The Loyalty Program Toolkit: Lessons Learned & Best Practices Enabling Break-Away Competitive Advantage

May 29, 2015 1 Comment

The content of this blog is a customer loyalty toolkit containing a host of loyalty program development ‘how to knowledge’ including best practices, project plan, business case, pros/cons, customer loyalty definition, customer loyalty benefits, loyalty program communications plan, loyalty program change drivers and loyalty program development lessons learned.

Sample Blog Content

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The market is currently saturated with customer loyalty programs that are either marginally effective or that actually represent an inconvenience to the very customers they are trying to retain. If you are even thinking of launching a loyalty program, consider the Ten Commandments of Loyalty Programs listed below.

Ten Commandments of Loyalty Programs:

The rewards of the loyalty program must be so compelling that customers are actually driven to defect from your competitors and organically refer other customers to your program
The rewards from the loyalty program must be so super-simple to redeem, the customer can do it without any unnatural and inconvenient steps: finding their card, remembering their rewards number, etc.
The rewards from the loyalty program maximize customer choice for redemption: Cash back, points with cash payments, merchandise, travel, buy points, donate points, transfer points, etc.
Company employees are empowered to distribute points to customers based on need such as distributing points to make up for a customer service issue or for a customer’s good will toward the company
Top Tier Customer loyalty achievers for each year are recognized in special ways: Meet with company CxOs to get their feedback; special in-person awards ceremonies, extra unannounced super-perks the following year, etc.
The pre-launch company rewards program is designed such that rewards programs rating agencies (Freddie Awards, Flyertalk), pre-determine the program to be top in class prior to launch based on the design concepts, rewards program content, etc. Ongoing reviews ensure top program billing following the program launch
Rewards program acquisition strategy must include conversion of a customer’s competitor points to join your company’s rewards program at the same level as your competitor(s). (a.k.a. a lateral join)
Any loyalty program should not even be considered without first leveraging Advanced Predictive Modeling Techniques (APMTs) to determine an overall program cost estimate. These APMTs tend to be much more responsive and accurate, quickly reflecting the impacts of all available information on the program liability. Without this APMT component, the program must be cost prohibitive and drive your product/services costs up to unsustainable levels.
The loyalty program must enable communications with its members via the member’s communication channel of choice without burdening members will annoying and redundant member information requests.
The loyalty program should encourage family company loyalty to the extent of top market leaders (USAA insurance for military service members) such that rewards can be transferred to family members, left to family members after death, allow entry at preferred reward program loyalty levels for select family members of top earners, etc.

Loyalty Program Strategic Drivers & Levers

Any world-class loyalty programs that I have helped establish and/or evolve at Macy’s, Bank of America, Wells Fargo, Starwood, Marriott, and American Airlines ALL contain (at least, as a common denominator) the above seven (7) strategic levers as part of their loyalty program.

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Loyalty Program Levers

Reasons People Leave Companies

The Relationship Between Customers Treatment & Retention

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Benefits of Customer Loyalty

Benefits Of Customer Loyalty

Company Benefits of Customer Loyalty

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Loyalty Definition

What Is Customer Loyalty

A Good Definition for Customer Loyalty

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Change Drivers for Loyalty Programs

Change Drivers For Customer Loyalty Programs

Drivers (Reasons) for Creating a Customer Loyalty Program

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Objectives & Desired Behavior Of A Loyalty Program

Loyalty Program Corporate Objectives

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Loyalty Program Approach

Customer Loyalty Program Approach

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Positioning The Loyalty Program

Customer Loyalty Program Requirements Development

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Loyalty Program Type & Content Examples

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Loyalty Program – Balancing Benefits With Company Costs

Loyalty Program Customer Benefits & Company Costs

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Loyalty Program Business Case

Loyalty Program Business Case and Reward Financial Model

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Loyalty Program Communications Plan

Customer Loyalty Program Communication Plan Structure

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Loyalty Program Point Collection Simulator

Customer Loyalty Program Reward Point Redemption Simulator

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Loyalty Program Point Redemption Calculator

Loyalty Program Reward Category Point Redemption Volume Estimates

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Loyalty Program Business Case & Project Plan

Loyalty Program Business Case & Project Plan

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Loyalty Program Pros and Cons

Customer Loyalty Program Pros & Cons

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Loyalty Program Lessons Learned – 1 of 3

Customer Loyalty Program Lessons Learned & Best Practices (1 of 3)

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Loyalty Program Lessons Learned – 2 of 3

Customer Loyalty Program Lessons Learned & Best Practices (2 of 3)

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Loyalty Program Lessons Learned – 3 of 3

Customer Loyalty Program Lessons Learned & Best Practices (3 of 3)

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Bottom Line: If you are ever considering implementing a customer loyalty program, please take the above lessons learned and best practices into account as these were all developed after having successfully implemented several of these loyalty programs at Fortune 500 companies across the globe.

How the Sales Conversion Funnel Can be Limited by Bottlenecks

April 4, 2015 4 Comments

Online Sales Conversion Funnel

In order for your company to get the most out of social media marketing, you’ll have to identify where along the customer conversion funnel (CCF) your customers may be dropping out. Just one bottleneck in the funnel can severely limit your revenues as well as customer return business.

Bottlenecks in your CCF can cause the following problems:

1) Reduces the effectiveness of advertising campaigns

2) Prevents potential customers from fully understanding the benefits of your products

3) Frustrates users and prevents them from being able to purchase an item

4) Keeps customers from returning

5) Discourages users from promoting your products

What is the Customer Conversion Funnel (CCF)?

The CCF is the path a consumer takes from being aware that the service or product and/or service exists, to finding out more information about the product/service, to finally buying the product. The e-commerce conversion funnel also includes the two further steps, which are loyalty and advocacy. Social Media can enhance each step of the way

Revenue Loyalty Formula

A Mathematical Viewpoint

Many view revenue as a simple equation, Revenue = Sales Price * Quantity Sold. This simplistic view overlooks the intricacies of the entire model. This basic formula can then be broken down into the segments of the pipeline itself. Viewing the second equation below, Price*Quantity is a function of the percent interested in your products, those who understand your products, and those who are not frustrated by your checkout process. From there, you should look at customer loyalty as a multiplier and their advocacy, usually done by those loyal to your brand increases. This exponentially as they are able to push outreach organically

Telltale signs of Bottlenecks in your Conversion Funnel

1) There is a market need for the products and services that you provide, but no one is coming into your e-commerce store. Potential Problem: poor community development on social media

2) People enter your online store, but few add anything to their shopping cart. Potential problem: you may not be giving your customers enough information about your products for them to feel that they understand your product and then are comfortable enough to complete the purchase.

3) Those who add items to their basket fail to complete the purchase. Potential problem: there are too many steps to complete the purchase or the process is confusing

4) Those who do buy your products don’t repeat their purchase. Potential problem: a gap between expectations of the product and what they received

5) Repeat purchasers fail to bring in more customers.Potential problem: no community feeling generated within your online brand as well as no incentive for them to advocate for your brand.

Methods of Removing Bottlenecks from your Conversion Funnel through Social Media

1) Brand awareness for your online store starts with social media. Here, you’ll want to create a community feeling around your product. You’ll also want to determine which social networks your customers use most frequently and what is the best way of getting into contact with them. Reach out to your audience and provide them with content that is related to the products you sell or services that you provide. Interesting or informative content should make up at least 80% of the content that you produce. This will help grow your brand’s public awareness without seeming too sales-y. The worst thing that you could do is start with advertisements out of the gate. This approach would repel your potential customers

2) Your customers’ consideration to purchase is enhanced by the amount of information that you provide on your website. Remember that your customers will not be able to touch, smell, feel, or try on any of your online products. They are completely limited to the amount of information you provide them. Knowing this, you should make sure that your provide them with all of the information that they could possibly need to make the purchasing decision – things like high quality images, numerous and credible product reviews, quality ratings, etc.

3) The checkout conversion rate is affected by the usability of your site’s checkout process. Make sure that this process contains as few steps as possible, does not require users to re-input information, and is completely linear, so that users do not have to repeat steps or go back

4) Loyalty starts with reaching out to your current customers, those who have purchased from you before. You must contact them to understand if they are satisfied with their purchase and if their purchase matched or exceeded their expectations. Following up will give you an opportunity to up-sell or cross-sell items that they may also need. Also, if the products that you sell have a natural expiration date or will normally be completely used and worn out at a certain point, be sure to understand when that point is and contact your customers with a suggestion of re-purchasing that item or a similar item.

5) Customer advocacy increases when you facilitate it. Encourage your satisfied customers to share their feelings on social media and share part of the profits that they generate with them. Your best customers can quickly turn into your best advocates, helping you to increase your revenues.

