necessary alterations

Three top marketing experts from The Principal Financial Group, Occam Networks, and United Way of America share their insights on:

Necessary Alterations:Tailoring Your

Enterprise LoyaltyStrategy

Mary O’KeefeSenior Vice President and CMO, The Principal Financial Group

Russell J. SharerVice President, Marketing, Occam Networks

Cynthia RoundExecutive Vice President, Brand Leadership

United Way of America

Driving customer loyalty begins with getting to know your customers — not as a whole, but as individuals, using mar-ket segmentation to drive a personalized understanding of

customer needs and desires. Marketing leaders must engage new tech-nologies to increase two-way communication and gather deeper andmore complete customer data. Take a proactive approach to build-ing customer relationships, and ground everything in a culture of ser-vice and engagement. The marketing department must actively builda company culture of service, where every employee is willing to goabove and beyond to tailor the customer experience. This culturewill increase customer interaction with the company, enhance yourvalue proposition, and plant the deep customer satisfaction that growsinto long-term customer loyalty. ■

in partnership with Aspatore Books

™ExecBlueprints

www.execblueprints.com

Action Points

I. Understanding Your CustomerThe first building block in a customerloyalty strategy is to segment your targetaudiences in order to understand them.

II. The Bottom LineCustomer satisfaction is an easilymeasurable and monitored variable.

III. Must-Haves for Marketing forLoyaltyMarketing leaders should focus on aservice-oriented culture, relationshipbuilding, personalized communication,and a culture of ambassadorship.

IV. The Golden Rules for Creating ActiveConsumersOpen venues for customer interaction.Build your social network. Give yourcustomers customized self-help tools.

V. Essential Take-AwaysCustomer loyalty is a byproduct of aculture of service and customer-centricity. Marketing for loyalty shouldfocus on relationship building andinteraction.

Contents

About the Authors . . . . . . . . . . . . . . . . . . . . p.2

Mary O’Keefe . . . . . . . . . . . . . . . . . . . . . . . . p.3

Russell J. Sharer . . . . . . . . . . . . . . . . . . . . . p.6

Cynthia Round . . . . . . . . . . . . . . . . . . . . . . p.10

Ideas to Build Upon & Action Points . . . p.12

Copyright 2008 Books24x7®. All rights reserved. Reproduction in whole or part is prohibited without the prior written permission of the publisher. This ExecBlueprints™ document was published as part of a subscription based service. ExecBlueprints,a Referenceware® collection from Books24x7, provides concise, easy to absorb, practical information to help organizations address pressing strategic issues. For more information about ExecBlueprints, please visit www.execblueprints.com.

© Books24x7, 2008 About the Authors ExecBlueprints 2

About the Authors

Mary A. O’Keefe is senior vicepresident and chief marketingofficer with The Principal

Financial Group. Ms. O’Keefe hasresponsibility for The Principal’s brand-ing and marketing strategy, all internaland external communications, local andnational community involvement and char-itable giving, as well as strategic planningand development for the organization.

The Principal Financial Group is aleader in offering businesses, individuals,and institutional clients a wide range offinancial products and services, includingretirement and investment services, lifeand health insurance, and banking,through its diverse family of financialservices companies. A member of the

Fortune 500, the Principal FinancialGroup has $311.1 billion in assets undermanagement and serves some 18.6 mil-lion customers worldwide from offices inAsia, Australia, Europe, Latin America,and the United States.

Prior to joining The Principal in 1990,she worked in a variety of economicdevelopment and marketing roles for thestate of Iowa. Ms. O’Keefe is very activein local and national boards, and community and industry endeavorsincluding: the Greater Des MoinesPartnership, Greater Des Moines Com-munity Foundation Board, United Wayof Central Iowa, National PublicRelations Society of America AuditCommittee, and the American Council

of Life Insurance Public RelationsCommittee.

She has been recognized as a Womanof Influence and Best Female BusinessLeader by the Des Moines Business Re-cord, featured in the book Women WhoMean Business: Success Stories of WomenOver Forty by A. Mikaelian, and featuredas one of Ad Age Magazine’s “Women toWatch.”

A native of Chicago, O’Keefe earnedher bachelor’s degree from NorthernIllinois University and began her careeras a social worker in Mason City, Iowa.


☛ Read Mary’s insights on Page 3

Russell J. Sharer, currently vice pres-ident of marketing, has served asan officer at Occam Networks

since July 2000. From October 2003 toOctober 2006 he served as vice presidentof sales and marketing, and from July2000 to October 2003 as vice presidentof marketing and business development.

