Retain Customers by Building Community

 

While some may think that an annual customer retention rate of 80% is good, that means you loose one out of every five customers each year. Theoretically, this translates to 100% turnover every five years. And, as most business owners know, it is much more cost effective to retain a current customer than to acquire a new customer.

There are many approaches to retaining customers. Frequency programs purport to do so as do other customer loyalty programs. CRM systems are supposed to help with this. Some companies try to lock customers in through multi-year contracts and automatic rebilling. But the best approach to customer retention is community building because community building creates emotional connection and stickiness. People stay with the brand because it has created a community for them.

Think about how powerful coffee klatches, book clubs and bridge groups are. Imagine if you could create that type of community with your brand's customers.

So, what are some community building techniques?

• Producing user conferences.
• Creating customer advisory boards and customer steering committees. 
• Engaging customers through Facebook pages and other social media platforms.
• Holding customer meet-ups.
• Creating local brand-focused customer clubs.
• Creating physical spaces where customers can interact.
• Holding customer holiday parties and appreciation events.
• Recruiting panels of customers to beta test your new products.

Hallmark sponsors local Hallmark ornament collectors' clubs. Tesla Owners Clubs hold frequent owner meetups. Many wealth management firms hold holiday parties for their clients. Orvis offers free fly tying and casting clinics for its customers. Robert Graham offers exclusive closed door events for people who achieve Master Collector status within their Collector's Club. Most colleges and universities invite their graduates back to reunions every five years. Large churches create small groups focused on different interests to retain parishioners. Patagonia supports grassroots groups working to find solutions to the environmental crisis. Eastern Mountain Sports encourages people to share their outdoor photographs on Instagram with #goEast. SONY's Playstation has create an online space for gamers to connect. Harley Owner's Group (HOG) has more than one million members and holds HOG Rallies around the world. P&G created "Being Girl" as a resource for teenager girls to connect and find answers to the difficult questions that growing up entails. Lululemon's brand community offers free yoga classes, festivals and events and even an experiential store in Chicago featuring fitness studios and a juice bar.

If you want to retain more customers, identify and implement ways to create community among those customers. 

Core Human Needs and Marketing

Psychologists have long hypothesized, studied and tested what they believe to be the core human needs. While most psychologists highlight six basic needs, many also include a seventh need. Here are the seven needs:

1. Certainty/Safety/Comfort/Control/Security
2. Love/Affection/Physical and Emotional Connection
3. Significance/Respect/Uniqueness/Feeling Special
4. Competence/Mastery
5. Contribution/Making a Difference
6. Variety/Experience/Stimulation/Novelty/Satisfying Curiosity
7. Independence/Freedom/Autonomy

Most people experience deficiencies in meeting one or more of these needs on a regular basis. Knowing this, marketers can target their brands' unique value propositions and marketing messages to address these needs.

Kintsugi is the Japanese art of repairing broken pottery by mending the areas of breakage with lacquer dusted or mixed with powdered gold, silver, or platinum. As a philosophy, it treats breakage and repair as part of the history of an object, rather than something to disguise. As a marketer, consider your role to be that of delivering Kintsugi to your brand's customers, that is to help them to fill their perceived deficiencies or brokenness with your brand's "gold."

As an exercise, try to identify at least one brand that focuses on each of these core human needs.

As an example, here is my list:

1. Certainty/Safety/Comfort/Control/Security - National Car Rental
2. Love/Affection/Physical and Emotional Connection - Hallmark
3. Significance/Respect/Uniqueness/Feeling Special - MINI Cooper
4. Competence/Mastery - Footjoy
5. Contribution/Making a Difference - Patagonia
6. Variety/Experience/Stimulation/Novelty/Satisfying Curiosity - Dr. Pepper
7. Independence/Freedom/Autonomy - Marlboro

These needs are fundamental and very powerful. Consider how your brand can promise the fulfillment of one or more of these needs. 

The Eight Skills of a Marketing Rock Star

To be a "can do it all" marketer, one who is extremely valuable to an organization as an individual contributor but who can also rise through the ranks quickly to become a marketing "rock star," the person should possess these eight skills:

1. Graphic design skills with Adobe Illustrator, Photoshop and InDesign fluencies and a strong sense of aesthetics
2. Strong copywriting skills, erring on the side of pithiness and impact
3. Storytelling skills
4. A working knowledge of Google Ads and Facebook Ads
5. WordPress fluency
6. A strong intuition about customer beliefs, values, attitudes, motivations and behaviors
7. An understanding of how to design and interpret research to achieve deep customer insight
8. "Out of the box" thinking ability

All other skills can be acquired over time.