Tools to help along the way.

WordPress

WordPress – the easiest content management system for creating a blog is WordPress. A blog should be one of your core advocacy outlets, allowing you to form the exact message that you want to go to your clients. The best thing about it is that it’s absolutely free. Download it here: https://wordpress.org/

Google Analytics

Google Analytics – Google Analytics is a powerful tool that helps you, among other things, track your customers’ movements on your site. You’ll be able to see where they come from and set up a check out funnel to google. Google analytics will also allow you to track your conversions that come through paid advertising on Google. Access Google Analytics here: http://www.google.com/analytics/

Get Social

GetSocial – I would recommend that you use GetSocial’s Social Sharing & Analytics tools. GetSocial’s Social Sharing & Analytical tools allow you to track both social sharing, through social networks, and dark sharing, which is the type of sharing through the copying and pasting of URLs. From there, you can see the true ROI of social media as their software tracks how many leads, visits, page views, and conversions each social and dark share creates. GetSocial gives a lot more detailed information than Google Analytics, giving you the shares and leads breakdown per page, and when combined with your user database, you can pinpoint exactly who is sharing, creating leads, and converting. If you have WordPress or Shopify, it’s even easier as they offer a no-code installation for most of their apps. Check them out here: https://wordpress.org/plugins/wp-share-buttons-analytics-by-getsocial

Filed under CRM, Sales Techniques & Strategies, Social Media Tagged with best social media monitoring tools, checkout conversion rates, customer advocacy, customer loyalty formula, customer referrals, dark sharing, e-commerce best practices, e-commerce store failures, free social media analytics tools, free social media tracking, free social media widgets, get more likes, get more shares, get social, how to measure social media, how to track social media, how to track social media analytics, increase customer referrals, measure social media, measuring social media, measuring social media effectiveness, measuring social media roi, measuring social media success, monitor social media, monitoring social media, online e-commerce, online sale e-commerce, online sales, online sales conversion, online sales conversion best practices, online sales store, repeat website purchases, return online customers, Sales conversion funnel, sales funnel bottlenecks, share on social media, share social media, sharing tools, Shopify, shopping cart abandonment, social analytics, Social conversion funnel, social data analytics, social marketing analytics, social media analytic tools, Social Media Analytics, social media analytics software, social media analytics tools, social media conversion funnel, social media data analysis, social media data analytics, social media industry analysis, social media integration tools, Social Media Marketing, social media marketing analytics, social media marketing tool, social media marketing tools, Social Media Measurement, social media measurement tools, social media metrics tools, social media monitor, social media monitoring, social media monitoring services, social media monitoring tools, social media reporting tools, social media research tools, social media revenue, social media revenue formula, Social Media Sales, social media sentiment analysis, social media sharing tools, social media tracking, social media tracking services, social media tracking tools, social share, social share widget, social sharing apps, social tracking, social widget, top social media monitoring tools, track social shares, tracking social media, web storefront, website sharing, what is social analytics, what is social media monitoring

Managing Customer Life Stages and Events Can Super-Charge Your Marketing Effectiveness

March 21, 2015 Leave a comment

Why Knowing Your Customer’s ‘Life Stage’ & Associated Events are Crucial to Delivering Effective Marketing

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: Life Stage Overview

Customer Life Stage Marketing Can Help You Deliver the Right Promotions with the Right Offers, at the Right Time and Via the Right Channel

Here are some important questions to bring into perspective how important it is to track and recognize your customer’s life-stages and events:

Would you forget to celebrate a school graduation for an important relative?
Would you forget to celebrate the birthday of a spouse or significant other?
Would you forget to recognize the birth of the first child of a couple that is close to you?
Would you miss noticing the retirement of a person that is very special to you?

If not, then why would you miss these important milestones for your valuable and long-time customers as these all represent significant and extremely meaningful life-stage events for them?!

A Statement on Life-Stage Marketing to Remember: “Marketing without Considering Your Customer’s Life Stages is Comparable to Marketing to Them With A Blindfold On”

For this reason, your segmentation strategy must take into account an array of customer profile variables including customer life stages. The following chart depicts how customers follow normal life stages and are grouped into life stage segments. As customers evolve to the next life stage segment, their consumer spending evolves and generally increases until they reach the most mature life stages. {Click on Chart for a Larger Image}:

Customer Life Stage Segments

As your customers age and evolve through their normal life-cycles, their customer profile changes along with this evolution including:

1) Needs & Preferences

2) Propensity to spend at higher levels

3) Desire for higher quality products and services

4) Growing insensitivity to higher product pricing in exchange for premium service

The next chart highlights the significant life stage events that are associated when a customer migrates from one life stage segment to another. These are the life-events you should track and recognize in order to build stronger and more meaningful relationship with your customers. Customers have reported that they feel “appreciated” or “valued” 31% more from companies that take the time to acknowledge a significant life stage event vs. those who do not recognize these events. {Click on Chart for a Larger Image}:

Customer Life Stage Events

How do you obtain insights into the above major customer life events? The simple answer is that you ask them. Customers are very willing to share their preferences and life events since volunteering this information builds the potential for a better relationship with your company. This also demonstrates that, as a company, you care and listen to your customers.

By using preference and life event subscription portals, world-class companies allow their customers take control of their relationship with your company by self-reporting their contact preferences (preferred topics they want to hear about, maximum frequency of communication, preferred communications channels, exception events that allow you to contact them even when there is a previous “do not contact” preference set, etc.). These same relationship preference portals also allow customers to report either known or as they occur life stage events (birthdays, anniversaries, expected graduation dates, job promotions, etc.) in exchange for being recognized and appreciated (discounts, upgrades) for supplying this relationship enhancing and sensitive information.

The next chart illustrates how customer’s needs for products and services evolves as they migrate through their natural customer life stages. By offering products and services that are right for the customer’s associated life-stage, companies can experience a much higher offer acceptance rates (8-47%). {Click on Chart for a Larger Image}:

Types of Products Offered Should VMatch Customers Life Stages

Types of Products Offered Should Match Customers Life Stages

The following chart illustrates how your marketing promotions and offers must be in total alignment with their life-stage segment needs. {Click on Chart for a Larger Image}:

Marketing & Promotional Offers Should Match Your Customer’s Life-Stages

The above two charts depict how both products and offers must be in total alignment with your customer’s life-stage in order to be effective. This ensures products/services and marketing offers are at the right time, with the right content and are at the right time and via the right channel (by collecting and managing life-stage channel preferences). {Click on Chart for a Larger Image}:

Customer Life Stages Segments with Matched Products, Offers, Spend

Bottom-line: If you are not taking your customer’s life stages and associated events into your segmentation and marketing strategy, then you are marketing with a blindfold on and not recognizing what is most important or relevant to your customers. A large US bank where I implemented this life stage segmentation schema and associated customer life-stage marketing management program witnessed a 25% increase in customer offer acceptance as well as a 18% increase in overall customer loyalty as measured by the reduction of customer defection rates.

Filed under CRM, Customer Profitability Tagged with aging customers, consumer life stage events, consumer life stages, customer advisory events, customer aging, customer appreciation events, customer birthday events, customer deaths, customer engagement, customer evolution, customer evolution stages, customer excitement, customer family addition events, customer family segments, customer first-time home purchase event, Customer focus groups, customer graduation events, customer insights gathering, customer life stage events, customer life stages, Customer Loyalty, customer marriage events, customer maturation, customer maturity stages, customer profiles, customer profiling, customer recognition events, customer references, customer referrals, customer retention, customer retirement events, Customer Segmentation, Customer Segments, customer student segments, customer value segments, customer wealth segments, life stages, life stages in customer segmentation, life-stage events, mature customers, maturing customers, mid-life customers, older customers, student customers, understanding customer motivations, understanding customer’s emotions, understanding customer’s needs, wealth preservation segments, wealth segments, younger customers

The Importance of the Brand Value Chain (BVC) to Attaining Market Leadership

January 2, 2015 3 Comments

A High Performing Company with All Value Chain Links Strong (No Brand Value Links Broken or Sub-optimized):

: Company Brand Value Chain

How a Broken Value Chain Impacts Your Company

In order for your company to have a chance at being a market leader, it is important for it to have all links in the brand value chain attaining top effectiveness. Just one broken link in this brand value chain (BVC) can bring your whole company down and subject your company to the following risks:

1) Loss of Market Share as compared to your competitors

2) Inability to close sales

3) Lack of marketing leads and inquiries

4) Declining customer base over time including customer defection to the competition

What is the Brand Value Chain (BVC) you might ask?

