Don't Persuade Customers -- Just Change Their Behavior

Most businesses underestimate how hard it is to change people’s behavior.  There is an assumption built into most marketing and advertising campaigns that if a business can just get your attention, give you a crucial piece of information about their brand, tell you about new features, or associate their brand with warm and fuzzy emotions, that they will be able to convince you to buy.

On the basis of this assumption, most marketing departments focus too much on persuasion.  Each interaction with a potential customer is designed to change their beliefs and preferences.  Once the customer is convinced of the superiority of a product, they will naturally make a purchase. And once they’ve made a purchase, then that should lead to repeat purchases in the future.

This all seems quite intuitive until you stop thinking about customers as an abstract mass and start thinking about them as individuals.  In fact, start by thinking about your own behavior.  How easy is it for you to change?

It's very hard to change behavior.  Given to their own devices, individuals will continue to behave a certain way unless nudged in the right direction.  I often refer to this concept as proactive vs reactive marketing.  In proactive marketing, the business is using direct marketing to communicate in an effort to change behavior.  This often takes the form of an offer or incentive to  incite the behavior change.  In reactive marketing, money is spent to gain awareness and then it is left up to the customer to interact with the business by clicking on the ad that has been served up multiple times.  Both of these models are important for the overall marketing strategy, but one is much more cost effective than the other.

First, you have to optimize your goals. 

For marketers, this means focusing on how to get consumers to interact with products rather than just thinking about them.  As an example, our local Sunday newspaper often comes in a bag with a sample product attached that encourages potential consumers to engage with products.

Interaction is the most important part of proactive marketing.  Be sure to measure the results on the behavior you are trying to change.  Remember, the biggest thing to watch when analyzing behavior change is did you change enough behavior to compensate for any increases in offer to entice the change?  Inevitably there are many customers that won't change behavior, but will take you up on your increased offer, so you just reduced margins for the same behavior.   

I try to instill into my team to focus on the individual and try to understand the mindset of our customer.  Are the incentives we are giving going to change their behavior?  Try to ask, "if it were me, would this offer convince me to engage with this communication?"  Always put yourself in the shoes of your customer and focus on their experience to achieve the desired behavior change.

'70 Percent of CRM Installs Fail' and Other Crappy Stats You Should Ignore

The big stat that I think is very interesting is the total amount of organizations that have marketing technology installed.  Such a low number.

by looking at data from 3 million businesses in our Fall 2014 report, that the truth — a statistically significant number across all sizes of business, and 151 industries — is much harsher. Marketing technology (as a whole) only has 4.1% penetration, let alone marketing automation.

The Slow Decline of Companies

In Seth Godin's latest blog he mentions how company's almost always melt, they rarely explode. It is almost always the short-term thinking of today that causes the crisis of tomorrow. 

Rarely in the moment, when business is down and your customers are no longer engaged can a corporation look back and find the reason. That's because it's multiple little reasons that were made in years past for short-term gains that lost the customers trust. 

Trust in a personal relationship is hard to regain, but trust in a consumer to business relationship is almost impossible to regain. 

Marketing Automation with Neolane

Building a capture program is something that usually is untouchable with most marketing automation tools.  We built ours in 3 days with Neolane.  Very complex offers built dynamically based on previous behavior of redemption or no redemption.  Yet another tool I am becoming quite a big fan of.

Marketers, Go Back to Basics

"There's so much that's sexy in social media and in mobile right now," he said. "Anyone who's bought a smartphone in the last 18 months is doing some things they hadn't imagined yet." When they read about a big company launching a cutting-edge initiative, they want in — but the economics usually only make sense for large companies that have experimental budgets. Instead, he says it often pays to focus on bread-and-butter marketing (like direct mail) or even on technical innovations of the past few years that are effective, but less novel (like mobile websites).

In the gaming industry, direct mail is still king.  In fact, it's not really close with a response rate of over 4X then email alone.  Yet, many marketers get caught up in the sexy new marketing trends.  Social gets more attention than direct marketing, even though direct marketing brings much more profit.  Likes are revered, yet direct mail is boring and so yesterday.  Sometimes whats worked in the past is what will work in the future.  

Best Time To Send Email

Interesting article on times to send emails.  The research included 21 million different emails and the findings are similar to what I have seen in my career.​

One of the most important conclusions is that sending newsletters during readers’ top engagement times of 8 a.m. – 10 a.m. and 3 p.m. – 4 p.m. can increase their average open rates and CTR by 6%.

