Marketers Need to Choose Their Defaults Wisely

By Jeanne Roué-Taylor

There’s a remarkable (and very predictable) fact about the human race that a great marketer accepts as truth: people from all walks of life usually take the default option when offered multiple choices. This fact makes it very important to choose default choices for your customers very intentionally, as it’s essentially one of the best “free” ways to influence customer behavior in your favor.

Consumers Accept Defaults

As an example, retailers have learned over time that the average consumer doesn’t think as much about decisions as you might expect. If you put a decision in front of them, they’ll often simply accept the default option because they are uncertain about their choice.

Applying this idea to something we all know, a common decision offered to a customer is how they prefer to communicate back and forth with a particular brand. Email is typically the default option and also the one chosen, or “accepted,” most often by consumers. This is no accident, and most marketers prefer to communicate by email. While important in retail, this concept is applicable everywhere choices or decisions are offered and responses can be influenced.

Looking Around the Industry

Surprisingly (or not), consumers are even more likely to accept more expensive options when presented as the default. Dell, Apple, and other PC manufacturers know well that customers will upgrade to more expensive options when those options are presented as the default choice on a list of options. Think of the last time you ordered a laptop and how often the larger hard drive was X dollars more and was the default choice. Having a brand-preferred choice already selected is momentum that takes effort by the customer to overcome.

You probably haven’t set up customer choices with this in mind, and should audit the places where choices are offered to see where defaults can be chosen more wisely. The positive results from restructuring default choices can be significant.

To learn more about other factors of success in retail customer loyalty, check out our webinar on the topic: Nudges, Influences and Rewards Part 2: Must-know Factors for Success in Retail Customer Loyalty.

What Marketers Can Learn From the Gaming Industry

By Jeanne Roué-Taylor

Study after study shows that our brains love small, predictable rewards more than occasional, large rewards. This principle is on prominent display in the gaming industry where slot machines far outnumber table games in any casino. Those same slot machines, with small stakes and small rewards, show up in gaming industry financial statements as significantly more successful than large-stakes tables. What makes that possible?

Small, Frequent, and Predictable Rewards

The significant skewing of real estate toward slot machines happens because gaming companies know that frequent, small, predictable rewards with unpredictable timing are precisely what our brains crave. Known as a variable ratio schedule of reinforcements, casinos know that customers respond better to a “…schedule of reinforcement where a response is reinforced after an unpredictable number of responses.” This pattern of expectation creates a high, and very steady, rate of responding and a very successful industry.

This principle is part of the allure of Facebook and other social media sites—once sites have a critical mass of active people providing frequent, yet unpredictable, small bits of content, users feel rewarded for continually checking the site and app. It’s enough to keep people coming back repeatedly, thereby increasing the content in a virtuous cycle. Just as with slot machines, these sites delight consumers when rewards average out every n times, but not always on the predictable nth response.

This “predictable unpredictability” is equally successful in marketing. By continually varying the level or frequency of a promotion or consumer benefit so that it still averages out over time, brands appeal to the consumer brain that loves the small, predictable, yet unpredictable, reward. In an increasingly noisy world, this practice very effectively draws attention and repeat visits to stores, kiosks, and Web and mobile sites. It shows up in the bottom line of companies that understand this just as it does for the gaming industry.

To know more about this and other success factors in customer loyalty marketing, check out our Nudges, Influence and Rewards webinar series.

Marketers, Immerse Yourself in the Data!

By Jeanne Roué-Taylor

“Immerse yourself in the data,” doesn’t mean “Be aware of the data,” or “Follow the reports.” It means “Really immerse yourself in the data,” by digging in and finding something new to learn each and every day. Make it a relentless habit for a very good reason—as the world changes, marketers can no longer wait a month, a week, or even a few days to know the ebb and flow of their business. There’s a new need to monitor what’s happening in all aspects of the business so that even daily results can be forecasted with a high degree of accuracy.

Immerse Yourself

Immersing yourself is the goal, but it has to start somewhere, so start with visualization. There are great tools in the market, including TIBCO’s own Spotfire, that are the best ways to spot trends and to find patterns that can’t be seen in a spreadsheet or report.

The patterns you should be seeking include anomalies that are begging for a cause to be figured out. Only when the cause of a pattern is known can a marketer be practical about taking remedial action now, instead of after a problem presents itself.