The Brand Value Chain is defined as the effectiveness of the sum of all company functions delivered to your customers and the marketplace: Marketing, Sales, Product/Service Quality, Customer Service, Pricing, Warranties/Returns, Customer Relationship & Experience Quality, etc.

: Brand Value Chain Defined

Therefore, when one link of the brand value chain is weak or about to break, the following rule regarding brand image almost always holds true:

: Brand Image & Brand Value Chain Rule

Symptoms of a Broken Value Chain:

Your sales team just can’t seem to close the deals. Potential broken value chain links: Poor customer service, product utility/quality, pricing.
You have great products, pricing and customer service but nobody has heard of you. Likely broken value chain links: Poor marketing and/or sales operations.
Your customer base keeps declining year-over-year: Likely broken value chain links: Poor customer service or eroding product quality or pricing.
Your marketing generates a plethora of leads that are not closed or turned into sales deals: Likely broken value chain links: Sales operations and marketing-sales lead management procedures are non-existent or sub-optimized.

Examples Companies with Potential Broken Value Chains:

Every day we see examples of companies that seem to have everything going for them except one weak link in the brand value chain that brings the entire perceived brand value down. Some examples are as follows:

Comcast – great programming, great marketing/sales, great products, great technology & infrastructure but perceived bad customer service and pricing creates a negative impression of the company by many customers and prospects – their company’s Achilles heel.
Sears – great products, good pricing, good in-store sales, etc. but is severely lacking in marketing and promotions including in-store and on-line customer experience design which tends to brings down the other great intra-company performers and has led to a decline in the customer base.
General Motors – good pricing, promotions, dealer sales, etc. but perceived increased negative product quality due to the number of recent recalls has brought many questions regarding the GM brand. These questions about product quality could impact customer retention and acquisition in the longer-term.

How the Broken Value Chain Impacts Company Performance:

What all of these examples show is that a company must deliver great performances in every category to become a market leader. One broken link in the brand value chain is enough to reduce the company to a market laggard and risks them going out of business over time if not rectified.

The following chart illustrates how one broken brand value chain has the ability to bring down the entire company and risk its overall viability:

: Company Impacts of the Broken Brand Value Chain

How to Identify & Rectify a Broken Value Chain:

What steps can you take to identify and then rectify a broken brand value chain (BBVC) you might ask? Here are some easy steps to take to first, identify and then rectify a broken value chain:

Proven Methods to Identify a Broken Value Chain (BVC):

Inter-departmental peer reviews – How well do our peer departments think we are performing?
External departmental & function benchmark reviews – how well are doing vs. market leading company’s similar function (e.g. sales to sales or marketing to marketing performance comparison)?
Customer external scorecard reviews – How well do our customers and prospects think we are performing?

Methods to Rectify a broken value chain:

Perform Six-Sigma process and effectiveness improvement reviews
Invite customers to participate in focus groups and advisory councils to help identify ways to improve the department’s effectiveness (sales, marketing, customer service, etc.)
Form Improvement “Tiger Teams” consisting of inter-departmental high performers to assist with increasing functional performance.
Invite outside and leading consulting firms to help infuse a holistic set of industry best practices across and within company functions – marketing, sales, customer service, pricing, etc.
Tie performance and variable rewards to customer rated scorecards where company employees only get paid bonuses when our customers rate us as high performing.

Filed under CRM Tagged with bad brand management, best brands, best brands operations, better brands, brand crisis management, brand failures, brand horror stories, brand image, brand image improvement, brand image measurement, brand image measures, brand management, brand market perceptions, brand perceptions, brand purchase, brand reputation, brand reputation decline, brand reputation improvement, brand reputation measurement, brand stockholder worth, Brand Value, Brand Value Chain, brand value defined, brand value definition, brand value worth, branding best practice, branding best practices, branding how to, branding quality, branding secrets, branding success, branding successes, brands that succeed, Company Value, CRM value chain, customer brand value, customer service value, Customer Value, declining brands, defective brands, developing a top brand, failing brands, fortune 500 brands, high quality brands, how best brands operate, how top brands operate, leading brands, luxury brands, market brand value, market leading brands, market leading companies, marketing and branding success, measuring brand value, most successful brands, perceived brand value, quantifying brand value, ruined brands, successful brands, tarnished brand image, top 10 brands, top 100 brands, top 3 brands, top 5 brands, top brand best practices, top brand failures, top brand secrets, top quality brands, value chain, value of brands, weak brand link, world-class brands

The Customer Centricity Test – How Customer Oriented Is Your Company or Organization?

March 28, 2014 5 Comments

This blog is dedicated to help you determine whether your company or organization has a customer centric culture.

Sample Customer Centricity Test Results

In this blog, we will cover the following topics:

A. The top 5 signs of a customer centric culture

B. Determine if your company has a customer centric culture by taking a simple test

C. Determine the category your organization falls into in terms of customer orientation. Is your company:

1) Customer Passionate

2) Customer Supportive

3) Customer Apathetic

4) Customer Users

5) Customer “Churners & Burners”

D. Three (3) easy steps to transform from a customer apathetic oriented company into a customer progressive organization that embraces customers as strategic partners

E. The metrics and measures that ensure you are maintaining a high degree of customer orientation and success

The following is the top five signs of a customer centric organization:

Top 5 Signs of a Customer Oriented Culture

Top 5 Signs of a Customer Centric Culture

Take the following test to determine how customer centric your organization’s culture is toward your customers. Is your company customer progressive or does it practice customer churn & burn?

Customer Centricity Test, Part 1:

Customer Centricity Test, Part 1

Customer Centricity Test, Part 2:

Company Customer Orientation Test, Part 2

Customer Centricity Test, Part 2

Customer Centricity Test, Part 3:

Company Customer Orientation Test, Part 3

Customer Centricity Test, Part 3

Customer Centricity Test, Part 4:

Company Customer Orientation Test, Part 4

Customer Centricity Test, Part 4

Based on the Test Results above, Is Your Organization Customer Centric and Does Your Company Have A Customer Oriented Culture?

Customer Centricity Test Results

Depending on the number of questions you were able to answer “Yes” to in the exam above determines your overall customer orientation score. Based on the total score (Number of “Yes” answers), you can rank your organization based on the above grid.

The following Are 3 Easy Steps to transition to a customer centric culture:

3 Steps to Transform Into a Customer Centric Company/Organization

Steps 1 & 2 are self explanatory. The sample metrics touched upon in step #3 above are detailed more in-depth on the next page.

The following are a set of progressive Customer Oriented Culture Metrics & Measures that ensure maintaining a customer passionate culture:

Progressive & Customer Oriented Measures & Metrics

For a deeper-dive on the top of Marketing and Customer Measures please visit my other blog on this topic: “Measuring Marketing ROI vs. Measuring Customer Value & Equity “ : http://stevenjeffes.com/2014/02/28/measuring-marketing-roi-vs-measuring-customer-value-equity/

In summary, transitioning to a customer oriented culture requires leveraging a proven customer oriented culture enablement methodology, skilled CRM change management practitioners and a holistic approach to implementing customer oriented methods and practices.

I have successfully used this approach on many customer oriented projects at many of the Fortune 500 companies in the US.

To find out more about this topic, please contact me via the “About” section of this blog.

Filed under CRM, Customer Profitability Tagged with best consumer service companies, complaining consumers, consumer advisory boards, consumer advocates, consumer analysis, consumer analysis program, consumer anniversary recognition, consumer appreciation events, consumer attrition, consumer birthday recognition, consumer celebration events, consumer centric, consumer centric company, consumer centric culture, consumer centric organization, consumer centric ranking, consumer centricity, consumer change management, consumer churn and burn, consumer complaint insights, consumer complaints, consumer crowdsourcing, consumer culture, consumer cultures, consumer defection, consumer defects, consumer engagement, consumer engagement success, consumer executive account managers, consumer executive sponsors, consumer feedback groups, consumer first policies, Consumer focus groups, consumer focused company, consumer friendly companies, consumer friendly cultures, consumer friendly policies, consumer fun companies, consumer honesty, consumer insights, consumer insights group, consumer loyalty, consumer management policies, consumer organization, consumer orientation, consumer orientation score, consumer orientation test, consumer oriented, consumer oriented companies, consumer oriented company, consumer oriented culture, consumer participation, consumer participation events, consumer partners, consumer passionate, consumer pilots, consumer progressive companies, consumer references, consumer reports, consumer sales references, consumer satisfaction decline, consumer satisfaction improvement, consumer satisfaction rating, consumer sentiment, consumer service balanced scorecards, consumer service cost center, consumer service dashboards, consumer service excellence, consumer service feedback, consumer service metrics, consumer service oriented, consumer service policy, consumer service policy improvement, consumer service rankings, consumer service scorecard, consumer service test, consumer service transformation, consumer social buzz, consumer social media sentiment, consumer transformation, consumer transparency, consumer warranty issues, consumers as assets, crowdsourcing groups, guest blogger, guest bloggers, highest consumer satisfaction, highest consumer satisfaction rankings, highest consumer satisfaction ratings, irate consumers, most valuable consumers, partner with your consumers, Pissedconsumer.com, platinum service, product defects, product returns, signs a company is consumer friendly, Steven Jeffes, top 10 consumer friendly companies, top 10 consumer service companies, top 5 consumer friendly companies, top 5 consumer service companies, top consumer companies, top consumer friendly companies, top consumer recognition, top consumer recognition programs, unhappy consumers

