MackCollier.com

by

Research: 97% of Loyalty Programs Fail Due to This Simple Design Flaw

loyalty programs fail

Would you believe that 97% of loyalty programs fail? And 77% of them fail in two years or less.

Why? It’s due to a basic design flaw that many loyalty programs suffer from. It’s a design flaw that reflects a fundamental misunderstanding of why people participate in loyalty programs.

The reason why the average loyalty programs fails is because it is designed to drive purchases from its own members. 97% of Loyalty programs rely completely on transactional rewards. If you participate in the program, you are rewarded with a free product. Or more likely, a discount toward the purchase of a product.

This indicates a fundamental misunderstanding of what drives real brand loyalty. Loyalty is created AFTER the purchase, not before. If you offer rewards to incentivize a purchase, you are building loyalty TO THE OFFER, not to your brand.

Customer Acquisition vs Customer Retention

The average loyalty program is designed like most marketing initiatives; The focus is on customer acquisition, with little or no thought given to customer retention.

Which goes completely against the concept of loyalty.  Customer loyalty IS customer retention. They go hand-in-hand.

When loyalty programs offer solely transactional rewards, the rewards build loyalty to the offer, not the brand. If you tell me that when I collect 1,000 reward points that I can get a free cup of coffee, I might push to get another 200 reward points to add to my 800 point balance to get that free cup of coffee.

But after I get it, my balance goes back to zero. As does my excitement for starting all over to get the next 1,000 reward points for the next cup of coffee.

Now this isn’t to say that transactional rewards don’t have a role in most loyalty programs. They absolutely do, but transactional rewards should be one tool in your loyalty program toolbox, not the whole garage.

Design For Retention, Not Acquisition

True brand loyalty is build after the purchase. It’s built by having a connection with a brand. And those connections aren’t built via coupons and discounts.

They are built by experiences. By access. By understanding. By shared values and passions.

If your loyalty program is rooted solely in transactional rewards, then the program with the best discounts wins. I will only be loyal to your loyalty program as long as you give me the biggest coupon. As soon as your competitor gives a bigger discount, I jump ship. That’s why the vast majority of such loyalty programs fail within two years.

So the key to creating a loyalty program that members are actually…loyal to, is to focus on rewards that offer a better experience for the member.

  • Access to the CEO and key executives at the brand. This communicates to members that they are special, and helps elevate them in stature as being equal with key decision makers at the brand.
  • Free webinars with SMEs. This is a nice perk for your members, and it helps them connect with and understand your brand. For instance, let’s say your brand offers a unique presentation tool for businesses. Having a free webinar with a top presentation expert not only benefits the members directly by educating them on how to become better presenters, it also helps them better understand your presentation software. And that helps them become better salespeople for your brand. And more motivated ones!
  • Early access to new products. This is a big-time perk that creates value for members, and it can be leveraged to create buzz for your new product’s launch! If your technology company has a loyalty program, 3 months before your newest laptop launches, give members early access so they can create online conversations about the new laptop to build excitement for its release. Then pick 10 members and give them the laptop for free to use and review. This will also generate excitement and buzz for the laptop building up to its launch, and that will generate more sales at launch.
  • Free training on how to use your products and services. For instance, if you sell cooking utensils, offer loyalty program members a free workshop with a top chef who shows you how to cook meals using your cooking utensils. This creates value for members, but it also helps them understand how to better use your cooking utensils, which makes them better salespeople for your products!

Notice that none of these rewards are transactional. Yet all will help the loyalty program members forge a deeper connection with your brand.

The best part? You are incentivizing your loyalty program members to sell more products for you. You are giving them rewards that help them better understand your products, and how to use your products successfully. All of the 4 hypothetical rewards above are experience-based. Yet all of them will increase the ability of your program members to generate more sales!

That makes them better salespeople for your products AND makes them more willing to happily promote your products to other customers.

So by simply shifting the focus of your loyalty programs rewards from transactional to experiential, you create more loyal customers AND more sales. 97% of loyalty programs fail because they focus on transactional rewards for members. The 3% that succeed focus on designing a loyalty program that creates amazing experiences for its members.

Is your loyalty program struggling? For the past decade, I have worked with companies like yours to optimize their loyalty programs to achieve greater success. I show companies how to increase signups and participation while also reducing churn rate. If you need help, email me today and we can discuss how to increase the efficiency of your loyalty program.

by

What is Your Product’s ‘Job to Be Done’?

job to be done Whenever I talk with clients about positioning a new or even existing product or service, I stress the need for there to be a clear benefit to the customer, that the customer can clearly understand. The customer needs to understand how a product or service will fit into their lives, and immediately make a positive impact.

Some would argue, that the ease of collecting data about modern customers can actually make it more difficult to correctly identify the value that a product can create for a customer. Sometimes, customers simply buy a product for reasons that are their own, that really aren’t easily uncovered by simply looking at data or demographics.

Let me give you a couple of examples:

1 – I never chew gum UNLESS I am about to board a plane for a flight. If I am at an airport, one of the last purchases I will make will be to run into a gift shop or Hudson News and grab a pack of chewing gum. I want the gum because chewing the gum as the plane is taking off and climbing helps lower the chance of my ears popping! So I never need chewing gum UNLESS I am about to board a plane, then it’s a purchase I always make.

