Chapter 1/3

Another study by the CMO (Chief Marketing Officer) Council in 2007-2008 titled, "Losing Loyalty: The Consumer Defection Dilemma," tracked 34 million shoppers and 685 grocery and pharmacy brands at 24,000 retail stores. The news is not good.

In that study, one third of those considered "brand loyal" actually switched to another brand during the study. About half that many again began switching to other brands from time to time, perhaps because of special promotions but, in any event, were no longer completely brand loyal. Combining these two groups, 52% of those thought to be loyal to the brand they were using at the beginning of the study had begun using another brand either exclusively or from time to time.

While this study was among consumer packaged goods brands, we see this trend in virtually every industry. And small business owners may want to think about their own customers as they interpret this secondary research and consider the implications for their own customer base.

Is customer loyalty dead? Not by a long shot. There are still plenty of businesses that have strong customer loyalty.

In fact, Bob Hill recently provided us with PeopleMetric's Annual Customer Engagement Study that named the ten companies that customers are most loyal to. Who are they?

1. Ritz-Carlton

2. Google

3. The Four Seasons

4. Netflix

5. Cartier

6. Armani

7. Newegg.com

8. Wegman's Food Market

9. Coach

10. Costco

Now I have done business with seven of these companies and I can agree that my experiences with them would lay the foundation for loyalty on my part. But that is just one guy talking.

More importantly, Mr. Hill offers some insights into why people are loyal to these organizations/brands. What can small businesses learn from these organizations?

Mr. Hill observed that each of these organizations has something in common with all of the others and that, he maintains, is the crux of the brand loyalty that each of these companies experiences.

First, all ten of these companies treat their employees very well. These companies recognize employee contributions with bonuses and other incentives for those who go above and beyond the norm to demonstrate that they and their companies value customers' business. When employees feel valued, they will most assuredly pass that attitude on to their customers.

How valued do each of your employees feel? Well, that is about how valued some of your customers feel!

Second, when problems arise with either products or service, the companies resolve the issue immediately. There is not time for the customer to even wonder if they will be treated fairly. Or doubt their importance to the organization. Employees in these companies have authority to handle most issues to customers' satisfaction. As part of this, there is a strong "life-time value of the customer" philosophy operating to ensure that little problems do not become big problems for either the company or the customer. In addition, these companies are continually verifying that each encounter with the organization is a positive one for that customer.

How empowered are your employees to handle complex customer problems? If the problem has to go to the owner of the small business to be resolved, it has gone way to far in the customer's opinion.

When your employees feel valued, they will most assuredly pass that attitude on to your customers.

Don't for a second think that just because these organizations are large entities that their job is easier. No, in truth, the larger the organization, the harder it is to garner brand loyalty and customer satisfaction. With the addition of each new employee, any organization increases the risk of a bad customer experience. It is actually much more difficult to achieve the level of customer loyalty these larger companies have attained. Small businesses should find it much, much easier to build customer loyalty. But, do they?

Please post a comment to what you read. Thanks for checking in.

More to come!

Chapter 1/2

Still need convincing?

In the September 2008 issue of Sales & Marketing Management, consultant Scott Hornstein further discussed this issue of American corporations' cataclysmic problem with customer service. Hornstein wanted to see what real, live customers thought about customer service so he sent out a survey to regular folks who deal with a variety of companies and their brands. Hornstein asked:

1. Of your current experiences, does customer service today meet your expectations? Please respond on a scale from 1 to 10 (with 1 being "absolutely not" to 10 being "deliriously yes")?

Average score: 3.7 (almost 20% of the responses were 1s)

2. How would you rate large corporations' commitment to customer service (on the same 1 to 10 scale)?

Average score: 3.0 (40% of the responses were 1s)

3. In general, what are your expectations of your initial customer service interaction? What do you expect will happen (with 1 being "absolutely nothing" and 10 being "thoroughly delighted")?

Average response: 4.6 (Ah, a glimmer of hope, on their part.)

4. How important is customer service to you when you make a decision to purchase from a company (with 1 being "no difference" and 10 being "nothing is more important")?