Measuring Marketing ROI vs. Measuring Customer Value & Equity

February 28, 2014 1 Comment

Hierarchy of Marketing ROI Analysis (Levels 1-4)

In this blog we cover the following topics:

The four (4) levels of sophistication in measuring marketing and customer ROI
The three traditional levels of marketing ROI that focus on spend vs. return
The calculations for measuring campaign ROI, Brand ROI and Customer Spend ROI
Why measuring customer value and equity is a far better measure than traditional marketing ROI
How Customer Value and Equity Covers the Measurement of ALL customer facing activity – marketing, PR, sales, customer service, community relations, etc.
What your company needs to do to increase its sophistication of measuring market and customer insights

The following chart depicts the capability levels for measuring market ROI and customer value.

Level 1: Campaign centric ROI is the measurement, at a campaign level, of campaign costs vs. campaign return (customer spend vs. campaign return)

Level 2: Brand Centric ROI is the measurement, at a brand level, of brand return for all conducted campaigns (roll up of campaign ROI to a brand level)

Level 3: Customer Spend ROI is the sum of all brand and all brand campaign ROI at a customer level.

Levels of Marketing ROI Measurement (Levels 1-4)

The following chart defines the first three levels of marketing ROI and points out the pros and cons for utilizing each method. The downfall for all three methods, as indicated at the bottom of the chart, is that they rely on historical spend vs. forward looking measures as are found in Level 4 – Customer Value and Equity Measures.

Traditional Marketing & Customer ROI Methods (Levels 1-3)

The following chart depicts the calculations for determining campaign level and brand level ROI that, if done correctly, should roll up to a customer level (Level 3 – Customer Spend ROI). The detailed definition of the highest level (Level 4 – Customer Value & Equity) is covered just below in this blog.

Levels 1 – 3 Focus on Spend vs. Customer Value and Equity

The following chart defines the components of Level 4 ROI analysis – “Customer Value and Equity”. This level includes the roll-up for Customer Spend ROI, but also includes insights that predict customer future behavior as well as defining how valuable the customer is to the company beyond what they spend.

For example, a customer who is referring 2-3 customers to the company per week, participating in customer focus groups is a far more valuable customer than another customer with equal spend with your company.

Similar to company stock value, the measurement of customer value and equity is a far more robust way to measure the value of the customer base, how likely they are to remain a loyal customer, etc.

Customer Value & Equity Calculations, as shown below includes several different indices such as Customer Contribution Index (CCI), Customer Perception Index (CPI), Customer Referral Index (CRI) and Customer Loyalty Index (CLI). These indices help determine the overall health of the customer base vs. merely customer spend as is associated with levels 1-3 (spend focused).

Customer Value and equity calculations take into account the level 1-3 spend ROI measures, but utilizes a balanced scorecard approach in that the indices above are weighted against the spend vs. ROI measures. For example, if Brand A has a high ROI but also has a bunch of irate customers unwilling to partner and participate in brand activities, then this is indicative of a brand that, while doing well now, will experience a great deal of future customer churn, negative social comments, brand tarnishing, etc.

Level 4 Marketing ROI Analysis – Customer Value & Equity

The following chart further defines the difference between focusing on spend ROI analysis vs. focusing on customer value and equity.

Value of Focusing on Customer Value & Equity

The last chart provides some real examples of the difference between focusing on spend ROI analysis vs. focusing on customer value and equity.

Examples of Differences Between Spend ROI
Focus vs. Customer Value & Equity Focus

The bottom line here is that if you are focusing on Level 1-3 ROI calculations, you have a short-term and myopic view of the health and value of your customer base and are missing the strategic and longer-term insights that enable you to determine customer, company and brand future value and earnings.

Any company thinking about acquiring another should perform this robust customer diagnostic to determine if they are inheriting a group of angry/upset customers that will defect after a merger or a set of extremely valuable customers with positive customer equity who will take the stock value of the merged company to the stratosphere.

Contact me to find out how to move past traditional marketing ROI measurement and how to evolve into developing more robust customer value and equity insights for your company.

Filed under CRM Tagged with angry customers, brand and company customer value, brand equity, brand perceptions, brand return on investment, Brand ROI, Brand ROI measurement, brand-customer equity, Campaign Management ROI, Campaign ROI, company perceptions, company stock and customer relations, competition stealing customers, competitor customer analysis, consumer satisfaction, consumer spend analysis, consumer spend ROI, customer acquisition, customer attrition, customer churn, customer defection, Customer Equity, customer focus group contributions, customer impact on stock value, customer insight value, Customer Loyalty, customer loyalty measurement, customer loyalty measures, customer merger, customer participation, customer participation index, customer perceptions, customer referral index, customer referrals, customer satisfaction, customer satisfaction index, customer satisfaction ratings, customer sentiment, customer spend aggregation, customer spend analysis, customer spend vs. value, customer transaction vs. value, Customer Value, customer value measurement, customer-brand perceptions, customer-company perceptions, customers and stock value, health of customer base, health of customers, Marketing Analysis, Marketing Calculation, Marketing Calculator, Marketing Campaign Measurement, Marketing Campaign Measures, marketing campaign ROI, Marketing Return, Marketing Return on Investment, Marketing ROI, Marketing ROI Analysis, Marketing ROI Measurement, measuring customer value, measuring the value of the existing customers, mergers and acquisitions, multidimensional marketing ROI analysis, relation of customer base and stock value, Steven Jeffes, stock equity and customers, stock price and customer relations, stock price and customer satisfaction, upset customers, value of customer loyalty, value of customer participation, value of customer referrals

The 80/20 Customer Profitability Rule

December 18, 2013 3 Comments

Develop intelligent customer service & customer management programs based on customer value insights…

Has your business ever performed an analysis of your customer base to determine any of the following:

1) Which customers are frequent visitors and have the greatest repeat business?

2) Which ones rarely do business with your company?

3) Which ones are the most valuable and profitable to your company?

If you haven’t then you really don’t have the insights necessary to really develop an effective customer service, customer management and/or loyalty program. In performing analytics and customer analysis for nearly 10% of the Fortune 500 companies in the United States, I have found a very revealing and astonishing pattern (rule) in this customer analysis that holds true company after company. The pattern is as follows:

80% of all company profits are derived from ~20% of your customers

Take the chart below (Chart 1) from one of the top US banks that shows 20% of their customers are responsible for 82% of their profitability and that a full 47% of customers are actually unprofitable and not worth having as customer as each transaction costs the bank more than it is worth (each customer interaction/transaction actually drives the bank further away from profitability) {Click on Chart for a larger/clearer image}:

80% of all company profits are derived from ~20% of your customers

When I presented this customer profitability analysis to the bank, the bank executives were amazed at the results and of the customer profitability distribution. (Note – The deciles were developed using a SAS generated RFM analytics model whereby Recency (How recent customer have visited/purchased), Frequency (How frequently customers have visited/purchased and when they visited/purchased) and Monetary spend (How much they spend and on what types of products/services they spent their $$ on). The RFM model was then used as input into a profitability model, using actual profit data for each product/service/customer using a unique customer id to match the profit data to the RFM score.)Why are these insights and analytics so important and what might the bank or any other business do to manage customer relationships more effectively? These insights are key in developing a customer relationship management (CRM) and loyalty program that is tailored and specific to each customer group.

Note: The 80/20 rule applies to companies that have higher transaction volumes, a diverse set of product & services and a heterogeneous customer base.

Ask yourself the following questions:

Should your company treat your best and most profitable customers differently than other, less profitable customers?
Should your company develop special customer programs so that the 20% most profitable customers are not lured away by competitors?
Do you think your company’s most profitable and valuable customers want to be shown appreciation for their repeat and profitable business in a way that makes them feel welcome and special?
Is it in your company’s best interest to want to develop strategies and programs that turn unprofitable customers into profitable or at least revenue neutral customers?

