Referral Marketing: Letting Customers Lead the Way

Referral Marketing - Employee Engagement

Referral marketing is all about getting leads through existing relationships.  People like to share good finds and good experiences so developing a referral marketing effort should be an essential part of a nearly every marketing plan.  Your plan should focus on the customer and their experience and aim for customer-centric leadership in the channel.  Let’s look at why customer referrals work.

Birds of a feather really do flock together

Your best leads—the ones most likely to convert to a sale—come from employees and customers.  Why?  It turns out that your parents were right when they told you that birds of a feather flock together.  Networks tend to be full of like-minded peers.  Business owners network with other business owners.  Lawyers tend to belong to the same professional organizations.  Stay-at-home moms share finds with other stay-at-home moms.  The goal of referral marketing is to get targeted leads from your existing customer base and relationships.  Find your way into the circle-of-peers conversations by encouraging customers to share their product experience with others.

You already have their attention

While the Marketing department creates leads, it is Sales organization’s job to convert them.  Right?  Absolutely not.  Sales and Marketing must work collaboratively to develop qualified leads.  When a sales rep closes a deal with a customer, she should ask “Do you know anyone else who could benefit from ….”  There is little downside to asking for the referral.  Another good time to ask for referrals is during a service experience.  Of course, good judgment is required here.  If a customer service manager is handling an escalated call, it may not be a good time to ask for referrals.  You should assess your customer touch points and identify the best opportunities to engage.

That employee touch point is already a sunk cost

If you think that the time it takes for a sales or service rep to ask for a referral is too expensive, I encourage you to think more deeply about your costs.  Most sales reps are salaried with commission.  Consider the incremental cost of asking for the referral versus spending your marketing budget on another marketing channel (radio, direct mail, even social media).  You will likely find that the cost of using additional media far exceeds the cost of using the human resources you already have engaged.

Of course, you don’t have to limit your referral marketing to customers and employees.  You can give vendors, contractors and others an incentive to refer leads as well.  But before you dive into an incentive-based referral program, start with a no-incentive program.  Start with the low hanging fruit.  Start with your customers.  You might be surprised by what happy, satisfied customers will do for you.

Good Content That Isn’t Found Doesn’t Matter

Good Content - Shared

Content marketing drives search engine optimization (SEO).  Developing content is relatively easy, but it simply does not matter if it cannot be found by your target audience.  And, if your content is found and found NOT good, it may not matter.

Good content is (highly) rated
In the 1970s and much of the 1980s, we watched whatever was on television—good or bad.  We did not have much choice.  Today, consumers have many choices, including unplugging completely or turning to another device.  This is exactly why we have come to a place where much of the content we have access to is rated.  If we are looking for a movie on Netflix, we check out how it’s rated.  If we search for a book on Amazon, we check out its rating.  Developing content that is rated differentiates the good from the bad and the ugly.

Good content is shared
Shared content is a practical evolution of rated content.  Rated content could come from any source, someone we know or someone we don’t know.  But shared content usually comes from someone within our circle.  When a Facebook friend shares content on our timeline, we value that content a bit more.  So, when developing content , remember that shareable content is more likely to be consumed.

Good content trends
For sure, “good content” is relative.  However, in the spirit of understanding that “good content” is not good until it’s read or viewed, we must acknowledge that good content trends.  Trending content is crowdsourced content.  What we collectively read and watch becomes good content.

You can surely create excellent content that is never read.  It will do nothing for awareness, nothing for growth and nothing for anyone else.  It’s like the tree that falls in the forest when no one is there to hear it.  Did it make a sound?  Doesn’t matter.  Turn your content into something that matters.  Get it ranked.  Find ways to share it.

Moving Beyond Loyalty to Customer Advocacy

Beyond Loyalty to Advocacy

The average U.S. household participates in nearly 22 loyalty programs every year.  However, that does not mean that householders are, in fact, loyal to these brands.  Repeat purchases rather than just loyalty program sign-ups ought to be the core metric for loyalty.  How many widgets a person buys determines how loyal they are to the widget maker.  But, in our digitally-charged economy, companies should aspire to lead customers beyond loyalty to advocacy.