Average response: 7.8 (over 30% of the responses were 10s)

Now, Hornstein admits that his sample was not random and that some could fault his methodology. But is anyone surprised with the results? You don't doubt the projectable quality of Mr. Hornstein's findings, do you?

Businesses face a terrible crisis right now and it is far more serious than the economic recession in which we find ourselves. There is a huge recession of customer confidence in businesses' ability to meet their service needs.

Do your own research. Not on your company (yet), but on other brands in the marketplace. People are fed up and they will do anything (including constantly switching brands) not to have to take it anymore. What I hope you also take away from this is that whether you sell products or perform a service, we are all in the service business! In fact, many businesses complain that they find themselves selling commodities where price is the sales-determining factor when great customer service could distinguish them to such an extent as to take them out of a commodities market.

One small ray of hope for the small business owner is that customers seem slightly more dissatisfied with how large corporations deliver customer service than they do with businesses in general. Hey, its a start.

There is a huge recession of customer confidence in businesses' ability to meet their service needs.

As a small business owner, you must recognize that the chances are pretty good that your company may not be delivering stellar customer service, either. In fact, it is rather probable that your company is not, if you just play the odds here. But you can find out for sure and that is what we will talk about soon.

Before we do that, be thinking about all that money you spend in advertising that brings customers to your door only to be mistreated by your organization's customer care because the advertising told them one thing and their customer experience told them another. Talk about a disconnect.

Thanks for reading. More to come!

Chapter 1: The Road Less Traveled When Marketing The Small Business

What's Wrong with Business?

Just for a minute, forget you are a small business owner or business person and think about how satisfied or dissatisfied you are with the majority of companies that you do business with.

What are you coming up with? It is not that much to write home about, is it? And that is a problem for every one of those organizations. You just don't like them that much.

Now, some of the people who are reading this right now may be thinking of organizations that are operated by other readers of this same blog. Scary, huh? Someone is really thinking about why organizations like yours just don't make them feel valued.

Hornstein Associates, a marketing firm in Connecticut, conducts a survey each year and rates how companies respond to inquiries to their Customer Service departments. From the response rate by the organizations solicited, the results can give us some idea of how these businesses (and business in general) are responding to stated inquiries by customers who ask a question of them.

At your next cocktail party, solicit stories about bad customer service: everyone has a nightmare.

It works really simply. Hornstein Associates sends an inquiry to the Customer Service departments of some of the largest and most successful organizations in the world: Financial Times' "World's Most Respected Companies" and to Fortune's "Most Admired Companies" with a question about their customer service. The goal is to see whether the organizations will respond within a 24-hour period, the expectation of most consumers when they contact a company's customer service department. The question is "What is your corporate policy regarding the turnaround time for emails addressed to customer service?" A simple question for an organization who makes customer service a true priority, right?

What Hornstein has found since 2002 is a shocking decline is customer service among organizations that most of the world thinks of as great organizations. The percentage of organizations that responded within a 24-hour period in 2002 was 63%. In 2003 it was 59% and in 2004, it plummeted to 37%. 2005 and 2006 rebounded somewhat and leveled at 42% for both years. Then in 2007, the number dropped to 33%. Last year, we hit an all-time low of 31%, just less than half of the response in 2002.

Is anyone surprised? I doubt it. We have become so accustomed to bad customer service that this sort of thing doesn't surprise us at all. In fact, at your next cocktail party, solicit stories about bad customer service: everyone has a nightmare.

So, what's to be done about how our organizations serve our customers? Something had better change, huh?

Thanks for reading. More to come.

Table of Contents (for Your Brand Reps eBook)

Introduction


Chapter One ... The Road Less Traveled When Marketing The Small Business

Chapter Two ... The Vertical Relationship Channel


Chapter Three ... The Horizontal Relationship Channel


Chapter Four ... The Circular Relationship Channel


Chapter Five ... When It All Comes Together


Chapter Six ... Is That All It Takes?

