Where online sale of lip gloss and B2B software customer retention converge

March 25, 2013

Sometimes marketing inspiration and confirmation of instincts comes from places you wouldn’t normally look. This recent blog post on getelastic.com is case in point: http://www.getelastic.com/the-easiest-way-to-increase-conversion-by-20/. On the face of it, this post would seem to be quite far afield from the world of customer retention in B2B software, or any of the other B2B industries in which EMI works for that matter. And indeed there isn’t much that links lip gloss and software; but there is a link in the approach to solving marketing challenges.

The getelastic blog post starts off with a research-based data point: ecommerce customers are 20% more likely to purchase a product that has at least one customer review. Then, based on that data point, it presents several reasonable ways to obtain that key *first* review. The ways to do this are only important if you’re interested in driving web purchases. What’s important outside that context – and especially in a B2B context like CSM strategy for SaaS – is the way in which marketing research and analytics have identified an operational measure which becomes the strategic focus. Increasing web sales is obviously the business goal, but it’s so broad and influenced by so many factors that it’s unwieldy as an operational focus. By isolating one key factor that has a significant impact on the objective, exploration and testing of tactical options becomes significantly easier. In mathematical terms, you solve for “reviews” because you know that it will drive conversions.

Take this approach out of the world of online sales of lip gloss and into the world of B2B software customer retention and it is still just as effective. Retention is impacted by a multitude of factors –satisfaction, perceived value, switching costs, depth and breadth of utilization – each of which can be affected by a set of strategies and tactics. To optimize retention, you must first sift through all the potential factors to identify those that actually have the greatest impact. Once you have effectively ranked the factors based on their likely impact, then you can develop retention marketing strategies – new communications approaches, new messaging, testing – that specifically and precisely aim to drive improvement in that factor.

10 marketing tips to optimize credit cardholder lifetime value

September 13, 2012

U.S. credit card issuers are struggling to generate revenue growth, which has been hit by both the decline in outstandings and the impact of the CARD Act and Durbin Amendment on noninterest income. At the same time, issuers are reluctant to invest in aggressive new cardholder acquisition campaigns, as they want to avoid the free-for-all that occurred in the mid 2000’s which led directly to the spike in charge-offs when the financial crisis hit in 2008. As a result, issuers are increasing their focus on optimizing relationships with existing cardholders.

The following are 10 tips for credit card issuers to get the most from relationships with existing credit cardholders:

Build a comprehensive communications strategy: Identify all opportunities for the cardholder to engage with the issuer, and build integrated communications and offers around these “moments of truth.” These include:

Predictable events (such as monthly statements or card expiration dates)
Cardholder use of issuer channels (such as visits to bank branches or use of the issuers’s website and/social media platforms)
Key life events (such as an upcoming marriage or a child about to go to college)

Create an onboarding program: The first 90 days is crucial to the credit card relationships, so issuers should establish a set series of communications during this period to welcome the new cardholder, highlight key card benefits and handle any problems the cardholder may have.
Provide targeted activation incentives: Rather than offer a bonus following the cardholder’s first purchase, require rewards cardholders to meet a minimum spend threshold within a certain period in order to build habitual use.
Recognize anniversaries: Some issuers offer anniversary bonuses, but there should also be a plan in place to communicate with cardholders in advance of the anniversaries. The communications should center on:

Thanking the cardholder for their business
Highlighting card benefits
Making special offers (usage, cross-sell and upsell)
Providing a forum for cardholders to surface issues

Reward relationships: Incentivize and reward multiple product ownership by cardholders with points, special offers and discounts, preferred pricing, and priority customer service.
Analyze data: Issuers are belatedly recognizing the value in analyzing cardholder spending patterns. The intelligence gleaned from this analysis in turn informs decisioning on both offer and messaging development.
Develop multi-channel customer service functionality: Issuers should reflect cardholders’ diverse channel usage patterns in providing customer service.