“They generate word of mouth advertising.  They like your social pages.  They share information on your brand on their own social pages.  They refer other business your way.  And, they generate more revenue…”

Customer Advocates Improve Your Top and Bottom Line

A customer advocate not only makes more purchases but also tells others about their positive experience with your brand.  They generate word of mouth advertising.  They like your social pages.  They share information on your brand on their own social pages.  They refer other business your way.  And, they generate more revenue—from their direct purchases and influenced purchases.  All of this activity reduces your acquisition costs, which improves the bottom line.

There are some categories that lend themselves to higher levels of customer advocacy.  For instance, new car owners are more likely than toothpaste buyers to be passionate about their purchases.  However, when new features are introduced—even in toothpaste, a campaign aimed at increasing customer advocacy can really help a business improve the efficiency of the marketing spend.

Customer Advocacy Should be Nurtured

We have all seen the social posts that say “The first person to tweet ‘#LoveXYZProduct’ gets a $25 gift card.”  These ads are promotions but they do not increase customer advocacy.  They are a temporary, one-time lift in awareness that is not likely to be sustainable.

Advocacy Through Social Media

Customer advocacy in social media should be initiated by the customer BUT making it easy for the customer to share information can increase advocacy efforts.  Include social buttons on your online product pages.  Be sure your social handles are included on product packaging that reaches the customer.  In mobile advertising, use hashtags or shareable links in your creative.  Take advantage of very opportunity to help the customer share your message.

Advocacy Through the Product Experience

Many customer advocates will share their experience in interacting with the product.  Marketers need to contemplate this in the delivery, use and ownership of the product.  To encourage customer advocacy:

  • Seamlessly integrate your product into the customer’s day-to-day
  • Make the product easy to buy and use
  • Deliver unexpected (and infrequent) surprises

Loyal customers generate revenue through their own purchases.  Customer advocates generate revenue through their own purchases and by influencing the purchases of others.  Business leaders would be well-served to identify and nurture customer advocates among their buying population.

Can Rebranding Lead to Sales Growth?

New Brand

In today’s world of the internet of everything and big data, every executive and every business owner is more concerned than ever about the ROI of every activity.  Marketing leaders have espoused the benefits of a strong brand for years.  Recently, more marketers have been asked to justify their activities, including brand-building efforts.  Business leaders want to know:  What return can I get from a branding or rebranding campaign?

First, let’s examine what rebranding is not.  There are components of rebranding that will, as standalone activities, likely have little or no effect on sales.

  • Rebranding is not simply a logo change.  And, a logo change in itself is not likely to increase sales.
  • Rebranding is not just a name change.  In fact, a name change may have a negative impact on sales, depending on the strength of your existing brand.
  • Rebranding is not just creating a new tagline.  Creating a new tagline is not likely to have an immediate impact on sales either.

When, then, does rebranding drive sales?

When more relevant messaging is delivered to the target audience.  Delivering the right messaging to the right audience is the core success factor of any rebranding campaign.  Your goal should be to increase awareness with your target market.  Of course, this requires knowing who your potential buyers are.  It also requires crafting a message that will make your product or service preferred over the competition.

When your media budget increases to support a rebranding campaign.  It is important to note when other changes that are implemented with a rebranding campaign.  Oftentimes, a rebranding campaign is a result of an increased marketing budget which includes other components, like increased media spend.  Be careful not to attribute an increase in sales to one campaign component without contemplating how all components may have impacted results.

When quality SEO is implemented to counter a decline in website traffic.  Google still owns the online search market and many online websites are still recovering from the so called Google Penguin update of 2012.  With this update to their search algorithm, Google closed the loop on SEO practices that artificially increased page rankings by gaming the prior search algorithm.  As a result, many websites have gone through a “rebranding” in an attempt to increase traffic.  The effort, accompanied by quality SEO (and often a brand new website and URL), has been successful for many.

The good news is that with the right components, a rebranding campaign will increase sales.  However, there is no magic formula for such and the process may be iterative.  It is important to have a clear strategy and a sound measurement tools to build an effective rebranding effort.

TV Advertising Is no Longer the Holy Grail

TV advertising

Fragmentation in advertising is good for small businesses as it gives such businesses an opportunity to compete effectively.  Where small businesses were previously left out of advertising on video-rich platforms like television, YouTube has created opportunity.

