The Loyalty Effect

If the title of this post sounds familiar, that’s because it’s the title of a well-known book by Bain & Company fellow, Fred Reichheld. While I’m not planning on talking about Fred or his book, I do want to dig into the concept of customer loyalty — a topic that is more important to marketers now more than ever for two simple reasons:
  1. The current economy sucks.
  2. We now live in a “search and click” economy
I know I don’t need to say anything more about the first item other than the fact that many companies I’ve talked to are taking a 15-25% haircut on their marketing budgets in 2009. That means that all of a sudden, companies can’t afford to acquire as many customers as they could even six months ago. With fewer new customers comes lower revenues and more importantly, fewer new customers to replace those older customers that have moved on due to natural attrition.
Compounding the “economy” issue is the fact that with the mainstream adoption of Google and price comparison sites such as Shopzilla or Froogle, it’s now easier than ever to find the absolute lowest price for anything online. This “search and click” mentality has created a level of price transparency that has never before existed and thus has pushed price sensitivity to an all time high. Not only can you NOT afford to acquire enough new customers, you’re going to continue to lose your existing customers at an exponential rate moving forward.
Yes, that news is depressing but in the immortal words of singer, Prince, “I’m here to tell you… there’s something else.” No, not the afterworld but a solution of sorts called “social marketing”otherwise known as the convergence of engaging content, social tools and expert community oversight.
Before I tell you more about social marketing, let’s go back to the title of this post and dig into something as a marketer, you probably understand. That’s right, I’m talking about customer loyalty. Your company may pay lip service to the idea of customer loyalty. Who knows, you may even have a customer loyalty program (good on you if you do) but realistically, there’s a good chance that you’re not doing enough proactively to make your customers feel like they want to be loyal.
To be honest, author, Fred Reichheld, does an infinitely better job than I ever could of providing the formulas and case studies behind why loyalty matters. But for the sake of this post, this quote by fellow “loyalty” zealot, Jill Griffin, from one of her many articles on this topic sums up the power of customer loyalty succintly:

Keeping customers who are highly valued can greatly improve profit, Fred Reichheld says in his ground-breaking book, “The Loyalty Effect.” Presenting extensive data across a wide array of industries, Reichheld shows why as little as a 5 percent increase in retention can improve a company’s bottom-line profitability between 25 percent and 85 percent, depending on the industry.

Wow! Who wouldn’t want to increase their bottom line by 25-85%? All it takes is as little as a 5% increase in retention. The problem is, retaining customers these days just isn’t that easy. I made that point earlier when I mentioned the “search and click” phenomena (which in the spirit of full disclosure is the part of the title of Jill’s latest book).

Enter the concept of “social marketing.” And rather than try and “philosophize” to you on why creating engaging content and wrapping it with social tools can help you dramatically improve your customer loyalty (and thus your retention), I’m going to share some real numbers from a recent MarketingProfs case study based on their interview with director of web services at Sony Electronics, Mildred Center (disclosure: Sony is a client of my employer, Powered). Some of the results are quite eye opening:
  • Increasing consumer loyalty and advocacy: The [social marketing] program has a 90% user satisfaction rating, and 78% of users report that they are more likely to purchase a Sony product as a result of Backstage 101. Sony’s NPS (Net Promoter Score) for 2008 came in at 44%, with 59% of users classified as “promoters” who are likely to recommend Sony electronics to a family member, friend, or coworker. [This score stacks up against most companies whose NPS efficiency is in the 5-10% range.]

  • Providing increased value to the Sony Electronics business: The number of users claiming to have purchased a Sony Electronics product grew to 36% for the first half of 2008 (prior to the launch of Digital Darkroom andFrontline Community), compared with 20% for the first half of 2007, and Center reports that sales on the Sony Web site “continue to increase month over month.” In addition, survey completion is up 12% this year, providing Sony with valuable additional consumer insight. And retail syndication along with the addition of Backstage 101 to the company’s CyberScholar site are allowing Sony to better support its retail relationships.

This isn’t rocket science but it does run counterintuitive to the way most companies do business. While your company may provide “content,” it’s likely to be focused on your company’s products and services. [See recent post on Hubspot for another company doing a great job providing value-add content] That’s not to say that your site shouldn’t include that type of information, but that’s not always what customers care about.

