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How Harley-Davidson and The Beard Club Use “Identity” to Build Customer Experience

September 25, 2018 by influexwp Leave a Comment

(Note: This is one of a series of posts to come around the various ways that marketers are crafting incredible customer experiences. In so doing, they are dramatically improving their customer retention and acquisition efforts, and concurrently building their brand.)

One of the most powerful ways to build customer experience is by tapping into raw human needs and emotions.

A person’s sense of sense, their actual, perceived and desired identity, is one of the more raw and powerful needs to connect with. Many businesses have done an excellent job of using their brands to help customer’s think differently about themselves. When done well, customers are proud to be associated with the brand and willing to show off that association in public. They begin to think of the brand as more than just a product. It becomes part of who they are and, even more powerfully, a reflection of who they want to be.

Of course, a business can use the power of identity in a negative way, manipulating customers through psychological games, but the examples shared in this section come from companies who are using this power in positive ways.

Harley-Davidson: More than a Motorcycle

Harley-Davidson has become one of the best-known brands in the world, in any category. People with absolutely no interest in motorcycles have heard of them and already have a clear sense of the brand’s distinct identity.

While most people associate motorcycles with younger demographics, the average Harley owner is forty, not old but certainly not a 20-something thing. This is due in part to the bikes’ cost; they aren’t cheap. But if you’ve ever met a Harley owner, however, you know they tend to be extremely proud to be a Harley owner. They love to show it off, and “owning a Harley” is a key part of many owners’ identities. They’re didn’t merely purchase a motorcycle; they became a part of a vibrant subculture.

The bikes themselves are loud, brash, and bold. You know when a Harley is moving down the street, and their owners rather enjoy that the bikes aren’t subtle. They didn’t join a membership where the card gets tossed in the trash nor is kept quiet. While it may not always be through their spoken words, but Harley owners scream being Harley owners.

One of the company’s biggest achievements has been transforming their product into more than a product. People know what Harley stands for: freedom, community, and a certain rebellious attitude.

Their website says it more directly, “If you want to fit in, take the bus.”

From a purely technical standpoint, there are probably better motorcycles on the market. However, Harley customers aren’t in it for the technical quality of the product. They are embracing the Harley attitude.

And for its target customers, Harley is giving them exactly what they want in terms of identity. For people in their forties and fifties, many of whom are empty-nesters, and some of whom are struggling through or approaching a midlife crisis, Harley restores for them a sense of youthful rebellion. Riders are able to detach from their jobs and the concerns of their daily lives to take to the open road with a sense of freedom.

While it’s hard to point to a single moment where the brand that had often been associated with the Hell’s Angels and featured in films like “Easy Rider” started attracting a growing following amongst older and more affluent customers (the average age used to be 32 and now it’s in the 40s, with average annual income increasing from $30K to $70K+), what is clear is that once the company noticed the CEOs, bankers and celebrities were taking to their bikes, they leaned in. (As an interesting side note, back in the early 1900s, Harley target farmers, then in the mid part of the century positioned itself as the bike for police officers. To say the brand has evolved and changed its targeting over time is a minor understatement.)

As an example of how the company has leaned in towards shifts in its customer profile, customers choose Harley-Davidson motorcycles because of how they feel and how they want to be as an owner. One way to amplify that feeling is by joining with others. Riding a Harley with others is a big part of being a Harley owner, and the brand encourages such connections with what they call H.O.G. (The Harley Owners Group).

H.O.G. was started in 1983, and today there are over a million club members. It’s the biggest factory-sponsored riding club in the world, and while many people think it’s managed by customers, each club is actually sponsored by a local dealership. In the past, dealers could only sponsor one H.O.G. each, but now they are allowed to sponsor two.

This is a great example of a brand recognizing what their customers would want, well beyond the basic “product,” and then creating opportunities to help their customers feel even more strongly about themselves and the brand.

From a financial side, this of course drives retention in the form of merchandise sales (I think we’ve all seen how decked out Harley riders can be) and certainly additional bike sales. That image and brand story that is then told – whether by hearing an owner talk about it or just seeing them riding down the road with others – no doubt leads to future customer acquisition. In fact, the company used to spend very little dollars in advertising. But that didn’t mean spending nothing on marketing. Their spend would show up in efforts like H.O.G. and other ways to support their customers. How’s that for a different take on marketing? And all the while the brand continues to form, evolve, and grow.

The Beard Club: Are You Man Enough?

The Beard Club began life as Dollar Bear Club, introducing themselves to the world through a video featuring the company founders, Chris Stoikos and Alex Brown, along with the rest of their team. Through that first video, as well as subsequent ones, they have tapped into something deep in the psychology of their target audience.

They aren’t the only company providing products for men with beards, but in each video, they have created a strong sense of what it means to be a man with a beard. They show images and tell stories of bearded men doing cool things, elevating the image of manhood in a positive way. On their website, they even ask the question, “Still don’t think you’re man enough?”

