Our Ideas
July 24th, 2010
Companies profit when they are able to satisfy a customer need. However, customer needs are as varied as the customers, themselves. It is nearly impossible for a company to satisfy every customer need by treating all of their customers the same. Segmentation is the means by which companies group customers in a market by characteristics they have in common. These characteristics can be as simple as their geographical location or industry SIC code, or as intricate as their tolerance for risk or their lifetime value. Customers with shared characteristics tend to behave similarly. As a result, these shared characteristics enable companies to know their customers and more effectively match their strengths and offerings to the groupings of customers that are most likely to respond favorably to their marketing efforts. Thru knowledge of their target market and by satisfying its needs, companies can create, at a profit, superior value, while also making it more difficult for their competitors to duplicate their success.
Why Companies Should Segment their Market
Unless they have an unlimited marketing budget, most companies are under considerable pressure to maximize the ROI on its marketing spend. Although it’s true that “Spray and Pray” marketing – a.k.a. mass marketing – allows for economies of scale, this marketing approach ignores differences in customer needs and increases the chances of other firms entering the market with a niche offering. Segmentation allows marketers to focus their resources on reaching and in satisfying the needs of the people who are most likely to convert to customers.
Segmentation also enables firms to identify gaps in the market that are not served or are under served, and highlights areas for new product development or extension of a given product or service. Using segmentation, a start-up can disrupt a market and unseat an incumbent firm with a product or service that targets a specific segment. Alternatively, an incumbent can extend its footprint in a market by introducing different, but related offerings to different segments within its chosen market.
Additionally, in instances where a company operates in a mature or declining market, segmentation allows companies to identify segments of their market that are still growing, enabling them to profit from the tail end of their product life cycle and maximize their ROI.
B2B Markets vs. Consumer Markets
To be effective, any segmentation effort should be done with full understanding of the differences between B2B and consumer markets. Firstly, it should be noted that the number of prospective customers for a typical B2B company is usually in the hundreds or small thousands – far less than the many thousands, or even millions, serviced by consumer companies. Another key difference between B2B and consumer markets is that a few B2B buyers are able to dominate a market, followed by a vast number of smaller buyers with comparatively smaller purchasing power. It’s impossible for an individual consumer to dominate a market. B2B buyers also differ from consumers in that the purchasing decisions are typically made by more than one person (i.e., Finance, IT), and there is greater pressure to demonstrate ROI. Additionally, in the case of B2B markets, buyers are also highly knowledgeable about the products or services they are purchasing – sometimes even more so than the vendors, themselves. It’s important to be aware of these differences influence the selection of a segmentation approach and the interpretation of the results.
Two Approaches to B2B Segmentation
A bad economy, globalization, and increased competition have driven companies to pay particular attention to the profitability of each of their customer relationships. As a result, value-based segmentation, which groups customers by the net present value (NPV) of all future revenue of each individual customer relationship, has become a popular approach to B2B market segmentation. To quantify a customer’s value, organizations measure:
Revenue to profitability
Past to future value
Lifetime value
Using these metrics, companies will group existing and prospective customers (usually in terms of high, medium, and low value), and then allocate resources to attracting and retaining the customers with the greatest value.
However, the value based segmentation approach implies that by focusing on the customer relationships with the greatest NPV, companies can maximize their ROI. This approach assumes that all of the high-value customers have the same needs and preferences. This is false – different customers have different needs.
Needs-based segmentation, on the other hand, focuses on the needs of customers and helps firms to identify what combination of products or services create the most compelling value proposition for different customers. In needs-based segmentation, companies divide their target markets by looking at “who” their customers are and by what their customers “do”, using:
Demographics – industry vertical, company size, geographical location
Behavior attributes – purchasing approaches, risk tolerance, customer loyalty
Needs based segmentation is a very convenient, highly actionable form of segmentation because marketers know exactly what features and performance a product or service needs to satisfy a given segment. As a result, needs based segmentation has become the go-to segmentation approach for many organizations because it allows companies to deliver exact solutions to the segment’s needs, while more broadly focused competitors are only able to deliver approximate solutions.
That said, needs based segmentation in itself is not the path to marketing nirvana and profitability, either. Though more scientific, this segmentation approach provides no insight into the overall business value of the segments. Winning a market segment in which the potential for profits are inherently poor is hardly a win.
Today, the most successful companies segment customers both in terms of value and need – that is, segments are derived from both the revenue they generate and the cost of establishing and maintaining relationships with the segments. By combining the results of needs-based and value-based segmentation analysis, marketers can gain meaningful insights into who their customers are, what they need, and their relative value to the company. Marketers can then use those insights to determine where and how to concentrate their resources to gain a sustainable competitive advantage within their chosen segments.
Getting Started
Effective segmentation starts with a good database. Before one can survey customers or prospects about their needs and preferences, one needs to be able to reach them. At a minimum, the database should include basic information like a physical address, transactional data, and contact information for key decision makers. Unfortunately, for many companies, this data will not be stored centrally and some data gathering may be needed. A good database is integral to the segmentation, however, and time spent scrubbing it is well worth the effort.