2 – I am currently playing a war game on my iPhone. The game includes chat functionality, and in playing the game, you can chat with other players and get to know them. I was talking to a player recently who said they enjoyed playing this game. They went on to explain that one of their parents had just died, and they were having to deal with the stress and worry associated with a parent’s death. They added that playing the game gave them a very welcome distraction that helped them get their mind off their real world issues.

 

I recently came across a wonderful article in the Harvard Business Review that explains this concept as buying a product for it’s Job to Be Done. For me, chewing gum bought at the airport has a job to do: Keep my ears from popping during takeoff. For my friend, playing the phone game had a job to do: Provide escape from their real world problems.

Here’s an example from the article: A consultant was hired by a Detroit building company to increase sales of its condominiums. The condos were positioned to retired couples that were looking to downsize from a larger home to a smaller condo. The units were given features designed to appeal to downsizers, and they even consulted focus groups to uncover any additional features they might have missed.

But sales were disappointing. The units generated prospective buyer visits, but struggled to close the deal. There was a bottleneck, something holding back the prospective buyer from becoming an actual one.

So the consultant decided to switch gears, and went back and started interviewing the people that had bought the units. The interviews were designed to help drill down on what prompted the person to commit to the purchase.

It turns out, it was the dining room table. Or rather, what the dining room table represented for the prospective buyer; Moving on from a home they loved, to a new condominium that had none of the attached memories.

As the article explains:

But as Moesta sat at his own dining room table with his family over Christmas, he suddenly understood. Every birthday was spent around that table. Every holiday. Homework was spread out on it. The table represented family.

What was stopping buyers from making the decision to move, he hypothesized, was not a feature that the construction company had failed to offer but rather the anxiety that came with giving up something that had profound meaning. The decision to buy a six-figure condo, it turned out, often hinged on a family member’s willingness to take custody of a clunky piece of used furniture.

This helped the company understand the Job to Be Done of its condos. It wasn’t about giving them a new place to live, it was about moving their lives into a new phase. The dining room table represented family, tradition, history. So the building company changed its offerings around the condos to reflect a better understanding of what was holding prospective buyers back from becoming actual buyers. They expanded the dining area to give more room to accommodate a larger dining room table. The company also added storage facilities to help buyers have a place to store items until it could decide what could be kept and what needed to be given away.

All of this goes back to simply understanding the customer. And with the ‘job to be done’ line of thinking, you are also thinking about ways to incorporate unpredictability into the lives of your customers. Every day, your customers are receiving unexpected good and bad news. In both cases, behavior patterns, either in the short or long-term, will immediately change.  They will suddenly need new products for new reasons to fulfill new ‘jobs’ for them.

Think back to the last two years and the impact that the covid pandemic has had on the world. If you will remember, one of the constant themes I have stressed here is considering how the pandemic would change the purchasing behavior of your customers. Some of the changes are big and easy to predict, such as a shift toward takeout from restaurants over dining in person. But other changes are harder to detect. But you need to be able to account of the possibility of changes and the resulting shift in purchasing behavior.

Here again is the link to the HBR review article detailing the theory of ‘job to be done’.

by

Grow Your Business By Growing Your Customers

training your customersYour happy customers are the best salespeople you have.

They just are. There has been a raft of research into most trusted sources of marketing communications, and the findings are always the same: We trust our friends and family more than we trust your brand. This is why companies that embrace their customers and empower them to market for them, typically have higher sales and revenue than companies that do not.

So, if we accept that your happy customers are also your best salespeople, what do we want our salespeople to have?

The best training. Therefore, if you are training your best customers to increase their knowledge and understanding of your products and services, you are also improving their ability to sell those products and services to other customers.

Right?

So this is truly a win-win we are talking about here. By giving your happiest customers training on your products and services, you are not only improving their ability to SELL those products and services to other customers, but you are also providing value to those customers. You are improving their sales ability, but at the same time, you are creating something of value for these customers, which deepens their loyalty and affinity for your brand. A true win-win.

 

The Secret Language of Happy Customers

Before we go any further, I want to make a book recommendation. Please buy and read Badass: Making Users Awesome by the brilliant Kathy Sierra. Badass teaches us that products that enjoy sustainable sales success do so because that success is driven by its users. So if you make your customers ‘badass’, you are simply increasing their ability to drive success for your products.

And customers who are highly skilled in using your product act differently and speak differently about that product.

Think of your favorite movie. The one you have seen so many times that you can recall entire scenes, you have the dialogue memorized. Now if I had only seen that movie once, what would our conversation about the movie sound like? I mean, I would be aware of the general plot, maybe I would remember the main characters and actors, but that would be it.

Now think about how that same conversation would be different if you were talking about your favorite movie with someone who loved it as much as you do? You would have a completely different conversation with that person. You could discuss the plot in detail, you could speculate on what happened in the story after the movie ended, maybe find out that you are both members of an online community of fans of the movie.

