Two problems with frequent buyer programs

Gecko Jones 124Have you been asked to consider implementing a frequent buyer program in your company? Be aware of these points:

  1. Your regular customers are the most likely to sign up, so benefits you offer will cost you money without giving you a return on your investment.
  2. Most B2B purchases (except for supplies) don’t happen often enough to motivate non-customers to sign up and help make your program pay off for you.

Unlike Seinfeld’s Elaine Benes, customers are not going to buy products they don’t like just so they get a bad product for free.

Airlines are an exception, as they surely maintain loyalty when a flyer is halfway toward a major benefit. However, airlines are raising the requirements to qualify for benefits and reducing what they offer. Whether it’s on purpose or through mismanagement, their programs are weakening.

I’ve written before about keeping an open mind when you revisit previous things your company has done that may not have worked. However, it was a no-brainer to ignore resurrecting a frequent buyer program that one CEO asked me, as his new head of marketing, to do. It hadn’t worked before and wasn’t going to work then.

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    How your products and services must evolve

    Gecko Jones 123It isn’t only new products and services that are needed to breathe life into your company and extend the upside of the business. Existing ones need to be enhanced. Let’s look at two real world examples:

    Case One – Product – Online Storage

    We’re not talking about online backup, where data folders are automatically backed up in case a server or workstation fails. We’re talking about the many online storage providers who want you to consider their cloud-based repositories to be active, external hard drives for your computer.

    Originally, these vendors let individuals (often consumers who didn’t want to buy and learn to install new physical devices on their PCs) store and archive files for which there was inadequate space on the user’s device.

    Then, there was the ability to share files with friends, relatives or co-workers. Access was assigned by the original file owner.

    Suddenly, security became a major issue. There was intellectual property to protect, as well as industry secrets. HIPAA guidelines for medical records and others (like financial institutions) who had to ensure their customers could trust that personal information was safe.

    Today, there are significant next enhancements that are “needed” by customers and will soon become “must offer” features from vendors. (We’ll see which vendors figure this out first.)

    Case Two – Service – Streaming Music

    Initially, the Internet began delivering streaming music by having radio stations post “Listen Now” links on their websites. Before long, non-traditional stations (with no ground antennas serving local markets) appeared.

    The market place advanced (iHeart, Pandora, Groove Shark, etc.) to sites/services offering songs by genre (jazz, classic rock, gospel, etc.). Along the way, these streams were delivered not only by HTML browser, but also by smartphone/tablet apps.

    Even these services are losing their appeal to repeat users. I personally like the tweet from one customer who asked “What do I do once I’ve listened 10 times to songs I remembered liking years ago?”

    Current services have expanded their options for that type of listener, playing songs that are from artists whose music is similar to other performers whose recordings you previously preferred.

    Now, we have companies, such as Spotify, who can help set moods for you with channels like “Summer Party”, “Workout” and “Your Favorite Coffee House” (my personal favorite).

    Bottom Line

    Never assume your product or service is maxed out, or that current market niche leaders can’t be defeated with innovative thinking.

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      Do you think you can put marketing on auto-pilot?

      Gecko Jones 122A company’s sales executive explained it this way:

      “The CEO decided our ever-increasing lead generation success was essentially a new plateau that he could personally take over, manage and build upon. He would get to do what he considered to be fun stuff, while saving a salary.”

      “Sadly, leads dropped the very first month and it was clear to our sales team this was no coincidence. When he asked me weeks later how he could help us meet our revenue goals, I told him he should get our lead level back to where it was. Instead, he stopped doing the things he obviously wasn’t good at, reducing leads further.”

      Marketing does not operate in a static world. Far from it. Just maintaining performance levels requires constant adjustments and brand new initiatives. Raising the bar demands an order of magnitude of fresh achievement. Here are some of the reasons why this is true:

      1. You need to expand your audience
      2. Your competitors take new approaches
      3. Stale campaigns will turn off your ongoing audience
      4. Media & events come and go
      5. Marketing platforms you use can change the rules or options you have available
      6. Creativity requires new thinking, not me-too advertising
      7. Skill sets of your team fluctuate, giving you more and different techniques to apply

      You’ve likely heard this famous quote: “Business is like riding a bicycle. If you don’t keep moving forward, you will fall off.”

      The same goes for marketing. Without constant adjustments, changes, adds, deletes and powerful new creative ideas, your lead generation and sales close rates won’t even stay level…they will drop.

