Last week, when I had a meeting at a Slovenian company, we started talking about the Net Promoter Score (NPS), which is used by InstantFeedback to measure customer satisfaction, and soon a pretty typical question arose: “What can we do with our existing customers? Is there any way we could use them?” Of course I was more than happy to provide an answer to this.

It’s vital to reward satisfied customers and at the same time use them wisely. Click To Tweet

NPS divides customers into three groups: detractors, passives, and promoters. When we ask our customers to assess our service on a scale of 1 to 5, we can divide them the following way in terms of the scores given: 1 and 2 → detractors, 3 and 4 → passives, 5 → promoters. We’re using a modified and simplified NPS system, whereas the standard system uses a scale of 1 to 10. Thus, NPS can be calculated using the following simple formula:

NPS = % promoters – % detractors

The people I talked to soon got the idea how they should respond to the detractors. Check the situation and apologize if needed. With passives you know you’ll have to try harder next time. So what should we do with our happy customers then? Thanking them for their loyalty is certainly appropriate, but of course you can do a lot more than that.

Here are three suggestions for how you can use happy customers to your advantage:

1. Make sure they recommend you to others.

Let’s have a look at how selecting a bank takes place today and why a good review is so important. In 2012, the OECD conducted a survey on young people’s financial literacy as part of the PISA program. Slovenia scored ninth among the sixteen countries included. At first glance this is not an alarming result. Only after looking at it from a broader perspective does it become obvious that other countries’ scores were also quite low. But we shouldn’t be critical only of young people. Ask the person sitting next to you what the difference is between leasing and a loan. Or what EURIBOR is. Most of them won’t be able to provide an answer. It’s also true that most people don’t select a bank based on its interest rates or account maintenance fees. These are fairly similar between all banks. Most people don’t have a clue and aren’t even interested in how banking services operate.

Service fees do not differ very much from one bank to another. The difference lies in customer recommendations. Click To Tweet

People make decisions based on reviews. They set criteria for themselves that they deem important. Then they ask their friends and acquaintances which bank they like the best. In the end they select the bank they have heard the most positive and the fewest negative comments about.

2. Create a profile of your ideal customer

When you notice that customers are impressed with you, ask them why they keep choosing you. They’ll be happy to tell you. When I talk to someone about this, I always mention my friend Matej. He lives in the northern part of Ljubljana, but he drives to a hair salon in the Štepanjsko naselje neighborhood every month, even though that’s almost ten kilometers away. I asked him once why he drove there even though there was a hair salon in the apartment building right next to his and he told me because in all that time the hairdresser never asked him one single question. He likes to just sit there quietly. “Hello and goodbye is the only thing we say to each other.” Over time Matej recommended that hairdresser to six friends of his and two of them decided to change salons. It is through customers like Matej that you can try to find out why you’re unique and how you can attract others.

3. Make sure your customers are happy to recommend you and can do that easily

I know at least three Slovenian companies that print thirteen-digit-codes on their bills that customers can use to access and complete their online customer satisfaction survey. With some companies it takes fifteen minutes of clicking before you can finally submit a review. It probably goes without saying that the response rate to these kinds of solutions for submitting customer reviews is next to 0.

The procedure for submitting customer reviews must be as simple and as fast as possible. Click To Tweet

How is this done in companies that see potential in customer recommendations? Uber is a good example. It offers a five-digit promotional code to its users, who can forward it to their friends via WhatsApp. Of course that’s the most widely used cell phone app, but the code can also be shared on Facebook, Twitter, and so on. If your friends use the code, they get a free ride. When they use it, the user that sent them the code is also entitled to a free ride. I got two free Uber rides in Los Angeles last year this way. Or actually three rides, because Uber reimbursed me in full for one ride because the driver didn’t do his job well. But that’s a story for another day.

Increase your sales

Companies are aware what trouble dissatisfied customers can cause and so they pay extra attention to them. But because of this they often forget about their happy customers. These must, first and foremost, be nurtured, but you can also use them to increase your sales. The following thought by Shep Hyken, probably the best-known customer satisfaction expert, may be of use here: “Learn from your happy customers, especially if they are willing to tell you their story, so you can repeat it with others.”

It was sometime in mid-May that I started to realize it was high time I bought summer shoes for my two-year-old. My buying process started off with a bunch of questions regarding what kind of shoes should I get him. Open-toed or closed sandals? Which sandals had soft soles suitable for my little boy’s flat feet? What kind of shoes would survive hanging out with grandpa, who brings my son home happy, but completely covered in mud, saying: “He had a blast watering the garden.” I searched for answers online, in a mommies’ group on Facebook, with online retailers, and so on. In a period of about ten days I looked at a number of shoes, responded to retailers’ remarketing ads, and then . . . bought the shoes at a brick-and-mortar store.

Nothing unusual, except that I’m not in their statistics

My buying process was nothing unusual. Already back in 2011 Google was claiming that the buyer seeks out eight to ten sources of information, among which online information predominates. Six years later, I’m sure that the statistics are even more on the side of the Internet, but that doesn’t mean online sales have gone up significantly over this time. According to the e-commerce sales report published last year by the US Census Bureau, e-commerce sales accounted for 8.5% of total retail sales. This means that Americans still make more than 90% of their purchases in brick-and-mortar stores. The buying behavior described can be defined as the ROPO (Research Online, Purchase Offline) model or trend.

