The modern age for retailers and notably for marketing and affiliate managers can be a complex arena and many brought up during the dominance of the internet take for granted, the myriad of technological innovations without fully understanding the core principles behind successful online and offline marketing.
The successes and standards today can trace their origin back to the post war era and the reconstruction of Japan, a country wholly under-developed at the time but which became literally overnight, a powerhouse and centre for excellence, achievement and technical superiority. This accomplishment can be attributed to one man and his core guidance for employee and industrial excellence and teamwork plus his sense of judgement on how the consumer drives a business to focus on quality. That man was Dr William Edwards Deming.
Dr. Deming’s famous 14 Points serve as management guidelines. The points cultivate a fertile soil in which a more efficient workplace, higher profits, and increased productivity may grow.
- Create and communicate to all employees a statement of the aims and purposes of the company.
- Adapt to the new philosophy of the day; industries and economics are always changing.
- Build quality into a product throughout production.
- End the practice of awarding business on the basis of price tag alone; instead, try a long-term relationship based on established loyalty and trust.
- Work to constantly improve quality and productivity.
- Institute on-the-job training.
- Teach and institute leadership to improve all job functions.
- Drive out fear; create trust.
- Strive to reduce intradepartmental conflicts.
- Eliminate exhortations for the work force; instead, focus on the system and morale.
- (a) Eliminate work standard quotas for production. Substitute leadership methods for improvement.
(b) Eliminate MBO. Avoid numerical goals. Alternatively, learn the capabilities of processes, and how to improve them.
- Remove barriers that rob people of pride of workmanship
- Educate with self-improvement programs.
- Include everyone in the company to accomplish the transformation.
The fourth point is something I wish to draw your attention to. Deming identified the imperative to secure a long term customer (and industrial) relationship. This ethos totally flies in the face of more modern day standards such as Compulsory Competitive Tendering. What it does identify is that relationships and trust are vital in securing quality and repeat business. This equally can be translated into the relationship between a customer and a retailer.
The fifth point is also worthy of note. Quality of service and merchandise is at the heart of any successful retail operation and as you will see later in this presentation; these simple yet effective points were almost entirely ignored in the coming decades and are at the heart of the problems retailers and managers face today.
The eleventh point is something I am sure you will identify to be at complete odds to what you are accustomed. There is a constant demand up the food chain for numerical goals to be met. This is I contend a wrong approach and should be vigorously challenged. Deming correctly identified that productivity and performance can be enhanced if you analyse the processes utilized. An improvement in processes can be far more effective in combating waste and enhancing efficiency and moreover sales than any top driven target. This is not to say that top driven targets do not have their place in modern retailing and marketing. However any such target should be an aspiration and not a cast iron position.
The teachings of Dr. Deming affected a quality revolution embraced wholeheartedly in America by American manufacturers and consumers. Through his ideas, product quality improved and consequently customer satisfaction in the products purchased. His work in Japan, where he instructed top executives and engineers in quality management, was a driving force behind that nation’s economic rise.
What Deming accomplished was to get retailers and suppliers to realise that quality of merchandise was essential to a continuance of custom and that the customer expected standards of quality to be present in everything they bought and also in how any deficiencies were attended to.
Prior to the 1950’s most issues that are now commonly associated with marketing were either assumed to fall within basic concepts of economics (for example, price setting was viewed as a simple supply/demand issue), advertising (well developed by the end of the 19th Century), or in most cases, simply not yet explored (for example customer purchase behavior, importance of distribution partners).
The development of marketing was in large part motivated by the need to dissect in greater detail relationships and behaviors that existed between sellers and buyers. In particular, the study of marketing led sellers to recognize that adopting certain strategies and tactics could significantly benefit the seller/buyer relationship. In the old days of marketing (before the 1950’s) this often meant identifying strategies and tactics for simply selling more products and services with little regard for what customers really wanted. Often this meant companies embraced a “sell-as-much-as-we-can” target driven philosophy with little concern for building relationships for the long term. This philosophy has sadly returned to haunt us and is particularly top driven. It is also something that affiliate managers and marketing managers fall into and this is because of the top driven target approach.
Starting in the 1950s, companies began to see that old ways of selling were wearing thin with customers. As competition grew stiffer across most industries, organizations looked to the buyer side of the transaction for ways to improve. What they found was an emerging philosophy suggesting that the key factor in successful marketing is to understand the needs of customers. This marketing concept suggests marketing decisions should flow from first knowing the customer and what they want. Only then should an organization initiate the process of developing and marketing products and services. Yet what we are seeing with many retailers today, especially those with an online presence, is a complete disregard for the consumer and a return to the “sell-as-much-as-we-can” ethos.
We all know how important customer retention is yet many pay mere lip service to this important retail goal. Analyze your own behaviour and I am sure that you will find that some of what I have mentioned in passing that is detrimental to successful retail activity is something you have at one time or another actively participated in.
At the organizational level, marketing is a vital business function that is necessary in nearly all industries whether the organization operates as a for-profit or as a not-for-profit. For the for-profit organization, marketing is responsible for most tasks that bring revenue and, hopefully, profits to an organization. For the not-for-profit organization, marketing is responsible for attracting customers needed to support the not-for-profit’s mission, such as raising donations or supporting a cause. For both types of organizations, it is unlikely they can flourish without a strong marketing effort.
Marketing is also the organizational business area that interacts most frequently with the public and, consequently, what the public knows about an organization is determined by their interactions with marketers. For example, customers may believe a company is dynamic and creative based on its advertising message.
At a broader level marketing offers significant benefits to the customer. These benefits include:
- Developing products that satisfy needs, including products that enhance society’s quality of life
- Creating a competitive environment that helps lower product prices
- Developing product distribution systems that offer access to products to a large number of customers and many geographic regions
- Building demand for products that require organizations to expand their labour force
Possibly the criticism most frequently made about marketing is that marketers are only concerned with getting customers to buy whether they want the product or not. The root of this argument stems from the belief that marketers are only responding to top level demands and really do not care about the needs of their customers.
Marketing campaigns are often criticized for exaggerating the benefits offered by their products. This is especially the case with the part of marketing that engages in customer communication, such as advertising and salespeople. The most serious problems arise when product claims are seen as misleading customers into believing a product can offer a certain level of value that, in fact, it cannot. There is a fine line between what a rational person should accept as a “reasonable exaggeration” and what is considered downright misleading. Fortunately, many countries offer customers some level of protection from misleading claims. Using such tactics is likely to lead to marketing failure as customers will not be satisfied and will likely not return. The emphasis therefore is transparency in all marketing so that the consumer may make an informed choice.
I am not here to discuss the ethics that we should all embrace in our marketing activity. That is a wholly different subject and one which could be discussed for hours. All I shall say with regard to ethical marketing is that we should place ourselves in the position of our customers and ask ourselves if we would wish to receive such styles of marketing approach in our personal lives. Whilst the anything goes approach may boost top level driven demands it does nothing to bolster a long lasting relationship with your customer.
When Deming produced point nine of his guide he touched on a relevant issue faced by marketing managers and affiliate managers today. Intradepartmental conflicts can be costly and marketers must know how their decisions will impact other areas of the company and others business partners. It should be realized that marketing decisions are not made in isolation and that decisions made by the marketing team could lead to problems for others. For example, making a decision to run a special sale that significantly lowers the price of a product could present supply problems if the production area is not informed well in advance of the sale. Too often affiliate managers will turn to a retailer and ask for a specific offer without fully understanding that the retailer may not be able to accommodate this and equally the retailer may not appreciate that the value of such a “loss leading” promotion may have longer term customer retention value. What is abundantly clear however is that communication between the affiliate manager and the rest of the marketing team and the retail management is absolutely essential. It is quite surprising how many retailers do not even communicate with their marketing teams other than to top drive targets without any thought as to schedules for marketing activity.
