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Golden Goldfish – All Customer and Employees are not Created Equal

Here is a slideshare on the third book in the Goldfish Series, the Golden Goldfish: The book is based on the simple premise that all customers and employees are not created equal. For most businesses, 80% of profitability is driven by the top 20% of customers and employees. These are simply your “Vital Few.” The book focuses on nine different ways to do the “little extras” to promote customer advocacy and drive employee engagement with these key stakeholders.

Pareto’s 80/20 principle is brought to life by authors Yoon, Carlotti and Moore in a case study about Kraft Velveeta cheese. In 2012, sales of Velveeta cheese were on a downward trajectory. The brand managers were faced with a challenge. Should they focus on getting lapsed consumers to buy Velveeta again? Or should they work to get occasional purchasers to buy more frequently? Their research uncovered that the top 10% of Velveeta buyers account for over 50% of profit. Kraft decided to focused on this key segment of 2.4 million consumers. According to Greg Gallagher, Velveeta Marketing Director, “The previous thinking was that the quickest, easiest path to growth was to identify light users or lapsed users. But when we talked to superconsumers, we learned that in fact they wanted to use Velveeta more —they were starving for it.” Kraft went to work on creating brand extensions. Additional products that contained Velveeta. The results are anything but cheesy. New product spin-offs totaled over $100 million in additional sales.

GOLDEN GOLDFISH LESSON: Do more for your best ones. In the words of Yoon, Carlotti, and Moore, “Show the love to those that love you the most.”

Today’s Lagniappe (a little something extra thrown in for good measure) – Speaking of a Golden and a Goldfish, here is a video of Rellie the Golden Retriever discovering a goldfish tank for the first time:

7 Key Takeaways from the Purple Goldfish minibuk

I recently published a minibuk entitled Purple Goldfish – Little Things Make The Biggest Difference. It is now on Slideshare:

Here are top seven takeaways from the minibuk:

#1. The Biggest Myth in Marketing

There is no such thing as meeting expectations. You either exceed them or you fall short.

#2. Choose Wisely

You can’t be all things to all people. You only have two choices as a marketer: Create to spec and face being a commodity or set out to exceed expectations and become literally remark-able.

#3. Shareholders vs. Customers?

Business is about creating and keeping customers. Customer experience should be Priority #1 in your marketing. Stop focusing on the “two in the bush” (prospects) and take care of the one in your hand (customers).

#4. Value is the New Black

Don’t compete on price. Cater to the 70% that buy based on value. Price is only relative to the value received.

#5. Purple Goldfish Strategy

Purple Goldfish Strategy is “differentiation via added value.” Finding signature extras that help you stand out, improve customer experience, reduce attrition, and drive positive word of mouth.

#6. Acts of Kindness

Think of lagniappe as an added branded act of kindness. A beacon or sign that shows you care. Marketing via G.L.U.E (giving little unexpected extras). A little something thrown in for good measure.

#7. Five Ingredients or R.U.L.E.S

Relevant – the extra should be of value to the recipient

Unexpected – it should “surprise and delight”

Limited – the extra should be something rare, hard to find or signature to your business

Expression – it should be a sign that you care

Sticky – it should be memorable and talkable

How are you standing out in a sea of sameness? What’s your Purple Goldfish?

About the Author

Stan Phelps is a TEDx Speaker, Forbes Contributor, and IBM Futurist. He believes that today’s organizations must focus on meaningful differentiation to win the hearts of both employees and customers. He is the Founder of the content hub PurpleGoldfish.com, a site  that focuses on customer experience and employee engagement solutions. He believes that “differentiation via added value” is a game changing strategy.

Before founding PurpleGoldfish.com, Stan had a twenty-year career in marketing included leadership positions at IMG, adidas, PGA Exhibitions and Synergy. At Synergy, he worked on award-winning experiential programs for top brands such as KFC, Wachovia, NASCAR, Starbucks, and M&M’s.