From November 1998 until July2000, Mr. Sharer served in variouscapacities at Ericsson Datacom Inc., a net-working equipment manufacturer, includ-ing acting vice president of marketing,vice president of product marketing, anddirector of product marketing.

Previous employers include Xircom,Rockwell Communications Systems, andCommunications Machinery Corporation.

Mr. Sharer received a B.S. in industrialand systems engineering from CaliforniaPolytechnic State University.


☛ Read Russell’s insights on Page 6

As executive vice president of brandleadership at the national organ-ization of United Way, Cynthia

Round is responsible for marketing,advertising, public relations, the NFLpartnership, national Web site, and fieldcommunications to 1300 local UnitedWays. She assumed her current positionin October 2002 after more than 20 yearsof building and marketing corporatebrands.

Ms. Round began her career at theProcter & Gamble Company in brandmanagement, where she held a variety ofmarketing positions over seven years,including a two-year international assign-ment in Rome, Italy.

When she returned to the UnitedStates, Ms. Round joined Ogilvy &Mather Advertising, where she becamesenior partner and executive group

director. During her 15 years with O&MNew York, Ms. Round helped create,build, and renovate domestic and globalbrands in categories ranging from pack-aged goods and high tech to fashion andentertainment. She led account teams forsuch clients as General Foods, AT&T,Unilever, Maidenform, Pepperidge Farms,Kimberly Clark, and U.S. SatelliteBroadcasting.

Ms. Round started an independentbrand consulting practice — specializingin public sector and non-profit organi-zations — in September 1998, andadvised such diverse organizations asSoho Repertory Theatre, Delaware StateCouncil for the Arts, Centers for DiseaseControl and Prevention, and Presbyte-rian College.

As an expert in global marketing andbranding, Ms. Round has guest-lectured

on college campuses across the country,including Dartmouth, Middlebury, Smith,Loyola, Emerson, Hunter, University ofMinnesota, and Brigham YoungUniversity.

She is on the board of directors forSoho Repertory Theatre and theAdvertising Educational Foundation, is amember of the Advisory Committee ofThe Advertising Council, and sits on theMarketing Council for the WildlifeConservation Society.

Ms. Round grew up in Oklahoma andholds a B.A. from Oklahoma StateUniversity, which honored her with itsDistinguished Alumni award in 1995.

Cynthia RoundExecutive Vice President, Brand Leadership, United Way of America

☛ Read Cynthia’s insights on Page 10

Defining LoyaltyThe first and most important build-ing block in a customer loyaltystrategy is to thoroughly segmentyour target audiences. The mostobvious segments include demo-graphics, firmographics (organiza-tion characteristics essential for aB2B strategy), and psychographics.We then look at value, vulnerabil-ity, satisfaction, persistency, and ulti-mately, loyalty.

At The Principal, we look at threeaudiences: current and prospectivedistribution or sales partners, cur-rent and prospective employercustomers, and current and prospec-tive individual investors. We meas-ure and model around each segment

and within each of these audiences.Once we determine common char-acteristics of our most loyal cus-tomers and our most vulnerablecustomers, we develop predictivemodels to anticipate likely behaviorsof these and others who exhibit sim-ilar characteristics.

Here’s an example: We’re able todetermine when somebody retires orleaves his job, he is most likely toconsider leaving our pension plansat the eight-month and two-yeartimeframe. Knowing this enables usto take pre-emptive action to avoidthis attrition and retain theirbusiness.

Beyond current value, we assesspotential value. In other words,what is the lifetime value of thatcustomer? If a new plan member is

young and does not currently havehigh fund values, we can determinepotential value by evaluating certaincharacteristics to project whethershe will be a loyal customer overtime.

Our Customer LoyaltyThe Principal Financial Group isfortunate to have significantlyhigher retention rates among ourcustomers than other companies inour industry. While many variablescontribute to our loyalty numbers,there is one driving force: we havea “do the right thing” culture. Wetake the promises we make veryseriously and we keep them. We’re not infallible — we make

mistakes — but we are very trans-parent in our services and workquickly to fix any problem. Itsounds corny, but we do always tryto go that extra mile. No customerrelationship management (CRM)system can overcome a bad serviceculture.

At the same time, we put ourmarketing efforts to work to developand deepen relationships. Buildinga relationship and reputation is likebuilding a marriage. You’ve got tohave an introduction, a courtship,passion, and commitment.

