How do you reduce customer churn?

How do you reduce customer churn?

Jun 29, 2016 | Customers, Marketing

Pretty simple answer really; you increase customer retention.

It costs way more to find a new costumer than it does to keep a current one, we all know that, but somehow do little about it. Almost every business I interact with fails to get an optimum balance between servicing existing customers and prospecting for new ones.

So, how do you do it.

Stand for something. I am a great advocate of Simon Sinek’s “Why How What‘ analysis. People buy products, not algorithms, and they buy at least partly with their hearts. Even aggressive  B2B buyers, and  multinationals who put in global sourcing by tender as a means to squeeze price, still buy with their hearts because there are people involved. They are more likely to buy from someone they see as standing for something they can relate to, even believe in, than someone who stands for nothing more than their own success.

Be human. Everyone likes to be treated as important, to know that someone cares. It is more than great customer service, it is genuinely caring about your customer. What a poor cliché it has become when much so called ‘customer service’ has been outsourced to low cost countries, where the so called service people have inadequate product knowledge, and no power to actually solve the problem, assuming they understand it in the first place. I received a parcel of stuff bought on line recently. The packaging was superb, and inside there was a note from the person who assembled the order, with her email address at the supplying company. It was such a unusual thing that I tested the email, saying thanks, and got a warm reply from the person. That is customer service!

Be a tribe. Seth Godin’s articulation of this phenomena is superb, people want to be a part of a group of people who are like them. Do you own a Rolls Royce because you want to pay 100 times more than you needed to get adequate and reliable transport from A to B? No. The ownership of a ‘Roller’ says something about you, and those you know and interact with, and attracts like minded people who want to be like you.

KISS. (Keep It Simple Stupid) Making it simple for customers to stay and interact with you is the key to keeping them. Why do Telcos have so much churn? Because they fail abysmally at customer service, and are so complicated and opaque in what they do that you feel encouraged to look elsewhere. It is only when you move that they come up with the better price, or service package, and make the moving of your account as hard as possible, hoping you will stay because it is easier. However, who wants to keep a customer who would rather be elsewhere? They will be restless and bad mouth you to all the time, rather than being an advocate for your product.

A management that encourages, particularly by means of financial incentive, investment in prospecting for new business, when their service to existing customers sucks is on the road to pain.

My preferred measure of churn and retention beyond the simple numbers is Share of Wallet. I recommend you use it.

5 things to avoid to do better consumer research

5 things to avoid to do better consumer research

Jun 24, 2016 | Customers, Marketing, Strategy

I sat through a qualitative research (focus) group a few weeks ago, recruited over the phone against a specific demographic list.

On the odd occasion I receive these calls, my stated occupation is never associated in any way with marketing, as that always disqualifies you, the excuse being you might learn something, which in my experience is pretty unusual.

Anyway, are we not consumers?

The moderator was a nice woman, probably had a psychology degree or something similarly disassociated from the tough task of creating value for money, and proceeded to make every research mistake in the book.

Taking ideas as gospel. Instead of digging around to understand why we said the things being tested would work, she just took the blanket statements as fact. The reality is that nobody knows for sure if something will work or not, so gathering opinions without the supporting attitudes and reasons why is dumb.

 Asking questions we could not answer. This often happens, I have seen it and fired researchers for doing it. Why waste time asking a question, then debating the silly answers when there is no way the group could know  the answer, as it requires some specific knowledge which was not in the filtering questionnaire.

Is it better? Collecting quasi quantitative data with questions like this can lead to gross misjudgements. Just ask Coke if they had the research assuring them that ‘New Coke” was better than ‘old Coke’.

Crystal balling. Asking a group to rub their crystal balls and tell you the future is dumb, dumb unless corralled by a statement such as “if A and B were to happen, what do you think would happen next?”

Defining behaviour by Demographics.  This is a general mistake in recruiting groups. Defining your target markers, which is what this is, by demographics alone went out with the turn of the century when we recognised and were able to track the impacts of the drivers of behaviour beyond simple demographics. Just because you might live in Blacktown and do not have a degree does not mean you cannot own a BMW, purchase expensive wine and go on holidays. Our cultural and social life is far more fragmented and eclectic than in past decades that demographics are now only a small part of the picture of who we are, what we want, and how we behave.

When you spend the money on consumer research, it pays to really consider the problems to be solved and how the answers might be used. If the answer to those is: ‘what problem’ and ‘To convince the boss’   or ‘because I do not what else to do’ it is better to save the research money and do something useful with it.

To Social media or not, that is the question.

To Social media or not, that is the question.

May 25, 2016 | Communication, Customers, Social Media

Many of the small and medium sized businesses I interact with still struggle with the notion that they should be investing in social media as a marketing strategy. Creating and sharing content of value to their customers, potential customers, and competitors runs against their grain .

In addition, the operational challenges are technically confronting to many, and the notion of having to write and produce the content necessary is normally a hill too far.

B2B, B2C,  it makes little difference.

