Ten reasons why LOYALTY is important for the future of your business

1. A 5% reduction in the customer defection rate can increase profits by up to 95% – Bain & Company
2. It costs 6 – 7 times more to acquire a new customer than retain an existing one – Bain & Company
3. An average company loses between 10 – 30% of its customers annually – McKinsey
4. A customer is 4 times more likely to defect to a competitor if the problem is service related than price or product related – Bain & Company
5. 68% of customers leave because they were upset with the treatment they received whilst speaking to customer services – US Chamber of Commerce
6. The probability of selling to an existing customer is 60 – 70%. The probability of selling to a new prospect is 5-20% – Marketing Metrics
7. 96% of unhappy customers don’t complain, however 91% of those will simply leave and never come back – 1^st Financial Training services
8. A 2% increase in customer retention has the same effect as decreasing costs by 10% – Leading on the Edge of Chaos, Emmet Murphy & Mark Murphy
9. A dissatisfied customer will tell between 9-15 people about their experience. Around 13% of dissatisfied customers tell more than 20 people. – White House Office of Consumer Affairs
10.  55% of customers would pay extra to guarantee a better service – Defaqto research

 For more see “50 Facts about Customer experience” (http://returnonbehavior.com/2010/10/50-facts-about-customer-experience-for-2011/ )

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Required: a revolution in retail

The retail sector has undergone immense upheaval over the last 20 years as sales have moved online and new, hugely successful entrants have changed the way we shop. Add the impact of the recession to this and the result is familiar high street names disappearing and many of the rest under extreme pressure. Retailers need to radically rethink their strategies for survival in a world where customer expectations, methods of transaction and supply chain relationships are all changing.

Ron Johnson, who created The Apple Store, said “A store has got to be much more than a place to acquire merchandise. It’s got to help people enrich their lives. If a store just fulfills a specific product need, it’s not creating new types of value for the consumer. It’s transacting.”

It sounds like a lot to ask – but if a store doesn’t offer more than product, why wouldn’t a customer just stay at home and buy online?  Of course, most retailers have to develop a strategy that works across both online and bricks-and-mortar – and an experience that is aligned for the customer.

A few are already doing it well.  One great example is C&A in Brazil, which has found a way of bringing online and offline experiences together by displaying Facebook ‘likes’ for products in-store. See how they do it here. In the US, JC Penney’s giant in store findmore touch screens allow shoppers to view the retailer’s full online offering, check stock levels in stores, share products with friends and scan product bar codes to access additional information and recommendations.  And take a look at the awesome Nike FuelStation recently opened in London, which takes customer experience to a whole new level.

New and innovative methods of payment are being launched across the globe that will alter the way we transact with retailers and offer a huge opportunity to build loyalty. Starbucks, for example, has introduced a sophisticated mobile app and payment system that lets customers load cash onto their mobile phone, which then displays a barcode baristas can scan at the register.

Amazing developments – but perhaps not yet our day-to-day shopping experience.  There is a great deal of ground for a lot of retailers to catch up – and they need to do it quick.

This is such a dynamic sector that TomorrowToday’s has asked its Strategic Insights team to delve deeper into everything retail so that we can get a fantastic understanding of what the future looks like.. If you have any great examples to share with us, please do!

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Innovation and Technology in Banking

TomorrowToday’s Strategic Insights team is working on a new study of how banks are currently using “ebanking”, digital banking and social media. We’ve already found some great examples of how the world of banking and money is innovating – from mobile money in developing countries and Square’s cashless solution in the US, to a great app from FNB in South Africa.

We’re looking for lots more examples – good and bad – and would love to hear from you!

