Tuesday, January 31, 2012

Loyalty and CKCH: When is it that you really lose a customer?


When do you lose a customer?
When does a customer decide to quit using your services? Does it happen right at the moment your customer picks up the phone to call you and say he doesn’t want your services anymore? Is this the best time for you to start taking actions to keep your customers from saying good-bye and signing up with your competition?

It's a bit funny (or sad, depending on your point of view) to see how much money companies - especially larger ones - invest in recovering customers after they have dropped out. This is what experts call "Customer Recovery Cost" and for me, it seems particularly ill-spent money, not to say that it’s simply thrown away.

If you've tried to unsubscribe from a telephone operator, for instance, you have already had the opportunity to see how, as soon as you say "I want to unsubscribe from your services", one of two things happens:

  • You can be told "Yes, sir, we’d like to let you know from this time on you’re free to go  and fry tomatoes with any of our competitors"
  • Or, suddenly, they begin to soothe your life with an extraordinary array of bids that you can’t do anything but ask yourself "if they can offer this to me now that I want to drop out, why they haven’t done it before?

If they can offer me this now that I want to drop out, why they haven’t done it before?

And here I think we can truly find the "heart" of the matter. Why do you have to wait for your clients to threat you with their unsubscription, to offer them the best of your services? Why don’t you take this actions before, while you still have the customer on your side, allowing them to be very happy with you, love you, and recommend you to their friends, and buy all your products, regardless of the pricing you have?

Do you see now why I think that investing money to get customers coming back to you after they get burned out, is throwing money away? And I’m sorry for having released three questions in a row, but it seems to be even a matter of common sense.

And it happens even in personal relationships. Many divorcing couples begin to get along better after separation. It would be worth asking why this happens, right?

But back to our topic. I think it's time to reconsider some fundamental marketing concepts which will prove to be very important in your business’ development: You can gain your customer’s loyalty while they are your customers, not after they drop out.

Gain your customer’s loyalty while they are your customers.

It's only when you lose a customer, that you have to recover it. But once the client makes the decision to drop out, you have very little left to do.

Look at it from this point of view: When a customer buys your product, he is satisfied with it, with the price, with the presentation, with all the "P's" that we like to mention. But along the way, something goes wrong. Something happens that your client is no longer as happy as he was before. It could have been a single incident, or it may have been more than one, the fact is that your client started to accumulate negative emotions about your product: fatigue, frustration, disappointment, disillusionment, boredom, ... and you can continue the list.

When do you think this is all going to end? Well, we already talked about it. It all ends the day your customer calls you to say he’s not happy and that no longer wants your services.

That's why you have to recover him. Because the guy is already tired of you, the company or your product and decided to drop out and sign up with the competition. That's why your work is more difficult and expensive now, because you have to climb the steep slope created by the bad experience your customer has had with your product.

Dedicate yourself to having happy, satisfied customers.

Instead of calculating the "CRC" (how much it costs you to recover a customer) devote yourself to invest your money and efforts into the "CKCH" - caution, this term is an invention of mine. What does CKCH stand for? It’s really easy to find out and you must have been thinking about it for a while.

The CKCH is the "Cost to Keep Customers Happy." I can assure you it’s a much lower cost than the recovery one and has a very strong argument backing it up: A satisfied customer will generate more sales, will recommend you, will engage with you and your product. An unhappy customer, doesn’t do any of this, and the worse part, he will make sure that others know he did have a bad experience with you.

What do you expect then? Are you still going to go with the "CRC" or you’re moving once and for all to the newest "CKCH"?

Related post: Can your company exist without customers?



Tuesday, January 24, 2012

Corporate reputation and sales reps’ responsibility.


Your company's face to customers.
All companies start out as someone’s idea, perhaps a small group of partners, a family business, a couple, among friends and so on.

And when businesses start out, the company's image, brand, reputation are directly handled by the people who started it.

It’s a strong mark, one that remains, durable, because it comes drenched on the energy that created the business in the first place. 

It might have been your case when you started your business as well: you serviced customers yourself, and did it the way you wanted to, putting your life on it, making every effort to have each client receiving from you, your company and product, the best of memories and, of course, coming back and buying again.

When the company’s footprint begins to fade.

Then your company began to grow. And that’s great! Just what you wanted: maybe open a second office, hire more people, delegating tasks, open new departments. The prize for all your efforts. Your business is growing!

But this growth brings with it a small, invisible component: the difficulty of directly controlling, as you did before, the service that your customers receive. And with that, the reputation of your business begins to be in other people’s hands as well.

That's when the footprint begins to fade, the emotional impact you were able to transmit on the beginning is no longer the same and doesn’t have its original strength.

You have to put a lot of effort and attention to make sure that each member of your team, no matter how small or large it is, thoroughly knows, maintains and implements in his daily chores, your company’s philosophy.

