REACTIVATION:  To Make Active Again If you are looking for the proverbial low hanging fruit, then look no further than your current customer data.  Within your data lies opportunities for immediate revenue.  Identify the customers who have not purchased from you in a time frame that they normally would. For dentists, this would be 7 months.  For most other industries, the purchase time frame will need to be tailored to groups of customers.  If I go more than 4 days without stopping by Chick-fil-A, they know something’s wrong.  However, I only go to Moe’s once or twice per month.

To successfully reactivate lost customers, you first must identify them.  Dig into your data and organize customers by their frequency patterns over time.  Next, determine the products that they purchase most regularly.  Finally, tailor your offers to the proper segments. Reactivation campaigns can produce results that are 10 to 20 times higher than new customer acquisitions.  These campaigns are targeted to customers that already know you and have bought from you before.  You simply must identify them and send them the right offer to bring them back in. Then, just measure, analyze and repeat.

Two years ago I had to learn what gamification meant.  It is the use of game thinking and game mechanics in a non-game context to better engage users and employees to solve problems. In short, playing games helps us to connect to brands, learn, and earn rewards and/or status.  In thinking about this, I wondered how my life has been “gamified”…and boy has it!

GAMIFICATION WORKS!

In the past month I have:

• Used a point tracking system for health education, wellness and physical activity to earn discounts on insurance and points towards the purchase of active lifestyle products
• Taken an education course on bicycle products to earn discounts on goods
• Set-up and participated in training classes at work to earn education credits that translate into rewards

Even my son has been “gamified” by:

• Gaining status on education websites to open new levels of training and access to games
• Earning points at the orthodontist for nothing being loose or broken, wearing orthodontic shirts to appointments, having notes from his dentist confirming no cavities, and more (SMART DR.)

My son’s orthodontist revealed to me that it isn’t a complex system requiring websites, analytics, and vast marketing budgets.  It’s simply putting together a fun and engaging system that rewards behavior you want to elicit from a customer.

HOW CAN YOU GAMIFY?

Modify the behavior of your target audience by establishing goals that will earn them merit towards something they are interested in.  Seems simple, right?  Seeking tactics that will motivate customers to engage in these activities can be quite challenging.  However, answering these questions will help:

• What is your strategic vision?
• What are your goals and objectives within that vision?
• What metrics will you put in place to measure performance?
• What behaviors lead to change in those measures?
• What will modify that behavior?

Many companies get stuck on the last three.  That is where you may need the help of a strategist that has an analytic background.  Good luck, and I look forward to being further gamified!

It’s official.  I am no longer an American Express “Member”, attested by the 14 small pieces of plastic resting in the bottom of my trash can.  In fact, I can still see the 1995 which used to read Member Since 1995, before the 1995 was bluntly separated from the Since.  No, this wasn’t a Dave Ramsey “I’m Debt-free” epiphany (I wish!!).  It was American Express either proverbially slapping me in the face and saying I was no longer important to them or having the worst trained off-shore customer service reps in the financial industry.

Allow me to reminisce a bit.  My Blue Amex card and I have been together for almost 10 years.  Before that, I was completely satisfied with my green Amex card that always reminded me of Karl Malden (Search ”Streets of San Francisco” for you youngsters out there).   That’s 17 years I have carried my beloved American Express card.  Yes, we had the kind of relationship Discover, Visa and Mastercard could only dream of.  17 years, over $408,000 in purchases and probably in the neighborhood of $35,000 in revenue from interest, fees and discount rate.  And we threw it all away for $108.00!

I won’t go into the gory details, but suffice it to say that I recently learned what the APR penalty at 27% interest meant on the back of my credit card statement.  So, American Express charged me $108.00 in interest!  I called to let them know there was a mistake (albeit on my part) and the unfriendly, inflexible Customer Service Representative, Kay, told me she would correct the rate for future months, but she could not credit the $108.00 rate.  Uh, excuse me??

I told “Kay” that I would be closing my account and she said she was sorry to see me go.  Just like that.  And to top it off, I had a pre-approved offer from American Express in my mailbox THAT AFTERNOON!!  It would be funny if it weren’t so sad.

But, what does this mean for loyalty marketers?  Here are 4 steps to help improve your customer retention:

1.  Know the cost to acquire a new customer and the cost of losing an existing customer.

2.  Segment customers by meaningful dimensions such as Lifetime Value, Current Value, Attrition, and Current Risk.

3.  Develop a Customer Engagement Strategy that determines offers based on the delta in acquiring a new customer and the cost to keep an existing customer.

