How to Walk in Your Customer Shoes (and Actually Learn Something)

walk cust shoesIf you are in marketing, sales or research you have probably read an article, attended a seminar or talked to a colleague about “walking in your customer’s shoes”.  How often do you really think about how the customer arrived at the point where they were ready to pay for a product or service? Why do they continue to buy goods or services from your company? What about the potential customers who were never to the point of that initial purchase? The catch-all phrase of “walking in their shoes” captures a lot of approaches and tools to better understand your customers and the reasons for their choices as it relates to your company’s products and services. Below is a list of a few common (and not so common) approaches to better understand your customers:

1- Create a Customer Journey Map – The act of making a purchase is both a financial and emotional transaction. Putting yourself in your customers’ shoes and experiencing the journey as they do, will help you to understand why they are frustrated, why they are happy, and why they might decide not to continue. Creating a positive experience will convert your prospects into real customers. If they find the journey too long, convoluted, or just plain painful, they are not likely to continue. It is not just the length of the journey that matters. Customer Journey Maps are useful for understanding and diagnosing experiences, designing new experiences and general communication improvements. There are some great resources available to help you with this process including a crash course guide by oracle and another great summary guide from the MMR Group.
2- Sit with Your Front-Line Employees – Once a month visit one of the company’s front line employees that are directly speaking with current customers about problems, issues or general educational support. Just an hour can bring a whole new perspective to who your current customers are and what some of their issues are (In their own words). Be sure to visit different customer touch points (call center, retail/service desk, etc) as each tends to serve customers at different points of the process.
3- Read What Your Target Customers Read – Read the key newspapers, magazines and blogs your target customers read. This not only gives you a better perspective of their point of view and opinions on hot topics, but it can also give a sense of key trends that may impact your product or service sales and retention efforts. If your company cannot supply what the target list of publications or blogs is – — just ask some of your best customers what they read on an ongoing basis.
4- Understand Customer Challenges With Key Communication Channels – There are some great tools to understand how customers engage with key company communication and transaction channels. Services like UserTesting.com provide fast feedback (in target customer’s words) on how they use your website or mobile app. It is a really valuable tool to understand what is working (and not working) for your website and mobile application channels.
5- Ask Why Past Prospects Did Not Buy From You – A great way to gain a better understanding of the weak points of your product or service is to ask past prospects why they did not buy from you. Although the approach may vary depending on the actual contact information available on past prospects, a quick and effective approach is to identify a target list of past prospects and call them. Ask why they had initially considered your product or service and why they decided to purchase from someone else (or not at all). This information has value for an organization both from a competitive positioning perspective as well as how to improve your customer journey experience.
By implementing these approaches you will identify approaches to meet and exceed customers’ expectations, differentiate yourself from competitors and drive long-term loyalty and customer value. Have any other approaches that are not listed above? Please share any other approaches with us below.

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How to Gather Insights from Customer Satisfaction Feedback

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Customer feedback can help guide decision-making and point out opportunities that may benefit your product. It’s also essential for measuring customer satisfaction among current customers.
  This post will review  the best ways to gather insights from current and prospective customers.

Step 1:  Define why you are asking for feedback.  Before you start collecting feedback, clearly define why you are seeking feedback.  This will help narrow the focus on the approaches that meet your objectives and increase understanding of your customers. Key questions to ask before you implement the process:

  • What part of the user experience do you want to improve?
  • What will you do with the data you collect?
  • Which feedback channel and approach works best for your goals?

Step 2: Gather Feedback throughout the Customer Relationship:  It is important to implement feedback approaches throughout the key stages of the relationship including:

  • Start of the relationship
  • Periodic points during the relationship
  • Change to a key product or service
  • After receiving negative feedback from the customer.

Each of these stages will deliver different insights about the company products and services.  It will also allow ongoing monitoring throughout the customer lifecycle to understand any potential changes or areas of concern.

Step 3:  Ask the right questions:  Often companies implement a standard set of questions to understand customer satisfaction ratings.  Although helpful to track any changes in satisfaction levels, the company misses out on gathering richer insights from their customers.  By asking open ended questions in addition to ratings and rankings, respondents have a place to share what they really think.  It is also recommended to use a mix of feedback approaches to gather different types of information and feedback.

Step 4:  Have a Process in Place to Understand (and Act on) the Feedback Collected:  This last step in the process is the one most companies forget.  Too often survey results are used simply for monthly reporting on “how we did last month.” An organization can respond to their customer’s needs in ways that increase revenue as well as improve satisfaction and loyalty. To do this people and processes need to be in place to analyze the feedback, organize feedback into categories, establish priorities and recommend an action to be taken.