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        The most important marketing measurement of all

        Gecko Jones 121There are a number of vital measurements marketing teams must constantly monitor, including:

        • Website visitors
        • Unique visitors
        • Website conversion rate
        • Lead count
        • Qualified leads
        • ROI on each activity (trade shows, webinars, seminars, user group meetings, PPC ads, banner ads, print ads, direct mail, etc.)
        • Performance against budget
        • Sales conversion rates

        Nevertheless, when I sit down with a new team or recent hire, I make it clear that the most important number of all is…(drum roll please)….total sales revenue.

        “Wait”, you say. “That’s the same number the VP Sales is measured by.” Absolutely.

        “How can that be?” you ask. “Doesn’t Sales often say they aren’t getting enough leads, while Marketing suggests the reps aren’t doing an adequate job of closing business?” That does happen a lot. Here’s the catch: Marketing also has a responsibility to help reps close deals.

        Business is a team sport. Except for unethical conduct, nothing disappoints me more than seeing departments act as competitors. Sometimes that culture permeates from the top – we’ve all seen CEOs who foster in-fighting that paralyzes their own company. Usually, teamwork exists (or doesn’t) based on the instructions and leadership shown by department heads (VPs or Director level).

        How can Marketing help Sales turn a larger percentage of prospects into customers?

        • It could be the quality of leads, or the timing of when a prospect is released by Marketing and handed over to Sales.
        • It’s how prepared the reps are to understand each prospect’s motivation for contacting the company, and the materials (scripts, presentations, collateral, etc.) Marketing has provided for reps’ use.
        • Equally, it’s a function of how well Marketing has helped differentiate the company from other vendors, and the strength of the value proposition they’ve transferred to Sales personnel.
        • It’s the “goodness of fit” of the product/service (often, Product Management is part of Marketing).
        • It’s affected by price points and structure.
        • It’s dependent on ease of ordering.
        • Ultimately, Customer Service has to step up to lock in those sales, keeping customers from finding avoidable reasons to return their purchase.

        The result of all of this work is revenue. It’s the life blood of a business. All other Marketing statistics are internal tools to help them contribute to top line performance. If revenue isn’t the primary mantra of your Marketing department, you have a problem that needs fixing, quickly.

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          Why you should never have long lists of new product features

          Gecko Jones 120Case One

          Dick Bank was responsible for all hardware development for ICL’s US-based Office Systems Group. He was supportive of our dual approach to expanding server disk storage capacity – integrating larger drives while simultaneously designing an expansion cabinet that could attach to the primary system.

          I was leading Marketing & Product Management and was responsible for identifying new feature requirements. Part of the process was forecasting sales of each as part of justifying the development work. Our sub-system tracking was very precise, so there would be no hiding whether demand had been over-stated or not.

          You couldn’t ask for a more personable and professional team than Dick’s. It was, therefore, somewhat funny when one of his managers came to the final specifications meeting with a one-of-a-kind sheet for me to sign. It simply stated that there would be no need to develop a “two expansion cabinet” option. One expansion cabinet would suffice.

          I’ve signed off on many design specs, but never a page stating what we didn’t need to do. As I looked up at the document’s author, he said “Only doing one will greatly save time and certification costs, so I’m excited about your plan. However, I don’t want to be in front of a room in six months, having to explain why I didn’t do a second cabinet if one gets ordered. No one has ever agreed to this type of sign-off, but I can’t take the uncertainty anymore.”

          If you’ve worked at all in new product planning, you surely sympathize with his perspective. And, yes, I signed the extra page. Someone, sometime, might want a second expansion cabinet. That account would have to live without it. It would not be worth delaying release (plus incurring extra testing and certification costs) for a small percentage play. Besides, my Product Management team generated all ordering SKUs, so I could ensure that option would not be offered.

          Case Two

          In another company, the CEO insisted on including a major add-on feature set with the items already planned for the next software update. The original enhancements were sufficient to excite customers, but he insisted his very large add-on would take the industry by storm.

          The features in the add-on were already available in the market, separate from all of our competitors’ core products. It was inexpensive, reliable, and those who needed it had it. Ours would require customers to retrain themselves or colleagues on a new product. We would be solving a problem that no one had.

          Worse yet, implementing the extra capability required a third party’s involvement (the technology was not within our programmers’ areas of expertise) and the integration took months longer than expected.

          When the new version was finally released:

          • The time between the new version and our previous one was well beyond our norm.
          • Few customers were interested in trying the add-on.
          • The add-on did not work well, causing a ton of frustration among those who tried it.

          Bottom Line

          Need I say more? Oh…by the way, no ICL customer ever pressed us for more than one expansion cabinet.

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