·:[ roarweb dot com ]:·
• • • • •

In my last post I wrote about one of the findings from the book “Loyalty Myths”. If the wrong customers can be so costly, how to we then attract the right ones?

Especially, in a world where generic messaging does not work and proper one-to-one marketing is too expensive (in time and resources) for many companies to engage in, what is a marketer to do?

Well, it depends!

For “Costly” customers you need to decide if you can move them to a different group. If you think they are staying “Costly” for a long time, then you would probably be better off not spending much of your resources on them.

• while you might not need to develop content for a true one-to-one campaign, at least you need to have an idea if you are dealing with a profitable customer.
• developing loyal long-term relationships with customers that continue to cost you money is most likely a waste of your time and money. I say most likely, because there are times and business models where the real focus is really long term and thus it might be ok to keep non-profitable customers on the book for a long time. Amazon.com, for example, was not making money for a long time, but they are now able to provide much more than books to a very large cutomer group.

With customer profitability in mind, let’s have a look at the next step in finding the right customer.

Sales and marketing techniques such as AIDA [wiki] can help us focus our process.

AIDA is an acronym used in marketing that describes a common list of events that is very often undergone when a person is selling a product or service:

* A - Attention - to attract the attention of the customer.
* I - Interest - to get the customer interested by demonstrating its features, advantages, and benefits.
* D - Desire - convincing customers of the product’s advantage and its ability to satisfy specific needs.
* A - Action - to push customers toward actually purchasing the product.

As we can see, attracting the Attention and getting the customer Interested is not enough. They also need the Desire to use your products and services to fill their need and then something must create a purchasing Action. (In some AIDA models, Action is replaced by Authority - indicating that A,I and D might all be there, but without Authority to buy, no Action can be taken).

As a marketer you can not guarantee a sale, but you can do your best to enable AIDA. Keep in mind that it’s not always about generating a sale, but also about pushing a potential customer down the funnel. (For more info on the funnel, check out Seth Godin’s post on Understanding The Funnel .

roar at roarweb dot com

Does loyalty create value or a profit?

The bottom line objective of marketing is to provide a “profit” for your organization. This profit may be financial or something else, it depends on your industry and your unique objectives.

How do you generate a “profit” or “get the most for your money”? By making sure you reach and/or keep the right (”profitable”) customer!

In the book Loyalty Myths, the authors shows that not all customers contribute positively to the bottom line:

“It is likely (especially in services) that 60% of a business’s customers could actually be generating negative profits…..”

The book breaks customers into 3 groups: Desirable, Break-Even and Costly.

Do you know how your customers fit into these groups?

roar at roarweb dot com

IIMA, the International Internet Marketing Association just launched a new blog at iima.wordpress.com

The blog, a result of their current e-mail marketing events, replaces their previous discussion forums. Thes forums were disabled due to a high amount of spam posted. The new IIMA blog is still not linked to the IIMA web site, but such a link is expected in the near future - as soon as the new board has organized the responsibities of the newly elected chairs.

Disclosure: I’m the IIMA Treasurer.

roar at roarweb dot com

The IIMA is bringing together some of the leading email marketers in North America for two intensive and interactive email marketing events. If you’re responsible for email campaigns, these are the “must attend” events of 2006.

roar at roarweb dot com

Free Webinar:

The Costs of Failed Customer Service

roar at roarweb dot com

Reaching Customer Service seems to be an issue for many these days. While my Technorati trouble finally is over, I do believe it took far too long before I finally got some help.

Setting the right service level is not an easy task - especially not for a free service. Tris Hussey (and others) have over the last day or two commented on how difficult it is to get any feedback from gMail and Blogger. In the situation Tris describes, the problem is hijacked accounts.

My guess is that most of the “help” e-mails are never read by humans. Words like HELP and EMERGENCY should, in my mind, lead to someone actually taking a look, but I doubt this actually happens. Just as for me in my Technorati case, Tris’ friend is having a hard time to get any replies.

Maybe the way I got my help is the way to go? Thanks to Liz from Successful Blog who pointed me in the right direction. By posting a comment to a blog I finally got the help I needed.

While I do not endorse being off-topic in comments, it might be that leaving a comment in a blog belonging to someone senior in an organization actually can help.

Senior Management support is always important to make things happen. By letting senior management know that their customer service areas are not able to help their customers, we will at least have a possibility of someone looking further into the issue!

Any reader out there that actually have managed to get “real feedback” from Blogger and gMail?

roar at roarweb dot com

If you read my blog on a regular basis you know that I’ve had a problem reclaiming my blog on Technorati.

While I know Technorati is a free service, I’m still very disappointed about the customer experience I have had trying to figure this out. It just seems to be impossible to get an answer from them!

