McDonald's might be the most popular of the bunch, but fast food burger operators know that the quality (and uniqueness) of their french fries will be a motivating force for repeat business.
I've moved! To read the rest of the post, check out the article on my new site: zacksimpson.com.
Here's the specific french fry marketing idea post.
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Fun fact: all the clever marketing in the world won't make up for a shitty product or poor customer service.
Despite the best efforts of marketing, branding and advertising, an organization simple cannot overcome ineffectiveness within it's core competencies.
Although this would seem to be a common sense business ideology, many businesses fail to invest in product refinement and customer service training. Why is that?
How many companies can you think of who have made their service the marketing message? Off the top of my head: Southwest, Zappos...and that's about it without spending much time considering it.Want to guess where these companies rank in their respective industries?
Our world is globally connected. We carry the power of the internet in our pockets. It is simply too easy for consumers to find your competitors if you do not provide them the service they expect.
What's more, they're more likely than ever to take to a virtual soapbox and decry your company. Why give them any reason to?
Companies must make money to exist, and I'm not suggesting businesses bow to the threat of virtual strong-arm tactics. However, most customer requests or complaints are usually well within the margin a business operates.
I used the example two weeks ago about Hainan Airlines and their shocking lack of customer service. I don't believe my requests were unreasonable (I was asking for their online quoted price over the phone, when their website went down), yet I didn't get my issue resolved, and I moved on to their direct competitor (Korean Airlines). It seems irrational that a business would operate in this way. What's more - I had heard nothing but POSITIVE things about Hainan Air. Perhaps it was an off-week for them.
To keep this short, businesses (particularly small to mid-sized businesses) need to invest more resources into their CRM, and in product/service refinement. If you sell ceiling tiles on the internet, invest in nothing but the highest quality tiles.
If you sell concert tickets online, then make sure customer relations management is a top priority. Positive customer experiences will lead to repeat customers, increasing their lifetime value. What's more, their virtual soapbox becomes their place to serve as a brand advocate. Which would you prefer?
The bottom line: Invest in strengthening your core competencies before opening up the marketing budget. If your customer experience is shoddy, you'll only do more harm than good by marketing to new consumers.
I wrote recently about online retail marketing after the recession, and since then, a thought has occurred to me: while the global consumer landscape is now different (expectations have shifted, etc), fundamental marketing research is still valid.
Today, I'm talking about the concept of customer lifetime value (CLV). In marketing, this means how much the average customer is worth to a business over the lifetime of the relationship between the business and the customer.
Of course, this is a highly variable thing, and not easy to calculate. It varies for each business type, industry and model. Contractual businesses (think real estate, subscription-based companies like insurance, cell phone service providers) rely on customers to renew a contract on a periodic basis. The reverse is called customer migration. Either a customer buys Product A from a business, or they do not.
If a customer doesn't renew a contract with a subscription-based company, they are considered lost. If a customer doesn't purchase Product A from Customer Migration Business A, they still might in the future. Determining the CLV metric for each business type is quite different.
In my opinion, drilling down CLV for customer migration businesses is much harder, as the marketer is not always certain when the relationship is over (from the customer perspective).
Once a business understands its CLV, it can use this metric to determine how much investment to make on customer acquisition, per customer. Example:
Ted's Toys Co. sells toys, and on average, customers spend $185 over the course of their relationship with the company. Marketer Jane from Ted's Toys knows that their products have an average 30% profit margin. This means, of the $185 spent per customer, $55.50 of it is profit for the company. Therefore, Marketer Jane must spend less than $55.50 to acquire each new customer, for the company to remain profitable. The lower she can get that number, the more profitable the company is.
Customer lifetime value is considered a long-term metric. It's not used for short-term goals, and generally emphasizes customer service and customer satisfaction as key barometers. Since we know that customer purchase behavior and expectations of value are now greater, CLV goes hand in hand with marketing to our post-recession world.
This week I was shopping for a round-trip plane ticket to Beijing, from Las Vegas. This isn't the first time I've been to China, and it probably won't be my last. I had done some research since my last trip, and had discovered Hainan Airlines. From what I've read, Hainan Airlines is an exceptional company. They are rated 5-stars by some publications, and the customer reviews I've read are largely positive.
With credit card in hand, I visited their website to purchase my plane ticket. Except, their reservation system wasn't working online, and I only received error messages. No problem…I called their 1-800 number. However, when I tried to make the exact same reservation over the phone, I was quoted a price 40% higher. When I expressed shock and mentioned the price on the website, the agent advised me the higher price was the best she could offer.
I got off the phone and sent a friendly email the customer service department of Hainan Airlines, expressing my disappointment in my experience. I said I had heard good things about the airline, that I was a ready-to-buy customer, and could they honor their online price. I even included a screenshot of their online quoted price.
It took about 24 hours, but I received a response, inquiring about my contact number. I responded with my cell phone number, and promptly called the manager who had sent me the email. Voice mail; message left. No response. I sent a message to their Twitter account. Nothing. I waited two more days, and opted to make my purchase with a different airline. Three days later, I still have not heard back.
The cost difference on the plane ticket was about $500 – significant to me. I have no doubt that if I flew on HA, my experience with the company would have improved, and I would make them my first choice when I fly to Asia. Surely that $500 has some margin built in to it. Surely the airline president would want my business at the online quoted price, if it meant I was more likely to buy again in the future.
This brings up several organization and marketing points:
Bottom line: Understanding key business metrics, like customer lifetime value, will help online retail marketers make better investment decisions in customer acquisition and retention.