Real-Time Modeling

Another key factor is real-time modeling. The traditional approach has been to have a server churning somewhere that reruns customer models periodically, as in weekly or even monthly. A great deal of investment has gone into a Hadoop (or Hadoop-like) approach, but it ends up being too slow to allow marketers to benefit from being truly immersed in their data. It won’t allow a real-time view of what’s happening in the business or for constant learning and correction. A far better approach is have data flow through in-memory, not in a database, and as it arrives. This allows remodeling and re-scoring customers in the moment, which provides the capability to make minute-to-minute changes that affect customer-by-customer interactions.

In a world with so much information moving so quickly, immersing yourself in the data is the only way to stay ahead of the deluge and to pick out the signal from the noise. Even more, the market is moving inexorably toward Fast Data. It’s the compliment to big data and how we describe the in-flight information that helps marketers make better decisions, faster.

To learn more about the success factors of success in retail customer loyalty, check out our webinar on the topic: Nudges, Influences and Rewards Part 2: Must-know Factors for Success in Retail Customer Loyalty.

Do You, Your Boss, and Your Boss’s Boss Agree on Your Metrics for Success?

By Jeanne Roué-Taylor

How you define success determines how you evaluate strategy and ongoing operations. This is such a fundamental point that we make it over and over again. It’s that big. Being crystal clear on what matters ensures everyone is focused on the same objectives. What’s more, the perception of your personal success depends on it.

Aligning Customer Loyalty Marketing Metrics

This comes to life when you consider a basic question: Which is more important, customer visits or customer retention? If you put your faith in visits by defining success through revenue lift over your control group, you’ll work to maximize your campaigns, potentially marketing to the same active customers over and over to keep them active.

On the other hand, if you define success by overall retention, you begin to look at your moderately active customers and ways to reactivate your declining customers. This may have a lower ROI than revenue lift in the near term, but if you’re looking at retention rate and lifetime revenue (and your boss evaluates you on this), you’ll be better off in the long term because you spent money in the right places to achieve the agreed-upon definition of success.

Do you, your boss, and your boss’s boss agree on your metrics for success? You clearly need to.

Getting Customers to Cross the Aisle

As a great example, one of our top retail customers had a well-aligned definition of success that was less about retention or visits, but instead was laser focused on cross-category selling. The company knew from its own experience that its customers had a higher lifetime value if they bought from multiple key categories. The whole approach—from a program structure to the content and engagement points—was designed to drive customers across the aisle to buy from other key categories. Cross-category sales is a tremendously successful success metric for them and has a big impact on the company’s revenue. If the company had agreed, instead, on other ways to measure success, its program would have been perceived as a failure very early on.

Gaining organizational alignment around key metrics isn’t an easy thing, but the benefits can’t be stressed enough. Agreement on what constitutes success will give you the backing to decide where to spend the next dollar of your marketing budget and the means to continue to spend, or shift spending, based on the outcome. An aligned organization is a powerful force.

To know more about factors for success, check out our webinar, Nudges, Influences and Rewards Part 2: Must-know Factors for Success in Retail Customer Loyalty.

Avoid Losing Your Customers—Or Margin—With the Right Marketing Spend

By Jeanne Roué-Taylor

Why do your customers _______ (buy, rent, subscribe, bank, fly, etc.) with you? This is a complicated question because there are many “paths” to the answer, not unlike the directions Google gives from Point A to Point B in a modern city. It depends on each customer’s individual goals and preferences…the rough equivalent of deciding the fastest, most direct, or most scenic route. Without an answer, it becomes a challenge for how much marketing spend to dedicate to maintaining the pull with existing customers.

Marketing Margin Wasting Problem

Untangling this question involves having a framework for understanding how to focus resources and time on marketing based on the customer’s spending levels. Marketing nirvana is about getting it just right by finding the sweet spot and aligning tactics so that a high-spend customer has just the right amount of marketing focus/spend to not be at risk from a competitor, nor at a point of reduced profitability.

Easier said than done.

Optimizing Marketing Spend

While it may not be easy, it is becoming easier than ever before. Optimizing spend involves having a deeper understanding of the customer and what it takes to drive the marketing success metrics that matter most. There are ways to optimize across the customer base that are different for every company, but the process for determining the right levels has become clearer and broadly applicable in recent years. The tools are far better, the visibility into customer behavior across a wider set of interaction points is better, and there’s a much more complete pool of data to optimize against.

There’s more to optimize today than ever before.

