A Business Technology Place

Rewarding switching over loyalty

A fast marketing engine.

It took about 8 weeks for the marketing department at Charter Communications to catch-up with my decision to cut the cable TV cord. Considering the size of Charter, I’m impressed with the turn around time to add me to the prospective customer list mailings. New subscriptions are up for Charter and the company is doing well in spite of serious market pressures from alternative forms of media content and broadband services. But wait, what just happened here?

Rewarding switching and quitting over loyalty.

The offer that marketers make to prospective customers for reduced rate services during the first 12 months of service continues to add friction for customer loyalty. Consider the madness. I received an offer in the mailer equivalent to the pricing I had with Charter before I cancelled my service. When Charter notified me that my special pricing was over and that my rates were increasing I called to cancel service. During that call, no one tried to retain my business. 20+ years of cable service loyalty gone in a flash.

 

Cable and cellular providers are judged by Wall Street on the metric of number of new subscribers. So we are left with a system where the guy who has paid for cable service for 20+ years is paying a higher rate than the guy who just switched from somewhere else. We have a system where a customer can quit and then wait 8 weeks to be offered a better rate of service than he had when he was an existing customer.

Who is the winner?

The winner is the guy who quits the game altogether or jumps from one provider to another. But this isn’t how companies known for customer service do business is it? This isn’t what they teach in MBA class. This type of behaviour isn’t even really logical either. What customer likes to be treated like this?

“Profit in business comes from repeat customers; customers that boast about your product and service, and that bring friends with them.” ~ W. Edwards Deming

There has to be a better system. What say you?

Onward and upward!

Software open feedback loops

What is the secret sauce?

What really drives new software features? Do we live in a world where the marketing department rules the day with ROI driven and profit making capabilities from within the software? To an extent, I believe the answer is yes. Businesses exist to make money. Business software is written to facilitate the flow of money either through sales or automation of processes. If a piece of software doesn’t help the organization to make money it won’t last long.Simple_Feedback_02

But software that is not used, doesn’t make money. No matter how good the idea, if the software is not used, the business justification fails. This is why an open feedback loop with users is critical to the success of the software and could be tagged as the secret sauce for software development. User input drives usage. Usage accomplishes the goal for sales or productivity.

Creating the WOW.

Service organizations like to create the wow factor with customers to drive brand loyalty. Good software has that effect also. I see people that are passionate about Evernote, OneNote, and Photoshop as examples. Evernote survives with paid subscriptions. With a free-version available, and many options for recording/capturing notes, they have to “wow” customers to keep the software in the market place. The Evernote blog is a good place to see user input and feedback. Users provide feedback in the comments section and are often cited in case-study like blog posts. New features sometimes don’t have a direct link to increased sales. But they do have a direct link to usage which has a direct link to sales.

I was pleased this week when I heard a product manager tell a steering committee that we have a good feedback loop in place with the user-base that is driving feature enhancements in a software tool. Some of the feature-adds were completely cosmetic. But they were added to drive additional usage on the site. For the site referenced by the comment, additional usage means increased cost reduction through productivity gains in the back-office. If we execute properly, we should position ourselves to deliver the wow factor for the users. That was exactly the point of the comment.

So I submit that the open feedback loop with customers is the secret sauce that helps software achieve it’s stated goals. Product managers and marketers have to find the balance between user input and needed features for ROI. Without usage, the software is just a heap of 1s and 0s.

The customer is always right?

Is the customer always rights?
The question is more complicated than face value. Within the context of a single event you could make a case that the answer is yes. But this study posted on LinkedIn about customer experience and expectations suggests the customer may not always know what is best.  Of course what’s best depends on who is judging the situation. What’s best for the customer, as in a lowest price, may not always be what’s best for the business.  According to the study,the problem for businesses is that it often isn’t what drives additional sales.

Digging into voice of the customer.
I looked at the voice of customer remarks for the eCommerce sites that I help operate. There are definetly patterns within the data so I pulled some common customer feedback to analyze. The question to consider was would it add value to the business transaction to do what the customer wanted? Here’s a look at three of the common feedback items:

Lower prices – It’s the Internet and customers are used to retailers enticing them with free shipping. In my case consumers opinions are molded by banks offering “free checking”. But if the business lowered pricing for expedited delivery on product sales would the customers that are looking for lower delivery prices be more likely to upgrade from standard delivery?

Would lower prices add more value? No. Price sensitive customers want to shop for the lowest price but will leave anyways if they find a lower price elsewhere. For the business it creates a race to zero. Zero margins doesn’t create an environment for a sustainable business.

Ability to change shipping address – This feature is a bit trickier for my site because it is selling a financial instrument (paper check) on behalf of a bank/credit union. In most cases my business is contractually bound to not service an address change. The owning financial institution requires their customer to change their address at a branch location.

Would an address change add more value? Yes for the customer. It keeps them in their preferred channel. Yes for the business. It increases customer satisfaction by saving a trip to the branch or a phone call. This is a good opportunity to use technology to help change a business rule.

Package Change – We recently changed the traditional packaging for our main product from a box to a flat folio container. Prior to the change we conducted focus groups getting input from hundreds of consumers. They indicated overwhelmingly that the package change was a good thing. But post implementation feedback has been mixed.