Introduction (to the eBook)

Today marks my 29^th year working as a marketing professional. I moved to New York on Sunday, June 1, 1980 and started work at NW Ayer the next day, June 2. It has been a fun 29 years, I’m happy to report. It has also been a very educational 29 years.

In truth, I have been a student of marketing and advertising a bit longer, having fallen in love with the advertising goddess in 1976 as a junior in the Grady College of Journalism/Mass Communication at the University of Georgia. Three years later I was a graduate assistant in UGA's MBA program and became a small business consultant with UGA’s Small Business Development Center, at the time the largest small business development center in the country. I mention this because I have felt for many years that smaller businesses continue to struggle as they try to implement marketing strategies and tactics that were more appropriate for larger businesses. Many of those strategies and tactics just don’t work for small businesses.

Small businesses (those with less than 100 employees) have distinct advantages over many large businesses. Critically important is their ability to develop and manage their brand reputation much more easily than larger businesses can. But no one ever tells this to small businesses. Instead, almost every consultant or agency tells them that they must play by the rules that large, multi-national businesses pioneered and follow to this day. Not only is this inaccurate, but it is a major time and money waster for the small business. There are many strategies and tactics that small businesses can and should use to compete with their larger competitors that their larger competitors would have trouble emulating. And that is what a distinctive marketing strategy should be: a direction that not all can follow.

Small businesses have distinct advantages over many large businesses.

Read on, especially if you own a small business. This book will explore ideas that made large businesses successful, but also other strategies and tactics that larger businesses cannot implement because, frankly, they have just gotten too big to do certain things.

And that is good news for small businesses everywhere.

Thanks for reading. And, please comment on ideas that move you.

More to come.

bpm

June 2, 2009

What's Great About This Recession...

With all the doomsday talk these days, I thought I would offer a bit of contrary editorial for your reading and consideration.

What's good about this recession? This recession, more than others I have seen, is really cleaning house with businesses that did not make marketing and customer service a priority. Don't get me wrong: I am not saying that any company doing badly in this recession was poorly managed before the recession. What I am saying is that a key marketing strategy in any recession is customer retention. And customer retention can only happen if customers truly value the brand. If you go into a recession with your customers placing a high value on your brand, then when push comes to shove and those customers must decide how to spend their fewer dollars in uncertain times, there is a greater likelihood that they will continue to spend their money on your brand and you will retain them as customers.

Regardless of whether you are currently employed or not, you have an opportunity to watch how virtually every organization you may have been previously interested in working for is handling these challenging economic times. And, while almost every business has been hurt by this recession, there are some number of companies who are still doing well. Pay attention. Watch closely. Some are actually prospering, and a larger number are getting by, turning a profit and taking care of their customers and their employees during all this mess. Those companies should be the ones you want to work for when times are better or they start hiring. Don't be surprised if they are not hiring long before most companies are, too.

To illustrate my point, let me offer for your consideration a local business that I frequent and think is faring quite well when many others are not. The Pita House, located on Pleasantburg Drive in Greenville SC, is a family-run business that offers a variety of foods from the Middle East. It is managed by Ziad with the help of wife, Ikhlas, children, cousins, uncles, aunts, nephews, nieces and friends. The place is always full. In fact, several weeks ago another customer surveyed the crowd that day and remarked, "There's no recession at the Pita House." Indeed, there is not.

Now, Ziad will tell you that he is blessed and he is. But he is also a great marketer because great customer service is one of the smartest forms of marketing and the Pita House makes great customer service a top priority. What can other brand-builders learn from Ziad for the future?

1. Be consistent in your quality. In my 500+ meals at the Pita House, I have never had a bad one. Neither have any of my take-out orders ever been inaccurately filled. Never.

2. Make loyal customers feel special. Many times, when I am in that restaurant eating with someone (rather than doing take out), Ziad has brought us a small dessert free-of-charge. This makes me feel appreciated but it also sends a message to my guest that I am a regular, someone special to Ziad and his family and perhaps they will be appreciated in such a way if they return.