It’s interesting to note that their videos speak both to men who have beards and work to instill a desire to grow one for those who don’t. For bearded men, they’ve created what Seth Godin loves to describe as a “Tribe.” The Beard Club wants bearded men to know they are being spoken to, to know that there is someone who understands them. And The Beard Club wants bearded me to think about themselves differently, as particularly proud not just to have a beard on their face but to remind them that having a beard means being special and different. (Whether this is “true” is irrelevant, it’s the message the brand is telling.)

Their message is also aimed at those who don’t have a beard, to say, “This is what you could have. This is who you could be. This is the life you could live if only you had a beard!”

Of course, any customer knows that having a beard isn’t a magic ticket to a wonderful life. The message is clearly tongue-in-cheek, but it still creates an identity that many men crave. Not only does it create a sense of aspiration, but it offers accessibility: “All this can be yours!” It could even be considered a call to arms: “If you don’t have a beard, grow one!”

What I find helpful in looking at The Beard Club vs. Harley-Davidson is that while the latter used its marketing dollars outside of pure advertising, the videos in which The Beard Club uses this strong sense of identity are primarily customer acquisition vehicles. Sure, they help reinforce the brand message to existing customers. But many of these videos are primarily used to bring on new customers. And for those who lean more towards the performance marketing approach, crafting an experience using identity is no longer something vague but can be integrated with the same data-driven approach, but just done from a creative side to intentionally create an experience, even before someone has become a customer.

Who You Are, Who You Aren’t

It’s important to recognize that Harley-Davidson and The Beard Club have a well-defined target customer. They don’t try to be all things to all people. If the leaders of Harley-Davidson decided tomorrow to target a completely different demographic, they would need deliver their experience in a different way. That’s the key. The product would be essentially the same, but the experience around it would change in order to target a different type of customer.

That is perhaps an obvious but crucial aspect of tapping into identity. And that is in being crystal clear of who your target (and existing) customer is, what they value, what you can offer them that is a clear point of differentiation, and that you can deliver on that message.

Some businesses try to create a sense of identity, but they fail to go deep enough. They don’t speak loudly enough about the identity of their brand because they don’t want to alienate other potential customers. In the early stages, as a few different demographics are being tested, this approach might make sense. But over time, not going deeper can mean a weaker connection with customers. Yes, it means making a tradeoff and likely turning away a demographic, but brands that seemingly go all-in by speaking loudly to a specific target customer do better than by trying to speak to everyone.

And that is in part because that specific customer wants to be treated a certain way. Unless there can be very clear segmentation within groups, trying to speak both to married women over 40 and single men in their 20s is very very difficult. The language, imagery, tone, messaging, etc. should be different for those two groups. So as much trying to straddle a couple worlds may feel like neither is alienated, it also means that neither get the sense that the brand truly understands them.

As you consider your own business, do you have a clear sense of who you are and who you aren’t? Are you clear on who your customer is, at least for 70% of the business? That’s the group you should be directly all of your messaging to. That is the group to see how you can connect with their sense of identity. Whether in the form of reinforcing what they already feel or creating a sense of aspiration based on who they are or want to be. And whether that shows up in strategic marketing efforts, in Facebook video ads, in the product or service you deliver, or anywhere in your business, being able to tap into someone’s sense of self can be one of the more powerful ways to build that customer’s experience. One of the big wins we can have as marketers is for customers to tell stories about our brands. And yet when that story is an outgrowth of their identity, it carries a much greater sense of impact and authenticity.

Crafting Amazing Customer Experiences: The Strategy That Helps Marketers Both Build the Brand AND Scale the Business

April 11, 2018 by influexwp Leave a Comment

Think about what happens when a customer has an amazing experience with your business. They are happier, more satisfied and more engaged. Which typically means they will buy again from you. So they stick around longer and are worth more to you as a customer. When they are happy, they’re more prone to tell positive stories about your business. Those stories help to craft the brand. Similarly, people talking good things about your business in an authentic way drives word of mouth. Which is the cheapest form of customer acquisition, not to mention helping your paid media efforts to be more effective. And since referred customers have been shown to be some of the highest value, these are particularly profitable customers.

That’s a lot of goodness…

Every marketer wants to grow their business. It’s human nature to do more, push ourselves, and our businesses. At the same time, the big win isn’t always just growth. The payoff happens when the business you’ve built becomes a brand that customers know, love and are excited to engage with.

On the spectrum, performance marketers generally believe that growth comes from pushing paid media hard, and that in selling and delivering on the product, you build the brand. On the other hand, traditional brand marketers approached things as “build the brand and the sales will follow.”

At the same time, we now operate in a world that is no longer either/or. As much as many things in society are portrayed as binary, marketing is not that way. Growing your business with more of a performance marketer’s hat is not at all at odds with building a brand. In fact, there are ways to achieve both concurrently.

One analogy I’ve found helpful is that performance marketing (aka direct response) is to brand as income is to wealth. You need income to get to wealth, just as you need a performance marketing approach to generate sales on the path to building a brand (I’d posit that even if you are funded, there has to be a sustainable business model in place at some point – see Blue Apron if you need a counter-example).

Over my career with my clients, the goals of scale and growth are typically the biggest reasons we engage. With a history in paid media (8 years at Beachbody and with my clients since), exploiting channels like Facebook, TV, and otherwise has been a cornerstone of my work. That always transcends to conversion and maximizing the value of each customer. Let’s be clear, there is a massive amount of scale and value that can be generated with this focus.

At the same time, every marketer faces the point where a channel has seemingly maxed out and so a search for a new channel to scale occurs.

This can be exhausting – the constant paid media, conversion, LTV, CPA model. Again, I’ve always considered myself a paid media guy, driven heavily with an analytics mindset. This stuff can be a big deal and can be used to push a business pretty far.

At the same time, word-of-mouth, and to a certain extent referrals, rarely gets that much attention. It can feel like it’s not trackable or measurable, when in fact there are ways to do so. And yet, it’s the cheapest form of customer acquisition and typically sees the highest value customers.

So where does word-of-mouth come from?

In essence, it comes from the stories customer tell. The good and bad ones. Those show up when someone asks them about a product they are using, on review sites, and beyond.

Where does these stories come from? Most often, from people’s experiences with your business.

And in a world where the customers are the ones who actually define the brand, as much as we try to affect it, those stories – which are an outgrowth of their experiences – are the way the brand comes to life.

It’s this progression and evolution, at least from my side, which has led to the realization of the power of customer experience. Not just CX in the online user experience definition, but much more broadly.

That crafting amazing customer experiences can serve both the growth goals of a business while elevating the brand. And while I don’t believe in silver bullets, it is convenient when a strategy can serve multiple goals concurrently.

Why don’t more business focus on customer experience?

When you’re growing a business, sales are key. Without them, the rest is moot. And with so many different platforms and tools, it’s easy to get caught up in trying to optimize and scale paid channels. But even within doing so, it’s possible to create an experience – I’d argue that Dollar Beard Club (now The Beard Club) has very effectively used videos to craft the experience AND to acquire customers. For them, there really isn’t a distinction between the two.

Also, setting a goal around word of mouth is not common. And while it’s not perfect, looking at direct and organic traffic as well as referral customers can be an indicator of word of mouth, especially when paid media may not be as strong. There are a host of other metrics that can inform the strength of word of mouth – volume of social engagement (shares, hashtags, etc.), as well as indicators like Net Promoter Score (“NPS) and CSAT ratings. All of these typically follow when repeat customer rate is strong and refunds are lower.

None of those are entirely perfect, but there are certainly signals to look at to better inform the volume, and certainly the likelihood of word of mouth.

Finally, it’s also true that retention and building long-term value can simply be a prioritization and sequencing challenge in an organization. Especially those that are just getting some traction on sales. It can mean attention and resources (time, dollars, people, technology, etc.) that feels like it’s pulling from sales. But based on the above, that additional attention should assist sales, not be viewed as a draw from it.

What, then, do great experiences look like?

Think about the businesses you rave about. That your friends and family post about for no good reason other than they are excited to do so. Which businesses get talked about at conferences and in case studies.

There’s the list of regulars – Nordstrom, Amazon, Ritz Carlton, Apple, Starbucks, Disney.

And there’s good reason that they often pop into mind and are talked about. They’ve put a ton of time and attention towards the experience they want their customers to have.

There are countless other examples:

Harley-Davidson

Peloton

SoulCycle

The Beard Club

Buc-ee’s Convenience Store

Sephora

SaddleBack Leather

Rock n’ Roll Marathon

Loot Crate

Each of these businesses has created a brand, in part by intentionally crafting a great experience for their customer.

How they do so can include a variety of tactics:

-Different forms of media, such as video and music, for example, can be powerful in helping to deliver an experience.

-The product itself may be differentiated in such a way that may establish a unique experience

-Arguably, for some businesses like Uber, AirBnb Stitch Fix, the product and experience are so intertwined that there isn’t a clear delineation of one versus the other. This is reflective of many shared economy businesses and new business models around existing services (taxis for Uber, hotels for AirBnb, retail for Stitch Fix)

-Clearly, customer service affects the experience. As do how you handle the various components of the transactional process (acquisition, returns, cancels, etc.)

By far the most powerful way to craft experience is by tapping into people’s sense of identity and community. These are raw human needs, so can be the most powerful. And certainly not mutual exclusive with any of the above.

Let’s look at just a few of the above:

–Harley Davidson customers clearly have a sense of identity attached to what it means to be a Harley rider. And whether it’s at Sturgis in South Dakota or at one of their local Hog events in countless cities across the US, there is a strong sense of community with the Harley world.

–Peloton and SoulCycle are each fascinating by themselves and taken together. Both are focused on indoor cycling. And even though SoulCycle customers go to a brick-and-mortar location while Peloton riders are at home, both nail customer experience.

(As a side note, this is one category I feel particularly qualified to discuss. I spent 8 years at Beachbody, was a licensed SPINNING instructor with Johnny G back in the day, have ridden across the county on a bike and have tried most cycling programs.)

For its part, SoulCycle, has become a lifestyle brand. SoulCycle is about identity, community, and apparel. Despite being a health and fitness company to start, you’ve never seen a before-and-after picture of their customers (at least not by the company). Whereas FlyWheel and SoulCycle were true competitors in NYC, FlyWheel focused on winning and being #1 while SoulCycle has been about being a team and inspiring yourself and others around you. And no doubt music is huge for SoulCycle.

Peloton similarly does a ridiculously good job with music. Anyone who has worked out at home knows how good or bad music can affect that experience. Just how much they are paying for music licenses is not clear, but they are using music well. It’s important to note that the Peloton bike and screen are top-notch. And with superb instructors and even the way they shoot the class, you feel a part of the in-person classes shot at their NYC studio. As much as Flywheel was about competition, Peloton has a leaderboard, a la Strava, but it’s a choice you have the option of hiding. But for those craving competition, it’s there.

–Buc-ee’s may be a brand folks outside of Texas may not know. But the fact that a convenience store is on the list is telling. Buc-ee’s may be the nicest convenience store on the planet. That’s why they’re here. It doesn’t take much to describe why most people go to a convenience store and all the parts they can’t stand. Often it’s to get gas, use the bathroom and to get some simple foods. Rarely are any of these better than horrifying. Instead, a typical Buc-ee’s has 50-100 gas pumps, is immaculately clean (the floor is spotless when you walk in and there are Purell dispensers next to each urinal in the men’s room), and the food is just amazing. When was the last time you said the food at a convenience store was something you looked forward to? And did I mention that these are 100,000 square-foot locations with shelves and shelves of jams, jerky, candy, not to mention a section on Buc-ee’s accessories. Essentially, Buc-ee’s did what I refer to as “Do the opposite.” Take everything that was horrible about a place, and do it in a polar opposite way.

-This list can go on for pages, but the final one I’ll mention now is Loot Crate, a box company for gamers and geeks in general (their language, not mine). What they’ve done particularly well is to tap into Seth Godin’s notion of “tribe.” By naming their customers Looters, on their site and in their emails, they immediately impart a sense of both identify and community on their customers. It’s not imposed, but it’s welcomed. At the same time, something I love is they are very clear about who they are trying to speak to. Their order confirmation email includes an image of a nerdy-looking woman (Note – as a math major from MIT, this is another area I feel highly-qualified to discuss). Loot Crate doesn’t shy away from who they are speaking to. In fact, they lean in. And while that image may not work for anyone else here as necessarily the core customer, it works for them.

Which leads to arguably the most important aspect of crafting an amazing experience.

Knowing your customer.

That sounds like such a simple statement but how many companies try to be all things to all people. Or are concerned about alienating 5-10% of their audience by not leaning in as boldly as Loot Crate has done. Your core demo may not be as clear, but don’t underestimate how much can be lost by not letting your target audience know loud and clear that you’re speaking to them. Part of the job of marketing is to separate the audience – to attract those you want while dissuading those you don’t.

As for devising your own strategy, knowing your customer, at least who you want to attract is one key step. As is knowing your brand values and what you want to stand for.

Keep in mind, too, that experience can and should be tied to measurable aspects of your business. Not perfectly. And not always. But nothing in marketing these days is “perfect” or an “always” thing. Even one of the most measurable components of the business, traffic from Facebook or Google, has clear areas of grey (attribution window, methodologies, cross-device, etc.).

Next, think about what you are replacing.

For starters, be honest about whether your product is new? Very rarely is the product entirely new.

-StitchFix is a new model for shopping for apparel

-Uber is a new way to get a taxi

-Tesla is an alternative to other cars.

The models and execution were different, the core premise wasn’t.

Hotmail was new. The iPhone was new. Spanx was new. If you have a truly new product, then product can win on its own for a while if it’s good.

Given that most products aren’t conceptually new, and they are a way of replacing what people have available to them, dig in to what people are currently using?

-What do people like about the thing you are replacing?

-What are their pain points around those things?

-What do you bring to them, especially if they’ve never had it before? This could be everything from health to convenience to identity.

-What do your customers value? What *should* they value?

Look back on the above examples and how they have created experienced for their customers that didn’t really exist previously.

Finally, it’s important to be self-aware about your organization’s resources and capabilities. What are some areas you have a sense of skill at or feel like you can create a true point of differentiation around?

The final finally, attach a business outcome to these efforts. Don’t just call them “brand marketing”. Depending on what you do, you should see an impact on one or more of these areas:

-Better performing paid media

-Increase in direct, organic and referral customers

-Higher repeat customer rates

-Lower refunds

-Low inquiries to customer care

-Higher NPS scores

It’s a rare case that a strategy can serve the growth and brand goals of a business. Frankly, consumers would rather have great experiences. They have become accustomed to the status quo. But when done well, as these companies have shown in crafting amazing experiences, consumers reward businesses both with their pocketbooks and thru word-of-mouth.

And aren’t those the outcomes that all marketers are looking for?

(I’m always interested to hear from others who they think nails (and doesn’t nail) customer experience. What aspects of the above resonate? Which parts would you like to delve deeper into? )

How Subscription Companies are Losing Customers who Don’t Proactively Cancel

March 10, 2017 by influexwp Leave a Comment

You may have decent metrics in place. When people ask you what a customer is worth, you confidently say a figure.

You may even have a quick response for what the average stick rate for a customer is – “7 months,” you might utter.

“We lose about 30% in the first month, 20% of those remaining in month 2”, and so on.

Just knowing these metrics is a lot more than most folks. (See here https://goo.gl/Pln3vU for my post about Customer LTV if you want a better understanding).

But let me ask this question – do you know what percent of those who dropped out did so proactively? Because the answer is NOT 100%.

In fact, depending on your business, it could range from 60% to 95%. Which is a MONSTROUS range. Said a different way, 5% to 40% of those people who dropped off as paying customers didn’t take a proactive step to do so.

Which begs the question, “What happened to them?”

One of the primary reasons that customers who didn’t want to cancel got cancelled was that their credit card didn’t process.

Yup. That annoying part of the business. The one you can never get a straight answer about. The one whose fees range from 2% of revenues into the double digits depending on your business’ risk profile. Because remember, it’s not just processing fees; it’s chargebacks, refunds, and a bunch of other little line items that add up.

Merchant processing is the bane of many a marketer’s existence. Sure, there are more partner options than ever before – Paypal, Stripe, Amazon, not to mention the “traditional” folks like auth.net, Vantiv, EasyPay, and so on.

(A small point of clarification before we get too far – subscription is the same thing as continuity, auto-ship, auto-renewal, or any other label where customers are billed on a recurring basis. I’m just using the term “subscription” for simplicity here.)

Insufficient funds, wrong expiration date, and reported lost card are some of the top reasons why credit cards decline on recurring billings. Oftentimes, these customers would like to continue being customers. But unless you are a utility or Amazon or Netflix (I’d argue that those latter two might now be considered the former), customers can be lazy, forgetful, or just too busy in taking steps to make sure their subscription stays active.

The next question is, what are you, as the marketer, doing about it?

Let’s get some grounding first.

If you’ve got some sort of subscription business, hopefully you have a version of the report below – where you are tracking customers by cohort. In the below table, it’s by month, but it could also be by traffic channel, offer, etc. And really the goal is to measure how long people stick around at each rebilling period.

Notice that the report is broken down by cycle (which is the frequency you bill – monthly, quarterly, annually, etc.); by gross vs. net (of returns); and by units vs. dollars in the top and bottom sections. Each of these sections have value, and it’s important to look at your metrics in a couple different ways.

One of the ultimate goals is to know for every person who begins, how many total billings do you get from them. In the above case, this might be a free trial offer that rolls into a paid subscription. We want to track how many people bill in Cycle 1, 2, etc., and then roll that up to what I refer to as “Turns”. Obviously, we lose people each month. Tracking those people and laying out as in the table above, helps us to see exactly how many.

For the month of January, there’s a value of 1.4x in the Gross section. Which means that for every person who starts their subscription, on average, we bill them 1.4 times. And then because of returns, we net out at 1.31 times.

How far you carry out this analysis out depends on a few factors – how much info you actually have (# of cohorts and over what period of time), the risk you can tolerate when there’s a good amount of revenue generated in later months (and clearly later months is subjective based on your business and risk).

You can see that there are then calc’s on the percent of people who are still around (simply how many people billed relative to the # of starts) – this is labelled as “Retention,” again both calc’ed for net and gross. The “Dropoff” section is what it sounds like – what percent of the people who were still around dropped off for the next cycle.

Whether you have a lot of volume or a small amount, if you’re running a version of a subscription model, this is a crucial bit of analyses to have. To begin with, you need to know your numbers and this is one of the best ways I know of to understand what’s happening, at least from a purely quantitative side. It can provide a sense of how long people are sticking around, when more people are dropping off, what types of refunds people are asking for, etc.

Depending on how you allow/ask people to cancel, you should try to marry this data alongside “reasons for cancelling”. The info won’t be perfect – call center agents may make mistakes or customers may not click on the right button, but you should get some directional info on why people are cancelling. The most common reasons are things like, “too expensive”, “not using it”, “found something better”, “don’t have the time,” etc. Now, if you start to see a whole lot of “your product stinks”, “it doesn’t work as you described”, etc., then there might be something you need to address with the marketing, the product, the onboarding, or something else.

Once you have all this info, then it’s a matter of figuring out if something’s broken and where the key levers in the business are. That analysis leads to action (translation: testing) or fixing something that might be broken (don’t worry, you’re not the only one who has things break…).

The Part Many People Miss

So, you may have the raw reporting and analytics in place and you might have the reasons for why people cancel, but do you know how many people intentionally cancelled versus how many people actually dropped off?

These are “Unintended Cancels.” People who did not take a specific action to cancel, but you are no longer billing them.

So, what to do here?

Some ecommerce systems might provide you reporting on credit card processing issues, but assuming yours doesn’t, it’s time for some forensics.

The first place I’d start is with your merchant account, which, depending on the size of your org, might mean you need to pull in help from accounting or finance. Or it might mean you need to dig out that login info and do it yourself. Obviously, different merchant processing platforms have different levels of reporting. And how easy or not it is to know which declined orders are for your continuity, you try to dig in to see what is happening. You might have SKU-level info in there or you might have to use price point, for example.

All this to say, get to the bottom of what’s happening with your credit card declines.

What are the reason codes associated with those declines?

And then what are you doing about it?

Which should then lead to a combination of both a retry process as well as a dunning process.

The Retry Process

This could be manual or automated. But the point is that you are trying to charge a credit card where you received an error code. I get tired of saying this, but different platforms have different levels of reporting. Ideally, you’re only retrying those cards where you have a chance of success. For example, if you received an error code associated with a lost or reportedly fraudulent card, you have a 0% chance of success. It makes no sense to retry that card.

The vast majority of decline reasons are associated with insufficient funds. Whether it’s a $9.99 charge or $999 charge, a lot of customers’ cards decline for insufficient funds (which is why 1-pay or annual contracts have value – but I digress). There are a host of other reasons: expired credit card (more below), need to call the bank for some reason, etc.

The strategy you employ to retry cards depends on multiple factors, such as the fee you pay to attempt a charge, the margin your business nets on a success transaction, and your tech/merchant processor’s tech capabilities. You may want to retry the card every week for 4 weeks, you might want to retry on Fridays, which is payday for many people. Or you might have another strategy that you test into.

Here’s a link to a great write-up of an automated retry process – https://docs.recurly.com/docs/dunning-management – note that recurly is a vendor that I’ve heard some folks work with. I don’t have first-hand experience. But at the least, the info in that article is helpful and can provide a sense of the different ways you can approach the retry process and how you can use segmentation to try different strategies.

(I also want to make something very clear – as with all things, if your marketing is deceptive or if your product truly stinks, any strategy can be used for “evil” purposes. But I’m assuming your customers like your service, they know what they are getting, etc. – and the fact that they don’t reach out to fix a declined card can be as much the busy-ness we are all a part of as opposed to their not wanting the product. That’s why I have no problem describing these methods. I believe in integrity and ethics. And believe that if customers want to cancel, you should allow them to do so without jumping through massive hoops.)

Presumably, you’ll test a few different strategies, do the math on costs vs. the additional margin (not simply revenues) you make, and find something that works. Even if you can’t figure out an automated way when you first start this process, find a way to do it manually. Remember, these are customers that you’ve paid for who have stopped billing. These are real margin dollars.

By the way, you can also communicate with the customer directly. Which leads to the next section.

Dunning Process

This is basically another way of saying, “reach out to your customers proactively to fix the situation.”

The tactics you use to do so can include email, phone calls, FB messenger, or whatever other ways you have approval to reach out to people. Let them know their card has declined and that access to your product or service is going to end unless they fix it. Whether they can fix it online or they need to call a customer service rep, it’s always best to give people options so they can choose the way they’d prefer. It goes without saying but particularly when it comes to credit card info, it’s always important to stress that you know and follow the rules on how you collect and store credit card information.

Test and do the math to figure out what works (translation: where you are ROI positive).

Account Updater

I referenced expiration date issues above. And Account Updater is something I’ve discussed previously and falls under the retry process, whether automated or manual, above. The short version is that some banks provide a paid service to update the expiration date of a valid card but one that has simply gone past its expiration date. It’s an extremely rare customer that will call to update their expiration date. The beauty of the service is that you only pay per successfully-changed card. You send the info for cards that have this expiration date issue to get the date updated. Depending on your partner and your status, you can get charged anywhere from $0.06 to $0.18 per updated credit card. Now, no matter your price point, that shouldn’t be that hard to ROI.

There are only certain banks that participate in this service, so it won’t be 100% of the expired cards, but this can add meaningful dollars to your bottom line. You should reach out to your merchant processor or gateway provider to discuss how to implement this.

In Closing

Business can be tough enough as is. But when you have paid for customers that you lose for an annoying reason like their credit card not processing, it’s that much more difficult.

Go get that margin. And keep those customers.

Low-Hanging Fruit for Subscription Box Companies

January 30, 2017 by influexwp Leave a Comment

Subscription boxes tout not just convenience but customization. Not simply making it easier for you, but actually designed for you.

Many of them use surveys as you enter the site and the sign-up process. It’s a great way to gather information and preferences about a customer and to help inform the personalization. Now, just how customized a box is based on the answers really varies by business, but at the least, you get the feeling that your preferences are being taken into account.

Below you can watch a video where we break down a key missed opportunity that these companies should be testing to help better convert warm leads and inactive buyers.

Analysis of SmartyPants Vitamins’ Customer Acquisition Efforts

January 30, 2017 by influexwp Leave a Comment

Without any inside info, I took a look, made some suggestions and asked some questions about ways to improve what Smartypants Vitamins is doing. I’m a fan of the brand and just wanted to put together a brief video of some thoughts on how they might be able to do things better.
Video and write-up, whichever you prefer.

http://www.roundtwopartners.com/smartypants

The 14 Questions All Marketers Should Have Answers To

October 12, 2015 by influexwp 2 Comments

A friend recently asked me for a list of questions that would help marketers make their business more efficient and optimized. These questions span a variety of areas within a business; while not all may be relevant to every business, the vast majority of them do (or should).

There is no right or wrong answer to any of these. What’s more important is being able to answer these questions yourself or knowing where and who to go to. None should take more than 5 minutes to answer; if so, then that means you aren’t giving them their due attention. (Hint: these are important points of leverage within most/all organizations.) And if these are entirely new questions, then this is your chance to address key areas of opportunity within your business.

