Edelman is the world's leading independent Public relations firm (at least that is what they advertise). Of interest is their Edelman Trust Barometer. They have just released their 2010 Edelman Trust Barometer Survey results. They report that they sampled 4,875 informed participants in two age groups (25-34) and (35-64). In order to qualify for the survey each must be college-educated with a household income in the top quartile for their age in their country. They must also read or watch business/news media at least several times a week and follow public policy issues in the news at least several times a week. Each interview participates in a 25-minute telephone. The results published in the 2010 survey was based on interviews between September 29 and December 6, 2009. The measurement is based on a 9-point Likert-type scale for trust. The scale notes that 1 denotes the lowest trust and d9 represents the highest trust.
With this background, it appears that their measurement system appears to follow sound survey techniques. They have summarized some of the general results that maybe of interest, namely,
1. Global trust in business is up modestly for the year.
2. The gain may be due to a spiked increase in a handful of Western countries. The trust measurement increased 18 points to 54% for the United States.
3. Trust also remains high in Brazil, India and China who each have a trust measurement higher than 60%.
4. The quality of products and services ranks higher than financial returns. according to Mr. Edelman,"Trust is now an essential line of business to be developed and delivered.
5. There appears concern by the majority that there will be a return to business as usual by companies as the economy recovers.
6. Sweden, Canada and Germany remain the most trusted countries for global headquarters.
7. Trust in government appears to be stable. However, the trust in the US is up 16 points to 46% and in Russia trust has decreased by 10 points to 38%.
8. In 20 countries corporate or product advertising continues to be the least credible source of information at 17%.
9. Reports from industry analysts and articles in business magazines remain the most credible sources of information about a company. However, the trust in mainstream media is waning.
Mr. Edelman notes that "we're seeing a vastly different set of factors driving reputation that we did 10 years ago". This is consistent with measures of loyalty that appear to have very different factors driving loyalty with an individual company.
The bottom line is that we now have another measure by which we can assess a company's strength in the market. The next step will be to compare these measures of trust with financial performance as has already been done using the ACSI measurement.
To learn more about the Trust Barometer you can find Edelman on the web at www.edelman.com.
Saturday, November 20, 2010
Friday, November 19, 2010
Customer Facts to Consider for Improved Loyalty
I am close to the edge of doing what offends me. I am tired of reading 5 ways to increase loyalty or 7 steps to improve customer satisfaction or 6 ways to avoid losing customers, etc. I am about to walk on the edge by noting some information that may help you improve your customer loyalty. I have taken these facts from a blog by Loyalty 360 titled "11 Key Customer Loyalty Trends for 2011". I will leave the blog alone except that within the blog there were some statistics that might provide some guidance for the new year.
Here are some statistics that, in my opinion, might have relevance to understanding customers:
1. Behavioral economists note that economic decision making is 70% emotional and 30%rational.
2. A 20009 Gallup survey found that those companies that are in the upper half of both customer and employee engagement get a 240% boost in bottom line results compared with those who are in the upper half of customer engagement or in the upper half of employee engagement who only get a 70% boost.
3. Customer engagement is the holy grail for loyalty initiatives because engagement yields loyalty, advocacy, trust and passion which are the components that directly impact the bottom line.
4. The 18 to 35 year-olds' are particularly responsive to social and green issues. 85% say they would switch brands because of such marketing and 73% said they would try a new brand.
5. The National Restaurant Association found that 84% of those members who responded plan to invest more in their loyalty initiatives in the future because of the proven ability to drive business growth.
6. A surprise finding is that traditional incentive marketing does not drive consumer participation as much as achieved by gaming. The statistics are that 200 million people play games on Facebook every month and 24 games have more than 10 million users per month. The point is that a good game can impact consumer participation and may help build a lasting relationship and/or brand loyalty.
While there is no BIG message in this blog, it does provide some insight about customers. The bottom line here is that customers continue to change and are becoming more connected using social media. Companies must be prepared to adjust their strategies to meet the changing face of the customer.
Here are some statistics that, in my opinion, might have relevance to understanding customers:
1. Behavioral economists note that economic decision making is 70% emotional and 30%rational.
2. A 20009 Gallup survey found that those companies that are in the upper half of both customer and employee engagement get a 240% boost in bottom line results compared with those who are in the upper half of customer engagement or in the upper half of employee engagement who only get a 70% boost.