3. Distinguish your brand in product and service. While there are a few other restaurants that offer similar cuisine, the Pita House distinguishes itself as much as a family business as it does with its cuisine. When I first went to the Pita House, I left a tip on the table, but John, another manager, followed me out that day and gave me my money back, telling me they were a "family restaurant," meaning that everyone was well-provided for without my tip. The fact that they had so much pride in their "family business" status to refuse the tip left an impression I did not forget.

4. Remember good customers' preferences. Many days I order the same meal because it is the cheapest on the menu. Most days when I walk in, they ask, "The usual?" and I nod my approval. Every now and again, I mix it up and they actually tease me when I do. It is another way they thank me for being loyal to them.

5. Don't let anything come between the brand and its customer relationships. Visit the Pita House tomorrow or in a month or in a year -- you will find the same people at the counter: Ziad, Ikhlas, John, and Manal. They do not vary who meets the customers and who services them. Pita House customers feel valued with the familiarity and that is another reason why they keep coming back. Familiarity doesn't really breed contempt, it breeds comfort. So many organizations change sales reps on their customers all the time. How valued does that make your customer feel? Or the company tries to use some form of technology to distance themselves from their customers. Not smart.

6. Consistently offer good value. The Pita House is by far not the cheapest lunch you can get in Greenville SC. In fact, most diners are paying between $6-8 to dine with Ziad and family. Why? Consistent product and service makes a strong restaurant brand and that is valued by today's consumers when so many others are inconsistent.

Now, I doubt Ziad will have a job for you now or after the recession is over. But others will be hiring and during these bleak times, take a good look around. Where are the great brands of this recession? Some companies are still prospering because they have created highly-valued brands. Those are the companies you will want to work for in the years ahead.

Great customer service is very smart marketing.

This recession will not be our last. In years to come, we will have others and the actions of organizations in this recession can tell you a lot about who you will want to work for in the next recession. Look for businesses and brands that don't just talk about how they value customers... look for the ones who are demonstrating it. Every day.

Thanks for reading.

More to come!

The Process of Building Brand Loyalty

What does it really take to convert the Unbelieving to the Loyal? Isn't that what smart organizations are trying to do... if they take marketing seriously? 

Of course that is what they are trying to do! Even if we were not waist-deep in a recession, that should have been the motive all along. And, it may have taken this economic climate to convince some organizations that what they were doing before this wasn't working. Hey, wake-up calls hurt, but only fools don't answer the ring.

There are three parts of this brand conversion process: 

* Experience

* Acknowledgement

* Articulation

First, the person being converted must have a positive brand experience that is real. And by "real" I mean representative of the brand experience in most situations. The experience cannot be a best case scenario. It has got to be able to be replicated most times. That means that the organization must be organized and managed so that a quality brand experience happens far more than it does not happen. 

Second, the customer (or employee) must acknowledge the experience as a positive one. What I am talking about is a sincere acceptance of the experience by the one doing the experiencing. And that probably tells you a bit more about how positive that experience needs to be. 

Third, the convert must articulate what has happened. S/he needs to do this for themselves, first and then for your prospective or other current customers. The reason this needs to be done is that, many times, only when one can talk or write about a subject are they able to crystallize what the subject (and experience) really meant to them. Most times, consumers do this naturally. We love to talk about the brands we love! And, the more we talk about them, the more we love them. Just human nature. 

Hey, wake-up calls hurt, but only fools don't answer the ring.

Now, where traditional marketing still has a role is in providing the brand cues that help in that articulation of the experience. Today's smart consumer may use these cues differently than their parents did, but they still use them. There are too many consumers using brand descriptors straight out of advertising to deny this. BUT, the advertising must be far more relevant than marketers got away with 25 years ago. 

So, think about it. Make the brand experience real. So real that it is sincerely acknowledged by the customer. And help (via a variety of marketing communications) to provide assistance in how consumers articulate that brand experience.

It goes without saying (but I will say it) that this important process can and should happen with your own employees before you try it on your customers. Remember: Brand Representatives determine Brand Reputation! 

Thanks for checking in. 

More to come.