aquent/ama webcast: priming the pump: driving loyalty with targeting and positioning
DESCRIPTION
It’s no secret that in many categories brand loyalty is declining faster than the price of Facebook’s stock. Kevin Clancy believes poor targeting and a lack of consistent, compelling positioning are major reasons so many companies struggle with connecting customers to their brand. In this webcast, Kevin will outline a process that considers profit-related criteria such as retention potential, level of satisfaction with current brand, likelihood to try or usage of a competitor’s brand, and problem potential when assessing the value of current and prospective customers. He will also explain the relationship between the magnitude of the problem a brand solves for a customer and market response in the form of sales and advocacy.TRANSCRIPT
Priming the Pump: Driving Loyalty with Targeting and Positioning
It’s no secret that in many categories brand loyalty is declining faster than the price of Facebook’s stock. Kevin Clancy believes poor targeting and a lack of consistent, compelling positioning are major reasons so many companies struggle with connecting customers to their brand.
In this webcast, Kevin will outline a process that considers profit-related criteria such as retention potential, level of satisfaction with current brand, likelihood to try or usage of a competitor’s brand, and problem potential when assessing the value of current and prospective customers. He will also explain the relationship between the magnitude of the problem a brand solves for a customer and market response in the form of sales and advocacy.
November 15, 2012
Priming the Pump: Driving Loyalty with Targeting and Positioning
Kevin J. Clancy, Ph.D.ChairmanCopernicus Marketing Consulting and Research
““CMOs see customer loyalty as their top priority in CMOs see customer loyalty as their top priority in the digital era.the digital era.””
4
Net Promoter Scores—Allegedly the only metric a company needs
Score 9 -10s
Less 0 - 6s
= Net Promoter Score
5
Customer Loyalty is a Priority; With Good Reason….
The highest NPS recorded across all brands and industry sectors is 83%. The highest NPS recorded across all brands and industry sectors is 83%.
2012 Top Net Promoter Scores Across Measured Industries
“Companies with the most efficient growth engines operate with an NPS of 50 to 80. The average firm sputters along at an NPS of 5 to 10—in other words, their Promoters barely outnumber their Detractors. Many firms—and some entire industries—have negative Net Promoter Scores.”*
*Satmetrix
These Findings are Scary!
The lowest NPS recorded across all brands and industry sectors was -21%. The lowest NPS recorded across all brands and industry sectors was -21%.
-25% -20% -15% -10% -5% 0%
2012 Lowest Net Promoter Score Industry Benchmark
Mediacom
Wachovia
American Airlines
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Acquiring a new customer can cost 6 to 7
times more than retaining an
existing customer.
Over a 5 year period customer attrition rates could reach as high as 50% if customers are
ignored.
Businesses which boosted
customer retention rates by as little as
5% saw increases in their
profits ranging from 5% to a
whopping 95%
Marketers tend to agree that fostering loyalty among current customers and motivating advocacy behaviors is an untapped opportunity to improve profitability.Marketers tend to agree that fostering loyalty among current customers and motivating advocacy behaviors is an untapped opportunity to improve profitability.
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Have a lower likelihood of
switching away from you
A higher likelihood of
repeat purchases
A great chance they’ll enhance
marketing activities
Customers that express a high level of satisfaction….
Happiness is Contagious
9
The Real Ultimate Question
How do you integrate growing loyalty and advocacy into your marketing strategy to take advantage of this untapped opportunity?First PurchaseFirst Purchase
SatisfactionSatisfaction
Ongoing LoyaltyOngoing Loyalty
AdvocacyAdvocacy
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Give All Your Customers a New CarFind More of the Customers You WANT to Keep
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Businesses Benefit When They Keep PROFITABLE Customers
Our own research has repeatedly found the relationship between customer retention and profitability to be curvilinear because the costs of keeping some customers exceeds their value to the brand or business.
Our own research has repeatedly found the relationship between customer retention and profitability to be curvilinear because the costs of keeping some customers exceeds their value to the brand or business.
Profitability($ Sales Less Costs)
Customer Retention
0% 100%
High $$$
Low $
50%
Marketing Costs Per Loyal Customer*
Private Banking $50,000+ $12,100 $6,300 $3,500
Software Services 1,000+ 644 357 216
Automobile Dealerships 1,000+ 325 150 99
Utility Companies 600+ 417 132 75
Personal Computers 300+ 266 155 83
Credit Cards 200+ 102 66 39
Packaged Goods 60+ 43 20 9
UndifferentiatedMarket
AllProspects
A GoodTarget
An OptimalTarget
*These figures are based on a small number of cases in each product category and hence are meant to be illustrative rather than definitive.
A Profitable Customer Target Decreases the Cost of Acquisition AND Retention
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Get on the Right TrainFind More Profitable Customers, Particularly Those Predisposed to be Loyal to Your Brand
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“If you’re on the wrong train, every stop is the wrong stop.”“If you’re on the wrong train, every stop is the wrong stop.”
