more of a learning experience than all the other Survivor series combined (ad infinitum).
Nevertheless, I must comment on some aspects of the series. The format typically has two teams competing against each other on a particular assignment. They have 24 hours (or less sometimes) to complete a business assignment. Of course it is “staged” but often fun to watch. Here’s my beef: in less than 24 hours the team are challenged to create a new brand or branding position for a particular product and present their findings to corporate head honchos.
Wrong. Wrong. Wrong. This is teaching America that all it takes is 24 hours and a Power-point presentation and you have established a brand that you can sell by the millions.. This is an entirely wrong notion of how to brand and what brands are. Brands are not created overnight and come into the world fully formed and ready for consumer consumption. Brands are an emotional shortcut between the product/company and the customer and provide valuable information to customers regarding quality to customers. Brands identify, differentiates, minimizes risk to the customer, reduces search cost to the customer, and provide meaning to the customer. It is basically a promise: ”You continue to buy from me and I will continue to provide the same high quality product to you.”
1) Branding is a multi-year phenomenon. Some experts indicate it could take as many as 5-7 years to firmly establish a brand in the mindset of your customers. It takes time and multiple purchases to gain credibility and trust among customers. You cannot merely tell them once and it is a done deal.
2) Consistency in the message is a necessity. All forms of marketing media must contain the same branding message and position. Otherwise, your customers will be confused about what you stand for . . . if anything.
3) Brand message and position must be reasonable and rationale with the product or service you are marketing and the company mission/reality. A Tiffany store in Walmart may not do well. In other words, you can’t make pearls from swine. You can always get them to buy once but it takes a good product to get repeat purchases.
4) Provide a simple, realistic, relevant message. All the branding advertising in the world is not going to make up for a poor product. The product must be a quality, usable, understandable and relevant.
So next time you watch The Apprentice, enjoy the show, watch the business banter but understand reality is much more subtle (and less forgiving than The Donald).
Wednesday, September 12, 2007
Hoorayforproblems
Problem, Problem, Who’s got a problem? We’ve got the problem.
The Retail Customer Dissatisfaction Study 2006, conducted by The Jay H. Baker Retailing Initiative at Wharton and The Verde Group, a Toronto consulting firm, surveyed approximately 1200 U.S. shoppers in the weeks before and after Christmas 2005. Those surveyed were asked to discuss their most recent shopping experience. Half said they had at least one problem. On average, survey respondents reported experiencing three problems on the shopping trip, during which they spent an average of $163.
Parking was a major source of aggravation for shoppers with 40% of those surveyed reporting dissatisfaction in the parking lot. This is not good news for retailers as parking problems set the stage for customers to "arrive angry," which can make them more likely to have a troubled shopping experience. Retailers must realize the shopping experience is total and inclusive, from the time the shopper decides to leave their front door until they return home
In addition to parking problems, shoppers surveyed complained that it took a long time for them to be waited on (24%) or to pay (33%). Shoppers who had to wait for service complained about it to 2.1 other people, on average, and those who had to wait a long time to pay told an average of 1.4 people. Customers' time has become an important part of the retail value equation, along with price, merchandising and other traditional components of the industry.. Time is a rare and precious thing. Yet because the Internet allows shoppers to buy around the clock, there is more pressure on retailers to respect their customers' time.
Meanwhile, retailers continue to focus on merchandise, jamming stores with inventory that overwhelms customers and cuts into the time they have to shop. According to the survey, shoppers are likely to tell 2.5 people, on average, about their inability to find an item because the store was cluttered with merchandise. In the end, retailers will wind up reducing the price on merchandise to make up for the negative experience, eroding their profit margins.
The survey shows some slight differences in attitudes among shoppers who were reporting their experiences at a mass merchant versus a specialty store. People who are in a specialty store are more in the pleasure-seeking experience, while people going to a mass merchant are on a mission.
Retailers historically have paid a great deal of attention to how to satisfy the customer, but have not been too interested in finding out what makes them dissatisfied. Historically it has focused more on product and experience as a way to create satisfaction.
And despite the value in learning about consumer gripes, retailers have resisted asking their customers what they do wrong for fear of stirring up negative thoughts. Retailers need to find ways to get customers to share complaints with management, not friends and family. One way is for retailers to ask customers to check a box on their credit card slip indicating they had a problem at the store. Retailers could then attempt to follow up, or give the customer a phone number or web address to make their complaints directly. If nothing else, it would give the customer a chance to blow off steam.. Retailers that are responsive and friendly are more likely to smooth over issues than those that don't try to be as friendly as possible.
