Customer-Centric Marketing Lessons from Apple, Disney, Southwest Airlines, Five Guys and Zappos

Portions of this post were taken from a post I wrote on Forbes:

Traditional Marketing is Dead… Long Live the Customer

Today’s consumer is empowered. Empowered to avoid marketing, empowered to avoid marketing, and empowered to share their experiences. Companies need to find ways to differentiate themselves beyond traditional marketing. They need to stand out in a sea of sameness. The key lies within the ability to leverage their most important asset: current customers. Understanding that the greatest form of marketing is the actual customer experience.

This post will make the case for a paradigm shift in marketing. Sharing nine ways brands can embrace customer-centric marketing, focusing on the customer and their experience, instead of constantly chasing the prospect. We’ll highlight lessons from leading brands such as Apple, Disney, Five Guys, Kimpton Hotels, Southwest Airlines, TD Bank, Wells Fargo, Zane’s Cycles and Zappos:

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Here are the nine customer-centric marketing lessons: 

#1. Focus on the Customer

Takeaway: The customer is your most lucrative marketing asset. Take care of the ones in hand, as opposed to the thousands in the bush.

Case Study: Wells Fargo. Wells Fargo gets 80% of their growth from current customers. They realize its costs 10% of the money to upsell a current customer than it does to acquire a new one. Their philosophy is summarized in this quote from their website:

“The more you sell customers, the more you know about them. The more you know about them, the easier it is to sell them more products. The more products customers have with you, the better value they receive and the more loyal they are. The longer they stay with you, the more opportunities you have to meet even more of their financial needs. The more you sell them, the higher the profit because the added cost of selling another product to an existing customer is often only about ten percent of the cost of selling that same product to a new customer.”

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#2. Exceed Expectations

Research from the American Express Customer Service Barometer: 93% of companies fail to exceed the expectations of their customers. Takeaway: Have a surplus mindset and leverage surprise. Give your most lucrative asset more than expected.

Case Study: Disney. Walt Disney believed in the importance of giving more to exceed expectations. There was an incident that took place at Disneyland during the early years of the park.  According to Disney historian Les Perkins, Walt decided to hold a Christmas parade at the new park at a cost of $350,000. His accountants begged him to not spend money on an extravagant Christmas parade. They reasoned with him, explaining that the customers were already in the park. Nobody would complain, they reasoned, if they dispensed with the parade because nobody would be expecting it. Walt replied, “That’s just the point. We should do the parade precisely  because  no one’s expecting it. Our goal at Disneyland is to always give the people more than they expect. As long as we keep surprising them, they’ll keep coming back. But if they ever stop coming, it’ll cost us ten times that much to get them to come back.” Walt believed so strongly in the concept of giving more that he had his own word for it. He called it “plussing.” He would drive the imagineers and the cast members crazy by constantly asking how they could “plus” an experience.

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#3. Referrals are Key

Customers gained through referral are the most lucrative for a business given their lifetime value and propensity for word of mouth. Takeaway: You should be asking you customers how likely they would be to recommend a colleague or a friend.

Equation: Value of a Referred Customer = 2LTV + 2XR. A customer referred to you is upwards of four times as valuable to you than a regular customer acquired by traditional marketing. Why a 4x multiple? A referred customer will typically spend up to twice the amount of money during their lifetime (2LTV) as a customer. Because they’ve been referred themselves, they will also typically refer up to twice the amount of people (2XR) compared to a regular customer.

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#4. Social Media is Only Part of  the Answer

Takeaway: The ME in social MEdia is not about you the company. The ME is the customer. Social media empowers your customer and gives them a megaphone to share the good, the bad, and the ugly. Your job is to give them something good to talk about, tweet about, Yelp about, and post to Facebook about you.

#5. Experience is an Investment

Takeaway: Giving something extra isn’t an expense. Giving something extra differentiates and bolsters your brand.

Case Study: Zappos. Zappos CEO Tony Hsieh refuses to see the experience as an expense. In his words, “Our business is based on repeat customers and word of mouth. There’s a lot of value in building up our brand name and what it stands for. We view the money that we spend on customer service as marketing money that improves our brand.” Some extra from Zappos include free shipping both way, no call times, overnight shipping upgrades, and a 365 day return policy.

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#6. Think Commitment, Not Campaign

Takeaway: Know the LTV – lifetime value of your customers. Always consider how the experience you are creating impacts the lifetime value of a customer.

Case Study: Zane’s Cycles. Do you know how much each customer is worth over their lifetime? Chris Zane does. Each customer of Zane’s has a $12,500 lifetime value. Chris sees the whole forest and not just the individual trees. Zane’s doesn’t sell stuff, they provide “experiences” that build relationships. They never sell anything without sharing a story of why its important.

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Case Study: – Apple. Carmine Gallo believes Apple’s “One to One” training program was created for one purpose and that’s to build a customer for life. “It’s based on a simple premise—the more a customer understands and appreciates a product, the more likely they are to make a deeper, emotional connection with that product, and to return or to recommend the product/service to a friend.”

#7. Convenience for the Customer is KEY

Takeaway: Customer effort is important and is directly linked to loyalty. Think about the convenience of your customers first. Are you making it easy to do business with you?

Case Study: TD Bank. TD stays open longer hours and in some places its open seven days a week. TD’s CEO Ed Clark shared his thoughts on this in an interview with the Financial Post Magazine, “The great thing about our model is if I put a branch on a corner in New York City, I know five years later I will have more than 25% of the local business, because at some time in that five years someone will come by at 4:02pm.Their branch will be closed, they’ll look across at our store, this beautiful store, there will be someone giving dog biscuits to somebody’s dog, they’ll walk in and there’s a greeter that’s unbelievably friendly, and they’ll say, ‘So why am I banking at the guy across the street?”

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#8. Think Value, Not Price

Takeaway: Compete on the value you provide. Price is relative to value.

Case Study: Southwest Airlines. When other airlines started to charge for checked baggage, Southwest created Bags Fly Free. According to an article in the New York Times, “A lot of people have been trying to pickpocket and nickel-and- dime their customers,’ says Kevin Krone, the company’s [Southwest] head of marketing. ‘We don’t think it’s right.” The policy turned out to be a good business move. Part of that growth in sales, Southwest believes, came from new customers fleeing bag fees. Mr.Kelly calls his rivals ’approach‘ a gift.” “The policy yielded another advantage. It allowed Southwest to subtly shift the focus away from its fares. Although it still offers low fares to many destinations, Southwest doesn’t always have the lowest fares every day on every flight.

#9. Differentiate through Added Value

Takeaway: Become talkable by design. Create ongoing added value.

Case Study: Five Guys Burgers and Fries. Five Guys gives away free peanuts, extra fries, and unlimited free toppings. Founder Jerry Murrell revealed in an Inc. article, “We figure our best salesman is our customer. Treat that person right, he’ll walk out the door and sell for you. From the beginning, I wanted people to know that we put all our money into the food. That’s why the décor is so simple — red and white tiles. We don’t spend our money on décor. Or on guys in chicken suits. But we’ll go overboard on food.”

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Case Study:  Kimpton Hotels. welcomes pets of the furry variety at all of their hotels. For guests in need of a little extra, but no extra effort, many of their hotels offer a special something extra. Guests have the option to request a live goldfish to stay overnight in their room. A program Kimpton calls Guppy Love.

Final Thoughts: I’ll leave closing thoughts to Peter Shankman, author of Zombie Loyalists:

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Today’s Lagniappe (a little something extra thrown in for good measure) – this slideshare shares the nine lessons: