Why Email Marketing is King →

A retailer I've worked with which has 900 stores and is very active with email campaigns recently did a great study. It took a group of 105,000 customers in its loyalty club database, divided them into three groups of 35,000, and marketed to the three groups differently, as shown in the chart below (click to see a larger version). Thanks to the loyalty program, it was able to see all subsequent purchases by these customers.

Direct mail has a higher response rate than email. But note that direct mail costs about 100 times as much. Meanwhile, the data collected by the retailer allowed it to calculate its off-email multiplier (a simple matter of dividing the percentage of online sales by the percentage of in-store sales generated by email-only marketing). It is 3.76. In other words, for every email shopping cart sale, this retailer gets 3.76 other, typically non-tracked sales due to the email.

There are a couple of things I have a problem with that logic.  

1. The logic takes every single transaction from either mail or email used with a loyalty card as 100% because of the way they were marketed.  My guess, there's plenty of transactions that happened regardless of the marketing
2. The direct mail and email made nearly $135,000 more than just the email alone.  This well covers the 100 X multiplier of the direct mail and made more profit.  So why is email and direct mail together not king?​

Now don't get me wrong, I like email, but it is a tough channel these days with many businesses flooding the inbox of the customers.  Savvy customers have a separate inbox for businesses because they don't trust they won't get spammed.  ​

Just don't discount direct mail in this day and age.  These days your message has a lot less competition in that channel.

Three Myths about What Customers Want →

Most marketers think that the best way to hold onto customers is through "engagement" — interacting as much as possible with them and building relationships. It turns out that that's rarely true.

Myth #1: Most consumers want to have relationships with your brand.

Actually, they don't. Only 23% of the consumers in our study said they have a relationship with a brand. In the typical consumer's view of the world, relationships are reserved for friends, family and colleagues.

The debate about whether social media and brands can really co-exist.  Do customers really want a message from a brand right after viewing new baby pictures of their niece?  These may be separated out in the future, a la foursquare.  ​

Myth #2: Interactions build relationships.

No, they don't. Shared values build relationships. A shared value is a belief that both the brand and consumer have about a brand's higher purpose or broad philosophy. For example, Pedigree Dog Food's shared value is a belief that every dog deserves a loving home. Southwest Airlines' shared value revolves around the democratization of air travel.

Customers can turn on a dime.  Southwest has such a loyal following because they made traveling something for the rest of us.  Brands like Apple bring people in to what they can do with their devices and how it can enhance ones life.   ​

Myth #3: The more interaction the better.

Wrong. There's no correlation between interactions with a customer and the likelihood that he or she will be "sticky" (go through with an intended purchase, purchase again, and recommend). Yet, most marketers behave as if there is a continuous linear relationship between the number of interactions and share of wallet.

This I have seen time and time again.  It amazes me how many emails I get from large brands on a daily, sometimes more than a daily basis.  ​I start to ignore these emails, as they tend to start offering the same thing over and over.  Even for large retail brands, there are only a few items that they can target to my specific wants and needs, so many communications will see my interest wane.  Make communications worth opening, it is much better to send an email that the customer will always open than an email they may just delete because they don't have time or they have become immune to too many communications.

With The Apple V. Samsung Verdict, Innovation Wins →

...the more important point is that both parties are now incentivized to behave differently. One can even argue that they're now predisposed to innovate like they've never done before.

​I agree completely.  It would be a shame if the smartphone race turned into the refrigerator, or dare I say television industry, when you go into a store and every television and refrigerator look exactly the same.  Smartphones should all be distinct, at least in the operating system.  This way we don't end up with 2 choices where 1 dominates, like Windows vs Mac.   

Apple--which isn't evil no matter how some may think--may press on with its smartphone and tablet UI innovation in an effort to truly distinguish the look and feel of its products in an ever-busier market, conscious that Samsung is nipping at its heels. iOS is getting a little long in the tooth, and now may be the perfect time to spend company time transforming it into the next generation of smartphone OS's.

I sure hope this happens.  If the verdict changes the copying behavior of its competitors, Apple is in a great position to reinvent the greatest invention of our time.  Here's to innovation.

