• Target has been liked on Facebook by 11 million people.
• Walmart by 15 million.
• McDonald’s by 19 Million.
• Starbuck’s by 29 million.
• Coca-Cola (the reigning leader) by a whopping 41 million people!

Facebook has posted remarkable performance in its relatively brief history. More than 40 percent of American adults log in to the site at least once a week–to share news, personal observations, photos and more. Worldwide, Facebook’s following includes almost a billion people (900 million to be exact)! Facebook’s revenue grew from $777 million in 2009 to $3.7 billion last year. And in the first quarter of 2012 it was more than $1 billion.

How Did These Companies Achieve These Levels and to What Avail?

So these five corporations are posting impressive numbers.  But, how are they achieved?  High “like scores” are, no doubt, the result of a number of factors.  Strong brand familiarity is perhaps the most important – built (independent of Facebook) by spending enormous sums of money in advertising and sales promotion over countless years.  Further, research suggests that having a generally ‘likeable image’ is important, but likes are also achieved by marketers smart enough to offer a variety of compelling discounts, coupons, sample products, and interesting information on their Facebook pages.  In other words, driving traffic with meaningful, relevant rewards.

Are Likes a Matter of Quantity, Quality, or Both?

Just like all marketing activities, the challenge isn’t just to get consumers to visit once, but rather success is all about repeat behavior and true engagement. That’s where success with the social media gets even tougher.  According to Prof. Tina McCorkindale of Appalachian State University, even among 18- to 29-year-olds (“the Facebook generation”), corporate America hasn’t achieved a real success story.  McCorkindale’s research finds that while 75% of that segment said that they had liked a profit or non-profit organization on Facebook, “69% said that once they liked the organization, they rarely or never returned to the corporate page”. In addition, “only 15% of the respondents said they visited organizations’ fan pages on a weekly basis”.   Even more damning, in a recent Associated Press-CNBC poll, just under half of adults (46 percent) predict a short timeline for Facebook, while 43 percent say it has staying power.

The Opportunity

So, are corporate Facebook pages a waste of time and money?  Probably not.  First of all, it shouldn’t be entirely about numbers.  Smaller numbers of better recruited “liking customers” could prove quite valuable. Second, even if just 15% regularly re-visit McDonald’s Facebook page that’s still 2.85 million weekly visitors!  Third, most corporations have yet to devote the resources or commitment to building a social media fan base that Coca Cola or Starbucks have.  Fourth, no matter the number of likes one has, there can be real value in getting customers to raise their hands to show they care about one’s brand.  While most corporations haven’t yet thought this far ahead, among those customers who have liked a brand are some of the best potential customer advocates a brand could hope for.  There’s an opportunity to prepare them to more effectively advocate the brand.

Doug Pruden and I have written extensively about how corporations ought to be identifying customers of theirs who are passionate about their brands and further nurturing them.  We call the process Identifying and Arming Everyday Advocates.

(After writing this entry I noted, with interest, that General Motors announced today their intentions to moderate their commitment to Facebook.  The auto manufacturer said Tuesday that it is “reassessing” its spending on Facebook advertising — about $10 million annually — but that it “remains committed” to the social network as part of “an aggressive content strategy with all our products and brands.”  In other words, GM will not pay Facebook for ads but says it will continue to maintain content, for which Facebook doesn’t collect revenue. )

 The Program in Brief

Let’s quickly review the “program”….  For every dollar a Loyallist spends (in-store, online or at an outlet) he or she receives one point.  But if they use a Bloomingdale’s credit card for the purchase, they receive three points per dollar spent.  And now the benefit: for every 5,000 points accumulated the Loyallist receives a Reward Card worth 25 dollars!  If you’re one of Bloomingdale’s best customers (spending $3500 or more annually) you’re bumped up to receive four points per dollar spent and you’re also issued a Bloomingdale’s Reserve card.

