Customer Loyalty: Obligation or Happy Marriage?

Consumers cheat on brands in many of the same ways lovers cheat. If you don’t like your spouse, or are bored with pillow talk or household conversations, you can easily go online and “meet up” with someone new behind the closed doors in Skype, Facebook or any other online “chat” room. Pretty much the same way we hook up with new brands.

cheatingNews Alert: Marriage today has reached an all-time high and all-time low. According to research referenced in a recent Time magazine article, married people describe marriage as “more satisfying or less satisfying” than any other generation ahead of our time, meaning the degree of happiness or the opposite is higher than ever.

The author of “30 Lessons for Loving,” Karl Pillemer, also referenced in Belinda Luscombe’s Time magazine article, sums up marriage as “really, really hard work” and a “commitment device”-like a program or system that locks people into situations they may find dreary or inconvenient in order to achieve a goal or reward later on. For some, those temporal states of dreariness or inconvenience are worth it as the good outweighs the bad in the end. For others, it’s not worth even the slightest bit of dismay.

Not hard to see where I’m going with this, but it is important to ponder.

Consumers cheat on brands in many of the same ways lovers cheat. If you don’t like your spouse, or are bored with pillow talk or household conversations, you can easily go online and “meet up” with someone new behind the closed doors in Skype, Facebook or any other online “chat” room. Pretty much the same way we hook up with new brands. Without social listening devices to help identify those who are happy with us vs. frustrated, and who are “chatting” with our competitors, we brand marketers are set up to be the “last to know” — and often, it’s too late to repair the damage.

With all the alternatives for just about any product and brand these days, and the easy access to new flings, making your brand experience a “marriage” worth enduring vs. “easy to replace” is critical, no matter what business you’re in. The divorce rate for marriage is about 50 percent, and according to reports on loyalty by various research firms, that’s roughly the same percentage of customers who stay loyal to brands these days. Accenture puts the customer loyalty rate at about 48 percent, indicating that 52 percent have switched brands due to poor customer service. And around 30 percent of customers switch just for fun, which makes it that much more “fun” for brands to secure lifetime value.

Growing apart is one of the top five reasons marriages fail. And yes, it’s a big reason why many brands lose around 40 percent of their customers every year and have to spend their valuable time and resources rebuilding their base vs. enjoying their profits.

With all the attractions out there luring customers from one brand to another, and all the demands and high expectations customers have today, is there really a way to keep marriages between consumers and brands alive?

Yes. Here are just a few ways to help assure you and your customers can celebrate many anniversaries ahead.

Listen

Many sources reporting on infidelity, from Fox News to WebMD, state that women cheat because of loneliness and a need to feel emotionally connected to a man, and of course, to have someone listen to them. Customers are really no different.

According to statistics on customer loyalty compiled by Access, a report by Apptentive shows that:

  • 55 percent of consumers out there are likely to switch to another brand if their feedback or needs are being ignored by a current brand they patronize.
  • 97 percent say that they are somewhat likely to increase their loyalty to a brand that listens and acts on their feedback.

Creating dialogues with your social media rather than monologues you hope they’ll “like” and “share” or “heart” and “retweet” is more than just good social manners. Per the above statistics, it’s critical to long-term commitment and sustainable revenue.

Engage

Engagement is not just about putting a ring on it! It’s about interacting with customers in meaningful ways that spark those warm fuzzies when we feel noticed, appreciated and connected with someone who has like values and seems to like us, too. By engaging with customers in ways that allow them to speak and be heard, and providing them with experiences that enable them to be part of the brand via user-generated content, applications, events or more, customer loyalty can soar.

Just look at the video game industry that now generates about the same revenue per year as Hollywood’s film industry. Gamers love to generate ideas for the games they play, attend their events in full costume to represent their favorite characters and avatars, and they bring others to their virtual worlds as they evangelize in ways that rival the success of even the best of religious missionaries.

Engagement does not just pay off in terms of keeping customers loyal and referring others, it pays off in increased transaction value, too. Cap Gemini research shows that fully engaged customers are worth at least 23 percent more in revenue and profitability than other customers. This same research shows that actively disengaged customers — who have chosen to find new relationships due to negative feelings — represent at least a 13 percent drop in share of wallet, profitability and revenue due to spreading bad vibes about a brand. With how quickly we can share our bad experiences via social media, this is a pretty serious issue facing all brands.

17 Principles of Persuasion, Direct Marketing Style

So you’ve created your campaign and attended to all the details of identifying your audience, created your offer, and toiled for hours and hours, honing copywriting and design. But in the end, the tipping point for your success likely stems from the degree to which you emotionally persuade an individual to take action.

So you’ve created your campaign and attended to all the details of identifying your audience, created your offer, and toiled for hours and hours, honing copywriting and design. But in the end, the tipping point for your success likely stems from the degree to which you emotionally persuade an individual to take action.