Would it add value to allow the customer to pick their package type? No. In this case the customer isn’t buying the package. They are buying the product in the package. For the business, it creates more costs to have equipment that provide the product in two different formats and it reduces the opportunity for volume based shipping rates for a given package type.

The article published on LinkedIn gives all of us a subject we should think about more. Is the customer always right? As with many questions in life, my answer is “it depends”.

Charter Communications Loyalty Discount Letter

Well this is something you don’t see every day.
I received a letter this month from my cable and internet service provider Charter Communications. As I opened the letter I suspected it was notification of a rate increase or programming changes. But to my surprise, the letter informed me that Charter was providing a $17 discount off their standard service rates for another 12 months.

Last year, after more than 12 years of service with Charter,  I called and price shopped them against satellite providers. Charter put me on a 12 month promotional rate which lowered my monthly bill considerably. This loyalty letter informed me that my 12 promotional rate had ended, but that they were providing another 12 months of discount.

I’ll say this about Charter Service.
I know many people are in a love/hate relationship with their communications providers. I’ve listened to a few of my friends talk about their dislike for Charter. But I’ve also heard other friends talk about bad experiences with Dish, DirecTV, and Comcast. The reason? A monthly communications bill is pricey, so people expect to have the service run flawlessly.

My experience over the years with Charter has been good. I’ve used them for television and internet services for over 12 years and have not had any major disruptions in service. I had an issue one year when I moved to a new house and converted to my own cable modem. It turned out the signal strength was too strong from a signal boost device I installed. The Charter technicians showed-up on time and attempted to solve the problem to the best of their abilities.

More recently a near-by lightning strike took out the DVR unit. Charter was onsite the next morning to replace the unit.

Loyalty discount feels nice.
It feels nice to look at my monthly invoice and see a line item for loyalty discount. I think it’s a great move from a company to reward customers for the longevity of their continuous service. This makes me not even want to investigate 12 month teaser rates from other providers. Maybe that’s a lesson for Charter or at least input into what feels like a marketing experiment to improve customer retention rates.

I wish my mobile phone provider would do something like this!

Getting beyond customer loyalty. Customer apostles.

Marketers love loyal customers.
They are the customers that return to the brand without further considerations or market research. They are repeat customers and may develop a deeper relationship with brand associates which will keep them loyal.

I was thinking about brand loyalists in the context of social media sharing last week because of how easy it is now to share information digitally with our connections. Similar to my thoughts on how the news media has been transformed by social media, the same concept also applies to all businesses.

The idea is that the customer becomes a brand advocate to the extent that they also become a brand marketer. Before the internet, the reach of the customer was their immediate group of friends and family.  It was limited. With the internet and tools like Twitter, Facebook, Stumbled upon, Google+, etc. consumers now have a reach that extends to hundreds or thousands of individuals.

But there’s a class of customers more powerful than loyalists.
I looked at my MBA class notes on customer types and found the term “brand apostle”.  A brand apostle is the upper sub-segment of brand loyalists.  The apostles bring other people to the business and refer to the brand in whatever communication tools they use.  It’s the brand apostles that are messengers and advocates of the brand.

For the brand apostle, the connection to the brand is something that becomes second nature. Today a prime example are the brand apostles for  Apple.  I work with a few of them. They constantly talk about how great their devices are and how they believe they are superior and worth the price premium over a PC. (The mind tricks don’t work on me. I use Linux). Another good example was the Saturn the automobile brand from GM.  Do you remember the community of customers they built? They held events for the customers to attend and everyone drove their Saturn to it.

Marketing has always been about connections. Historically it’s the connection between the brand the customer. But today’s marketing is as much about shared messages as connections. It’s about getting customers and prospects to act as the marketing advocates for immediate and broad reach.  It no longer take a Superbowl ad to get a Superbowl reach.

Ideas to make brand apostles:

  • Open-up customer reviews for your products and services in the online catalog. What better place is there for prospective customers to be influenced for a purchase decision than when they are looking at the product in your catalog? This isn’t a new technology or merchandising technique, and many retailers already do it. It’s just an easy place and context relevant for brand apostles to leave their mark.
  • Educate your employees. A great product is only half the equation in getting repeat customers. The experience with the employees is the other half. When employees understand this and their stake in creating brand apostles they’ll feel more involved and likely to contribute. I realize employee interaction with customers and employee attitudes are much more complex than this. But the point is the employee needs to be a brand apostle to grow other apostles.
  • Do something the customer isn’t expecting. As I write this post I’m sitting at my local car maintenance shop Christian Brother Automotive. It’s a franchised business, but I’ve been bringing my vehicle here for years because I value the service and straight-talk about the maintenance needed. I remember my first visit when they told me that they do not charge for inspection of the vehicle. They only charge for worked performed. Coming from the dealership model where I was use to paying $70 for “inspections” this was a pleasant surprise.  In subsequent trips they’ve found burned out bulbs and just changed them for me. It’s little things like this that have made me an apostle for their local business.


If you have stories or ideas about brand apostles I’d love to hear from you.