Have you ever heard the phrase “true one-to-one marketing?” I always want to know what separates plain old one-to-one marketing from true one-to-one marketing. And better yet, is it worth it? My first decade of work experience was in finance. As great as marketing ideas sound I am always doing the math in my head as to whether or not the proposed solution is worth the investment. At the end of the day each investment needs to have a payoff. Now some results will take longer to realize than others and it is prudent to be patient but sooner or later the money has to come home. So what is one-to-one marketing? One-to-one marketing is a customer engagement strategy emphasizing personalized interactions with customers. But here is where it goes from black and white to mostly 50 shades of grey. There are many different forms of personalization that marketing can... [Read More]
By Tim Young
When making decisions as a business leader, do you ever take time to think from your customers’ point of view? Aren’t you also a customer? Don’t you have similar expectations as your customers? When you’re a customer, how do you like to be treated?
With the growing potential for analytics and Big Data, sometimes we can get caught up in the numbers, and forget to apply our experiences and our intuition to the equation. We can be lead to believe that decisions – like how to price a product, where to add a new retail location and whether to introduce a new product – can only be found though number crunching. We might assume that quantitative analytics can make expert judgment – your judgment – obsolete.
The danger of these assumptions is that they lose sight of that fact that the “end consumer” is a real living breathing person. And people do not always make rationale choices. Emotion plays a big part in the brands that we are loyal to, the decisions that we make and why we make those decisions.
I’m a big believer in...
By Tim Young
One of the trickiest parts of my job is convincing retailers that they should shift some of their mass promotional investment to personal incentives. Instead of having 50-100 deals that everyone can take advantage of, they should reduce the number of mass offers and then give each customer an additional mix of offers that are personalized and highly relevant at a particular point in time.
Many questions come out of these conversations:
What determines relevancy for each customer?
Can you use predictive analytics to tell me what they will buy without an offer?
How do you avoid margin erosion and cannibalization?
Ultimately, after some back and forth and disagreement on philosophical approach, those that are intrigued will ask “What is the ROI?”
If at that point your answer is complicated, you have lost. You need to be able to explain in simple terms how you measure success and are able to prove the ROI is positive.
This is where performance metrics collide with KPIs (key performance indicators).
Performance Metrics
Promotions are...
The retail marketer’s dilemma is very similar to the prisoner’s dilemma, well known in game theory, except instead of only two participants there are numerous participants. The dilemma centers around discounting. There would be more profit to go around if discounting was held in check, but not knowing if your competition will make a move on price forces you to make a difficult decision. If you hold price constant and your competition lowers theirs, you may lose business. If everyone lowers their prices the same, you would most likely get the same business you would have without a price adjustment, and you would all make less profit.
So what to do? Does price matter as much as we think it does?
Many studies have been done on why consumers buy, what they buy, and why they shop where they shop. You may be shocked to find out that price is usually not the main reason. But as retailers continue to emphasize low prices, offer deeper discounts and use promotions more frequently, price becomes a greater focus and therefore a bigger part of the buying...
Do you love your customers? I’m being serious.
Ok, then how about this question? Why are you in business and how are you making money?
Is it because you are smarter than the next gal, work harder than the other guy, and you just have “it?” Or is it because, whether by accident or purposeful calculation, you identified what your customers want or need and figured out how to connect with them?
Without customers, you wouldn’t be in business. So I ask again, do you love your customers?
That was the easy part. Now here is the more difficult step. How do you show your customers that you love them?
Customer loyalty can be fleeting. Many experts will even say you can’t ever really generate customer loyalty because “true” loyalty is emotional, illogical and driven by passion. You are loyal to your family or favorite sports team – you are loyal to people and things that are not easily replaced. But one store can easily be replaced by another. Competition is fierce and value propositions are copied quickly. So how do you carve out an advantage?
I argue...
