Marketing Libero

Don't be fooled no one knows anything...

 

At the start of my last year at Uni our Tutor articulated a hope for his students. He hoped by now, with our exposure to the subject matter (Human Geography - should you be interested!), that we would realise how little we actually knew.

Far from being depressing this was in fact liberating. It was OK not to know everything.

I had a similar feeling reading Russell Davies in Campaign today. In relation to trying to work out the elusive new model of marketing he quotes Frank Chimero:

"We break stuff before we know what replaces it, and we invent things before we know what they're for"

Like Davies I find this liberating and exciting. With no disrespect intended I am fed-up with Old-Guard creatives from the 70's crap-on about the golden days of television - when that was the best time to be in the industry.

I don't agree this has to be the best time - we have broken all kinds of models from communication to business - it's up to us to work out what replaces them.

Allied to this has been the press coverage of Forresters latest report (Refine Your Marketing Innovation Strategy) from their marketing and strategy research panel. The report calls for CMO's to lead the innovation within their organisations and find ways of adapting their marketing methods to accomodate future customer engagement methods.

All things considered I'm pretty excited about the next 10-years...

The Loyalty Paradox

 

Trawling through some client research I am struck by how consistent customers are in their definition of loyalty.

It would seem for the majority of customers it is about longevity of relationship.

However, for most brands loyalty (and hence rewards) is about intensity of relationship, or in other words - spend levels. The more you spend the more cash you get back or the more points you accrue.

I accept that many marketing practitioners would wish to split the assumption that a competent reward scheme equals a loyal customer base, wishing to focus instead on creating magic moments with the brand and driving up the holy grail of loyalty metrics - net promoter score (NPS).

(The uncomfortable truth for many service brands is that their NPS scores are mostly negative, put simply they have more customers who would not recommend them than customers who would).

But nonetheless this sets up a classic loyalty paradox between customers and brands.

There are some excellent reward schemes out there undoubtedly helping with customer retention (a very different thing to loyalty) and I accept / even extol the CRM 101 pragmatism of focusing your resources on your most valuable customers.

I have blogged previously about the holy trinity of loyalty; structural, emotional and rational. There must be a way to resolve this paradox using this important and consistent customer insight on the definition of loyalty.

As practitioners we surely now have the data & CRM capability to build longevity, as another dimension to value, into both our reward schemes and our customer service policies.

Welcome

Having just bought a new iPhone from CPW on Orange I am reminded of the importance of a good welcome process.

During the first 12 months of any relationship between a customer and a service brand it is estimated that 75% of all X-sell & up-sell happens and particularly in the early months churn risk is at it's highest.

Also the relationship is set. For example whether marketing permission is given for contact, whether key data is collected such as email addresses, etc.

In short welcome is the cornerstone of any CRM programme. Yet more resource is often focused on retention and mature customer up and cross sell.

Five quick rules:

1. Ring fence new customers and make welcome someone's responsibility, they will have to work X-functionally of course.

2. Work out what a successfully welcomed customer looks like, preferrably using behavioural rules to gauge engagement - these should be in line with your business aims and set your communication objectives.

3. Synergise service and marketing communications, ideally making them feel like part of the service.

4. Choreograph your channels and have a single contact strategy, preferably with the website at the heart of your welcome strategy.

5. Create a welcome dashboard with a holistic KPIs to track your progress.

Data visualisation rules

 
 

This is a subject getting increasing conversation time on various blogs. One of the consistent challenges is to avoid visualisation for the sake of it.

In thinking about our rule set I like very much Manuel Lima's information visualisation manifesto:

1. "Form follows function
2. Start with a question
3. Interactivity is key
4. Cite your source
5. The power of narrative
6. Do not glorify aesthetics
7. Look for relevancy
8. Embrace time
9. Aspire to knowledge
10. Avoid gratuitous visualisations"

However in avoiding Lima's points 6 & 10 Edward R Tufte is still the authoritative source. Below is Tufte's own manifesto quoted from his excellent book page 13 - the second bullet encapsulates it all really.