If you respond to items promptly and implement new approaches to meet customer needs, it demonstrates to customers how much you care about their business. If you don’t, the customer will perceive you are wasting their time in asking them to participate in the survey. The goal is to take advantage of the opportunity to show the customer how much you truly care about their needs by listening and taking action.

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Top 3 Approaches to Increase Customer Loyalty

Customer-LoyaltyPreviously we reviewed how  to compare the cost to acquire a customer vs. customer lifetime value. By calculating these metrics an organization can understand the potential success of their overall business model as well as what areas they need to focus on to improve business results.  This article will focus on the top three approaches to improve customer lifetime value and loyalty

#1 – Keep it Simple:  Marketers today are ramping up their messages and pushing it through an increasing number of channels. The thought is the more messages and interactions they create, the better their chances of staying top of mind and creating loyalty. Unfortunately this increasing volume of messages is overwhelming customers and they are tuning out. The Corporate Executive Board (CEB) conducted research to understand of 40 potential variables – which drive the greatest “stickiness”or loyalty. The biggest driver was “decision simplicity”—the ease with which consumers can gather trustworthy information about a product and confidently and efficiently weigh their purchase options. CEB offers a great diagnostic tool to determine how simple your current purchase process is.

#2 – Ask Your Customers For Advice and Feedback:  One of the best approaches to create loyalty is to actually ask your customers for advice. Loyal customers love to provide feedback on products, their experiences, current promotions – really anything. A great way to engage customers on a regular basis is to add a few questions to an ongoing customer satisfaction survey. Another approach is to add a quick poll question to the company website, blog or current email stream. It is also important to share the results back to the community to encourage continued participation and feedback.

#3 – Quickly Respond to Customer Complaints or Problems:  One of the best ways to create loyalty is to quickly respond when a problem occurs. Paying customers want help when something goes wrong. Businesses should view these complaints as windows of opportunity to solidify customer perception and improve their product or service. The benefits of satisfying customer complaints include customer loyalty, product feedback and an intact reputation.  According to “Best Practices in Resolving Customer Complaints,” a quick resolution to a complaint increases customer loyalty by 25%. This statistic highlights the importance of satisfying displeased customers.

In summary, to increase customer loyalty, a company needs to listen to its customers, act fast when there is an issue and keep it simple. Be sure to share any other approaches that have worked for your organization.

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Do you know if your Cost to Acquire a Customer is >=< to your Customer Lifetime Value ?

CAC vs LTVMany clients ask where they should invest the majority of their marketing dollars – in acquisition efforts or retention programs.  Although there are business stats from different resources claiming retention can yield a much higher return than acquisition, there is no “standard” answer or correct approach.  The answer depends on your business stage, model, etc.  This article will focus on what metrics to use to analyze your own data and situation.

The Cost to acquire a customer (CAC) and Lifetime Value (LTV) are important because unknowingly many companies spend more to acquire a customer than the actual value of the customer (lifetime monetization).  As you can imagine, a company in this net negative earn scenario will not last long.

Metric 1: Cost to Acquire a Customer (CAC):  To accurately measure take the cost of sales and marketing over a set period of time.  This includes marketing budgets, salaries and other headcount related expenses.   Divide by the number of customer acquired in that period.

Note:  there are modifications that may need to occur based on business model, for example, if headcount does not need to grow as customer acquisition scales then look at this calculation without the headcount costs.

Metric 2:  Customer Lifetime Value (LTV):  Calculate the gross margin that is expected from a customer over the lifetime of your relationship.  Ideally, this should take into account any customer support, installation, servicing costs, etc.  The simplest calculation is shown below:

(Average Order Value) x (Number of Repeat Sales) x (Average Retention Time)

Although the above is a good start, it does not take into account any servicing or marketing costs associated with retaining a customer.   If you are willing to invest the time and resources to get this metric correct, I highly encourage you to visit the Kissmetrics Blog to see a few different methods of calculating LTV http://blog.kissmetrics.com/how-to-calculate-lifetime-value/

By calculating the above two metrics, a company can begin to understand the potential success of their overall business model as well as what areas they need to focus on to improve business results.  Entrepreneurs in particular are so excited and optimistic about their idea, they often underestimate the cost it will take to acquire a customer.

