Category Archives: Marketing thru Operations

Interview-Podcast w/ Jim Novo

Analytical Culture, Analytics Education, Brand Management, DataBase Marketing, Lab Store, Marketing / Tech Interface, Marketing Research, Marketing thru Operations, Measuring Engagement, Web Analytics

Friend and fellow blogger Alan Rimm-Kaufman spent some of his valuable time asking my opinion on various online marketing issues in a far-ranging interview and podcast.

We met in person for the first time doing a presentation together at the DMA show in Chicago this fall, and because he used to work at Crutchfield – a truly customer-driven remote retailer – we share some experiences and beliefs.

For those of you who might be wondering where a lot of the Marketing Productivity ideas I post here come from, this interview-podcast is probably a pretty good backgrounder. We talk about a lot of stuff, including:

Monetizing customer experience

Importance of Control Groups / Source Attribution

Multichannel Marketing Strategy

LifeCycle Contact Strategy versus Calendar-based

Retail Business Models / Lab Store

Search box or not? / Serendipity

How to tell if online customers are really engaged – without web analytics

Here’s another link to the Interview-Podcast. Enjoy!

That was lots of fun, thanks Allen!

Marketing through Operations

Analytical Culture, Brand Management, DataBase Marketing, Marketing thru Operations

OK, so to review, here’s the premise. Customer-centricity is something companies want to embrace more than ever. Company can do this through a Chief Customer Officer, but why isn’t a Marketing exec taking the reins on this issue? In direct marketing companies – where customer-centricity is not just a fad, but has a decades-long history – the Marketing folks know that Operations typically contains a goldmine of customer-centric Marketing opportunities they can take advantage of. Many of these opportunities come from problems with empathy and context – or for the more technical folks out there, “Usability”.

Yes, you can optimize the service side of a business just like you can optimize a web site. Here is how:

1. Do you have a relationship with a peer in customer service? If not, that’s really short-sighted for a marketing person who wants to be viewed as a strategic thinker – find someone, OK?

2. Does customer service record the reason for each call? If not, that’s nuts. Most every call center system provides this capability, but you do have to turn the damn module on and populate it with the reasons people call. So if the center is not using this functionality, get talking about how to get it turned on.

3. You and your customer service peer need a list of the reasons people call. Get this by talking, of course, with the agents. If such a list does not exist, create it. If such a list does exist, review it – it’s probably filled with crap or default reasons that don’t really have much to do with your business. This is the most common mistake I see made in the “customer centric” area – using default call reasons not customized for the business.

4. Once you have the module running and the call reasons right, make sure the agents know how important it is to status every call correctly. Tell them by statusing calls, you plan to make their jobs easier by reducing routine problem calls, allowing them to spend more time on quality of call and resolving complex issues.

5. Determine how to report on compliance with correct statusing. If you don’t do this, all your effort will be subject to failure. Hint: Do not provide agents with a giant “other reason” bucket; force accurate call accounting by providing a full and complete call reason set that only allows a very small percentage of “other reason” ticks.

6. Find out from Customer Service or Finance what the internally acceptable “cost per call” calculation is; what does Finance think it costs to take a customer service call?

7. In conjunction with customer service, study the reasons people call and think about how to reduce the need for those callers to call. This project is about reducing or eliminating the triggers for a call. Why do they call? FYI, most really customer-centric companies have a meeting on this topic every week. At HSN, we had this meeting every day. Why? Because we could react in real time. If you are in an interactive business, perhaps you can too.

8. In many cases, you will find they call because of things marketing does or could affect, for example:

Confusing language or other problems with marketing materials / advertising – this is a huge category which includes all kinds of bad Marketing execution – wrong or expired coupon codes, collateral distribution problems, etc.
Incomplete or confusing instructions or product packaging
Incomplete or confusing installation process or procedures
Pricing or bundling logic issues – the options don’t make sense to the customer
Problems with call center script language or logic
Illogical touch-tone trees or branching problems
All kinds of similar problems with the web site too numerous to mention here

Note to web analysts reading this:

Sound familar? After you optimize the web site, find out if they will let you join the BI unit and optimize the business. Idea: Optimizing a VRU / IVR is really no different than optimizing a web site using path analysis – think about it. Traffic sources, the funnel, leaky bucket, pogo-sticking. Same thing.

9. Get off your GRP-lovin’ ass and fix the operational problems Marketing is causing or can affect.

If you are saying to yourself, “But I don’t have control over a lot of the items on this list” then ask yourself why that is. All this stuff is about copy and presentation, and heck, you’re the expert in those areas, right? So why don’t you have control over these issues? Did you ever ask for this control? If not, why? That’s what a strategic thinker would do, because all these customer contact issues directly affect customer value and retention.

This stuff is marketing. It directly affects the value of the customer and customer retention, not to mention word-of-mouth. You want that new fangled social media thingie you bought to boost sales, right? How about optimizing the customer experience with your company?

Oh, I forgot, less than 30% of you said increasing customer LifeTime Value is a top marketing objective. So I guess less than 30% of you should move to the next step.

10. Measure the reduction in phone calls for these problem areas you have fixed, calculate the cost savings, present to senior management.

Extra credit: measure the increase in customer satisfaction, if that’s all you can do. Better than nothing. Hopefully you have some kind of statistically correct, longitudinal study going and can measure satisfaction properly.