There are a variety of statistical techniques (i.e. cluster analysis, factor analysis) that can be used to segment a market. Markets can also be segmented using plan old judgment. As well, there are just as many tools – from statistical packages to CRM applications – that can be used to segment prospects. Regardless of the technique or tool used, it’s generally accepted that, per Kotler, for segments to be effective, they must be:
Measurable – the differences amongst the segments must be measurable so that they can be identifiable
Accessible – marketers must be able to reach the segments thru marketing communications and sales distribution channels
Substantial – the segments must be large enough to justify the investment of resources and energy needed to target them
Differentiable – the segments must respond differently to a company’s marketing mix
Actionable – it must be possible to develop effective marketing programs that target the segment
Customer groupings that fail to satisfy these requirements are not worth pursuing.
Once valid customer segments have been identified, they should be prioritized according to their attractiveness and the company’s competitive advantage. Segments should be ordered and pursued so as to maximize market results.
For each segment, companies should a business plan that describes how it will be treated differently from other segments. The plan should not only define segment-specific goals, but also what company resources will be allocated to the segment. Additionally, the plan should outline the company’s strategies and tactics for winning the segment.
Clearly, segmentation is a powerful marketing technique that, when applied thoughtfully, can make it easier for companies – in particular, start-ups trying to establish a foot-hold – to discover new markets, improve marketing effectiveness, and increase profitability. By investing time and resources upfront to understand who its customers are, what their customers need, and how their customers behave, companies can respond more effectively to competitive challenges in the marketplace, identify their most (or least) profitable customers, and position its products or services to leverage the company’s strengths.
For help with your company’s market segmentation efforts, visit www.washingtonsquareconsulting.com, or email us at info@washingtonsquareconsulting.com.
Posted in Demand Generation, Marketing Strategy | Comments Off
July 7th, 2010
Mention branding, and the first thing that usually comes to mind is a cool logo. However, branding is more than a logo. True, brands are used to identify the goods and services of a reseller, and to differentiate them from those of the competition. However, a brand is also an intangible product that exists in the mind of the consumer. Brands reflect a consumer’s perceptions and feelings. They take on unique, personal meanings that change with the consumer’s experience with a company, its products, and its services. They also represent the seller’s promise to consistently deliver those products and/or services. Thru experience, as well as observation, consumers form associations with a brand that dictate how they will respond to a company’s marketing efforts. A company that treats its brand only as a logo misses a unique opportunity to influence the nature of that response.
Given the importance of branding to marketing, brand management must be a high priority for companies – in particular, start-ups that are still relatively unknown in their chosen market. These organizations must actively manage their brands. Firstly, these organizations need to drive brand awareness, or the degree to which a brand is known to consumers in a market. Brand awareness can be cultivated by visually and verbally reinforcing the company’s brand name and brand elements (i.e., logo, website, tagline), using a variety of tactics like advertising, PR, social media, and so on. Second, these organizations need to create a positive brand image via strong, favorable and unique associations to the brand. Associations come in all sorts of forms. Although they often reflect characteristics of the product, they can also be independent of the product or service. For example, when a consumer thinks of Apple, they may have associations such as, “consumer friendly”, “creative”, or “cool”. Different consumers will form different associations for the same company, product and/or service. Thru skillful marketing, a company can cultivate a variety of associations that cause consumers to perceive meaningful differences among brands in a marketplace. Organizations that consistently invest in driving awareness of, as well as in cultivating positive associations with, their brand increase the likelihood consumers will react favorably to their marketing programs.
Here are four tips for improving your brand management:
Be Clear About Who You Are & What You Stand For
Since a brand is, in part, a reflection of your company’s promise to consistently deliver a product or service, you must first clear about what your company is about and what it stands for. Interview your employees and executives. Ask yourselves:
- How do you want your brand to be perceived?
- What feelings do you want your brand to evoke?
- What does your company value?
- What does your company promise?
- How is your company perceived in comparison to your competitors?
You should also interview your external constituents: consumers, investors, partners, etc. Ask them the same questions. How do their answers correspond to those of your employees? Only thru an honest assessment of how your company is perceived – both internally and externally – will you be able to gain a clear picture of how people view your brand and of what brand associations they form.
Create & Cultivate Brand Associations that Differentiate
By definition, brands allow companies to differentiate themselves, as well as their products and services, from those of the competition. The key to this differentiation is the associations consumers form about a company, product or service. Companies can identify associations that they’d like consumers to form and promote them in their marketing. For example, a manufacturer of energy efficient servers may choose to associate its brand with the “green” movement, and adopt green solutions and sustainable strategies. Another type of association relates to the customer experience. Studies have shown that price alone does not drive a customer’s purchasing behavior. Rather, the purchasing decision is driven by the consistency of a consumer’s experience with a brand before, during, and after the buying-cycle. To differentiate itself, companies should strive to be consistent in its delivery of customer service. Additionally an organization can create a positive association thru innovation. Obviously, organizations can innovate by introducing new products, features, services, etc. However, innovation is not limited to R&D. Companies can differentiate themselves thru disruptive business practices. For example, Dell Computer, one of the leading manufacturers of computer hardware, turned the computer marketplace upside down when it introduced its direct sales model. Similarly, MySQL AB, the manufacturer of the world’s most popular database, differentiated itself from other RDBMs vendors by offering its database under an open source license. So be creative! By cultivating unique associations with your brand, you will make it easier for consumers to distinguish your offerings from others in the marketplace.