Marketing Training & Marketer Competency

I had the good fortune to learn about most aspects of marketing through a fifteen year stint at Hallmark Cards. While there, I learned product development, new product development, advertising, promotion, marketing research, brand management, brand licensing, trade marketing, merchandising, category management, pricing strategy, distribution strategy, corporate communications, crisis management and global marketing. This hands-on learning far exceeded anything I learned in undergrad and grad school marketing courses.

P&G, Unilever, General Mills and other "houses of brands" teach classical marketing to their marketing professionals. Many marketing agencies are good training grounds for marketing techniques and there are a multitude of conferences and seminars that share marketing case studies and best practices. CRM and marketing automation software companies and social media websites have their own training videos and webinars. You can even find marketing training videos on YouTube. My company, BrandForward, Inc., has been hired by many Fortune 500 companies and marketing agencies to train their marketing staffs on different aspects of brand management and marketing.

Despite all of this, most marketers are thrown into smaller companies and startups, in which they are supposed to be the marketing experts without any hands-on marketing training. They are expected to be experts on everything from copywriting, graphic design, website design and marketing automation to brand identity creation, brand management, social media marketing and trade show booth design. This is just not realistic. It frustrates the hiring company and creates a negative perception of marketers and marketing. This could partially account for the high turnover in the marketing profession.

Looking back on my career, there are many more aspects to marketing than one might imagine. And each aspect has its own tools, techniques, rules of thumb and body of knowledge. Everything is becoming increasingly specialized. There are SEO experts, WordPress experts, CRM experts, data analytics experts, marketing automation experts, media buying experts, event planning experts, and the list could go on and on. In fact, each software platform requires its own expertise.

Given this, companies either need to have extensive marketing budgets to hire experts in each area or they need to support their marketing employees with as much marketing training as possible as often as possible. Unfortunately, the marketing field is changing rapidly and the knowledge and expertise to stay current is formidable. And business schools sometimes have professors who have never actually worked in the field of marketing and may be drawing on syllabi that were developed years and even decades earlier.

In summary, post university marketing training is essential to ensure that marketing professionals remain current and effective in their roles. And no matter how much training a marketer receives, it is not realistic that he or she is an expert in every aspect of marketing. So startups and smaller companies that are hiring one marketer to "do it all," especially on limited budgets, are likely to be disappointed.

Business Strategy Workshops

Over the years, my brand positioning workshops have evolved to something much broader. First, I added brand mission, vision and values workshops to the mix based on client requests. After that, I added pricing strategy workshops to the mix, again based on client requests. Eventually, these workshops evolved into full-blown business strategy workshops tailored for each organization and its strategic issues. The types of issues we address in the workshops include:

• Determining the organization's highly motivating purpose
• Identifying "category of one" branding opportunities
• Developing a pricing strategy the produces increased revenues and profits
• Developing a distribution strategy that best aligns with the brand while still maximizing revenues
• Rethinking the brand's unique value proposition and the organization's culture after a merger or acquisition
• Identifying additional revenue streams
• Identifying passive revenue sources
• Increasing the value of the organization to potential investors
• Identifying strategic partnerships that can strengthen the brand's position and increase its revenues
• Identifying business model options that will create barriers to entry for potential competitors
• Identifying the fastest paths to reach scale and to achieve network effects
• Identifying the optimal sequencing of activities for sustained business growth
• Identifying add-on sales and other upselling opportunities

All of this is accomplished by using the appropriate tools and templates and through skilled group facilitation, insuring that everyone's ideas and concerns are thoughtfully considered. Most of these workshops involve the CEO and his or her staff. They sometimes also include key board members, depending on the type of organization.

I concentrated on business and marketing strategy while at Harvard Business School and throughout my career. My approach is informed by Michael Porter's competitive strategy model, W. Chan Kim's and Renee Mauborgne's Blue Ocean Strategy approach to creating uncontested market space, Peter Thiel's approach to creating successful startups, Adam Brandenburger's and Barry Nalebuff's concept of co-opetition, Thomas Nagle's and Reed Holden's approach to pricing strategy and tactics and Alexander Osterwalder's and Yves Pigneur's Business Model Generation approach to designing business models. 

To learn more about this business strategy facilitation process, email me at vanauken@brandforward.com.

To purchase Brand Aid, click here.