Anyway, maybe there is hope. Thanks to Liz from Successful Blog I’ve found a link to the blog of Janice Myint of Technorati. In one post she describes what you might try to check out when you are in my situation. I have just left her a comment, maybe - just maybe - I will be so lucky that I actually get some help. That would be great!

roar at roarweb dot com

Technorati Tags: customer experience, Successful Blog, Janice Myint, Technorati, roar, roarweb, Technorati Support, Technorati Help, Technorati Tips

I went to a VEF session last month where we were told why Venture Capitalists are looking for the “home-run” in all their investments

If I remember it right :

• Investors into VC funds are looking for a 20% annual return on their money

Since I did not write down the math presented at the VEF I had to look around the net or some help. I found the following info on one site:

For every 10 companies you invest in, expect:

• 1 home run (>10x return)
• 1 decent return
• 6 return your original investment
• 2 complete write-offs

which means that if you have $1,000,000 to invest and you split them in 10 equal pots, you should get back

• 1 home run (>10x return) = $1,000,000
• 1 decent return [lets say 2x] = $200,000
• 6 return your original investment = $600,000
• 2 complete write-offs=$0

for a total return, including principal investment, of $1,800,000.

While 80% return sounds good to most of us we must not forget that it might take 10 years to get to this point. So, even if we really simplify and forget about the NPV of money, and then even forget about the IIR the VC’s like to use (Read about some problems with IRR here), it does not take much to figure out that $1.8M does not give a 20% annual return over 10 years. In fact, if we forget about interest on the annual returns (to keep the language in layman’s terms)then $1M will grow to $1.8M after 4 year at the 20% annual interest required by most VC fund investors. $1.8M after 10 years only give $80,000 annually, simplified to 8% annually.

Let’s get back to the VEF presentation… since you never know which investment is going to be the home run, then ALL investments should have the possibility of reaching 10x to make sure that at least one investment reaches this level.

While 2x on an investment might sound great to many of us, it is thus not enough to make up for the losses and and zero-percent returns a VC fund is likely to see.

So, if you find a VC not to be interested in your HOT 3-4x opportunity, you now know why

roar> at roarweb dot com

I sometimes refer to Paul Kedrosky, a Venture Capitalist (VC) with his own blog at Paul Kedrosky’s Infectious Greed.

In a recent post Paul wrote that he had noticed that not many VC’s blogged.

In a comment, Jeff Clavier says:

“…. it also requires a genuine engagement, and you have to know what you want to get out of blogging before you start.”

Jeff is right, successful blogging requires engagement. It requires engagement in the form of providing interesting content and in the form of providing this content on a regular basis. E-mail newsletters and web site news sections also requires this type of content.

I wrote about similar issues about a year ago:

In planning communications schedules an organization must take their resources into account. Keep in mind it is easier to increase frequency of communications, should you find you have the additional resources, than it is to reduce frequency should your audience have gotten used to getting your updates on a regular basis.

roar at roarweb dot com

I’ve just read an article on InformationWeek.com, where they discussed the results of negative online experiences on shopping habits at brick and mortar stores belonging to the same company. Bottom line was that 33% of those asked said they might actually stop shopping at a brick and mortar store due to a negative online experience.

I had planned to link to the article, but just happened to read their “licence this article” announcement. I’m sorry, but you’ll have to find the article yourself!

While the copyright section, managed by copyright.com, did not specify how I as a blogger should deal with linking, it had some other suggestions on what I could do:

• link from my corporate or academic web site: $2.50
• include a link in an e-mail with a distribuion of one (1): $5.00
• inlcude a link in an e-mail with a distribution of one hundred (100): $25.00

While a publisher must choose on how to make their money, I question the choice they have made. While they could have included a “blogging” option (free?!), they have chosen to try to get money for every little thing. They have chosen to try to get money from me for actually doing them a favour by linking to them.

I believe they have made a mistake! While I support their right to make money on their articles, I believe their current options are too limited. As a blogger, pro or not, I am helping them to get eyeballs to their site and I should not have to pay for that. (I wonder, if I paid for the right to link, should they have to pay me for the advertising exposure to “my guests”?)

The internet was made great by access to information. In a web 2.0 world, where being a part of the discussion is becoming more and more important, companies that choose to limit linking are also choosing to say on “the outside”.

While this migh matter little to the regular reader of InformationWeek, it matters to me. I’ve been a subscriber to some of the TechWeb newsletters for a long time. Now I have to ask myself - if I can’t comment or pass on a link to an article without paying for it - is it worth it for me to continue reading these e-mails?

I guess their research is right, your online experience really impacts how you view the overall brand!

roar at roarweb dot com