In most cases online research actually ends with a purchase in a local store. Click To Tweet

But digital content creators, including digital marketers, would perceive my behavior as a failure. My purchase is not recorded in the digital marketing statistics, because I didn’t complete it online, even though I came in contact with the ads. My presence in online stores was recorded under the percentage of decrease in conversion rate that we often look at sadly during digital campaign analyses, wondering why and how we can reduce it. In reality, digital content influenced 90% of my decision and only the remaining 10% depended on whether the shoes were the right fit for my kid. Pure success on the part of digital content creators, which, however, can’t be proved. Or can it be?

Google can do it

According to forecasts, approximately a third of the total advertising expenditure this year will be allocated to internet advertising. Google’s revenue is the largest in this respect, because it’s going to attract approximately half of this money. Growth in digital advertising is also predicted for the next few years, although it will be smaller each year. There are several reasons for this, including the statistics on the ROPO effect mentioned above. Google has shown a clear interest in proving that internet advertising is worth the money, even though analyses don’t show that because of the offline purchases.

To this end, it launched a new tool at the end of May to measure how much money website visitors that click on the ads spend in the advertiser’s brick-and-mortar stores. This new Google tool will look for matches between the digital ad clicks made by website visitors that are logged into Google services at the time of making the click and their purchases recorded on credit and debit cards. Google is believed to have access to approximately 70% of credit and debit card transactions made in the US through its partnerships with companies that track this data. With its new tool, Google will automatically inform advertisers of when their digital ads pay off in the form of purchases in local stores.

For or against Google?

I welcome these kinds of initiatives myself because I believe marketing should be directed by sales or by the results of its activities for the sales department.

But it’s clear that what Google is doing is opening a series of questions about the protection of Google users’ data. Google claims to protect their user privacy because this tool only sends information on aggregated and anonymized sales activities to the advertiser. I think this isn’t as simple as Google is trying to present and I could go on about this for a while, but this is not the purpose of this post.

How to adapt marketing and sales to the ROPO behavior?

Even though more than 90% of purchases are made in the physical world, around 80% of the buying decision takes place online. This means that a prudent marketing strategy focuses on creating web content that follows all the development stages of the customer relationship. At the same time, we need to predict how this strategy will connect marketing activities to sales activities that end with a purchase in the physical world. An example of a digital campaign that connects marketing and sales activities and follows the ROPO behavior of buyers is presented in the figure below.

It’s a campaign that was designed for a product intended for consumers, but a similar concept can also be used for the B2B segment. Marketing would take the same action, sales would get in touch with prospects at business meetings rather than in business units and complete the sales process, and customer support would probably be provided by the sales department itself or a special customer support department rather than the call center.

The campaign’s effect can also be measured without a Google tool.

The campaign was designed to track customers from the first moment of contact to the moment when they visit the brick-and-mortar store. Because every activity performed with the prospect is recorded, we can identify each stage from lead to buyer without having to need access to the buyer’s credit card transaction data. But I have to admit that, just like Google can only measure 70% of transactions, we also don’t have the entire picture because some buyers follow their own path and may skip an activity or two in the buying process, where we can lose them.

The answer is to adapt campaigns to buyers that end up going to a brick-and-mortar store. Click To Tweet

 I nonetheless think that only for the sake of campaign measurability and better targeting and segmenting, it wouldn’t be wise in the future to make the purchase so complicated for the buyers that when buying a product at a brick-and-mortar store they would have to somehow show where the campaign reached them first, how many times they made contact with various types of digital content, or what (which ad) was the deciding factor that finally made them purchase the product. But we can already better target and segment prospects based on the digital footprints of those buyers that we’ve tracked from their lead stage to the final purchase. If we look for similar prospects among those that haven’t made the purchase yet, we can estimate which prospects would it be wise to approach additionally in order to push them towards making the purchase. Of course, this only works if the campaign is appropriately designed and supported by marketing automation and customer relationship management tools.

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Last summer, Elon Musk’s comment that “artificial intelligence is the greatest risk we face as a civilization” inspired me to read up on artificial intelligence and start thinking about it. Musk tries to describe the gravity of the situation by using several examples that I find intriguing. He thinks that the use of AI should be legally regulated. I’m afraid that greed always finds a way to get around regulations. Once this genie is out of the bottle . . .

Up until now we’ve always gone on about how robotization and AI would “devour” our jobs, but what the Tesla CEO is worried about is the long-term survival of humanity, when at a given moment in time it will (sooner or later) become redundant to AI. Well, anyway, I started thinking about how AI would affect my business, shopping or forming buying decisions, sales and marketing, and product development.

Who’s afraid of artificial intelligence? According to Elon Musk everyone should be. Click To Tweet

Are you thinking about the sales process or “intervening” in your customers’ decisions?