In our experience, once peopleget to know The Principal and whatwe do, they come to love us for ourgreat service and stick around fora long time. Our marketing efforts

serve as matchmaker — providingthe introduction, courtship, andcommitment necessary to ignitecustomer loyalty.

The FutureWe continuously seek to improveour customer relationship manage-ment strategy, concentrating onthree main areas of focus: whatinformation we have about our cus-tomers that can help us deepen rela-tionships; how accessible is thatdata; and the customer contactstreams and touch points to help usfurther build the relationship.

One common problem with datais that it can be kept at a very locallevel. It isn’t always used to do the

© Books24x7, 2008 Mary O’Keefe ExecBlueprints 3

Mary O’KeefeSenior Vice President and CMO

The Principal Financial Group

“We’re collecting more data in placeswhere we can use it more effectively.”

• Among Ad Age Magazine’s “Womento Watch”

• Recognized as a Woman of Influenceand Best Female Business Leader byDes Moines Business Record

• Member of Fortune 500; $311.1 billion in assets under management

Ms. O’Keefe can be e-mailed at [email protected]


No customer relationship management (CRM)system can overcome a bad service culture.

Mary O’Keefe

Senior Vice President and CMO

The Principal Financial Group

right analysis. We’re changing all of that.

We’re using technology and spe-cific outreach programs to connectwith customers. One difference forfinancial services companies: we’rehaving one-on-one conversationswith people. We should be able toconvey a unique value propositionto the customer. We’re using cus-tomer relationship managementtechnology to make it easier andcheaper to reach people on a morefrequent basis. We have very specificmeasurements to determine ourlevel of success.

Across our businesses, we havevery different customer groups. Wehave relationship managers whocarefully track customers. We try togroup customers who have similarneeds by size and by industry so thatwe can share best practices.

We take a proactive approach toour employer customers — workingclosely with brokers and marketersto provide higher levels of service.With employees and individualinvestors, we’re doing a lot morefrequent contact and follow up.

Personalization is a big part ofhow we’re trying to build our loy-alty strategy and technology enablesbetter service. Having tracking sys-tems and tickler files makes it eas-ier to track and deepen relationshipswith customers. And, instead of justsending a statement at the end of theyear, we’ve added reminders of

the things someone laid out in aplan last year.

The last, but perhaps mostimportant, strategy for building cus-tomer loyalty is to engage our ownemployees as ambassadors of ourcompany.

Communication EffortsCertain factors correlate to moreloyal customers. Our relationshipwith loyal customers differs from that of less engaged custom-ers because more engaged cus-tomers have greater frequency ofcontact. For example, a loyal cus-tomer will actively get a PIN num-ber. They’ll go online to look at theirfinancials. They will be in contactwith us and continue to increasetheir investment with us.

Both existing and prospectivecustomers use our Web site forresearch and education. Customer-only access to value-added tools andself-help features drives loyalty.Online financial planning tools areavailable in a variety of formats andskill levels to help people identifytheir needs with better, more robustoptions available to loyal cus-tomers only. Our salespeople andfinancial planners are equippedwith Web tools to evaluate customerneeds and gaps and develop finan-cial plans for our customers’ uniquesituations.

One area of differentiation in ourbusiness is we communicate with

our loyal customers about theirfuture needs on a very personalizedbasis. Our whole industry is swim-ming in a sea of sameness. People seeour industry as an obstacle and wewant to turn it into an opportunity.

We think this industry can besimpler. We’ve introduced a newbrand program over the last twoyears that is all about simplifying.It features an animated characterthat is very simple. We write in sim-ple terms. We’re trying to differen-tiate our message.

And it’s very important to inte-grate all areas of contact. We linkthe Web site closely with both ourcall centers and the field. We’ve gotmore service people in the field thanmany other companies. It’s a bigpiece of the overall puzzle.

ChallengesIn developing loyalty strategies, wehave faced quite a few challenges.Just finding the resources to dowhat we’d like to do is challenging.We’d love to jump in and make allof the improvements right away, butresources don’t allow us to do that.

We have to build and customizetechnology, which takes time. If we put an expectation out there, wehave to make sure we’re going to beable to follow up.

And last, but not least, there istremendous clutter in our market-place. Getting through to the cus-tomer is a big challenge. Ourmessages have to stand out from the traditional communication infinancial services — evolving fromcomplex to simple, from the con-ventional “sea of sameness” to dif-ferentiation, from obstacles toopportunities. After all, if it wereeasy, everyone would be doing it!