The answer to all four questions should be a resounding YES!

Armed with the above insights and analysis a company can start to architect customer intimacy and loyalty programs such as the following:

Offer most profitable customer special discounts or accelerated loyalty rewards earning rates
Conduct special top customer, by invite only, appreciation events
Deliver occasional special top customer gifts or recognition when they interact with you in-person or on-line
Invite your top 1-5% of customers to participate in an invite only customer advisory board or insights group event every year at an exciting destination where most or all expenses are paid for by your company
Develop unprofitable customer management programs such that these customers become more profitable, cost less per company transaction and/or they are effectively ‘encouraged’ to migrate to competitors.

Take the same chart above and now overlay customer treatment programs to each customer decile and sub-segment (Chart 2) {Click on Chart for a larger/clearer image}:

: Effective Customer Management Programs Based on Profitability Insights

Even though decile #1 (10% of all customers) has been identified as the most valuable customer segment generating 65% of all company profits, the decile can then be further sub-segmented based on further profitability analysis/decomposition. In this particular case:

The top 5% of the top profitability decile customers generated 42% of all profits
The remaining 5% of the top profitability decile customers generated 23% of profits

As shown in the ‘golden’ box (#1) above and below, these top tier customers should be given special access and special attention and made to feel totally appreciated and a partner of the company. The golden box also demonstrates the types of special programs you might want to provide to this top profitability group. It is of your utmost importance to do everything in your company’s power not to lose these most valuable/profitable customers. These suggested treatments are just a sample, but ones I have developed for many clients in the past, including top tier banks, retailers, life sciences companies, telecommunications providers, etc. {Click on Chart for a larger/clearer image}:

Top 5% of Customers Receive Platinum Plus Customer Programs

The next (Green) group of profitable customers highlighted in box #2 (below) can receive special treatment as well, but not quite the golden treatment as the most profitable 5%. These next valuable set of customers would still receive top customer treatment, but not quite the platinum access that the most valuable 5% would receive. You wouldn’t want to lose these valuable customers either, so their treatment would still be special, memorable and differentiated vs. your competitors. {Click on Chart for a larger/clearer image}:

Next Top Set of Customers Receive Top Treatment, but not Special Access, Handling Like the top 5% (Platinum) Group

The blue box (#3) in the chart below speaks to customer migration programs that incentivize customers to spend more, visit your company (physical or online) more, purchase higher value items, buy in bundles, etc. {Click on Chart for a larger/clearer image}:

Effective Customer Management Programs Effectively Transition Customers into More Valuable Customers Over Time

One very effective way to do this is to develop what I call modeled incentives. In that, if a loyalty program is to be effective there should be an incentive for the customer to model the behavior to achieve the next loyalty reward level and the following must be present:

1) Every customer group must know what they need to do to achieve the next loyalty rewards level

2) Customers need to feel the next loyalty rewards level is significantly more valuable than their existing level

3) There should be prestige and/or notoriety associated with achievement of the next loyalty rewards level so that customers feel privileged, special and differentiated from regular customers.

Lastly, the red box (#4) below speaks to customer management programs that need to either turn these unprofitable customers into profitable customers or find ways to reduce the cost to serve these unprofitable segments. Some strategies including limiting these customers to self-service, providing incentives to transact during off hours, incentivizing them to seek lower cost providers, etc. {Click on Chart for a larger/clearer image}:

Effective Customer Management Program Also Address Unprofitable Customers

The bottom line is that, through customer insights and analytics, you will find that not all customers are the same in terms of profitability (the 80/20 rule), therefore it makes no sense whatsoever to treat all customers the same. Through a robust customer insights program you will then be able to leverage these insights and develop a sophisticated and custom loyalty and retention program in order to accomplish the following:

Develop break-away tier 1 (Platinum) loyalty programs that stand alone in the industry such that your top 1-5% most valuable customers would not even consider defecting to another provider
Develop programs to retain your most profitable customers and make them want to remain a loyal customer
Develop a loyalty migration path for customers to want to achieve the next loyalty rewards level (Silver, Gold, and Platinum) so that they simultaneously feel more recognized/special/connected to the company while providing your company great value/profits/monetary return.
Develop programs to mitigate expenses when dealing with your least profitable customers (more self-service, helping them ‘discover’ lower cost competitors, offering more limited services, etc.) (the other 80%)

Filed under CRM, Customer Profitability Tagged with 80-20 profitability, 80-20 rule, 80/20 profitability, 80/20 rule, Accelerated Loyalty Programs, consumer insights, Consumer Intelligence, Consumer Profitability, Consumer Profitability Analysis, CRM, Cross-Segment Customer Management, Customer Advisory Groups, customer analytics, Customer Base Analysis, Customer Deciles, Customer Defection Prevention, Customer Frequency, Customer Incentive Programs, customer insights, customer insights group, customer intelligence, Customer Loyalty Program, customer loyalty rewards, customer loyalty rewards levels, Customer Management Programs, Customer Migration Strategies, Customer Profitability, Customer Profitability Analysis, Customer profitability distribution, Customer Relationship Management, Customer Repeat Business, Customer Retention Programs, Customer Segmentation, Customer Segments, customer service differentiation, customer service differentiators, customer service levels, customer service programs, customer service strategy, Customer Sub-segments, Customer Treatments, Customer Value, Customer Value Analysis, Customer Value Programs, differentiated customer service, Firing Your Customers, Focus Groups, Gold Customers, Most Valuable Customers, platinum customer service, Platinum Customers, Profitability Algorithms, Profitability Models, RFM modeling, RFM Scoring, SAS Customer Models, Silver Customers, Unprofitable Customer Management, Unprofitable customers

Social Campaigns that SCORE Social Media RAVES – ROI, Awareness, Value, Excitement, Success

September 7, 2012 4 Comments

World Class and Multi-Channel Social Media Campaigns that SCORE…RAVES

Elements To SCORE Social Media RAVES

Many people look at social media as a chance to reach an audience within a select platform, venue, community or channel. In actuality, in order to drive real value from social media, you must look holistically across all channels and drive ROI and value from an optimized multi-channel social media approach. Take the following example:

I recently wanted to boost the number of hits on my social media, CRM and innovation blog and developed a LinkedIn campaign to drive awareness. The LinkedIn awareness campaign was set to run from March 18 – March 22 and then again from March 25 – March 30. On March 21st and again on March 30th I added promotional campaign messages from my Facebook Account in addition the ongoing LinkedIn promotion to drive multi-channel awareness of my blog. The Campaign Key for this campaign:

Campaign Execution from March 18 – March 22 and again from March 25 – March 30:

Campaign Key: LinkedIn Campaign to Read/Follow My Blog

Campaign Execution on March 21st and March 30th:

Campaign Key: Facebook Campaign to Read/Follow My Blog

The following chart illustrates the results of these multi-channel blog awareness campaigns:

If you plan to develop a SCORE Plan similar to what is illustrated in the below chart, you are very likely to generate social media RAVES:

Planning the SCORE Elements for Social Campaigns will Generate RAVES

This campaign generated many RAVES as shown by this next chart:

This next chart illustrates the results of my campaign which netted a 5x lift in monthly blog hits – an amazing increase over normal months!

I next posted a comment and link to my innovation & continuous improvement blog in response to a blog post on the Harvard Business Review’s website on continuous improvement.

Campaign Execution on May 8th:

Campaign Key: Havard Business Review Blog Link to My Blog

As a result, my blog hits (RAVES) went through the roof (see next chart), with 8 people liking my post on the HBR blog site.

As shown by the following chart, as a result of my posting on The Harvard Business Review Blog site, the hits (RAVES) to my blog were 10x over a normal traffic day.

Next up in my campaign execution plan, and following a similar SCORE plan of the blog campaign, I set out to increase my Twitter Followers by sending messages to my LinkedIn Connections and Group Members to Follow Me on Twitter.

Campaign Key: LinkedIn Campaign to Follow Me on Twitter

And also executed….

Campaign Key: LinkedIn Group Campaign to Follow Me on Twitter

This chart illustrates my pre-campaign execution Twitter follower metrics:

Pre-Execution Campaign Metrics to Increase Twitter Followers via LinkedIn

As shown by the following chart, the (post campaign execution) RAVES associated with this Twitter “Follow Me” LinkedIn campaign resulted in an additional 96,283 Twitter followers in just two weeks time and a post-campaign increase in daily Twitter followers of 50-100 per day.

The RAVES Associated with LinkedIn “Follow Me” On Twitter Campaign

Next up in my campaign execution plan, and following a similar SCORE plan of the Twitter Campaign, I set out to increase my LinkedIn Connections by inviting my LinkedIn managed group members to connect with me on LinkedIn.