In Sony’s case, they have tutorials on how to take better digital photos, irrespective of whether you use a Sony or a Canon camera. In addition to these tutorial (which you can ran
k, review and tag) Sony’s online communities allow members to upload their own photos for others to rate, discussion boards and other social features that allow photo enthusiasts to communicate with one another.

So what are you waiting for? As I mentioned in an earlier post, there is no better time than now to be thinking about engaging your customers with a goal of creating deeper loyalty and greater retention. It’s a new way of thinking but one that provides demonstrative results.

Is your company focused on customer loyalty and retention? If not, what’s stopping you?

Cross-posted on

How Important is Authenticity? Just Ask Bear Grylls.

A few weeks ago, my friend, Chris Brogan, who just happens to be a well-knownblogger and president of New Marketing Labs, wrote a paid for post for K-Mart. In spite of Chris’ up front disclosures about the relationship, a fire stormerupted in the blogosphere over the ethics of paid for content.

As you can probably imagine, this was a polarizing issue with one camp believing that it was okay for bloggers to get paid to write favorable posts as long as they were up front about their relationship with the company in question and the other insisting that mixing sponsorship and editorial bastardized the process, irrespective of disclosures. From an intellectual standpoint, I certainly can understand and respect the first camp’s position although my heart sits squarely in the second. [At at a minimum, you should read Chris' follow up post on the topic and decide for yourself.]

With that as a backdrop, I was surprised at how willing I was to overlook “authenticity” as a critical factor when it came to my television entertainment. In particular, I’m refrencing two shows on the Discovery Channel. The first titled, Man vs. Wild, where ex-British special forces macho man, Bear Grylls demonstrates survival in the most extreme locations. The second, Survivorman, featuring much more mundane and less heralded, Les Stroud, doing approximately the same. My wife and I quickly became addicted to first show last season as Bear demonstrated survival techniques in extreme environments such as the Alps, the Amazon and the Sahara Desert.

If you haven’t watched the show before, I’ve included a video clip below to show you just how captivating Bear can be. His fearless nature and “I’ll eat anything” mentality is contagious. I find myself thinking after every show, “I wonder if I could do that?” However, there turned out to be one catch. Not all of Bear’s extreme situations were truly “survival” worthy. In fact, the BBC wrote a fairly scathing piece spelling out a number of instances where Bear had either been assisted by his camera crew or even worse, stayed in a hotel vs. roughing it out in the wild.


After reading about some of the less-than-flattering press Bear received, I thought it might be time to check out rival survival guru, Les Stroud, on aptly named, Survivorman. Unlike Bear Grylls on Man vs. Wild, Les is hardcore about the authenticity of his treks out in the wild (he’s visited many of the same extreme climates as Grylls). In fact, he has chosen to eschew a camera crew and films everything himself. He also is dedicated to actually “surviving” out in the wild at nearly all costs. No hotels. No assistance. Just himself, his cameras and his knife.

That should make for entertaining television right? Unfortunately it doesn’t. Not for me anyway. The reason being that not a whole lot goes on during Survivorman other than a constant stream of self-wallowing by Les. I know this because I did a marathon four hour session over the holiday break with my family. At various points in the show, my 10 year old daughter was openly questioning the fact that Les, once again, was coming up empty handed in his attempts to actually catch something to eat. It turns out that Les is a lot better at enduring 5-6 days of no food (while incessantly complaining about light-headed and hungry he is) than he is at foraging for actual food (clip of Les below).


As you can imagine, this leaves me in an awful dilemma. I led off this post with the fact that while I was intellectually okay with the idea of paid for content, I had a hard time truly embracing this notion in my heart. So how is it that I would gravitate toward a guy that I know isn’t authentic (at least some of the time) while I do little to hide my disdain for a similar personality who is doing things by the book.

To help shed some light on my dilemma, I thought I might ask my Twitter network of nearly 4,000 to chime in. Surely they might feel the same way I did. The question I posed was, “Doing some research for a blog post I’m writing. It’s about authenticity. Any strong feelings either way RE Survivor Man VS Man vs. Wild?”

@Ninenty7: I know it is silly, but I don’t watch Bear’s show because he isn’t really out there in it.

@tallglassofmilk: Don’t watch either but overheard others saying one is for real b
y himself while the other pretends but has a crew. True?

