StratBiz News Quarterly
StratBiz News is a quarterly newsletter featuring articles across a range of industries, markets and functions. Our membership is free and offers our readers access to current information and the latest ideas and thoughts from leading professionals. Subscribe now.
This quarter’s top featured articles:
Tuesday, 14 July 2009 12:50 PM
Iceberg Dead Ahead
How word of mouth influences customer decisions
By Peter Lee
Companies typically report on lost (or churned) customers, using this number as the definitive scorecard for how their business is performing from the Customers perspective, and the damage (or lack of) that this is doing to the financial bottom line of the business.
However using lost Customers alone as the measure of the impact of the Customer Experience that you provide on the bottom line your company is misleading and dangerous as Customer Experience affects much more than just lost Customer numbers.
A good way to visualize the full impact that the Customer Experience you deliver has upon your fiscal bottom line is as an iceberg.
Above the water it is easy to see the number of Customers that you have lost. However, below the water the even greater damage that you are doing to your business is in the lost acquisitions. You can loose to your competitors without even realizing it. Word of Mouth will act as a double edged sword killing potential sales and raising your cost of Customer acquisition.
How 'Word of Mouth' influences Customer purchase decisions
'Word of Mouth' is the act of consumers providing information to other consumers about a product or service. It can take either a positive form where a person recommends purchasing from a company or a negative form where a person spreads news about a bad experience to their friends and colleagues.
Recent research from Purdue University has shown that 87% of people follow the opinion of their friends and family in their own purchase decisions.
'Word of Mouth' is a very powerful sales and marketing tool for an organization with its ability to either promote or negate significant facets of the marketing campaigns that you are running. Research has shown that every time a potential Customer hears a negative comment about a product or service from a trusted friend or colleague it takes 5 new advertisements to overcome the impact of the negative comment, pushing up the cost of new Customer acquisition significantly. Unchecked negative 'Word of Mouth' will grow your Customer Experience Iceberg increasing the chances of your business ending up with a fate like the titanic!
Show Me the Money
So does 'Word of Mouth' impact in any significant way upon revenue growth and profitability for companies? The answer to the question posed above is a resounding YES and it probably has much more impact than you currently imagine.
There has been significant research done in the USA and the UK in companies across a range of industries, mapping revenue growth against Customer Advocacy Scores (or Net Promoter Scores), and studying the correlations.
Customer Advocacy Score is a measurement based on the number of positive 'Word of Mouth' recommendations against the number of negative 'Word of Mouth' comments with the results converted into a percentage with a range from (very bad) -100% up to 100% (excellent).
Research by the London School of Economics found that 'Word of Mouth' was found to predict sales growth for retail banks, car manufacturers, mobile phone networks and supermarkets in the UK. (need to validate the revenue base that supports the figures in bullet point 3 and 4 below, here). Their specific findings included:
- Companies enjoying higher levels of 'Word of Mouth' advocacy such as HSBC, Asda, Honda and O2, grew faster than their competitors
- In cash terms every 1 point increase in 'Word of Mouth' Customer Advocacy score correlated with an £8.82 million increase in sales (7 point increase in Advocacy correlated with a 1% increase in growth)
- A 1% reduction in negative word of mouth would lead to £24.84m additional revenues; every 2% reduction in negative word of mouth correlated to just under 1% growth
With company revenues and sales growth so closely tied to 'Word of Mouth' and Customer Advocacy, its little wonder that savvy companies are working to shrink their Customer Experience Icebergs.
Avoiding a fate like the Titanic
Knowing that there is an iceberg floating in the sea ahead of you is one thing; taking action to make sure it doesn't sink your business is another altogether, fortunately there are steps you can take to shrink your iceberg:
Step 1 - Know where you are starting from
Before you can navigate your way successfully on any journey you first need to know where you are starting from. Research has shown that most companies are oblivious to the experience that they deliver to their Customers.
To determine where your Company is currently positioned you will need to audit a cross section of your Customer base, capturing a definitive Customer Advocacy Score, this will give you an measuring point to start from so you can check you progress along the journey.
Step 2 - Target where you want to go and plot your course
Once you have established your current position it is time to set targets for your business that you want to reach and use these as management KPI's, tracking your performance throughout the year with regular Customer follow up audits, holding your team accountable when Customer Advocacy targets are not met.
