The Case for Customer Lifetime Value…


Just when things were going great…

Not long ago, I praised a certain  Big Satellite Company  for the outstanding customer experience I had when moving across town (despite some other shortcomings – full article here).  This past month, with a single billing related event, Big Satellite Company almost destroyed our relationship forever.  Let me tell you a story.

Thirteen years ago

As cable TV was riding high and the internet was still a baby, I placed a bet on who I wanted to deliver television content to my home.  Primarily due to the exclusive availability of a certain sports programming package, my bet was placed on (what is now) Big Satellite Company.  For over a decade, through four moves in two states, my chosen television delivery partner provided a fantastic experience in all facets of our relationship, to include my most recent move (full article here).

This year, as a result of some uncertainty with the professional sports league featured in the programming package, Big Satellite Company made a wise move (in my opinion) by not automatically renewing customer subscriptions for this package until the leagues disputes were settled.  However, once resolved, subscribers like myself were forced to contact Big Satellite Company and re-subscribe to the package.  This was not the end of the world assuming I was able to simply renew the subscription, at the previously established renewal rate.

Herein lies the rub

As I prepared to renew the programming package, the pricing I was offered via the website was approximately $85.00 more than what I had paid for previous seasons.  I contacted the customer service center via telephone and was offered a statement credit of $5.00 per month for the next 12 months.  That still left us $25.00 apart from what I felt was fair.  As I was on the telephone, I looked into my account billing history, and proceeded to inform the service agent that as a 13-year subscriber, my customer lifetime value to date exceeded $23,000 and I asked her if she was prepared to let me walk over $25.00?  She responded with a counter offer of additional free services and content, and ultimately got us to where we were only $5.00 apart.  I asked again, are you ready to let me walk over $5.00?  She was.  At this point, I decided to perform an experiment by NOT asking for a supervisor and simply saying “no thank you”.

Everyone who heard this story said “you should have asked for a supervisor, you would have gotten what you wanted” – to this I say, the companies to which we send our hard-earned money in exchange for services, need to have more respect for their customers. The protocol for solving a customer problem should never end with the customer leaving.  I argue that the customer service agent should have proactively escalated me to a supervisor with more authority as opposed to letting me walk.  Most consumer technology services companies (i.e. phone, TV, internet) seem to be in a customer acquisition arms race, as opposed to focusing on serving the customers they already have.

So how does the story end?

Last week, approximately 3 weeks after the incident described above, I was contacted by a “manager” from Big Satellite Company who proceeded to offer me the desired programming package renewal, discounted beyond what I paid in the previous years, plus the additional services and content from the previous negotiation.  Apparently he is one guy who knows it is cheaper to keep a customer than acquire a new one – it’s a shame it took 3 weeks to escalate through the CRM system.  This could have easily been avoided if Big Satellite Company had a robust customer segmentation system and armed the customer service agents with a well thought out “next best offer” strategy for retention of key accounts – maybe even immediately pushing my call to a more senior or experienced agent given my tenure and status.

Have you had a similar experience?  Or is your company losing customers faster than you can acquire them?

Tell me about it.

Did you know that I have now posted more than 30 articles on this blog?  If you read and enjoy the content, please don’t be afraid to Comment, Share, Like, Tweet, +1, or whatever you do.  I would greatly appreciate the feedback.

If the World is Flat, why do you need a Sherpa?


Flat Earth Sherpa

By now, I am sure you all have read The World Is Flat: A Brief History of the Twenty-First Century by Thomas Friedman?  If you haven’t read this book yet, I highly recommend you read it right away – it will change the way you think about the future that is already here.  With that said, the basic premise that I took away from the book in a single sentence is that technology has essentially “flattened” the  Earth by enabling real-time collaboration on a global basis. The concept of a small manufacturer in India, sourcing raw materials in China, perhaps on Alibaba, with funding via micro loan from the UK, and selling finished goods on eBay to an American consumer is now a reality.

This is where the irony enters.

This new flat Earth has been a tremendous enabler for small and medium-sized businesses, but has muddied the waters for much larger companies.  I spend a great deal of my time consulting with some of the world’s largest and most recognizable consumer brands, and for the most part these companies recognize and are actively trying to exploit this new flat Earth, but frankly they have no idea how to choose the best countries for expansion, how to maximize growth for those countries they are already in, and in either case, how to navigate the myriad of technology, data, cultural, legal and consumer privacy challenges.