So, has Bloomingdale’s truly discovered loyalty or is this a missed step?  It’s actually not a loyalty program at all!  What it is is a simple frequency program.  Just as your local donut shop offers your 13^th dozen free, Bloomingdale’s is attempting to stimulate repeat purchase with a discount coupon.  There are at least two serious flaws in this retailer’s thinking.  First, repeat purchasing isn’t loyalty.  Loyalty is something far more…  It’s the emotional glue that “sticks” customers to a brand and the emotional passion that motivates customers to go out of their way to endorse and recommend a brand or product.  Second, I’ve repeatedly chastised marketers who “reward” their best customers with discounts.  That’s simply undermining their own bottomline!  It has little impact on increasing overall spending and discounts the dollars already being spent!  In addition, it destroys part of the brand’s cachet by suggesting its merchandise was overpriced to begin with!

 What Were They Thinking?

Bloomingdale’s COO, Tony Spring, misguidedly stated, “Through this new loyalty rewards program, Bloomingdale’s is reinforcing our commitment to our customers.  We want to recognize those shoppers who continue to be loyal to our brand and engage new shoppers by offering a very distinctive program.”  But I’d counter: there’s no immediate outreach to this program (since a customer has to register to participate; it’s not distinctive (even your pretzel dealer will give you a punch card); and it’s a seemingly frivolous ‘reward’ (only ½  a percent discount.  Consider that Kohl’s Cash offers that retailer’s shoppers a $10 coupon for every $50 spent (when the program is in effect).

And so, not only is Bloomingdale’s late to the game, but they don’t appear to really understand loyalty, if that’s what this program is truly about.  Neiman Marcus (a much more direct competitor than Kohls) initiated a much more effective loyalty program more than twenty years ago with the creation of its Inner Circle.  The Inner Circle is all about recognition, a motivator that truly speaks to the caliber of shopper Neiman Marcus wants to retain.  The status and appreciation conferred by the perks of the program are likely to be much more effective in strengthening customers’ affiliation with the store.  Rather than discounting high-value customers’ purchases (with discount coupons) the Inner Circle is all about recognition: special shopping nights; privileged treatment as a repeat shopper; even courtesy valet parking!

So, to sum up; Bloomingdale’s Loyallist program – an embarrassment to a statured brand; the Neiman Marcus Inner Circle a true loyalty-builder.  No doubt some frequency agency gave Bloomingdale’s a pitch…too bad Bloomingdale’s didn’t retain a loyalty consultant….

While some pessimistically greet the remarkable explosion of information on the internet with despair, Rosenbaum believes users are developing their own ‘filters’; ways and mechanisms by which to sort out useful and trustworthy information from the surrounding “noise” (useless or untrustworthy messages).  People performing some of this filtering – through their blogs, on their websites, through emails or via Twitter postings, to name just a few – he labels curators.  The sorting process they’re developing: curation.  But, it’s far more dynamic than the sterile curating activities museum directors and librarians have performed over the ages.  Rosenbaum’s curators interact with information, adding value through their sorting and even editing and amplification.

Crowd-Sourced vs. Corporate Communications

Beyond the mechanics of how it occurs, curation marks a shift in power.  Crowd-sourced information (on the internet) gives everyday people power previously held by only the largest communication companies.  (Andrew Blau has coined this power a “massive megaphone”.)  However, “crowd content” without curation tends to drive the thoughtful voices to the edges and gives overdue emphasis to the loudest and most outrageous ones.  But if a “human editorial layer” inserts itself, civility, accuracy and thought can regulate and transpose the information making it more generally useful.

Rosenbaum defines curation as the selection, organization, presentation and evolution of content, information or data.  So curation is about the sorting out (from the morass of information available) items pertinent to a particular “editor’s” interests.  Curators accumulate, prioritize and highlight the most important articles in an interest area. In this way, order and value are added to an otherwise useless agglomeration of information through the selection and even active editing (qualitative organizing) of the material.  [I’ve recently noted a new Target TV commercial:  “The shops we loved at Target, collected and curated for you”.]

Which Curators Will You Trust?

And so, individuals are stepping forward in various channels to undertake their roles as curators.  This is an interesting twist to the prevalent drive towards simplification and direct communication because it inserts an intermediary between the creator of the message and the consumer.  But, Rosenbaum postulates that consumers will embrace the “complication of” the middleman for the value he/she adds…  In my parlance, this curator could, in many cases, be the known and trusted everyday advocate - an individual I’ve frequently suggested brands should identify to help spread favorable word of mouth about themselves.