Mary O’KeefeSenior Vice President and CMO, The Principal Financial Group (continued)

Expert Advice

Our benchmarks to assess the effectiveness of our loyalty strategy start with cus-tomer satisfaction. Next, we look at persistency. Do people stay with us? What’sthe rate at which we lose customers? What’s the rate at which we retain customers?Do people want to buy additional products from us? We measure all of those fac-tors very carefully on an ongoing basis.

The Role of FeedbackCustomer feedback plays a bigrole in the development of our loy-alty strategies. We test everything upfront and continue tracking it overtime. We actively engage customercouncils and other groups for feed-back. We conduct regular trackingstudies to assess our reputation. Weconduct customer service surveys —online, phone, and snail mail. Weuse all of that information to con-tinue to drive our customer-centricstrategy.

Our customer feedback methodshave changed in the past two yearsbecause of our new simplificationstrategy. We have made a very con-scious effort to be simple, to driveaction items, and to take the jargonout. And the response has beentremendously positive.

Collaboration EffortsIn a diversified, multi-line businesswe must have a higher level ofinternal collaboration than singleline businesses. We work closelywith our internal business partnersand provide marketing support. Atthe CMO or corporate level, we tryto be a center of excellence for mar-ket research, business intelligence,analytics, marketing commun-ication, and marketing strategy.One place where this strategy haspaid off is in supporting our effortsto reach brokers across our variedbusiness lines. The strategies weredriven by needs that were identifiedby the businesses; we provide thesupport and, together, we’ve builtsustainable outreach programs tobrokers. Brand building, sponsor-ship, online tools, conferences,advertising, public relations, CRM — we use every tool in ourmarketing toolbox.

InternationalConsiderationsThe essential features of our loyaltystrategy vary by country. Marketingtactics are most successfully built atthe local level. In some countries,our products are seen as more of acommodity. In other countries, weare able to deepen relationshipsmore significantly.

At the same time, there is a needfor integration — particularly at thebrand level. The world has becomea smaller place. People move frommarket to market. There is a lot oftravel, so there is a need for an over-lay in working with member com-panies in marketing. And marketsdevelop at different paces. A strongmarketing framework can helpspread the word: help less-maturemarkets mature and learn frommore mature markets and learnfrom internal and external bestpractices. ■


Mary O’KeefeSenior Vice President and CMO, The Principal Financial Group (continued)

Our Challenge: A Cluttered and Complex Marketplace

Opportunities

Simplicity

Security

Create Stopping Power

Action

Obstacles

Complexity

Insecurity

Sea of Sameness

Inertia

Defining a Loyal CustomerWe define a loyal customer assomeone that not only purchasesour product, but is willing to act as a reference for other non-competitive prospects when they are considering our company. Iwould consider 80 percent of ourtotal customer base loyal. I don’tthink this percentage is typical forthe industry — we have unique loyalty.

It has been my experience thatcustomer loyalty is a direct func-tion of customer satisfaction, andcustomer satisfaction is best drivenfrom the CEO down through theorganization. Our CEO at OccamNetworks communicates at nearlyevery company meeting that it isthe responsibility of sales to makethe first sale, but that follow-onbusiness happens only when devel-opment, operations, marketing,and customer service have all suc-cessfully performed their respon-sibilities at the appropriate qualitylevel.

As leaders of an organization,our teams will be reading both whatwe say and what we do. If we saythat customer satisfaction is impor-tant, but we fail to fund quality orservice initiatives, if we fail toengage with customers, or if wefocus only on the financial aspectsof the business, employees willcome to realize satisfaction is a sec-ondary priority.

At Occam, the executive teamtries to participate in some waywith every customer visit to ourheadquarters, spends time travel-ing and meeting with key cus-tomers, and closely monitorsannual customer satisfaction feedback surveys. Our time and our vocabulary are aligned in ourcommitment to satisfaction.

The Meaning of CustomerSatisfactionCustomer satisfaction rarely means“no troubles.” Rather, it is the cus-tomer’s perception of a company’sreaction to their issues. It can beaffected by a single large issue, ormore commonly is a function of theoverall experience with the com-pany and its products over a periodof time. Internally, this is oftenreferred to as “death by 1000cuts,” where a series of unrelatedissues, none critical in itself, drivesthe customer to seek a differentsupplier.