Example:  A company that sells dog toys that heavily leverages search engine marketing to acquire customers

CAC Calculation = $542 CAC

=$20K (SEM spend & other acq costs for qtr) +$75K (S&M staff spend for  qtr) /            175 customers converted based SEM efforts (based on leads from that qtr)         

LTV Calculation =  $540 LTV

=$54 (Avg order value) x 5 (avg visits per year) x 2 (avg years loyal to company)

In this scenario the CAC and LTV are almost break-even.  Although not as bad as some company business models, this is certainly not sustainable.  After a baseline calculation of both the metrics, additional analysis can be done to not only refine the overall numbers, but to begin to understand what levers can drive a bigger impact.  Examples  of deeper analysis include:

-Segmentation Analysis:  Calculate different customer “segment” metrics .  By understanding what “segments” of customers have the highest LTV, this can help determine where the  company should invest in growth

-Metric Variable Analysis:  A team can also dig into the different variables to figure out how to improve these key metrics

-Projected vs. Actual Metrics:  As the team (and supporting infrastructure) gets more advanced, a company can begin to track a real-time CAC vs. LTV.  Although benchmark calculations are helpful, if a company can calculate real-time CAC and LTV it becomes a very powerful tool for planning

-Different time periods for customer value:  Although lifetime value is a great metric, it takes time to understand any changes or variances.  Some companies have calculated smaller customer time period calculations to track growth of customer value; e.g., 3 month, 6 month, etc.  Note 12 month calculations are often used to understand company cash flow (most subscription companies need to recoup the cost of acquisition in 12 months or less)

Has your company ever calculated and used these key metrics?  If so, please comment below and share your experiences.

 

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Using Email to Increase Purchase Funnel Conversion

remarketing email exampleWith the growth of social media, mobile and other modern marketing techniques, there are many that claim email marketing is dying.  According to a 2013 Compete Survey, approximately 46% of people receive 10+ emails from retailers in a typical week.  Approximately 20% receive 30+ emails.   Most people, especially online shoppers, use email on a daily basis.  Because consumers need to proactively subscribe to email in order to receive them, this information is often taken more seriously. Although social media is a powerful tool, it is most often used to attract consumers to a brand, whereas email allows for a more personal connection.  Sending the right email at the right time can improve your sales dramatically.  Below is a list of 3 email marketing tactics to consider for improved funnel conversions:

#1:  Building Quality Prospects

Depending on how complex your product or service, you may need to educate prospective buyers on the problem before they buy.  An educational email series can be a great way to push consumers through the stages from acknowledging the pain through to their selection of you as the best product or solution.  Educating prospects through a series of emails (good benchmark is 6-10 emails over course of a month) is a great way to spoon-feed the content, build creditability and slowly bring consumers to the point of purchase.

#2 Converting Window Shoppers

Many prospects will visit a website and search around to learn more about the services or products offered.  Unfortunately many prospective visitors abandon their search and never come back.  For the retail category, Forrester Research estimates that 87% of consumers abandon their carts, and 70% abandon just before check-out.  If a company can collect email information for these visitors, there is an opportunity to send follow up email information to drive a repeat visit (and conversion).

A great example of this is by Ebates, a website that consolidates coupons, promo codes and cash back deals.  If you are logged in, click on any of the available offers and then abandon the website – you will be pushed an email within 24 hours with all the current available deals for that retailer, as well as all the current deals for similar retailers.  It’s a great example of how to push a prospective shopper back to the website by either offering them a reminder to come back, a selection of all deals for latest search, as well as other retailers or offers that might be more relevant.

#3 Trouble in The Funnel

If a company is accurately tracking conversions throughout the funnel experience, then it is possible to identify the point in the funnel with the biggest drop-off in conversions.  Depending on the company offering, this could be activation, upgrades, renewals, etc.  Email offers the opportunity to target these customers at certain points of the cycle (timing) as well as by certain needs (info collected on the customer/prospect).  Consider setting up a simple A/B test to figure out what works best at this stage to improve conversions.  Although many companies use offers to increase conversions, it could be as simple as providing the right information at this stage to improve performance.

A good rule to remember across any email remarketing tactics – the more personal and relevant, the more likely the conversion. Be sure to share any other tactics that have worked well for your organization.

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How to Increase Business Impact Through Email Segmentation

segmentEmail is still an important channel to communicate with prospective and current customers — especially this time of year.  The challenge is how to make an email more relevant.  Although there are many approaches to improve email results, segmentation is often an overlooked approach.  Below are a few examples of how to better segment your email list for improved results:

·         Demographics:  A company can either collect core demographic information or overlay the information from one of the main data companies.  For BtoC campaigns a company may purchase or collect presence of children, home ownership, buying behavior, etc.  For BtoB campaigns a company might collect job function, industry, etc.  Sports teams have successfully used this information to target what games to promote to fans living in different cities.

·         Preferences:  The email preference center can be very valuable for segmentation.  A company can segment messaging and content by providing a range of opt-in options for consumers; e.g., what specific products interested in, types of sales, new product launches, etc.

·         Email Click Behavior:  Tracking who is regularly opening and clicking on your emails can be valuable information.  Future emails can be customized based on what sections were clicked in past emails.  An online garden center company has modified their email approach from sending one email per week to sending two emails per week.  The first email is a core email that promotes a variety of products.  If an email recipient clicks on a particular product, they receive a follow up email featuring the product(s) clicked.  For those that did not click on a link, they receive a default email based on the overall top product clicked from those that engaged with the email.