He has spoken for Fortune 100 brands such as IBM, Citi, ESPN, and Target. Stan has keynoted over 150 events in the US, Canada, UK, France, Sweden, Spain, The Netherlands, Russia, Peru, Israel, Bahrain, and Australia. Stan received a BS in Marketing and Human Resources from Marist College, a JD/MBA from Villanova University and a certificate for Achieving Breakthrough Service from Harvard Business School.

Interested in having Stan speaking at your event, email us at: speaking@purplegoldfish.com.

Today’s Lagniappe (a little something extra thrown in for good measure) – Every minibuk needs a jingle. Here’s one for Purple Goldfish. NOTE: No goldfish were harmed while filming this:

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:

Customer Experience in Pharma is About Winning the Hearts of Customers

This post was originally published on eye for pharma by Deirdre Coleman on May 1st:

In the new value-based health economy, pharma companies must understand the characteristics of next-generation consumers, who want to take increasing control of their own treatment, to become co-pilots rather than passengers in drug purchase and usage decisions.

Credit: Starbucks.com

Credit: Starbucks.com

“To build an enduring, sustainable, long-term business and consumer brand, it’s not about fancy marketing, it’s about establishing a very powerful and an unusual emotional relationship with the customer” – Howard Shultz, Starbucks

The next generation of consumers is reshaping the pharmaceutical industry much as they have transformed other industry sectors. Customers want their preferences and behaviors understood and acted upon, constantly demanding more and actively communicating dissatisfaction if their needs aren’t met. As consumers take on more risk and responsibility in their healthcare, they’re migrating from a passive recipient to a joint participant in drug purchase and usage decisions. They have edged ahead in terms of their demands and expectations and traditional pharma marketing efforts are ill-equipped to address their needs and values. In the future, medication will increasingly be designed to appeal to a particular segment’s preferences, rather than everyone’s symptoms. How can you encourage people to have as great an affinity for their favorite brand of medication as they do for their favorite brand of car? What can you do—beyond the pill itself—to encourage people to pick your brand?

Exceeding Expectations

According to best-selling author, keynote speaker and customer experience architect, Stan Phelps, putting the emphasis on customer engagement and lifetime value rather than acquisition is key to future commercial growth. “I founded 9 Inch marketing in 2009 and our philosophy is focused on the value of customer experience as a competitive differentiator and the importance of employee engagement in building a strong corporate culture. For far too long, the overwhelming majority of marketing has fixated on the eyes and ears of the prospect. Not enough has been focused on creating experiences for current customers that drive referrals and create advocates. Great customer experience is about being so remarkable that people can’t help but talk about you; that if you absolutely delight someone – they will not only come back, but they’ll bring their friends. To me, you are never meeting consumers’ expectations you are either exceeding them or you are disappointing them. In a world where 60-80% of customers describe their customer satisfaction as satisfied or very satisfied before going on to defect to other brands, ‘meeting expectations’ is no longer an option. Behavioral psychologists have long argued that only 30% of human decisions and behaviors are actually driven by rational considerations. This means that more than 70% of consumer loyalty and spending decisions are based on emotional factors. Three primary drivers of engagement are personalization, relevancy and superior customer experience.”

Insight Cultivates Connection

Pharmaceutical companies can go beyond the one-way mirror in analyzing consumers, delving into their behavior and motivations. Patients are benchmarketing their healthcare experiences against their experiences with Amazon, Starbucks and JetBlue. Pharma companies will need to face the reality that the bar is set very high in terms of peoples’ expectations of personalisation, convenience and service”.