3. Customer engagement is the holy grail for loyalty initiatives because engagement yields loyalty, advocacy, trust and passion which are the components that directly impact the bottom line.
4. The 18 to 35 year-olds' are particularly responsive to social and green issues. 85% say they would switch brands because of such marketing and 73% said they would try a new brand.
5. The National Restaurant Association found that 84% of those members who responded plan to invest more in their loyalty initiatives in the future because of the proven ability to drive business growth.
6. A surprise finding is that traditional incentive marketing does not drive consumer participation as much as achieved by gaming. The statistics are that 200 million people play games on Facebook every month and 24 games have more than 10 million users per month. The point is that a good game can impact consumer participation and may help build a lasting relationship and/or brand loyalty.
While there is no BIG message in this blog, it does provide some insight about customers. The bottom line here is that customers continue to change and are becoming more connected using social media. Companies must be prepared to adjust their strategies to meet the changing face of the customer.
Friday, November 12, 2010
Is the Impact of the Internet on Loyalty Positive or Negative
Forrester Research has completed a study in the UK that suggests the Internet has created a platform that is having a negative effect on customer loyalty. A summary of the research was reported in ComputerWeekly.com in their 11/10/2010 issue. Some of the statistics that were derived from a survey of 500 shoppers in the UK are:
1. 60% of UK shoppers have not decided on the brand they will purchase before buying a product online.
2. 86% of the shoppers use ratings and reviews for online purchases.
3. 44% go online before buying products in-store.
4. 42% use their mobile phone while shopping of whom 16% used their phone to compare prices with other stores.
The UK is a relatively mature market. The average UK shopper spends about $900 annually compared with $750 in the US.
Based on these statistics one might conclude that shopping has become more of a commodity and buyers are either price or value shopping. There is little, if any, loyalty in price or value shopping unless the shopper adds value for a particular store or company.
On the other side of the coin there is an interesting note in facebooksniper.com that describes how companies can use Facebook and Twitter to increase incoming traffic to a website. Here are the steps that are suggested:
1. Sign up to Facebook.
2. Make friends in Facebook by joining groups or communities that match your market niche.
3. Send a friend request to people in the community or social network.
4. Use your existing customer's contact email in your email account.
5. Start promoting your business on Facebook - but do it tactically. One way is to promote your website is to create Fan pages representing your business and add people there.
6. Update your Fan pages with the latest happenings in your business.
7. Use Tweets to get the same message out.
8. Let users post their message so that it will be visible for all buddies in the friend list.
The bottom line is that the Internet can be a friend or enemy. It can be a friend if you learn how to use it to attract customers. It becomes an enemy when you allow your business to become a commodity with all your competitors. You choose.
In this new world of instant communication, those who understand the Internet will have a distinct and superior advantage to those who do not.
1. 60% of UK shoppers have not decided on the brand they will purchase before buying a product online.
2. 86% of the shoppers use ratings and reviews for online purchases.
3. 44% go online before buying products in-store.
4. 42% use their mobile phone while shopping of whom 16% used their phone to compare prices with other stores.
The UK is a relatively mature market. The average UK shopper spends about $900 annually compared with $750 in the US.
Based on these statistics one might conclude that shopping has become more of a commodity and buyers are either price or value shopping. There is little, if any, loyalty in price or value shopping unless the shopper adds value for a particular store or company.
On the other side of the coin there is an interesting note in facebooksniper.com that describes how companies can use Facebook and Twitter to increase incoming traffic to a website. Here are the steps that are suggested:
1. Sign up to Facebook.
2. Make friends in Facebook by joining groups or communities that match your market niche.
3. Send a friend request to people in the community or social network.
4. Use your existing customer's contact email in your email account.
5. Start promoting your business on Facebook - but do it tactically. One way is to promote your website is to create Fan pages representing your business and add people there.
6. Update your Fan pages with the latest happenings in your business.
7. Use Tweets to get the same message out.
8. Let users post their message so that it will be visible for all buddies in the friend list.
The bottom line is that the Internet can be a friend or enemy. It can be a friend if you learn how to use it to attract customers. It becomes an enemy when you allow your business to become a commodity with all your competitors. You choose.