Step 3 - Act on your Audit results
The businesses that have the best long term growth prospects are those who are prepared to make strategic decisions even if sometimes that means spending more money in the short term to improve the Customer experience.
Filed Under:
Tuesday, 14 July 2009 12:27 PM
Optimizing Beyond Google
How to retain website visitors
By Josh Wright
How much money has been spent on search engine optimization over the past 12 months? Millions? Billions? All well and good to pay to get visitors to your site but how good is it if they leave after only 10 - 20 seconds? How good is that return on investment? The real test of an optimized website is to retain the visitors to your site and actually achieve the objectives behind creating a site in the first place, to sell your products and services. Technology never ceases to amaze and with the introduction of web video following the success of YouTube, you can now bring your website to life.
The one thing missing from the internet has always been people, but now even that is passé. With some unique and creative strategies you can personalize your website and truly optimize it by talking your visitors through the "need to knows" and the "hard to finds". Teaming this up with some good search engine optimization (SEO) can ensure your website will attract and retain your visitors.
The latest in video for the web CLIVE Video (www.clivevideo.com), can certainly deliver what most of us are looking for to get cut-through and keep visitors happily engaged long enough to make a pre-sale or sale!!! There's a lot that goes into the successful implementation so having the right strategy is vitally important. For more information about optimizing your website contact us at
StratBiz Services.
for more information: www.clivevideo.com
Filed Under:
Tuesday, 14 July 2009 12:25 PM
WHAT COMPANIES ARE DOING RIGHT, WHILE THEY ARE DOING IT TOUGH.
CREATING BUSINESS STIMULUS
By DANITA MURDOCH
Recent conversations with senior managers found them all saying "times are tough, the market is dead, things have changed drastically and some said, things are never going to be the same" .
When asked what are you doing about it, many duplicated responses such as; riding it out, cutting costs, operating lean.
Ultimately, there are many businesses that are agitated, lost or adrift in the churning sea of economic decline and revenue depletion.
Sadly, there are some complacently waiting for the storm to subside or for some dramatic change to come around the corner. They may be waiting a long time.....
Australian GDP is predicted to slow to 0.5%, unemployment took a 0.5% decline in just one month and the analyst are forecasting continued economic decline through 2011-12. So what does all this mean? Are companies doing it right while they are doing it tough? For those that have gone astray or adrift, all is not lost, there are good prospects for change. There are many ways that companies can follow suit in line with the concept of 'stimulus'. Creating their own business stimuli should turn out the same results that many global governments are hoping for. The US,UK and Australian governments have successfully introduced stimulus packages with significant results over the past 6 months. So, if it is working to stimulate consumer spending then it should work for your business. After all, consumers classify as your customers.
How many companies are shifting their focus and talking to their customers? How can they change their businesses to respond to customer's changing needs and look for new ways to innovate in customer interactions? What is the stimulus customers are looking for? It sounds pretty simple doesn't it?
Successful companies are being smart whilst cutting costs and redirecting some of their savings into ways to learn more about customers and how to engage with them so that (a) they don't leave and (b) they can continue to acquire new ones.
During what the US are now calling Depression 1.0, many companies were floating on that sea of desperation and thousands failed. Companies like Ford lost their market positioning because they focused too internally on how to administer cost cutting through out their organizations and all 9,000 banks failed. However, companies like General Motors (history does not always repeat itself), Proctor and Gamble and Camel Cigarettes took their new positions as market leaders and found growth. They did this by focusing on their customers and responding to their changed needs and perceptions. It is important to be able to engage and connect with your customers on both emotive and practical levels.
Take McDonalds Corporation, who just released their first quarter results. Their return to shareholders was up 4.3% globally. Their net income rose $979.5 billion and the return to shareholders was $1.4 billion. You might say consumers are spending less and shifting their place of purchase and they are, but there is a lot of competition out there and McDonald's are doing it right while they are doing it tough. How are they doing it right? They invest in knowing their customers and how to respond to them during any economic change. They offer 'business stimulus' in the form of two for one offers, or FREE fries with that burger. They innovate in their menu and offers.
Tips to Create Business Stimulus
The secret formula is to understand what is going on with your customers at any given point in time. The only way to gain the understanding is to ask them. There are many ways to do this cost effectively.