But more basically, I’m perplexed for two additional reasons.  First, mainstream marketing was impacted in the early 1990’s with several books on relationship marketing, including my own, Aftermarketing - first published in 1992.  Today there are over 2,000 books on relationship marketing.  This collection suggests relationship marketing is not only beyond its “dawn” – but quite likely in its “mid-day”!  Second, I’m a huge believer in the value of relationship marketing because it builds positive word of mouth and stimulates referrals.  But, I also see many product categories in which the importance of advertising, product positioning, promotions, etc. remains critically important.

Think about it.  How often do most people strike up a conversation about or ask someone for a recommendation regarding categories like the following:

Toothpaste                                       Laundry Detergent                       Orange Juice

Breakfast Cereal                             Life Insurance                                Frozen Vegetables

Magazines                                        Furniture                                         Gasoline

Not Quite Time to Bury Traditional Marketing Tools

There are hundreds of product categories, generating billions of dollars of sales each year, which are either too private, too insignificant in price, or simply just not considered meaningful enough to prompt recommendation-giving or searching for endorsements.  Add the thousands of new products being brought to market each year that need to reach a critical mass of loyal customers – before referrals can really get under way – and you begin to recognize that advertising, promotional support, signage, couponing and many other forms of traditional marketing won’t be going away anytime soon.

New Ways to Communicate

On the other hand, would you consider staying at a hotel, booking a dinner reservation, or buying a car, a computer, or a smart phone today without tapping into private or public word of mouth?  Probably not.  Understanding this, Ad Age does make a creative suggestion.  It suggests that the traditional center of distributing marketing messages – the ad agency media department – has to be redefined.  No longer are the traditional media (TV, radio, magazines, and newspapers) the only way to spread word about one’s brand.  In the world of relationship marketing, it’s virtually “everything one does and delivers that carries the brand’s message forward”.  The challenge for agency media departments will be to adapt to impacting content on the newer social media.  And this will be foreign territory.  There aren’t any rate cards; there aren’t specific ad formats.  Success will be measured in the ability to seed and stimulate personal discussions about clients’ products and services.

This is where true relationship marketing has to come in.  But, as Ad Age has editorially dismissed the traditional tools of brand marketing (positioning, preemption and the unique selling proposition), it has failed to offer a replacement set of tools.  In fact, one of the troubling aspects of the whole relationship marketing ‘movement’ has been its very obvious lack of universally shared strategies.  Most practitioners, myself included, appear to have some processes in mind, but the marketing community has yet to agree on a core set.  So, while I believe it’s historically incorrect to characterize today’s marketplace as the “dawn of relationship marketing”, a good case could be made for today as the starting point for the development and sharing of a universal set of tools for relationship marketing.  I’ll have more to say about that in the future.

The recent growth of the public social media (Facebook, Twitter, YouTube, etc.) has seemingly “revolutionized” the monitoring process.  Customers now can voluntarily express their satisfactions and dissatisfactions with business organizations.  This “posting” appears to alleviate companies from having to actively pursue and collect them. The reaction from companies has been to greet the opinions posted on the social media as a “gift”….one that’s free; without obligation; and captured without any formal marketing research.  But while the accessibility of customers’ opinions has greatly improved, this access is not without its own problems.

Problems with the New Customer Feedback Process

The first problem is the visibility of customer feedback logged in the public social media. When negative word of mouth is posted an infinite number of other customers are impacted.  A personal issue suddenly becomes public.  A second problem is customers’ expectations.  Recent studies, including one from Conversocial, remind us that when customers post a question or a problem they expect a response – and they expect it fast. Yet more than 60% aren’t getting a response because proper monitoring of and timely response to customers’ unhappy posts has proven more expensive than imagined.  Companies either haven’t put the needed response-processes in place, or have deferred from the effort based on its costs.

But, a more important issue (one reminiscent of the criticisms leveled at the traditional marketing research initiatives) is just how representative are publically posted opinions (word of mouth)?  In my work at Customer Experience Partners, we’ve repeatedly cautioned that public word of mouth is only a fraction of total word of mouth.  A current study from Microsoft reiterates this message with the finding that 90% of word of mouth takes place offline in what we call the private social media (text messaging, phone calls, emails, and face-to-face conversations).  Is the tonality and are the themes conveyed in the private social media representative of those in public social media?  I’m willing to bet there are some considerable differences – which means that audits of only the public social media are probably misleading corporate initiatives and responses!

The Obligation

Marketers really owe it to their brands to monitor total word of mouth.  That means auditing the public social media and conducting some marketing research to sample private social media.  Those who aren’t so thorough: 1) can’t identify the key strengths they could be leveraging and critical problems they need to fix,  2) don’t really understand whether word of mouth is helping their business grow or ‘poisoning the well’ for the future,  3) can’t know how their word of mouth compares to the word of mouth of their competitors, and  4) lack a process to quantify whether the money they are spending to stimulate additional word of mouth is delivering positive results.  But they could.

The author claimed that traditional marketing research for box office forecasts (using telephone interviews and surveys) is passé. He argued that measurement of online clicks is more accurate today, citing the ability to track trailer-viewing and online sharing through emails, Facebook, Twitter and personal blogs. A film like The Hunger Games, targeted at young adults is even more prone to this mode of interaction, the author suggested. Online data showed Hunger accumulating 89.4million views (10 days prior to release). But compared to the first Twilight episode (at 98.5million views) and an early Harry Potter sequel (136.2million views) the analyst concluded Hunger was trailing.

A statistical model was compiled. The model’s components included measures of online activity: content sharing; fan-made trailers; other UGC; and trailer mashups. Data for several other teen-oriented films (including the Twilight film and the early Potter movie among others) was fed into the model. With a strong statistical fit, the model predicted a $70million take for Hunger (bumped up to $80million because Hunger had an advantage of opening in 300 IMAX screens – with higher ticket prices).

On Monday, March 26, Hunger’s actual box office figures were released; $152.5million! Hunger became the most successful non-sequel movie opening ever! And so, the projection based on online activity underrepresented Hunger’s actual ability to stimulate ticket sales. This documented event validates a message I’ve continued to send: while monitoring online activity can provide some insights into consumers’ feelings and intentions, there is still substantial influence occurring via traditional, personal offline communication. In the case of Hunger, traditional face-to-face communications and interactions obviously supplanted what at least one “expert” thought he saw lacking in the online activity surrounding the movie’s release.

I’ve tried to alert the marketing community to the fact that public word of mouth is only a fraction of total word of mouth. A current study from Microsoft reiterates this message with a finding that 90% of word of mouth takes place offline in what I call the private social media (text messaging, phone calls, emails, and face-to-face conversations). Can the interests and passion posted in the private social media fully represent the feelings being communicated in the private social media? Obviously in Hunger’s situation, a resounding “NO”. The only acceptable conclusion; audits of only the public social media are likely to be misleading.

Marketers really owe it to their brands to monitor total word of mouth. That means auditing the public (online) social media but also conducting some marketing research to sample private (offline) social media activity. Check out my article (written with Doug Pruden) “Controlling the Grapevine” in July/August 2004 Marketing Management for more ideas on how to assess the volume and valence of word of mouth.

And so Clint Eastwood’s “It’s Halftime America” can hardly be expected to be viewed in unequivocal terms…it, too, is subject to the same selective interpretation as all other communications.  Consequently some Democrats are welcoming Eastwood into their company, seeing the commercial as an endorsement of President Obama’s leadership.  Many Republicans (apparently, correctly) viewed the commercial as a common call to action… but other more rabid Republicans are characterizing Eastwood as a turncoat and traitor.

Unfortunately human nature intercedes in the way we listen to messages we’re presented with.  People tend to interpret things in a manner that’s consistent with their own values and beliefs.  That’s why it’s so difficult to change opinions.  Messages inconsistent with current beliefs tend either to be ignored or selectively interpreted so as not to be as challenging as they may have been intended.

Too bad we can’t just all hear the real message, let’s pull together America, we can reclaim our role as a world economic leader…it’ll just take hard work and coming together…setting aside political bickering for the greater good.