The immediate reaction of my B2B clients is that this social media stuff is for consumers, not serious businesses. However, it is the reality that those in businesses who make the purchase decisions  are usually engaging, anonymously at first with potential suppliers during the early phases of the purchase cycle, and coming to the supplier only for the transaction. Not being in on the ‘conversation’ early is clearly a mistake.

vanity metricsIt is becoming pretty clear that social media well used is a remarkably potent marketing tool, but challenging for those with modest resources, as this stuff is time consuming, technically challenging to measure properly as distinct from just measuring what is becoming known as ‘vanity measures’ just thinking they are measuring something useful.

 

 

There are a small number of very sensible strategies you can use.

Use it as a tool.

Social media is a marketing tool,  and like any tool, the effectiveness is best measured by the outcomes rather than the use, so set out to measure the effectiveness by identifying the cause and effect links between the SM and your corporate objectives.

Understand the tool.

When you have a nail to be driven, a screwdriver is of little use. Same with social media, they are tools that can be used very effectively in the right circumstances, but are useless in the wrong place. Understanding how the tool works, and where it’s characteristics are best deployed is a fundamental part of the game.

Identify your key customers, and what they want out of it.

You simply have to  be able to put yourself in the customers shoes, understand the value you can deliver from their perspective, and be prepared to be patient. My favourite  metaphor for social media is to humanise it in a way everyone understands. You walk into a bar, and spot someone who just overwhelms you. If you just walk up and ask them to marry you, your chances are pretty slim. By contrast, introduce yourself, find shared interests, spend some time together, and you never know where it can lead. Social media is no different. To have a chance of the desired outcome, you need to do the spadework up front.

Measure, test & improve.

Be creative but deeply interrogative about the measures. (is interrogative even a word?) continuously test options, so you can continuously improve. Social media and digital generally have absolutely changed the practise of marketing. It has made it measurable and accountable, but there are limits.  ‘Vanity measures’ such as number of friends, and likes  are very poor measures. They are superficial and misleading offering no clue as to which activity is likely to generate a commercial outcome, they just look good on a piece of paper to a boss who does not understand. Understanding the difference between cause and effect and correlation is critical, observing correlation is terrific, but do not make the mistake of thinking it is always cause and effect and therefore measurable. A metaphor used by Gary Vaynerchuk is particularly potent here. He observes that everyone understand the value of good parenting, over time it has great outcomes for both, but trying to measure it in a month  by month basis is stupid, it is a cumulative effect of many small things over a long period. There are some aspects of measuring digitally the return on SM that can really stuff us up.

 

Success with digital marketing, including the leveraging of the potential of social media is not easy, despite all the nonsense and get rich quick promises to the contrary.

Hopefully now you are at least a part way to answering the question.

Are supermarket customers a means to an end, or the end?

Are supermarket customers a means to an end, or the end?

May 18, 2016 | Customers, Marketing, retail

Woolworths has delivered in spades to shareholders in the last 20 years, but the rot had set in a decade ago.  The seeds of the rot were assisted in my view by a lack of credible competition, and management losing touch with the subtle changes happening in consumer attitudes and behaviour that added together began making a noticeable performance difference 5 or 6 of years ago.

Can it be reversed, we will know in another 3-5 years.

New CEO Brad Banducci appears to be making sweeping changes at Woolies, ditching his fancy CEO office for a workstation sends a string messages, stronger yet is the message to his troops that it is not just desired that they get into the stores, it is mandatory.

Getting the executive decision makers close to the retail action……..what a novel idea!

Former Executive chairman Paul Simons who pulled Woolies out of the gutter in the late 80’s after returning from a gig as MD of trail-blazer discounter Franklins, was famous for turning  up unannounced in stores, checking the minor details of the way the store was operating and presented to consumers, talking to floor staff, and espousing frugality as a great virtue. He must have been dismayed at the way Woolies followed Coles into an extravagant head office, seeing it as a sign of executives isolating themselves from the interaction with  customers in stores, where retail success is won or lost.

In the 80’s the Morrisons chain, then  concentrated in the North of England before they expanded south, was a leader in produce merchandise. Their stores were the best I had seen to that point anywhere in the world. In a store one  day near Leeds during a visit to the UK, complementing the manager on the display during a conversation where I was sucking his brains, he pointed to an elderly gent in a brown cargdigan carefully stacking apples on a shelf, ‘that is the reason’ he said, “Mr Morrison turns up in a different store every day, so everyone is on their best game‘. I introduced myself, complementing him on his stores, I recall he said ‘did  not matter what happened elsewhere, it was the little things in the stores that made the difference’.

I never forgot that conversation, it reminded me at the time of the words of Paul Simons, and of Reg Clairs the real architect of “Fresh Food people” who I came to know very well after he retired from Woolworths.

It seems Brad Banducci heard it also.

You would think Woolies would have learnt from their experiences, plenty of opportunity to so.