The Marketer’s Most Important Job—The Maintain Phase

Finding that optimal point of return changes based on the lifecycle of the customer relationship, which spans from Acquire to Recover, as shown in the diagram on the right. The marketer’s job is to get customers into the Maintain phase as fast as possible and to keep them there as long as possible. The three curves on the diagram are high, medium, and low spend, reflecting that fact that not all customers can spend at the same level over the long term. Marketers need to have best practices for each level of customer spend, recognizing that there are different ways to influence and different levels of return on investment for each.

Marketers need to know their own maintenance patterns. Nudge too much and profitability goes down; nudge too little and frequency and revenue go down. (We’ll focus more on that soon.)

For more on how to use nudges, influences, and rewards to create success in customer marketing, check out our on-demand webinar, Nudges, Influences and Rewards Part 2: Must-know Factors for Success in Retail Customer Loyalty.

You’re Not Helpless to Prevent Churn and Attrition

By Jeanne Roué-Taylor

Churn is not as inevitable as you might think. In fact, churn and attrition are preventable problems that require great focus and a carefully-thought-out strategy. After all, the cost of acquiring new customers in the digital age remains relatively high while the cost of retaining the ones you have, especially the good ones, has become cheaper; it’s a far easier process as well. It’s all about where you put your resources.

Know Your Customer

Preventing churn and attrition starts with knowing which customers have the highest lifetime value. Only when you know where each customer falls can you decide how much retention effort is appropriate. This is where customer loyalty marketing enters the picture as a highly cost-effective, interactive way to decide what resources to commit and where. Customer loyalty marketing takes the guesswork out of who to retain and how to go about it.

And the market matters less than you’d think. Regardless of industry, churn management through customer loyalty marketing is remarkably consistent. It comes down to knowing the risk factors for churn, modeling churn’s dynamics, knowing the cost and benefit, being proactive and timely with intervention, and constantly seeking ways to measure and improve the overall system. If this came down to a series of manual processes, we’d be in trouble. Fortunately, it doesn’t.

Know the Tools and Techniques

Customer loyalty marketing in the digital age is a combination of powerful tools and smart techniques. Analytics is the basis for an attrition propensity index that drives action in the right moments, based on key factors proven to affect churn. That index shifts depending on real-time input from industry-specific factors like time remaining on contract (telecom) to distance from the store (retail). The takeaway is that each factor has a role to play in how an attrition propensity index morphs over time and customer life events.

Lastly, automation of customer loyalty marketing means more than points and plastic cards. Tracking the factors for churn and attrition is the job of a technology platform.

Good Enough Marketing Isn’t Good Enough Anymore

By Jeanne Roué-Taylor

Marketing in the modern digital age has done great damage to the term “good enough.” It wasn’t that long ago when good enough was a quality standard that meant, “This will work well enough and nothing better is needed.” But in times of great change, the term good enough needs to be seriously rethought.

Good Enough Isn’t Good Enough

So what changed? For starters, we’re a decade or so into the challenges of Big Data—also known as the digitization of nearly everything a marketer cares about. Customer information, including their past history, preferences, and even where they are in this moment, are flowing across many different devices and channels. What was good enough to work with the data we used just five years ago is very unlikely to be good enough today.

Secondly, our ability to analyze past behaviors to predict future ones has grown as quickly as the data that feeds those analytics. Once we can know what’s likely, we have a need to do something with that information, meaning we need new ways of interacting, nudging, and influencing our customers digitally, and otherwise. The old execution tools and techniques simply aren’t good enough.

Lastly, the customer has transformed into an always-connected, mobile—and much, much pickier—shopper. The customer has the ability to know and choose like never before. Good enough for the new customer is also a moving target that will certainly be not good enough at a point in the not-too-distant future.

What Can You Do About It?

When good enough is such a moving target, maybe the term itself needs to be tossed out in favor of something that better defines the marketer’s needs. But what, exactly, does the marketer need? Today’s marketer needs to tool up with technology that goes beyond the needs of right now. Choices need to reflect that we don’t know what’s coming, but we can be sure that things will evolve to become more digital, faster, more predictive—and that customers will expect a better experience than we can even imagine right now.

Hear more in the webinar, Nudges, Influence and Rewards: Must-know Factors for Success in Retail Customer Loyalty.

Mobile Is More Than a Channel—It’s a Lifestyle

By Jeanne Roué-Taylor

When it comes to marketing, mobile is too often considered a channel—one of several ways to reach the buying public. In reality, mobile is far more than one of many pathways to and from the consumer. Mobile is, in fact, a world apart from Web, in-store and kiosk. It’s not only a channel for purchase, but also a pathway to a brick-and-mortar store or website, and it’s certainly a channel for engagement. Are you treating mobile as the nuanced channel that it truly is?

