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Marketing Insights Question: Calculating the lifetime value of your customer

December 12, 2011

What is your customer worth to you?

Over the next few weeks, as we head towards 2012, I want to get you thinking about your business in a new/fresh way. I’m going to ask a single question in each post — but I’m warning you, these aren’t slam dunk questions.

I’m hopeful that as you ponder my question — it will give you some ideas for making 2012 a break out year for your organization. If nothing else — this exercise should fine tune some of your marketing efforts.

What’s a customer worth? I’m always surprised when people don’t know the answer to this question. If I said to you “for every $100 you give me, I will give you a client” – is that a good deal for you? How about for every $1,000? $5?

The truth is, most business owners have no idea what a customer is worth to their business. If that’s the case – how do you know how much you can afford to spend to get one?

Why does this matter? What kinds of decisions do you think you’d make in terms of acquiring new clients if I told you that over the lifetime of your relationship, every one of them is worth $500 in profit? How would your choices change if I said each one is worth $10,000?

How do you figure out the lifetime value of a customer?

You need to know this number. (Want to bet that your ideal customers are worth a heck of a lot more than your so-so customers?)

Not sure how to calculate the lifetime value? Check out this great infographic (from kissmetrics)which does a nice job of modeling how you can get a good ballpark figure.

Once you know that….you know what you can do to earn a customer. And what it costs you when you lose one.

Lifetime value of a customer infographic

Stock photo courtesy of BigStockPhoto.com

Do you know how to hit the peak?

December 11, 2011

Get your team and company to peak!

I read a book that seems to fit perfectly with some of the questions we’ve been asking as we think towards 2012.

Peak by Chris Conley (click here to buy*) is a book about deciding what matters.

After climbing to the peak of the hospitality industry, Chip Conley—CEO and founder of Joie de Vivre Hospitality—was rocked to its foundation and suddenly undercapitalized and overexposed in the post-9/11 economy. This situation made Conley reconnect with psychologist Abraham Maslow‘s iconic concept of the Hierarchy of Needs and rely on Maslow’s theory of human motivation to help his business flourish once more.

In his book entitled Peak, Conley explores how he applied translations of Maslow’s ideas to his company’s business practices and brought it back to the top.

Conley looks at a company from three perspectives. The employee, the customer and the investor.

From the employee’s POV:

People want to work for a cause, not just for a living. Conley, suggests there are three kinds of relationships someone can have with work: You can either have a job, a career or a calling.

Meaning in work relates to how an employee feels about their specific job task. It is the achievement of meaning at work that realizes transformation. So how can meaning at work be achieved? Conley believes an employee must align intrinsically to the mission of the company. If the company can identify its higher calling: what philanthropic, strategic or humanistic mast it “pins its colors to” – then the employee can in turn find meaning.

From the customer’s POV:

The greatest risk facing a company? Getting comfortable with purely satisfying customers rather than delighting them. When a company’s leadership is focussed purely on meeting the expectations of their customers, the company can become a sitting duck for a surprise competitor with a new mousetrap.

To address the unrecognized need of its loyal customers, companies need to find a way to give them what Conley calls “an identify refresh” – some status, some belonging. How do you do that?

The first step is to be willing to ask: What business are you in? (much like we asked ourselves — what do you really sell?)

Like Apple or Harley Davison, can we offer something beyond the product? What are the unrecognized needs of our customers? Apple positioned themselves at the top of the pyramid bysuggesting to customers that with an Apple product you can do anything –technology is the byproduct.

Harley Davidson, through HOG owner groups created a social connection.

How can you do it? Help your customers meet their highest goals. Give your customers the ability to truly express themselves. Make your customers feel like they are part of a bigger cause. Ultimately, offer your customers something of real value that they hadn’t even imagined.

Conley’s book is loaded with thoughtful, educational stories and counsel for entrepreneurs as well as Fortune 500 managers, taken from his own hard earned experience as well as other business books. One of the best features of the book are Conley’s numbered lists sprinkled throughout the book.

I think you’ll find this one both inspirational and actionable. A good year end read! (want more inspiration? Check out Conley’s TED talk.)

*Amazon affiliate link

How/why we buy: Social commerce infographic

December 7, 2011

One of the best decisions I made as a college student was to get a Psych minor. It certainly helps me be smarter when it comes to marketing, business ownership and life in general. Besides, people fascinate me and I like understanding how they tick.