Nearly 50% of U.S. households now have digital video recorders (DVRs), which have resulted in fewer television commercials being watched, but the proliferation of DVRs is not the only thing causing the shift in ad dollars from television to YouTube.  Here are four other drivers of this shift that small business owners need to know to take advantage of the increasingly fragmented advertising market.

  • YouTube advertising is more targeted than TV advertising.  Because audiences are so broad on television, TV advertisers end up spending ad dollars on prospects that are not their target.  With YouTube, advertisers can specifically target subscribers by age, gender, location and even interest.  And, they only pay when their ad is watched.
  • YouTube advertising is more measurable than TV advertising.  An advertiser just cannot know with certainty if a specific audience was reached on television.  Nielsen’s use of a representative sample of the population (measured through people meters) is far less sophisticated than the viewer analytics available to advertisers on YouTube.
  • Smartphones rule.  YouTube audiences are growing while television audiences are shrinking.  YouTube is among the top ten most frequently used smartphone apps.  How many Cord cutters and Cord nevers have a smartphone?  A majority.  In fact, these individuals are more likely than the general population to use smartphones.  So, YouTube advertisers have an opportunity to reach an audience that is unreachable for TV advertisers.
  • YouTube advertising is more affordable than TV advertising.  Most small business don’t dare to dream of using television advertising to get the word out about their products.  By its very definition, broadcast advertising gets audio or video content out to a mass audience.  Mass audiences cost mass dollars.  Marketers can more effectively spend more modest advertising budgets on YouTube, where costs can be controlled on a daily basis.

While it’s great to have a budget large enough to warrant television advertising, it is not the only place to build brands today.  Advertisers with modest budgets can deliver targeted, measurable ads online and reach an audience that is not even accessible on television.  TV is no longer the Holy Grail of advertising…and that’s good news for small business owners.

Social media is not “free” marketing

Social Media - Not Free Marketing

Many business leaders, especially those with limited marketing budgets, think of social media as a free way to deliver their brand’s message in the marketplace.  While it is true that the barriers to getting into the social media fray are low, there are costs to developing successful social media campaigns.

This post is not meant to deter any business from setting up a social media account.  By all means, pick a username, set up your profile and post a few logos and pictures, but be sure that you have considered the following:

  1. You will need to develop content regularly.  Simply developing an account and linking your website to your social media account is a futile exercise.  If you do not have a plan to deliver content—that is, posts, pictures, videos, infographics, etc.—regularly, you need to rethink your social media strategy.  The point of the social media account is to initiate a relationship with your target audience, which can only be done through regular communication.
  2. You may need multiple accounts.  Consider why you are setting up a social media account.  Are you trying to attract new customers?  Do you want to build brand awareness of a specific product?  Are you ready to answer customer questions?  If you search for Amazon on Twitter, you will find @amazon, @amazonkindle, @amazonvideo, @amazonassociate, @amazonappstore and @amazonhelp, among several other Amazon accounts.  Each one serves a different market need.  It is not likely that you will need as many accounts as Amazon, but it may be desirable to give customers a social service “line” that is distinct from your primary brand-building account.
  3. You should have an integrated marketing plan.  Your social media marketing strategy should be one component of your overall marketing strategy.  Think of it as an extension of what you do in other marketing channels and be sure your have consistent messaging across media.
  4. You must measure your social media efforts.  Given the time spent doing #1 through #3 above, you will want to be sure that there is value in your social media activity.  Are you getting enough views of posts to efficiently build awareness?  Are you reaching your target audience?  How has your customer satisfaction changed as a result of creating a social service account?

All of these things will affect the marketing budget but there are a few things you can do to mitigate the above costs.  For instance, there are tools such as Hootsuite and Tweetdeck that increase the efficiency of managing social media accounts.  These solutions allow users to manage multiple accounts from a single platform.  They also allow users to schedule posts for a future day or time.  So, executing a social media strategy often becomes less arduous with these tools.

Being selective about which social media platforms you use can also mitigate costs.  It is not likely that you need to be on Facebook and Twitter and Pinterest and LinkedIn and Google+ and Instagram and every other new social media.  Select the platforms that are most relevant to your target customer base and focus on optimizing your presence there.

Consider hiring a social media expert.  It may seem counterintuitive but if you are inefficient because of lack of familiarity with Hootsuite or because you do not have the bandwidth for developing content, it may make sense to hire an expert so that your time can be spent where you add the most value.