"Excellence in statistical graphics consists of complex ideas communicated with clarity, precision and efficiency. Graphical displays should

• show the data
• induce the viewer to think about the substance rather than about methodology, graphic design, the technology of graphic production, or something else
• avoid distorting what the data have to say
• present many numbers in a small space
• make large data sets coherent
• encourage the eye to compare different pieces of data
• reveal the data at several levels of detail, from a broad overview to the fine structure
• serve a reasonably clear purpose: description, exploration, tabulation or decoration
• be closely integrated with the statistical and verbal descriptions of a data set.

Graphics reveal data".

The image above is one of my favourites from his fantastic collection of visualisations - Napoleon's march into Russia. The brown line is proportionate in size to his army as he begins his campaign. The advance of the army is shown across a map of Russia. The black line is Napoleon's retreat with date and temperature plotted - revealing with great articulation the human tragedy.

Evidence Based Marketing

 One of the trends I like to follow is how marketing is changing as a profession. 

The rise of digital with its clear measurability and the recessionary climate has dragged everyone's attention back to accountability.

I believe we are seeing unswerving adherence to practitioner expertise, particularly around the art of branding, starting to give way to a more evidenced based approach. This is also evident in other professions, most notably medicine. (See Ian Avers excellent book - Super Crunchers).

Of course the very best marketers have always used customer intelligence in all its guises but in my experience these kinds of practitioners are the rare exception.

In support of my belief Marketing Week's recent article Marketers make intelligence choice makes reassuring reading. The piece sites a recent Forrester report which claims that the future ranks of chief marketing officers will come from the "customer intelligence" division of the business.

Being creative with data - IPA event

Link to a recent IPA event I helped to organise. Thanks again to all those who participated.

Do You Get Value from Sharing Your Data

Clearly this is a rhetorical question.

One of the constant themes that interests me is the value consumers receive in exchange for providing their personal information to large brands.

A few companies aside, evidence would suggest that the value exchange is stacked in favour of the Big Brands.

This asymmetry takes many forms - most commonly:

• Repeating your details multiple times when you call the contact centre
• Spamming / Junk-mailing you with inappropriate offers that you have failed to respond to time and time again
• Etc

Those brands that will be successful in the future get the following:

• How you use your customer's data is part of the brand promise - this goes beyond simple security and appropriate use
• Through demonstration not declaration there needs to be a clear value exchange for supplying your personal details
• Finding ways that customer data can be applied to help them manage their service with you rather than just for your company's benefit

What's provoked my latest tirade?

I called my mortgage provider. At first the voice recognition software was excellent, far better than fighting through a push button IVR system, only to have to repeat every single detail to the agent in Mumbai!

I love wordle.net

I am fairly obsessed with data-visualisation and telling stories. A part of the digital age is the creation, storage and analysis of different kinds of data. We need new techniques.

Excell is great for numbers and graphs but it lacks a certain creativity. 

What about analysing and visualising words?

At wordle.net you can do just that. By simply cutting and pasting in a section of text it creates graphic "clouds" of words where size is proportional to frequency. It is surprisingly effective.

One of my own favourites is below. You have a number of options for analysis when considering the question - who are the most successful international football teams in the history of the World Cup?

Looking at teams who have made the semi-final you could  - produce a table, build a complex score and graph it or simply do this...

Faster, Faster, Faster?

Yesterday the government produced its report dubbed Digital Britain. One of the key points attracting most attention was the promise to ensure that every home in the UK can get 2Mbps broadband by 2012.

In the age of 50Mbps super-fast fibre-optic broadband this doesn't seem like much of a commitment - although the graphic below shows that you can do most things with your 2Mbps.

