Get Your Company To Know Your Customer

Before starting graduate school, I worked for an organization* that had an internal communication vehicle called the Buzz, which published several times a week on the company's intranet. The Buzz reported on company projects, new associates, new procedures, etc. Its purpose was to keep associates in the loop on the goings on of the company, and hopefully help them feel more engaged with its growing infrastructure.

Often, buzz stories centered on new client work - the unique demands of the project, the innovative services we were applying, and so on. But as I think about it, we never really got to know the customer. Sure, we would be briefed on the client company, but did we really know the actual people we were working for?

Often, when a consumer interacts with a faceless company, there is an emotional detachment that can lead to behaviors that would be regarded as unacceptable in a face to face encounter. Think about a time you wrote a scathing communication to an underperforming company (I'm guilty of it...this past summer Kia got an 'earful' from me in a very long, very detailed letter). And in a state of absolute frustration, consider how simple it is to harshly criticize a product feature on an organization’s community forum or feedback page.

This concept unfortunately also works in reverse. Have you ever noticed how much easier it is to let a deadline slip by (but it was just a day or so, you tell yourself) when the only interaction you've had with a client is over email? Or, when in a meeting with your coworkers you spoke in a careless or rude manner about a challenging client? After all, the client doesn’t really know what they want, do they? Before you know it, the impact of those detached behaviors could cost you a client relationship.

I think there is a great opportunity with corporate intranets to introduce associates to actual customers, the people they are working for one on one. Through a simple interview, an organization can provide a face to a project or customer - for example, a profile on Mark Smith, his role within his organization, reasons why he chose to work with your company or buy your product. Companies would better position their associates to provide an exceptional experience, namely because they would feel a greater degree of accountability when relating to a person rather than a corporation.

*I used to work for WD Partners, a firm specializing in delivering an exceptional prototype and rollout experience for national retail and restaurant clients.

Communities I Love and Who Are Doing It Right

Here is a random sample of some companies who I think are doing a great job engaging with their customers.

Cluttercontrolfreak.com
This site is Stacks and Stacks' blog devoted to the topic of organization. Admittedly, I'm not really familiar with the parent company (and I'm only a wannabe organization freak). However, what I love about this blog is that it's not a glorified Stacks and Stacks ad, but is a genuine resource for people who are crazy for organization. When I first came across it, almost accidentally, I was impressed that this seemingly modest, not overly impressive (that sounds harsh, but that's what I thought) company decided to connect with this niche market in an engaging way. I like that.

J Crew
I LOVE J Crew. Even if they sometimes make it hard, like when they tried to push plaid pants a couple of years ago. Anyway, they are so together in their marketing efforts. For me, it all starts with a direct e-mail notification (how did they know I'd cave last month and buy a sweater because they gave me free shipping?!). Then it moves on to the personal shopper experience (a new service they are promoting, and I ate it up, even if I did spend [a ton] more than I was going to). Down to the J Crew debossed notecards at their catalogue phone desk, where I can jot down my order number (no talls in the retail stores, unfortunately). I can name a dozen reasons why J Crew excels in the user experience, but I encourage you to check out their website and find out why yourself.

TheBabyWearer.com
I will be the first to admit this site is ugly and not intuitive. But despite the ugliness, thebabywearer.com has an absolutely thriving, cult-like user forum. Women interested in baby wearing spend hours, racking up hundreds, even thousands, of posts, discussing baby carriers and the joys of babywearing. Beyond product reviews and debates over the best carriers, there is an extremely active for sale or trade forum where mama's all over world sell to each other via pay pal accounts. What I love so much about this site is how involved and enthusiastic the members are, and how so much of the content is user generated. There was a very brief period where I was part of the cult, and this site dispelled any ideas I once had that social networking was either for the tech crowd or for kids. Anyone and everyone can find a place online to belong.

We're Still In the Early Stages of Social Media Marketing

I have been spending a lot of time getting familiar with social media concepts, and exploring how companies are using social media as part of their marketing strategies. I've come to the conclusion that while there is a lot of enthusiasm around social media and its potential, companies are still in the early stages of exploration. Though they have been around for years, blogs, RSS feeds and user forums seem to be the primary tools being used in the social media sphere. This is not a bad thing! It takes time to do these things right, as well as for users to start feeling the community love.

