Month: February 2009

Categories
Branding Business CRM Directed Advertising Marketing Relationship Marketing

Don’t turn your customers into quitters

The other morning on my way to work I was listening to CBS-AM, and Joe Connolly of the Wall Street Journal told the story of someone who had gotten a collections letter from their bank that sounded more like it had come from a repo man. (Or maybe it was the Sopranos… sorry if I’m misquoting, Joe.)

I’ve been seeing a lot of collections letters recently, and not because I’m up to my eyeballs in debt.

It turns out my agency, Tanen Directed Advertising, is pretty good at writing collections letters. And not the kind Joe was talking about.

For the most part, collections letters tend to fit into a few basic molds.

There’s the impersonal, computer-generated type that remove all humanity from the equation… and from the recipient. (You’d be surprised how many of them aren’t written by computers.)

There’s the escalating, threatening letter that’s meant to scare the recipient into compliance but frequently just pummels them into paralyzed inaction.

And there’s the sickeningly sweet, fake “we know what it’s like and we want to help” letters that allow the sender to hide behind feigned consideration without presenting any real options and just serve to drive the recipient further away.

We don’t write those kind of letters. You see, we look at collections letters as CRM (Customer Relationship Management) tools.

After all, the recipients are your customers. They bought a car from you. They took out a mortgage with you — or with a bank thrice removed, but they’re your customers now. They get their electricity from your utility. They’re your patients and you’re their doctor.

Every time you communicate with your customer, you have the chance to deepen or damage your relationship with them. Which outcome would you prefer?

Sure, you can beat them into the ground to get your money, and you’ll get it. Maybe all of it, maybe just some of it. Maybe you’ll be the last straw that breaks them, but you’ll get your money.  And unless you’re a monopoly, it’s probably the last money you’ll ever get from them.

What if it turned out that by simply communicating with your customers, by treating them like valuable human beings who have feelings and brains and are integral components of your company, and by going the extra mile to give them some options, you can actually get more of the money they owe you?

We’ve written collections letters that have gotten 400% more of our client’s customers to call in to discuss repayments than did their previous best performing letters (known as controls in direct marketing). We’ve increased the amounts collected by our clients time and time again.

If you know anything about collections, you know that you usually have to hunt down your customers to talk to them. Our letters get your customers to pick up the phone and call you. Willingly. Because we explain their options to them, we empower them to take control of what felt like an out of control situation.

If you keep a customer, their lifetime value to you continues to increase, rather than bottoming out. If you show faith in your customer, and work with them to come up with a solution, they tend to respond with something every business desires:  loyalty.

Last night our President reminded us that we’re not a nation of quitters. That given a chance, Americans will do what it takes to rise from the depths of despair and work their way back to the top.

I’ve heard our current economic situation described in part as a crisis of faith, and that not until we all have faith in the future and start spending and lending again will we come out of it.

I’d like to add that as businesses, if we have faith in our customers and help them through these tough times, the rewards can be far greater than can be gotten through threats and intimidation.

I’m not arguing for charity — I’m making a case for a more successful business strategy. I’ve seen it work for our clients.

So can someone please explain to me why there are so many short-sighted businesses out there who would rather turn their customers into quitters today than do what it takes to earn their loyalty for years to come?

Categories
Business Marketing Media PR and News

Darwin, Domino and the Theory of Media Evolution

In honor of Charles Darwin’s 200th birthday yesterday, I’d like to talk about survival of the fittest and the evolution of the media landscape.

A few weeks ago, I wrote a blog post called The Magazine as Metaphor. I talked about the three segments of magazines that added the most new titles in 2008, with Regional magazines in second place with  24 new titles.

Well, MediaFinder.com (as reported here on Marketing Charts.com), the place where I got my data, just reported that regional magazines also lost the most titles last year, losing 33 titles. Overall, 525 titles folded in 2008.

The Theory of Evolution says that the species best adapted to its environment is more likely to survive than those that are less well-adapted. In nature, this happens through natural selection and genetic mutation.

In marketing, it does too. You see, environment is a combination of factors, and sometimes the most obvious ones are not the most important ones, evolutionarily speaking.

Let’s look at Domino, the most recent home furnishings magazine to get thrown out with the trash. And thrown out it was, by Conde Nast.

You see, Domino seemed to be doing everything right. It had growing paid readership, newsstand sales were increasing, it had an integrated online presence, a thriving fan base that built blogs, social networks and even real-world social groups around it.

Domino appealed to the vast majority of Americans who shop in Target and want to live with style without selling our souls to afford it.  (For the whole story, see this great NY Times piece by Penelope Green called “A girl world closes, and fans mourn” here.)

One would think that Domino was perfectly suited to survive and thrive in the changing media environment.

But alas, it wasn’t Domino that was unfit to survive. It was its prehistoric business model that depended on ad pages to survive. And ad pages were down 26%. More importantly, it pulled in only half the advertising dollars that Architectural Digest gets.

For those of you who don’t know, now that House & Garden and Domino are gone, Architectural Digest is Conde Nast’s only remaining shelter book. If you didn’t know that, it’s forgivable. AD has a median readership age of 50, and if you can afford to emulate the lifestyles in that publication, you’re a bit above me and my friends on the socio-economic scale.

Just a few months ago, before the announcement to close Domino, Conde Nast was telling the world how successful the publication was. It was, to all appearances, healthy, on top of the world, the masters of their environment. Just like the dinosaurs may have seemed just before they all died.

It seems wrong that an otherwise healthy and thriving publication was brought down by dropping ad sales, especially in this era when ad dollars are plunging across the board.

But that’s the point. Evolution is heartless. Survival of the fittest is frequently determined after the fact. The advertising supported publishing model is dying, and while some dinosaurs may last longer than others, they are all doomed, in the end.

Maybe it’s size that is the defining factor. In this era where we’re discovering that “too big too fail” applies to more than just dinosaurs, banks, airlines and auto manufacturers, is small the new key to success?

Or are blogs the tiny, furry upstart mammals that will become the next dominant species in the media environment? Aren’t the best of them also dependent on advertising dollars to survive? Is media always destined to be chasing ad dollars, and it’s not the media that is at the top of the food chain, it’s the almighty ad dollar?

Even ad dollars are subservient to a greater force: the consumer. Ad dollars are spent chasing one thing: consumers. And consumers are finally beginning to realize how much power they really have.

They’ve saved television shows that were slated to be canceled. They’ve killed movies and products that were supposed to be the next big thing. They’ve put Hulu on the map. They’ve been the building force behind Google and Facebook and Twitter.

And they’re why even though Domino is gone, it’s spirit will live on online in blogs like Apartment Therapy.com, the 3,196th most popular site on the web with over 900,000 monthly unique visitors according to Quantcast. Which, by the way, is higher than Domino’s paid circ of 850,000.

But still, it’s sad that Domino is gone. It is possible that it could have been saved if Conde Nast hadn’t thrown the baby (Domino) out with the bath water (ad sales).Magazines and newspapers are going extinct all across the land even when they have loyal fans who want to devour their content.

So can someone please explain to me how many more otherwise healthy content providers must die before prehistoric publishers realize that it’s the ad sales based model that’s killing them and that it’s the publishers, not the magazines, that must evolve or die?

Categories
Branding Business Marketing Relationship Marketing

Did Costco call you?

The other day, we got an interesting pre-recorded message on our phone. It was from Clif Bar, notifying us of their voluntary recall of certain Luna Bars that potentially have peanut butter in them that came from the same processor responsible for the current salmonella outbreak.

The message said they called us because we were Costco members, and that we’d bought the affected products. A friend of ours got a similar call, also because his family are Costco members, too.

Here’s what I find most interesting. Just the week before, I’d bought a case of Clif Bars that fell into the recalled batch… from BJ’s.

Did I get a call from BJ’s? No.

Did I get a call from any other manufacturer about their possibly contaminated products? No.

Recalls are touchy things. They can make or break a company. Marketing professors use the 1982 Tylenol recall as a case study of how to manage a crisis and turn a potential customer service nightmare into a brand building triumph. It cost them over $100 million dollars to recall 31 million bottles of Tylenol, but in the long run it saved the brand, and possibly the company, Johnson & Johnson, for whom it represented 17% of net income.  The International Herald Tribune has a good article about it here.

I’ve had other things recalled — most recently, my daughter’s toys being recalled for lead contamination comes to mind. But I never received a call from the company — I had to find out about it myself online after hearing the news stories.

What Costco did is good customer service. And Costco and Clif Bar have raised the bar (no pun intended.)

In the rivalry between Costco and BJ’s to win my business, who do you think just gained the lead? Given similarities in pricing and selection, what else is there to help set these two big box wholesalers apart except service?

I can’t imagine there’s much of a difference in the way they track customer data. They both swipe my membership card before they ring up my orders. BJ’s must have known that I bought the contaminated bars.

So can someone please explain to me, not why Costco called, but why BJ’s didn’t?

PS. Shameless promotion follows…

I just finished another dark and twisted collaboration with my friend, the extremely talented illustrator, Viktor Koen. As some of you may know, we worked together on Lexicon: Words and Images of Strange (AtticChild Press, 1996).

Our new collaboration is Toyphabet. You can read more about it here. But for those of you going to New York Comicon next week, I wanted to let you know that TOYPHABET is a limited edition book made specially for the 2OO9 New York Comic Con and is carried exclusively by Baby Tattoo Books at booth#1622.