Since 2012, FrodX has been focusing on customer engagement and implementing marketing automation systems. To put it plainly, our goal is to help companies “intervene” in their customers’ buying experience more effectively. We think about what approach to take and prepare the tools that companies can use to more effectively influence their customers’ buying decisions even before they meet them in person.

Marketing communication means buying attention and trust

In addition to knowing how the mind works and how people behave, technology can be of great help here of course. Marketing automation is a tool that uses rules set in advance to help us segment people with similar interests (the area of interest and purchase readiness are the basic parameters of a specific segment) and automate personalized communication with each individual that the system identifies as a prospect. Let’s say that our project goal is to set up a kind of proactive digital turf (a combination of a website and communication via email, social media, and digital ads) that dynamically adapts to each visitor by holding their attention, building trust, and encouraging them become fond of us or sometimes even enthusiastic about us. Trust is actually the key component that makes the buying decision work to our benefit. All we must do is ensure the right communication with the right person at the right moment.

Marketing: a prisoner of unending optimization

In order to achieve all of this, we have to define the journey the customer wants to travel while making a buying decision, as well as the story along this journey that builds customer trust in the provider or customer enthusiasm. What this means in practice is that we have to clearly define the processes and business rules based on which the marketing automation system works, and prepare the content it distributes across the communication channels it manages. Let’s say that our services help turn a marketing automation system into a smart system during setup. It tries to handle the information it got from us wisely: that is, it tries to satisfy as many customers as possible of the ones it contacts during their buying process.

Marketing is subjected to constant optimization: we keep adapting, but there’s no end to it. Click To Tweet

 Of course we also make mistakes as consultants and system implementers. We make them considerably more often than one looking at us or our work from afar might think. But that’s nothing to be worried about. A component part of our services is using empirical measurements to find room for and provide improvement. This means we test how much sense it makes to change the business rules and processes driving how the marketing machinery operates for an individual customer. We also adapt the content that the marketing system distributes. Seeking optimal communication channels is also part of the optimization process. In truth, optimization is never fully completed. If we start by preventing childhood diseases, over time we start making optimizations primarily because the campaign’s allure faded. Because our competition may have used a similar approach and we’re losing attention.

Smart versus intelligent systems

Today’s marketing communication automation still continues to largely rely on marketing automation systems that are only smart. These systems can observe and follow our rules. They get their smarts from people. But they don’t yet have the intelligence to learn by themselves or adapt themselves based on performance analyses and ongoing testing. However, this time is unbelievably close. After becoming a SAP Hybris partner, I believe in this even more. I’m sure that by using intelligent marketing automation systems that will be able to learn by themselves and adapt their operation with the help of AI, within the next three to five years we’ll be able to use the same number of technical specialists to serve at least three times as many customers as today. We’ll most likely call them “customer engagement systems,” but in fact they’ll only represent a new technological development stage of the current marketing automation systems and CRM platforms.

AI already writes sports news today and will also write fiction and marketing messages tomorrow

Therefore, artificial intelligence will undoubtedly also take some business away from us, but not only in relation to the technical services required for system implementation and maintenance. I think something similar will also happen to content creation a little further on. Today’s sports news is already written by machines, so it would be naive to presume that fiction and marketing messages won’t also be written by robots one day. Yes, robotization and artificial intelligence will also take away jobs in the creative industries. In the long term, customer engagement will most likely no longer be FrodX’s central activity. The bulk of our business will probably include customer experience projects and the development of new products.

What if artificial intelligence turns out to be so good one day that people are no longer needed? Click To Tweet

Privacy is currency: we’ll intervene in your buying decisions through your friends

Sooner or later people will no longer want to be so closely connected with companies and give their personal data away to them just like that. We’re finally starting to become aware of how important our privacy is. Here, privacy protection legislation will probably make its greatest contribution. It seems that the days when consumers will be ready to pay for making access to their privacy more difficult are not that far away at all. On the other hand, we’ll want to be even more closely connected with our friends. We’ll communicate with them even more effectively than the technology and social networks currently allow. That’s why I think that in the future our friends’ experience with a specific provider and its service or product (customer experience) will be significantly more important even than it is today. This is where I think the key opportunity lies for intervening in the prospects’ buying experience, which companies will be able to influence. People currently involved in marketing and sales will have to start thinking along considerably different lines and develop completely new skills if we want to continue to be useful. Good luck!

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In Slovenia, if someone tells you that they’re involved in digital marketing, they’re most likely talking about advertising within the Google and Facebook advertising network. They’ll also tell you that they’re specialists in website traffic analytics and that they may manage their customers’ Facebook profiles. Even if they’re doing other things as well, most likely they only stick to the part of marketing that has to do with promotion, and they have probably never heard of Philip Kotler.

Promotion is only one of the Ps in the marketing mix. I think this is the part of marketing that should only be tackled at the end, when we’re confident in the product’s value to the customer. Companies often forget this.

Fooling the customer?

Often I come across companies that know that the uniqueness of their product’s value to the customer is questionable. They know that their product is not significantly different from those of their competition. Sometimes it actually is different, but to the advantage of the competition. Nonetheless they want to invest in promotion rather than the revamping their product’s unique value. Like it or not, such cases always make me feel that these companies are asking me to give them ideas for how to use promotion to fool the customer.

Promotion is the last step in the selling process. The first step is a high-quality product. Click To Tweet

Listen, the times are gone when you could bet on ignorant customers. They practically no longer exist. Today all information is only a click or two away, and we have our phones with Internet access constantly in our pockets or in our hands 150 times a day. Betting on uninformed and ignorant customers in this day and age is madness. Today’s economic model of society is no longer based on uninformed customers. Full transparency and limitless and effective dissemination of information is the core value highlighted by today’s winners.

We can see others clearly, but we’re unable to recognize our own mistakes. Click To Tweet

We’re all good at understanding the examples of others, but we find it practically impossible to take a critical view of our own situations. We think we can hold back on development and still retain our ignorant customers. Development devours its own young. If your development doesn’t, your competition’s surely will.

Record companies managed to destroy Napster, but that only prolonged the sale of CDs for a short time. They didn’t want to understand what customers were looking for and what a new value for them would be. Apple understood that, sorted out the copyrights with authors and performers, and offered iTunes to the market. But consumers gradually moved on. Now we want to stream music limitlessly through Spotify and similar services for a monthly subscription. Who in this chain would benefit from promotion alone? Only Spotify and its contemporaries, in my opinion. The others probably turned to something on the periphery, if they’re still present in the market at all.

Devour your young!

FrodX tries to offer its customers what they still can’t get anywhere else in the market, at least not as simply, conveniently, and inexpensively. We’re aware of all the followers that track our footsteps and try to offer our uniqueness from three years ago for less money. We can compete with them by lowering our prices and optimizing our operations, or by reintroducing solutions that our customers want but aren’t able to find because there aren’t (m)any providers on the market that offer a comparable range of products. Usually this means that with every such step, stories in which followers gradually increase while we’re adding new features come to an end, at least in financial terms. We don’t fight to be cheaper, but for the cheaper options to become irrelevant, or at least not comparable. We seek to go the extra mile, as the Americans would say. Considering the business we’re in, this path seems more natural to me, even though with every new step of development, we make everything that came before it less interesting.

Constant progress demands victims in our own ranks. So devour your own young! Click To Tweet

Something similar applies to all industries in which the product is the end result. When Philips makes a real market breakthrough with its smart toothbrush that can keep a record of and report how effectively I brush my teeth, and when parents realize that collecting toothbrushing data on a smart toothbrush is a tool that makes children have more fun brushing their teeth and do it better, all “non-smart” toothbrushes will turn into second-class items. Their only market advantage will be that they are cheaper. If such a toothbrush had been produced by GlaxoSmithKline (Sensodyne, Aquafresh, etc.) and if GlaxoSmithKline “had devoured some of its own young,” Philips wouldn’t have interfered in their line of business. Mattel realized early enough that someone with a new approach could interfere with their business and so they decided to come up with their Hello Barbie instead, which I’ve already written about. Amazon is also known for devouring its own young, as is a series of other global household names. What about you? Are you betting on being cheaper or offering more to your customers?

 

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I’m going on a short trip to Rome this weekend and so I’ve been spending a considerable amount of time browsing the Internet over the last couple of days. I’m interested in the Italian capital’s major sites, good shopping venues, and recommended trips near the city, as well as the most popular bars and restaurants where I can try the typical local food.

The hotel that takes all four moments of my purchase decision into account is the one that wins. Click To Tweet

The marketer inside me wouldn’t pipe down. I couldn’t stop thinking that I would’ve been spared at least some of this browsing if the hotel I’d already booked a few weeks ago had conducted its marketing and sales activities in a more targeted way. It would’ve saved me time and the hotel would’ve earned one or two more commissions thanks to me booking a culinary experience, a tour of the Vatican, or a moped rental.

Reeling in customers even before they decide

An even bigger “win” for the hotel would be if it had taken into account all four moments of the purchase decision as defined recently by a Google study. These moments include:

  1. Dreaming,
  2. Planning,
  3. Booking, and
  4. Experiencing.

Can you imagine my Roman hotel already approaching me online at the very moment I Googled “things to do in Rome” or “the best time to visit Rome” and I was still pretty undecided about taking this trip at all? Research shows that as many as 37% of travelers dream about vacations every month and that in this phase of their customer journey most of them are interested in general information about the destination, such as the weather, the distance, current events, and so on. By then they have already left enough traces enough to make their intent known and providers should seize the opportunity.

A hotel with the right range of services beats websites like Booking.com each time

If I had already ended up on my hotel’s digital turf through its useful answers to such questions, I would also definitely be more in favor of this hotel during the trip planning stage (the purchase moment when I was looking for the most suitable hotel) and, even more importantly, the hotel would also be able to approach me at the moment of purchase, which in this case I could simply make via this hotel’s website rather than a hotel booking site.

All roads lead … towards personalization

Today, when I’m only four days away from leaving for Rome, I’d most definitely be glad to receive any tips for travel experiences I could book in advance, whether a birthday dinner (the hotel definitely has this information) or tickets for the Patti Smith concert on Saturday (let’s not forget: the more personalized the offer, the greater its chance of success!). If my hotel had sent me such tips together with the opportunity to book them immediately and maybe a travel packing checklist a day before my departure, I’d no longer perceive it only as one of the many accommodation providers in Rome, but as an experienced local advisor and my personal travel planning assistant (by the way, isn’t this basically also the goal of the magazine that AirBnB began to publish with Hearst at the end of last year?).

All roads lead to Rome. But on the way they go past generic offers. Click To Tweet

The digital environment makes countless more marketing and sales activities possible, and advanced personalization tools provide the way to deliver the right message at the right time. But everything starts with a plan—and a moment to think it over.

 

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The time is coming when the entire buying process will take place without sellers and buyers. When we no longer decide ourselves what we need and when, and from whom to buy it, because devices will do that for us.

To be clear, by “sellers” I don’t mean providers and by “buyers” I don’t mean those with needs or desires. What I have in mind is the individuals that are physically involved in the buying process. It’s also true that this doesn’t apply everywhere and that it’ll still take some time for it to apply to all the products or services in all industries, which may also never happen at all. People will still want to take an active part in the buying process for quite some time, because if nothing else it’s a unique and desired experience. In turn, salespeople will stay part of the buying process for exactly the same reasons.

For areas to which this does apply Forrester predicts that one million B2B salespeople will lose their jobs within the next three years. It can be logically concluded that these will primarily be the ones that collect orders and finalize purchases, providing the lowest added value in the process.

Too many steps in the buying process drive buyers away

In terms of sales, the selling process must be as simple and as frictionless as possible because every step that causes additional strain for the buyer significantly impacts sales.

We need to make the purchase simple. The less the buyers click, the more likely they are to buy from us. Click To Tweet

Purchase friction reminds me of the hypothesis presented at a meeting we held on the fourth industrial revolution. The event was tied to our translation of the book The Fourth Industrial Revolution by Klaus Schwab, which 13,000 people have already downloaded for free. The overall conclusion was that if the book had cost one euro, it would’ve been downloaded by a few dozen or hundred people, at most. Not because the book wouldn’t have been worth the euro, but because the effort required to make the payment would’ve been too great. If the payment could have been made through a fingerprint or on a vending machine, most people would’ve paid for the book.

Be one step ahead of the customer

Let me illustrate the same thing with another example, such as the purchase of printer cartridges. Before you keep on reading, stop for a moment and think about what steps you take every time you buy new cartridges for your printer.

We pretty much all do the same thing: we wait until the computer or printer warns us that we need to replace the cartridges. Because we’re right in the middle of printing and we’re already sitting behind the computer, the next step is quite logical: we search for new cartridges on Google. In turn, Google gives us ten hits, nine of which are offers for fake or refilled ink cartridges. The printer producer or distributor has already lost its deal at that moment.

But the buyer is far from being done. He must first find out which dealers are reliable, which ones deliver to Slovenia, and which ones charge less for shipping than the cartridge itself, so the package won’t be held up in customs. In addition, he must also make the online purchase by registering at an online store, entering his delivery address and credit card info, and completing the purchase.

Modern customers will only be happy when printers order new cartridges and cars order new tires on their own. Click To Tweet

The producer and its distributors only stand a chance if they’re one step ahead of the customers and simplify the purchase for them as much as possible by starting the selling process before they start buying. They should send a 1-click offer for new cartridges even before the low ink warning appears on the customer’s computer screen. Because the purchase is simpler and because the customers already know the dealer, they are considerably more likely to make the purchase.

Another good example is the Amazon Dash Button. The entre buying process consists of two steps: a click on the button when you’re out of laundry detergent and a purchase confirmation on your smartphone (to prevent your children from ordering an entire container).

Click, click, click

Sooner or later even the click on a physical dash button or a button within an app or e-mail will no longer be needed. On the one hand, providers will monitor and know our behavior and that of our devices extremely well, and on the other, customers will overcome their fears and build trust in the providers. The provider will send us a new package in a timely fashion without any interaction on our part based on our supply of laundry detergent or used-up quantity of ink.

And there’s a multitude of other examples and areas of this kind. Most people insure their cars by taking out “the same insurance as last year.” Do we really need to go see our insurance agent each time? I believe we no longer even need an online process for this.

It’s not about how expensive it is, but how much of our time it takes. Click To Tweet

At this point, new cars already know better than the driver when they need a service and most likely also which new tires would be the best fit for them and when it would be best to replace them. When the car places a service or tire replacement order by itself, and coordinates it with our schedules, the process will take place without a seller and a buyer. With self-driving cars, we’ll only find out that our car has been serviced and that its tires have been replaced once we get in the car.

A world without sellers and buyers

OK, some of this may still be a little unrealistic and strange and hence socially unacceptable, but there are some facts we can’t ignore. Ask yourself what you would do if you downloaded our Slovenian translation of The Fourth Industrial Revolution. Would you pay for it if it only took one click? And what would you do if you had to register at an online store, enter your credit card info, and complete three more steps in order to make the online purchase?

For me the question is no longer whether there’ll be increasingly more purchases that include no seller and buyer, but how we can adapt to these changes and where the opportunities lie.

What about you?

 

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Customer recommendations are the only marketing tool that definitely works. Always! All other methods that companies use are definitely less effective in terms of input and yield. Unfortunately, the range of recommendations is limited to the number of (satisfied) customers. When this range is reached, we have to start using other, less effective marketing approaches—whether we like it or not—to increase growth (if our ambitions for growth are substantial). Sadly I see that in most cases customer recommendations are completely left to chance and therefore represent potential that is still largely underused.

Customer recommendations are the only marketing tool that definitely works. Always. Click To Tweet

Do you know which customer recommended you?

When someone I talk to tells me the exact same thing I wrote in the title I don’t even bother explaining the difference between marketing and advertising. I came to realize that it’s significantly more effective to continue the conversation by discussing the use of potential provided by customer recommendations and satisfied customers. I ask people several key questions:

  1. Do you know for sure which customer recommended you and to whom? Do you also know this if the recommendation that was given did not lead to closing a new business deal?
  2. Do you know how you could systemically encourage satisfied customers to make recommendations? Can you make them think of you and motivate them to recommend you in their social circle?
  3. Can you assess the unused potential of satisfied customers that, even though they were satisfied with you, don’t actively promote you?
Can you make customers think of you and motivate them to recommend you in their social circle? Click To Tweet

If the conversation then develops into a debate on the suitability of certain concrete examples that we have already introduced with some of our clients, the people I’m discussing this with usually realize that they could still do a great deal to encourage their customers to recommend them or set up a special system for this.

This leads to discussing whether they have the capacity to systemically measure their customers’ satisfaction after every service they provide and accordingly measure the potential of promoters among all of their customers.

Be proactive and encourage satisfied customers to recommend you

The list of potential promoters (according to the Net Promoter Score methodology) forms the basis for being proactive and encouraging customers that have expressed satisfaction to recommend you. Another element guaranteeing success in encouraging your customers to do this is the “reward” they receive for making a recommendation, which you as a provider can use to start the conversation on recommendations or your wish to be promoted by satisfied customers in the first place. Here it’s of course wise to follow the golden rule of customer recommendation systems and reward both the person making the recommendation and the person receiving it when the recommendation has taken place. In any case, this sooner or later requires setting up a special system covering the entire process and providing suitable IT support for it.

Think outside the box

In some cases, especially when taking into account the provider’s activity, the simplest way to set up a customer recommendation system is to create special products that offer recommendation-related offers. I sometimes feel that companies don’t see this at all, even though it’s constantly there in front of their eyes or they are actually already doing something similar.

Why wouldn’t friends also take advantage of the concept of a family car insurance bonus? Click To Tweet

Why wouldn’t the concept of a family insurance bonus be used by friends that would add a new policyholder for the insurance company to their “family” circle each year? Why wouldn’t friends that decide to take out a consumer loan together with the same bank be offered better loan deals? Why wouldn’t we collect loyalty points with a retailer or tourism provider collectively with our friends, and then all receive discounts for making group purchases? I’ve already written about some concrete examples in the past. Maybe they’re worth reading again.

Show gratitude even for recommendations of little things

The “soft” recommendations are a separate chapter altogether. I (FrodX) would be happy to reward anyone that only brought me a lead or invited new readers to sign up for our newsletter and start reading our blog. Even though they didn’t buy anything. Or at least not any time soon. In the B2B segment, recommendations probably count significantly more than in the B2C segment, but it’s significantly more difficult to link them directly to closing a specific deal and they are always more of a matter of handling a person on-on-one than through an automated process.

Consultancy companies and business solution providers, such as FrodX, can use case studies that their customers proudly share and active participation of satisfied customers at their events as a tool. Visits by our reference customers have an even greater impact and we also bet a lot on the personal promotion of our clients’ employees that got promoted by their companies thanks to taking part in our projects.

The most sensible step you can make when you’re no longer satisfied with your business growth

Your business may truly not need to be advertised. But I truly doubt that you don’t need to manage your customer recommendations actively—that is, systemically measure your customers’ satisfaction and encourage the most satisfied ones to recommend you. In any case you practically can’t set up a more measurable marketing process than customer recommendation management. Setting up a customer recommendation system is the most sensible first step in enhancing your marketing activities, when you’re no longer satisfied with your natural business growth. We’d be happy to give you a hand.

You practically can’t set up a more measurable marketing process than customer recommendation management. Click To Tweet

 

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One of the first things I learned as an anthropology student was that people behave illogically and irrationally. Specifically, ever since the beginning of human existence it has been usually more important for us to make quick decisions rather than completely correct ones. Consequently, our brain developed many shortcuts for making fast and impulsive decisions.

If you’re in any way involved in marketing and/or sales, whose main point is actually the art of managing decisions, knowing these shortcuts can help you tremendously. When you want to strategically reposition the development of your business operations, things will evolve faster if you keep the irrational ways of human thinking in mind while planning your moves. It’s wise to use the general human weaknesses from the very beginning of designing a new product to shaping the marketing strategy for it, as well as with every individual campaign. Why wouldn’t you if you know them?

If you know your customers, you can more easily influence their decisions. Click To Tweet

Seven irrational ways of thinking:

1. We hate to give up, when we invest our time, money, or effort in something, even though we know that the original goal is no longer worth it. Psychologists say that persisting in a half-completed project that no longer makes any sense to us arises from the fact that we don’t want to accept failure; this is also why we don’t abandon projects, relationships, or tasks that are doomed to fail.

2. Have you ever wondered why car sellers always set their prices high, even though everyone knows they can be lowered by bargaining almost without exception? I’m not sure how many sellers are actually familiar with the theoretical background, but the fact is that the human brain constantly “anchors” information. This means that we subconsciously save the numbers or data we’re exposed to in our brain as starting points (we’re sort of benchmarking them) and after that continue to compare new information against them. Think about how you’re going to set new “starting points” in your next marketing campaign or perhaps position yourself as the one that can offer more than what is currently available on the market …

3. The gregarious instinct is probably the most powerful shortcut developed by the human brain and also the one that marketing most often exploits. The desire to belong within a group often prevails over the desire for one’s own wellbeing and so it often leads to incorrect or illogical decisions—which experienced communication specialists are acutely aware of.

4. When you agree with your prospects’ thinking, you’re immediately a step closer to them. People tend to, completely subjectively, seek confirmation of their beliefs, theories, doubts, or fears and are hence exceptionally likely to conform to those that know how to confirm them. On the other hand, this means that if your prospect doesn’t already believe in something himself, that is much more difficult (or at least more expensive) to change.

5. Have you ever designed a marketing message suggesting that if people didn’t do a certain thing, something bad would happen to them? Did people heed it? If you’re frowning, keep on reading: people tend to be extremely optimistic about themselves by nature. In principle, every individual believes they are less subject to a certain misfortune than others. Accordingly, many smokers believe that they have a smaller chance of developing lung cancer than other smokers, and many investors believe that others are more prone to making a loss than they are. Next time you feel like scaring your prospects, think of this shortcut first.

6. Despite the exceptional capacity of the human brain the decisions we make are largely connected with recent events, the information we’ve been exposed to, or info that quickly comes to mind. The potential of “the accessibility of recent information” in our memory is exceptional and most likely it is the politicians that exploit it the most; just think how many political promises connected with safety are given right after a local terrorist attack.

7. In general people believe that a bird in the hand is worth two in the bush. Research has shown that if people had to choose between fifty dollars in the hand today and a hundred dollars next year, the majority would opt for the fifty dollars. But if they had to choose between fifty dollars in five years and one hundred dollars in six years, the majority would wait for the bigger sum. Have you already figured out how you can use this fact to your benefit?

We can be as rational as we want, but the majority of our decisions are still irrationally based. Click To Tweet

Understanding your customers well also means you know what subconsciously affects their decisions. If this is still too challenging for you, that’s where we can help. Stop by for a cup of coffee. 🙂

 

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Despite all the clever solutions modern marketing has come up with, the comment that John Wanamaker made over a century ago still holds true—that is, that half the money spent on advertising is wasted. The only progress we’ve actually made is that now, in the digital world, we can much better determine which half hasn’t produced any results. Let’s say we can measure our successes and failures significantly more accurately, but we still respond reactively. Despite all of the technology and because the digital and physical worlds are interconnected, many businesses are incapable of piecing together an individual customer journey so they measure the effects of their promotional activities in terms of clicks or even ad views. Media buyers that fulfil their customers’ needs this way are dying out, even though they themselves may not yet realize this.

Where does martech see its big opportunity?

I often say that technology will swallow marketing sooner or later. And I mean it. Those that will help companies detect and also prevent in advance the wasted half of funds for winning new customers (not just advertising), will clearly make a big breakthrough in the industry. Investors invest enormous funds in companies that want to take up this challenge. I think that in some way even Microsoft justifies its recent purchase of LinkedIn along these lines. And let’s say that Salesforce knows what a big opportunity it has lost with LinkedIn.

Technology will swallow marketing sooner or later, for sure. Click To Tweet

We can only see the true picture from the end of the customer journey

If we want to act intelligently in designing a marketing strategy and outline reasonable promotional activities, we always have to look from the end of the customer journey towards the beginning. This is the only way to really understand the starting point well: who, when, where, and why buys the company’s products or services. We can only find the answers to this with our existing customers. If we don’t do that, we only guess and take greater risks than necessary, even though the answer is right there in plain sight.

You want to win attention but also build trust. And you’re not alone in this!

To put it more simply, a company investing in promotional activities buys two things: the public’s attention and the trust of individual prospects. Advertisers are pretty good at buying attention because many things can be saved by a big pile of money. On the other hand, buying trust is often a critical point in winning new customers. What is funny about it, though, is that we often don’t know who blows it when it comes down to trust. Was it the marketing communication specialists that designed the campaign that made the fatal mistake or was a mistake made while switching to one-on-one communication with the prospect? I personally think that the latter is usually more fatal, especially because customers are considerably more engaged during one-on-one communication and because they expect to receive personal treatment tailored to their needs. But here we might have a problem if we only see “the average customer.”

