A single version of loyalty… a single truth? Maybe not.

The idea of creating a definition of loyalty in marketing terms is the same idea as trying to come up with an agreed single proposition for what the term marketing means as well.

There are so many different interpretations that I believe that there is no ‘right’ one, it is very dependent on how the definition is applied to the type of marketing discipline in discussion. Thus, the same applies for the marketing meaning of Loyalty.

In effect, I believe that as with all drivers of ‘meaning’ that a definition or context of a word does and will change over time. It is just the nature of the English language and our ongoing usage of the language. So, I have predictably retrieved from the web a dictionary description to start. In know this is old hat but like all good debate you have to start from a solid base or meaning.

loyalty
Noun
pl -ties
1. the quality of being loyal
2. a feeling of friendship or duty towards someone or something

So, this dictionary meaning is of course quite generic in its reference of the meaning of loyalty. But this is my point. For businesses and marketing practitioners to apply what we believe are the core elements of loyalty would be to; create the intangible feeling of wanting to be loyal and to further link this into an action, when making purchase decisions by a feeling of friendship or duty.

Okay, so we have identified some of the emotive and intangible drivers of loyalty. But how does business use this intangible human driver to create a meaning or definition of what loyalty is for their business?

All loyalty programmes have one end goal in mind, sustainable increased incremental revenue and greater profits. The key for business is how this is applied and what ‘mechanic’ the business chooses to use in the market relative to their immediate competition but the best known example is American Airlines (AA) whom actually invented the first loyalty programme.

The programme was known as AAdvantage and was an instant success it was so successful all the competitors copied it as the programme was based on a simple model (low barriers to entry). The more you travel (Miles) the more points (rewards) you can redeem from the programme. I could further analyse AA’s programme and debate that this was actually a frequency programme rather than loyalty as it just rewarded usage.

So, in effect the ‘mechanic’ for AA was to build a programme which identified customers and then based on the information (data) collected the customers are then rewarded for their ongoing usage of the product. Looking at this example you can start to see the beginnings of an argument where we could look at two different meanings of loyalty marketing already, we have a frequency based programme with AA which rewarded frequency.

There is also the possibility of another type of loyalty based on the intangible desire to below to a cohort of users. This is highly relevant to the automotive industry where a customer will generally not be in market on average more than once every 1 to 3 years at the earliest.

Whilst frequency loyalty marketing is important for AA (supermarkets are another good example) and can fill seats that either would have been empty or reward customers with seats at marginal cost. Automotive suffers from the opposite of Airlines in that the tyranny of time in the duration between purchases.

What do automotive companies do differently to the Airlines with their frequency loyalty marketing? Well it is all about having an ongoing conversation with your existing customers. The biggest problem automotive company’s face is actually maintaining contact with their existing customers so they can keep you going back to their branded dealer network for servicing and of course ultimately sell you another 5 cars over your lifetime.
So, we now have two types of contexts for loyalty marketing, we have frequency programmes and we have a communications programmes. Both share the same objective, getting the customer/user to buy more from the same company over time.

So the definition of loyalty here… well it comes down to what type of service product you sell and what your objective is with the programme. But ultimately it is about influencing your customers to buy from you more often and to feel a great sense of satisfaction with their choice to purchase from your business so they will buy again and again.

I think we can make this even more succinct in fact: your company chooses to create a loyalty programme which will by design increase the loyalty of your customers and exceed their expectations. As long as the services or products your business supplies to your customers are of a matching or higher quality relative to the competition, this will lead to higher customer satisfaction, which then leads to customer loyalty, which then drives greater profitability.

In effect, what we have here are the antecedents for building not only a successful loyalty programme for your business, but even as a strategic framework for your business overall to become a market leader in your chosen sector.

Till next time, The Integrati team.

Word of Mouth marketing or WoM is an Australian first…

Well believe it or not Word of Mouth Marketing is believed to have originated in Australia in the early 1980′s!

Word of Mouth (WoM) is defined as passing information from person to person with no intermediary or media channel delivering the message, such as a newspaper advertisement. Or you could say it is the most trusted form of business recommendation or the most trusted advice not to choose a business, it works both ways.