Today’s affiliate and marketing managers must have a strong understanding of technology on two fronts. First, they must be skilled in using technology as part of their everyday activities. Second, marketers must understand emerging technology and applications in order to spot potential business opportunities as well as potential threats. For instance, the rapid growth of mobile requires marketing teams and retailers to firmly understand how these fit within an overall marketing strategy.
It is the emergence of technology which has flummoxed retailers the most. Many bricks and mortar retailers are way behind smaller firms in application of the internet and do not have a strategic policy in place whereby online and offline marketing can co-exist and complement each other. We read of so many bricks and mortar companies that perform well online but have to fold or restructure because of falling footfall in the bricks and mortar stores.
One activity I encourage these “hybrid” retailers to operate is cross promotion. This isn’t anything as fancy as cross product promotion between different retailers (something I also encourage) but rather identifying your demographics between offline and online sales. One retailer I shall mention is the concession chain Apricot. This company has hundreds of concessions stores inside major department stores and a few stores of their own.
In the case of Apricot they identified that most of their walk in customers at the concessions were in the 20 something age demographic and were primarily office workers making use of their lunch breaks and after-hours time to shop in store. Yet their online core strength came from the 30 something age bracket. So I suggested a simple yet highly effective promotional method to increase footfall and thereby stave off any potential issues from the bricks and mortar element undermining the successful online activity. I introduced a simple in store coupon available for customers who purchased online to redeem on a second order metric via the concessions. Now given that the online customers were primarily the 30 something age bracket, this introduced a whole new customer demographic into the stores. Equally measures are in place to provide online coupons for customers purchasing in store. This then increases online activity and also introduces a new demographic to the online acquisitions. It’s not rocket science but a simple identification of trend and coming up with a simple mechanism to increase footfall and at the same time build new customer base and longer term customer retention.
Trend marketing is something I am passionate about. I particularly encourage retailers to devote a lot of attention and effort online towards trending study. Trends can be fashion advice driven or even created by offer, as opposed to pure customer driven analysis. One particular angle I love to use is to introduce a loss leading mechanism on new products. Time limited promotions of new season products at markedly reduced loss leading prices to stimulate demand followed by a “top sellers” promotion again at a reduced but slightly more profitable price solely devoted to what has performed well from the loss leader promotion and then followed by a “recommended buy” promotion at full price, by which time you have created an artificial trend which is then expounded upon by the media (and in particular the fashionista) and the customer is then drawn to what now forms the cream of the new collection. The trend then takes off and with suitable cross marketing activity including press featuring, a retailer suddenly finds maybe half a dozen items from that new season becoming the must have product purchased in number by the consumer. During 2011 and the early part of 2012, tartan was the must have style in ladies fashion. Retailers stocking a tartan dress for example found that sales skyrocketed and this was all down to trend and the step by step educating towards the consumer that marketing teams undertook.
However creating a market for a product is not the end of the road and we must not lose sight of the principles of excellent customer care. It’s no good providing a trending product if the quality is poor. Quality control and immediate customer support is integral to successful marketing and customer retention. Remember what I have said about the “sell-as-much-as-we-can” target driven philosophy and how detrimental that can be. Here you have a no-brainer seller created by skillful marketing and the retailer starts fobbing the customer off with any old tat because it sells. Is that honestly going to bolster customer satisfaction?
A retailer that takes that slippery road is a retailer I do not want to work with. They will ultimately fail, have terrible consumer review and be a poor retailer to promote longer term. Affiliates will not be encouraged to promote over any long duration simply because the retailer doesn’t give a fig. That is not the sort of retailer we want to work with. Affiliate Marketing is a highly professional industry and not a spiv’s paradise. Customers want quality and affordability plus unrivalled customer care and any retailer that wants to retain their customer base needs to ensure that they take this lesson on board.
One retailer I wish to highlight for excellent customer care is The Jewellery Channel. Offering a 30 day no quibble money back guarantee on all merchandise, the retailer continues to grow at a significant rate across all marketing channels and is also not shy of embracing new technology. Their core Company Statement embraces most if not all of the 14 principles set out by Dr Deming.
Their business is a high volume high intensity oxygen driven consumer led revolution and by making use of emerging and existing technology to market and promote their products to the consumer, The Jewellery Channel is pushing all the right buttons to not only continue to grab more market share but also to progress their expansion plans and targets. They are also a vertical retailer in that they design or produce some or all of the products themselves. Recently and at no financial gain to themselves, they recently undertook to support London Fashion Week by providing jewellery for one of the new collection displays for models to wear when demonstrating the new collections. This then will feature in September 2012 at London Fashion Week and will receive prominence on their own television channel and online. Again a form of trending and social marketing but one which enables the consumer to identify products to create a perfect ensemble and which affiliates, journalists and others can clearly identify and for which then generates huge customer interest and moreover sales.
So quality and customer care is at the heart of successful long term marketing. Communication is however just as important and I am going to highlight now a few disasters without embarrassing the retailers concerned.
One retailer with more than 30 years of established trading from a store and now with a modest online presence simply retained the services of a marketing company with just one simple instruction. Generate sales. Yet at every turn that retailer (who is still just trading today) was always too busy to communicate with the marketing team, had a very narrow mindset concerning what to deliver to the customer and moreover, was solely interested in their new products and their clearance without any attempt to put together any form of promotional calendar, no on site offers, no investment in site maintenance, no communication even as to when new product ranges would be available and absolutely no preparedness to either be ahead of competitors or respond to competitors. They also had no mechanism in place oriented towards customer retention, no methodology in place to encourage any customer loyalty, their products were not price competitive and in addition, their communication with customers was equally as bad as their communication with their marketing team. At a time when others in their sector saw customer loyalty and retention increased and who had put in place promotional schedules and who communicated closely with their marketing team, this particular retailer continues to this day to underperform, their sales volume decrease and they are once again almost solely reliant on their walk-in trade.
If you are going to embrace and try to benefit from what the internet can offer, then surely it makes sense to invest in this medium and not simply assume that if you build it they (the customer) will come. If anything it highlights that successful marketing requires investment, flexibility but above all, communication.
Another retailer again with a modest bricks and mortar presence and equally bespoke, catering to a handful of local customers willing to pay hyper inflated prices for what quite frankly is available at any up-market department store but which is considered to be in-vogue amongst café society decided to invest in an internet presence and retained the services of a marketing agency. Again they failed to put together any sort of promotions schedule and followed the same decision making process as the retailer I mentioned before. Except this time they also decided that because they were so bespoke, that they really only wanted one type of affiliate to promote them, affiliates who were equally as bespoke and those affiliates should not in any way mention competitors. Needless to say, their affiliate program has failed in spectacular fashion.
If a retailer wishing to expand beyond their small customer base to appeal to a larger market, they should not hamstring themselves so terribly by trying to micro manage every aspect of their marketing. If they are not a huge Brand and they are not a huge success they should remember that marketing agencies are retained to handle the marketing and who promotes and how. The retailer sometimes can be too restrictive in what they wish to have available online as a marketing impression and that can be detrimental. It also explains why many small retailers cannot take the leap from a modest bricks and mortar business to a global online presence.
The retail industry is splitting into three camps: those that compete on price, those that compete on uniqueness, and those that can’t compete. The recession has accelerated the demise of those that fall into the third camp. I would also contend however that those that fall into the second camp can also be under significant pressure if they fail to heed the principles first expounded back in the 1950’s and still relevant to this day.
The retailers that excel in this second camp are often larger companies that are no longer satisfied letting other people sell their products and who have entered the retail space directly. Some companies have found that selling their own products direct to consumers is the best (but not only) way to ensure control. Many traditional retailers are creating their own products that are sold only by themselves. Vertically integrated retailers figure out what their customers want and deliver it.
Uniqueness of products extends to services as well. Providing installation, delivery, repair, training, are ways to differentiate. Offering unique products and a value-added service can be very profitable. These value added services can also be successfully promoted by marketing and especially by affiliates.
Today’s consumer has very high expectations regarding a retailer’s capability to provide information, customer service, and engaging content. Here again the internet has impacted the way in which people shop. Not only do consumers expect to be able to shop in stores, online, television and via catalogue (i.e. multi-channel) in various combinations (i.e. cross-channel), but they also expect reviews, ratings, comparisons, and advice at their fingertips. They want to be recognized as good customers, and be rewarded with discounts and special treatment..
The ironic thing is that as customers we’re now demanding the same high-touch customer service we received during the 1950’s, but through the use of technology. Technology is the great enabler that provides service at scale. This makes the software retailers use even more important in order to maximize the customer satisfaction and investing in that technology an absolute imperative. The internet and its associated technologies have changed retail forever, the recession is just making that even more obvious.
The emphasis on customer loyalty is mostly driven by the bottom line however so pricing is always going to be a key point and ensuring competitiveness in comparison to others in your sector is absolutely essential. Keeping existing customers is cheaper than finding new ones, and having a base of loyal customers for one product or service improves sales for the retailer’s other offerings. It can be estimated that the amount a company must spend to attract a new customer is five or six times that needed to keep bringing back loyal customers. Repeat customers are also more likely to recommend the company to others and to try out the company’s latest products. The financial results are that a small percentage increase in customer loyalty can translate into a significant rise in profits. Why then do so many retailers ignore this most obvious issue? Customer retention is at the heart of any successful retailer and affiliates love repeat orders. Retailers need to remember that many affiliates are at the heart of the communications tree and that customers making use of that tree will pass judgement on a retailer’s quality and price and service.
So how can affiliates work with you to ensure that you could benefit from customer loyalty? Obviously the first thing that comes to mind is communication. However communication is a two way street and if the retailer does not communicate with the marketing team how then do you expect the marketing team can effectively communicate with the affiliate? Also let’s not forget what we are focusing on. Retaining a customer is not an easy task and to do so effectively you need to enact a range of strategies.
Strategies for improving customer relations and building customer loyalty range from simply opening up communications channels to implementing elaborate point systems that reward loyalty. Enhanced customer communications approaches include
- providing customer feedback forms
- asking about customer needs in general when customers call with problems
- training call-center staff to handle disputes uniformly and constructively
- responding directly to customer feedback
- demonstrating how the company listens to its customers
- encouraging a service culture throughout the organization
Companies also employ a wide variety of tactics to directly encourage customer loyalty through promotions or special treatment. Some examples are
- creating a point system that offers rewards once a customer accumulates a certain number of points
- offering discount or free-product coupons either as a first or second metric
- running contests in which customers may win prizes by entering a competition
- offering lifetime service guarantees
In order to be effective, such programs and initiatives must be tailored to customer needs and interests. For example, if a company overwhelms its would-be loyal customers with frequent mailings consisting of trivial or unappealing offers, it may be turning itself into a nuisance instead of encouraging loyalty.
Customer satisfaction matters. It matters not only to the customer, but even more so to the business because it directly impacts a company’s bottom line profits. Furthermore, it is one of the most important components of a company’s positive brand image.
Businesses that have been successful retaining the business of their loyal clients have shown over time to consistently increase profits from their installed client base. The impact of customer loyalty is impossible to overlook.
The traditional marketing model has always been Business starts with the customer.
Find out what the customer wants, then produce it, then sell it. Customer-oriented business philosophy has since gained global acceptance, but surprisingly, most companies are not practicing some of the most fundamental tenets of this school of thought.
The 80/20 rule has been a very popular benchmark of business professionals in this era of customer-oriented business strategy. It states that for most companies, 80% of their profitable revenue comes from just 20% of their clients.
This highlights a very important element of customer-centric business: not only is it important to find the right customers, but it is even more imperative that an organization retain the continued business of these loyal clients.
Understanding and fostering key relationships can create short and long-term value in customer loyalty and marketplace alliances. Surveying customers, then, makes very sound and fundamental business sense.
Discovering, developing and nurturing these customers, therefore, is critical to the present and future success of most businesses. Identifying key customers is only one step of creating this profitable relationship; to maximize profits companies must continuously collect ongoing data about these customers or groups. By doing so, a business can truly create one-to-one relationships with its clients and create opportunities for continued business with up-sells, renewals, cross sells, and referrals.
This data, or customer knowledge, is critical in laying the groundwork for a successful customer retention strategy because it allows companies to maintain highly personalized, one-to-one, relevant communication. We already see the success of personalised behavioural retargeting and remarketing. What we do not see much of by medium and smaller businesses is personalized behavioural re-selling. Tailoring a promotion around the individual based on previous consumer acquisition. Why is personalization so important? The high level reasons are obvious. Modern communications technology (email, telemarketing, television advertising) has simply created too much information overload in the marketing airwaves. As a result, people have become increasingly callous to marketing messages. Recent research found that people are inundated with thousands of messages every day. Taking just office email as an example, the average office worker receives 90 to 100 messages per day in his or her inbox. Most of these emails are ignored, deleted, or dismissed. What messages do get read? It’s simple: the ones that matter. Messages that are personally relevant to the recipient are the ones most likely to be given due time.
So how do you identify and act on what a customer needs? To define customer satisfaction you could for example
- Work backwards. Determine what data will help you make decisions first, then create the questions that will accurately yield that data.
- Be specific. Try not to use the word satisfaction if you can help it; determine what dimensions of satisfaction are meaningful to your organization and customers.
- Be complete. If there are multiple dimensions, measure them separately. You can always aggregate data later.
The most common mistake companies make when assessing customer satisfaction is asking the wrong questions. Too many companies utilize generic questions such as:
How satisfied are you with Product A?” (Very Dissatisfied, Dissatisfied, Fairly Satisfied, etc.)
or
Please rate your level of satisfaction with Service B:” (1 2 3 4 5 6 7…)
Vague questions generally elicit vague responses, and customer satisfaction surveys are no exception.
Recall the aforementioned 80/20 rule. With this in mind, a company may be able to greatly increase profits by focusing efforts on installed base marketing—cross sells, up-sells, renewals. Using customer satisfaction surveys to pinpoint the likes and dislikes of a company’s “top 20″ customer base can reveal valuable insight. By having a robust database of customer analysis data, a sales organization can, for instance, determine the best strategies for maximizing marketing and sales results. For example, if a company’s “best” customers show significant affinity for a certain product, or if they are from a certain geographic area, an organization can ramp up marketing efforts for that product or that territory. Accordingly, this organization can also determine which products should be discontinued or what territories should receive less advertising budgets. In either case, customer satisfaction data enables businesses to make informed decisions that can greatly increase profits.
In a nutshell, if the paying customers are complaining about products, or the way they are being treated, one should know there are challenges with the Customer Relationship Management process. When the conversation is a bit harder to locate, extra efforts need to be employed in order to better deal with amicable solutions.
Taking the time to monitor the chatter, separate the noise from the legitimate concerns will be a win for the company in a number of ways. Existing customers like to know they are valued. They’ll tell everyone within their spheres of influence when the business goes out of their way to make the customer feel valued and worthy.
But customers will also tell their friends and associates when they’ve been done wrong. With today’s communications capabilities this bad news can spread much faster than wildfire.
So to conclude I would like to just end by saying this.
Your customer is your lifeblood. Your marketing team is instrumental in generating success. Communication is the key to profitability. Ignore your customer, your marketing team or fail to communicate and you are just not cut for the modern way we all do business.