@MikeLangford: This is the only situation ever where I’d say a guy named Les beats a guy named Bear. Survivor Man rules.

@dbcotton: Mixed feelings. Bear has better all around survivor skills, but Survivor Man is more realistic.

@LisaHoffman: Two of my 12 yo’s fave shows. He likes Bear better (me too) but says Survivorman is more authentic. M v. W more instructional

@tinycg: Survivorman is authentic and provides useful real tips.. Man v Wild is mostly staged and useful if you are ex-spec ops.

@SusanBratton: google “joe pine authenticity dishymix” for ideas for your blog post. Listen to the Podcast and/or read the transcripts. [Link to Susan's podcast with Joe is here]

@LisaHoffman: Bear is far more interesting because he engages the audience (sound familiar?) Survivorman is actually trying to survive, tho.

@peplau: @MikeLangford @tallglassofmilk Bear is also a bit of a fraud Afraid it’s more than just having a crew.

@tallglassofmilk: Well, authenticity certainly doesn’t guarantee entertainment, especially in TV. Probably why so much “reality” is faked.

@jamessumerlin: absolutely survivorman, big fan.

@m750: Bear is entertainment, Les Stroud is the real deal.

@chareich: think survivorman seems a little less contrived. Man v wild – probably eats big macs off camera

@davidkspencer: Survivorman is where it’s at. Feels more real, less polished. This clip is what did man v. wild in for me:

@ChrisKeef: missed the earlier tweet. I’m all about Survivorman, not Man vs. Wild. Les is far more genuine, raw and honest.

@ChrisKeef: I will agree that Bear is more ‘entertaining’, however Survivorman seems more organic. Easier to believe, I guess.

Not surprisingly, nearly everyone that responded validated what I suspected that they would i.e. authenticity was more important than entertainment value by a long shot. @m750 hit the nail on the head when he mentioned that “Bear is entertainment [but] Les Stroud is the real deal.”

As a marketer, this tells me that it doesn’t matter how slick, exciting or entertaining the content is that our company creates, at the end of the day our customers will want us to be authentic. For their sake though, I promise not to whine about how sore my fingers are after several hours of typing or how much of a caffeine headache I have as a result of my forgoing my morning coffee.

How about you? Are you being authentic in the way you communicate with your customers? Seems to me that there’s a reason why Josh Bernoff and Forrester’s customer survey shows that only 16% of people trust corporate blogs. Sounds like we all have a lot of work to do. Just ask Bear.

Originally posted on

Switching Names on Twitter

Having recently gone through a name change on Twitter, this post provides the quick and easy steps I went through for my friend @fairminder aka Jim Spencer.

The good news is that changing your name on Twitter is as easy as going in and editing the name you originally chose. For instance, I went from being “astrout” to “aaronstrout.” However, I wanted to keep a 2nd account with @astrout since I’ve got some equity in that name (and it’s posted in about 250 comments across many blogs).

So here goes:

1) Open up a second Twitter account with the new name you’re going to use (for instance, I did this with “aaronstrout”). NOTE: you’ll need to use a second e-mail since on Twitter you can only have one account per e-mail address.

2) Now change this address by adding a “1” or any digit after. For example, I changed mine from “aaronstrout” to “aaronstrout1″

3) Go back to your original twitter account and change your old name to the new name. For example, I changed from “astrout” to “aaronstrout.”

4) Now go back to your new account and change that to your old name. For example, I changed it from “aaronstrout1″ to “astrout.”

Mobile post sent by astrout using Utterlireply-count Replies.

Changing my Twitter Handle
I’ve been considering a change of Twitter handles from @astrout (my first initial plus my last name) to @AaronStrout (my full name) for a while now. Well today — after some careful consideration and feedback from my friends on Twitter, I pulled the trigger.

Interestingly enough, the crowd on Twitter was almost equally split. Folks like @kyleflaherty @ericglazer and @rockstarjen gave me the thumbs up. @AxiomPR @CathleenRitt and @93Octane said don’t do it.

So I thought I’d give it a try. So far so good!

Mobile post sent by astrout using Utterlireply-count Replies.

5 Reasons Why Your Company’s Website Sucks

Have I got your attention? I can already see you rolling up your sleeves, spoiling for a brawl. Either that or you’re sitting there nodding your head saying tell me something I don’t know. Either way, I guarantee that your site could use improving, even if you do think that it’s God’s gift to the Interwebs.

What makes me the expert you ask? For starters, I learned how to build websites 15 years ago at a small ad agency called Bombaci + Mitchell, right after the World Wide Web was born. Second, I worked at Fidelity Investments for nearly 10 years and for a good portion of my time there, I worked closely with our 200 person Web team to make it the financial juggernaut that it is today [ranked 2,278 according to Alexa]. And finally, I’ve worked in senior level marketing roles at two “socially” focused companies over the last three years – Mzinga for a majority of that time – and now Powered. Clients of Mzinga included, Disney, John Deere, Cisco and Ford Motor Company. At Powered, we help clients like Sony, HP, Motorola, iVillage and Atkins – not just by building world class online communities, but more importantly by helping them to create engaging content that helps them generate measurable ROI [see post on Social Marketing ROI: Ignore at your Own Risk]

If you’re still not convinced I’m qualified to tell you, feel free to tell me why I’m wrong (or what I’ve missed) in the comments. Otherwise, here are the five reasons your company’s web site sucks: 

  1. You spend WAY too much time talking about yourself. If you were on a date, (s)he would be looking at their watch by now. Try listening to your customers for once. Or even better, give them a way to talk to each other. An example of a company that’s good at NOT talking about itself all the time is
  2. Remember that blog you had your intern set up for you last summer? It hasn’t been updated in over three months (right after that same intern left coincidentally). If that’s the case, it’s either time to pull the plug (bad idea IMHO) or dedicate some of your or your team’s time to update it (much better idea).
  3. What? You’ve actually been updating your blog regularly? Well, that’s a step in the right direction. However, now go back and see reason number 1. I’ll bet you $100 that you talk too much about your company and why you’re great on your blog. See BestBuy CMO, Barry Judge’s blog, as an example of one that does a good job of delivering real value.
  4. Your Website is built to generate leads but not to teach your customers anything useful. Don’t get me wrong, you MUST have ways to generate leads (don’t let the “return on conversation” wonks tell you otherwise). However, try actually providing educational information on your site that can genuinely help your customers. See one of our client’s,Sony’s Backstage 101 community or better yet, see what Hubspot has done (see my recent post on this topic).
  5. You aren’t letting your customers give you open and honest feedback where other customers can see it. Yes, it hurts when people tell you that your products stink. But if they are telling you that, don’t you think you’ve got bigger problems? Considering the fact that the number one source of information is still word of mouth, people have a hard time trusting the good if there isn’t some “bad” or at least “honest” feedback sprinkled in. 
  6. Okay, I know only mentioned “five” things in the title of this post but I couldn’t resist adding this one in. STOP including the little uber-social widgets that let people tag, Stumble, Facebook and RSS your content unless you can look yourself in the mirror and state that you are not guilty of rules 1-5.

    If you do believe me and are willing to take the time to start chipping away at the list above, PLEASE make sure you stop and benchmark your site in its current state. The last thing you want to do it make your site and more engaging and productive and not get the credit for doing so. 

    What else am I missing? I’m sure there are another 100 reasons your company’s Website sucks. I just didn’t want to pile it on! ;) 

The Sixth Photo Meme and More Fun with Memes!

Ever heard the term, “you reap what you sew?” Well, I guess I deserve to be tagged in not just one, but TWO games of meme tag by friends, Gradon Tripp and Jennifer Leggio. This particular post is fulfilling on my obligation to Mr. Tripp. The other post will be fulfilled over on Facebook and is building on a meme that I tagged Jennifer with earlier i.e. 7 things you may or may not want to know about me. My task in this case is to come up with 25 things.

Gradon’s game of meme tage is a little bit simpler because all I have to do is pick the sixth picture on the sixth page of Flickr. It would have been nice if I could have picked a picture of my choosing – if so, I may have gone with something like below (I took it earlier this week up in Maine). It was 3 degrees that day and the wind was blowing 40-50 mph).

Instead, we got this one which is not one of my most exciting. It’s just a family picture from a recent holiday party up at my parent’s cabin. I guess that’s part of the fun of this meme tag is that who knows what you’ll get when you choose.
With that said, I’m off to the tagging part of this post. For my six, I’m going to tap:

Enjoy! Make sure you return the favor.