Identify Your Brand Elements & Get Consistent
One of the easiest ways to create confusion about your company is inconsistency in your branding. Conduct a brand audit and make a list of all of your brand elements. Though they can be time-intensive, brand audits are useful for several reasons. First, they help companies identify consumers’ current associations and compare them to the intended associations. Second, audits provide insight into how well the brand is being managed (i.e., are the brand elements used consistently? Or are there different variations and versions, depending on the geographical market?) Lastly, a brand audit can also reveal the lack of perceived differentiators between products sharing the same brand (i.e., the open source version of an application vs. the paid version of an application). Examples of brand elements to catalog include:
- Brand names
- Logos & symbols
- Slogans & jingles
- Packaging
- Website
- Identity items
- Colour schemes
Once you’ve identified your brand elements, review them for consistency and professionalism. You should strive to incorporate your brand, colour scheme, taglines, etc. into everything you do, from your online presence to your tradeshow giveaways. As well, you should ensure that, when viewed together, your brand elements present a cohesive and professional characterization of your company – that is, together, your brand elements should tell your story. Consistent branding minimizes possible confusion and fosters a culture of familiarity.
Measure Everything
The old adage, “If you can measure it, you can manage it” holds true for branding, too. Since the effectiveness of a brand is often described in terms of the feelings and impressions it evokes, it’s easy to assume that it can’t be measured. However, qualitative and quantitative techniques have been developed for measuring brand equity. Thru qualitative techniques such as free-association and role-playing, marketers can gain valuable insight into the degree, or strength, of brand awareness, and the diversity of brand associations. Quantitative measures (i.e., tracking surveys) offer a more definitive assessment of brand awareness, as well as the strength, favorability, and uniqueness of brand associations. Regardless of the measure you choose, you should collect data on brand awareness and brand associations on a regular, if not continuous, basis so that you can readily identify any changes in brand recall and association, and make adjustments as needed.
Mega Brands are Not Created Overnight
Mega brands like Sony, Microsoft, and IBM were not created overnight. Branding is an on-going effort –cultivating awareness and creating positive associations takes time and resources. So be patient – as with a lot of things in life, branding is a process! However, companies that are relentless in their consistent delivery of products and services, as well as their use of their brand in their marketing, will be rewarded over time when their brand evolves into a valuable corporate asset, market differentiator, and revenue generator.
For help with your company’s branding efforts, visit www.washingtonsquareconsulting.com, or email us at info@washingtonsquareconsulting.com.
Posted in Customer Experience, Customer Loyalty, Marketing Strategy | Comments Off
June 29th, 2010
Open your inbox on any given day, and it’s easy to see that email marketing continues to be one of the most popular advertising vehicles for marketers. According to an Ad Effectiveness Survey by Forbes Media in Feb/March 2009, email and e-newsletter marketing are considered the second most effective conversion tool after search engine optimization. With an ROI of $42.08 for every dollar spent (the DMA’s 2010 estimates), email marketing is also one of the most cost-effective tools in a marketer’s toolbox. Even the popularity of blogs, Twitter and other social media tools hasn’t dampened marketers’ enthusiasm for email. But if email marketing is so popular and everyone is doing it, can it still work for you? Certainly – if you adhere to some basic principles.
Start with a Good List, then Target, Target, Target!
Whether it is home grown or rented, your list will dictate the success of your email campaign – it’s imperative that you start with a good list.
Perhaps the most important criteria of the list is that it be made up of individuals who have given you permission to email them. Failing to obtain permission exposes you to not only the loss of customer goodwill, but also CAN-SPAN violations. The best way to get permission is to ask for it. This is not the time to be shy. You should ask anyone who might have an interest in your business – whether they be prospects, existing customers, partners, and/or investors – for permission to email them news about your company, special offers, new product announcements, etc. Another way to get qualified subscribers is thru downloads (i.e., whitepapers, case studies, webinars/podcasts, software). When people request a download, ask them if they would like to receive emails from you about your company and/or to sign-up for your company newsletter. The end result of your efforts will be a self-qualified list of individuals with an affinity for you, your business, and/or your product.
Next, segment your list. The days of “spray and pray” marketing have gone the way of eight-track tapes. To ensure a good response to your emails, you should target individuals that will have the greatest likelihood to be interested in what you have to say or offer. You can segment your list using any number of criteria: LOB, points in a sales cycle, customer type, industry vertical, etc. The more targeted your mailing list, the more you’ll be able to tailor your message and offer to your audience, increasing the likelihood of a positive response.
Provide Useful Content
Email marketing is just one channel of communication in an on-going dialog with your stakeholders. With each email you send, you ask for permission to continue the conversation. If you want people to read your email, you need to provide helpful and interesting content. More specifically, your content should not only be relevant, but it should also have value to your target audience – it should be information they would want and can do something with. Examples of compelling content include:
Information that demonstrates your expertise
Helpful tips or suggestions
Customer service information
Useful facts or customer testimonials
Special discounts/coupons
Contests or give-aways
Information about events or webinars
By providing value with each and every email you send, you create goodwill and increase the likelihood that your reader will want to continue the dialog.