The business community has largely bought into the strategy of customer retention.  But, as in so many movements, the advice has been adopted in a wholesale manner; special considerations are over-looked.   In my book,  Loyalty Myths I placed substantial qualification on the urge of many marketers to retain all of their customers by reminding them that not all customers are profitable!

In Loyalty Myths, I suggest that businesses have three types of customers: Breakeven Customers (those customers who neither contribute to nor drain from the bottom line); Costly Customers (those who either demand so much special treatment or so abuse privileges offered them that they ultimately end up costing a business more than they contribute); and Desired Customers (customers who, because of their constancy and buying volume, contribute significantly to the bottom line).

While most businesspeople will casually acknowledge the existence of these three customer-types, few actually manage their businesses accordingly.  Not many organizations have actually scored their customers into these three categories.  But, if an organization does so, two important learnings emerge.

The first learning, the “macro perspective”, is an awareness of the “health” of one’s customerbase.  Most customerbases will be predominated by Breakeven Customers.  Desired and Costly Customers will each be in the minority – with hopefully more Desired than Costly.  If one has more Costly Customers than Desired Customers, the first order of business has to be to reduce the number of Costly Customers – either by “firing” them (“polite-relocation” is best) or by converting them into  Breakeven Customers – at the very least.  Experience dictates that a business’s customers will be approximately allocated as follows: about 40-60% will be Breakeven, with ideally no more than 10-15% as Costly, and hopefully as many as 25-35% as Desired Customers.

The second learning, the “micro perspective”, identifies specific customers who are in each category.  This allows treating customers differentially according to their value or profitability to the business.  The reason so many retention programs fail is that they’ve overlooked identifying their most valuable customers (the only ones who should be retained) and instead direct resources to all customers!

With the celebration of Christmas and Hanukkah, we all become a bit more sensitive to how we’re treating others and how we’re being treated in return.   This awareness is usually generalized to our customers as well.  We become more conscious of treating customers fairly and providing them a quality product and/or superb service.  In short, either consciously or unconsciously we may goal to delight our customers – in the spirit of the season.  This awareness also serves as a good reminder of how we ought to be conducting business the remaining 51 weeks of the year!

I hope this heightened sensitivity to goodwill transcends the Holiday season and becomes an accepted component of your organization’s mission statement.  And so I wish each of you not just a satisfying or a Merry Christmas, but a truly Delightful holiday; one, that because of your delight, you’ll remember for many years to come.

The top five reasons customers defect?  Delivery/installation/performance issues; improper complaint handling; price/cost; dissatisfaction with organizational/procedural changes; and feeling uncared for and unwanted.  Surveys on the relative importance of these causes differ, but uniformly service issues are found to be among the most important.

Strategic Decisions

To efficiently win back customers several decisions have to be made.  Foremost among these is which customers should be targeted?  Not every lost customer will have been profitable in their first lifetime.  Winning back unprofitable customers would be ‘throwing good money after bad’.  The low frequency, low share of wallet customer demanding excessive customer service is one obvious example.  But there are others including the spinner who flips from your brand to your competitor (and back) taking advantage of every promotion and offer without ever staying long enough to let a brand earn a profit.  Boy, do they love those winback offers!

Secondly you have to consider if the reason for the customer’s original departure has been fixed.  But don’t always assume it’s a performance problem.  Curiously we find many times defection is based on misperception or misunderstanding – a communications problem.  Either performance needs to be improved or your communication of performance needs to be sharpened.  Without an exit interview or a good database, you may not know the major causes of defection or which customers defected for which reasons – complicating targeting.

Search for Root Causes

Assuming you know the key disappointments, you need to determine how they can be most efficiently fixed.  Considering service issues, “poor service” can mean lots of different things. Getting an objective measure of the total customer experience and where customers see key failures is a first necessary step.  Some problems come from poorly motivated employees (poorly trained and poorly managed).  Other cases may be the result of not setting proper expectations among customers, or poorly communicating how customers can get the most out of your product/service through correct usage.  Until or unless the specific problem is identified and corrected it’s hardly worth your creating a winback initiative.