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Starbucks and the future of customer relationships

In November 2010 I wrote an article called “Herding Cats” that explored how increasingly difficult it is to build customer loyalty using conventional approaches and that companies who are serious about loyalty needed to focus on personal partnerships with their customers. It would seem that Starbucks have been listening because today they launched a very personal customer initiatives. From now on at Starbucks coffee houses across the UK you can be expected to be called by your name. As Starbucks says:

After all, it’s personal. That is why we put your name on it and promise that your drink will be perfect every time. If not we will make it again until it is

You can watch the promotional video below here – this is a pretty neat initiative

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Capitalising on the future face of consumer demographics

My previous blog identifies three trends driving the future face of consumers: Older, Female, Urban – It is important that business leaders understand the impact of these three disruptive forces. We have identified three critical steps to serving the needs of these segments:

1. It’s not about age: Pay special attention to baby boomers as they enter retirement (don’t neglect them for younger generations), and importantly don’t approach them or talk to them as retirees. Adapt your marketing messages – promise health, vitality and youthfulness. Provide them with great experiences and don’t forget the importantce of the human touch. Product features and services should take into account consequences of ageing without overtly drawing attention to them.
2. Undertake robust research to understand the Future World of Women: Identify the sub-segments that your company can target. What are their new dissatisfactions and unmet needs. Find ways to help women save time and gain access to more money. Convenience, variety, ease of use and tailored products are important considerations.
3.  Develop a comprehensive understanding of the urban consumer.Cities are becoming bigger and more crowded. They asre also becoming smarter. A substantial number of new opportunities are developing as the center of gravity of the urban world moves south and, even more decisively, east. It’s not always the biggest cities where the greatest opportunities exist. The Mckinsey Global Institute (MGI) believes that the best opportunities exist in what they call middleweight cities

“MGI identifies 407 emerging middleweight cities contributing nearly 40 percent of global growth, more than the entire developed world and emerging-markets megacities combined”

 Sometimes the opportunities are not always in the most obvious places. Resaerching and understanding the changing nature of cities is becoming more important than deciding which countries to operate in. From an urban consumer perspective tap into emotional benefits—such as security, privacy, and city pride. And, do not underestimate consumers’ willingness to spend on offerings that address these needs.

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Three major trends reshaping the face of tomorrow’s consumer

Following a study of customers attitudes and behaviours, CitiBank declared that 75% of their customers had changed as a result of the economic turbulence of the past few years. The report’s finding was correct in one sense; the economic uncertainty is influencing peoples’ behaviour. But the turbulence is also masking three much bigger and more powerful disruptive social forces: Older, female, and urban. Most companies are only just becoming aware of these forces and very few are actively researching and strategizing what needs to be done. Let’s explore these three trends further – Here are  interesting insights we’ve uncovered:

The Silver Surfer Tsunami

• By 2050, the share of the world’s population over the age of 55 will have nearly doubled, from 15 percent to 28 percent! That is a staggering demographic shift.
• In the U.S. alone, there are expected to be 2.2 million more people over 55 every year between 2010 and 2020.
• In China, the population over 55 will grow from 18 percent to 38 percent during that period. An ageing population is not just a developed market phenomena
• An ageing population is driving a massive change in consumer markets.

 Female

• Women now control about $12 trillion in global spending and on average, seventy percent of household spending, in developed countries.
• Worldwide, working women are expected to increase global income by more than $1 trillion per year, making them the fastest growing market segment. 

 Urban dwellers

• In 1980, only 40 percent of the world’s population lived in cities.
• By 2030 that percentage will be over 60 percent and this figure will be closing in on 70 percent by 2050
• Between 2010 to 2050, the urban population will grow by 3 billion more inhabitants
• Many villages and country houses will get deserted as a consequence.
• Every week 1.2 million people move to cities which means there are more than 60 million new urbanites each year.
• That’s a population the size of the UK moving to cities every year!
• Overwhelmingly, tomorrow’s consumers will be city dwellers.

 Is your team researching and exploring the impact these three massive disruptive social and demographic forces? Are you debating and analysing the threats and opportunities? What is your business plan?

TomorrowToday has a team of global experts who have developed highly acclaimed frameworks like TIDES of Change , SCRIPTing Your Future and the many others. We can help you understand and develop strategies to capitalise on these changing forces. Please contact James Dunne to learn more.

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Why people follow brands on social media – insights for social marketers

I was watching a video by one of Microsoft UK’s top digital marketing strategists (you can too, it’s available on YouTube, courtesy of Digital Surrey). In it, he shows research about why people follow brands on social media. It’s very insightful.