By Tim Young
Marketers everywhere are being pushed to come up with ways to help drive incremental business for their organization. And with the development of sophisticated tools and software products, marketers can not only track their customer’s behavior but predict what is most likely to happen next. With this information they can create highly targeted incentives and personalized communications.
But what is the best course of action to take?
Well, many marketers are focused on the action that will drive the most incremental sales. So with all that “Big Data” and fancy math, how do you define and then measure incremental?
Here are two answers I’ve heard in the past:
“We were able to get someone to buy something they were not going to buy.”
“We were able to get someone to buy more than their normal quantity of an item.”
My questions would be “how do you know they weren’t going to buy it, and how did you know how much they were going to buy?”
But don’t you work for a predictive analytics company? Yes I do.
And we can make some...
In the early 90s, there was a segment on Saturday Night Live’s Weekend Update featuring Dana Carvey as the Grumpy Old Man who was unhappy about progress. Today, I’m going to tap into my own Grumpy Old Man, and look back at the way things were, back in the day, when things were simpler…
Retailers didn’t have gigabytes and terabytes of data to make everything so complex. Shop owners relied heavily on their instinct to know how to run their business. Those with the better intuition stayed in business while others closed up shop.
That intuition wasn’t just natural born though; it was something that was developed over years of watching a mentor hone their craft and through trial and error. And most of all, retailers listened to their customers. Not all their customers, but their best customers. That was the way it was, and we liked it that way!
They treated all customers fairly, but they learned to identify their best customers and listen to them. Were their best customers just the customers who spent the most? Not necessarily. Were they the customers who...
By Tim Young
Yes, I am a consultant. A consultant focused on helping companies achieve greater loyalty with their customers. And so I have to admit, as much as I love trying to solve the challenge of generating loyalty, I strongly hate – maybe hate is a little too harsh – dislike many of the “loyalty” programs that are out there today.
Maybe they should be called profit programs instead. It seems like the focus is on profit before cultivating loyalty, so why hide behind a name? Then again, the joke would be on them, because loyalty programs that focus on profit usually end up not driving the intended long term results.
Don’t get me wrong, profit is the goal. But it should be the outcome of a good loyalty program not the focus. The key performance indicators should be around customer behaviors. The KPIs then keep your focus on the customer, and when they improve, they point to incremental profit that is sustainable.
So back to what I dislike about “loyalty” programs:
Complexity – If I have to take out my slide rule to understand...
By Tim Young
Anyone who has small children is probably familiar with the book, “If You Give a Mouse a Cookie.” The story goes that the mouse will probably ask for a glass of milk, and it snowballs into the mouse engaging in many activities and never leaving. So, I will ask the same question, what if you give a loyal customer a discount?
A data scientist at a conference recently told his audience, “I would never give a discount to a loyal customer.” After laughing, I wondered if the guy had bothered to read his company’s press release on its reward program.
I am a math geek. I love math. But I also understand how it can lead you astray. It can identify insights that, if turned into strategies, can be disastrous long-term.
First you need to ask yourself this: “Should I treat customers who have propelled my company’s success worse than those I just met?”
If that doesn’t give you pause, then consider this. Your best customers today could become your competition’s best customers tomorrow. While you are busy trying to attract their best...
Loyalty programs have existed for decades. They have taken on many forms and range from simple (stamp cards) to complex (earn points and redeem). Today there are 2.65 billion loyalty program members in the U.S. alone. But even though the average number of loyalty programs per U.S. household has grown to 21.9 (up from 18.4 in 2010), only 9.5 of those memberships – less than half –are currently active.
No matter how loyalty programs take shape, they have one common goal: Increase customer loyalty. Why? Because repeat customers spend 67 percent more than new customers. In fact last week, Starbucks reported 34 percent stronger sales attributed to its loyalty program and expanded food service driving up customer visits.
What separates the successful programs, like Starbucks, from the unsuccessful programs is how they treat their customers in the form of the “customer relationship.”
Most organizations want their customers to be loyal to them and spend scores of resources analyzing how customers relate to their organization. But what many of them...