Create an Email People will Read
When it comes to email marketing, first impressions matter. Before your email is even read, your reader is already assessing the potential value of the mailing from the subject line, the “From” address, and by what appears in the preview pane. As a result, when drafting your emails, you should consider the following:
Subject line – When crafting a subject line, you should identify yourself, include an offer, and entice the reader with a benefit
“From” address – Most people will not open an email unless then know who it is from. Your email should be sent from whatever address is most recognizable to your recipient. As well, the sending address should be consistent with the point-of-view of the body copy. If you write the body copy in first person, you should send the email from an individual’s address instead of a generic company address. As well, the address should include the company’s brand.
Preview pane – The preview pane enables the reader to move beyond the sender and subject line, to the crux of your offer. Therefore, your most important content should be at the top of the email.
Though a subject line and “From” address may seem like small details, they can have a huge effect on your open rates and click-thru rates. By enticing your reader with a compelling and relevant subject line, and by taking steps to ensure that the mail is sent from a known and trusted source, you can increase the likelihood that the recipient will read your message.
Mind your P’s & Q’s
Because email marketing is relatively easy and cheap to do, it can get sloppy. It’s also easily abused. A well-executed email marketing plan has many moving parts, and it’s a marketing manager’s job to ensure that the parts are working correctly. A good habit to get into is maintaining a checklist that will help you identify and address problems before you hit send. Here are a few things to include in your checklist:
- Use the right list – Before sending out your email, check and double-check that you are sending it to individuals that have given you permission to email them. Few things generate SPAM complaints faster than accidentally sending alive email to your Do-Not-Send list.
- Proof-read your copy before you code it for HTML – Take advantage of review features (i.e., spell-check) in today’s word processors to spot and correct typos in your copy before you drop it into HTML. Typos are often easier to spot in plain text than in HTML.
- Double-check that you’ve included an opt-out link and a mailing address – Compliance with CAN-SPAM laws require you include an unsubscribe link and a mailing address where you can be contacted. If you’re sending emails in multiple countries, make sure you’re familiar with each country’s anti-spamming laws.
- Include your company’s contact info – Make it easy for recipients to reach you if they have questions/concerns by including a mailing address, phone number, email address, etc.
- Check your links to make sure that they’re working
- Remember to include an alt tag for your images – Not everyone will be able to view your images, so make sure that your email makes sense without them. When you do include images, be sure to include an alt tag describing the image or that features a call-to-action.
- Test your email in different browsers and on different platforms – At a minimum, check to see how your email will appear in Internet Explorer, Firefox, and Safari, and in PC, Mac, and mobile environments. Different browsers and platforms may affect the way an email appears to your users – if something looks off, fix it.
- Be just as rigorous about proofing and testing your plain-text email messages – Typos are just as offensive in plaint-text as in HTML. Also, be sure to include a functioning Web link for mobile readers and browsers that can decode HTML.
- Test your email for SPAM filters – Avoid excessive uses of punctuation, as well as frequent font and colour changes. Limit the number of images you use in the body copy. As well, try to steer clear of SPAM trigger words (i.e., “Adult”, “Gambling”, “Weight-loss”). You should also consider using a third party service that scans your email for the most up-to-date, known triggers for commonly used SPAM filters.
Though these steps seem like a lot of additional work, they’ll actually spare you grief downstream. By taking some time to ensure that your mail doesn’t trigger SPAM filters, you’ll decrease the likelihood that your email is sent to the junk file, or worse, blocked outright.
Be Data Driven
If you can measure it, you can manage it. One of the reasons that email marketing is such a popular and effective marketing tool is because it is data driven. Every email you send out generates valuable data that you can use to refine your approach. For example, when executing a campaign, you may want to consider having 2-3 versions of your email so that you can test different subject lines, copy, offer, etc. At a minimum, you should track:
Hard & soft bounces
Open rates
Click-thru rates
Use the data you collect to drive your next steps. Clean-up your list to eliminate hard bounces and un-subscribe requests, as well as up-date email records – the cleaner your list, the better the response rate of your next mailing. As well, take time to analyze what combination of tactics (i.e., subject line copy, offer) yielded the best open rates, click-thrus, etc., and refine your approach, accordingly.
Clearly, email marketing is a powerful and highly effective tool for communicating with your stakeholders. However, its popularity as a marketing tool has also led to abuse. By adhering to a few basic principles, you can increase the likelihood that your emails will not only reach your intended audience and but also be read. And once you’ve mastered the basics, the range of tactics you can use to drive your response rates, are boundless.
For help with your company’s email marketing campaigns, or other demand generation efforts, visit www.washingtonsquareconsulting.com, or email us at info@washingtonsquareconsulting.com.
Posted in Demand Generation | Comments Off
June 22nd, 2010
Although recent upticks in the GDP might you have thinking that the worst US recession since the Great Depression is over, you may want to think twice before going off on a hiring spree to re-staff your marketing team. In fact, your company may be better served by firing what is left of your rank and file employees and replacing them with contingent marketing professionals.
The Great Recession has forced marketing managers – particularly those with start-ups – to rethink how they grow their business, while minimizing their marketing spend. Increasingly, driven by both an uncertain economy and increased globalization, marketing managers are replacing their permanent workforce with contingent staffers as a means of not only growing and managing their marketing teams, but also remaining competitive. Marketing managers are using a contingent marketing strategy to build marketing departments that contain costs, increase flexibility and accelerate ROI.