Taking Advantage of Mobile’s Differences

The differences matter and here’s a breakout of each:

Mobile for purchases - Purchases on mobile have been the long-sought-after goal of many retailers, but are a challenge in the real world. Small screens and being on the go aren’t the best circumstances for getting consumers to buy. We love rich visuals (bigger screens or being there live) when we make our decisions.

Mobile as a pathway to other channels – Consumers are easily encouraged to head for the website or the store by communication on a mobile device. Quick research and location-based searches are mobile’s stock in trade. Notifications of special deals and location-specific events are also ideally suited for mobile, where the goal is to intercept the consumer and steer them to the best places for purchases to occur.

Mobile as a channel for engagement – Engagement is highly contextual, which makes mobile the ultimate channel—it travels with us, sharing the context of our lives. Consumers who are engaged with a brand through a mobile channel are more likely to share the context that makes engagement more relevant and allows for brand advocacy in the perfect moments, like being with friends and family.

A Bigger Mobile Opportunity

These factors, when used together, make mobile a bigger opportunity for those who recognize its subtleties. Capturing the value of mobile’s differences involves understanding the user’s individual motivations and varieties in paths to purchase. This is a modeling exercise of its own, not unlike the way other propensities are discovered, modeled, and executed in real time. Brand awareness, engagement, loyalty, advocacy, and creating a path to other channels are all valid outcomes of a great mobile strategy.

Learn more in our webinar: Success with Mobile Loyalty.

The World Cup Reminds Us That Marketers Are Architects of Passion

Watching the World Cup 2014 in Brazil is an excellent reminder of the power of passion and the role of marketing. World Cup passion is found on the football pitch, in amazing quantity in the stands and streets of Rio, and in pubs and offices around the world. It would be safe to say that the tournament has become synonymous with passion, excitement, and shared experience.

The Roots of Passion

In the World Cup, passion comes from players and fans putting all of their energy into something bigger than themselves. For a short period, footballer players aren’t free agents taking in millions—instead, they are playing for their countries. None of the passion of the World Cup is accidental, and there’s an enormous amount of work that goes into whipping it up and serving it. This is no different than what happens between a strong brand and its most passionate customers. Today’s marketer needs to be an architect of passion.

Passion Defines

For consumers, passion drives nearly everything they do—what to eat, what to wear, and how and where to spend their time. Connecting with that passion involves making the brand a part of how consumers define themselves and live their lives. Tapping into it requires a different flavor for different products and services, but here are common ways to foster and benefit from consumer passion:

  • Create a strong, omni-channel loyalty program that ‘returns the favor’ for your customers’ business.
  • Give your customers an outlet for expressing their passion that includes social media.
  • Capture the context of your customer’s buying moments, and serve the most relevant interaction possible.
  • Find ways to surprise and delight your best customers and draw them even closer to your brand.
Fire up your customers by stoking their passion, and turn them into fans! For more ideas on how, download our whitepaper, Marketing Transformed: Big Data Sciences and the Revolution of Customer Engagement and Loyalty.

Using Nudges, Influence, and Rewards For Marketing Success

By Jeanne Roué-Taylor

Success in customer loyalty marketing doesn’t arrive from just a single contact with a customer or even from a single approach to interaction. Customers are growing more savvy every day; their expectations are shifting. Marketers need to know and take advantage of the many different factors that will draw in and delight, and—most importantly—the factors that will increase customer loyalty and lifetime value.

Nudges, Influences, and Rewards

Customer loyalty marketing is all about working to make a brand top of mind, the first place customers thinks of for spending their money. Success comes from using a series of well-timed and relevant nudges, finding places and channels of influence and creating rewards that drive customer spending behaviors.

There are key things to know before you can expect to find success,  including:

  • Critical pieces of program setup
  • Investing in the right places
  • Generating customer insights
  • Building your context platform
  • Increasing meaningful frequency
  • Effecting racking and monitoring

Join me for a webinar with TIBCO Loyalty Lab’s Michael Greenberg as he takes us through the critical factors best correlated with success in customer loyalty marketing. Greenberg is an expert at laying out the latest successful approaches to customer loyalty marketing and has extensive experience with top international retail brands. I hope to see you there. Register here.