Campaign Key: LinkedIn Group Campaign to Connect with Me On LinkedIn

The following chart illustrates the pre-campaign execution metrics – total number of LinkedIn connections:

Pre-Campaign Execution Metrics – Connect with Me via LinkedIn Groups

As shown by the following chart, the (post campaign execution) RAVES associated with this campaign resulted in a growth of LinkedIn Connections of 5,378 in just ten months time (an average increase of 537 LinkedIn connections per month) and a post-campaign increase in daily LinkedIn Connections of 5-10 per day.

All of these above SCORE campaigns demonstrate the advantage of planning and executing successful multi-channel social media campaigns.

As illustrated above, while multi-channel social media campaigns have the highest potential reach, impact and RAVES, it comes with an entire set of more complex targeting strategies and communications tactics than does the single channel (i.e. LinkedIn only) campaign. Obtaining RAVES with multi-channel social media campaigns therefore, requires much more time and effort in campaign (SCORE) planning.

The following chart illustrates these differences and nuances between a single and multi-channel social media campaign and what must be considered in your SCORE prior to campaign execution (similar to my examples above):

Multi-Channel Social Media Campaign Execution – Targeting, Reach, Tactics, Benefits (RAVES)

All of the above gives you some sample insights on how to SCORE RAVES with multi-channel social media campaigns, and achieve your own success by executing similar campaigns.

The end result of all this campaigning…?–>Me ending up as #1 among all global social media experts in social media reach (combined total of LinkedIn Connections, Twitter Followers and Facebook Friends) by SocialChiefs.com.

As a result of this ranking, I have had numerous inquiries on speaking nationally on the topic of social media, social media consulting inquiries and inquiries to see if I would be interested in joining organizations as their social media lead/manager/director.

Filed under CRM, Social Media Tagged with Acxiom, Best practice campaigns, best practice social media, Best practice social media campaigns, Blog analytics, blog campaigns, campaign analytics, CRM, cross-platform social campaigns, Customer Experience, Database management., Epsilon, Experian, Facebook, Facebook campaigns, Facebook friend campaigns, Facebook friend growth, Facebook growth, famous social media campaigns, Friend Campaigns, grow social communities, grow social connections, Grow social fan base, grow social following, grow social reach, Harte Hanks, Harvard business review, Harvard business review blog, Human Resources, IBM, increase fan base, increase influence, increase social connections, increase social fans, increase social participation, increase social reach, Key Opinion Leader, leading practice social media campaigns, LinkedIn, LinkedIn Campaigns, LinkedIn connection growth, marketing campaign ROI, marketing mix optimization, marketing optimization, Merkle Marketing, Most LinkedIn connections, Most Twitter Connections, multi-channel campaigns, multi-channel social campaigns, social campaign analysis, social campaign analytics, social campaign execution, social campaign lift, social campaign measurement, social campaign metrics, Social Campaign planning, social campaign results, social campaign ROI, social campaign success, social campaign value, social channel integration, social channel optimization, social channel selection, Social communications, social communications campaigns, social community growth, Social connections campaign, social connections campaigns, Social CRM, social cross-channel campaigns, social follower campaign, social friend me campaign, social marketing campaigns, social marketing mix, social marketing spend, Social Media, Social Media Analytics, Social Media Balanced Scorecard, social media campaign ROI, Social Media Campaigns, Social Media Compliance, Social Media Considerations, Social Media Consultants, Social Media Conversations, Social Media Dashboard, Social Media External metrics, Social media growth, Social Media Influencers, Social Media Internal metrics, Social Media Key Performance Indicators, Social Media KPIs, Social Media Measurement, Social Media Measures, Social Media Methodology, Social Media Metrics, social media multi-channel campaigns, Social Media Optimization, Social Media Organization, Social Media Planning, Social Media Process, Social Media Programs, Social Media Software, Social Media Success, Social Media Tools, Social Media Trends, Social Media War Stories, social mix optimization, Social Relationship Management, Social Sentiment, SRM, Steven Jeffes, successful social campaigns, successful social media campaigns, top social media campaigns, Twitter, twitter campaigns, Twitter Connections, twitter follower campaigns, Twitter growth, twitter key influencers, twitter leaders, Ultimate social media campaigns

Blow Away Your Competition by Replacing Your Old CRM Program with the New Customer Relevant Relationship Management (CRRM) Model – Part 2: The Necessary Components.

March 18, 2012 4 Comments

1) Introduction:

In my previous blog, I covered what the new Customer Relevant Relationship Model (CRRM) is and the benefits of adopting this new model. In this blog, I will cover the components of the new CRRM model and what you need to put in place to make this new model a reality.

Ever wonder why companies like ESPN, Apple, Google, Zynga, Amazon, and Marriott dominate their respective markets? The reason is that they are ‘Customer First’ organizations and are passionate about listening to, understanding and then delighting their customers based on leveraging true customer insights. They treat their customers as business partners vs. commodities and include them in many critical decision making processes. They get this new CRRM model. Why/how ? – Read the rest of this blog to find out…

The differences between the old CRM model and how these companies are embracing the newer CRRM model are depicted in the following chart:

The Old CRM Model vs. New CRRM Model – Customers as Business Partners

2) Customers are fed up with old Dictatorial Management Style & Want to be Empowered as Business Partners

Customers and stakeholders today are longing for a company to partner with them and include them in the corporate decision making process. These same constituencies are sick and tired of political, corporate, and other organizations making unilateral decisions for them that are really not in-line with their needs, wants, etc. The backlash from this unwanted dictatorial management style of some companies can be seen in the Bank of America fee customer rebellion, the customer backlash from Netflix deciding to split their company without first consulting with their customers and HPs initial decision to exit the computer market.

3) Components of the New CRRM Model:

In order to progress your organization from the old CRM model to the new CRRM model, a few key essentials must be put in place and are as follows:

A. New CRRM Model that includes the 360° Cultivation of Customer & Market Insights. This model enables a 360° view of all customer and market insights including customer feedback, preferences, likes, dislikes, social sentiment, competitor activity, etc. This new model takes your insights to an entirely new level whereby you are now enabled to delight customers, stakeholders and stockholders by having insights that are light-years ahead of insights provided by a traditional CRM model.

B. Customer First Culture driven by management that is passionate about their customers including a set of customer first principles and guidelines developed by company leaders

C. Customer Ratings & Feedback Structure that will identify areas where you will collect customer 360° feedback from customer and stakeholder interactions

D. Customer Feedback & Preferences Cultivation Process and corresponding infrastructure in order to allow your customers to continually rate how well you are serving them

E. Customer Health Scorecard that provides real-time insights on how well the customers, stakeholders and stockholders perceives you as serving them as well as insights into a Continuous Customer Improvement Process (CCIP) that enables you to continually improve your customer perceptions, satisfaction, brand loyalty, etc.

These components can apply to large enterprises as well as Small to Medium Businesses (SMBs).

The following graphics are all sample components from the list above (A-D) that need to be put in place to enable this new CRRM Model.

New CRRM Model – 360° Cultivation of Customer & Market Insights

3A) The above chart “New CRRM Model – 360 Cultivation of Customer & Market Insights” demonstrates the new insights model that must be put in place to deliver world-class stakeholder and customer programs.

These enhanced insights will enable you to deliver products and services that delight your customers, stakeholders and stockholders as well as enable you to leapfrog the competition in terms of market share if they continue to rely on their antiquated CRM data and analytics insights only model.

For Small to Medium sized Businesses (SMBs), some of the insights do not apply, but the following charts (3B-3E) most certainly apply and can be tracked via simple Microsoft Excel spreadsheets.

CRRM Customer First Policies & Organizational Principles

3B) The above chart “CRRM Organizational Guiding Principles” demonstrates the principles that must be in-place to be customer first culture. This culture is driven by management that is passionate about their customers and governs the company around a set of customer first policies.

Sample Enterprise CRRM Customer Rating & Feedback Structure

3C) The above chart “Enterprise CRRM Customer Rating & Feedback Structure” illustrates a sample structure (will vary for each type of business) whereby customer feedback and preferences will be cultivated in order to develop 360° insights into customer needs, wants, likes, etc.

Enterprise CRRM Customer Feedback & Preferences Cultivation Process

3D) The above chart “CRRM Customer Ratings & Feedback Cultivation Process” illustrates a how customer feedback and preferences will be cultivated in order to develop 360° insights into customer needs, wants, likes, etc.

Sample Enterprise CRRM Customer Scorecard Ratings Visualization

3E) The above chart “Enterprise CRRM Customer Scorecard Ratings Visualization” illustrates a how customer feedback and preferences ratings will be visually represented in a scorecard.