Before you look at it, ask yourself this: why do you (or would you) connect with a brand in a social media space (Facebook, Twitter, LinkedIn, YouTube, etc)? Marketers attempting to create a digital strategy would do well to try and establish why their customers (and potential customers) would connect with them in the digital social space. Let’s not forget that as social media slowly starts coming of age, people are beginning to learn how to use it more effectively as part of their “normal” lives. Only the geeks and public figures are in competitions for “the most followers” – most people are using social media to do precisely what it was designed for: to enhance and augment their real world social interactions and relationships.

So, why would people follows brands on social media?

Microsoft’s research suggests the following reasons:
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Retailers innovate in an attempt to tempt

We are well into the Christmas shopping season and most foresee a tough time for retailers in the UK.  Visa reports spending for last week was down 6.2% against the equivalent week last year, and 2.3% down over the past 4 weeks.  Given higher fuel and food costs, rising unemployment and little hope of a New Year pay rise for those in work, it’s not surprising that UK consumers feel they need to cut back on Christmas spending – and they are looking for great deals to drive their purchases.  The response from retailers has predictably (and necessarily) been to slash prices – but some have also taken more innovative approaches to attract customers.

Research by Virgin Media Business uncovers how flagship stores in London’s Oxford Street have been using technology to enhance their customer experience.  Niketown has staff taking payments on mobile devices, Debenhams are offering a “free coffee Friday” via Foursquare and nearly a quarter of the stores are taking online orders instore via touchscreen terminals.

Meanwhile, following on from Tesco’s innovatory approach to shopping in South Korea, the retail giant is now set to trial AR (Augmented Reality) online and instore.   Customers will be able to see AR images of a product before they purchase – so, for example, could compare how different TVs look in their living room, or see how a Lego model will look before they buy the box.  In store, Tesco will be able to showcase additional products that there isn’t physical floorspace to stock.  You can get a flavour of it by viewing the video here.  Personally, I find the robot rather patronising, but it’s a first for retail, and a great development to use AR to practically enhance the customer experience.

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Selling to Generation X: you must connect to their families – in their way!

One of the keys (not the only key, but a very important key) to advertising and selling to Generation X is to connect to their families. Gen X are the generation who were born and grew up in the 1970s and early 80s. They are not “the young people” anymore, although this is still how Boomers think of them.

They’re in their 30s and early 40s, have families, mortgages and mid life issues. They’re as settled as they’re ever going to be (although this isn’t what it looked like for the Boomers). One of the things they’re very focused on is their families. Some of these middle managers, for example, are turning down promotions – not because they don’t want to move up in their companies, but because they don’t want to move their families to a new location (their son just made the first sports team at school, and they don’t want to move him). And they will prioritise family time more than any previous generations.

So, if you want to impress them, get their attention, touch their emotions and connect with them, it would be a good idea to connect with their sense of family values. But it’s a new type of family these days, isn’t it?

Microsoft’s latest campaign attempts to do just that – and they get it mainly right. “It’s a great time to be a family” is the tag line, and the series of adverts portray families using technology to do traditional family activities in exciting new ways. Here’s a great example (see more below):

They are really well put together and strike a chord with Gen X. To connect with Gen X you need to show that you understand the new rhythms and relationships of today’s families. They’ve also been adapted for different cultures (there are some excellent changes made for different countries in the homework video, for example – I like the Indian version best; compare it to this).

But they also show the limitations of traditional advertising these days. If you’re an Apple fan, for example, you’d be very unlikely to change across to a PC with Windows based on these adverts – you might even laugh a bit as you realise how simple graphics, videos and multimedia are on Apple compared to Windows. And if you own a PC, you get Windows standard, so I am not sure what these adverts are trying to do. Surely, Microsoft can funnel their creativity (and awesome budget) into something that achieves a lot more.

The connection with a generation’s value is important – in fact, a vital starting point. But you then also need to connect with the experiences of that generation and communicate with them in ways that make sense to them. This series of adverts from Microsoft does the first thing brilliantly, but falls short on the rest. But, that’s better than most, who don’t even pass the first connection hurdle with this middle aged, but still much misunderstood, generation.

Some other adverts from this series include:
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Making Profits with Purpose Gains Momentum

While many skeptics still battle the notion that not all profits are equal, great companies continue proving that Creating Shared Valuereaps significant enduring benefits.   This movement is at front and center stage with many of our brilliant thought leaders and change makers.  Whether you call it Creating Shared Value (CSV),  creating “thick value”, or the “for benefit enterprise”, all are focused on rethinking capitalism where profits have purpose; solving the world’s problems and simultaneously making money.

In January’s HBR big idea, Michael Porter and Mark Kramer ignited this movement by introducing us to what they call Creating Shared Value.   Around that same time Umair Haque published “The Capitalism Manifesto” and since then we have seen numerous discussions driving more awareness and stirring polarized beliefs.  A growing number of smart business leaders are beginning to recognize the merits of becoming accountable for more than the bottom line.  The spotlight for November’s HBR is “What Great Companies Do Differently” with numerous articles chiming in on the virtues of this new way of doing business.  Rosabeth Moss Kanter’s article How Great Companies Think Differently is brilliant and an absolute must read.

The fundamentals of this movement rely on establishing a broader common purpose, invoking emotional engagement, reconceiving our products and services to benefit social progress, forming accountable value chains, creating trust based organizational structures, and having the courage to get naked.

For all my fellow customer experience enthusiasts, we need to broaden our focus to encourage leaders to rethink their businesses at the core.  Creating Shared Value is key to sustaining thicker customer experiences.

What I love most about this movement is that it puts us all on the same team.  Business, society and government with a common purpose is mass collaboration at its finest.

Over the upcoming weeks we will examine each of these fundamentals in depth and discuss the real challenges that need to be overcome as we pioneer forward.  This kind of change is not easy, but it is essential.

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Lesson for bankers

The current global crisis continues to heap pressure on banks around the world to listen to customers.

Whether it be service, product design and development or fees customers are becoming increasingly vocal about their bank.

On the product development front banks are great at launching “innovative” products that no one understands without always being transparent about charges and fees. The best of the banks now involve both front line sales people and customers in the design and development process – result products that are easier to sell and more attractive to buy,

This involvement of customers has been harnessed by “quirky.com” a company in the US where if you have an idea you can send it to them and for $99 they will carry out on line customer research… if it works they will work with you to launch it. It’s all about listening to customers.

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Better events – for Generation Y

I spend two or three days a week at conferences and formal, large group meetings. And it’s ever more obvious that this part of our business lives is out of date. Most of this is because events and conferences are not keeping up with the new expectations and demands of the younger generations of attendees and delegates.

Pete Roythorne, Joint Editor in Chief of Meetings:Review recently wrote about this – read his article here, or an extract below. He makes some very good points, but I would add a few to his list, too. Here’s a summary, without much explanation – read on for some detail:

• Your communication has to be short, to the point, visually stimulating, with beautiful design, customised and targeted for individuals as far as possible
• Your conference spaces should also be visually enticing. What would your event look like if Apple designed it?
• Be creative about using interesting spaces and venues
• Use technology better, especially interactive, collaborative and social media
• Make sure your venues are technologically enabled – lots of power points, good quality wifi, and experiment with interactive technologies
• Sustainability is vital – Gen Y demand a green mindset
• Have shorter sessions, with lots of changes in energy and flow
• Your event can start before people arrive and finish long after they’ve left – keep connected using technology
• Ensure your content is top quality, with world class speakers – don’t skimp on costs here (there are many mediocre speakers who will talk for free or cheaply; be careful of using them).
• Allow space in the programme – Gen Y want experiences, they want to network, and they need space to keep connected to their world.

These suggestions might be targeted for Generation Y, but they’ll work for other generations too and improve the quality and take-home value of your events.

IT’S GOOD TO TALK : Why Generation Y is leading the way we communicate at events

Meetings:Review on 07/09/2011 by Pete Roythorne, Joint Editor in Chief

Generation Y is currently the most economically influential demographic group. Pete Roythorne looks at why its members demand fruitful dialogue rather than a stream of marketing messages, and how meetings and events organisers can best engage with this key audience.

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