But I suspect the reason not to jump too far ahead is because many companies are not sure how to target, communicate, or measure strategies and tactics in other social media areas (some examples include Facebook, Gooruze, Satisfaction). Heck, many companies struggle to figure this out for their corporate websites, intranets, and now blogs, etc.

And while people are increasingly spending more time online, the younger generation is still the primary users of social media tools, encouraging the older generations to follow suit (see this report, by way of emergencemarkeing.com). Many companies with an older customer may find there is less urgency to move marketing dollars to social media campaigns.

Why You Don’t Want a Perfect Customer Satisfaction Score

I was recently introduced to the concept of 91. 91 is the theoretical score out of 100 that a business person would want from a customer satisfaction survey (10 points for 10 questions each). Why only 91? Why would you not want to exceed expectations on every facet of your business? Logically, you want 10 points out of 10 for every question, right?

Wrong, says the president of a major, global, industrial manufacturing company.* This person says the one question you want a 1 out of 10 on is about price. The question “Is our price competitive with your alternative suppliers?” or something of that nature, should garner your company a flunking score.

But if your customer satisfaction survey returns a 91, it means you are exceeding expectations everywhere else, and hopefully, that your customer prefers to use you to your competitors for the value you bring to the table. A score of 91 also means that your company is not leaving money on the table.

According to the McKinsey book, The Price Advantage, a 1% increase in pocket price (the price a company actually receives after all discounts) can result in an 11% increase in profits, which is more improved profitability than any cost reduction strategy, including reducing variable and/or fixed costs. Furthermore, if that 1% is justified, volume should not decrease. The moral of this story: pricing is critical to a profitable business. The right price may not be where your customers want it to be, but they will pay it if your product or service offers a value that exceeds the price tag.

*I heard this person speak in a Pricing class I am taking, and I'm not sure if he'd like his customers to know that he wants to make them cringe over the price!

You Get What You Pay For?

You’ve heard the old adage “you get what you pay for,” but I’m not so sure that is true anymore. With the internet, product pricing is very transparent, highly accessible, and quick and easy to find. You can go to many product websites, review sites, or, if you're so inclined, to a brick and mortar store and get advice, guidance, recommendations on a product. At an physical store you can actually hold and test a product, see the actual size, etc. Then you can go back home, free of stress and sales people and crowds and search around for a bit to find the best price. In a couple minutes, you can have that product paid for and sent to your home. Now to the kitchen for a cookie!

So are you getting what you pay for? This used to mean that if something was a higher price, it was generally assumed to be better. But now, you just might have found a great deal. Maybe there is a site that had overstock of a product. Maybe a store is having a random Tuesday sale. Maybe you found your product selling at a discount rate for one day only on woot.com. Maybe you found it on ebay. Maybe, you emailed a variety of retailers what you were willing to pay for a product, and the one that got back to you first with an acceptance for that price got your business (I did that for my Kia minivan…a new 2006 cost our family less than a used 2005! Not that I like Kia, as I’ve come to find out, but that’s a different story).

This evolving pattern of consumer behavior has changed the way I view products. It used to be that I felt somewhat superior having a product that cost more than a competing product. With the proliferation of “retailers” carrying identical items, I have a harder time using product price to estimate value. The more personal, interactive, participatory behaviors of web 2.0 are shaping how we define worth, forcing companies to communicate brand in a proliferation of context driven ways. (Brian Oberkirch describes this as edgework, a fascinating concept which I am still trying wrap my head around.)

Banner Advertising on Social Networking Sites

After insulting the VP of a major banking firm, I decided to email her an unsolicited idea for her internet marketing strategy. Perfect timing, right?

Anyway, I had listened to this VP describe a campaign for a newly launched banking product, and felt there were better ways to utilize the banner advertising they had developed. Thus far, they had pretty poor click-thru on their banner ads, using them primarily on bankrate.com. Why the poor response? I don’t think it is because of the banner design, which I felt was pretty compelling and interesting. I think the ads were ineffective because internet users are becoming increasingly blind to on-line advertising.

Since I am fascinated by social media and how it is affecting consumer behavior, I think there are ways that companies can compromise between traditional methods of marketing and opportunities opening up in the web 2.0 environment. In the case of these banner ads, I thought that compromise could be between incentives (aka bribery) and referrals on social networking pages.