Thinking Like A Customer

In assessing marketing talent, there is one thing that sets hyper-successful marketers apart from everyone else - they can put themselves in their consumers' shoes and they do so all of the time. 

Designing a website? Who will use it? What are their needs? What will they be looking for? What will they notice first? What information do you want to convey to them? What do you want them to do? What language will they understand best? What is the optimal navigation path for them?

Writing copy for an email campaign? Who are you writing for? Where are they in the process of interacting with your brand? How do they feel about your brand? What do they need to know now? What will hold their attention? What do you want them to do? What next step do you want them to take?

Creating a television ad? To whom should this ad appeal? What state of mind will they be in when they are watching the ad? How familiar are they with your brand? How will you appeal to their values and their emotions? Do you know what their values are? How do you want them to respond to the ad? What do you want them to feel? What do you want them to do next?

Top marketers naturally think like this - not just once in awhile but all of the time. 

If you encounter a "marketer" who seldom considers the customer's perspective, don't hire him or her. If that person is a close friend, suggest that he or she might consider pursuing another career. This insight has to come naturally and it has to be active 24/7. 

I have encountered marketers who are good at graphic design or copywriting or social media but do not think in this way. At best they will be good tacticians if given enough direction. But they will never be great marketers. 

Do you want to be a great marketer? Think like your customers. Put yourself in their shoes.

Why Brands Can Seem More Scattered and Conflicted Than Humans

Humans can at times seem quite scattered or conflicted. Some can exhibit substantial mood swings. While others might seem to have multiple personalities. However, most of us are quite predictable day-to-day and over our lifetimes. 

While brands should strive for a similar level of consistency and predictability so as to seem trustworthy, often brands will have significant swings in values, behaviors and personalities. A radical example of this is Abercrombie & Fitch.

Abercrombie & Fitch was founded in 1892 as an upscale sporting goods store. In 1928 Fitch retired and sold the company to his brother-in-law James Cobb. Under Cobb, sporting guns, fishing tackle and polo, golf and tennis equipment were added to the mix. During the Great Depression, sales dropped precipitously. After that, the products were mostly sold in seasonal shops at resorts. The brand continued to struggle for years until it filed for chapter 11 bankruptcy in 1976. Oshman's, a sporting goods retailer, purchased the brand for $1.5 million in 1978 and continued to operate it as a sporting goods store, trying different product mixes, but without success. The biggest change came in the years 1988 through 1999 when Limited Brands purchased the brand for $47 million and turned it into a trendy brand focused on teens, sex and pop culture. This was as big a pivot as ever has occurred for a brand. More changes have been made between 2000 and today and the brand has had its struggles. In 2006 CEO Mike Jeffries made a comment disparaging customers with body types not like those of Abercrombie & Fitch models. That comment came back to haunt the brand in 2013, when detractors launched the "Fitch the Homeless" Internet campaign. The campaign highlighted giving used Abercrombie & Fitch clothes to the homeless. With the advent of celebrating differences, including different body types, Abercrombie & Fitch continues to struggle with its product mix and brand positioning.

A second example of a highly schizophrenic brand personality is Volvo. In the late 1990s to mid-2000s, Volvo Car executives believed the brand position of the “ultimate safe car” for families was too limiting and began to extend the brand into the performance car segment targeted at men. Results were disappointing. When Ford bought Volvo in 1999, it pushed the brand into the crowded luxury brand market. Ten years later, sales were down 20 percent from where they were when Ford first purchased the brand. Volvo Car Corporation was then acquired by China’s Zhejiang Geely Holding Group Co. Under this new ownership, in August 2011, Volvo Car announced a new global brand strategy—”Designed Around You,” focusing on a position of human-centric luxury cars that are safe and dependable. In November 2013, Volvo Car Corporation announced a new brand strategy designed to revive the brand in the United States after a decade of declining demand. According to Automotive News, “The new focus is on ‘Scandinavian’ design, safety, environmental leadership, and ‘clever functionality’ reflected in state of the art—yet simple— infotainment systems.” 

Both of these examples demonstrate why brands can change quite a bit. The change is usually the result of poor positioning in the midst of changing market forces leading to new ownership (or at least new leadership) that then pursues a radically new brand position. Though sometimes brand change can occur associated with a leadership or ownership change without the pressure of a poor brand positioning. 

For your information, the image at the top of this post is of a vintage Abercrombie & Fitch Leather Rhino, circa 1970s. This item is not appropriate today and has no fit with the current brand.