The price ($0.00) is right

In the new economy, how can companies give away so much and still make money?

Today’s  savvy consumer knows they can surf the web and find just about anything they need to know for FREE.  Hit the search engines, and you’re off to finding your answers.   With traditional media (direct mail, telemarketing, TV) it used to be, give away a watch, backpack, or DVD FREE with a paid offer.   Now more and more dollars are being diverted to “getting mindshare”–getting prospects/customers to your online presence… engaging them with free content and a community experience, and then presenting them with your premium offer.  

 Here’s a perfect example:

Comedy’s legendary Monty Python members–you know, “I’m a lumberjack and I’m OK,” the Killer Rabbit, the Dead Parrot —were tired of seeing their legendary sketches pirated and posted on YouTube, free to whoever wanted a quick laugh.  So they posted their own, higher-quality versions on YouTube–also free–but let fans know that complete DVD versions were available for purchase.  As a result, sales rose 23,000 percent!

There are many examples of how companies are monetizing “free” in Chris Anderson’s new book, Free:  The Future of a Radical Price (Hyperion, $26.99).  According to Anderson, “people are making lots of money charging nothing. Not nothing for everything, but nothing for enough that we essentially created a country-sized economy around the price of $0.00.

 Bottom-line:  Allure your prospects/customers with the right price ($0.00); get them to embrace your brand with helpful tips, customer forums, etc. and soon their mindshare will turn into walletshare.

Bookmark and Share

Advertisements

Surviving the Downturn: Building and Maintaining your Brands’ Reputation

Today’s consumer now struggles with weighing “value” in a product or service and “values” in what they want and expect from companies –according to a recent Harris Interactive poll.

 That should come as no surprise considering the bailouts, bonuses and bad business behavior that all combined to erode the overall reputation of corporate America to its worst standing in ten years. Technology remains the highest rated industry, but its reputation declined along with six other industries, with the Automotive industry reporting the greatest decrease ever.

Despite this free-fall in Corporate America’s image among consumers, Johnson & Johnson, Google, Sony, Coca-Cola, Kraft, and returning to the list of Most Visible Companies, amazon.com, all received RQ scores that categorize their reputations as “Excellent”. An RQ score of 80 and above is considered “Excellent”.

“While the overall reputation of Corporate America has never been worse in the eyes of the general public, greater understanding of and credit for working diligently to build and maintain a good reputation has never been stronger,” says Robert Fronk, Senior Vice President, Senior Consultant, Reputation Strategy at Harris Interactive. “The RQ study also validates that both corporate behavior and corporate communication play a major role in how a company is perceived.”  And, this theory is also reinforced by the following definition of a brand by Scott Bedbury in “A New Brand World” —

    ” A brand is the sum of the good, the bad, the ugly and the off-strategy. It is defined by your best product as well as your worst product.. It is defined by the accomplishments of your best employee…the mishaps of the worst hire you ever made…the music your customers hear when put on hold…the finely worded statement by the CEO..but also consumer comments overheard in the hallway or in an online community.  Brands are sponges for content, for images, for fleeting feelings.  They become psychological concepts held in the minds of the public, where they may stay forever.”

“The companies that achieved RQ scores that characterize their reputations as either good or excellent have a decidedly value or comfort basis in their businesses”, says Fronk of Harris Interactive. “While the reputations of many of these companies have been relatively stable over time, there is no doubt that in the current economic environment, these two characteristics only serve to reinforce a positive reputation.

The RQ surveys more than 25,000 American consumers in a two-step process, through online and telephone interviews, to first identify the 60 most visible companies and then to rank these companies based on their reputation in six different categories: Emotional Appeal, Products & Services, Social Responsibility, Vision & Leadership, Workplace Environment, and Financial Performance.

The top 10 companies on this year’s list in order of ranking include: 1) Johnson & Johnson; 2) Google; 3) Sony Corporation; 4) The Coca-Cola Company; 5) Kraft Foods; 6) amazon.com.; 7) Microsoft Corporation; 8) General Mills; 9) 3M Company; 10) Toyota Motor Corporation. For a full list of the top 60 companies and other findings visit: http://www.harrisinteractive.com/RQ.

The six areas that the RQ survey focuses on that influence reputation and consumer behavior include the following, along with the companies that scored highest in these categories:

• Social Responsibility – Whole Foods, Johnson & Johnson, Coca-Cola, Walt Disney, Microsoft

• Emotional Appeal – Johnson & Johnson, Kraft, amazon.com, Sony, General Mills

• Financial Performance – Johnson & Johnson, Berkshire Hathaway, Coca-Cola, Microsoft, Google

• Products & Services – Sony, Johnson & Johnson, 3M Company Google, Kraft

• Vision & Leadership – Berkshire Hathaway, Google, Microsoft, Coca-Cola, amazon.com

• Workplace Environment – Google, Johnson & Johnson, Sony, Microsoft, Kraft

In addition to Wal-Mart and Sony, other big gainers in 2008 included AT&T, Unilever, Royal Dutch Shell, and Nike. Each of these companies has confronted reputation issues in recent years and it would appear that their efforts to mitigate these issues and rebuild a positive reputation are beginning to bear results.

To review selected research from the Harris Interactive RQ survey, please visit www.harrisinteractive.com/RQ.

Hope this gives you some food for thought — Brian.

Bookmark and Share

Surviving the Downturn: Strategies Part 2

In my last post, we looked at re-tooling the “price” – P  in the marketing mix.   This week I’d like to hone in a bit on the “promotion” -P.