·         Past Purchase History – RFM (recency, frequency, monetary):  This is a classic marketing technique used to determine which customers are the best ones by analyzing how recently a customer has purchased (recency), how often they purchase (frequency), and how much the customer spends (monetary).   In email, this approach can be used to promote past items purchased.  A florist shop used this approach with great success.  In the past, they had promoted different product choices to customers that had made a previous purchase.  They assumed past purchasers might be interested in exploring  the wider offerings from the company.  What they found is by providing too many choices they were paralyzing the consumer from making a decision.  They tested the multiple offering email vs. an email that only featured the past product purchased and discovered consumers purchased at a higher rate from the email that only featured the past item purchased.

·         Email and Website Behavior:  If a company can build a tight integration between their ESP and website they have a valuable source of consumer behavior for targeting.  A company can segment and customize future emails based on who clicked on an email and spent time on different sections of the website.  Many eCommerce companies have discovered the power of sending follow up emails based on website browsing.    It is also possible to identify and target inactives who have not opened emails or visited the website in months.  More sophisticated companies use modeling to present the right product and offer combinations based on profile, email and website behavior.  Although this is one of the more complex approaches to implement, trigger messages are extremely relevant and tend to provide the biggest lift of most segmentation efforts.

Need more motivation to implement some of these approaches – it is reported that relevant, triggered emails deliver three to nine times the revenue of broadcast emails (source:  SilverPop and Jupiter Research).  Be sure to share any additional segmentation approaches that have worked for your firm.

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Companies That Are Here to Help You Spend (and Save) this Holiday Season

Save money shoppingIt’s that time of year again — the holiday spending season.  Below is a list of the top innovative apps or online features to help you plan, share and spend this holiday season:

Online Shopping and Browsing:

  • Amazon  - With holiday deal promos, free shipping, and other rich online features – Amazon is often a first stop for many shoppers.  A feature that is especially useful around the holidays is the Wish List Feature.  Not only is there a list of product ideas to aid gift giving, there is also the option to create a custom gift list.  They recently added a Universal Wish List Button which offers one click link you can add to your bookmarks bar.  It allows you to easily add any item (from any website) to your Amazon Wish List.
  • Pinterest – A favorite for general browsing (of everything visual), Pinterest last year announced the introduction of “Secret Boards.”  These are a great way to save gift ideas for yourself or other people on your list.  Currently limited to 3 secret boards per user, to start simply scroll to the bottom of your current boards and select “create a Secret Board” option.
  • FatWallet – For shoppers looking to save this holiday season, fatwallet.com  is a top ranked website for online shoppers looking for cash back, coupon or general sales information.   Registered users can create online wish lists that can be shared via email or on your Facebook page (via Facebook app).
  • Kaboodle – Although a bit more niche than some of the other “shopping” sites, Kaboodle has a small, enthusiastic user base (est 35K users).  Kaboodle is a great place for gift inspiration.  Think of it as Pinterest focused on wish lists.  They have other unique features such as polls (which dress should I buy?), a custom feed of your friend’s activities, etc.  Worth checking out if you are not sure what to buy someone on your list
  • Wish List  –  This service basically provides the ability to add products from any retailer on the Internet to a single list.  Although this website does not have as many social features as the other list sites,   it does have a unique mobile feature which lets you use a camera phone to send items directly to your account while out shopping (helpful if have small children browsing a toys store).   

In Store Browsing and Mobile Shopping:

  • The Find – This app allows you to find the best price for what you are looking for.  Unique feature is ability to scan a bar code in the store and price match against current online sales and deals.   Note, Amazon offers a similar feature but it only checks against its own online pricing for similar products
  • PriceGrabber - Price Grabber not only let’s you scan bar codes in stores to compare prices, but it also offers the ability to set price alerts and get notified when your price alert has been met.
  • Offerlink - This app allows you to track your favorite stores and get alerts when new offers are available.  Also provides ability to save special offers and get alerts when it is about to expire (so you make sure not to pass up a good deal).  A good app for the holidays and all year round.
  • Retail Me Not – Also a top ranked shopping site, their app allows you to save coupons to use on the web or in-store.  Nice feature is ability to show your phone to use the coupon in the store (no need to print off coupons anymore)
  • Shopular -  This app gives you the inside scoop on the best in-store deals while you are shopping .  Simply download the app and when you walk into your favorite stores, a coupon or notification of a deal will pop up on your phone.  If you prefer to shop in the malls – this app is for you.

Happy shopping season!  Be sure to share any additional online sites, features or apps that make spending this holiday season a little easier!

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