On reflection - and whilst we all want to have fun - this seems a very trivial list of activities. In Japan which tops the high-speed list they are beginning to ask what can be done with all this bandwidth.

For me where it gets interesting is when the infrastructure starts to facilitate real social change such as workable telecommuting (with usable video-conferencing) and remote interaction with public services such as healthcare. 

The Law of Disruption curve below shows that all elements of society lag considerably behind technological advancement - with the political sphere bringing up the rear.

For me a government serious about a Digital Britain would have been more ambitious - 50Mbps fibre-optic broadband for every household by 2012 is more like it. For that it might have been worth paying a levy.

Loyalty's Holy Trinity

This week both Virgin Media and Sky communicated their results for the last quarter. This is a service sector driven by investment analyst sentiment to be fixated by the number of "net-adds". In simple terms the number of new customers minus those customers who left.

Sky stated 80,000 new customers driven by their HD-offer as they hurtle inevitably to their stated target of 10m households with a Sky product.

Virgin's figures were more modest but far more interesting citing customer churn at an all time low of 1.1%

Once you sort involuntary churn (bad debt, etc) from voluntary churn for most service brands there is a generally held belief in the Holy Trinity of loyalty...

• Emotional engagement
• Reward schemes
• Structural entanglement 

Emotional engagement

By far the most powerful loyalty factor and the one we all strive for. It is made up of all those emotional and intangible aspects of brand experience. 

It takes time to build and can be re-enforced by genuine "magic moments" and can be lost in a single interaction. It is often expressed in advocacy - a customer's potential to recommend a brand and measured in terms of net promoter score (NPS).  

Reward schemes

Sorry I can't bring myself to call them loyalty programs. These are a very useful tool particularly where there is a genuine value exchange between the customer and the brand. There are of course good examples and bad. 

Often a key objective is to remove the anonymity of retail or third party transactions through data collection as well as to reward the right customer behaviours. 

It is often overlooked that the loyalty is to the reward scheme not the brand. For example, people follow AirMiles not necessarily the specific credit card. 

Whilst useful reward schemes can never overcome "structural faults" in your service proposition or customer experience.

Structural entanglement. 

What is meant by this is often referred to as "locking-in" customers through a 12-month contract for example. This is often justified (not unreasonably) where equipment is needed to access the service and is given for "free" e.g. a mobile device, modem / router, set-top box, etc. 

It is not common practice to use price promotion periods as a lock-in as regulators see this as anti-competitive. Other forms may include early payment clauses and depth of relationship. 

A good example of the latter is current accounts where the hassle of changing direct debits / standing orders, re-setting up of internet passwords, etc are a formidable barrier. Here structural entanglement is made exponentially more powerful by the second most powerful force in the universe - apathy. (The first is serendipity). 

However, whilst it was once said that you were more likely to get divorced than change your bank account this is perhaps less true these days. The opening up of utility markets to competition, the decline in trust of big-brands, the commoditisation of once intermediated services (home insurance), the transparency facilitated by the internet, aggregators and the current global financial crisis are changing customer attitudes to switching for good.

Also this week I considered changing my standard Sky wireless modem router to improve the coverage in my house. Not unsurprisingly my wife is "sick of wires everywhere". However, to my chagrin I found out that as a Sky customer I can only use their equipment on their broadband service. 

They justify this by the fact that the equipment is free and they do not want people canceling within the introductory period and using their modem routers on another supplier. 

After quick but not exhaustive research none of the other providers seem to have this stipulation. Now their Netgear equipment is OK but N+ standard it is not. Apparently this is in the T&C's and a quick review of the relevant blogs found examples of customers who had hacked-in to get the relevant details to use another modem router and been subsequently cut-off.

Now its about a value exchange. This T&C would be fine for the first 12-months but after that it's plain unreasonable. I was an advocate of Sky broadband but now because of this insidious piece of structural entanglement - I'm open to offers! Will I leave tomorrow? Probably not but the seed of discontent has been sown.