Super extra credit: measure the actual reduction in customer defection and monetary value of this reduction. That’s the right thing to do and will boost the monetary value of your actions tremendously.

11. Pitch strategic seat at the table / Chief Customer Officer responsibilities using knowledge from “why they call” study and resulting operational modifications. You will have no shortage of future issues to work on. Somebody has to do it, might as well be you.

12. Convene cross-functional team, you will need it. Get best and brightest from every area of the company or unit. At minimum: Marketing / Sales, Customer Service, Finance, IT, Distribution

13. Start fixing more stuff that pisses the customer off, generates calls, and truncates customer value. Achieve customer centricity. After all, they tell you every single day what pisses them off.

Why don’t you fix this stuff?

Any takers? Anybody doing this? Any Marketers think they will get resistance if they start poking their nose into customer service land?

Measuring Customer Experience ROMI #2: Lab Store – New Customer Kits

Analytics Education, DataBase Marketing, Lab Store, Marketing thru Operations

Here’s another Customer Experience kind of test that proves you can generate incremental profit by improving the Experience. You just have to make sure customers want the experience “improved”. This example is from the Lab Store and the ROMI on this little program is a real eye popper.

Back in the old days (meaning the 80’s), what I guess is now called WOW was referred to as “surprise and delight”. Essentially, this 2-step idea works like this: when you surprise the customer, you really get their attention. If you can get their attention by surprise and delight them at the same time (instead of pissing them off with your surprise), then you are going to have a more loyal customer. The trick, of course, is to somehow make more money doing it…

New Customer Kits are a very simple way to do this, and in my remote retailing experience, it works every time. First impressions, in case you didn’t know, are really important – and especially so in remote retailing, where there is no way for the customer to get any tangible “feeling” for the company. Sure, you have copy on the web site that paints a picture. But how many times have people read all this wonderful copy only to be screwed when delivered the tangible experience?

The challenge is to design a kit that is relatively inexpensive yet packs an emotional delight. Lots of people toss extra stuff for the customer in the first order, but that stuff is usually company-centric, for example, “Here is a magnet with our URL on it” or “Here is a catalog of our other products”. That’s fine, but it’s neither surprising nor delightful.

Here is what makes up a good New Customer Kit, based on years of testing:

1. A letter or other message from the company that Welcomes the customer, talks about the people and philosophy behind the company, and reinforces any guarantees or promises that are part of the Brand. This piece must be written carefully, and from a customer-centric point of view. No “we we” stuff.

2. A free gift. This gift must be related to the merchandise or general category being purchased, and must not be discards, seconds, or defective merch. Giving a new customer something that is dented or discolored is not a gift, it’s an insult. Giving a new customer something that is promotional (magnet) may be a gift, but it is expected and not particularly delightful. Giving a new customer a “gift” because they made a first purchase (Buy today and we’ll include a…) might be delightful but sure is not surprising. Ignore the above cautions at your own peril.

3. Free Samples, if relevant to the business. Anything that is consumable and generates repeat purchase is ideal.

Anyway, I suppose you’re expecting some kind of numbers to go along with all the fuzzy-wuzzy “Oh, if we just make their experience better, they will be more loyal” drivel you hear all the time online. This is the Marketing Productivity Blog, after all, right? OK, here are the stats on this technique from the Lab Store. As usual, this promotion was tested versus control (new customers who did not receive a New Customer Kit are control) and we compare sales activity of both test and control over the next 90 days. Why 90 days? Well, if it makes money at 90 days, it sure makes money at 120…

Average cost of New Member Kit (there are several versions) – $.74

Increase in 90-day second purchase rate, test versus control – over 30%

90-day ROMI – 4,891% ($36.68 in net profit for every $.75 spent)

Surprised and Delighted Customers – Priceless

Now that the bottom line has been presented, the black box folks simply interested in the “what happens” can skip the next part. If you want to know why it works and maybe learn something useful you can port elsewhere, read on.

New Customer Kits are a great way to shape Theatre of the Mind.

What you have with a remote retailing customer is a “theatre of the mind” scenario, much like you have in radio advertising. Customers can’t see or touch you, so “Cues” become extremely important; if you don’t populate the theatre of the mind for the customer, the customer will go ahead and populate it themselves. If you want some control over the image of your company people create in their head, you need to be proactive. Theatre of the mind, folks. Very powerful stuff.

Our New Customer Kit generates absolutely tons of “Thank You” e-mails from new customers who want to tell us all about how great the experience was purchasing from the Lab Store. Now, I think you’d agree that purchasing from a web site isn’t a particularly thrilling experience in any way, but if you really listen (and understand a bit of Consumer Psychology) these customers are not really talking about the web site, or even our company.

What they really are saying is they are very happy with themselves for making a first purchase from us; our actions have confirmed they made a good decision. Remember, this is remote retailing. There is risk to the customer, especially on that first purchase; they have no idea if their expectations based on the web site copy are going to match the reality of delivery. They are concerned about what might happen – will they be proven smart or dumb for taking this risk?

When we deliver the products they ordered in a timely way we meet expectations. When we deliver these products carefully packed in a pristine new box packed with fresh blank newspaper, we probably exceed expectations by a bit. But when these new customers get to the Welcome letter, the free gift, and the samples, we blow out their expectations.

The picture these new customers had in their mind of our company based on the web site experience is then permanently altered; we’re doing brain surgery for 74 cents a head.

Now, I have a question for you – is this program Marketing or Customer Experience Management?