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A Better Approach: Profit-Directed Segmentation
Enter into taxonomic
analysis (e.g. neural network,
latent class, proprietary
cluster)
Evaluate different
solutions using statistical,
managerial and financial criteria
A systematic process should be employed from start to finish
Create Hundreds of Ways
to Segment
the Market•Advocacy•Attitudes and Values•Decision-making•Motivations•Brand Perceptions•Buying Behavior•Personality Traits•Media Profiles•Demographics•Lifestyles•Internet Behavior•Political Factors•Job Descriptions•Personal Optimism•Social Media Profiles
Undertake a projectable
survey and test all of the ways of segmenting
the marketagainst
rigorous, profit-and loyalty-
related criteria to identify key
drivers of value.
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10 Examples of Profit- and Loyalty-Related Criteria
• Current spending patterns• Price insensitivity• Pre-disposed to be loyal to the brand• Problems you can solve• Satisfaction with current brand• Switching potential• Personal influence• Social sharing propensity and power• Advocacy for your brand• Inexpensive to reach and engage
All can be used in algorithms to predict profitability for each respondent in a survey and every target group identified
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% of AllProspects
% ofCurrent Revenues
% of Potential Profits
ROIIndex
34
217
100
44
Young Up and Comers
SuperMoms
Over 50’s
Careful Spenders
Identify Financially Optimal Market Targets For a New American Express Payment Vehicle For Women
18
Bring Back That Lovin’ Feelin’Connect Customers to Your Brand
19
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The Quest for the Emotional Connection
Only 25% on average reported even a “moderate” emotional connection to a brand
Less than 10% on average claim a “strong” connection
An emotional connection is more readily formed in certain product categories
– Colas (39%)– Beer (37%)– PCs (33%)– Coffee (31%)
Copernicus and Greenfield online surveyed consumers on their “personal or emotional connection with their brand” across a variety of categories
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I can’t identify emotionally with any brand of anything…
Brands build a connection with customers by solving their problems with problems or services.
The bigger the problem a brand solves, the bigger the emotional—and market—response.
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Magnitude of the Problem
0
50
100
Effect of Implementing a Marketing Solution
None Small Moderate Large Enormous
Zero Effect
NegligibleEffect
Modest
Effect
Take Significant
Share
Crush Competitors
The More Serious a Customer’s Problems, the Bigger the Customer ‘s Response
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Traditional “importance” ratings overstate rational and pro-social responses “Derived importance” is interesting, but also has flaws (such as failing to detect
the influence of price-of-entry features) Employ a unique three-dimensional approach
“Dream Detection”
Self-reported in the questionnaire on an 11-point
desirability scale
“Problem Detection”
Desires versus satisfaction with brand used most often
“Brand Preference Detection”
Regression of brand ratings on brand preference
Motivating PowerWeighted Average of the Three Measures
(Computed for each attribute / benefit for each respondent)A far better approach to measuring problems than any conventional methodology
A state-of-the-science way to measure buyer problems
Positioning Strategy – “Motivating Power”
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Motivating Power of Attribute/Benefit
Motivating Power of Attribute/Benefit
Brand Strategy Matrix
Brand Strategy Matrix
We are Superior We’re InferiorAcceptable, But Could Be Better
Excellent: Could Not Be better Unacceptable
Perceptions of Our Brand versus CompetitorPerceptions of Our Brand versus Competitor
11
55
2244
6633
77
Value of Strategy ranked from highest to lowest11 77
We’re Looking for a Positioning that is: Highly Motivating to our Target; Our Brand Has It; The Enemy Doesn’t
Motivating Power of Attribute/Benefit
Motivating Power of Attribute/Benefit
Brand Strategy Matrix
Brand Strategy Matrix
We are Superior We’re InferiorAcceptable, But Could Be Better
Excellent: Could Not Be better Unacceptable
Perceptions of AMEX versus MASTERCARDPerceptions of AMEX versus MASTERCARD
11
55
2244
6633
77
Value of Strategy ranked from highest to lowest11 77
Illustrative BSM for an American Express Payment Vehicle for Women
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An example of poor positioning....An example of poor positioning....
Motivating Power of Attribute/Benefit
Motivating Power of Attribute/Benefit
Brand Strategy Matrix
Brand Strategy Matrix
We are Superior We’re InferiorAcceptable, But Could Be Better
Excellent: Could Not Be better Unacceptable
Perceptions of AMEX versus MASTERCARDPerceptions of AMEX versus MASTERCARD
11
55
2244
6633
77
Value of Strategy ranked from highest to lowest11 77
Illustrative BSM for Coors Beer
Don’t Just Fill the Funnel—Use Your Marketing Strategy to Prime the Pump
Start building brand loyalty from the very beginning of the marketing process.
• Who are you targeting?– Are they profitable? – Are they predisposed to stay loyal to your brand?
• How are you motivating them to love your brand?– How big a problem is your brand, product, or service solving for your target?– How feasible is it to deliver on your positioning strategy in a way that will foster
loyalty?– Are you working hard to build an emotional connection between your customers and
your brand?
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Questions?
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Boston, MA / (617) 449.4200Norwalk, CT / (203) 831.2370 http://twitter.com/marketingfrayercopernicusmarketing.com
Thank you!