1. What are your top 2 sources of traffic? Are they different than your top 2 sources of paying customers?

No one is good at everything. That goes for marketers as well. It’s a rare company that is actually good at more than 2 media channels. Folks great at TV are rarely just as exceptional online. Even within online media, it’s rare to find a company that is great at SEO, YouTube, Facebook and banner advertising. Which sorta makes sense. You test a bunch of stuff, find success in 1 or 2 areas, and then push hard there to grow. And then as a company grows, competence builds in these areas.

As it relates to the question(s) above, many people don’t actually know where their biggest volume of traffic comes from. And for a lot of folks, the list of traffic sources vs. list of converting customers isn’t always the same. Impressions, reach and visitors don’t always translate to paying customers. Understanding that breakdown and then managing accordingly is important to most efficiently use resources, dollars, etc.

2. What is the average lifetime value (“LTV”) of a customer?

The single most important question any marketer (not just a direct response marketer) can answer. How much is a customer worth? $100? $1,000? Are you including the first transaction or all future transactions as well? Do you actually have the tools, systems and people in place to measure and track this information? When you think of the value of a customer, are you talking revenues or profits? Do you know if customers from different channels vary in LTV?

I don’t know how you can manage your media or your business without knowing the answer to this question and the resulting questions that come out of it. How do you know if your media is working? Are the customers you acquired last week actually going to make you money? Do you have the cash position to tolerate losing money on the front-end with the knowledge (not hope) you will generate more revenue later? What steps are you taking every week to increase the value of a customer, either through increasing sales or decreasing costs?

Understanding the value of a customer is crucial for 2 reasons: 1) it helps to ensure the business model is actually intact; and 2) it helps to drive future actions.

3. What is the average amount you pay to acquire a customer?

A direct corollary to the prior question but it deserves its own question. Some call this a media allowable, CAC (customer acquisition cost), or SAC (subscriber acquisition cost). The name used doesn’t matter. Put simply, how much did you spend to get a new customer? For most folks that means media dollars divided by new customers – assuming you can match customers back to media. For others, you have to factor in PR, promotions/sponsorships, and other non-trackable media spend. Regardless, if you don’t know the value of your customer (#2 above), you won’t know whether your cost to acquire a customer works in your model. For example, while it might sound like a lot to pay $10,000 to acquire a customer, if you are a high-end divorce attorney, that might actually be cheap given the millions of dollars a client might generate for you. And while a typical Starbucks customers spends around $6 per visit (I’m making that number up but it feels about right), given just how many times they return over not just 1 year but numerous years, Starbucks may be able to spend hundreds of dollars to acquire a new customer and make it profitable.

4. What do your customer service reps say to customers who want a refund because they feel your product/service is too expensive?

My guess is that even the 99 Cent Store gets customers who say the product was too expensive (Note – I’m not trying to live in an ivory tower – I know there are a ton of people who can barely afford those stores, I’m just picking a low-priced establishment to make the point that every company selling something most likely has customers who think their products are too expensive.). The question is whether someone has provided guidance to the customer service reps on what to say. I’m not suggesting making life miserable for customers who want to return a product. But assuming the product is of value, then presumably it’s a positive for customers to have and use it.

The real issue is whether the product/service actually has value. Are the people who are buying it the ones it would benefit? Are customers clear on what they are purchasing? And then do customer service folks understand the value so that they can make sure that customers understand and capture the value.

5. When was the last time you personally ordered your own product / service?

Everyone is busy. I get it. And we get so caught up in managing the business, managing others, looking at analyses on the business, etc. that we forget one of the most valuable and simplest things of all – putting ourselves in the shoes of our customer. And that means going through the same process that an actual customer (or potential customer) goes through. Whether that means calling a phone number, visiting the website, going into an actual brick-and-mortar location, or even buying person-to-person, pretending like you are a first-time customer and playing that part in the buying process will likely make you appreciate the pros and cons of what you are taking others through.

A couple more thoughts – if you sell online (I know that sounds silly to actually say today), go through the process both on your desktop/laptop as well as your smartphone. Also, once you’ve bought the product/service, try to return it and see what that experience is like (see #4 above).

6. When was the last time you personally ordered your top 3 competitors’ product / service?

Here’s a shocker to some marketers – your competitors are better than you in at least one area. You actually aren’t the best at every single component of your business. Competitors are also a great source of ideas and inspiration, both because of the good and the bad things they do.

See what their experience is like. You’ll likely pick up a thing or two.

7. Have you opened the emails your company sends to customers on your smartphone?

Because that’s where the vast majority of them are reading them. And do you know where they physically are when they are reading those emails? Especially if you send them overnight or early in the morning, they are reading them (and likely deleting them) while sitting on the toilet. Email, just like TV, is too often described as dead or at least no longer relevant. Yea, no. There are still plenty of companies that use only email (and TV) to build 9-figure businesses.

But it is getting harder to get through the clutter. So whether it’s evaluating the subject line, design, or content, experience your emails how most of your customers are.