Cost Containment
Perhaps one of the most important survival lessons managers learned during the Great Recession was how to do less with more. Usually the first to be hit with cuts when sales decline, marketing managers, in particular, have become adept at stretching their budgets. A contingent workforce offers cost conscious marketing managers a very effective means of increasing productivity and profitability, while minimizing labor costs. Think about it: a professional marketing consultant or contingent staffer will cost an organization significantly less than a full-time employee, when you consider the total cost of wages, healthcare benefits, training, vacation/sick-time, retirement benefits, and overhead. Additionally, for many organizations, the cost of contingent staffing (including agency mark-ups on wages) is tax deductible as a purchase of subcontractor services by a client employer. As a result, a contingent staffing strategy offers managers a highly cost-effective, on-demand means of accessing marketing professionals and experts.
Increased Flexibility
Another key lesson managers have learned during the Great Recession is that a company’s survival often depends on its ability to react quickly to change. One of the key benefits of contingent staffing is that it allows managers to make adjustments to employment levels and labor costs, based on the type of labor or expertise needed at any given time. For example, in anticipation of a new product launch, marketing managers can bring on contingent staffing to handle specific projects. Later, when the launch is complete, these staffers can be let go because there is no expectation of a long-term commitment. Marketing managers are free to move on to the next project without worrying that they’re paying full-time salaries or benefits for work that did not require full-time attention. And should lay-offs become necessary mid-stream, contingent staffers offer managers the added benefit of providing a “buffer” around permanent employees. Managers can quickly reduce labor costs by cutting their contingent staff without having to immediately cut their core team.
Rapid ROI
The pursuit of greater value is another key take-away from the economic downturn – people expect more from their money. Marketing managers are no exception. Unlike permanent marketing staffers who are often hired to be generalists (how many of us wear more than one hot?), contingent staffers provide managers with immediate access to subject matter experts that may not be readily available in-house. For example, when a marketing manager must react quickly to a change in their business (i.e., a product recall or lawsuit), they can go to a PR agency and select from a pool of consistently trained and qualified staff that is ready to go, at a moment’s notice. Ramp time is minimal and there is no need for additional training – as a result, marketing managers are able to receive a rapid ROI on their labor costs. Additionally, since contingent staffing professionals are brought on as needed, they reduce the risk of overstaffing, or worse, carrying expensive marketing resources which may go underutilized after the crises has abated or the project is complete.
Clearly, contingent staffers offer marketing managers an alternative approach to managing staff that not only lowers costs of managing their staff, but also mitigates the risk of employing them. Thru technological advances which facilitate communications (i.e., instant messaging, email), as well as access to external expert resources, organizations can successfully operate their businesses using smaller permanent workforces, supplemented by contingent staffers. And in a constantly changing business environment, it should be obvious that it’s the company that remains flexible and agile in the face of ambiguity that will have the advantage.
For help with your marketing department’s contingent staffing strategy, visit www.washingtonsquareconsulting.com, or email us at info@washingtonsquareconsulting.com.
Tags: Marketing Strategy
Posted in Marketing Strategy | Comments Off
June 17th, 2010
Like a lot of Apple devotees, a Washington Square consultant woke early Tuesday – the first day of pre-ordering for the iPhone4 – excited to place her order and be one of the first to have this coveted new phone. Sadly, eight hours later, despite waiting on-hold for two hours and having her computer freeze-up no less than two dozen times, she still hadn’t placed her order! All was not lost, however, as she walked away from the customer experience with a few lessons-learned that could benefit any marketing manager responsible for a product launch.
Plan, Plan, Plan – and then Plan Some More!
Apple began pre-ordering for the iPhone4 via its new online application store around 4AM ET on Tuesday. However, it wasn’t long before Apple’s website and application store had slowed to a crawl. By 6AM ET, Apple had taken the store down and replaced it with a Post-it note saying “We’ll be back soon”. When they did get the store back up, the application failed to open or crashed for many visitors once they had entered their phone number, zip code, and SS#. The site was plagued with problems throughout the day.
Given that this launch was for the fourth generation of the iPhone and that Apple had launched other consumer devices (i.e., iPod, iPad) that had exceptionally high pre-launch demand, one would have expected Apple to be experts, by now, at scaling their systems and call centers to accommodate large spikes in demand. Unfortunately, Tuesday’s chaos left Apple’s devotees disappointed and created fodder for the media and social networking sites.
A product launch is NOT the time to be a Pollyanna – marketers should imagine the worst possible outcome, plan for it, and only then, hope for the best. When planning launch day activities, marketers should stress test their mission critical processes and applications to ensure that they will not fail or hinder the performance of other systems. Temporary extra capacity should be added to sales call centers to ensure that customer wait times are reasonable. If possible, companies should try to reduce launch-day online and call center volumes (as well as drive customer loyalty) by allowing existing customers to purchase early. As well, marketers should have contingency plans for if/when a process or application fails, or their call center is overwhelmed. With proper planning, a smart marketer can avoid a launch day melt down.