- Technology has moved a long way in delivering new ways to engage with your customers or potential customers. I recommend to partner with good technology and software providers that can deliver effective programs economically.
- If you have a database then there are highly effective methodologies to employ and ensure that you are getting statistically significant information that can help turn your business from a drifting mass to a racing vessel. If you don't have a database then there are ways to retain and obtain them.
- Once you have the new and desired knowledge, you must then look for ways to innovate it. Sometimes it is easier for companies to cut through the mounds of information by outsourcing this to experts who can analyze and synthesize the information and bring fresh ideas and strategies into the business.
All this will cost, but the return on investment will create the needed stimuli for the business to sail forward and do the right thing while doing it tough!
for more information: www.stratbizservices.com
Filed Under:
Tuesday, 14 July 2009 1:48 AM
Social Media
What Businesses Need To Know
By Danita Murdoch
We've all heard or are hearing about Social Media, but do we really understand it and it's impacts for businesses? In essence it is a new way of communicating. In business speak it is a new channel to market. Before social media, companies would utilize PR firms, journalists and advertising agencies, now they simply socialize their information and allow it to circulate around the various social media networks. Some of the most popular at the moment are:
- Twitter
- Facebook
- LinkedIn
- Blogs
- YouTube
- Digg
- Delicious
- Flickr
Why is it so popular? Let's re-coin the old phrase of "its not what you know but who you know" to say "it's ALL about who you know and what they know".
There's a profoundly higher level of perception of truth when we hear something from someone who has nothing to gain by telling it. An example would be when an advertiser tells you how great a product is, you take it with a grain of salt. But when three of your good friends tell you how good it is, you listen.
Impacts for Businesses
The biggest misconception about Social Media is that it's a pastime. The fact is, that it is becoming a critical path to the success of your communication strategies and your website, just as pay per click (PPC) and search engine optimization (SEO). Trends are showing social media moving into the top 3 channels that can be used to promote business and one of the most cost effective.
These days, many consumers probably wouldn't trust a company that didn't have a website and soon many won't trust you if you're not in the Social Media arenas.
Why is this? (You may have asked the same question about websites). One of the greatest aspects of social media is it's transparency. It opens up dialogue between businesses and their customers. Not a one-way dialogue, but a very open engagement which sends messages that your businesses is approachable, has a personality and is open to their comments, concerns and needs. All this helps to build trust, confidence and loyalty.
Today the most common approach to seeking information is through Google. Tomorrow it could be that your potential customers will ask a question to their thousands of followers on Twitter or it' successor instead.
Successful businesses are not just investing in getting top rankings in Google, they are optimizing their websites and creating their own social media channels.
Social Media Tips for Businesses
Methodologies for using social media in the business world are still evolving, but here are a few tips:
- Respond to negative publicity about your company
- Announce breaking news in your industry
- Reach a substantially larger, more targeted audience than through radio, TV, yellow pages or direct mail marketing. And a lot more economically!
- Position yourself as an expert in your industry
- Conduct market research
- Network
Achieving ROI with Social Media
As with all new innovations of the Internet, social media is the buzzword and many businesses have jumped in and tried to get measurable results right away.
Lasting and rewarding relationships are not built in one conversation or in one day. It takes time and continued engagement to build the trust and gain the value. This is also true of building the return and rewards of social media. Some companies are succeeding and others have not had much luck. Some of the mistakes that businesses have made are:
Promoting before building the trusted network. Businesses should take time to research the networks, the audiences and the culture. Sending out a blast into a social network that you have not taken the time to acquaint yourself with is the same as getting up and promoting yourself at a function where you don know anyone and they don't know you. You won't get the same level of engagement, results or return you would get if there were people to introduce you who know and trust you and an audience that will be the type to interact with you.
Being Anti-social. Just like the bank, if you only make withdrawals and never make deposits you lose your line of credit. Once you have researched and chosen the social media channels that best suit your business requirements, be active. The whole objective behind the medium is to be social and to interact. Just as you are wanting to gain results from your media, so to do others. It is important to answer other blogs and answer your own.
Not being committed. It will take time and energy and you will need to dedicate resources to making it all work for you. If you do it right, then you will reap the rewards and if you do it wrong then the Twitterers, Bloggers and You-Tubers will definitely not waste any time in telling the world exactly what they think of you!