Sample Enterprise CRRM Customer Scorecard Metrics

3E-2) The above chart “Enterprise CRRM Customer Scorecard” illustrates a how customer feedback and preferences ratings will be rolled up into an analytical scorecard that provides insights into customer trends, customer feedback, customer issues, core customer strengths and weaknesses, etc.

This scorecard can also be used to manage a Continuous Customer Improvement Process (CCIP) that continually drives improvements to customer perceptions, ratings, satisfaction, etc.

Sample Scorecard for “Shopping Experience”

The above depicts how analytics and metrics would be maintained for a business who had a retail or wholesale shopping function.

Sample Shopping Experience Scorecard – #2

Robust Scorecard Analytics and Metrics should support Customer Trend Identification and Root Cause Analysis for Customer Issues.

Sample Branding & Public Relations Scorecard

Sample Public Relations Scorecard Above gives you insights into how well your company and brands are perceived by customers, stakeholders, stockholders, etc.

Sample Customer Service Scorecard

Sample Customer Scorecard Above from Customer Service tells how well you are serving your customers.

Sample Marketing Scorecard

Sample Marketing Scorecard Above Gives you insights into how well your Marketing Efforts are resonating with your customers.

Sample Product Management Scorecard

The Sample Product Management Scorecard above gives you insights into how well perceived your products and services are with customers and prospects.

4) Company & Customer Benefits of Adopting the CRRM Model:

By treating customers as business partners (vs. commodities) and including them in the corporate decision making process, as well as allowing them to rate how well you are serving them from an array of customer facing areas, companies can reap huge rewards including the following:

1. Better insights into the types of products and services customers want & need

2. Fiercely loyal customers who feel part of the corporate team

3. Customers who are most likely to spend more, be retained longer and purchase at premium prices with higher profit margins

4. Customers who are very likely to be brand advocates and refer others to your company, brands, and services.

5. Customers who feel connected to the company and empowered to improve company operations

The following are actual customer comments from those who have participated in a customer feedback program to help shape products & services:

“I feel like xyz company cares about me since they ask my opinion”

“Finally a company that listens to us”

“It is so refreshing to have a company ask you your opinions on products and services vs. ramming something down our throats that we don’t like”

“Wow – this is fun. I enjoy providing my opinion”

“As silly as this might sound, xyz company is the only company that ever asked me what I wanted”

“In my opinion, xyz company is much more progressive than their competitors by seeking consumer opinions, what matters to them, etc.

5) Conclusion:

More dynamic companies like Goodle, Zynga, Amazon, etc. are inviting customers to become part of the corporate decision making process and empowering them to provide feedback, insights and rate company operations in order to drive continous customer improvements. Companies who adopt this new CRRM model whereby company management is democratized by including stakeholders and customers into the decision making process will reap the rewards of ever higher customer acquisition, retention and spend – leading to ever higher profits and share price.

Filed under CRM, Social Media Tagged with Alain Monié, Amazon, Amy C. McPherson, Andrew R. Jassy, Ann Mather, Apple, Arne M. Sorenson, Arthur D. Levinson, balanced customer scorecard, Bank of America, Barry Cottle, benefits of listening to customers, best practice customer listening programs, best practice customer management, best practice customer measurement, best practice customer policies, best practice customer scorecards, Blake G. Krikorian, Bob Mansfield, branding ratings, branding scorecard, Bruce Sewell, Cadir Lee, Colleen McCreary, consumer data warehouse, CRM programs, crowd sourcing, customer advocacy, customer advocacy councils, customer advocates, customer analytics, customer annoyances, customer attrition, customer balanced customer scorecard, customer beliefs, customer betterment, customer councils, customer culture, customer dashboard, customer data, customer data mining, customer data warehouse, customer defection, customer driven design, customer ethics, customer feedback, Customer focus groups, customer friendly organizations, customer friendly policies, customer guiding principles, customer idea sourcing, customer improvement process, customer intelligence program, customer listening program, customer management, customer management dashboard, customer measurement, customer measures, customer metrics, customer mindset, customer mindshare, customer monitoring, customer mood, customer motto, customer orientation, customer oriented culture, customer oriented policies, customer partners, customer passion, customer passionate, customer perception, customer policies, customer principles, customer procedures, customer pushback, customer ratings, customer relationship building, customer relationship enhancement, customer relationship improvement, customer satisfaction, customer satisfaction enhancement, customer satisfaction improvement, customer satisfaction ratings, customer scorecard, customer scorecard benefits, customer scorecard example, customer scorecard template, customer sentiment, customer service, customer service dashboard, customer service evaluation, customer service feedback, customer service governance, customer service improvement, customer service scorecard, customer tone, Customers first, Dave Ko, Dave Wehner, David C. Drummond, David J. Grissen, Diane B. Greene, Diego Piacentini, Eddy Cue, Edwin D. "Ed" Fuller, Eric E. Schmidt, ESPN, George Bodenheimer, Google, H. Brian Valentine, Hewlett Packard, intelligent customer service, J.W. Marriott, Jamie S. Gorelick, Jeff Karp, Jeff Williams, Jeffrey A. Wilke, Jeffrey M. Blackburn, Jeffrey P. Bezos, John L. Hennessy, John Schappert, John Seely Brown, John Skipper, Jonathan Ive, Jonathan Rubinstein, Jr, K. Ram Shriram, L. John Doerr, L. Michelle Wilson, Larry Page, Larry Page CEO, Marc A. Onetto, Mark Pincus, Market Intelligence, marketing balanced scorecard, marketing feedback, marketing ratings, marketing scorecard, Marriott, Marriott Courtyard, Marriott International, Marriott Vacation Club, Mike Verdu, Netflix, Nikesh Arora, Patricia Q. Stonesifer, Patrick Pichette, Paul S. Otellini, Peter Oppenheimer, Philip W. Schiller, pro customer policies, product defect warnings, product defects, product issues, product management feedback, product management ratings, product management scorecard, public relations feedback, public relations ratings, public relations scorecard, Reggie Davis, Robert A. Iger, Scott Forstall, Sebastian J. Gunningham, Sergey Brin, shareholder satisfaction, Shelley L. Reynolds, shopping experience feedback, shopping experience ratings, shopping experience scorecard, smart customer service, Social Intelligence, Social Listening, Social Listening Programs, SRM Programs, stakeholder management, Steve Chiang, Steven Jeffes, Steven Kessel, stockholder satisfaction, Thomas J. Szkutak, Thomas O. Ryder, Tim Cook, Tom A. Alberg, William B. (Bing) Gordon, Zynga

Blow Away Your Competition by Replacing Your Old CRM Program with the New Customer Relevant Relationship Management (CRRM) Model

January 29, 2012 8 Comments

Blow Away Your Competition by Replacing Your Old CRM **Program with a more effective Customer Relevant Relationship Management (CRRM) Model**

1) Introduction

Do you have a robust CRM program in-place, but you feel you are still missing the mark in terms of delivering what your customers really want & need?
Is your organization at risk of making market decisions that can cause a backlash and mass defection by your customers like the Bank of America $5 fee decision or the Netflix business split decision?
Do you have volumes of consumer data and analytics, but sales are declining or flat and customers are churning at an increasing rate?
Do you feel you could improve the quantity and quality of your customer insights including ascertaining critical consumer needs, preferences, likes/dislikes, interests, preferred communication channel for you to contact them, preferred timing and frequency for you to communicate with them, etc?

If you can say “Yes” to any of these questions, the rest of this post is a MUST READ for you and it is time to consider this more effective CRRM Model to replace your outdated CRM Model.

2) CRM vs. CRRM Model Overview

The following diagram depicts the major differences between the old CRM Model and the new CRRM Model including the problems associated with the old CRM model and benefits of the newer CRRM model.

Old CRM Model vs. Customer Relevant Relationship Management (CRRM)

Old CRM Model (left above):

Relies on historical data and analytics to determine what customers need, want, etc. by the analysis of sales history, types of products purchased, categories of products purchased, views on websites, stores visited, etc.
Customer activity information is a proxy to what customers really want and need. Example, you will seldom learn that a customer hates an in-store or web experience through this proxy for what they are wanting, feeling, needing, disliking, etc.
Companies are unlikely to gain insights into the impact that any future company decisions will have on customer loyalty, retention, acquisition.