And if you don’t feel like you are aggressively emailing your customers, you probably aren’t. (Btw, here is a great analysis of the email marketing campaign used by the Obama campaign in 2012 – https://blog.kissmetrics.com/email-marketing-lessons-obama/.)

8. If you have a physical product, are you selling on Amazon? How many images do you have on your listing?

News flash, Amazon is taking over. I’ve already written about this once before here, so I won’t revisit it in depth other than to say if you put your physical product up on Amazon, you’re going to make more money than you do today. It’s largely incremental, and there are a lot of folks out there (myself included) who try to make as many of our purchases on Amazon, even if we found your product on your website.

The question about the number of images is really about how optimized is your listing. You are allowed 7 images. Most people have 1-2. Not to mention, there are a host of additional areas to optimize your page – the bullets, description, and reviews.

If you don’t have your products up on Amazon, get them up there.

If you don’t have some who is accountable for maximizing Amazon, get that assigned – whether it’s their full-time job or a component of it. It needs an owner.

9. What happens to customers whose credit cards decline / default on a multi-pay or a subscription payment?

Another point I previously wrote about here, but these are really important points that I keep re-raising.

10. How often do customers get a call from someone in your organization checking in to see how things are going?

I was at a mastermind event last week where I heard the CEO of MemphisInvest describe how every month, their folks call each of their Company’s 1,200+ investors to see how they are doing. And yes, there are investors who tell them they get the point of calling and don’t need a call every month, but I was struck at the level of service. It also goes to show how much they think of their offer that they aren’t afraid to call customers. As silly as that may sound, many marketers don’t want to talk with their customers, whether that’s because they know their product isn’t good, they think it’s a headache to deal with customers, or they just don’t care to improve.

As with many of these questions, there are implications of the original question. Each reflects assumptions, attitudes, and philosophies of your business.

11. What is the 2nd item (product/service) you offer to a customer?

It’s amazing how many people don’t offer more to their customers. Some think it’s sneaky or beneath them. But there are countless examples in mainstream companies where it’s happening everyday:

-Do you want fries with that?

-For $0.25 more, you can get the large drink instead of the medium

And if you think it’s only at McDonald’s or the movie theater when this happens, go add an item to your Amazon cart. What shows up immediately below is the “customers who bought this product also bought these” section. That’s an upsell.

Depending on what the initial offer is, upsells can be orders of magnitude greater value than the original offer. But whether they add up to 10x or .25x more, adding them – I’ve seen up to 8 and still make sense – is a crucial way to add to your customer LTV.

12. What was the last test you ran on your thank you page?

Or let’s just start with, when was the last test you ran period? Too many people aren’t testing enough (or at all). There is just no way that what worked last year or what worked initially is the most optimized way of doing things. But it’s also not about just blindly switching things – your organization has to become a testing organization. It needs to be built into the culture. Testing means failing, and too many organizations are fearful of failure.

But testing is the only way to get better.

Please do it.

13. What tasks that you individually do are the highest value and which are the lowest value? What are you doing to delegate or eliminate the lowest value ones?

There is a value associated with everything we do. Hopefully it’s positive, sometimes it’s neutral, and the reality is that some of our actions have negative value. But when was the last time you looked at how and where you spend your time, and whether explicitly or otherwise, put a value on each of the things you do? What during your day is the greatest ROI thing you do? For some, it’s about writing copy, for others it’s about building technology, for other it’s about hiring for key roles. Too often people are doing a lot of the things they did when they were on their own or didn’t have a team. But those can be really really low-value time-sucks. Everything from managing your schedule, filling out expense forms, booking travel, etc. This is not to say that you necessarily need to hire someone. New tools like Expensify make the expense process tons easier. Or for $10/ month you can use travel app Native to help with booking, re-scheduling, etc. It’s time to start getting rid of those low-value tasks, especially those you detest, that you’ve been doing “just because.”

14. In 2 sentences, describe where you want your company to be in 18 months?

Depending on your role, you may have varying ability to affect your company’s strategic vision. Sounds obvious, but a lot of professionals feel that they are so busy that they don’t have time to plan. These are the same folks who are usually complaining about the same types of issues over and over.

As the saying goes, “If you don’t know where you’re going, all roads lead there.”

For your sake and for that of your company, you need a written plan of where you want your company to be in 18 months. In your head or even spoken isn’t good enough. Something happens once you write something. It forces a different clarity of thought, allows people to react to it, and serves as a reference document that everyone can refer to.

Bonus Question:

15. In 2 sentences, describe where you personally want to be in 18 months?

And then there are folks for whom business planning is a no-brainer, but they forget that planning for themselves should also be such. Whether it’s around the New Year, halfway through, or a quarterly review, it’s the same idea as business planning. You certainly need to know where you are and then plan for how to get where you want to be.

Btw, one of the best books I’ve read recently about getting from Point A to Point B is Straight-Line Leadership by Dusan Djukich. My favorite line from the book is, “It’s been said that your life, when it’s over, will either be a warning or an example.” Powerful words.

Feel free to take this list and have a conversation with your partners or management team. Because these are some of the more important issues every business should not only be paying attention to but also be working to optimize.

Please leave a comment below because I’d like to hear what you think.