In this new world of instant communication, those who understand the Internet will have a distinct and superior advantage to those who do not.
Saturday, November 6, 2010
Who Cares About QBE?
I think many fall into the trap of naivete' when it comes to customer satisfaction surveys. The belief is that the customers are NOT influenced by the survey questions. In the normal course of purchasing and receiving products and services many people do not give much thought to their level of satisfaction, would they purchase again or would they recommend the product or service to a friend or colleague. It is not until the survey arrives (call/Internet or hard copy) that the customer begins to think a little deeper in order to answer the questions on the survey.
This phenomenon is referred to as QBE or "question behavior effects." In other words, the questions themselves induce responses which may cause customers to think more deeply about the answers and may even impact current or future behavior toward the company who sent the survey. This topic came up in a research article by Dholakia, Singhand Westbrook from Rice University titled "Understanding the Effects of Post-Service Experience Surveys on Delay and Acceleration of Customer Purchasing Behavior: Evidence from the Automotive Services Industry" and published in the Journal of Service Research Issue 13(4) pages 362-378.
One interesting outcome of the research was the difference noted in the quality evaluations when the customers are forewarned that they will soon receive a survey versus those who receive the survey with no forewarning. The customers who were forewarned reported lower evaluations and reduced their willingness to purchase and recommend the service. The authors suggest that this phenomenon is "negativity enhancement." What the authors are suggesting is that customers who are forewarned tend to focus primarily on negative aspects of their service experiences since they have the time to reflect on their event. Whereas those customers without the forewarning don't have the time to dwell on how they will respond and hence they are more likely to give a more balanced response.
The bottom line is the reminder that surveys are not simple. Yes, it is easy to write questions that may have simple flaws but even the best written surveys must be viewed with the perspective that there may be some customer behavior that will result from the questions themselves. I will have more to say about QBE in future blogs.
This phenomenon is referred to as QBE or "question behavior effects." In other words, the questions themselves induce responses which may cause customers to think more deeply about the answers and may even impact current or future behavior toward the company who sent the survey. This topic came up in a research article by Dholakia, Singhand Westbrook from Rice University titled "Understanding the Effects of Post-Service Experience Surveys on Delay and Acceleration of Customer Purchasing Behavior: Evidence from the Automotive Services Industry" and published in the Journal of Service Research Issue 13(4) pages 362-378.
One interesting outcome of the research was the difference noted in the quality evaluations when the customers are forewarned that they will soon receive a survey versus those who receive the survey with no forewarning. The customers who were forewarned reported lower evaluations and reduced their willingness to purchase and recommend the service. The authors suggest that this phenomenon is "negativity enhancement." What the authors are suggesting is that customers who are forewarned tend to focus primarily on negative aspects of their service experiences since they have the time to reflect on their event. Whereas those customers without the forewarning don't have the time to dwell on how they will respond and hence they are more likely to give a more balanced response.
The bottom line is the reminder that surveys are not simple. Yes, it is easy to write questions that may have simple flaws but even the best written surveys must be viewed with the perspective that there may be some customer behavior that will result from the questions themselves. I will have more to say about QBE in future blogs.
Saturday, October 9, 2010
The Changing Face of Loyalty
There was an interesting article written by Mila D'Antonio in the August edition of
1to1 Magazine. The article posits the notion that customer loyalty is evolving. I agree! A brief look back in time brings to mind the memory of S&H Green Stamps that my mother diligently collected. That process is the first loyalty program that I can remember The second one that comes to mind is the American Airlines AAdvantage program of which I am still a member. But business is not the same as it was 40 years ago or even 10 years ago.
The appearance of the Internet and all the accompanying social media has changed the face of business. Some of the statistics that tells the story include the fact that 75% of consumers today are enrolled in at least one loyalty program and more than33% are enrolled in 2 or more programs. The Internet has helped the consumer to be well-informed. With all the information that is available, the consumer can use the Internet to get product and service information as well as reading reviews from other shoppers.
In January, 2010 the CMO Council reported that 60% of marketers say that loyalty program participants are the best and most profitable customers,only about 15% believe they have been highly effective in leveraging loyalty among its customers and 20% don't even employ a customer loyalty strategy.