Now think about what would happen if you and I were both discussing that same movie with a friend who hadn’t seen it. While I could barely explain what the movie was about, you could go into minute detail about what the movie is about, and why it’s awesome. You could do a much better job of promoting the movie to others than I could.

This is an example of why your happy customers are your best salespeople. Because they love your products and services, they are knowledgeable about them, and they have a passion for seeing other people use and enjoy your products and services as they do.

 

A B2B Example of the Value of Training Your Customers

A few years ago, I worked with a SaaS company to design a customer advocacy program, which was primarily designed to increase subscriptions to the software, as well as reduce the customer churn rate. With this particular company, many of its customers sold marketing services to small businesses that included training on the same software.

So we created a customer advocacy program that offered expert training on the software as one of the perks for being involved. This training created value for the company, because it gave customers an incentive to not only attract more customers, but to also stay longer as customers themselves. Thus reducing the churn rate. It also created value for the customers, because as they became more knowledgeable of the software, it improved the level of training they could in turn pass through to their own customers.

By creating training for the company’s current customers, it gave the company a way to not only scale its sales (customers selling to other customers), but also its customer support. As customers received training on the software and became more adept at using it, they would also become more adept at troubleshooting problems that they and other customers encountered while using the software. So they could actually deflect calls or requests to customer support that the company would normally field. Which would result in a cost savings to the company!

 

A B2C Example of a Missed Training Opportunity

Many years ago, I participated in an influencer program where I was in a small group of influencers who were given a very expensive camera in order to use it and, ideally, promote it to other people. The company wanted to give the camera to a select few people it had targeted as being influential in their space, and then have them create content (and pictures!) in order to promote the camera to other potential customers.

The problem that I quickly encountered upon receiving the camera was that I had absolutely no idea how to use it. It was a beast, and it was a professional quality camera meant to be in the hands of a professional photographer. Which is the last thing I am! In the hands of a pro, this camera could have created magic, but in my clumsy hands it created out-of-focus and blurry disasters.

Ideally, I would have received some training on how to use the camera before I received it, or soon after. Just remember if you are crafting an influencer program, make sure the influencers who will be receiving and promoting your products have enough familiarity and understanding of the products to promote them successfully. To be fair to this company, this influencer program was done over 10 years ago, and was one of the first efforts of its kind. So they learned a lot, and went on to improve their efforts I am sure!

 

How to Incorporate Product Training in Order to Create Value For Your Customers

So let’s think about how we could add product training to our marketing and communications efforts in order to create value for our customers, and how this would also create value for our company.  To help simplify how training could be incorporated, let’s view the training as having three levels:

101 Level Training – This is basic product/service training. It’s designed primarily to handle basis issues and problems that might arise from a new customer, as well as to address questions they might have. The level of instruction will be very basic, and this will help eliminate requests to customer support by letting the customer solve their own problems, via this training. The idea behind this level of training is to help the current or potential customer become familiar with the basic functions of the product, as well as helping them solve common problems that other new customers have faced.

This level of training should be free and available to all current and potential customers. Think of this type of training as being an extension of you FAQ, or Frequently Asked Questions. It could include white papers or articles with detailed instructions, or videos that show how to use your product in a particular way, or how to solve a basic issue with using the product. This level of training will serve to not only save costs by deflecting requests to customer service, but it will also lead to more purchases as the most basic questions that potential customers would have are answered prior to purchase.

If we were selling a high end digital camera, the training at this level would focus on getting the customer familiar with the core features of the camera. Basically, here’s what you need to know to turn the camera on and start taking pictures.

201 Level Training – This is more advanced training that’s designed to teach customers how to use your product to its full potential. This level of training is typically not available to all your customers, as not every customer will want or need more advanced training. It can often be offered as a reward for engaging in some pre-determined activity. For instance, if you sign up for a loyalty program, this level of training could be a perk for doing so.

If we go back to the example of selling cameras, this level of training could focus on helping the customer improve his ability to use the camera in certain ways. Such as taking pictures of wildlife, or taking night time pictures in urban areas, etc.

301 Level Training – This is your most advanced level of training. Only a select few customers will want or be offered this level of training. This can also be offered as a reward or perk, for instance if your company has a brand ambassador program, members could have access to this level of training.

Customers who receive this highest level of training are typically the ones you also want to empower to sell your product for you, to other customers. So you could reward referrals or additional sales with more training, if warranted. Remember that the more proficient your customer is at understanding how to use your product, the better, in theory, they will be at understanding how to sell and promote it to other customers.

 

How Does Your Company Benefit From Training Your Customers?

Let’s close by looking at the benefits that training your customers creates for your company:

1 – Reduced customer service costs. One of the earliest adopters of corporate social media use was Pitney Bowes. The company justified using social media in part because it found that every social interaction it had with a customer about a support issue deflected a call to customer service. And at the time, Pitney Bowes placed an internal cost of around $9 per call, so each call that was averted, was a cost-savings of $9 for the company. So if you train your customers on how to better use your products, they can in turn provide support directly to other customers. Which further lowers costs for your company.