Social media is not free but with the right support and tools, it can be an effective and efficient component of the overall marketing strategy.

Improve Retention Rate through Better Service

Airport customer

Renewals, repurchases or reorders–whatever you call them in your business–are a key component of growth.  And, every single customer touch point can affect your retention rate.

Recently I flew across country on a no-frills airline. In the online sales process, if you want a carry-on, you pay a fee. If you want to check a bag, you pay a fee. If you want an assigned seat, you pay a fee. Expectations are set. But, my non-stop flight from Los Angeles to a remote Midwestern city was only $250 so I do not mind the nickel-and-dime sales process. When I was checking in for my flight to return to Los Angeles, I was asked to place my carry-on bag in the bag sizer to ensure it did not exceed the maximum dimensions. No problem. Where this airline went terribly wrong was when the gate attendant asked two young women to put their duffle bag into the bag sizer before boarding the airplane. The gate attendant who collected their tickets asked (very loudly, I might add) the airline employee who stood over the two women as they struggled to get their bag into the sizer if indeed the bag fit. It was a very public, unfriendly, embarrassing event for the passengers. Because they were right behind me, I saw everything and overheard them say they would never fly the airline again.

In my email inbox the day after I returned home, I received a thank you for flying the airline email. Can you imagine the two women’s reaction when they received the same email? Customer communications are key to retention but so is the sales process and every other customer touch point.

It is essential to have the appropriate evaluation tools in place to monitor when customers leave and why. Ask customers about their experience at every touch point from the buying process to the experience. If you improve the process, you might also just improve your retention rate and increase sales.

Marketing Basics Still Apply on Social Media

Marketing Basics - Social Media

Many seasoned marketers are all too eager to leave the social media marketing to younger professionals. The ever-evolving social media space can feel daunting to traditional marketers accustomed to broadcast and print marketing. But while the technology is different, the basic building blocks of marketing still hold true.

When creating a marketing campaign delivered through any media, you must…

  1. Identify your target market. In traditional marketing, we get to know the target market through quantitative or qualitative market research. With social media marketing, we can get to know the target by “listening” on the social media platform. What are customers saying about the product? About what they want? About how they use the product? Same questions, new media.
  2. Create relevant messaging. In traditional marketing, the development of the message can be a very long, intensive process. With social media marketing, the creative development cycle is usually much faster. Some of the most effective social media campaigns will build on current trending topics or hashtags.
  3. Measure your campaign results. With traditional marketing, effectiveness can be measured by reach and frequency. With social media marketing, engagement is king because the platforms are inherently interactive.

Let’s take a few examples of how these marketing fundamentals apply in a social media context.

Oreo seizes social moment at 2013 Super Bowl

Oreo’s 2013 Super Bowl social media campaign spoke to a large audience at the right time. When the lights went out at the Superdome during the 2013 Super Bowl game, Oreo saw an opportunity and tweeted, “You can still dunk in the dark.”

By contributing to an ongoing trending topic, Oreo received nearly 16,000 retweets. The now-famous blackout tweet demonstrates how relevant messaging can reach a targeted audience and ignite viral engagement.

Yeti Coolers engages Facebook fans

Social media can also improve the playing field for lesser known brands. Igloo and Coleman are strong brand names in the cooler market, but the (once) lesser known Yeti now has cooler sales revenue that rivals its competitors. Yeti makes rugged coolers for those who have a passion for outdoor activities. The company’s social media strategy speaks to this audience in their language. On its Facebook page, Yeti regularly shares imagery of its product featured in the fun and adventure of the great outdoors.

The company’s more than 207,000 Facebook fans routinely engage with these posts. In fact, it’s quite common for the company to get 500 likes per Facebook post. That works out to an engagement rate of 0.24%. Compare that to Disney, one of the most recognized brands in the world, which gets about 35,000 likes per Facebook post. Disney has 48.4 million Facebook fans, an engagement rate of 0.07%. Yeti may have a smaller presence, but it is more effectively engaging its audience.

You’ve heard this marketing refrain before: Deliver the right message for the right audience at the right time. It is as relevant today as it has always been.