The responsibility of sales reps and how it relates to your company’s reputation.

And I refer specifically to the commercial area because it’s one of the positions that begin to appear in any company as soon as it starts to grow: the "sales representative", the sales guy who walks down the street with your product to show it to new prospects and make your billing grow.

If for a moment you stop to look at the “sales representative” as the face of your company in front of customers, and you value it from that point of view, then you can easily realize the immense influence sales representatives have on your company’s reputation.

Hence the fact that your business philosophy, mission, vision, and all the concepts and values ​​that you want your company or brand to be recognized for, should be completely understood by your sales team.

If your sales representatives are not a true reflection of your company and its values, your reputation starts to run significant risks, whether you can recognize them or not, they are there, dormant, waiting for any failure to unleash the famous "reputation crisis "and the corresponding loss of profit.

When the heat is on, pressure is higher, values ​​are ignored and your reputation suffers.

Generally, the management model applied to commercial teams is the compensation for goal’s achievement. If your team sells, you pay them a commission; if they don’t, no commission is paid, and that’s the end of it. Simple. It’s been practiced for many years, a little in order to force the team to make more money, and secondly to keep the company from committing to pay a salary to a person who isn’t productive.

A double-edged sword, and very sharp edges indeed. One edge points toward the production of money. You want your team to sell a lot, that way they make money and smile, you make money as well and smile too. Everybody is happy and that's fine. This edge is a friendly one. Makes people smile.

However, the other edge is a bit tricky since it points to that sales guy who is hard-pressed to achieve his goals, and who could eventually feel so "between a rock and a hard place" to draw on certain tactics and actions, that even though they may help him close more sales and achieve the goals you’re asking for, can also seriously compromise your company’s reputation.

And here are the consequences of a brand’s footprint that dilutes as the company grows. Unwittingly, and as a consequence of business itself, your company’s growth involves your obligation to train each employee in the core values ​​that you want the business to be identified for over time.

Without adequate training and follow up the footprint disappears.

And it’s important to always keep it in mind to avoid not only the loss of customers but also the possible legal repercussions that could come along with the practice of unusual, commercial or administrative actions.

Always try to invite your sales representatives to share the same philosophy of work that you had when your company was born. Catering to your customers the same, or on a better way you did on the beginning. And always make sure to monitor within your company, all those areas of business that get in contact with your clients at anytime.

Note also that all employees, not just sales people, one way or another, are your company’s face to the client at some point in time and anyone can ruin a business or ruin a relationship without realizing it, starting from the secretary, the transport driver, one of the administration department, etc.. When someone does something to the detriment of a client or potential client, is clearly damaging your business.

For this reason the training of your employees on core company’s values and monitoring of your customer relationships are so important, at all levels within your company. Only by acting this way you can  be sure that your reputation remains in your hands, regardless of your business size.

Related Articles: Can your business exist without customers?


Tuesday, January 17, 2012

Today’s big challenge: From abundance to shortage.


From abundance to shortage.
Reading Andres Pérez post titled “It’s that I don’t see myself” and thinking about the many conversations I have had with friends and business owners in which we frequently talk about those long gone days that aren’t coming back, I couldn’t keep myself from thinking about that phrase: “It’s that I don’t see myself”. It’s something like “I cannot adapt to this brand new situation in which I’m making much less money than what I made before”, or “it’s that I can’t picture myself working more hours than I did before”.

If you find yourself among those who “don’t see themselves”, the situation is crystal clear: We have switched from living in a market of abundance to one of shortage.

Why is it so hard to get adapted to the new situation?

But, what has happened? why is it so hard to get going again and adapt to the changes? why does it happen so often that more and more companies shut their doors and take down with them ideas that could have been sucessful?

The biggest problem facing business owners who lived in abundance, in a market where product demand was outstripping supply, is that, unfortunately, they did become used to being passive, to be "order takers" and left on the side developing and nurturing one of the most fundamental business activities for any company: business development, the pursuit of orders, cold call selling.

The problems generated by living in abundance.

For sure you're wondering: "But Joel, how wealth can generate problems?". There are habits that develop during our life in abundance that become real problems during the shortage times. I'll try to enumerate those that, in my opinion, are obvious:

  • There is a huge bunch of customers going after you: so you don’t mind too much about losing one or two, because you know within ten minutes time, somebody will come through the door and buy. During wealthy times you don’t tend to care too much about customer’s loyalty and most of your efforts are focused on attracting new buyers.
  • Product prices are directly set by you and not the market itself:  since there are so many customers out there willing to buy, you can afford to raise your prices as high as you want, because, in the end, someone will always appear and like the product enough to pay the price you’re asking for. The direct relationship between supply and demand just isn’t there when customers abound.
  • You’ve got money enough to do whatever you want. You plan and spend your advertising money without too much concern, you keep more inventory than you really need because you know you're going to sell it along the road, you get into financial commitments, loans, buy equipment, increase your assets, as a matter of fact, you’ve got the money, so why bother?
  • You spend a lot and save very little, if any: You never thought (and if you did, then you didn’t pay attention to it) that abundance doesn’t last forever and that what goes up must come down. If you take a look at Mother Nature, during certain times of the year, some animals put aside food, nuts, seeds, for the winter, knowing that food will be hard to find during the rough days. However, when we, human beings, have plenty of something tend to waste instead of saving it.