A blog like Integrati Marketing can be considered a WoM opportunity for a business and can drive new customers to the business. But there is a key caveat with WoM – your business has to have great products and services to be endorsed by a trusted friend, family or associate.

Even more important, unlike traditional marketing media where the business controls the message in the advertisement, brochure or on the website with WoM you do not have that control at all. This is of course talking about person to person WoM, not on blogs which can actually be “cash for comment” by bloggers.

Word of Mouth has gone through a renaissance of sorts since the fragmentation of media started in the early 1990′s and the reduced importance of Mass Media such as TV and newspapers.

Today, communications options are far greater and new direct channels such as email, websites and blogs exist. These are defined as 1 to 1 or direct marketing media. The WWW is an example of a Direct Channel where people have a 1-to-1 engagement with websites and interact with the information, even creating their own through ‘user generated media’ or blogs like this.

The important issue for business is to be aware of the new effects of eWoM, where customers can discuss your products and service delivery quickly and now with Twitter real-time! These discussions via eWoM on Social Networks and in blogs can be critical to your existing and future potential customers perceptions of your business.

It is important to be aware of just how easy it is to create positive or negative reviews, posts and tweets about your business! And because this media is so open and accessible it means your business needs to take into account what people are saying about your business and your services.

Research companies are now starting to tap into the power of Social Networks to monitor brand perceptions and use this to enhance or repair a company’s brand.

So, are you aware of what your customers are saying about your brand?

Think about this the next time you have a challenging experience with a customer or a brilliant customer service moment.

Till next time, The Integrati team.

Web 2.0 and the Network Effect.

The network effect is the value an exchange medium has (such as, Facebook) by supplying usage (your time) and your information to the service. You must of course, as a ‘user’ receive value from the usage of the service in return. Effectively, the more people who use the service such as; Facebook the more benefit the users will receive from the network. This can be with virtual groups, associations, friends and family. The difference here is again the WWW as you can now connect anywhere in the world with friends or virtual friends.

And wherever there are large numbers of users, business and marketers look to use the medium to engage and interact with the ‘users’ to sell their products and services.

With Facebook it was the simple and effective design of the site and features which colleague students in America started to use. So, with word of mouth and referral, “are you on Facebook?” a process began which was the Network Effect. This is an example of a Positive Network Effect, whereby the users found they had a way to keep in touch and share information with trusted groups or on campus more like trusted tribes!

Just as there are Positive Network Effects there are also Negative Network Effects, I will be a little cheeky here and suggest that the public transport in Melbourne (Trams and Trains) suffers from a serious Negative Network Effect when it rains as it cannot cope with the increased volume and long lines of grumpy wet passengers are the negative result. Not enough capacity = Negative Network Effect.

The classic Positive Network Effect which you will most probably have in your home or on you is the home phone or mobile. The more people connected (phone network) the more efficient and useful the telecommunications network became, locally, regionally, nationally and internationally. Well, that was true until we had unsolicited telemarketing calls.

So, how do you harness these new forms of The Network Service for your business?

Well there are a couple of really important things you have to have first, and these are;

1. Permission to interact with your customers, preferably by email (for online marketing)

2. The correct strategy to leverage and build a community with these new Network Service Providers such as; Twitter, LinkedIn, Facebook and MySpace without naming all the other web 2.0 possibilities.

3. Customer data (no data – much harder to connect)

4. A strategy to use the networks with a consistent and relevant message for your business.

5. Fun, you have to want to use these to engage with your customers so they enjoy being connected to your business with the benefit that comes with the connection.

So there we go, a few lines on what is the Positive Network Effect. I hope this helps to further understand some of why Sean Parkers presentation from the post “Connect or Die: The Network Service and the future of your business!” is so important for all businesses.

It is in effect digital Word of Mouth or as Advertisers and Marketers like to abbreviate everything WoM! I will talk about Word of Mouth marketing and digital Word of Mouth Marketing in my next post.

Till next time, The Integrati team.

Connect or Die, what will your business choose?