That’s probably why this infographic caught my attention. It focused on the psychology behind how/why we buy and how social interactions influence those buying decisions.

Throughout the infographic, you’ll find little nuggets called psychological reasoning like “we have an innate desire to repay favors in order to maintain social fairness whether those favors were invited or not.”

Check this out… and then tell me which insight will be most helpful to you.

Thanks to Stephania Andrade from TabJuice for making sure I didn’t miss this one. If you’d like to share it with others, here’s the link to the original post.

Marketing insights question: Who is your ideal customer?

December 6, 2011

Do you really know your ideal customer?

Who is your ideal customer? One of the biggest mistakes most businesses make is that they cast too wide a net, when it comes to prospecting. Not all money on the table is good money. We’ve all had a bad customer. But if we’re really honest, we’ll admit that they weren’t a bad customer. They were just bad for us.

Assuming you have a finite marketing budget or that you still haven’t figured out how to extend the day past 24 hours — you have to make some choices. So why not target the very best possible customers?

Your intentional marketing efforts should be laser focused on those people/companies who are ideally suited to benefit the most from your offerings AND bring you the best benefit (profits, repeat business, referrals, longevity etc.) back to your organization.

Are you running around like Chicken Little, trying to make sure that everyone and anyone knows about your business? Do you spend marketing dollars on long shots and Hail Mary passes? If you are — stop it. Now.

Instead, invest that energy into discovering who your best customer is. Describe them. Be able to tell me what matters to them and how they get their kicks. Know what they drive and why they chose it. When they go to a restaurant, do they pay attention to the fat content of the offerings, the prices or if there’s a 16 z steak on the menu?

Once you really know who they are — you’ll know how you can help them. Talk to them about it. Help them a little so they get to know you before you ask them to buy. Tell them stories of how you’ve helped other people. In other words — market to your best customers in a way that creates trust and familiarity. have you noticed how your best customers end up being your friends?

That should tell you something, shouldn’t it?

Unless you have an unlimited marketing budget and time on your hands – you can’t afford to waste one minute or one dollar on anyone who isn’t ideal. So figure out who that is…. and stay focused on the people/companies you can help the most.

Photo courtesy of BigStockPhoto.com

Marketing insights question: What do you really sell?

November 29, 2011

What do you really sell?

Over the next few weeks, as we head towards 2012, I’m going to write a series of posts that are designed to get you thinking about your business in a new/fresh way. I’m going to ask a single question in each post — but I’m warning you, these aren’t slam dunk questions.

What do you really sell? Do you understand what your customers are really buying? Odds are, it’s much more than the “thing” you sell, whether that be a pair of glasses or accounting services. Look beyond the tangible or what you list on an invoice.

Do you really sell peace of mind? Or a competitive edge? Are your customers’ buying the reassurance of your years of experience or your ability to nudge them out of their comfort zone?

Before you can effectively help someone buy – you need to actually understand what you’re selling.

If your honest answer is “I’m not sure” then it’s time to break out the trusty telephone and invite some of your best clients (the ones you’d like to replicate all day long) to lunch. Ask them why they buy from you. What is the ultimate value you provide to them? Why would they tell your competitor “no thanks” even if they offered a bargain basement price?

You will be amazed at what you hear. We’ve done this over the years at MMG and heard things like:

“Because I know you won’t have your hand in my pocket all of the time.”
“You don’t just preach social media, you guys actually do it.”
“I don’t think they’d care as much about our business as your team does. You all act like you own the joint.”
And one of my favorites was “Because I don’t just need an agency, I need a thinking partner.”

Can you see how those answers would alter the way we market our agency? Do you recognize some client worries/fears in those responses?

You’ll find your clients’ answers to be even more insightful because you’ll get to have the follow up conversation as well. Listen so hard it hurts. The learning will be huge!

And in the end, you will know exactly what you sell!

Photo courtesy of BigStockPhoto.com

This book is light on the BS and heavy on social media insight

November 28, 2011

Good primer on social media

As a member of Amazon’s Vine program, I received a copy of Jason Falls and Erik Deckers‘ new book No Bullshit Social Media*. (click here to buy it) and knew it would be a great read — simply by knowing the authors.

I dove into it — and was not disappointed.