2 – Reduced Customer Acquisition Cost. As your trained customers are engaging with other customers, they become better at selling and promoting your products to other customers. So they are literally creating new sales for you, all the time. Think of it as passive income for corporations. By training your customers on how to better use your products, you turn those customers into an additional sales staff, one which generates new sales for you, while you sleep!

3 – Improved Customer Satisfaction and Increased Brand Perception. If your customers are trained on how to properly use your products, they will have less complaints about them. A good portion of most customer complaints are simply due to user error. The customer thinks there’s a problem with the product, when in fact the product is fine, they just aren’t aware of how to use it properly. Training your customers reduces complaints about your products, while at the same time increasing positive mentions. This can have a massive impact on overall brand perception.

 

Training your customers is completely worthwhile. It reduces costs, while increasing sales. As a result, the training more than pays for itself.

by

The Secret to Spotting Business Opportunities

understand what the customer is saying
Well a Mustang IS a faster horse…

“If I had asked people what they wanted, they would have said a faster horse.” – Henry Ford

This quote from the founder of Ford Motor Co is often offered as an example of how the customer doesn’t always know what it wants. I disagree, the customer always knows what it wants, it’s up to the company to listen and understand what the customer is saying.

In the above quote, the customer is really saying that they want a faster and more efficient mode of transportation. Horse = transportation for the customer, because that’s likely the only form of personal transportation that they know.

Smart companies are the ones that can interpret what the customer is really saying, and wanting.  Another example is the iPhone. I remember when the iPhone debuted, a certain well-known branding expert claimed it would be a massive flop. The expert said people were used to having their alarm clock and radio and camera in separate devices. They didn’t want all of them smushed together in one clunky device.

Of course, the ‘expert’ was completely wrong about how successful the iPhone would become. Customers were happy to have all these separate devices smushed into one phone, if it was done in a way that created value for the customer. This ‘expert’ didn’t understand what the customer was saying.

When the customer gives feedback on what products it would like to see, the customer does so in terms of what products are currently available. Let’s go back to cars for a minute.  When the customer says “I wish my car got better gas mileage’, what they are really saying is they wish they didn’t have to spend XX dollars a week on gas.

Maybe that means they simply want the same vehicle they have now, with better gas mileage. Or maybe it means they would be willing to buy a completely new vehicle, if it got better gas mileage. Perhaps it means they would be open to buying a motorcycle, since it requires far less gas.

It’s up to the company to understand the core issue (‘I want to reduce the amount I spend on transportation’) the customer is facing, and offer products that match the customer’s wants and needs. If a company can do that repeatedly, you win the customer’s trust and loyalty. Apple does this, so when the computer company comes out with a music player, people buy it.  When Apple comes out with a phone, people buy it.  Because they trust Apple to give them a product that meets their needs.

One of the first jobs I had out of college was working as a vendor for Lowes. I represented a company that sold lawncare products. I worked Weds-Sunday. On Weds-Friday, I was responsible for stocking the shelves and making sure that my company’s products were correctly displayed in the store and available for purchase. If any customer came by that needed help, I provided assistance. On the weekend, my primary responsibility was to sell directly to the customer. I stayed in the store on the lawncare isle and helped any customer that needed assistance.

One weekday, I was stocking the shelves, when a customer came up and asked me if I could help him figure out what product he needed to get rid of a certain bug that had infested his lawn. After talking to him for a few minutes, it was obvious that he had no idea what product he needed, and what he really wanted was someone he could trust to tell him how to fix his lawn.

So I did the only thing I could do; I told him I couldn’t help him. It turns out that my company didn’t make a product that addressed his particular problem as well as the competitor’s product. So I told the customer that honestly, he needed to buy the competitor’s product, because it would do a better job than ours would. I even walked him to the competitor’s product, and handed to him and told him this was the product he needed to solve his problem. The customer took it from me, and walked away without a word, in a kinda confused state as if to wonder why I had just cost my company a sale!

Two days later, I sold in that same store. So there I was setup on the lawncare isle waiting for customers. As it turns out, a representative from our competitor happened to be standing at the front of the same isle, and like me, he was waiting for a customer to sell to.

Curiously enough, after a few minutes I noticed that same customer I had helped two days previous started walking down the isle. The representative from the competitor immediately pounced “Hello sir, can I help you today?”

The customer, without breaking stride, waved his hand at him and said ‘Nope! I’m here to talk to HIM!’ and he pointed at me. The customer then walked up and thanked me, he said my product recommendation from two days ago had worked perfectly on his lawn. He then asked if I had a suggestion for another lawncare issue. This time, it turns out that my company did offer the superior product for the customer’s issue, which he bought.

The customer always knows what it wants. It’s up to the company to listen and understand what the customer is REALLY asking for.

by

A Key Marketing Lesson That Most Businesses Completely Miss

When I wrote Think Like a Rock Star, I spent a lot of time researching how rock stars connected with their fans, and the marketing strategies they employed. One of the biggest lessons I learned is that most rock stars are excellent at understanding this key lesson to building a successful business:

Reward the behavior you want to encourage. 