4.  Empower employees to make relevant offers based on your Customer Engagement Strategy.

Of course, it’s much more difficult than just these 4 steps, but if you aren’t doing this—you should be.  As marketers, we spend too much time, money and effort trying to find, acquire and develop Raving Fans.  Keeping them should be the easy part.  For many companies, it’s not.  Here’s hoping I can find some love at Mastercard!

In today’s economy, consumers are growing fonder of the coupon every day. From Groupon to Living Social, marketers and consumers alike have proven that no matter what may change in their world, everyone still loves a good deal. But what is the threshold for getting a customer in the door? Groupon and Living Social have mastered getting customers in the door by requiring pre-payment of services. I have recently become a Groupon user myself – unable to pass up the over 50% savings on services I would normally pay much more. I’m also a fan of the coupons I receive from my favorite retail stores, but getting me in the door is somewhat of a calculated process.

One of my favorite coupon campaigns is the Kohl’s scratch off card. It can be anywhere from 15-30% off of your entire purchase. Living in the state of Tennessee, I consider a 15% coupon to actually be 5% savings, since our sales tax rate hovers at 10%. A 15% coupon doesn’t usually get me in the store. Give me 25-30% and I am there. That’s a true 15-20% savings after considering the state sales tax rate.

A 15% savings coupon holds completely different weight for someone in Tennessee, Washington, or California in comparison to a shopper in, say Virginia. While the majority of the country comes in around 7-8 % state sales tax, there are several states with no sales tax at all. There can be as big as a 10% gap in the true savings for a consumer in California vs. Montana for the same coupon face value! See reference below to get a better idea of what consumers are paying in sales tax.

Aggregate rates shown here are weighted averages that include county and city rates.

Tax Rate Map -The Sales Tax Clearinghouse

State Sales Tax along with the combined City and County rate

In today’s barrage of media, researchers cite numbers of impressions in a single day for a consumer to be between 600 and 850.  All of them probably have the goal of engaging you with their brand.  The question is do you want a relationship with a brand, do you care if a brand has aspirational value, or do you want what you want when you want it.

In the article below you’ll see that consumers don’t want to engage with your brand. This dovetails with our experience over the past couple of years.  The key to maximum ROI continues to be making the right offer, at the right time, through the right channel.  Too many brands are depending on impressions—whether it’s through digital, mobile, social or old-fashioned direct channels.  What customers want is to receive a relevant offer when they are ready to buy.  The best way to accomplish this is through a comprehensive customer intelligence strategy…

Consumers Don’t Want to Engage with Brands

By Tom Ryan

June 11, 2012

According to a study involving more than 7,000 consumers from Corporate Executive Board (CEB), only 23 percent of consumers indicated they have a relationship with a brand. The researchers also found that for most consumers, increased interactions don’t drive relationships and often work against purchases.

In a posting on Harvard Business Review, the CEB researchers — Karen Freeman, managing director; Patrick Spenner, another managing director, and Anna Bird, a senior researcher — wrote that, in the minds of consumers, relationships are reserved for friends, family and colleagues. A typical explanation given for not having a relationship was, “It’s just a brand, not a member of my family.”

At the same time, for those having a relationship with a brand, only 13 percent cited ‘frequent interactions’ as the primary reason for having that relationship. By far the largest reason given was ‘shared values,’ cited by 64 percent.

Moreover, while helpful interactions can quickly drive highly-favorable relationships, there’s no correlation between a higher level of interactions with a customer and the likelihood the relationship with turn “sticky.” Wrote the researchers, “Without realizing it, many marketers are only adding to the information bombardment consumers feel as they shop a category, reducing stickiness rather than enhancing it.”

While touting the value of brand messaging around “philosophy or higher purpose,” the overarching message was to “stop bombarding” consumers who don’t want relationships “through endless emails or complex loyalty programs,” since these efforts equate to low ROI. For those indicating a willingness to communicate, the quality of those conversations should be high and relevant.

“Instead of relentlessly demanding more consumer attention, treat the attention you do win as precious,” the researchers concluded. “Then ask yourself a simple question of any new marketing efforts: Is this campaign/email/microsite/print ad/etc. going to reduce the cognitive overload consumers feel as they shop my category? If the answer is “no” or “not sure,” go back to the drawing board. When it comes to interacting with your customers, more isn’t better.”

The research comes after a recent article in The Wall Street Journal noted that retailers are trying the cut down on spam e-mail. The article cited research from Responsys Inc. that showed in 2011 the nation’s top 100 retailers by e-commerce revenue sent recipients an average of 177 emails apiece, up 87 percent from 2007.

(Click here for link to entire article on www.retailwire.com)

How well do you know your customers?  Oh sure, you probably (hopefully!) know things that happened at your register like what they buy from you, how often and how much.  But what else do you know?  And how would it help you target your customers to learn more about them.