One-on-one communication must be credible and personalized so we can maintain the customer’s trust. Click To Tweet

We might successfully win attention based on a sample of average eyes and ears, but in order to build trust, every customer hears the story his or her own way. Customers can even hear (and understand) the same story differently depending on who’s telling it to them. The more they trust the narrator, the more credible they find the story and the more attentively they listen to it. You probably often say it yourselves that the best advertising is word-of-mouth and that your good reputation precedes you. Yes, it does, but not all by itself.

Who influences whom to what degree?

Here I’d like to talk about an opportunity, where machine learning and later also artificial intelligence may soon lead to revolutionary changes in winning new customers. We can now use publicly accessible data to identify connections between people and the strength of this connection, shared interests and experiences, and so on. The frequency of their communication is only one of the indicators and certainly not the most important one given that only a small percentage of people conveys a large majority of content in the social media. The majority of participants are merely passive observers.

The frequency of communication in the social media is just one of the indicators of influence between people. Click To Tweet

Let’s say we’re close to the moment when technology will be able to use complex algorithms to calculate the level of influence between connected individuals based on publicly accessible data in the social media and business directories. Your sales staff will be much more successful during their first contact with the prospects because, in addition to the contact information that your marketers have obtained from them because the prospects responded to you or because you’ve managed to win their attention, you’ll also obtain information on which people that are already your customers or are one of your customer’s employees your prospects have a certain relationship with and how much they trust them. Would you be able to use such information? I imagine this could be some sort of a business directory of the future. Can you see that we’re on the verge of marketers and salespeople obtaining the tools that will allow them to finally start selling things using people’s connections? Plus, there’s a bunch of others that could use this. Can you imagine the HR department receiving reliable information on how much the individuals applying for a position of a salesperson can influence the decision makers at companies you want to reach? I sure can.

 

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This probably rings a bell, right? A company spends several months (or years) developing a product until it finds the most original, technologically sophisticated, or advanced solution, but then when they start marketing it, they run into problems. No matter how loud they praise their R&D department’s excellent work, and no matter how much they invest in showing off their meticulously creative ads, their actual sales don’t reach the anticipated results. Why? Because they’ve forgotten all about the golden rule of consumerism or shopping: people don’t buy products; they buy values that they understand.

People don’t buy products; they buy values that they understand.

A few years ago I heard a brief thought in some movie that I always bring to mind whenever I try to put myself in someone else’s shoes (which I normally do at work when I help businesses better understand their customers). It goes like this: “Why do people think their problems are more important than anyone else’s? Because it’s their problem.”

It’s human nature to blow our problems (and desires!) out of proportion and spend lots of money resolving (or fulfilling) them. This applies to both private and business purchases (that is, to both B2C and B2B customers), but more importantly, there’s also an almost inversely proportional correlation between the importance of a problem and the price of a product: the bigger the problem the product is supposed to solve (or the greater the value the product provides), the less important the price of the product is to the customer.

The term “value” is one of the most frequently misused terms in today’s marketing world. The true meaning of value lies in a compromise between the benefits customers receive from the product and the price they pay for this product.

If companies want to win customers, they need to stop behaving egotistically

I’m not saying that a decent amount of confidence has no place in marketing and sales. I just want to highlight the gap between the typical salesperson’s thinking about the “solution they can offer their customers” and the customers’ thinking about the “benefit they can receive from a specific solution.” Once you know how to fill the gap between these two views, which are generally quite far apart, you’ll know you’ve created perfect marketing.

To explain this with a banal example: ever since I moved to a new apartment last December I’ve had this unsettling feeling whenever I spent the evening home alone. When I recently decided to buy a new front door, it wasn’t the information on the high-quality wood the door was made of or the special Black Friday deal the supplier was offering that drew my attention. Why? Until one of the providers approached me by saying how safe I’d feel when my apartment had a new door, I hadn’t even thought about buying his product at all!

What may be a little less motivating in this regard is that, in order to transform your way of thinking, you’ll have to intentionally distance yourself from your product (within the context of its properties, functions, capacities, and so on) and move closer to your (potential) customers. Even though this shift seems logical and simple, it’s a step most of our business partners have problems with—and yes, I admit that sometimes even we, the FrodX team, are tripped up by this.

How to present your products or services so that they convey value for customers

The following steps may serve as an introduction to this way of thinking:

  • Get to know your customers well. if you don’t know their needs and desires, you’ll never really know for sure what value represents to them, nor how and where you can communicate this value to them;
  • Create a list of various (elements of) values. Bear in mind that some customers recognize value in economic terms, others in terms of comfort or safety (such as my front door), and still others recognize it within the context of their social life, and so on. Consider all possible viewpoints and try to outline all the different values your products or services can bring to various customers;
  • Collect data. This especially applies to cases where we, for example, want to communicate the value of the purchase in terms of the money saved. In order to come across as credible and authoritative, equip yourself with relevant and accurate data;
  • Test your value model and learn from mistakes. Bill Gates once said that success is a lousy teacher. Muster your courage, test your model, and learn from both your successes and mistakes.

 

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P. S. An even safer route is to consult experienced experts that can help you find the right messages for your (potential) customers. We’re pretty good at this. 😉