Hence, the need for a Sherpa (hint: ME).

If your company or if you have a client that is facing these types of Global Expansion challenges in this new flat earth, please let me know – I can lead the way.

It has been a while since I have posted an article, and I certainly have no shortage of topics to write about; the fact remains that  I simply do not have enough time in the day.  And to add insult to injury, my travel schedule and client load keeps me flush with article ideas, but  no time to write about them.  I actually did some of the final editing for this post on my new iPhone 4 (more on that in future articles) while my son drank his milk and watched Little Einsteins from my lap!

Anyway, thanks for stopping by and keep your eyes open for a few rapid-fire posts over the next week or so – having not written in a while, they will be based on my travels and observations over the last couple of months.  Don’t forget to leave your comments and provide feedback.

Thank you for reading and Happy Hunting!

5 Ways to Boost Business


In 1975, Paul Simon had a hit with “50 Ways to Leave Your Lover”.  As a kid I obviously did not know what it was about or even what the name of the song was, but I would gleefully belt out the catchy chorus, rhyming about Jack, Stan, Roy, Gus, and Lee (special prize to the first reader to tell me the other half of the rhymes!).

The song really only highlighted 5 of the ways to leave, so I thought I would take some poetic license and offer you my “5 Ways to Boost Business”.

1.       Understand Your Audience

Steven Covey, author of “7 Habits of Highly Effective People”, begins his Habit #5 with “Seek First to Understand”.  I personally rank this much higher, but nonetheless we should all agree that this is a pillar of any successful endeavor.  One of my previous articles detailed some relatively simple ways to better understand your customers.

2.       Reach Them Where They Are

There are a myriad of choices today regarding “where” to try and establish a dialogue with your customers.  Notice I said dialogue, implying a 2 way conversation.  This is possible with newer and growing approaches related to Search, Online Display, Social, and Mobile – including location-based services, and even present in the tried and true of methods using Point of Sale promotions, Direct Mail, and Email.  A major step in creating a customer dialogue is to do it on their terms.  Channel preference is often overlooked yet can be a critical factor in defining the customer’s overall experience and opinion of your products and services, and most importantly their willingness to recommend you to others.  Don’t overlook or disobey your customer’s channel preference – if you don’t know their preference, JUST ASK! 

3.       Make Timely and Relevant Offers

Matching an offer to the target audience can be approached several ways from the complex methods of predictive analytics to the simple like using basic demographic information, geography, Life Stage segmentation, Life Event Triggers, or even triggered actions (or inactions) from your own transactional data.    

4.       Give/Get

In today’s economic climate, it seems that Customer Loyalty is at an all time low, with consumers switching providers or changing brands based on price.  The underlying message is that the product or service is viewed as a commodity because there is no intrinsic value in buying it one place or the other.  All things considered equal, lowest price will win every time unless there is a compelling value in the relationship.  The path to retention (and growth) requires you to reward your customers, or “GIVE”, so that in turn you are rewarded by the customer and “GET” to keep and expand the business. 

5.       Deliver Great Service

Lastly, great service is hard to come by these days.  I am not sure why, but it seems to have been going downhill for some time.  Too many companies are focused on getting new clients in the door and are not providing the “care & feeding” of the clients already on board, and customers leave as fast as Sales can land them.    

I hope you find these tips useful and I look forward to your questions or feedback.  Don’t forget – I have a special prize to the first reader to tell me the other half of the rhymes in the song!

With the sprouting of gray hairs…


With the sprouting of gray hairs comes the realization that life is changing. First it was the reading glasses and now the gray hairs in my beard. This got me thinking about how my life today is different from a year ago not to mention 5, 10, or 15 years ago, and how much it will continue to change in the future. Fast forward through the sentimental and philosophical and you end up with the simple notion that:

“People need stuff and that stuff changes depending on their Lifestage”.

It Doesn’t Take a Genius
Marketers have known this for years and I take no credit for pointing this out. Many have gone to great lengths to create tools and methodologies to capture new clients whose journey through life is punctuated with events that ultimately define their needs (“needs” are very subjective and a whole ‘nother story). Life events include things like getting married, buying a home, having children, getting divorced (for more than 50% of U.S. society), becoming an empty-nester, and finally becoming a senior whose only interest seems to be spoiling the grandchildren and driving with a turn signal on. Let’s just say that my neighbor and I are both buying diapers but for different reasons – talk about cradle to grave, right?

Successfully reaching these consumers and getting them to buy your product or service depends on your ability to deliver a relevant, timely and compelling message in the appropriate and desired channel, which might include direct mail, email, mobile, social, search, or display.

Lifestage + Channel
This is a topic with increasing interest as of late – just this past week I read a MediaPost article that talks specifically about marketing to new parents in the mobile space. Apparently new parents are the group most likely to be responsive to mobile marketing. Some could guess that the lifestyle of those with young children is chaotic and thus making this group more receptive to “marketing on the go” since they are no longer spending a lot of time surfing the web, sifting through their inbox, social network, or even their direct mail as diligently as they did before children. When it comes to proximity or geo-location type of mobile marketing, again, the segment of those with children under 6 was most positive about the idea, as opposed to the “gotta have the new technology young male” as many would assume.

Since mobile marketing is still relatively new and untapped, only later will we later find out if mobile marketing receptiveness is less about the lifestage (having children under 6) and more about the generation of those who presently have children under 6? Only time (and science) will tell.

Image compliments of webcomic XKCD - http://xkcd.com/


Science is Fun!
There’s that word science again. The science behind marketing doesn’t have to be complicated. As a matter of fact, there are many solutions in the marketplace today that let you benefit from the science of others. Examples of this from Acxiom include things like “Life Event Triggers” which enable one to choose a prospect list based specifically on a recent life event like graduation, marriage, or child-birth. If your product or service is specifically relevant to people experiencing these events you can simply “subscribe” to receive lists of prospects in your area that recently “triggered” an event. Combine that with some technology and you can automate direct mail programs to effectively go “door-to-door” for you.

If your product or service does not have a clear tie to a specific life event, this is when you might use a Lifestage Segmentation system to uncover commonality in your current customer base to target new customers. Acxiom has a Lifestage Segmentation solution called PersonicX – if you follow the link you can see an interactive introduction to PersonicX. This solution segments U.S. households into 30 Lifestages that are then assigned to one of 70 Clusters. The Lifestages have cool names like “GenX Parents”, “Boomer Barons” and “Active Elders”, while the Clusters are sub-categories like “Cartoons and Carpools” or “Apple Pie Families”. Each Lifestage and Cluster is defined by a specific set of demographic variables combined with geographic and behavioral factors and represent a modern take on “birds of feather flock together”. Consumers move from one Lifestage/Cluster to another over time.

Using these types of solutions can be a very beneficial and simple way to inject some “science” into your marketing. With a simple list of your current customers you can identify the Lifestage of each with PersonicX, and chances are you will see the old 80/20 rule highlighted in a previous post come to life. There will likely be a concentration of your best customers in only a handful of Lifestages & Clusters. Based on this insight, you would be ahead of the curve if you were to then obtain a list of prospects in your trade area that are in the same Lifestages and Clusters as your best customers.

I look forward to your thoughts and feedback on using Lifestages to improve your targeting and increase response…

“You Put Your Chocolate in My Peanut Butter!”


We’ve all come to love the irresistible combination of chocolate and peanut butter served to us by the folks at Reese’s and can probably name scores of other perfect combinations in nearly any context. Things like cell Phones with cameras and Gin & Tonic; or people like Sonny & Cher or Will & Grace! Not to mention the ever-present “Value Meals” and Price Fixe menus in nearly every segment of dining these days. I guess 1 + 1 does equal 3?

To this end, my blog is aptly named marketing+technology and I wanted to share with you some fine examples of how the combination of sound marketing principles with appropriate technology can yield tremendous results.

I assume you’ve read my recent post about getting reading glasses? Anyway, yesterday I received an automated phone call from the retail eyeglass location where I purchased my glasses. The computer voice on the other end of the line was a very pleasant-sounding young lady, British or Australian I think, who identified herself as calling from the store in question and asked to confirm that I was Mark Donatelli (she even pronounced it right – better than many people!) and if I was willing to answer 2 survey questions about my recent experience. After I pressed 1 (Yes) to continue, I was asked to rate my experience from 0 to 10 (10 being best) and rate my willingness to recommend them to others. After pressing my entries I was then asked to record a short message about why I rated the experience as I did. Done and Done. After this 20 second process I immediately thought “They put chocolate in the peanut butter!”.