Well, we have all seen the rise and rise of Google and the importance of being able to find ‘stuff’ on the world wide web. Many of you may not remember the WWW before Google when you had to go to portals and lists of links like boards to find ‘stuff’ you were interested in.

Today we search sites like Bing and Google and we use these site to serve up paid links/ads on these sites to drive targeted traffic to our own sites. This model is what has made Google billions of dollars. It works, I am not denying this at all and I happily use Adwords and love all the reporting which you receive as part of the service on the dashboard.

So, this is all known and works, so what is this new term The Network Service? Well, it is a new term coined by an analyst of web 2.0 Sean Parker. In many ways I think it actually sounds like an outdated ‘network’ term but what Sean is actually referring to is  Social Networking.

Web 2.0 logos

Sean Parker, has created a thesis that he believes that the power of search is limited in that:

1. Companies that Harness the power of networks will dominate the internet
2. Collecting data is less valuable than connecting people

Well, let’s have a look at point one, in effect what Sean is saying is that whilst being able to find stuff on the WWW is still important (and will remain so) what is really important is being able to be leverage your connections to find ‘stuff’ faster and well with Trust. I think that is something which people have left out of the argument. In essence you trust a search engine to search that is it. But with a social network, the power of the search is in the TRUSTED reference. In other words the people you link to on MySpace, Facebook and professionally on Linkedin. So these Social Networking companies are all in line for being more valuable than Google and Bing and even poor old Yahoo.

Because… well because as Sean has stated collecting, aggregating , filtering and presenting data to a single user via search will be less important than collecting people!

That is what Social Networking is all about, it is the ability to tap into your known networks of trusted groups and individuals. This is not new, in fact it has been around since humans have been, what is different is that on the WWW it is able to connect you anywhere, any time on a device of your choosing. The Anthropologists and Sociologists have studied this and it is a cause celeb for them, they call it Tribal!

Tribal networks are the ability to use your trusted network or tribe for reference, reassurance and acceptance, except this is different to the periods of mass consumerism to the late 1990′s. In that geographically you can be linked into a ‘tribe’ anywhere in the WWW and share the same values and traits.

Now, I know you are thinking, “yeah but I am a small business owner what has this got to do with my business?” Well in my opinion it is simple, the saying was “Change or Die” (in other words innovate your business before your competitors do) now I believe it is Connect or Die. And, this is where the small business has a massive opportunity, not only does your business have excellent customer service and great products but you KNOW the Customer!

In marketing one of the biggest advantages is knowing your ‘target market’ your customers, If you use Social Networking as a business tool now to connect and foster a ‘tribe’ of your customers you will be building a sustainable competitive advantage – You will sell more to your customers than ever before.

Now, I have written enough about Sean’s basic premise and I won’t make your eyes bleed with anymore discussion here, in fact I you can read Sean’s presentation here from Scribd.com or directly from the Integrati.com.au Public Dropbox here in MS PowerPoint.

Now, Sean also talk’s about the Network Effect, I will cover this off in my next post, I will be interested to hear your thoughts as well.

Till next time,

The Integrati team.

Lead Management

Lead Management is simply creating a business process to understand where your leads are generated from (marketing activity, Social 2.0, Sales etc.), and ascertain how valuable the lead(s) may be to your business and allow the prioritisation of these leads to be ‘worked’ by your sales team to sell more ‘stuff’ to your customers.

By creating a process to rank and measure leads your business (regardless of size) is optimising the investment in activities which drive new business to you. By being able to measure where the ‘hottest’ leads come from and ascertaining how much it cost to generate a lead you will be able to produce Return on Investment (RoI) on your businesses leads process.

Today there are many systems which you can access on the web or you can install a client lead management software to give your business insight into managing the leads funnel.

The important thing here though is, if you are managing your leads today your well on your way to prioritising your resources such as marketing/advertising and sales investment.

If your business is not looking at a Lead Management process and actively measuring what leads are more effective than others from different activities your business may be wasting significant resource.

Take some time out, sit down and have a think about your businesses leads process works today. After that, if you think you may be wasting resource or worse missing out on opportunities then get in contact with the team at Integrati Marketing we will be happy to talk about  how your business could improve your lead management with detailed processes and metrics.