Spamming. Social media is primarily about the exchange of useful information, with subtle sales messages thrown in every once in a while. You cannot put links to your site in all the social media arenas if you're not giving people any reason to click on the link. You have to first provide informative, newsworthy or sometimes even entertaining content before you can expect anyone to want to click on your link to learn more about you or your business.
for more information: www.stratbizservices.com
Filed Under:
Tuesday, 14 July 2009 1:42 AM
Does your brand make an impression?
How to get the most from your advertising mix
By Brett Hawkins
The most important reason for advertising your brand is to make a positive and lasting impression on you current and prospective customers. But the advertising dilemma is always about how much to spend and what forms of advertising to use. Given the current economic climate successfully dealing with this issue has never been more important.
When considering your advertising mix there are so many choices - television, radio, print, outdoor, promotional products. How do you decide where to make your advertising investments?
For many marketers facing tight advertising budgets the most important measure of where to invest is the cost per impression. Simply put, the cost per impression is the measure of how much it costs for every impression your brand makes in the market. For example if you spend $100 on advertising and your brand makes a single impression on 100 people then the cost per impression is $1.
A recent study conducted in the USA by the Advertising Specialties Institute has yielded some very interesting results that just might make you rethink your advertising mix to take advantage of more cost effective forms of advertising.
According to the research the following costs per impression were assessed across various forms of advertising;
• Prime time TV - $0.019
• Syndicated TV - $0.006
• Cable TV - $0.007
• National Magazines - $0.033
• Sports Radio - $0.005
• Newspaper Ads - $0.019
• Billboards - $0.003
• Promotional Products - $0.004 (average)
Breaking promotional products down further the following results were found;
• Caps - $0.002
• Bags - $0.002
• Pens - $0.002
• Calendars - $0.003
• Desk & Office - $0.007
Do the above results surprise you? For many they do because many believe that TV or radio are the best ways to get brand impressions out to the masses. These results may cause you to rethink. The other thing to consider in advertising is just who is receiving the brand impression you're your advertising? Is it your target market? For TV & radio often the answer is no, as you have little control over who sees or hears your ad. Promotional products give you more control over who is receiving your message, ensuring a much high percentage of impressions with your target market. So promotional products not only give you great value for money, they also give you a way to target your advertising spend that TV & radio advertising do not.
Many companies are now employing promotional products more prominently in their advertising mix, claiming it is the secret ingredient that is taking their advertising results to a higher level of success.
for more information: www.actionaustralia.com.au
Filed Under:
Thursday, 2 July 2009 6:17 PM
One of the greatest aspects of social media is it's transparency. It opens up dialogue between businesses and their customers. Not a one-way dialogue, but a very open engagement which sends messages that your businesses is approachable, has a personality and is open to their comments, concerns and needs. All this helps to build trust, confidence and loyalty.
Today the most common approach to seeking information is through Google. Tomorrow it could be that your potential customers will ask a question to their thousands of followers on Twitter or it' successor instead.
Filed Under: Articles
Thursday, 2 July 2009 6:17 PM
'Word of Mouth' is a very powerful sales and marketing tool for an organization with its ability to either promote or negate significant facets of the marketing campaigns that you are running. Research has shown that every time a potential Customer hears a negative comment about a product or service from a trusted friend or colleague it takes 5 new advertisements to overcome the impact of the negative comment, pushing up the cost of new Customer acquisition significantly.
Unchecked negative 'Word of Mouth' will grow your Customer Experience Iceberg increasing the chances of your business ending up with a fate like the titanic!
Filed Under: Articles
Thursday, 2 July 2009 6:16 PM
There are many ways that companies can follow suit in line with the concept of 'stimulus'. Creating their own business stimuli should turn out the same results that many global governments are hoping for. The US,UK and Australian governments have successfully introduced stimulus packages with significant results over the past 6 months. So, if it is working to stimulate consumer spending then it should work for your business. After all, consumers classify as your customers.
How many companies are shifting their focus and talking to their customers? How can they change their businesses to respond to customer's changing needs and look for new ways to innovate in customer interactions? What is the stimulus customers are looking for? It sounds pretty simple doesn't it?
Filed Under: Articles