And now to the moral of the story: Why don't shoppers confront the retailer directly? Respondents indicated they rarely discussed their concerns with store personnel or management. The prevailing psychology was that most people presumed it would happen repeatedly (46% of those who had a problem expect they would definitely or probably experience the same problem in the future), was unavoidable, and resigned themselves to poor service. When any service has become a pleasant surprise instead of the expected, the time is ripe for a marketer to woo customers with (if not exceptional) then solid good sincere service. How much more effort would it take to do so? And by what America is telling us, the reward would be well worth it.
The Retail Customer Dissatisfaction Study 2006, conducted by The Jay H. Baker Retailing Initiative at Wharton and The Verde Group, a Toronto consulting firm, surveyed approximately 1200 U.S. shoppers in the weeks before and after Christmas 2005. Those surveyed were asked to discuss their most recent shopping experience. Half said they had at least one problem. On average, survey respondents reported experiencing three problems on the shopping trip, during which they spent an average of $163.
Parking was a major source of aggravation for shoppers with 40% of those surveyed reporting dissatisfaction in the parking lot. This is not good news for retailers as parking problems set the stage for customers to "arrive angry," which can make them more likely to have a troubled shopping experience. Retailers must realize the shopping experience is total and inclusive, from the time the shopper decides to leave their front door until they return home
In addition to parking problems, shoppers surveyed complained that it took a long time for them to be waited on (24%) or to pay (33%). Shoppers who had to wait for service complained about it to 2.1 other people, on average, and those who had to wait a long time to pay told an average of 1.4 people. Customers' time has become an important part of the retail value equation, along with price, merchandising and other traditional components of the industry.. Time is a rare and precious thing. Yet because the Internet allows shoppers to buy around the clock, there is more pressure on retailers to respect their customers' time.
Meanwhile, retailers continue to focus on merchandise, jamming stores with inventory that overwhelms customers and cuts into the time they have to shop. According to the survey, shoppers are likely to tell 2.5 people, on average, about their inability to find an item because the store was cluttered with merchandise. In the end, retailers will wind up reducing the price on merchandise to make up for the negative experience, eroding their profit margins.
The survey shows some slight differences in attitudes among shoppers who were reporting their experiences at a mass merchant versus a specialty store. People who are in a specialty store are more in the pleasure-seeking experience, while people going to a mass merchant are on a mission.
Retailers historically have paid a great deal of attention to how to satisfy the customer, but have not been too interested in finding out what makes them dissatisfied. Historically it has focused more on product and experience as a way to create satisfaction.
And despite the value in learning about consumer gripes, retailers have resisted asking their customers what they do wrong for fear of stirring up negative thoughts. Retailers need to find ways to get customers to share complaints with management, not friends and family. One way is for retailers to ask customers to check a box on their credit card slip indicating they had a problem at the store. Retailers could then attempt to follow up, or give the customer a phone number or web address to make their complaints directly. If nothing else, it would give the customer a chance to blow off steam.. Retailers that are responsive and friendly are more likely to smooth over issues than those that don't try to be as friendly as possible.
And now to the moral of the story: Why don't shoppers confront the retailer directly? Respondents indicated they rarely discussed their concerns with store personnel or management. The prevailing psychology was that most people presumed it would happen repeatedly (46% of those who had a problem expect they would definitely or probably experience the same problem in the future), was unavoidable, and resigned themselves to poor service. When any service has become a pleasant surprise instead of the expected, the time is ripe for a marketer to woo customers with (if not exceptional) then solid good sincere service. How much more effort would it take to do so? And by what America is telling us, the reward would be well worth it.
कस्तोमेर्सोल्दंड़व
Something New, Something Old: Customers
Last week, I started counting the signs and marquees I saw in our little town alone:
“New Customers Half off first rental”
“Free XXX with first purchase”
“10% off First Year Fees”
“ First Time buyers—no payment until 2007”
At first glance, I thought, isn’t this terrific marketing. Then it hit me: I was not eligible for any of these because I was an already established customer. And then I did not feel quite so kind. What am I missing out on by being an old, reliable, non-threatening, buy and never complain type of customer? Are you taking me for granted—good old reliable Paul. Are you being complacent about me? Perhaps it is time for me to shake you up and change businesses. I (and I suspect most people as well) do not like being taken for granted and discriminated against (which is exactly what this is, discriminating for new customers/businesses at the expense of us older clients).
Is your business doing likewise? Working overtime to attract new customers and not paying attention or giving time to present, existing customers? This is a recipe for disaster. Do you think that once you bagged a new customer, s/he will be yours for ever and you can go hunting for new clients without regard for your previous catches? Think again.
Do you know what the numbers say? It takes five times as much time and money to get a new customer as it does to enhance an existing customer’s business. The typical business gains less than 5 to 10% of lifetime potential business from the initial sale to a customer. If you do not go back to your existing customers, you are missing out on up to 95% of potential revenues from that customer. You have already established a relationship with the customer, s/he knows your products, your company, your service capabilities and your employees. You have already established awareness and a reputation (hopefully a good one) with your existing customers. Think of the costs involved in gaining the levels of awareness and reputation that already exist in current customers to new customers who may have never heard of you. That is the benefit of your established base.
