How to become a customer-centric business

25 Aug 08 - Mark Klein

I was meeting with a new client recently who asked me what would be the effects on their business from adopting a mathematical marketing approach. I quickly responded with the obvious answers that came from my experience with many other companies, namely that they would see higher response rates and more revenue from their marketing campaigns. This was a results-oriented answer supported by multiple campaigns conducted by many different types of businesses.

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Loyalty Marketing and the Stockholm syndrome

04 Aug 08 - Mark Klein

Some of my friends have helped me to a better understanding of the difference between loyalty and satisfaction.

They live in a mid-sized city in the mid-West. For a long time their city has been primarily served by Northwest Airlines, so they are frequent fliers on that airline. By many measures they are loyal customers of Northwest.

But when you talk with them you quickly learn that they are more trapped than loyal. They don’t have alternatives, and   to them the airline is “Northworst". Loyalty may be high, but satisfaction is not. If there was another carrier, my friends would switch in the blink of an eye.

I’m sure you know instances of customer loyalty being more  the lack of alternative vendors than of a favorable opinion. So how do you think  a company  should operate when many  customers who appear to be loyal are really trapped?

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The fallacy behind "break-even point" strategy

23 Jul 08 - Mark Klein

We believe that there is a big fallacy buried in the strategy of companies that use direct mail.
Most direct mailers, especially catalogers, have a ‘house list’ of customers to whom they mail. This list is scored by one methodology or another, for example recency or RFM (Recency, Frequency, and Monetary value). These companies usually talk about “mailing down” the list to some point called the “break-even point”. By this they mean they have ordered their scored list with their best customers at the top and their worst customers at the bottom, and have identified a point on the list below which it is unprofitable to mail. “Unprofitable” typically means that the mailing cost to reach these lower ranking customers exceeds the gross margin dollars that the mailing generates.

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Are your marketing ratios out of whack?

26 Jun 08 - Mark Klein

In the past month I’ve been to two trade shows for direct marketers, ACCM in Orlando and DM Days in New York. I walked the aisles of the exhibit halls at these shows and was continually struck by how many of the exhibitors were on the customer acquisition side of the street. But the exhibitors were only following the money; they were selling what their customers wanted to buy. And it seems to me that companies spend much more on customer acquisition than on marketing to existing customers.

I think a good marketing program flows like a good golf swing. One measure of a golf swing is how well a golfer is able to maintain balance throughout the swing. Does he or she start in balance, stay in balance during the swing, and finish still in balance? Or is there a lot of lunging this way and that, and a result to match? Good marketing requires a balance between where your revenue comes from and where you spend your marketing dollars.
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What's up with your customers?

04 Jun 08 - Arthur Einstein

ATT Wireless has been airing a TV commercial that’s simply joyous. It’s a bunch of happy mobile customers doing their thing –strolling along, walking the dog, calling friends and saying ‘Hi’, ‘Howdy’ Whatcha doin’? ‘What’s up?’

I think of it as a Web 2.0, ‘next generation’ spot. Totally social. And ATT’s message is unmistakable: “staying in touch is good for relationships and you don’t need to log on to Facebook to do it, friend – just use that wonderful little gadget in you pocket and stay wired to your friends”.

As a customer relationship wonk I’ve been thinking about this campaign and wondering why more companies don’t apply this kind of thinking to their business relationships. Instead, when customers hear from their suppliers they expect a sales pitch – and that’s what they get. Accountability has become king, and the king says maximize the revenue of every marketing dollar. And do it now!

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