Social media: create a dedicated Twitter card handle(s) and/or incorporate card service into the bank-wide customer service Twitter handle (it is also notable that some leading banks now have dedicated social media customer service reps).
Issuer website: create FAQs, online forms, and click-to-chat functionality
Phone: differentiate live customer service for different customer segments

Survey cardholders: Rather than waiting for cardholders to provide feedback on needs/concerns and then reacting, anticipate upcoming trends in these areas by conducting regular customer surveys, and then applying the learnings from these surveys into marketing strategies and programs.
Provide financial management resources: Issuers should publish information and develop resources to enable cardholder to better track and control their spending patterns. This also has the effect of positioning the issuers as a financial partner.
Establish a winback program: An effective winback campaign should focus time and resources on cardholders who are worth winning back, and should involve a combination of direct mail/email and outbound calling. The call center agents or branch staff tasked with making the winback calls should also be trained on how to identify the reasons the cardholder left, and receive systems support on the most appropriate winback offer to make.

What an Overnight Camp Can Teach Us about Managing the Customer Experience

July 18, 2012

Note: Since this involves a personal anecdote, I deviate from normal EMI blog practice and include my name at the bottom of this post. What follows is a cautionary tale about how an organization can destroy customer satisfaction and ultimately threaten revenue by not adhering to these simple rules:

View your CRM approach and communications through the lens of the customer.
Understand that satisfaction = reality – expectations: if you set expectations properly through communications, then satisfaction will benefit.

This summer, for the first time, my 11-year-old daughter decided that she really wanted to go with a friend to overnight camp. The camp we selected was one that the friend—and my wife—had attended in the past and enjoyed a great deal. For anyone familiar with overnight camps these days, it will not come as surprise to learn that the cost for a month of camp was not insignificant. My wife and I wanted our daughter to be able to have the experience, though, so decided to sign her up.

About a month before camp was to start, we received a communication that detailed all of the clothes that our daughter would need during her stay. All of a sudden, we were now on the hook for several hundred dollars more, but we appreciated the level of organization that enabled us to ensure that our daughter had what she needed.

But things took a turn for the worse, as detailed below:

We were informed that in addition to the clothes on the list, we would also HAVE TO purchase several shirts and pants from the camp. No option to opt-out, no mention of that when we signed her up.
Then, immediately after dropping her off, we were told that in order to communicate with her we had to sign up for an emailing service for which, yes, there was a fee.
Now, with the end of camp approaching, we have received another communication: on the day we pick up our daughter we must—before we actually get to see her—settle up her “Canteen tab”, which comprises items (e.g., batteries, candy, soft drinks) she “purchased” from the little on-site store as well as the costs associated with day trips (e.g., to a nearby amusement park) planned by the camp.

All these additional costs took us by surprise. Maybe they were buried somewhere in the material provided about the camp, but they certainly weren’t prominently displayed. Moreover, we had no control over the expenditures. I’m confident that opting-out of the amusement park trip was not an option, nor would I have wanted to deprive my daughter of the experience, but since the camp knew it was going to charge me for these things, why didn’t it clearly tell me upfront…or better yet, why not build the charges into the cost of the camp?

And that brings me to what this whole experience should teach us about the importance of thinking strategically about the relationship between poor customer experience and lifetime value. My daughter might come back from camp having had so much fun that alternatives will not be an option next summer, and the camp will retain us as customers. However, the camp’s poorly considered pricing and communication decisions mean that even if my daughter loves it, I don’t. The next time another parent asks me how it was, my answer will be “Well, my daughter thought it was great, but it aggravated me like crazy….”

That’s called negative word-of-mouth and it should be a cause of concern for any business—but especially ones like this camp that relies on referrals for most of its marketing. Now, not only am I on the fence about sending my daughter, but I’m sure the parents I talk to will have second thoughts about sending their children. Avoiding this problem wouldn’t have involved any loss of profit for the camp; all it needed to do was follow the rules laid out at the top of this post.

Anthony Nygren