Rock stars love their fans, but they also view every fans as a potential driver of business. They know that every fan they have will promote them to their friends and family. As such, every fan will help drive ticket sales, merch sales, and album sales. Rock stars trust their fans and empower them to market for them.

Rock stars want fans to engage in particular behaviors: Such as promoting them online, and offline. So rock stars go out of their way to connect with their fans directly, because they know this connection will build trust and admiration for the rock stars, and will encourage them to promote the rock star to their friends and family. And it also serves as the reward for fans that have already done so.

Every year as part of the CMA Music Awards, country music stars will participate in a Fan Fair. It’s a chance for fans to meet their favorite artists and get a picture taken with them or an autograph signed. Typically, an artist will stay for a couple of hours, maybe a bit longer. In 2010, Taylor Swift stayed for an incredible 13+ hours to sign autographs for her fans, occasionally stopping to perform music for them.

But that pales in comparison to what Garth Brooks did in 1996 at Fan Fair. In 1996, Garth Brooks was the face of country music, and one of the biggest music stars on the entire planet. He was not scheduled to attend Fan Fair in 1996 and wasn’t promoted as being there. During the middle of Fan Fair, he showed up, unannounced, and went to an unmarked tent to start signing. He stayed for a staggering 23 hours straight signing autographs for every single fan that showed up. He never left the tent, not even to use the bathroom. Security at Fan Fair tried multiple times to end the session so Garth could leave, and each time he told them no.

Rock stars view their fans as promotional partners and they trust them enough to empower them to market for them. As a result, they act differently toward their customers, and they treat them differently after they engage in the behavior that they are trying to encourage.

 

Now, how does this apply to your business?

Think about the types of behaviors that you would like to see your customers engage in.  Such a list for most businesses would probably look something like this:

  • I want customers to buy from my business
  • I want customers to continue to buy from my business and become repeat customers
  • I want customers to increase the amount of every order
  • I want customers to generate positive Word of Mouth about my business

 

Now think about your marketing strategy in terms of:

1 – What can I do to get my customers to engage in these behaviors?

2 – What can I do to reward my customers for engaging in those behaviors?

 

Many businesses focus only on getting customers to buy. But if you look at the above list of desired customer behaviors, there’s a natural progression, isn’t there?

You want customers to buy from your business. Customers that buy more than once become repeat customers. Customers that buy repeated from a business tend to purchase more from that business, because they trust them. Customers that trust your business, will promote you to others, generating positive Word of Mouth.

So if your business had a mechanism in place to reward customers for engaging in the behaviors that you desire, that would not only encourage them to CONTINUE to engage in those desirable behaviors, but it would also encourage them to move to the next stage of desired behavior.

Let’s look at a couple of examples:  One of the desired behaviors above is “I want customers to continue to buy from my business and become repeat customers”.  Then create a Loyalty Program. A loyalty program would not only encourage customers to become repeat customers, it would reward customers for engaging in the behavior of making repeat purchases.

Another example: One of the desired behaviors above is “I want customers to generate positive Word of Mouth about my business.” Then create a Customer Advisory Panel. Dell did this in 2010, they identified customers online who were creating content around the Dell brand, and invited them to come to their world headquarters in Austin, TX. This happened again in 2011, and I was lucky enough to work with Dell to facilitate and moderate both events. During the 2011 event, the customers that attended were surprised when CEO Michael Dell joined briefly to say hi to the group and answer questions.

Introducing CEO Michael Dell to the DellCAP group

By holding this event, and having Dell’s CEO and CMO speak to the group, it communicated to the customers that Dell valued their time and feedback. This improved the customers’ perception of Dell the brand, and rewarded them for engaging in the behavior that Dell desired, and at the same time encouraged the customers to CONTINUE to create positive word of mouth about the brand.

So much of marketing for many businesses is simply focused on getting a sale. Just get someone to buy once, that’s it. Few businesses think about what happens AFTER the purchase. How do they ensure that the customer is satisfied, maybe even thrilled with the purchase? What reward is given to them for engaging in that behavior? How do you encourage the happy customer to continue to engage in the behavior that you want them to?

:What happens after they buy?” is a question every business should be asking. What do you WANT to see happen? Do you have the process in place to make sure your desired outcomes are met?

Shouldn’t you?

 

Are you subscribed to my newsletter, Backstage Pass? If not, now is the perfect time to get on board. Backstage Pass is delivered straight to your inbox every Friday morning. I’m working on this week’s issue right now and I gotta say, it’s gonna be a gem! I will be covering how your company can create an educational system for your employees to boost their skills, productivity, and keep them longer at your company. Such a vital process that very few companies make the investment in. I’ll give you the roadmap to do so, along with examples of companies and organizations that have done so successfully. Want in?  Just click the image below!

by

Case Study: The Morning Brew’s Newsletter Referral System

Recently, I came across a very detailed write-up of how popular newsletter The Morning Brew’s referral system works.  You can read all the nuts and bolts here.