If you are already aware of these benefits and still chase after new customers, why? For many of us, the roots of the problem can be found in our evolutionary past: it is the thrill of the chase and the immense joy in the successful ‘kill.’. Or the pride achieved in a new ‘conquest.’ That as it may be, it is time to tame the primitive hunter and use the rational civilized mind to run a business, not a wild game chase on the Savanna.
I recently received a notice in the mail from a health plan I belong to. They indicate a rate increase is forthcoming. Then they indicated they could either raise the rate only on old customers thus “keeping our new customer rates lower to attract new business,” or raise rates on both old and new customers. They decided to do the latter. They have foregone the temptation to lure in new business while taking advantage of older customers. In the end, they will gain less new business but retain many more older customers. I cheer them on with their decision.
What can you do?
1) Many of the challenges can be traced directly to the incentive system provided to salespersons—more bang for new accounts than for managing older existing ones. Modify it so appropriate weights exist.
2) Do not actively discriminate between old and new customers. Your existing customers will play the game to get the ‘newie’ benefits: they will create new email addresses to confuse the system into thinking they are new customers. Don’t get into playing games. Stick to providing the best products and services you can offer. Everything else will follow.
3) Of course you should always be seeking new business. Remember that new business that comes because of deep initial discounts or freebies will more readily leave when the next vendor offers better deals. Seek those businesses/customers who will be long-term customers. Gain their attention with your product/service/reputation/quality not with a one-time deal.
Remember your old existing customers for it is they that will grow your business.
Last week, I started counting the signs and marquees I saw in our little town alone:
“New Customers Half off first rental”
“Free XXX with first purchase”
“10% off First Year Fees”
“ First Time buyers—no payment until 2007”
At first glance, I thought, isn’t this terrific marketing. Then it hit me: I was not eligible for any of these because I was an already established customer. And then I did not feel quite so kind. What am I missing out on by being an old, reliable, non-threatening, buy and never complain type of customer? Are you taking me for granted—good old reliable Paul. Are you being complacent about me? Perhaps it is time for me to shake you up and change businesses. I (and I suspect most people as well) do not like being taken for granted and discriminated against (which is exactly what this is, discriminating for new customers/businesses at the expense of us older clients).
Is your business doing likewise? Working overtime to attract new customers and not paying attention or giving time to present, existing customers? This is a recipe for disaster. Do you think that once you bagged a new customer, s/he will be yours for ever and you can go hunting for new clients without regard for your previous catches? Think again.
Do you know what the numbers say? It takes five times as much time and money to get a new customer as it does to enhance an existing customer’s business. The typical business gains less than 5 to 10% of lifetime potential business from the initial sale to a customer. If you do not go back to your existing customers, you are missing out on up to 95% of potential revenues from that customer. You have already established a relationship with the customer, s/he knows your products, your company, your service capabilities and your employees. You have already established awareness and a reputation (hopefully a good one) with your existing customers. Think of the costs involved in gaining the levels of awareness and reputation that already exist in current customers to new customers who may have never heard of you. That is the benefit of your established base.
If you are already aware of these benefits and still chase after new customers, why? For many of us, the roots of the problem can be found in our evolutionary past: it is the thrill of the chase and the immense joy in the successful ‘kill.’. Or the pride achieved in a new ‘conquest.’ That as it may be, it is time to tame the primitive hunter and use the rational civilized mind to run a business, not a wild game chase on the Savanna.
I recently received a notice in the mail from a health plan I belong to. They indicate a rate increase is forthcoming. Then they indicated they could either raise the rate only on old customers thus “keeping our new customer rates lower to attract new business,” or raise rates on both old and new customers. They decided to do the latter. They have foregone the temptation to lure in new business while taking advantage of older customers. In the end, they will gain less new business but retain many more older customers. I cheer them on with their decision.
What can you do?
1) Many of the challenges can be traced directly to the incentive system provided to salespersons—more bang for new accounts than for managing older existing ones. Modify it so appropriate weights exist.
2) Do not actively discriminate between old and new customers. Your existing customers will play the game to get the ‘newie’ benefits: they will create new email addresses to confuse the system into thinking they are new customers. Don’t get into playing games. Stick to providing the best products and services you can offer. Everything else will follow.
3) Of course you should always be seeking new business. Remember that new business that comes because of deep initial discounts or freebies will more readily leave when the next vendor offers better deals. Seek those businesses/customers who will be long-term customers. Gain their attention with your product/service/reputation/quality not with a one-time deal.
Remember your old existing customers for it is they that will grow your business.
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