They took over Dick Smith, and stuffed it up by ‘corporatising’ and in the process removing the things that made it successful. They watched the challenges and mistakes of BBC hardware in the early days of big box hardware, as Bunnings set the pace, then a decade later deciding to take on Bunnings with an inferior customer offer from a position of significant financial, branding and logistical weakness. Meanwhile, they had made a great start with Thomas Dux modelling Harris Farm, but again throwing out the things that delivered the early success in favour of more of the same from Woolies head office, arriving at the current place where Dux is being closed down.

Mass market retailing is a schizophrenic occupation.

On one hand, it is the advantages of scale that that deliver profitability, but at the retail selling face it remains a highly personal business. Get the balance wrong in either direction, and the financial results will follow. Allowing the financials to drive decision making  inevitably results on the focus being taken off the customers, and they will react accordingly.

The absolute best way to overcome objections to a sale

The absolute best way to overcome objections to a sale

May 16, 2016 | Customers, Sales

Over many years and considerable experience in developing sales programs, one of the regular stumbling blocks is how to respond to objections.

The single best way I have ever seen to overcome a sales objection is to articulate the objection before the sales target gets the chance to do so. That usually shoots it down in flames as a serious objection if the conversation continues past that point.

For example, a while ago doing an assessment of a client’s sales efforts I sat with one of their sales people as they made the initial contact over the phone after the lead had been qualified by a reasonably robust process. My clients product is a quality offering in  a crowded market that has a number of cheaper offerings without the value added capabilities and guaranteed longevity. The qualification process filters out many of those for whom the feature additions will add no or little value, so those with whom we were trying to have a sales conversation had been judged to be genuine leads with a need we could fill. However, in the early parts of the conversation almost always  price was raised as a problem, and often it ended the sales process before it really got started.

When we turned the scripts around so that the sales personal brought up the premium pricing, acknowledging it was not for everyone, as not everyone values the assurance that comes with the quality built in to the design and fabrication of the product, price was removed as a barrier to the sale.

It worked almost every time multiplying the ‘conversion rate’ which was in this case gaining  the face to face opportunity to demonstrate the product in an operational context. From there, the sales conversation rate was already pretty high.

Following is a list of the common other barriers to completing a sale I have seen. Being creative about the manner in which they are handled has a great impact on the conversion rates.

Lack of perceived value in the product

Lack of urgency in purchasing the product

Perception that an alternative is superior

Internal politics in your customers business

Lack of funds to purchase

Personal issues with decision makers

Conflicting corporate initiatives

A no decision no risk attitude

Lack of trust in your company

Lack of personal rapport with you

Your inability to communicate effectively with them

Now you have a list of the possible objections, workshopping the responses is extremely useful

In short, make a feature of the things that you think they will object to, and remove it as an objection before a potential customer has the time and opportunity to bring it up themselves.

How to get lucky!

How to get lucky!

May 2, 2016 | Customers, Innovation, Management

‘Getting lucky’ has some pretty specific connotations in Australian vernacular,  but has much wider implications in business.

My old dad used to say “the harder I work, the luckier I get”. He would usually be saying it as he reached for his last bob while playing a round of golf, or chasing the bream off the beach in the morning.

‘Lucky’ has many faces.

Dad also had things to say about the nature of luck in business, things that have stuck with me over the years and informed the way I advise those I work with.

Luck comes with hard work……

Luck does come with hard work, but working hard to dig a hole will just get you a deeper hole, and sometimes that is not the answer. You have to be able to be selective at what you work at, and swap horses when you need to.

Luck come to the prepared mind.

This old saying is also true, and recognises that preparing your mind to recognise and act on the so called ‘luck’ when it happens is hard work. This work usually happens over a long period, and is usually the result of some level of collaboration. Alexander Fleming  ‘discovered’ penicillin in 1928, his lucky observation informed by previous work by others over a long period. It was not until 10 years after later that is was turned into a product by Howard Florey, driven by the demands of war, and funding from the Rockefeller foundation.

Luck comes from learning.

Thomas EdisonIt seems to me that ‘luck’ also favours  those who treat ‘bad luck’ not as a setback, or indication that they should cease and desist, but as an opportunity to learn and build something better that sometimes, magically overnight after 20 years, comes together in a new way. Thomas Edison’s famous words telling us that the discovery of the light bulb was the result of 9,900 failed experiments says it all.

 

Luck come from seeing what others miss. 

See what others missThen, there is also those who see opportunities as they emerge by, and have the sight to recognise them, and balls to act on them. Steve Jobs was a master at this. He saw a whole new world in combining the existing functionality of the telephone and MP3 player with the then unused touch screen technology that had emerged from NYU labs and demonstrated publicly for the first time in 2006.

 

‘Luck’ rarely just arrives, although it does happen. As a kid I knew a bloke who bought a single Opera House lottery ticket (when 200k was a lot of money) for himself on special occasions, and then won it. That seems like luck to me, but luck is usually a function of several of the above working together.