However, optimizing email timing takes more than awareness of top engagement times. As our research points out, it’s a combination of many factors, including knowledge of time zone differences, your subscribers’ daily routines and the practices of other marketers. Find out more for yourself:

Remember to test on your own data.  I have seen different optimal open rate times between properties in the gaming industry, so test many different times and days and determine what the optimal time for your organization.

Emails have the best results within the 1st hour after delivery. This is when 23.63% of all emails are opened. But 24 hours after delivery, the average open rate is close to zero.

Almost 40% of all messages are sent between 6 a.m. and noon. This can result in inbox clutter, and significantly decrease results for these emails.

Messages sent in the early afternoon have a better chance of being noticed and consequently achieve better results: up to 10.61% open ratio and up to 2.38% CTR.

Subscribers’ top engagement times are 8 a.m. – 10 a.m. and 3 p.m.- 4 p.m. with up to 6.8% average open rates and CTR.

​I like the afternoon hours.  It has a high engagement rate and most emails are sent in the morning hours.  The more you can stand out, without being too late to be stale, the better success your email campaigns will have.  

Remember, once an email sits for 24 hours, there is hardly any chance you will get a conversion.  ​

The Four Basic Forms of Customer Loyalty →

Great article about the types of loyalty you can achieve as a business.  It really shows there is only one form of loyalty, because the other forms are not lasting and don't represent a sustainable business.​

Purchased Loyalty

The best example of purchased loyalty is a customer rewards program. Other examples include memberships, coupons, and rebates.

Basically, purchased loyalty pays customers to be loyal, and there is nothing wrong with that practice. In many industries and market sectors the purchased loyalty strategy works extremely well.

The main problem with it is that purchased loyalty can be easily stolen because the customer is loyal to the program, not the company.

Purchased loyalty is a portion of the loyalty program, but can't be the basis for the business.  Someone can always come over the top and create a richer loyalty program and forces you to squeeze your margins even more to compete.​

Convenience Loyalty

The local market, the corner dry cleaner, the coffee shop on your way to work. You might be loyal to those businesses simply because they're convenient. You're likely to remain loyal unless competitors come along who are equally or even more convenient.

Location, location, location.  This loyalty is a great advantage as a business, but doesn't mean the guest will be truly loyal because of it.  When you have a convenience advantage, it takes a lot more for a customer to defect, but don't give your guest a reason and this advantage can be sustained for a long period of time. ​

Restricted Loyalty

Restricted loyalty exists when there is no other game in town. Your cable company may enjoy restricted loyalty, especially if you live in a rural setting and there is no competition. (Although it is easy to argue that other options do exist, like online services.)

Utilities tend to enjoy restricted loyalty. Most cities do not have multiple electricity providers.

Monopoly's are a wonderful thing if you find yourself in one.  They make life very easy as a business.  However, they rarely last for any period

of time because once someone else sees they can steal your market share, they will.​

Also, businesses tend to get lazy when they have a monopoly.  They don't take care of the customer and deploy strategies that are more bottom line ​driven, instead of customer focused.

True Loyalty

True loyalty is earned loyalty. True loyalty is undying allegiance to a brand or product based on an incredible level of satisfaction.

Customer satisfaction breeds true loyalty. When you are highly satisfied, when your needs are completely met and your expectations are consistently met and even exceeded, you simply cannot imagine using another product or service.

True loyalty is the holy grail of customer satisfaction and is something every business should aspire to create.

If you take care of your customer and provide a high level of satisfaction, you can overcome any of the other loyalty forms.  Customers will travel and accept less from you than your competitors if they truly feel cared for.  Always strive to build an organization around true loyalty, it's the only form of loyalty that is sustainable.​

Is This Driving Incremental Revenue?

So I went to lunch with my daughter today.  We were out and about and she loves Tony Roma's, saw that we passed one and asked if we could go to lunch there.  When walking up to the door there was a "check-in with foursquare" sign on the front door.  So I did.

Mind you I was already there, already made my decision to eat there, was going to pay full price before I saw this sign.  I checked in and they gave me 10% off of my meal, for essentially doing what I was already going to do.  So why is this a good strategy?