There were two key points that struck me as I was reading the post that I wanted to highlight here. First, this quote from Tyler Denk, who created the system, discussing the prizes that current subscribers get based on their number of referrals, and the CPA (Cost Per Acquistion) for each:

5 referrals: we mail readers Morning Brew stickers. Bulk ordering 10,000 die cut stickers from StickerMule breaks down to a unit cost of $0.20/sticker and our pre-stamped envelopes cost roughly $0.65/envelope. That totals roughly $1.25 in cost, or a $0.25 CPA (cost per acquisition) for 5 new subscribers to the Brew.

For reference, the CPA for us on Facebook/Instagram, our largest paid acquisition channels, is typically between $3 and $5.

10 referrals: readers gain access to our exclusive “Insider” community. The private Facebook group, which is quickly approaching 10,000 members, is the place to discuss the latest stories, trends, and events in business, pursue career opportunities, and network with other like-minded Brew readers. Again, this reward comes at no real cost to Morning Brew.

To this point: In exchange for 10 referrals, we have provided value in the form of premium content, an exclusive community, and swag…all at the cost of $1.25.

15 referrals: we mail readers a custom Morning Brew silicone phone wallet. The cost of the phone wallet is $1.50, and the cost of the pre-stamped envelopes is $0.65/envelope.

When someone refers 15 people, the CPA on those referred is $0.23 ((cost of phone wallet + stickers)/15). We’ve actually managed to spend less per subscriber as someone continues to refer additional people.

For those who are bad at math, like me, it means that The Morning Brew’s cost to acquire a new subscriber is typically $3-5 each if they go the Instagram or Facebook ads route. If they use their referral system, the CPA plummets to 23-25 cents EACH.

One of the key points I make in my book Think Like a Rock Star is to challenge companies to rethink their customer acquisition strategy. The reason the Cost Per Acquisition for each new customer is so high for so many companies is because of the channels used. Most companies rely on traditional marketing in print, television and increasingly digital, to acquire new customers. Those channels are not cheap, and the acquisition rate for these channels is typically very low, which drives the acquisition cost even higher.

Yet when your customer acquisition efforts flow through your current customers (or in the case of The Morning Brew, its current subscribers), then the acquisition cost plummets. Research has shown this for years, but the simple reality is that we trust our friends and family more than we trust brands. That’s just reality. If the brand runs a commercial and tells us to buy it’s product, we will likely ignore it.  But if our brother or best friend tells us to buy that same product, we will listen.

Here’s the second quote from Tyler that I also thought was very powerful:

I also think that the referral program actually boosts engagement for the person who refers others. If someone goes out of their way to share a product or service with their friends, classmates, co-workers, etc., I think the likelihood they continue to engage with that product increases. No one wants to look foolish by abandoning a product they’ve so vehemently recommended so soon after making that recommendation

Bingo, these same subscribers that referred the new subscribers, will then become sources of ongoing encouragement, education, and even customer service for The Morning Brew. They current subscribers will likely check in on their buddy that they just referred in as a new subscriber, and ask them how they are liking The Morning Brew. Or if the referral has a question about The Morning Brew, they will probably reach out to the friend that referred them, rather than The Morning Brew itself. Which could also be a cost-savings for The Morning Brew in the form of a deflected inquiry to customer service.

This is why I am such a proponent of customer/brand advocacy programs and loyalty programs. If structured correctly, they can always become a pipeline for more engaged customers who have a higher lifetime value, with a much lower acquisition cost.

Have you subscribed to Backstage Pass? Every Friday, I give you an indepth, strategic deep-dive into the world of content, digital and marketing. Giving you all the tools and knowledge you need to take your marketing, digital and content strategies to the next level. Click the banner below to learn more and signup now!

by

Monday’s Marketing Minute: All Eyes on Clubhouse, Kroger’s Smart Shopping Cart, B2C Marketing Priorities

Happy Monday! Hope you’re ready for an amazing week, off to a rainy start here, but at least it’s not bitterly cold! By the way, a quick thought, I know a lot of us are really worried about everything that’s happening in the world right now and even locally. A few weeks ago I was driving and listening to the news and just felt overwhelmed with all the ‘bad’ news and stories. Suddenly, I had this thought come into my head ‘You are responsible for your own happiness”. That thought has given me a lot of comfort and calm since, as well as a feeling of empowerment! I hope it does for you as well!

On with the news…

 

So I’ve always had this rule when it comes to ‘new’ social media tools; I usually wait a month or so to try them out. This is because marketers being marketers, we want to overhype every new social media tool, each tool or site immediately becomes the new Facebook killer or the new Twitter killer. So I generally wait a while for the hype to die down, then see if anything sustainable is left.

But I’m jumping in a little faster with Clubhouse simply because the tool offers a different experience than most. If you aren’t familiar with Clubhouse, in a nutsell, it’s an app (only for iOS currently) that has audio chat rooms. You pick a chat room and LISTEN to everyone, you don’t chat by typing. The app is super hot, even though it’s in closed beta and you can only join if given an invite, it still has over 2 million users. I think this speaks to how we are hungry for new offerings in the social media space. 10 years ago, it seemed like a hot new social media tool came out every 3-4 months that everyone gushed about. We haven’t seen that environment in a long time, but I think the pendulum may be swinging back. Clubhouse has some obvious monetization issues to work out both for itself, its investors and hosts, but the future looks bright. For now.