Many pharmaceutical and life sciences companies have relied on traditional techniques of using demographics such as gender, insurance status, age, and health condition to segment the types of patients best suited for their products. But too often that approach to customer segmentation misses individual attitudes and behaviors, resulting in an incomplete picture of the consumer. “Pharmaceutical companies can go beyond the one-way mirror in analyzing consumers, delving into their behavior and motivations. Patients are benchmarketing their healthcare experiences against their experiences with Amazon, Starbucks and JetBlue. Pharma companies will need to face the reality that the bar is set very high in terms of peoples’ expectations of personalisation, convenience and service. Patients live in a world where they can do everything (banking, shopping) over the phone, where they get pinged on their mobile when their order is ready. That’s elevating the bar for the entire healthcare industry. Patients don’t always act rationally and they may not make their healthcare decisions based on best outcomes – take for example Cleveland clinic. The chief factor determining people’s selection of a hospital was patients’experience (41%), followed by physician’s decision (21%), reputation (20%) and location (18%). Patients are making decisions everyday to change healthcare providers and facilities based on the information they hear from friends, family, online and in their community.  Very quickly, a hospital or practice can become “known” for providing a certain level of patient experience, either good or bad. Consumers want their medication experience to be personalized and meaningful. If theirexpectations are met, they’re more likely to follow the proper course of treatment for longer. Whether a consumer is starting a new therapy, managing a chronic condition, or juggling multiple treatments, evaluating their needs throughout the patient journey is critical to delivering experiences that resonate with the patient”, remarks Phelps.

Customer Experience: 5 Things that Lead to an Exceptional Customer Experience

Companies don’t emotionally engage with their customers – people do. Marketing needs to become more about employees and customers and how to connect more and less about quarterly reporting and campaigns. Companies that have engaged employees grow up to three times faster than others with a company with less engaged employees.”

1)     Employees First

“I would argue that putting the employees first, customers second and shareholders last is a winning formula for any organization looking to succeed. Employee engagement is the emotional commitment an employee has to the organization and its goals, resulting in the use of discretionary effort. Satisfied employees lead to satisfied customers. Because satisfied employees care more, they are more productive, give better service, and even stay in their jobs longer. All of that leads to happier customers, who buy more and refer more often, which drives sales and profits higher, finally resulting in an increase in stock price. Companies don’t emotionally engage with their customers – people do. Marketing needs to become more about employees and customers and how to connect more and less about quarterly reporting and campaigns. Companies that have engaged employees grow up to three times faster than others with a company with less engaged employees. Employee engagement can be a competitive differentiator. Becoming a best place to work soon attracts the best customers.”

2)    Driving Loyalty & Retention

“Traditional marketing is all about building awareness for products and brands. The emphasis is on getting new customers, and very little attention is paid to retaining existing customers. The way to accomplish “more” is through added-value. It works by giving customers unexpected extras. Those extras improve the brand, drive loyalty, and promote referrals. Referrals are key. Referred customers are four times more valuable than customers acquired by other means. Why? A referred customer spends twice the amount of money and refers twice the number of customers than non-referred customers do. Unless you spend a lot of time in Louisiana, you likely haven’t heard the term ‘lagniappe.’ But this Creole aphorism has the power to transform your business. Defined as “the gift” or “to give more,” lagniappe represents the potential to turn customers into your largest sales force by exceeding expectations. According Gartner research, decreasing customer churn by just five percent can increase profits by 25 percent to 125 percent. The reason is that it’s expensive to get new customers—it’s much easier and more sustainable to keep your current customers happy and sell them more products or services.”

3)    Outside-In Approach

“Really think about what’s important to the customers, and how you can make those things great in terms of delivery. Whether stretching beyond the bounds of segmentation and demographics or increasing the focus on behavioral insights, the industry must find a way to tap into its customers’ nuanced lives to offer an enhanced personalized experience. Patients want personalized care and real-time feedback. They want to be treated as active participants in their care and treatment and they are demanding convenient, cost-effective solutions.”

4)    Give Little Unexpected Extras (G.L.U.E.)

what's your purple goldfish“Shifting your focus away from awareness and acquisition towards the customer experience and retention is a mindset change that pays dividends. My book, What’s Your Purple Goldfish is based on the Purple Goldfish Project, a crowd sourcing effort that collected over 1,001 examples of signature added value. if you are not willing to differentiate yourself by creating valuable experiences or little touches that do ‘above and beyond’ for your customer, you will languish in the sea of sameness. Creating small unexpected extras can go a long way to increasing retention, promoting loyalty and generating positive word of mouth.”

5)    Handling Mistakes

“Mistakes are part of doing business. How you handle the fumble determines whether or not you will recover the ball (or business). Showing a little empathy and a willingness to go the distance can make all the difference.  Johnson and Johnson’s handling of the Tylenol tampering crisis is an example of how to get it right. The company immediately alerted consumers across the nation, via the media, not to consume any type of Tylenol product. They told consumers not to resume using the product until the extent of the tampering could be determined. Johnson & Johnson, along with stopping the production and advertising of Tylenol, recalled all Tylenol capsules from the market. The recall included over 30 million bottles of Tylenol, with a retail value of more than 100 million dollars. They offered to exchange all Tylenol capsules that had already been purchased. It was estimated that millions of bottles of Tylenol capsules were in consumers homes at the time. Although this proposition cost Johnson & Johnson millions more dollars, and there may not have been a single drop of cyanide in any of the capsules they replaced, the company made this choice on their own initiative in order to preserve their reputation. Their ethical approach and their commitment in putting humans above profits made a heroic event out of a catastrophic event.”

Empowered patients are wanting – and taking – more control. The focus on customers’ experiences will require seamless collaboration between healthcare providers, pharmacists, insurers and pharmaceutical companies and a choice of treatment options. Customers are reacting with increasingly high expectations of the industry shaped by experiences in other sectors.The pharmaceutical industry’s challenge is to create similarly meaningful experiences across the patient journey. The advent of social media and real-time interactive feedback via the Internet allows every customer to build and expect a relationship with your business, rather than just touchpoints. Engagement and an emotional connection will make a customer relationship the driving force for loyalty and differentiation. Is it time to get emotional?

Today’s Lagniappe (a little something extra thrown in for good measure) – Empathy in healthcare is key. Seeing things through your patients eyes and being aware of their thoughts and feelings. This is a MUST SEE video by the Cleveland Clinic. “If you could stand in someone else’s shoes . . . hear what they hear. See what they see. Feel what they feel. Would you treat them differently?”

Golden Goldfish Excerpt – Retention vs Acquisition

The following is an excerpt from the upcoming book, What’s Your Golden Goldfish? (available on Amazon May 1st):

Golden Goldfish Book

Chapter 2

RETENTION VS. ACQUISITION

“The search for meaningful differentiation

is central to the marketing effort. If marketing is

about anything, it is about achieving customer

getting distinction by differentiating

what you do and how you do it.

All else is derivative of that and only that.”

– Theodore Levitt, Harvard Business School

Question: Do you focus on the funnel or fix the leaky bucket?

retention versus acquisition

Answer: Focus on the Leaky Bucket

Retention is Fast Becoming the New Acquisition

Satisfaction drives loyalty.  More importantly, it drives retention.  The key to a healthy bottom line is the ability to keep your best customers and employees.

According to the recent book Outside In by Harley Manning and Kerry Bodine, {Endnote 13} retaining customers drives revenue in three critical ways:

  1. Incremental sales from current customers.
  2. Retained sales as a result of lower churn.
  3. New sales driven by word of mouth (referrals).

Can small improvements in retention make a big difference?  Absolutely. According to Gartner Group, {Endnote 14} “A mere 5% improvement in retention can increase profitability by upwards of 25% to 125%.”

The Revolving Door Effect 

Too much focus in business is on acquisition.  The vast majority of spending is focused on getting prospects through the door and converting them to customers.  Little attention is paid to their retention.  For most companies this door represents a revolving door.

Let’s use the insurance category to illustrate the point.  The average insurance company maintains a retention rate of 80%.  USAA, a leader in customer experience, retains customers at a rate of 97% {Endnote 15}. Christine Moorman, the T. Austin Finch Professor of Business Administration at the Fuqua School of Business at Duke University, demonstrates how this plays out over a three-year time frame.

The results are eye opening.

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Companies with 80% retention will have to replace over 50% of their customers every three years.  Comparatively USAA only needs to replace less than 9% of its customer base over a similar three-year period. 

Retention of the Vital Few

Based on the Pareto’s Law, {Endnote 16} for the vast majority of companies, 80% of profitability is driven by 20 percent of customers.  These customers are your key accounts. Retaining these customers should be your top priority.

Let’s start exploring how companies utilize the concept of the Golden Goldfish to retain these vital few. Little extras that drive loyalty and referrals.

Rethinking your first bite of the apple and how you approach marketing

 Apples to Bananas

This video is going to make you rethink how you eat an apple. What if I told you there was a way to consume 30% more of an apple. Have a look:

It all comes down to the critical first bite. I would argue that same question applies to marketing. Where do you prioritize your marketing spend? Are you putting your customers first or your prospects first? Here is a slideshare deck that talk about prioritizing between the two. It’s entitled, Traditional Marketing is Dead… Long Live the Customer:

Here is the takeaway. Traditional marketing is dead. Today’s consumer is empowered. Tell and sell marketing is no longer effective. Companies need to differentiate themselves to stand out in a sea of sameness. Brands need to find ways to leverage their most important asset: their current customer. Referrals and word of mouth are keys to future growth. I believe the answer lies in taking that first bite towards improving the experience for current customers.

Are you ready to eliminate the current waste in your marketing spend? Many would argue that the waste far exceeds 30%. A popular saying illustrating how difficult it was to reach potential customers using traditional means is attributed to retail pioneer John Wanamaker: “Half the money I spend on advertising is wasted; the trouble is I don’t know which half.”

I believe the critical first bite lies in the power of “The Gift” or what I would call the Goldfish Rule.  The most successful brands leverage gift economy principles to exceed expectations.

Philosophy of The Goldfish Rule

Businesses think that the best way to grow sales is to find new customers. Actually, the best way to grow sales is to increase the lifetime value of existing customers.

Happy existing customers benefit your business in at least three ways:

  1. They buy more from you.
  2. They buy more frequently from you.
  3. They tell more of their friends to buy from you.

How do you make existing customers happier? You realize that, from the customers’ standpoint, there’s no such thing as “meeting expectations.” Your only two options are to deliver less than they’d like, or more than they’d like. Choose “more.”

Want “more” proof:  See how leveraging greeting and gifting helped this QSR increase sales by 40%

Today’s Lagniappe (a little something extra thrown in for good measure) – While we’re on topic of hacking fruit, what is the best way to peel a banana?

Complaints are a Gift in the Age of the Empowered Customer

urlThis article by Anthony Myers originally appeared on CMS Wire. I had a chance to sit down with Anthony right before speaking to MENG NorCal in San Francisco on 11/11:

Complaints are a Gift in the Age of the Empowered Customer

Empowered customers are more demanding than ever and traditional views of marketing continue to be entrenched. One enterprising marketer has built his own value matrix to help companies figure out how to become the kinds of organizations those empowered folks love to talk about.

Forget B2C or B2B; It’s About Person to Person (P2P)

Whether businesses are focused on consumers or other businesses, it’s the relationships they build with people that makes or breaks customer loyalty, marketing industry veteran Stan Phelps said in an interview with CMSWire.

I’ve come to the realization companies must exceed customers’ expectations or completely fail,” Phelps said. “It’s not enough to simply meet their expectations. The bar has been raised too high.”

Consumers no longer compare experiences with particular brands to experiences they’ve had with similar companies, Phelps said. Companies like Amazon, JetBlue, Apple and Zappos have satisfied their customers so thoroughly, every company now gets compared to them no matter what business they are in.

Customers no longer just look at the last interaction they had with a competitor, they look at the last interaction they had period,” Phelps said. The customer now thinks, “Amazon does x, y and z this way, so why can’t this other company do it?”  

More is expected from companies through customer service, questions about products and finding information online, and the way Phelps looks at this is through his Value, Maintenance matrix (below). Companies that provide high value and are low maintenance are the ones customers love the most, Phelps said.

Customer Experience, Complaints are a Gift in the Age of the Empowered Customer

One of the ways those businesses provide value is by doing the little things right, he said, and that includes things like handling complaints.

Most of the time, complaints are a gift, but companies often don’t empower employees to do anything about it,” Phelps said. “Most people don’t even bother to complain, they just don’t come back.”

That’s why it’s so important for marketers to connect with people in small, memorable ways, he said. That’s the kind of differentiation that sticks in people’s minds. Handling a complaint the right way can even be more powerful than having a good experience in the first place. Those complaints are an opportunity, Phelps said, one that too many companies don’t take advantage of.

Building the Lagniappe Economy

We hear plenty about the gift economy or the collaborative economy, but Phelps said he is a proponent of what he calls the Lagniappe economy (pronounced Layn-yapp). This is a creole word hailing from New Orleans, and it denotes a small gift or something extra thrown in for good measure.

A Lagniappe economy takes the gift economy mindset and applies it to a market economy, Phelps said. The idea is to shift the way companies approach their customers, a notion that is all the more needed in the marketing world, he noted.

“Most companies spend 10 percent of their earnings on marketing, and 80 percent of that is usually on acquisition,” Phelps said “That should be switched around and more money should go to making existing customers happy.”

It’s cheaper to keep existing customers than it is to constantly go after new ones, but one of the big reasons companies don’t alter this reality is sales teams are paid for bringing in new customers, Phelps said. That’s not likely to change, and this inevitably raises the question of who in fact owns the customer journey.

In the short term, companies should focus on doing little things for their customers that will exceed their expectations. Offer them a little something extra, Lagniappe style, Phelps said. One example of this is the company Safelite Auto Glass, a company that ranked high on customer satisfaction at a recent Forrester Forum West conference.

Safelite workers will fix a chip or crack in an automotive windshield, and while the epoxy dries, they’ll vacuum and clean the inside of a vehicle. Who remembers the company that fixed their windshield? People do tend to remember the person that cleaned their car unexpectedly. Another example is a company called Peter Millar, a provider of clothing and apparel for golfers.

The company ships out packages to retailers — its customers — and makes sure the packing slip matches what’s in the box. This helps those customers cut down on taking inventory, a painstaking process that when made just a bit simpler, can really make a difference, Phelps said.

Having an approach like this, especially when dealing with empowered customers, means relationships become more relational and less transactional, he said. Customers are then more likely to spend more money, more likely to continue doing business with that company, and maybe even become an advocate to their friends and followers.

Everything is P2P, human to human. People buy from people they like.”

Today’s Lagniappe (a little something extra thrown in for good measure) – I am currently in Amsterdam. I spoke this week at CEX in the City. Hat tip to Chris Parker of Cool Experience and Brigette Johnston of Marae Business Services for putting on a fantastic and inspiring event. Big thanks to the sponsors such as Bare International, Oracle, Knowledgebase and Web Care Company who helped make it happen. Here’s a picture from the main stage:

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Halloween Edition of the EXTRA, EXTRA Newsletter

THE HALLOWEEN EDITION

Hi, it’s Stan. I hope this edition of the newsletter reaches you in good “spirits” on Halloween. That’s Jenn and I over in the picture. She went all out as a witch with purple hair. I kept it simple with a mock black turtleneck, jeans and running shoes as the late Steve Jobs. To quote Antoine de Saint Exupery, “Perfection is achieved, not when there is nothing more to add, but when there is nothing left to take away.”
It’s hard to believe it’s almost November. Only 55 days left for holiday shopping.
Enjoy the Newsletter!