I understand the whole social aspect of this check in.  This goes to all of my "friends" and they get to see I ate there.  But how many of my "friends" are paying attention to what I am doing, aside from those stalkers I have, by the way, stop reading this, but I digress.  How many people am I really influencing, enough to make up 10% for a meal I was going to pay full price?  I don't see it.  That is a lot of cost to overcome to drive something that can't be measured.

Am I crazy?  I just don't see this as a good business decision.  Just my thoughts.

In Search of the Ideal Groupon Discount - Rafi Mohammed - Harvard Business Review

50% off discounts attract the wrong customers, who I call uber-deal hunters. These deal-maximizers come simply for the big discount with little intention of becoming full price patrons.

This is exactly what I thought when Groupon first came out.  I remember doing 2-for-1 coupons at my families restaurant in California when I was a kid and we were very busy, but the customers never came back.  I quickly came to realize that the customers who look for those deals are always looking for the next big deal, not the next best product.  I like what Rafi has to say, ​smaller discounts for trial has a better opportunity for repeat guests.

Big Data's Human Component - Jim Stikeleather - Harvard Business Review

Machines don't make the essential and important connections among data and they don't create information. Humans do. Tools have the power to make work easier and solve problems. A tool is an enabler, facilitator, accelerator and magnifier of human capability, not its replacement or surrogate ... That's what the software architect Grady Booch had in mind when he uttered that famous phrase: "A fool with a tool is still a fool."

From my last post, I talked about humans being able to make the data actionable.  The understanding of the data that is used for the model is more important than understanding the ​math behind the algorithms.  Algorithms can find the patterns humans can't, however the algorithms can't determine if the answers are relevant. 

We forget that it is not about the data; it is about our customers having a deep, engaging, insightful, meaningful conversation with us

Exactly.​

Understand that expertise is more important than the tool.  Otherwise the tool will be used incorrectly and generate nonsense (logical, properly processed nonsense, but nonsense nonetheless).

The answers will be fancy, but will not help make decisions for frontline or CRM more effective.​

When we over-automate big-data tools, we get Target's faux pas of sending baby coupons to a teenager who hadn't yet told her parents she was pregnant, or the Flash Crash on Thursday May 6, 2010, in which the Dow Jones Industrial Average plunged about 1000 points — or about nine percent.

Humans should always be paying attention to the outcomes and put parameters around the use of automated answers.  Answers should be used in conjunction with other factors for the best decision.​

Although data does give rise to information and insight, they are not the same. Data's value to business relies on human intelligence, on how well managers and leaders formulate questions and interpret results. More data doesn't mean you will get "proportionately" more information. In fact, the more data you have, the less information you gain as a proportion of the data (concepts of marginal utility, signal to noise and diminishing returns). Understanding how to use the data we already have is what's going to matter most.

​

No Change Fees, No Duh

Southwest Airlines has just started airing commercials talking about how other airlines charge for changing your flights. This comes after a year of pounding home the "Bags Fly Free" messaging. I think this is a brilliant move, but of course this is Southwest.

I used to be a fairly frequent traveler and many times I would have the need to adjust my original flights at the last minute. Fortunately I flew Southwest most of the time, so when I did this it didn't cost me $100 just to make a couple of clicks on the website. There were times I had to fly other airlines and it cost me as much as $150 to change a flight. Luckily for me I wasn't picking up the tab, but if I was I would not be a happy flyer. So again Southwest is hitting home with a problem in many of our industries.

Ask a customer what they hate the most and at or near the top would be nickeling and dimeing. This flies in the face of the ultimate goal of business, building a loyal customer base. Why when I stay in a hotel do I have to pay a resort fee for things I either do not use or should be free. For instance, the gym, if I did use the gym on my trip, shouldn't that just be included in the price? It's not like the hotel has figured out the cost of the gym and reduced that from the room price. Also, when I am flying, shouldn't my bags have already been calculated in the cost of the ticket?

Customer centric businesses focus on the customer. Customers hate add-on fees that should already be factored into pricing. The last thing I want to worry about when I go on vacation is how much extra am I going to be charged for everything on my trip. Companies like Southwest make the most profit in their industry because they have the most loyal customers. My guess is if Southwest were to start charging fees for all of these things, then they would be in the same place as their competition, going out of business. Remember, always have the customers best interests in mind and loyalty will follow.