Persuasion builds. It doesn’t just pop up and present itself. By the time you’ve engaged your audience and you’re moving toward the close, you should already have stimulated and calmed emotions, presented your USP, told a story, and walked your prospective customer or donor through logical reasons to purchase.

But to seal the deal, you need to return to emotion, and you need to persuade. So today I offer 17 principles of persuasion, direct marketing style.

Persuasion is an art, really, that builds over time. It’s earning trust and leading your prospect to a place where they give themselves permission to act. That permission comes from the individual recognizing that acting is in their interest and that they will feel good about their decision. You want them to say “this is good, this is smart, I’m going to do this!”

A place to start this list of persuasion points is with the six principles from the landmark book, Influence: How and Why People Agree to Things, by Robert Cialdini:

  • Reciprocity
  • Commitment and Consistency
  • Social Proof
  • Liking
  • Authority
  • Scarcity

Expanding on Cialdini’s concepts with additional principles for direct marketers, I offer this checklist for direct marketing persuasion:

  1. Trust and Credibility: Persuasion isn’t coercion or manipulation. Trust is earned. Credibility is built. Without these two foundational elements, most else won’t matter. Begin persuading by building trust and credibility first.
  2. Authority: People respect authority figures. The power of authority commands respect and burrows deep into the mind. Establish your organization, a spokesperson, or an everyday person, relatable to your customer, as having authority.
  3. Express Interest: Your prospects are attracted to organizations that have an interest in them. Use this starter list of the six F’s as central topics to build around so you can persuade by expressing interest: Family, Fun, Food, Fitness, Fashion, or Fido/Felines.
  4. Build Desire for Gain: A major motivation that persuades your prospects and customers is the desire for gain. Give your prospect more of the things they value in life, such as more money, success, health, respect, influence, love and happiness.
  5. Simplify and Clarify: Communicate clearly. Obsess over simplifying the complex. Write to the appropriate grade level of your reader. Your prospects are more easily persuaded when you simplify and clarify.
  6. Expose Deep Truths: Go deeper with your persuasive message by telling your prospects things about themselves that others aren’t saying. Don’t be judgmental. Be respectful.
  7. Commitment and Consistency: When your prospect commits to your idea, they will honor that commitment because the idea was compatible with their self-image. Compatibility opens the door to persuasion.
  8. Social Proof: Even though the first edition of Cialdini’s book was written in 1984, a generation before the explosion of social media, he recognized the power of people behaving with a “safety in numbers” attitude from seeing what other people were doing. Testimonials and an active and positive presence on social media are often a must that leads in trust and persuasion.
  9. Liking: The term “liking” in 1984 was developed in the context of people being persuaded by those they like. People are persuaded and more apt to buy if they like the individual or organization. Still, it’s affirming to be “liked” on social media!
  10. Confidence is Contagious: When you convey your unwavering belief in what your product or organization can do for your prospect, that attitude persuades and will come through loud and clear.
  11. Reciprocity: It is human nature for us to return a favor and treat others as they treat us. Gestures of giving something away as part of your offer can set you up so that your prospects are persuaded and happy to give you something in return: their business.
  12. Infuse Energy: People are drawn toward and persuaded by being invigorated and motivated. Infuse energy in your message.
  13. Remind About Fear of Loss: No matter how much a person already possesses, most want more. People naturally possess the fear of missing out (FOMO). When you include them, they are more easily persuaded.
  14. Guarantee: Your guarantee should transcend more than the usual “satisfaction or your money back.” Your guarantee can persuade through breaking down sales resistance and solidify a relationship.
  15. Scarcity: Human nature desires to possess things that are scarce when we fear losing out on an offer presented with favorable terms. But make sure you honor the any positioning of scarcity in your message. If it’s an offer not to be repeated, don’t repeat it.
  16. Convey Urgency: With scarcity comes urgency. Offering your product or making a special bonus available for a “limited time” with a specific deadline can be a final tipping point to persuade.
  17. Tenacity and Timing: Just because a prospect said “no” the first, second or more times, it doesn’t mean you should give up on someone who is in your audience. It can take multiple points of contact, from multiple channels, before you persuade your prospect to give themselves permission to act.

What would you add to this list? Please share in the comments below.

The Future of Online Is Offline

I find it offensive when marketers call anyone an “online person.” Let’s get this straight: At the end of some not-so-memorable transaction with you, if I opt in for your how-bad-can-it-be email promotions, or worse, neglect to uncheck the pre-checked check-box that says “You will hear from us from time to time” (which could turn into a daily commitment for the rest of my cognitive life, or, until I decide finding that invisible unsubscribe link presented in the font size of a few pixels is a better option than hitting the delete key every day), I get to be an online person to you? How nice.

I find it offensive when marketers call anyone an “online person.” Let’s get this straight: At the end of some not-so-memorable transaction with you, if I opt in for your how-bad-can-it-be email promotions, or worse, neglect to uncheck the pre-checked check-box that says “You will hear from us from time to time” (which could turn into a daily commitment for the rest of my cognitive life, or, until I decide finding that invisible unsubscribe link presented in the font size of a few pixels is a better option than hitting the delete key every day), I get to be an online person to you? How nice.

What if I receive an email offer from you, research the heck out of the product on the Internet, and then show up at a store to have instant gratification? Does that make me an offline person now? Sorry to break your channel-oriented marketing mind, but hey, I am just a guy. I am neither an online person nor an offline person; which, by the way, happens to be a dirty word in some pretentious marketing circles (as in “Eew, you’re in the offline space?!”).

Marketers often forget to recognize that all this “Big Data” stuff (or any size data, for that matter) and channel management tools are just tools to get to people. In the age of Big Data, it shouldn’t be so hard to know “a lot” about a person, and tailor messages and offers for that person. Then why is that I get confusing offers all the time? How is that I receive multiple types of credit card offers from the same bank within weeks? Don’t they know all about my banking details? Don’t they have some all-inclusive central data depository for all that kind of stuff?

The sad and short answer to all this is that it really doesn’t matter if the users of such databases still think only in terms of her division, his channel assignment, and only through to the very next campaign. And such mindsets may even alter the structure of the marketing database, where everything is organized by division, product or channel. That is how one becomes an online person, who might as well be invisible when it comes to his offline activities.

What is the right answer, then? Both database and users of such databases should be “buyer-centric” or “individual-centric” at the core. In a well-designed marketing database, every variable should be a descriptor for the individual, regardless of the data sources or channels through which she happens to have navigated to end up in the database. There, what she has been buying, her typical spending level, her pricing threshold, channels that she uses to listen, channels that she employs to make purchases or to express herself, stores she visited, lapsed time since her last activities by each channel, contact/response history, her demographic profile, etc. should all be nicely lined up as “her” personal record. That is how modern marketing databases should be structured. Just putting various legacy datasets in one place isn’t going to cut it, even if some individual ID is assigned to everyone in every table. Through some fancy Big Data tools, you may be able to store and retrieve records for every transaction for the past 20 years, but such records describe transactions, not people. Again, it’s all about people.

Why should marketing databases be “buyer-centric”? (1) Nobody is one-dimensional, locked into one channel or division of some marketer, and (2) Individualized targeting and messaging can only be actualized through buyer-centric data platforms. Want to use advanced statistical models? You would need individualized structure because the main goal of any model for marketing is to rank “people” in terms of your target’s susceptibility to certain offers or products. If an individual’s information is scattered all over the database, requiring lots of joins and manipulations, then that database simply isn’t model-ready.

Further, when I look into the future, I see the world where one-click checkout is the norm, even in the offline world. The technology to identify ourselves and to make payment will be smaller and more ubiquitous. Today, when we go to a drug store, we need to bring out the membership card, coupons and our credit card to finish the transaction. Why couldn’t that be just one step? If I identify myself with an ID card or with some futuristic device that I would wear such as a phone, glasses or a wristwatch, shouldn’t that be enough to finish the deal and let me out of the store? When that kind of future becomes a reality (in the not-too distant future), will marketers still think and behave within that channel-centric box? Will we even attempt to link what just happened at the store to other activities the person engaged in online or offline? Not if some guy is in charge of that “one” new channel, no matter how fancy that department title would be.

I have been saying this all along, but let me say it again. The future of online is offline. The distinction of such things would be as meaningless as debating if interactive TV of the future should be called a TV or a computer. Is an iPhone a phone or mobile computer? My answer? Who cares? We should be concentrating our efforts on talking to the person who is looking at the device, whether it is through a computer screen, mobile screen or TV screen. That is the first step toward the buyer-centric mindset; that it is and always has been about people, not channel or devices that would come and go. And it is certainly not about some marketing department that may handle just one channel or one product at a time.

The Big Data movement should about the people. The only difference this new wave brings is the amount of data that we need to deal with and the speed in which we need to operate. Soon, marketers should be able to do things in less than a second that used to take three months. Displaying an individually customized real-time offer built with past and present data through fancy statistical model via hologram won’t be just a scene in a science fiction movie (remember the department store scene in “Minority Report”?). And if marketing databases are not built in a buyer-centric structure, someone along the line will waste a lot of time just to understand what the target individual is all about. That could have been OK in the last century, but not in the age of abundant and ubiquitous data.

How Big Is Your Vision?