The other day, I was shopping at Harris Teeter.  Okay, I confess—there is no ATM in my neighborhood, so I ran into the store with my son and grabbed the first decent thing I saw.  It just happened to be a pack of Double Stuff Oreos.  The Halloween edition with the Orange filling instead of white.  So, my son and I head over to the self-pay check-0ut line.  I dutifully scan my Harris Teeter VIC Card—I’m sure Harris Teeter spent many hours and dollars coming up with the name VIC, but I have no idea what it stands for other than I have to use it to get great discounts.  Anyway, after scanning my VIC card and letting my son scan the barcode on our soon to be devoured pack of Oreos, the register asks me “Do you have any coupons?”  My son hit the No button.  Next, the screen asks me “Are you eligible for our Over 60 discounts?”

Whoa!!??  Hold everything.  Why is this cash register wondering if I’m 60?  Do I look 60?  And why, after many trips to this Harris Teeter did they just now decide to ask me if I’m 60 years old?  Do a lot of 60 year olds buy Halloween Double Stuff Oreos?  This is all going through my mind in a flash.  I must admit, I was a bit offended.  I don’t know if any other Harris Teeter customers are feeling the same way or not, but it made me wonder.

Age is an easily obtained demographic.  First, you could just ask for it on your loyalty application.  Or you could simply append it from voter, drivers license, and self-reported data.  It is the most accurate compiled demographic category–other than gender.  The great thing about age is it’s not going to change.  So, once you apply it to your file, you have it.  Then, you can begin offering discounts–like Harris Teeter is–based on age without making some customers feel left out.  Also, you can begin segmenting your customers by age based on purchased habits and begin targeting your marketing better based on what your customer wants.

One final thought.  Can you imagine having your store clerks ask your customers, “Excuse me sir, are you 60 years old?  I want to see if you are eligible for our 60 Rewards Club.”  If you can’t foresee having your clerks ask, don’t have your cash register or kiosk ask either.  There are much better ways of getting the information you need.  Oh yeah, and drivers license data doesn’t lie!

Steve Jobs’ passing is causing moments of reflection around the world. As I read and watch news stories on his impact on the world I can’t help but think, he knew what customers wanted before they did. That is Customer Intelligence at its peak, giving someone something they didn’t know they needed. I’ll be the first to admit I’m not an Apple devotee. I have an iPod, use iTunes, and owned a Mac in college but that is the extent of it.

With that said, I can still recall the significant impact of:

-          Apple IIC
-          Macintosh
-          iPod
-          iTunes
-          Pixar
-          iPhone
-          MacBook and
-          iPad

Over the summer one of the more memorable news stories was that Apple had more cash on hand than the U.S. Federal government. That is mind blowing.

So, what’s my point? Sometimes you need to step away from the data, step away from the algorithms, and step away from the evolution of your organization and think! Think like my 10 year old, whose ideas aren’t jaded by constraints.  What would I want if I came to my company for a product or service?

In reflecting about Steve Jobs today, do what he did best – go outside of convention.  Tomorrow, you can go back to convention with a better perspective, hopefully. That’s my plan.

In defining when engagement begins you really need to start with why engagement begins.  There are many blogs, articles, white papers and research publications that I’ve seen on how to go about engagement.  The topics of how to measure, how to engage, how to test are prevalent topics but to without when and why you can’t do the proper how.

My lifetime of jobs and my now career have always been centered on selling.  My first job during high school I sold oriental rugs.  I learned the basics of retail from a savvy Belgian filling a niche for machine made high quality oriental rugs.  From that day until now I’m a firm believer that engagement starts with your brand’s ability to relate to potential customers.  When they see your storefront, hear your radio ad, watch the commercial or get the direct mail piece or email do they connect with WHY you do what you do.  I’m loosely paraphrasing from Simon Sinek’s, “Start with Why” but engagement starts with Why.  Put another way, every decision is a lifestyle decision and your why is how your brand fits that person’s lifestyle.

Our little rug store’s why was… “We want to bring the high quality budget friendly oriental rugs to consumers who want a great rug at an affordable price”.  This in mind we kept the store filled with rugs so there was no question we had the rug they were looking for, we had displays easily explaining the quality and how to judge it for yourself and our pricing was easily seen on every rug.

As a salesperson I’ve been very successful at knowing why I believe what I believe about the solution set that I work with and I communicate very well with people that understand “my” why.  The challenge comes when you need to understand someone else’s why and how that relates to what you do.  When I work the clients and potential clients I continually ask ….

• Why would someone engage your brand?  Is it potentially…
  • Are you cutting edge?
  • Are you high quality?
  • Do you have the best selection at the lowest price?
  • Are you convenient to use?

Ask yourselves these questions, know your why and then get to how.