Get your Ducks (a.k.a. Channel Partners) in a Row
When Apple announced the iPhone4, it also announced that the device would be available for pre-order thru its channel partners – AT&T, Best Buy, and Radio Shack. Unfortunately, these partners were no more prepared than Apple for the onslaught of pre-order demand.
By mid-afternoon, the internet was a-buzz over Apple’s order processing issues. Rumor has it that the problem started with a security glitch in one of AT&T’s recently up-graded, un-tested customer databases. AT&T was forced to take down the customer database, creating process ordering problems for Apple and AT&T. Needless to say, given heightened concerns over identity, this security glitch also generated a lot of media attention – just not the kind of media attention Apple or AT&T would want.
Adding to customer’s frustration was the fact that Apple failed to accurately forecast pre-order demand for the iPhone4. Despite the order processing glitches, both Radio Shack and AT&T sold thru their entire launch day inventory on the first day of pre-ordering.
Given the exclusiveness of Apple’s iPhone distribution channel (Apple has intentionally limited distribution to just a handful of partners), one would have expected Apple to have a better handle on its partners. However, Tuesday’s pre-order debacle raised serious questions about Apple’s channel efforts.
It should be obvious that one of a Marketing Manger’s key responsibilities on launch day is ensuring that the company’s channel partners have received the resources, training, and inventory they need to successfully sell his or her company’s products. Towards that end, prior to the launch, Marketing managers should work with the partner to ensure that their ordering systems, or whatever mission critical systems, are not only operational, but also able to scale. As well, managers should ensure that its resellers have adequate inventory to satisfy 60-70% of first day demand – especially if the product has a track record of selling out quickly. To be sure, “selling out” early adds to launch day buzz, however, there’s a fine line between generating PR buzz and frustrating your early adopters.
Manage Expectations
Not having success with Apple’s website, she called Apple Sales, directly. Unfortunately, she didn’t have any better luck on the phone. Her first dozen calls resulted in a recording stating that, due to extremely high call volumes, Apple would not be able to answer her call. When her call finally went thru, another automated recording informed her that her wait time would be less than 1 minute. However, two hours later, she still hadn’t spoken to a human being and she had to hang up. When she tried again later and managed to reach a sales representative, she was told that Apple’s reps were also unable to place her order and that they hadn’t been able to place orders for some time. The rep went on to say that she had no idea of when they would be able to take orders, or when Apple’s application store would be back online.
To be fair, launch day glitches, long lines, and extended hold times aren’t too unusual for retailers. However, how a vendor handles a customer while they wait can be the difference between a really frustrating customer experience and one that generates goodwill, in spite of any inconveniences.
Expectations need to be managed throughout the customer experience. If despite your planning efforts, your order processing application crashes and customers cannot place orders, post regular up-dates on your site letting customers know where else they can go to purchase your product (i.e., call direct sales, visit a store, contact a channel partner). As well, you should keep your call center and channel partners regularly up-dated on when the site will be up, etc. so that they can inform customers when they call. Similarly, if you expect an inventory shortage, provide partners and customers with a timeline of when you expect the product to be available. No one likes to be inconvenienced or to receive bad news. However, if you proactively provide actionable information to your customers and partners, you may be able to avoid some of the frustration experienced by thousands of Apple customers, Tuesday.
Delight your Customer
The tens of thousands of Apple devotees around the world that stood in lines, waited on hold, and/or stayed up all night to be the first to pre-order online, did so because they love everything Apple – they are self-defined Apple early adopters.
Early adopters are a very important class of stakeholders for any company. In Apple’s case, not only can this group of devotees be counted on to be the first to purchase an iPhone4, but they can also be counted on to provide candid feedback about the device to Apple and to the rest of the world. Thanks to social media sites like Facebook, Twitter, etc., this feedback – the good and the bad – can be rapidly disseminated and potentially make or break a new product launch, or worse, the company itself.
Fortunately for Apple, it will take a lot more than long wait times or a crashing application store to scare away the Apple die-hard. Apple’s early adopters are unique in that they will always be loyal to Apple. Because of its cult-like following, Apple will easily weather Tuesday’s debacle and survive to screw up another product launch. However, most companies cannot boast of such a loyal fan base. This is especially true of start-ups launching their first product or service. As a result, it’s imperative that companies prepare for the worst case scenario on launch day, so that if/when a disaster occurs, it can turn these disasters into opportunities to delight their customers. Or at the very least, take the edge of their frustration!
For example, if your average phone wait time is going to be longer than 5mins, why not use your hold music to educate your caller about the cool features of the new product? Alternatively, you can take advantage of your captive audience and use their wait times to up-sell them other products and/or services. In Apple’s case, instead of subjecting callers to mindless Muzak, Apple could have easily increased the ASP of inbound calls by using customer wait times to promote music sold on iTunes.
You can also take the edge off customer frustration by providing customers with a special offer for their troubles. For example, if you run out inventory, you might give frustrated customers rain checks that ensure their priority in the queue when more product is available. Another option would be to offer a discount off of a complimentary product or service. Even a coupon for a cup of coffee could be just the thing to off-set a customer’s disappointment over long wait-times, crashing web-sites, etc. While such promotions do increase your cost of sale, they also help to generate goodwill/maintain customer loyalty that might otherwise be lost.