By this, I mean that they took the solid marketing and CRM practices of:

1. Follow up with your clients after their purchase.
2. Survey your clients to measure satisfaction.
3. Ask your clients for an endorsement or quote regarding your satisfaction.
4. And as a by-product, they were also able to verify my phone number in their database.

These steps if done by a person would be time-consuming and costly, but with the injection of some technology the process is automated and efficient.

To take this a step further, I imagine that about 11 months from now I will receive a postcard reminding me to stop in and have my annual eye exam. If they were really cookin’, I might get a birthday card with a discount coupon on prescription sunglasses – we’ll have to wait and see on that one. Regardless of industry, these types of automated “campaigns” can have a positive effect on your business by deepening customer loyalty.

From a prospecting standpoint (as opposed to the CRM scenario above), the combination of technology and sound marketing principles can be even more powerful. For example, a national home improvement store might have ongoing, automated direct mail programs for New Homeowners, New Movers, Households expecting a child, or those will children headed to college. Each mail program has a creative design and content relative to the “lifestage” the recipient is experiencing. This allows the store to call attention to specific, relevant products likely needed by the recipient. Without technology to automate the data acquisition and delivery, then merging with creative and print, this would not be possible.

Imagine if Peanut Butter and Chocolate had never met? Tell me about your marketing+technology idea and let’s make it happen!

A trip in the way back machine below – 80’s commercials for Reese’s Peanut Butter Cups.

Vampires, Werewolves, and Targeting Consumers


No, I’m not that obvious. I can hear you thinking now, “Duh – Everyone knows that Vampires and Werewolves have been pursing people (read: target consumers) for centuries!” While true, that is not where I was going. I am referring more to the phenomenonal resurgence of these monster movie legends in pop culture today. Not only is it mainstream in the form of the Twilight saga, but with TrueBlood and scores of similiar shows. This is way bigger than Buffy the Vampire Slayer, Boris Karloff, or Tom Cruise could have ever imagined!

Then this past year, Werewolves were suddenly in the mix. Seemed like a “twist” to me, but for those that follow the ways of these creatures, apparently they often coexist and crosss paths; huh, who’da thunk it? All it took was one of the current reigning Vampire franchises to take the lead and everyone followed. So now you're asking yourself "So what?" and "What does this have to do with marketing and targeting consumers?”. The fact is that all of the movie companies, book publishers, toy manufacturers, you-name-it suppliers of whatever recognized a behavior and interest trend in the marketplace and are now riding the wave made up simply of like minded consumers. Just yesterday I was flipping though my 3 ba-zillion channels (and nothing is on) and ran across that movie from 1991 called “Silver Bullet” with Corey Haim and Gary Busey (it was a much better life for those 2 back then!) – it’s about a wheelchair bound kid who confronts the town Werewolf. Even old “products” get a boost when you have identifed the right audience.

So am I saying you should try to recognize the next cattle herd moment for marketing success? No – I am suggesting that you closely examine the behaviors and characteristics of your current clients. That could mean using Google Analytics on your website to capture browsing habits and click-through patterns. Or as previously discussed, it could mean looking at your clents purchase history and habits with you in terms of RFM (Recency Frequency Monetary) or even by enhancing your customer data with demographics or proprietary lifestage and lifestyle segmentation systems.

I look forward to your comments. If you would like to discuss any of these methods and how they can improve your marketing performance please contact me directly.

The Data Dilemma: Mining, Privacy, and Other Concerns


Xplor Lunch & Learn Series

I will be a panelist on the Xplor.org Lunch & Learn webinar scheduled for August 19th. The topic is “The Data Dilemma: Mining, Privacy, and Other Concerns”

Space is limited, so reserve your Webinar seat now at:
https://www2.gotomeeting.com/register/485313730

We’re all encouraged to make our marketing more relevant, add personalized marketing to transaction documents, and target direct mail more strategically. That requires using data, and that gives some people pause. Especially privacy advocates. What do you really need to know before you jump in the pool?

Our panel will include industry experts and will be hosted by Pat McGrew of Kodak.

Title: The Data Dilemma: Mining, Privacy, and Other Concerns

Date: Thursday, August 19, 2010

Time: 1:00 PM – 2:00 PM EDT

After registering you will receive a confirmation email containing information about joining the Webinar.

System Requirements
PC-based attendees
Required: Windows® 7, Vista, XP, 2003 Server or 2000

Macintosh®-based attendees
Required: Mac OS® X 10.4.11 (Tiger®) or newer

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