What has changed is that customers now have many channels of information to access when making a decision for product purchases or services. Companies are now being forced to manage all the channels so that there is a consistent message. The social media, while new, brings as much, if not more, value to the customer that the traditional methods. Social media has and will continue to significantly impact customer loyalty. In fact, it appears that the social media may become one of the ways to establish emotional attachment to companies. Kevin Knowles, VP of merchant loyalty at First Data notes that "if you don't have a centralized model you run the risk of having your customer data fragmented."
This evolution of information availability has led a number of companies to evolve their loyalty programs to include managing social media, providing proactive customer service, and establishing ongoing programs to maintain contact with their customers. Some of the newer programs include including Twitter and chat capabilities with the company.
The bottom line is customer loyalty requires a long term relationship with customers. That relationship must be built on the episodes that occur during the customer's life cycle with the company. Therefore, companies must think of approaches that continuously build and strengthen the customer relationship. The connection between company and customer must proactive, NOT reactive.
As I have said to many clients, every time you touch a customer you will either add a strand to the bond of your customer relationship or will be break a strand of that bond. This includes every customer contact whether it is with someone from sales, customer service, accounts payable (the cashier), or any aspect of your social media. The stronger the bond the less likely the customer look for an alternative supplier.
1to1 Magazine. The article posits the notion that customer loyalty is evolving. I agree! A brief look back in time brings to mind the memory of S&H Green Stamps that my mother diligently collected. That process is the first loyalty program that I can remember The second one that comes to mind is the American Airlines AAdvantage program of which I am still a member. But business is not the same as it was 40 years ago or even 10 years ago.
The appearance of the Internet and all the accompanying social media has changed the face of business. Some of the statistics that tells the story include the fact that 75% of consumers today are enrolled in at least one loyalty program and more than33% are enrolled in 2 or more programs. The Internet has helped the consumer to be well-informed. With all the information that is available, the consumer can use the Internet to get product and service information as well as reading reviews from other shoppers.
In January, 2010 the CMO Council reported that 60% of marketers say that loyalty program participants are the best and most profitable customers,only about 15% believe they have been highly effective in leveraging loyalty among its customers and 20% don't even employ a customer loyalty strategy.
What has changed is that customers now have many channels of information to access when making a decision for product purchases or services. Companies are now being forced to manage all the channels so that there is a consistent message. The social media, while new, brings as much, if not more, value to the customer that the traditional methods. Social media has and will continue to significantly impact customer loyalty. In fact, it appears that the social media may become one of the ways to establish emotional attachment to companies. Kevin Knowles, VP of merchant loyalty at First Data notes that "if you don't have a centralized model you run the risk of having your customer data fragmented."
This evolution of information availability has led a number of companies to evolve their loyalty programs to include managing social media, providing proactive customer service, and establishing ongoing programs to maintain contact with their customers. Some of the newer programs include including Twitter and chat capabilities with the company.
The bottom line is customer loyalty requires a long term relationship with customers. That relationship must be built on the episodes that occur during the customer's life cycle with the company. Therefore, companies must think of approaches that continuously build and strengthen the customer relationship. The connection between company and customer must proactive, NOT reactive.
As I have said to many clients, every time you touch a customer you will either add a strand to the bond of your customer relationship or will be break a strand of that bond. This includes every customer contact whether it is with someone from sales, customer service, accounts payable (the cashier), or any aspect of your social media. The stronger the bond the less likely the customer look for an alternative supplier.
Thursday, September 16, 2010
Loyalty Programs Help Restaurants in Tough Times
An online survey was conducted in 2010 among members of the National Restaurant Association. There were approximately 1300 responses. The survey had several objectives; namely:
1. investigate the level of penetration of loyalty programs in the industry,
2. identify the types of loyalty programs,
3. collect the metrics being used to measure performance, and
4. determine the level of resources dedicated to support the effort.
There were a number of findings that appear to be significant. They are
1. 77% of the respondents said that loyalty programs helped drive business during the economic turn down,
2. 90% said that the loyalty programs gave them a competitive advantage
3. for those already using loyalty programs, 84% plan to maintain or increase their program investment
4. 74% of the respondents used social media to support their loyalty programs. Facebook was the most common site and was used by 65%, followed by Twitter at 40% and blogging at 17%.