The great challenges we face during shortages.

However, there comes the pinch, sales go down, the economy is depressed, money is not enough, then the problems begin to pile up.Why is it so difficult to adapt to scarcity? I’ll mention just a few of the reasons why:

  • You have to go out looking for your clients, the dreaded cold calling, which should always have been part of your plan, now becomes your only ally, and it’s now when you realize that you didn’t prepare yourself at any time to go out looking for your customers but instead were completely focused on "taking orders".
  • The price war is killing you because you were used to having full control of your pricing policy and build your business based on a high profit margin, perhaps, too high for what the market could really afford. It is now when you quite clearly see that supply and demand are closely related to price.
  • You need to strengthen your cash flow, but now you find out banks are not lending money, customers do not buy as regularly as they did before, your sales projections (if you do project) don’t reflect the reality and you just have to play it day by day.

What do we have to do now? what do you have to do as it refers to your business? We must start by understanding that our main problem is that we’re living on a different environment where there isn’t as much money as there was before and customers are not waiting for you in line as you open your shop.

It’s now time to turn passivity into proactivity, it’s time to leave the desk and go out of your comfort area, stop being "takers" to be "developers" of orders, new customers. If you didn’t see yourself doing it before, now it’s time and it should be your top priority. Others do it, why not you?

Related post: Vision and planning: Are you adapting to the changes?


Tuesday, January 10, 2012

“Engagement”? There is one thing we’ve got to know about this guy.

A few days ago, I came across a post which highlighted which had been considered the “Top Engager” Facebook fan pages during the year 2011, and by “Top Engager” they meant pages that were supposedly creating the highest engagement or commitment among their fans.

The numbers were as follows:


It’s really impressive to see how these pages can generate such a powerful interaction with their respective fans. From 4 to 1 million average comments per post, even in the “lower ranks” where you find MTV Roadies creating an amazing 450,000 comments per post! Almost half million comments!

It was even funny because by the time this information was published, the comments were about the fact that “Top Engagers” were pages in which religion-related information was posted, and that this content was even more powerful than that generated by a high-profile, teenagers’ idol such as Justin Bieber. Quite a surprise for our traditional marketing mindset, isn’t it?

However, there’s an important idea I want to share with you and for doing that, I did play along a little bit with my Excel table and added an additional column on the right side which I named “Real Engagement”.

You can see it in the following figure.


The “Real Engagement” figure represents the percentage of a fan base that is actually interacting with each published post. If you look at it, the reality changes dramatically, doesn’ it?

First, on Figure 1, we did have Justin Bieber occupying position #5 among the “Top 20 Engagers” and then you have him, on Figure 2, sitting down at the bottom, on position # 18. Why the difference?

Let’s start by defining “engagement”, shall we? Engagement refers to commitment and when it comes to marketing, especially on social media, it’s about how eager or reluctant a person is to interacting with a particular brand or company, taking as “signals” of this eagerness the times a person “likes” a post, comments on it or shares it with his friends or acquaintances.

And here you have my thoughts about it and the reason why I’m writing this post: Who is the “Top Engager”? Is it the one generating the highest number of comments, or is it the one with the highest percentage of users commenting each of the post published?

As you can see, we’ve came down to the “quality vs. quantity” debate. What’s truly the point of it? To have a huge amount of users who don’t talk with you? Or to have a decent amount of users that in their majority are actively and regularly talking with you each time you post new and relevant information? In which situation the relationship will be richer? Where will you find more potential for growth?

If you look at the “Real Engagement” column on figure 2, let me know if you can also come to the following conclusions:
  • Surprisingly, content generating the strongest engagement continues to be related with religion. It could probably be due to it being so highly emotional, but we’ll talk about that later.
  • Jesus Daily is no longer on the Top position but maintains a really healthy 45% of “Real Engagement” rate. Forty five percent, meaning that out of every 100 users, 45 actively interact with their content. In brief, almost half of its fan base!
  • Justin Bieber is no longer among the top 5 and descends 13 spots to end up at position # 18 and, even though one million comments per post continue to be an impressive figure, it only represents 3% of his total fan base. That is only 3 out of 100 fans react to his posts, meaning that 97 fans remain silent at every post.
And that’s a key difference!