Social media hasn’t reinvented marketing: If anything, it underscores that the basics of marketing are as valuable as ever.

6 Tips to Launching a Successful Cause Marketing Program

cause marketing

Cause marketing is a term used to describe a company’s efforts to partner with a solution to a societal problem.  Nowadays there are a number of “social enterprises” that exist to sell something AND bring awareness to or solve a social problem.  But, even if your business is not a social enterprise, you may benefit from creating a cause marketing program that customers an rally behind.  Consider these tips before launch your program.

  1. Align program with your corporate marketing strategy.  You can drive awareness of and preference for your brand through cause marketing.  An effective program must aligned with your overall marketing strategy.  If consumers cannot make the connection between your support and the charitable cause, it’s less likely that your program will have a positive effect on your brand.
  2. Develop criteria for potential nonprofit partners.  It’s best to develop a list of criteria for your nonprofit charitable partner.  There are a number of charity evaluators (like Charity Navigator) that offer criteria for consideration.  You should also consider criteria that are specific to your needs.  For instance, if you are trying to grow in a specific region, you may want to identify a nonprofit who serves in that region.
  3. Interview other donors of your potential partner.  It’s always a good idea to talk to references.  Charitable partners who have good relationships with other donors will want you to talk with those donors.  Once you find a partner, ask for reporting that helps you evaluate your program. Other donors or partners have likely asked for something similar.  Find out if they delivered as expected.
  4. Define success.  As with any marketing program, you should have specific goals that delineate what a successful campaign will look like.  Are you looking to increase the number of clients served by the nonprofit organization?  Are you expecting to improve your own brand image?  Defining goals will help you measure progress after the program is implemented.
  5. Identify an executive champion.  Your internal champion should be from your leadership team and well-versed in your cause marketing strategy.  This leader should ensure that the program is integrated with your other marketing efforts.  They can also serve as your spokesperson regarding the cause and your commitment to it.
  6. Measure results.  And, refine as needed.

The Cost of Losing an Loyal Customer

loyal customer

Recently, I broke up with my cable company.  It was actually a very painful thing for me to do.  You see, I don’t like change; I’m a loyal customer.  I’ve thought about this breakup for years.  I moved into my current home seven years ago and I’ve had the same cable provider since the move.  Every year, my cable bill would creep higher and higher each year.  Each time it happened, I would contemplate a change.  My cable company provided both my television service and my internet service.  I still had a landline for home phone service.  There were so many reasons not to leave.  With another provider, I wasn’t sure if I would have to pay more for cable channels I’m used to getting.  I didn’t know if the service would be as stable as my cable service.  Would my internet service be fast enough?

To make a long story short, I left because of a terrible customer experience.  It was solely based on one bad interaction with one customer service rep.  Within a week of the cancelling my service, my cable company’s telemarketers were reaching out to me with new offers.  It was rather ridiculous because the new offers cost the cable company much more than keeping me in the first place.

As a result, I’ve been contemplating the cost of losing a loyal customer.  It usually results in higher expenses, lower revenue and damage to brand value.

Marketing expenses increase as customers leave

Generally, the marginal cost of keeping an existing customer is lower than the cost of acquiring a new customer.  It’s also lower than the cost of re-soliciting a former customer.  As a result, churn and marketing costs are positively correlated.  As existing customers leave, companies must put more marketing dollars into new customer acquisition to keep revenue flat and even more to grow.

Average revenue declines when customers exit

In nearly every business model, the average revenue from an existing customer is higher than the average revenue from a new customer.  Said differently, once a customer has made one purchase, that customer has given permission for a conversation for a second purchase…and a third and a fourth…  In subscription-based models, the longer a customer stays, the more likely that customer will stay longer.  This loyal customer requires an adequate investment in customer service.

Brand value is damaged when customers leave

Former customers cost companies an unknown, but likely large, amount of brand damage.  Most people are more willing to share a negative brand experience than a positive brand experience (which explains why we often find mighty fine restaurants with mediocre online ratings).  Again, this is why the customer experience—even for loyal customers—is so critical.

This is not to say that all customers are valuable.  It’s important to understand the value of each customer segment.  Ah, but that’s another discussion for another day.

As for me, I still don’t like change.  And, the breakup with my cable provider was hard.  Maybe I’ll go back one day…but it’ll cost them!