The bottom line is that loyalty programs are clearly a competitive weapon. That weapon has been shown to be particularly effective during the economic downturn in the last two years as can so easily be noticed by the willingness to continue the programs. It is not difficult to image that its effectiveness will continue even as the economy improves. Loyalty programs can provide the added incentive to increase visits from individual customers.
1. investigate the level of penetration of loyalty programs in the industry,
2. identify the types of loyalty programs,
3. collect the metrics being used to measure performance, and
4. determine the level of resources dedicated to support the effort.
There were a number of findings that appear to be significant. They are
1. 77% of the respondents said that loyalty programs helped drive business during the economic turn down,
2. 90% said that the loyalty programs gave them a competitive advantage
3. for those already using loyalty programs, 84% plan to maintain or increase their program investment
4. 74% of the respondents used social media to support their loyalty programs. Facebook was the most common site and was used by 65%, followed by Twitter at 40% and blogging at 17%.
The bottom line is that loyalty programs are clearly a competitive weapon. That weapon has been shown to be particularly effective during the economic downturn in the last two years as can so easily be noticed by the willingness to continue the programs. It is not difficult to image that its effectiveness will continue even as the economy improves. Loyalty programs can provide the added incentive to increase visits from individual customers.
Wednesday, September 1, 2010
What Price Loyalty
I saw a quote on the net the other day. It asked the question "Why do customers need to take the initiative to ultimately be rewarded for loyalty?" GREAT question! As we review the many loyalty programs that are offered by B2C and B2B companies the onus is almost always on the customer to initiate the program and often it is the customer's responsibility to manage it as well. Businesses have the resources and the tools necessary to do the work for the customer. It seems that treating the loyal customers with a little extra effort by taking care of the loyalty program for them is a natural step for showing them the benefits of being a loyal customer.
This is an open question to those companies who have a loyalty program. Are your customers responsible for initiating your loyalty program? if the answer is yes, why? One of the major objectives of just about all loyalty programs is to entice the customer to continue to return (as often as possible). Are there any hurdles that the customer must overcome to continue to capture rewards? Must the customer always have his loyalty card to get reward "points"? Are there other policy obstacles that might disallow the addition of loyalty points?
One of the prime rules of business that has become part of the gospel of customer loyalty is that the business must do everything it can to make it as easy as possible for the customer to do business. The obvious extension to this fundamental rule of business should be, in my opinion, to make it as easy as possible for the customer to accumulate loyalty points (or whatever is used) as easily as possible. To burden the loyal customer seems to be against the basic tenet of making it easy to do business with the company.
One of the latest marketing concepts is to segment the customers as finely as possible so that advertising programs and rewards can be finely tuned to the customer level. As long as the marketing program is tracking customers to determine their buying habits, would it not be reasonable to use that data to build the loyalty profile of the customers so that any loyalty program developed can be automatically applied to the appropriate customers?
I believe that the next step in loyalty programs is to take them off the backs of the customers and put them into the company where they belong. The idea is to make loyalty a benefit not an aggravation.
This is an open question to those companies who have a loyalty program. Are your customers responsible for initiating your loyalty program? if the answer is yes, why? One of the major objectives of just about all loyalty programs is to entice the customer to continue to return (as often as possible). Are there any hurdles that the customer must overcome to continue to capture rewards? Must the customer always have his loyalty card to get reward "points"? Are there other policy obstacles that might disallow the addition of loyalty points?
One of the prime rules of business that has become part of the gospel of customer loyalty is that the business must do everything it can to make it as easy as possible for the customer to do business. The obvious extension to this fundamental rule of business should be, in my opinion, to make it as easy as possible for the customer to accumulate loyalty points (or whatever is used) as easily as possible. To burden the loyal customer seems to be against the basic tenet of making it easy to do business with the company.
One of the latest marketing concepts is to segment the customers as finely as possible so that advertising programs and rewards can be finely tuned to the customer level. As long as the marketing program is tracking customers to determine their buying habits, would it not be reasonable to use that data to build the loyalty profile of the customers so that any loyalty program developed can be automatically applied to the appropriate customers?
I believe that the next step in loyalty programs is to take them off the backs of the customers and put them into the company where they belong. The idea is to make loyalty a benefit not an aggravation.
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