 

Ok I would love this if it came to Wal-Mart, which I only shop at when I have to. The biggest reason why I can’t stand Wal-Mart is going to checkout and seeing those massive lines. But a new ‘smart’ shopping cart that Kroger is testing could make the buying process in grocery stores so much easier! It lets you scan items as you place them in the cart, link up your loyalty cards and coupons, even pay with your credit card! That would help eliminate the biggest detriment most people have to grocery shopping, the checkout line. It’s all about finding and addressing the pain points that your customers have.

 

This always blows my mind. I saw this story from Marketing Charts on top priorities for B2C marketers in 2021.  The top three priorities are: 1 – New customer acquisition, 2 – increasing engagement, 3 – increasing customer loyalty. These are pretty standard, and new customer acquisition is almost always the top priority for all marketers. Yet the same marketers that plan to focus on customer acquisition, loyalty and engagement typically won’t invest in the customer advocacy programs that drive all three. These same marketers could deliver on all three by investing in advocacy programs such as Voice of the Customer, Brand Ambassador and Customer Loyalty programs. And the hell of it is, such advocacy programs are much easier to create, execute and measure in a B2C environment.

So those are some stories that caught my eye on this Monday! Hope you have a wonderful week, check back tomorrow, I’ll have a new post up on how the push to decentralize social media is underway, and look at two people that are making it possible. One you will expect, the other will definitely surprise you! See you tomorrow!

by

How to Create Customer Loyalty After the Product Purchase

Let’s say for every product you buy, there are one of three outcomes as far as your satisfaction with the purchase:

1 – Indifferent. The product does what you expected it to do, no more or no less.

2 – Upset. The product doesn’t meet your expectations.

3 – Excited. The product exceeds your expectations.

 

If you are indifferent toward your purchase, the odds are that you aren’t likely to praise or criticize the purchase to other customers. Likely, it was an inexpensive purchase, and you really didn’t have high expectations for it to begin with. For instance, if your purchase cost a dollar and was a complete disappointment, well you are only out a dollar, so you are less likely to be as upset with the quality of the product.

If you are upset or excited with your purchase, then that means you want to talk about it.  You want to share your experience with others. Interestingly, Guy Winch has found that 95% of the time when a customer is upset with a purchase, they will tell other customers, and won’t tell the company that made the product! According to Winch:

“Research has found that 95% of consumers who have a problem with a product don’t complain to the company, but they will tell their tale to eight to 16 people,” he says. “It’s unproductive because we’re not complaining to the people who can resolve our issue.”

Venting also floods the bloodstream with cortisol, the stress hormone. “We tell ourselves that we need to get it off our chest, but each time we do, we get upset all over again,” he adds. “We end up 10 to 12 times more aggravated.”

Isn’t that fascinating, in a depressing sort of way? But it makes complete sense that retelling a negative experience with a product to other customers would make us more upset with the purchase. And the customers we are talking to would likely want to be supportive and sympathetic toward our anger, so they may say they agree that the company was in the wrong, which would make us even MORE upset with the purchase!

Which is honestly a bit unfair to the company, when you think about it. Because we didn’t reach out to them and give them a chance to help us with our problem.

Let’s come back to this in a moment and talk about what happens when you are excited with a purchase. You tell other customers, right? We know this is true from our own experiences for many reasons. We want to share with others what worked for us. Also, we probably want to ‘brag’ on ourselves to a degree by sharing what a ‘smart’ purchase we made.

The point is, we talk to others about our purchase in either scenario. But if you think about it, even when we have a positive experience with a purchase, are we really that likely to reach out to the company and communicate that to them?  Probably not.

So the onus, rightly or wrongly, is on the company to do everything it can to encourage the customer to give feedback on the purchase. If the customer is indifferent toward the purchase, they will likely ignore the request.

But if the customer is either very upset or very excited with the purchase, an invitation to give feedback will be greatly appreciated.

Now, many companies aren’t thrilled with the prospect of hearing from angry customers. It’s just human nature. But, if you can give a customer the support they need post-purchase, you greatly increase your chances of converting the upset customer into a happy one.

And remember, happy customers are your best salespeople. They acquire new customers for you!

So think about how you can better connect with your customers after the purchase. This will only improve and enhance your customer loyalty efforts. And if you want to learn more, we will be discussing this topic tonight during #ContentCircus on Twitter, starting at 7pm Central. Follow me on Twitter, and watch my tweets, the topic will be How to Create Content For Each Stage of the Buyer’s Journey!

by

Marketers Now Prioritizing Customer Retention over Customer Acquisition

I started to include this story in yesterday’s Marketing Minute post, but it’s so important that I wanted to expand on it a bit. Research is showing that marketers are shifting from focusing on customer acquisition to focusing on customer retention. Some of this is attributed as a reaction to the pandemic, as marketers believe customer acquisition will be easier as buyers are seeking out sellers, especially online. But also, most of us are wanting a return to normalcy and are more likely to stick with brands we know and trust. This just stands to reason.