Here’s who will find great value in this book:

College students who want to find a fresher way to get a job
Young marketing professionals who know social media matters but don’t really understand the business implications
Seasoned marketing professionals who didn’t grow up in the digital age and want to catch up
Corporate types who have to convince their boss that social media shouldn’t be ignored
Business owners who are wondering if it’s worth the time investment

This book lays out the argument that social media is not going away. It’s not a fad — it’s a new and permanent shift in how we communicate with reach other, with companies, brands and how we influence strangers through sites like YELP and Amazon reviews. Authors Jason Falls and Erik Deckers really demonstrate both the risks of ignoring it and the huge potential gains for any business smart enough to jump on board this moving train.

The authors tell great stories and provide lots of examples that are both educational and compelling.

Here’s who will enjoy the book but may not take copious notes:

Seasoned marketing pros who have already been active in social media
People looking for a blueprint of “how to do it” so they put down the book and launch their social media program
Social media consultants (although frankly some of the so called experts should read it!)

Even if you feel like you’re on the cutting edge — you will enjoy this book. It’s worth the read.

And if you’re new to the idea of using social media to promote, grow and sustain your business — grab a highlighter, a lined notebook for jotting down ideas and your imagination and then settle in for a very good introduction that will have your head exploding with ideas and the possibilities.

*Amazon Affiliate link

How did your Black Friday behavior compare?

November 27, 2011

Check out this infographic (from mashwork.com) on what was expected this Black Friday.

How did your behavior and choices compare?

Most of these predictions were compiled using Twitter conversations from September through November 17th of this year. Makes you wonder what marketing intelligence you might gain with a few targeted Twitter searches.

black friday infographic 2 resized 600

How do you sell what no one wants to buy?

November 14, 2011

How do you market stuff no one wants?

Most of us don’t have the luxury of selling ocean front property, the coolest laptop, the latest in tractor technology or porsches. But in most cases, while it may not be sexy to many — someone really wants it.

But how do you sell something that no one has any enthusiasm or interest in buying? You know, things like…. funeral services, trauma clean up or bankruptcy law services.

Granted…when someone has lost a loved one, had a horrific accident in their home or can’t survive their financial crisis — they need to talk to you. But it’s not something they’re looking forward to doing.

How do you market to them prior to that triggering event so that when an event occurs — they know about your company, your offerings and you, at the very least, are on their short list of potential vendors?

When you sell something that people dread having to buy, the psychology of that dread is pretty straight forward. Something very bad has to happen before they’d need to buy something from you. And odds are that bad thing would have to happen to someone they love.

Focus on the emotion: 99% of the time people don’t want to buy what you sell is because of the emotions attached to the purchase. You are not a want. Sooner or later — you’re a necessity.

So in your marketing — paint me a picture of how you help your customers get over the very thing they’re afraid of. This means you have to truly understand the psychology of your customers at their point of purchase. Once you do, think through every touch point of the purchase cycle and make sure you’re focusing on getting them through the event.

This isn’t the time for being fuzzy with your message. Directly acknowledge that you understand their pain/fear etc. and show them how you’ve built your business to ease those emotions.

Go with a prevention message: One of the best ads for a funeral home I ever saw was an ad with an anti drunk driving theme. The basic message was — don’t drink and drive, we’re not that anxious to see you. it made them seem very human and caring.

If your product or service only comes into play when something bad has happened — one strong marketing tactic is to help people avoid that bad event.

Offer/sponsor a financial literacy class or promote a suicide hotline. But do something that actually helps people avoid you. Those who aren’t so lucky will remember that you were compassionate enough to try and help.

Demonstrate on a small scale: Usually, part of what makes people dread buying from you is the enormity and finality of their situation by the time they get to your front door.

But you can show off your skills on a much less scary scale. For example, if you clean up trauma scenes — think of the stains you have to remove. Blood, body emissions, etc.

Is there a way you can demonstrate those abilities — but on a less scary scale? Kick off a series of blog posts or post card tips that talk about how to remove tough stains like blood. Show us you know your stuff — but slowly and in less dramatic applications.

Find your influencers: Often times, people are a bit numb at the moment they need to buy these sorts of services. They are on auto pilot, due to the emotions they’re facing. So people like attorneys, police officers, hospice centers etc. are often guiding them through the process.

Find out how to genuinely connect with these influencers. Give them information, materials, etc. to help them get a person/family through that moment in time. Be truly helpful and they’ll remember you at the point of referral.

The over-arching message here is — you have to be part psychologist to sell what people have no interest in buying. You are often meeting them at their most vulnerable moments and they need you to help them feel safe and cared for.

The upside of all of this is just that. You are meeting people in their worst nightmare. If you can truly serve them well, help them with not only the mechanics of what you sell — but more importantly, walk through the nightmare with them — that’s very noble work and you should take great pride in it.

Photo courtesy of BigStockPhoto.com

What Josh Groban can teach us about marketing

November 7, 2011

Josh Groban, the master marketer

If you also follow me on Twitter or Facebook — odds are you know that I have an 18 year old daughter who loves Josh Groban and his music.

This past summer was all about Josh for the McLellans. We saw his concert in 3 different states, culminating in front row seats, backstage passes (see the picture of my daughter and Josh) and him wearing a t-shirt that she gave him on stage during the encore.

I tell you all of this because as we’ve done our family Josh Groban deep dive, I couldn’t help but notice something:

Josh Groban is a brilliant marketer.

You may not like his music (seriously, what’s not to like?) but you can take emulate his marketing prowess, no matter what you sell.

He has build a solid marketing foundation: Josh has all the usual things you’d expect a singing sensation to have these days. A robust website, an active fan club, lots of Josh Groban personalized items (Yes, we do have a pair of Josh Groban flip flops at our house), and plenty of ticket giveaways on radio stations etc.

Lesson for us: While the marketing foundation might not be sexy — it’s necessary. You can’t start off in the middle. Build a rock solid foundation and then grow from there.

He gives his best customers exclusive content/access: He gives fan club members exclusive access to front row seats. He also offers $25 tickets for all students at every show, which is not advertising anywhere but on his fan page.

For every concert, he selects one local fan club member to be his “road reporter.” That person gets back stage passes, a press pass (to sit with the media during the concert and have special photo taking opportunities) and gets to write a review of the concert — which is posted on Josh’s website. As you can imagine…every road reporter includes the photo of themselves with Josh. Do you think that drives some traffic to the page?

Lessons for us: Rewarding your best customers transforms them into fans. Fans who brag and spread the word. That’s marketing you can’t buy, but you sure can influence and encourage.

He uses social media to be a real human being, not a robot: His tweets are his own and often, not about his music or singing. (One that amused me was when he was trying to imitate the sound of a train) He hosts webinar/chats with his fan club members and he really does just hang out and talk with them.

He does some crazy stuff on YouTube like this cooking show video. He also did a couple where he interviews himself. He’s goofy. Which makes him very real and very likable.

[youtube]http://www.youtube.com/watch?v=wFMMRJ9K5u0[/youtube]

Lessons for us: I don’t care if you’re a huge brand like Nike or a local shopkeeper — people want you to be real. They want to like you. But they can’t do that if you hide behind corporate speak or “official statements.”

He shows his heart: Josh launched a foundation years ago, but really has sharpened the focus of it to raise money for arts organizations for kids. It might be a youth symphony, buying instruments for a disadvantaged elementary school or a theatre camp. At every concert, he talks about his Find Your Light Foundation, offers his fans a chance to text in a donation and introduces a group of kids from that local city who are benefiting from those donations. It’s all very nicely handled.

Lessons for us: Your customers want to know that you stand for something. And if you truly show them your heart, they’ll join you in the fight. Look at what Avon has done for breast cancer. That’s not the company doing it — it’s their loyal customers. Who are even more loyal because they share a passion now.

Bottom line — if a 30+ year old singer can launch a marketing tsunami mostly through gile and technology — so can you. What Josh reminds us is — if it’s real, people gravitate towards it.

Thanks for the lessons Josh…and for the summer that will live in Mclellan infamy!

Don’t have the time to do marketing

November 2, 2011

I don’t have time to do marketing

If there’s a common theme in the conversations I have with business owners, it’s that they don’t have the time to consistently market their business.

We might be talking about sending out a customer e-newsletter, participating in social media, attending an important trade show or updating their website. The specifics don’t matter. They just simply don’t have the time.

I get it. The whole 24 hour in a day thing.

I ask them if they have time to serve their clients. And they say, “of course… I have to do that to stay in business.”

I ask them if they have time to send out bills to their customers. And they say, “of course… I have to do that to stay in business.”

You find time to do what’s necessary. If it has to get done, it gets done.

Ahhh. So it’s not that you don’t have time. It’s that you don’t consider marketing a necessity to stay in business. Now that’s a very different conversation.

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