New CRRM Model (right above):

Takes a more direct approach with customers and utilizes a systemic querying method to ascertain exactly what customer want/need/prefer/etc.
Embraces customer councils, customer forums, customer voting to drive future content, interactions, product/service offerings, etc.
Activity solicits ratings from customers on many aspects (marketing materials, web experience, in-store experience, product usability, quality of customer service, etc.) regarding the health of the overall customer relationship and continually asks “How well are we managing our relationship”

3) Example of CRM Model Gaps

To illustrate how companies are struggling to really determine the real needs of their customers, I took selected comments from interactions with senior CRM executives from major US Corporations based on consulting engagements, job interviews, speaking to them in passing, etc. The following charts are their actual verbatim comments as well as my read on their CRM gap that prevents them from developing world-class relationships with their customers.

Traditional CRM Programs:

Organizational culture, operations, and go-to-market strategy does not put the customer and real customer insights into the center of CRM operations
Relies on data, analytics, and customer history to drive on-going customer interactions.
Puts the organization at extreme risk of missing the boat from a customer’s perspective – real needs, wants, concerns, preferences, experiences, etc.
Companies that rely on this model are at-risk of customer defections, decreased customer spend/loyalty, etc.

New CRRM Model – with Customers In The Center of Customer Operations

New CRRM Program:

The organizational culture, operations, and go-to-market strategy puts the customer and real customer insights into the center of CRM operations rather than rely on the proxies of what customers want, i.e. data, analytics, and customer history.
The customer becomes the actual judge, ‘rater’ of whether you are delivering quality, value and a good relationship to them.
The customer is put in charge of CRM operations and enables a bi-directional and on-going dialog with the customer whereby they tell you their real needs, wants, concerns, preferences, experiences, etc.
Companies that rely on this model are more likely to develop products, services, offers, communications that delight the customer and whereby they are more loyal, greater brand advocates, and likely to refer your company to their friends as a company who listens, cares and empowers their customers.

6) Companies That ‘Get ‘CRRM

The following are samples of companies that, in my opinion, get the CRRM model and details how/why each of them get this new go-to-market customer model.

Companies That ‘Get’ CRRM – 1 of 2

Companies That Get CRRM – 2 of 2

Phrases That Describe Companies who ‘Get’ the New CRRM Model

We don’t hide behind data and analytics to drive our customer & CRM operations, but rather we ask our customers what they want.
We are eager to ask our most disgruntled customers how we can improve our relationship with them and to determine who to improve our go-to-market strategy
Before we make any major market-facing decisions, we ask a cross-segment of our customers what they think about each of our proposed decisions and then ask them how to improve upon how these changes are implemented so we ensure a continued delighted customer base.

The bottom line of this post is that, if your company relies less on historical data and analytics to determine what customer want and actually builds methods, processes, and systems to put the customer in charge of rating CRM operations in order to provide you with ongoing and valuable real insights (needs, wants, likes dislikes, preferences, concerns, etc.), the customers will feel more valued and connected with your brands. The benefit of adopting this new CRRM model will be more loyal, empowered and delighted customers who will be brand advocates and brand referrers that will increase shareholder and company value.

As I have now built this new CRRM model for several major US brands, my next blog post will be on ‘how to’ develop this capability at the enterprise level.

Filed under CRM Tagged with Alex Lintner, Amtrak, Amtrak CEO, Amtrak Customer service, Amy C. McPherson, Anne B. Ireland, Arne M. Sorenson, AVID MODJTABAI, Bank of America, Bill Campbell, Brad Smith, Brian Boardman, Caroline Donahue, Carrie L. Tolstedt, CDW, CeCe Morken, Chairman of the Board, Christina M. Corley, Communispace, Computer Discount Warehouse, consumer analytics, consumer backlash, consumer councils, consumer data, consumer data mining, consumer data warehouse, consumer feedback, Consumer focus groups, consumer information, consumer insight mining, consumer insights, Consumer Intelligence, consumer loyalty, consumer needs, consumer preferences, consumer sentiment, Consumer trends, CRM, CRM Excellence, CRM model, CRM Operating model, CRM Operations, CRM process, customer acquisition, customer analytics, customer backlash, customer brand advocate, customer brand referrer, customer churn, customer concerns, customer councils, customer data, customer data mining, customer data warehouse, customer defection, customer dissatisfaction, customer driven design, customer driven operations, customer driven requirements, Customer Experience, customer feedback, Customer focus groups, customer hate, customer hates, customer information, customer insight mining, customer insights, customer insights group, customer intelligence, customer ire, Customer Loyalty, customer management, customer needs, customer oriented, customer oriented culture, customer preferences, customer products group, Customer Relationship Management, customer satisfaction, customer service excellence, customer service feedback, customer strategy, customer strategy development, Customer Trends, customers are always right, Customers first, customers suck, Dan Maurer, DAVID A. HOYT, David J. Grissen, DAVID M. CARROLL, Dennis G. Berger, Douglas E. Eckrote, Eric Dunn, Executive Vice President, Facebook, Federal Emergency Management Administration, FEMA, frustrated customer, Ginny T. Lee, Godiva, Godiva Chocolate, Intuit, Intuit CEO, Intuit Software, J.W. Marriott, JAMES M. STROTHER, Jill Ward, John A. Edwardson, John G. Stumpf, Jonathan J. Stevens, Jr, KEVIN A. RHEIN, Kiran Patel, Laura Fennell, Macys, Macys Corporate Marketing, Macys Marketing, Maria M. Sullivan, market insights, Market Intelligence, Marriott, Matthew A. Troka, Michael J. Loughlin, Mr. Don Gould, Mr. Gene Dunkin, Mr. James A. Goldman, Mr. Michael Simon, Mr. Richard M. Paschal, Neal J. Campbell, Netflix, Nora Denzel, PATRICIA R. CALLAHAN, Per-Kristian (Kris) Halvorsen, poor customer service, product councils, R. Neil Williams, RICHARD D. LEVY, Sasan Goodarzi, Scott Cook, Sears Holdings, Senior VIce President, Sherry Whiteley, Social Listening, Social Listening Programs, Social Sentiment, Steve Malik, Steven Jeffes, Tayloe Stansbury, Terry Lundgren, Thomas E. Richards, Timothy J. Sloan, Volvo, Volvo North America, Wells Fargo, Wells Fargo CEO

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A Good Definition for Customer Loyalty

Drivers (Reasons) for Creating a Customer Loyalty Program

Loyalty Program Corporate Objectives

Customer Loyalty Program Approach

Customer Loyalty Program Requirements Development

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Customer Loyalty Program Communication Plan Structure

Customer Loyalty Program Reward Point Redemption Simulator

Loyalty Program Reward Category Point Redemption Volume Estimates

Loyalty Program Business Case & Project Plan

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Customer Loyalty Program Lessons Learned & Best Practices (2 of 3)

Customer Loyalty Program Lessons Learned & Best Practices (3 of 3)

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A Mathematical Viewpoint

Tools to help along the way.

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Why Knowing Your Customer’s ‘Life Stage’ & Associated Events are Crucial to Delivering Effective Marketing

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A Statement on Life-Stage Marketing to Remember: “Marketing without Considering Your Customer’s Life Stages is Comparable to Marketing to Them With A Blindfold On”

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A High Performing Company with All Value Chain Links Strong (No Brand Value Links Broken or Sub-optimized):

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What is the Brand Value Chain (BVC) you might ask?

Symptoms of a Broken Value Chain:

Examples Companies with Potential Broken Value Chains:

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How to Identify & Rectify a Broken Value Chain:

Proven Methods to Identify a Broken Value Chain (BVC):

Methods to Rectify a broken value chain:

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This blog is dedicated to help you determine whether your company or organization has a customer centric culture.

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Develop intelligent customer service & customer management programs based on customer value insights…

80% of all company profits are derived from ~20% of your customers

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World Class and Multi-Channel Social Media Campaigns that SCORE…RAVES

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1) Introduction:

2) Customers are fed up with old Dictatorial Management Style & Want to be Empowered as Business Partners

3) Components of the New CRRM Model:

B. Customer First Culture driven by management that is passionate about their customers including a set of customer first principles and guidelines developed by company leaders

C. Customer Ratings & Feedback Structure that will identify areas where you will collect customer 360° feedback from customer and stakeholder interactions

D. Customer Feedback & Preferences Cultivation Process and corresponding infrastructure in order to allow your customers to continually rate how well you are serving them

4) Company & Customer Benefits of Adopting the CRRM Model:

5) Conclusion:

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Blow Away Your Competition by Replacing Your Old CRM Program with a more effective Customer Relevant Relationship Management (CRRM) Model

1) Introduction

2) CRM vs. CRRM Model Overview

3) Example of CRM Model Gaps

6) Companies That ‘Get ‘CRRM

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Blow Away Your Competition by Replacing Your Old CRM **Program with a more effective Customer Relevant Relationship Management (CRRM) Model**