Here is the scenario:

New Banking Product is geared toward young, affluent, internet savvy consumers. It’s likely that they network with other young, affluent, internet savvy consumers. So, once this customer is approved via the product website (which is the only way it is available), the customer is thanked, then offered the opportunity to be entered into a drawing for a very cool tech gadget in exchange for posting a banner for the product on their Facebook/MySpace/blog, etc. They only had to post it for a short period (3 days, or so). The banner could even be modified to say something like “Check this out…I did.”

The banner is now in front of the demographic the bank is looking for, and is vouched for by the original customer. The banner becomes much more relevant, the bank is given the opportunity to strengthen the relationship with the customer, and the customer becomes a voice for the bank.

Obviously there are caveats. I have not discussed or even explored the technological requirements involved, the methods of ensuring compliance with X days posted on the site, or the advertising restrictions on networking sites in general. Also, it is obviously crucial to run this type of strategy through the company’s brand filter to ensure it makes sense with their business objectives and relationship strategies.

Still, I think it’s an interesting tactic. Social media is increasingly about participation between consumers and businesses, about conversations and experiences, and about indirect methods that grow (or aim to develop) positive brand attributes. This tactic is far from that personal dynamic, but I think it’s on the path.

So, how did this VP reply?

"We know we need to get into that space, but we're treading lightly, for not only budget reasons but we're a bank and there is fear in the hearts of our legal and compliance people!! Web 2.0 is all about getting other people to talk about you rather than us talking about us so we need to get there!"

Is Radiohead's Pricing Experiment a Sign of Things To Come?

By now, the Radiohead set-your-own-price-for-their-CD event is old news in the blogging world. 1.2 downloads in the first week at roughly $8 a pop. I'm not even a Radiohead fan, but I am intrigued by their unorthodox pricing experiment, and what it means to the future of transaction pricing.

Presumably, Radiohead wanted to tap into the emerging social networking phenomena. Their fans are likely an Internet savvy, texting-obsessed, MySpace lovin' group. It just so happens that this demographic is comfortable "sharing" digital versions of music with each other, or would maybe pay only for a song or two. Radiohead (and their label*) likely hopes to find extra album sales from these folks who would otherwise not have shelled out for the entire compilation. Their willingness to enter into this type of transaction is a proclamation that they respect and trust their fan base. As a financial consideration, it is evidence they are confident in their brand equity and reputation.

This pricing strategy is especially uncommon because it has to do with intellectual property. Simple economics dictates that if an owner of intellectual property is not compensated for their contributions, there is lack of incentive for future innovation (aside from artists, think pharmaceuticals).

However, as an adoption strategy, the logic behind this type of pricing isn't new. For example, weight management (and social networking) website thedailyplate.com (TDP) is a community of over 100,000 people using TDP's free on-line food tracking software to track their caloric intake. Users have the option of paying a fee for some lite-weight bonus features. And devoted TDP users do, despite the fact that the bonus features are little more than the addition of some cute graphics and priority for service requests. But their is no requirement, no hassling, no annoying emails, no pressure whatsoever to contribute. Those that contribute have determined there is value in TDP, and want to see it succeed.

Many websites offer free services, and (like thedailyplate.com) get much of their revenues from advertising. But with online ads having questionable relevance and low click-thru rates, they may have to modify their business model to stay profitable. Has Radiohead shown us that if there is trust and respect between business and consumer, the goodwill will work both ways?

This is a level of participation and collaboration that is relatively rare. Web 2.0 principles are ushering in new behaviors between business and consumer. Beyond marketing and communication, traditional pricing for products and services may be challenged by this participation-driven phenomena. As an afterthought, I'm struck by the similarity between Radiohead's fans determining their album's value, and tipping a waiter or waitress for their service. Could the the future of payment be determined on value after the fact?

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*Ammendement: According to The Week (11/9/2007) Radiohead released their album online with this pricing experiment without any help or guidance from their label. In fact, Radiohead frontman, Thom Yorke, says "...you have to ask yourself why anyone needs [a record label] anymore." The music industry's decaying business model is leading artists to explore new ways to distribute their work.