But the debate over customer acquisition vs customer retention is one of my favorite topics, because so many companies completely mismanage the acquisition of new customers. One of the key teachings in my book Think Like a Rock Star was the difference between how rock stars acquire new customers, and how most companies do.

In short, most companies attempt to acquire new customers via advertising, while most rock stars acquire new customers via their current customers.

Now would be a good time to review The Loyalty Graph:

For The Loyalty Graph, the x-axis is Brand Loyalty. At the left there is 0 Brand Loyalty, as you move all the way to the right, Brand Loyalty is at its highest levels. These would be your ‘Fans’.  The y-axis is Size of Market. At the bottom there is no market, at the top there is a massive market. Let’s look at each customer segment:

New Customers – These are customers that have bought from your company for the first time, or potential customers.  Their Size of Market is massive, but they also have little or no Loyalty toward your brand.

Existing Customers – These are customers that are currently buying from your company. Note that the size of this group is much smaller, but levels of Brand Loyalty have gone up slightly.

Some Brand Affinity – These are regular customers, who have some affinity for your brand. They buy regularly, they probably like your products enough to endorse them to other customers, even if infrequently. The size of this market again shrinks dramatically, but loyalty levels also rise.

Brand Advocates – These are your ‘fans’. The customers that love your brand, that buy your products constantly, that promote those products endlessly to other customers. The size of this market is very tiny, but their loyalty levels are at maximum.

 

What’s fascinating about this graph is to note that companies and rock stars focus on opposite ends of the Brand Loyalty axis.  Companies focus almost all their attention on marketing to New Customers, while rock stars focus almost all of their attention on Brand Advocates.

Why is this important? When you see that New Customers are by far the largest market, it’s easy to see why most companies focus on this group. But while the size of this group is massive, notice that New Customers have almost no loyalty toward your company. So most companies are literally marketing to a group that has no interest in hearing their message. This is why advertising is so expensive, because you are paying for the fact that your message is interrupting people that don’t want to hear that message. Also note that most companies spend little or no attention to their current customers and fans, who actually have an interest in hearing their marketing messages.

Now notice that rock stars focus almost exclusively on their Brand Advocates. Brand Advocates are by far the smallest market, but notice they have the highest levels of loyalty toward the brands they buy from. Also, think about what brand advocates do: They advocate for your brand. Brand Advocates acquire other customers for you! They promote your brand to other customers and encourage them to buy from your brand. And unlike New Customers, Brand Advocates WANT you to market to them! They are desperate to hear from your brand and have more contact with that brand.

So think of the contrast: Companies spend billions to market to a group (New Customers) who does not want to be marketed to. On the other hand, rock stars only attempt to connect with the group (Brand Advocates) that wants to hear from them!

Companies spend billions on advertising to acquire New Customers, rock stars market to their fans and let their fans acquire customers for them.

Which method is less expensive?  Which method is more effective?  Obviously, letting your current customers acquire new customers for you the better and smarter play.

So why don’t more companies do this? Because by acquiring new customers via advertising, companies have far more control over its marketing messages. This need for control over marketing messages shows that most companies don’t trust their customers to market to other customers. Rock stars completely trust their fans, and empower them to market for their favorite rock stars.

Interaction leads to understand, leads to trust, which leads to advocacy. Rock stars constantly interact with their fans, so they understand them, and trust them. Most companies have little to no interaction with their customers, so they don’t understand them, and don’t trust them.

Your current customers are your best available tool to acquire new customers.

 

PS: I want to thank everyone who is reading and subscribing and I appreciate all the kind emails as well! Yesterday’s traffic was up 32% versus last Monday, so thank you for your support!

by

Monday’s Marketing Minute: Driving Customer Loyalty, Consumers Trust Ads Alongside Content

Happy Monday, y’all! Ready for another great week, if you missed it check out my blogging recap for September, traffic up 21%!

 

Interesting data from XM Institute on how customer loyalty is impacted by CX. In short, they found that a very good customer experience greatly impacts how likely that customer is to purchase from and recommend a company. “The vast majority of consumers surveyed who rated their experiences with 319 companies tracked as very good indicated that they would purchase more from the company (94%) or would recommend the company (94%). Some 9 in 10 (89%) would trust the company after very good CX performance, while more than three-quarters (77%) would forgive a bad experience after such an experience. On the other hand, just 13% of those studied who reported a very bad experience with a company would recommend it.”

 

 

More than a third of consumers say their trust in brands grows after seeing its content alongside news. Additionally, the study from IAB found that 84% of consumer said their trust in brands grew or was unaffected when viewing this content. The larger question I would have is how is trust in the regular news content affected by seeing ads inserted alongside the news content? Personally, I tend to view sites as less credible if they are constantly mixing in ads alongside news.

 

Great recap of shopping trends for the Holiday season from Adobe and Avantis. I agree that shoppers are desperate for a return to normalcy, but also will be looking for deals and want an order online/pickup in stores option. Covid is absolutely changing shopper and consumer behavior, and smart companies are tracking these changes and adapting their service, support and offerings.

There’s your Monday Marketing Minute, hope your week is off to a fantabulous start, see you tomorrow!