FEATURED POST:

It’s Time to Focus on Retaining Customers

This post was written by Monique de Maio and originally posted on onDemandCMO. It is a recap of my MENG presentation on 10/11:

Traditional marketing is all about building awareness for products and brands. In traditional marketing, the emphasis is on getting new customers and very little attention is paid to retaining existing customers. According to best-selling author and marketer, Stan Phelps, traditional marketing is dead. Instead, it’s time to focus on retaining customers.

The data backs Phelps’ claim up: according to Gartner research, decreasing customer churn by just 5% can increase profits by 25%-125%. The reason is that it is expensive to get new customers-it’s much easier and more sustainable to keep your current customer and sell them more products.

Phelps discussed how to do this at the last meeting of the NJ Chapter of MENG (Marketing Executives Networking Group). It all boils down to doing that little extra for your customers . . .

TALKING HEAD VIDEO:

A few minutes on the philosophy of 9 INCH marketing.
9 INCH philosophy

TOOL TIME – Vsnap

iconvsnap758x371Big thanks to Katie Del Angel of ISITE Design. I had a chance to connect with her out at the Delight Conference in Portland. Katie told me about Vsnap. Vsnap allows you to send :60 second video messages. Follow up and saying “thank you” is one of the key tenets of the Purple Goldfish philosophy. I love this service as it combines the personal touch of a handwritten note, the warmth of a smile and the real time deliverability of an e-mail.

Why Vsnap?

Because recognition is key. Vsnap allows you to record quick, personal video messages to make your customers and employees feel valued. Best of all its free with premium plans starting as low as $3 a month. Check out the :83 second video below for a complete overview:

Vsnap Overview - July 2013

THE GOLDFISH BOOK TOUR

The 20 city book tour is in winding down with my busiest month ever. Last month included stops in Boston, NJ, DC and Portland.

Here is the current schedule for this month:what's your purple goldfish
November:
11/1 Chapel Hill – AENC Marketing Conference
11/7 Phoenix – Compete Through Service Symposium
11/11 San Francisco – MENG at Parc 55 Wyndham
11/14 Amsterdam – CEX in the City
11/20 Webinar – Digicert
11/21 Workshop – Atlanta Tech Village
11/28 Moscow – Coral Promo
Keep me in mind if you are looking for a keynote, breakout session, workshop, webinar or strategy session on customer experience or employee engagement.

Today’s Lagniappe (a little something extra thrown in for good measure) – If you haven’t seen this video prank on YouTube to promote the movie “Carrie,” you are in for a treat. If you’ve already seen it, it’s time for an encore viewing. It’s that good:

Retention vs. Acquisition: Do you focus on the funnel or fix the leaky bucket?

retention versus acquisition

[This post was originally posted on MENG Blend. MENG is the indispensable community of executive level marketers who share their passion and expertise to ensure each member’s success]

Answer: Retention is Fast Becoming the New Acquisition

Satisfaction drives loyalty.  More importantly, it drives retention.  The key to a healthy bottom line is the ability to keep your customers.

According to the book Outside In [click here for infographic] by Harley Manning and Kerry Bodine, retaining customers drives revenue in three ways:

  1. Incremental sales from current customers.
  2. Retained sales as a result of lower churn.
  3. New sales driven by word of mouth (referrals).

Can small improvements in retention make a big difference?  Absolutely.  According to Gartner Group,

A mere 5% improvement in retention can increase profitability by upwards of 25% to 125%.”

The Revolving Door Effect 

Too much focus in marketing is on acquisition.  The vast majority of spending is focused on getting prospects through the door and converting them to customers.  Little attention is paid to their retention.  For most companies this door represents a revolving door.  Let’s use the insurance category to illustrate the point.  The average insurance company maintains a retention rate of 80%.  USAA, a leader in customer experience, retains customers at a rate of 97%.  I recently heard Christine Moorman, the T. Austin Finch Professor of Business Administration at the Fuqua School of Business at Duke University, discuss how this plays out over a three year time frame.  The results are eye opening.