Keep Your Sense of Humor – S*** Happens
No matter how much you might plan for your product launch, the reality is that something, somewhere will go wrong. How you choose to respond to the disaster will dictate the quality of your customers’ experience. So keep your sense of humor.
When our consultant finally did connect with an Apple Sales Representative on Tuesday, though she was unable to process her order (or anyone else’s for some time), she not only maintained her professionalism, but also kept her sense of humor. The rep acknowledged the difficulties our consultant experienced trying to pre-order an iPhone4, joked around with her, and even made it a point to let her know that she, personally, appreciated our consultant’s efforts to place an order. In other words, the rep was nice to her. It’s a small thing, but it was something. Even the grumpiest of customers will find it hard to deny that, more so than some grand gesture, a kind word or jest in the heat of the moment will go a long way in diffusing their frustration. So if/when disaster strikes (and it will), just remember to treat your customers right from the start, and some day, you too may have a cult-like following like Apple.
For help with your next product launch, visit www.washingtonsquareconsulting.com, or email us at info@washingtonsquareconsulting.com.
Tags: Customer Experience, Customer Loyalty, Product Marketing
Posted in Customer Experience, Customer Loyalty, Product Marketing | Comments Off
May 19th, 2010
These days, buyers are less interested in having the latest bells and whistles, and are more interested in maximizing the value that they get from products or services – in particular, those they’ve previously purchased. Vendors on the other hand, faced with obsolescence, are compelled to continuously deliver the latest and greatest version of their product, often leaving their marketers to figure out how to drive demand for these offerings, while keeping their cost of sales in check. On the surface, these goals seem diametrically opposed. However, it’s WSC’s opinion that it’s possible to achieve both goals, with minimal marketing spend, by focusing on the customer experience.
In their quest to arm their offerings with tangible features that “increase operational efficiency”, “lower TCO”, etc., vendors often overlook “softer” features like:
- The ease of access to product information on its website
- The complexity of the its sales process
- How problems are handled when they arise
- The quality of its after-market support
Each of these features offer vendors an opportunity to not just meet, but exceed, a customer’s expectations, and in turn, ingratiate themselves to the buyer and ultimately, drive revenue growth. Moreover, because these soft features are most often promoted by customers thru word-of-mouth, these offerings can raise brand awareness and be lead generative with little if any additional marketing spend.
There are two principles integral to enhancing the customer experience. First, vendors must recognize that the customer relationship extends beyond any one sales cycle – that is, the true dollar value of a customer is measured over the lifetime of the vendor’s relationship with that customer. If you accept the generic metric that selling an existing customer costs 40-60% less than selling a prospect, then it becomes obvious that it would behoove vendors to create a customer-centric culture and to invest in retention programs that ensure the highest possible customer experience over the customer’s lifetime. We advise vendors to stop fixating on closing and focus on continuously delighting a customer over time. Relationship-focused benefits such as customer loyalty programs, one-click purchasing processes, etc. take center stage, and create switching costs for the buyer. And when orchestrated in a meaningful way, the customer experience becomes not only a differentiator, but also a tie that binds and is the basis of customer loyalty. (Obviously, any cost savings are predicated on the vendor marketing differently/more efficiently to their existing customer base.)
Second, vendors must hold every employee accountable for creating the best possible customer experience. Towards that end, vendors must not only reward customer-centric behavior, but also make it safe for employees to raise concerns about business practices that detract from the customer experience. Only when an organization’s employees take personal responsibility for doing what is right for the customer, will an organization be able to continuously work towards enhancing the customer experience, and in turn, drive revenue growth.
The list of opportunities for enhancing the customer experience is endless. Given its focus on revenue generation, WSC recommends that organizations begin by examining its customer-facing business processes (e.g. sales , billing, and customer support), and identify steps in the process where it can:
- Eliminate unnecessary steps/complexity
- Bundle solutions to common problems
- Add value (e.g., access to a knowledge base or best practices)
For example, legal agreements are often a source of grief for customers and vendors alike. How many of us have had our sales processes hijacked by lawyers hemming and hawing over the placement of a comma? One easy and relatively low-cost way an organization can enhance its customer experience is to have its lawyers review its agreements to identify where they can be shortened and/or reduced in complexity, thereby minimizing the amount of time the customer (and vendor) must spend with their lawyers. (Less time with lawyers? Who wouldn’t like that?) Simplifying one’s contracts is a little change that can have a huge influence on a customer’s perception of how easy it is to work with a given vendor – the better the experience, the more favorable the customer’s opinion, and the more likely they are to make future purchases, tell their friends, etc.
To be sure, enhancements to an organization’s customer experience can have a subtle effect on revenue growth and the benefits may take time to realize. However, for organizations with little or no marketing budget and unable to do traditional programming, every little bit helps. WSC advises budget-constrained organizations to focus on selling existing customers by revisiting how it interacts with its customers. For inspiration, we recommend managers read “Moments of Truth” by Jan Carlzon, and “The Nordstrom Way: The Inside Story of America’s #1 Customer Service Company”, by Robert Spector and Patrick D. McCarthy. “Oldies but goodies”, these books offer real-world examples of how successful organizations are using the customer experience to drive their businesses. For help with enhancing your company’s customer experience, or its other demand generation efforts, visit www.washingtonsquareconsulting.com , or email us at info@washingtonsquareconsulting.com.