Way back in the Internet dark ages of January 1996, Bill Gates wrote about and coined the phrase “Content Is King.” He was talking of course, about Web content and the need for people and organizations hoping to monetize the Internet to consistently produce fresh and relevant topics in order to gain the interest and loyalty of viewers, just as television had been doing, radio before that and print media the longest of all. His assertion that “over time, someone will figure out how to get revenue” from Internet advertising is frighteningly similar to today’s gurus predicting much the same in regard to social media marketing. Just as back then—when companies and marketers struggled with deciding whether a Web presence was needed—today there are still major corporations only testing the social media waters, even if only half-heartedly, to keep pace with competitors.

Way back in the Internet dark ages of January 1996, Bill Gates wrote about and coined the phrase “Content Is King.” He was talking of course, about Web content and the need for people and organizations hoping to monetize the Internet to consistently produce fresh and relevant topics in order to gain the interest and loyalty of viewers, just as television had been doing, radio before that and print media the longest of all. His assertion that “over time, someone will figure out how to get revenue” from Internet advertising is frighteningly similar to today’s gurus predicting much the same in regard to social media marketing. Just as back then—when companies and marketers struggled with deciding whether a Web presence was needed—today there are still major corporations only testing the social media waters, even if only half-heartedly, to keep pace with competitors.

For me, however, two lines in the Gates vision statement take on a slightly different connotation than his thoughts on content: “The definition of ‘content’ becomes very wide” and “Over time, the breadth of information on the Internet will be enormous, which will make it compelling.”

I read those two lines and what immediately strikes me is the overwhelming amount of data being generated during these last 17 years and how it is being captured, nurtured and put to work in areas such as Lead Generation, Brand, Affinity, Cross-Channel and Retention marketing. If at all.

IBM has an infographic regarding the flood of Big Data they use in demonstrating how their Netezza device handles integration for several major marketing organizations. This shows how, with connectivity, speed and bandwidth issues having become nearly eradicated during just the last two to three years, the amount of collectible, actionable data has exploded.

Unfortunately, the amount of irrelevant and useless data being collected is even greater than the actionable data, and being able to simply store that much data, let alone begin to organize and digest it all, is a major concern for most organizations. Before even thinking about the incorporation of Big Data initiatives, there should be an organizational review of quality for the existing information held in the collective datamarts that feed the central repository used for decision-making. Long before Big Data, the issue of Bad Data must be addressed.

Whether you are a B-to-B or B-to-C marketing entity, the creep of inaccurate data is constant across every customer and prospect contact you currently maintain. Experian-QAS has a stark reality “Cost of Bad Data” infographic showing the millions of dollars lost each year as a direct result of inaccurate and incomplete contact information. Complacency and budgetary shortcuts speed the process even more. Whether it is via an in-house effort or using third-party tools and vendors to perform ongoing hygiene, the vitality of your contact strategy is not sustainable without regular maintenance.

Once secure in the clarity and accuracy of your core data, you can move on to the integration plan for all of the additional goodies sprouting up from the Big Data seeds being sewn across every outbound and inbound marketing channel being utilized. But again, more planning and decision-making is critical before just jumping in and trying to grab every nugget. Perhaps the Fortune 50- to 500-level corporations might have the resources to take this on in one massive project, but I doubt that many small, mid or even larger brands can just dump everything into a pot and begin using the information gleaned into a successful series of campaigns. In a SAS/Harvard Business Review whitepaper I read recently; “What Executives Don’t Understand About Big Data,” this quote stood out to me:

“What works best is not a C-suite commitment to ‘bigger data,’ ambitious algorithms or sophisticated analytics. A commitment to a desired business outcome is the critical success factor. The reason my London executives evinced little enthusiasm for 100 times more customer data was that they couldn’t envision or align it with a desirable business outcome. Would offering 1,000 times or 10,000 times more data be more persuasive? Hardly.”

Having the foresight to develop phased approaches for data incorporation based on both short- and long-term ROI is the most realistic approach. Using results from the interim stages provides the ability to thoroughly test and analyze and measure value, keeping the project moving forward steadily while minimizing roadblocks to the longer-term goals.

My initial recommendation for the process would be along the lines of:

  1. C-Suite leadership establish the long-term goals for organizational success and with other Senior Management develop the phases to follow based on data, budget and resource availability to be assigned through each phase.
  2. Set the expectations and build the benefits case of the project across the entire company, communicating these goals in order to coordinate the gathering and availability of resources needed from whatever silo in which they reside.
  3. Design the KPIs that will be required in determining accuracy of marketing integration of the insights being introduced during each phase.
  4. Test and Measure every step of each phase for completeness and success before moving on to the next.
  5. Build simple and multivariate test panels into marketing campaign segmentation to analyze what new data elements truly provide sustainable lift in response.

I would love to hear your thoughts.