Don't Persuade Customers -- Just Change Their Behavior

Most businesses underestimate how hard it is to change people’s behavior.  There is an assumption built into most marketing and advertising campaigns that if a business can just get your attention, give you a crucial piece of information about their brand, tell you about new features, or associate their brand with warm and fuzzy emotions, that they will be able to convince you to buy.

On the basis of this assumption, most marketing departments focus too much on persuasion.  Each interaction with a potential customer is designed to change their beliefs and preferences.  Once the customer is convinced of the superiority of a product, they will naturally make a purchase. And once they’ve made a purchase, then that should lead to repeat purchases in the future.

This all seems quite intuitive until you stop thinking about customers as an abstract mass and start thinking about them as individuals.  In fact, start by thinking about your own behavior.  How easy is it for you to change?

It's very hard to change behavior.  Given to their own devices, individuals will continue to behave a certain way unless nudged in the right direction.  I often refer to this concept as proactive vs reactive marketing.  In proactive marketing, the business is using direct marketing to communicate in an effort to change behavior.  This often takes the form of an offer or incentive to  incite the behavior change.  In reactive marketing, money is spent to gain awareness and then it is left up to the customer to interact with the business by clicking on the ad that has been served up multiple times.  Both of these models are important for the overall marketing strategy, but one is much more cost effective than the other.

First, you have to optimize your goals. 

For marketers, this means focusing on how to get consumers to interact with products rather than just thinking about them.  As an example, our local Sunday newspaper often comes in a bag with a sample product attached that encourages potential consumers to engage with products.

Interaction is the most important part of proactive marketing.  Be sure to measure the results on the behavior you are trying to change.  Remember, the biggest thing to watch when analyzing behavior change is did you change enough behavior to compensate for any increases in offer to entice the change?  Inevitably there are many customers that won't change behavior, but will take you up on your increased offer, so you just reduced margins for the same behavior.   

I try to instill into my team to focus on the individual and try to understand the mindset of our customer.  Are the incentives we are giving going to change their behavior?  Try to ask, "if it were me, would this offer convince me to engage with this communication?"  Always put yourself in the shoes of your customer and focus on their experience to achieve the desired behavior change.

The App Store is in Trouble Without Paid Upgrades

I want to preface this by saying I am not an app developer, however I have watched the app store and Apple for a long time now.  I have also lead very successful digital marketing teams for billion dollar revenue companies, so I know a thing or two about marketing ad driving revenue for products and services.  

Ever since the app store was introduced in 2008 it has been a boon for many developers, but more and more I hear their revenues are down even though the app store as a whole is up.  I hear a lot of complaints about the app store is geared to only help the top grossing apps or the apps Apple wants to help.  All of this is true, it is hard to find the app you want in the app store and their curation definitely has some favoritism happening, but that's business.  These are problems that still need to be solved, but the biggest problem in my eyes is the lack of paid upgrades.

Being a consumer of apps I have enjoyed the lack of paid upgrades, it allows me to reap the benefits from the app for a long time.  However, I paid for Instapaper 6 years ago and I have not paid a dime since, this is not a good model for the app developers.  I am a loyal customer, but I don't need the upgrades that come with the monthly fee, which I think is spending too much for the extras.

Loyal customers are the best source of additional revenue

For any business to thrive, they have to be able to establish a base of business that provides the bulk of the revenue.  This is the loyal customer base that equates to 70-80% of the revenue, but accounts for only 30-50% of the investment in advertising and marketing.  These are the customers that love the products, tell all their friends about the products and buy new products when available.  This is why Apple is crushing their competition because they have a loyal base of customers that buy new products from Apple when available.

For app developers, without a model for paid upgrades, they are forced into a model of perpetually finding new customers or create a subscription type model.  For game developers this is fine, because they can create an experience that is easier and more enjoyable for the gamer when purchasing extra coins to make getting through levels faster.  People are willing to pay for these and that is great.  For the indie app developer making polished apps, this model does not work.  For that reason, they are constantly trying to find another customer who will buy their app for $2.99 and then forget about them.  This is not a sustainable business model.  Eventually there are not enough customers to buy the new app to make a living.  As more people buy the app, the less people there are to buy the app in the pool, so it is inevitable that revenues will not be maintained.

Beautiful apps will become fewer and far between

The Apple app store is filled with a lot of garbage, but it is also filled with amazing apps.  Apps that developers have put their heart and soul into.  Even back in the days of only the Mac, an application on that platform was much nicer than applications on the PC.  This is a trend that continued on iOS and continues to this day.  But that may all change soon.

A developer has to feel confident they will get a return on their investment for the time they put into an app.  There are never certainties in this business, but someone who takes pride in what they build will always take the time needed to make it beautiful, functional and have the best customer experience possible.  If there is not a business model that seems viable, the developer is then forced to create many apps or develop for multiple platforms to succeed.  This limits their time.  Limited time results in less polished, less amazing apps.  This hurts the app store.  This hurts Apples platform.

Paid Upgrades is a superior app business model

Paid upgrades give the app developer the opportunity to continue to work on their app while making money from current loyal customers and new customers alike.  This is a sustainable business model.  It is also a business model that will create and maintain amazing apps.  So many developers have created great apps and made very good money, only to see the app become less and less updated over time leaving the customer with the same experience they had 5 years ago. 

A paid upgrade model will allow developers to build apps that they want in their heart to build, continue to improve that app, while having a revenue stream that supports the added development work.  This will result in apps that have longer shelf lives.  Imagine if this model existed and Marco Arment was still toying with Instapaper because their was a revenue stream that could sustain the business?  Developers like him and many others would continually improve and push the envelope of what their apps can do.  All this would cost the customer $3.99 a year, or every other year, or whenever the developer decided the upgrades to the app warranted an upgrade?  And if the customer didn't want to upgrade, that's fine, they can stay with an older version.   

I would like to see Apple adopt this model.  I know app developers have been begging for years, but I am an app consumer that is now begging.  I don't want amazing, innovative apps to go away.  I want apps where developers spend many hours toying with the customer experience until it is just right.  Where they obsess over every little detail because they know their most loyal customers will remain loyal because of that obsession.  Where they create the next "pull to refresh" because they know there is a better way.  

I don't want to live within a platform where the developers don't improve upon their original design because it is not worth the effort from a revenue perspective.  Please Apple, just for us app consumers.

Social Media Study: E-Mail 40 times more Effective than Facebook and Twitter

So, after all the excitement about Facebook and Twitter as communities and marketing panaceas, a recent study by McKinsey & Company reports something counter-intuitive: good, “old fashioned” e-mails prove to be 40 times more effective than Facebook and Twitter combined.

That is, if your goal is to acquire customers, and not just share the latest family news or travel experience.

I don't really understand why they say this is "counter-intuitive".  I have believed for a long time that social media was not a good channel for businesses.  It costs a lot of money to be in those channels because of the immediacy that customers expect, but more importantly these channels are not targeted whatsoever.  When posting on Twitter or Facebook, everyone gets to see what is being posted.  Whether those are the customers you are trying to target or not.  It is an even worse channel when it comes to current customers.

It’s a lot of work, but the the research sighted Williams-Sonoma which reported a 10% improvement in response rates by personalizing their e-mails, based on the customer’s on-site and catalog shopping preferences.

Another interesting comment.  Of course there is better response when the emails are targeted to customer behavior.  When customers get offers that are tailored to their behavior they spend more, it is just a simple fact.  When email is used as a simple newsletter channel, they will get lost.  Don't over communicate and keep the offers tailored.  Those are the keys to effective email marketing.