We all know that marketing expenditures are shifting from traditional branding efforts and media to more direct ROI methods and “customer nurturing” or social media.  With budgets shrinking marketers are faced with having to do MORE with LESS.  So, what are some of the savvy marketers doing?   

Well that depends on what industry you are in, and whether you are a B-to-B or B-to-C marketer.  But, one strategy that many marketers have embraced is to focus more on RETAINING customers rather than acquiring new customers.  I’m not saying they are abandoning their new biz efforts, but SHIFTING more of the marketing budget towards retention.

If you think about the old 80/20 rule (in the B-to-B world), where 80 percent of your business comes from 20% of your customers, then it really makes sense regardless of the economic climate to keep those customers loyal to your brand.  Many companies are stepping up their efforts to identify and nurture the decision makers and influencers in their top 20%.  It’s not enough to just focus on one or two individuals in an account, but rather anyone who has an experience with your product or service.

Another main reason is the obvious –it simply costs much less to maintain a customer than to acquire a new one.  So, in a downturn when budgets are scarce, it makes sense to change your main focus to maintaining your market share vs. growing it.  Some of the tactics being deployed are:

               Loyalty programs:  Companies that have them are enhancing and promoting them more.   Companies that don’t have a loyalty program are creating them.  One strategy that is also growing is  the “brand ambassador” program.  The brand ambassador program can be implemented with various media —direct mail, email, inserts, collateral material, social media, and by word-of-mouth.  It’s simplest form is the “referral program” where your friend gets xx and you get xx for referring them.  A few more expensive to implement, but bring in a positive ROI are the following social media tactics:

           Tap into customers’ enthusiasm with online ratings and reviews.  Many marketers have seen an explosion of new sales just because they implemented this feature in their website.  One company, eBags expects to yield over $400,000 in profit from a $200,000 investment in one year!

          Create a community to energize your customers.  This works best if your customers have a passion for your product/service and have an affinity for each other –especially in a B-to-B environment.   Constant Contact- an email service provider for small business owners is experiencing an incredible snowball effect from this effort —13000 participants -10% from it’s customer base, with 30% of the community providing referrals. That equates to an 82% growth rate for the company! 

More to come..have a great day!    Brian.

Bookmark and Share

A few primers before your business dives into the Web 2.0 World

If you’re like me, when you first started hearing about social media (web 2.0) you probably thought it was just a passing fad or something that you didn’t need to deal with.   Well, the fact is that it is by far the fastest growing media right now — (I know, most of you bloggers out there already know this, but hey –give me a little slack here–I’m catching on very quickly). 

I want to give a little plug for an amazing book I’m reading called “The Groundswell” by Charlene Li and Josh Bernoff.  For anyone who is serious about understanding the business implications and the correct way to approach the Web 2.0 opportunity, this book is a MUST READ.

For those of you who rather not read it, but just want the topline, here goes:

1.  Know your objectives before you DO ANTHING.  That’s right. Don’t just set up a website, Twitter, Blog, etc. without clear objectives of what you want to accomplish.  Why?  Because you can waste big bucks and time executing the wrong tactics.

2. Research your customers/prospects and their “social media behavior”.  According to Messgrs Li and Bernoff, you need to identify and dissect the different groups of people and adjust your strategies accordingly.  For example, there are 6 categories that make up their Social Technographic profile: Creators- who publish content, Critics -who react to online content, Collectors –who tag and organize content, Joiners –who maintain Facebook pages, Spectators- who consume what the rest produce, and Inactives -they go online but they are not into social media.

3. Find an agency partner who has a proven track record in producing successful and measurable campaigns and that can grow with you as your communities take off.  Also make sure they begin with your objectives in mind and a clear understanding of what constitutes a successful campaign.

4.  Make sure upper management is involved.  Whatever progams you implement will be a  major change on how your organization communicates with your customers.  Implemented correctly, it can reap big rewards.  A wrong turn, can be devastating.

Cheers!

Brian

Bookmark and Share

The “customer experience” —is it tops on your priority list?

Now more than ever, companies/organizations must place a high priority on gauging their customers’ experience with them.  And I mean the TOTAL experience —all touch points from sales, customer service, usage of product or service to post-sales and tech support.  It must begin with upper management’s commitment and it needs to be filtered throughout the organization. 

How many instances can you think of where you might have had a problem with a product such as a PC and you had to deal with a tech rep to solve the problem?  Did you have a good experience or was it a nightmare? And after the incident, did you tell a bunch of your friends?  Or, did you post your experience online?

 In today’s world, companies cannot afford to leave a bad taste in any customer’s mouth.  Take for instance the true story of an aggravated customer of a cable (TV service) provider….

This person was getting the runaround trying to get a tech out to his home for service.  He was so enraged with the lack of service, that he started a blog called ” (Cable Co. name) must die!”   The very next day, he received a call from the cable company (who obviously is monitoring the web for  publicity) and they immediatley sent out a repair tech.  This cable company knew damn well that they could not afford to have the power of viral marketing damage their reputation —in fact, no one can especially in these tough economic times. 

The lesson to be learned is simply, to be one of the leading companies in your industry and perhaps even survive this economic crisis, you must analyze and monitor all the possible touch points your firm has with your customers.  Make sure everyone in your organization knows how crucial any communication is, and that they must do everything possible to ensure a pleasant and positive customer experience. …make your customers rave about you and your business will thrive!

Bookmark and Share