Tags: Customer Experience, Demand Generation
Posted in Customer Experience, Customer Loyalty, Demand Generation | Comments Off
May 11th, 2010
From affinity credit cards to pink breast cancer awareness ribbons, examples of for-profit organizations partnering with charities for their mutual benefit, abound. Companies have discovered that charity marketing offers numerous opportunities to not only grow one’s business, but also help others by appealing to people who want to associate with organizations that support causes, assist the disadvantaged, etc. Savvy start-ups are capitalizing on this altruism to increase awareness, generate goodwill, and drive demand.
Contributing to this trend is broader acceptance of the role of business in society – it is no longer gauche to profit from charitable giving. In fact, charities are looking for businesses to help them with their causes. Aware of businesses’ ulterior motives, today’s charities will work with organizations to maximize their ROI. So why not grow your business by lending a helping hand?
Choose the Right Charity
The charity or cause you select will dictate how much exposure you get, the extent of your marketing reach, and the quality of your networking/prospecting opportunities. As well, when you partner with a charity, you leverage the brand and goodwill (or bad will) of the charity – who you choose to associate with affects your brand. So choose carefully!
Pick a charity you believe in and know something about – not only will you have more fun, but you’ll also feel better about allocating your company’s time and resources to a cause you care about.
Consider local as well as national/global charities. While you may get more mainstream media coverage working with a national/global charity, you may also get lost amongst the charity’s other corporate sponsors. Sponsoring a local charity increases the likelihood that your company’s contribution will be visible.
Choose charities that offer opportunities to show off your organization’s skills. For example, if your organization markets professional IT services, donate consulting hours to set-up a technology lab for a local senior center. If you offer Web design services, offer to build or revamp a charity’s website.
As well, choose a charity or cause that will resonate with your target audience. If you sell software to the education market, choose charities that make technology more accessible to children, teachers, and/or schools. Find out what your customers care about and show support for their concerns.
Promote Your Involvement
Key to effective charity marketing is promotion of your company’s good works.
Issue a press release publicizing your company’s donation or participation in a charity event. Write about your efforts in newsletters and blogs, as well as social media sites such as Twitter and Facebook. Charity marketing programs promoted via social media sites often become “viral”, leading to not only greater awareness of your company’s efforts, but also of your chosen cause or charity.
When sponsoring events, choose high-profile events or causes that draw media attention and put you contact with influential people. Encourage employees to volunteer for events and participate in non-profit boards. Keep in mind that corporate decision makers often sit on the boards of charities. Not only do charities provide a terrific vehicle for raising your company’s profile, but they also offer a wonderful networking opportunity for you and your staff.
As well, ask the charity to not only recognize your efforts/contributions, but also promote your company. Request prominently placed signage at an event, or ask that the company be mentioned in the charity’s newsletters or marketing materials. Additionally, if you designate a product or service for the charity with a percentage of all sales going to the charity, encourage the charity to sell or promote the offering. By asking the charity to promote your company, product and/or service, you will be able to increase your reach, as well as further capitalize on the charity’s brand and goodwill.
Market your Product or Service to your Charity’s Stakeholders
From donors to board members, every charity has a following of potential prospects for your business that share a common characteristic: an affinity for a particular charity or cause. It’s highly likely that these stakeholders have other characteristics in common. Profile your charity’s stakeholders and develop marketing campaigns specific to this audience.
Create special promotions targeted at this audience. For example, donate a percentage of sales generated from this audience back to the charity. Offer discounts to charity donors/members. You can also create a customer loyalty program for supporters of your charity, to encourage members to purchase your products or services.
Additionally, consider partnering with your charity to target a particular audience or market. For example, if you sell HIPAA compliance software, develop and fund a telemarketing campaign that targets major donors in the healthcare industry. Not only will you help the charity to grow its donor base, but you’ll also have the opportunity to develop contacts – perhaps even relationships with – key decision makers within your target vertical. By leveraging the goodwill of your charity, you may be able to get past gatekeepers you may not be able to get past, on your own.
She Who Hesitates is Lost
Lastly, remember that while you may have an ulterior motive for getting involved, at least you’re getting involved. Don’t be embarrassed or ashamed to engage in charity marketing. Charities want help with their causes, and will gladly work with you to help you help them. And if you don’t do it, some other marketer will!
One quick and easy way to get started is with www.allthis.com – a new online auction site that allows individuals or organizations with a cause to convert time and talent into dollars. For a small fee, you can quickly create an auction for a product or service, to benefit a charity of your choosing. Using widgets for Twitter and Facebook, you can easily promote your auction as well as your company, while raising funds for your charity.
Check-out Washington Square Consulting’s allthis.com auction to benefit the One Laptop Per Child (OLPC) Foundation at http://bit.ly/dfkqI9. Just creating this auction resulted in a >5% increase in daily unique visitor traffic to www.washingtonsquareconsulting.com.
For help with your allthis.com auction or with other charity marketing activities, visit www.washingtonsquareconsulting.com, or email us at info@washingtonsquareconsulting.com. Or better yet, help us help others by bidding on our auction at http://bit.ly/dfkqI9, today!
Tags: Demand Generation
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