Even though having a huge fan base for your facebook page clearly offers you the opportunity to directly reach more and more people (and the more people you reach, the better chances you have), it’s really the “Real Engagement” factor or the real commitment of each of your fans what will show you that the content you are sharing is going right to their hearts.

Can you see the difference? Even when your ego can have a great time realizing you have came to made a million fans and generating thousands of comments, knowing how many of your users are truly committed with your product or brand, will definitely help you consider whether you’re doing things the proper way or not, or to make it more simple, help you better define your goals.

In your social media plan, where are your priorities set? Is it on quantity or quality?

Related post: Interaction: Why your comments are so important?


Tuesday, January 3, 2012

Marketing: ¿Where can we find the “starting point”?


¿Where can we find the “starting point”?

Talking with a dear digital friend, Luis Reyes (@ Luisreyes6) about an article I published recently, entitled "I want to be social networks, but don’t know where to start" we, among jokes and not-so-serious comments, got to a crossroads and Luis told me: "Joel, it’s obvious we must start from the beginningl" and I then replied "And where is that beginning point then?"

And that question brought me to the topic I’m sharing with you today: We’re now at the beginning of the year and, hopefully, we know exactly where it does begin: It's the first minute, the first day of January.Simple, right?

But, is it that easy to figure out where the starting point is when it comes to your business, your company, or even yourself? Where is that starting point? Why it happens so often that new companies or products fail, and most of them fail even before starting it’s own development? Is there any relation between knowing where the starting point is and the fact that many products don’t reach maturity in their respective markets?

For sure when you were thinking of starting your own business, you put all your enthusiasm and effort in setting it up, its structure, skeleton, in creating your product and developing your brand’s main concept. Maybe you invested a lot of time in finding the most significant opportunities for your product, as well as identifying your market segments, the reasons why people would buy from you and not competitors. In a word: you’ve invested significant time, money and effort in drawing a map that would allow you to clearly see the path that your product, company or brand would follow once it was released.

And sure enough you were also deeply in love with your product, completely convinced it was going to be a success, and you were the first one to be shocked when you had to make the decision to put a stop to everything because your initiative had failed, as it has happened to so many others. You were so excited that you didn’t put time into doing the  initial analysis you had to do, which was - by far -  the most important thing in your “to-do list”, even before doing anything else: to analyze the strengths and weaknesses of your product, company or brand.

And here, in my opinion, is where the chain of errors that has been able to prevent your product from establishing and properly developing in the market, begins. A failure doesn’t happen overnight, it turns out to be a sequence of things that happen and start undermining the potential growth of an initiative.

In my experience, and from the experience of colleagues and friends who have set up their own businesses have shared with me, the biggest mistake is to not assess the attributes, limitations, weaknesses and strengths of your product, brand or company,  sincerely, honestly and humbly.

I’m not referring to the analysis you’d have either done or not about the market itself, but about the inner review you should have done to properly identify your niche, your target audience, your approaches and strategies, but really and not superficially.

As always, let me explain myself with an example: You spend the night coughing and very congested, with high fever, stomach discomfort, heaviness in your head and trembling in your extremities. However, when you get to the doctor and he asks you about the symptoms you've had, you simply mention you've had a bit of discomfort and fever.

Do you think the doctor will be able to give you appropriate treatment? Do you think he’ll have the opportunity to really tell you what you have have to do, when the information that he’s starting from is inaccurate and doesn’t adequately represent the real situation you went through?

Same thing happens with products, companies and brands. If the initial analysis, the one you have to do even before analyzing your industry, market or competition, isn’t done in a thorough, honest, sincere and deep way, you're running a huge risk. Why? Because the market itself will show your product’s weaknesses and by bringing it down, it’ll indicate you that it would have been better to invest a little more time in the initial research and preparation.

Have you ever seen one of these contests to find new musical talent, like "American Idol" or “The X-Factor”? Have you ever thought that there are participants which shouldn’t even have entered the contest at all?

Surely these people's friends and relatives were all positive and encourage them to enter the competition, they all thought their friends were talented enough and could do a good job (have you ever seen a mother who doesn’t have nice words for an excited child?) And these people, starting from the wrong place and simply basing all their arguments on an incomplete reality check, embarked on something that had already been marked as a not-happily-ending story.

The market is just like that and generally doesn’t forgive mistakes, especially when they relate to products and brands. That’s why many products don’t make it to their development phase and simply fail to grow because they all started from the wrong place, what we could call a “not-so-real” starting point.

Be sure to start at the beginning, but the real one, not the one you would like to start from. And do it making a real, honest, transparent analysis, that truly reflects your actual situation and not a reflection of what you want. It may take a little longer, but you'll avoid many of the unpleasant situations, which also happen to usually be very expensive.

Is this your case? Did you analyze your business, brand or product in depth before you jumped into the market?

Related post: Seriousness and discipline: Things you can learn from the Army.