Retention Impact

Companies with 80% retention will have to replace over 50% of their customers every three years.  Comparatively USAA only needs to replace less than 9% of its customer base over a similar three year period. 

Retention of the Vital Few

Based on the Pareto Principle, for the vast majority of companies, 80% of profitability is driven by 20 percent of customers.  These customers are your key accounts. Retaining these customers should be your top priority.

Coming Spring 2014Over the next ten months, I will be exploring how companies utilize the Goldfish Rule to retain these vital few.  Little extras that drive loyalty and referrals.  My findings will complete the third and final leg of the Goldfish trilogy.  Purple Goldfish focused on customers, Green Goldfish focused on employees, and now the Golden Goldfish will focus on 20% of customers and employees.

Any good examples or best practices to share?  How do you work towards retaining your Top 20%?

Today’s Lagniappe (a little something extra thrown in for good measure) – Here’a a slideshare showcasing best in class examples focused on retention building practices. It contains 9 lessons from leading brands from Apple to Zappos:

The Goldfish Rule: Love your customers and employees as yourself. Give more than expected. Be remark-able

The Goldfish Rule for Customers and Employees9 INCH marketing was founded in 2008 on the belief that “differentiation via added value” can be a game changing marketing strategy. Our aim is to shift the marketing paradigm. For far too long, the overwhelming majority of marketing has fixated on the eyes and ears of the prospect. Not enough has been focused on creating experiences that drive referrals by reaching the heart of your customers and employees.

The Goldfish Rule is about being so remark-able that people can’t help but talk about you. That if you exceed expectations and absolutely delight someone – they will not only come back, but they’ll bring their friends.

The Goldfish Rule venn diagram

Philosophy of The Goldfish Rule

Businesses think that the best way to grow sales is to find new customers. Actually, the best way to grow sales is to increase the lifetime value of existing customers.

Happy existing customers benefit your business in at least three ways:

  1. They buy more from you.
  2. They buy more frequently from you.
  3. They tell more of their friends to buy from you.

How do you make existing customers happier? You realize that, from the customers’ standpoint, there’s no such thing as “meeting expectations.” Your only two options are to deliver less than they’d like, or more than they’d like. Choose “more.”

The way to accomplish “more” is through added-value. The Goldfish Rule, which is based on a time-tested loyalty strategy, works by giving customers unexpected extras. Those extras improve the brand, drive loyalty, and promote referrals. (Related post: Marketing GLUE can increase sales by 40%)

Referrals are key. Referred customers are four times more valuable than customers acquired by other means. Why? A referred customer spends twice the amount of money and refers twice the number of customers than non-referred customers do.

The Goldfish Rule — and the strategy of giving existing customers more than they expected — isn’t new. Leading companies, such as Apple, Doubletree, Five Guys, Southwest, Wells Fargo and Zappos have leveraged such gift-economy principles for years to create customers for life. (Slideshare: Traditional Marketing is Dead, Long Live the Customer)

The Goldfish Rule also applies to employees. When organizations give employees little unexpected extras, those extras drive engagement and reinforce the desired culture. Employees are happier, more productive, stay longer, and are excited to spread word to friends (who may themselves become employees).

Bottom line: Adhere to The Goldfish Rule. Stop spending dollars on chasing prospects. Instead, focus on giving customers and employees more than expected. Giving more builds loyalty to your brand, which translates into increased sales, word of mouth, engagement, and productivity.

Today’s Lagniappe (a little something extra thrown in for good measure) – The Goldfish Rule should not be confused with the Golden Rule. An although there are three ways to leverage The Goldfish Rule (Purple, Green and Gold), it should never be confused with a 3-way. Maybe I should just let Justin Timberlake, Lady Gaga and Andy Samberg explain it:

9 inch coffee mug

 

Let’s grab a cup of coffee. Skype, Hangout or Starbucks. You choose.

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