​

Pin Down Your Customer Intelligence Objectives →

The problem with customer intelligence is that while everyone wants more of it — and better versions of it — there are many different avenues to take in pursuing it. No organization can pursue all of them at once ... so the challenge is to narrow down the options fast. You need to reflect on your business situation and goals and consider only the initiatives that will offer the highest impact.

​The common mistake of customer intelligence is companies want to do everything all at once.  Rarely is there enough resources or technology to make this strategy a reality.  Start from the basics, which I believe is the data warehouse, and then attack the items which will provide the highest return on the time and investment.  Focus on becoming great in each area before attacking the next.  

Learn More by Asking Fewer Questions →

Every day online, a pop-up or email from a major brand or frequently visited site implores me to answer a few questions about myself and them. I (almost) always decline. Not because I care about my privacy but because I don't care to waste my time.

Customers are continually being bombarded by large surveys.  I know I can't buy much without receiving a survey a few days later asking how they did.  The problem is these surveys are all so long.​

One Fortune 100 firm showed me its comprehensively designed internal "innovation culture" intranet survey containing 25 questions. I (strongly) suggested they ask no more than five. They thought that ridiculous. But they were persuaded to run an A/B experiment where a third of the 10,000+ recipients got the short form. The results were unambiguous. Response rates for the fewer questions were over 11X better than for the full questionnaire. When one factored in the declining quality of "tail end" answers — people clearly just "box ticking" the final five or six answers to be done with it — less proved to be more.

I have been a big advocate of this for awhile.  I know how I feel when I have taken one of these surveys, I am wondering when it will end.  What is the important information they are looking for?  When analyzed, I know the companies I have been involved with only focus on a few high-level ​metrics anyway, so why ask so many questions.

Start with a small baseline of questions and add-on as needed.  It is like my database marketing strategy, you only add segments when there is a clear purpose for doing so.  The same ​applies to surveys, keep it simple and the customer will give you better feedback.

Too Much Data? →

When data is missing, we overestimate its value. Our mind assumes that since we are expending resource locating information, it must be useful.

We're fascinated with filling information gaps and that obsession can lead us astray. Especially today, when reducing uncertainty has become all too easy.

An interesting study on how our minds work utilizing data.  I see this everyday.  People are more fascinated with the information they don't know, rather than looking at what is known and making a solid decision based on the facts at hand.  So many times a report is issued and there are thirty questions, most of the time the questions are deflecting making a decision.  The lack of some piece of data is reason enough to put off the decision and look for further validation.    ​

I believe there is a combination of data and experience hat goes into making a qualified decision.  ​Validation of whether a decision was right or needs to be tweaked happens after the fact.  There is never going to be enough perfect data to make a right decision 100% of the time, so trust your experience and the data you have.  

Competition as a Crutch →

Competing with yourself is more difficult, requires more bravery and leads to more insight.

​It amazes me how often companies follow what everyone else is doing in the market.  Without being inside the competition, you don't know if what they are doing is working or they are just throwing something against the wall and hoping it sticks.

Conflict Keeps Teams at the Top of Their Game →

Some of the best ideas I ever had were through conflict in teams.  ​

A typical response to conflict is to ignore it — to avoid getting to the root of the problem and hope that it will somehow go away...What few people seem to realize is that even the most effective teams will feel conflict-prone at times. And there are good reasons for this. Teams composed of high-performing individuals are naturally subject to contradictory tensions, like cooperation and rivalry, trust and vigilance. These tensions should not be managed away

Is Mo' Betta'?

Every industry has a few metrics that it relies on to measure their business. In the cell phone industry it seems to be units sold, in the casino industry it is headcount and in the restaurant business it is covers. Are these the best metrics to use to determine success? It all depends.

Let's take the cell phone industry. I hear all these statistics that Android is catching the iPhone in u it's sold, how many units did Motorola sell, how many RIM products are out there. Many times what is easily to count is the judge of success. But what really matters is profit. How much of these sales is hitting the bottom line. The iPhone makes double the profit of Motorola and Samsung combined, while not selling any more phones. Samsung and Motorola sell low margin, cheap phones in a race to the bottom. Not only does this minimize the worth of the handsets in the industry as a whole, but doesn't make them as much money as Apple. I'll take Apple's mo' cause mo' money is betta'.

In the casino industry there is an obsession with head counts. How many players are on the slot machine at any given time. In this industry that metric has one major flaw. Every head is not worth the same amount. If this was Disneyland and everyone payed the same amount to get in, this would be a good metric, but when you count a player that is worth 10's of thousands of dollars the same as someone worth 10's of cents, mo' is not always betta'.

Restaurants are notorious for driving covers by giving food away. The obsession with covers can overcome the obsession with making money. It feels good when there are mo' people eating in the restaurant, but at what cost. In a past life I saw many coupon clippers fill my families restaurant never to return again. The point in sacrificing the margin to bring in customers to eat is that they enjoy the food and service so much, they will come back. If they don't come back, why continue to offer the coupons? It's not about the coupon trip, it is about the subsequent trips to the restaurant because they become loyal. If the coupons don't convert into loyal customers, stop driving covers and fix the issues. Sometimes becoming betta' can make you mo'.

Just a thought.

No Change Fees, No Duh

Southwest Airlines has just started airing commercials talking about how other airlines charge for changing your flights. This comes after a year of pounding home the "Bags Fly Free" messaging. I think this is a brilliant move, but of course this is Southwest.

I used to be a fairly frequent traveler and many times I would have the need to adjust my original flights at the last minute. Fortunately I flew Southwest most of the time, so when I did this it didn't cost me $100 just to make a couple of clicks on the website. There were times I had to fly other airlines and it cost me as much as $150 to change a flight. Luckily for me I wasn't picking up the tab, but if I was I would not be a happy flyer. So again Southwest is hitting home with a problem in many of our industries.

Ask a customer what they hate the most and at or near the top would be nickeling and dimeing. This flies in the face of the ultimate goal of business, building a loyal customer base. Why when I stay in a hotel do I have to pay a resort fee for things I either do not use or should be free. For instance, the gym, if I did use the gym on my trip, shouldn't that just be included in the price? It's not like the hotel has figured out the cost of the gym and reduced that from the room price. Also, when I am flying, shouldn't my bags have already been calculated in the cost of the ticket?

Customer centric businesses focus on the customer. Customers hate add-on fees that should already be factored into pricing. The last thing I want to worry about when I go on vacation is how much extra am I going to be charged for everything on my trip. Companies like Southwest make the most profit in their industry because they have the most loyal customers. My guess is if Southwest were to start charging fees for all of these things, then they would be in the same place as their competition, going out of business. Remember, always have the customers best interests in mind and loyalty will follow.

CES Thoughts

In reading all the articles and great new products at the Consumer Electronics Show this week in Las Vegas, something struck me as interesting.  These companies have very extensive organizations and huge resources in R&D, yet nothing seems to be truly innovative.  Why is that?

I used to work in a technology company for the gaming industry, technology was even in their name.  Seems a majority of these companies are engineering and sales focused, this particular company sure was.  Now I am not saying that as a slight to engineers, it is just that engineers tend to be, well, engineers.

Engineers build cool stuff.  They believe most people think like them, but the truth is most people don't think like an engineer.  Consumers want technology that is intuitive and they want to be guided through user interfaces and hardware.  Engineers want complex and open.  

The products that I saw at CES were all in response to competition.  It seems like a "we need that too" mentality that puts these companies in a catch-up position.  Why is everyone after Apple?  Why is Apple so successful?

Apple is so successful because they put themselves into the shoes of the consumer.  Steve Jobs is obsessed with UI and customer interactivity.  How ill a consumer use this device, what buttons will they hit, how would a normal everyday Joe think when presented with a particular screen.  Engineers don't do that.  Engineers are obsessed with creating something technologically amazing.  The problem is most of the time it makes it very hard for the consumer to use it.  Apple takes that great thought and says, how can we make this easy for 98% of the people and use cases.  Sure, the 2% think it is terrible, but the 2% doesn't pay the bills.