In the companies that I haveworked for that have had thehighest degree of customer satis-faction, it has been the goal of theCEO to ensure customers arehappy. While never the front line of customer interaction, CEOs thatwelcome interaction, via face-to-face meetings, e-mail, or by hand-ing out his/her mobile telephonenumber, demonstrate that they careabout the customer experience andwant to hear about successes and failures of the organization. Inthese cases, the CEO must learn toreact to customer comments witha balance of responsibility andencourage the organization torespond. In this manner, the CEO becomes a safety value forissues before the customer jumpsship and goes to another supplier.

The Impact of the Sales ModelAt Occam, we deploy a “heavytouch” sales model. Sales peopleseek frequent “face time” withcustomers. Each company mustdefine a sales model for its partic-ular market and customers. Andthen be sure that it reinforces andsupports customer satisfaction. Oursales force communicates with our loyal customers regarding theirfuture needs through standardizedpresentations and home office exec-utive briefings. Marketing usesWebinars and annual user groups.Customer service uses a knowledgebase and other information througha Web portal. Executive outreach

© Books24x7, 2008 Russell J. Sharer ExecBlueprints 6

Russell J. SharerVice President, Marketing

Occam Networks

“The formula for building loyalty ispretty simple: deliver what you promiseand keep commitments.”

• Joined company in 2000

• Product marketing experience atEricsson Datacom

• Experience at Xircom, Rockwell Communications Systems,and Communications MachineryCorporation

Mr. Sharer can be e-mailed at [email protected]


Customer satisfactionrarely means “notroubles.”

Russell J. Sharer

Vice President, Marketing

Occam Networks

includes executive sponsorships ofaccounts with specific service issues.Each contact has as an unstatedgoal that we are continuing to buildan ever more positive customer rela-tionship, and that we communicatehow important they are to ourorganization.

Our customers will derive themajority of their future revenuefrom the successful deployment ofour equipment, and I like to fre-quently tell customers we do nottake their business and trust lightly.

At Occam Networks, marketingworks to create customer/CEO

gathering points for interaction.These include having our CEO rep-resent the company at a variety ofinvestor, customer, and industryevents, taking a lead role in ourannual user group meeting, andspending time on the road travelingwith salespeople and visiting cus-tomers of all sizes.

Customer satisfaction starts withthe interaction of the sales personor channel with the customer.Careful communication of what the product can do, without over-promising, starts the relationship offon the right foot. In our industry,

there has been a history of vendorsfailing to deliver on productroadmaps or even basic requestedfeatures. While it is always easier inthe short term to tell a customerexactly what they want to hear,marketing must work to equip andtrain the sales force to communicateaccurately the value proposition andcapabilities of the product.

Customer FeedbackMechanismsAt Occam, we perform an annualsurvey with about 30 questions,


Russell J. SharerVice President, Marketing, Occam Networks (continued)

Driving Active Consumerism

Enhanced Customer Pride

and Loyalty

Give Customers an Active Voice

Create Venues for Customer

Interaction

Involve More Voices in Delivering

Your Story

Enlist Customers as

Problem-Solvers

kept consistent year-to-year, to seehow our customers perceive ourcompany, products, service, andconsistency. The results arereviewed companywide, and insome cases specific improvementgoals are assigned to individuals ordepartments. These goals are thentracked by the executive team toensure improvement.

We talk to customers about theirbusiness, present our productroadmap, and ask them questionsabout its content and features. Ourcustomers are good at providingfeedback, and the aggregation ofinformation from a number of cus-tomers adds real value to our plan-ning. We established a user groupboard of directors about 18 monthsago. They had a significant role inthe formation of the agenda for ourannual users group.

During executive briefings,where customers come to our homeoffice to get an update, we try andplan a meal sharing time with atleast a couple of the execs (in addi-tion to the VP of sales) and ask thecustomer or prospect to discusstheir business challenges. Occamhas at least three products that weretotally conceived of by our cus-tomers. We reward customer inputwith recognition in case studies andas speakers at our users group.

Implementing and LearningFrom Loyalty StrategiesOur annual user group meeting,annual customer satisfaction survey,and our weekly executive customersatisfaction meeting are the key con-tributors to maintaining a highdegree of satisfaction, which trans-lates into customer loyalty.

Our weekly customer satisfactionmeeting is where key accounts and

their current product or networkissues are monitored. This onehour session ensures accounts witheither a large or a series of smallissues, have an executive sponsor,are receiving frequent communica-tion on the status of their issue, andthat the company is bringing theproper resources to bear on resolv-ing the issue. This is another goodplace for CEO leadership, both by attendance and a willingness to modify corporate priorities toensure prompt resolution of theissue. It is not always possible torespond to a customer issue in thetimeframe that they desire, but forthem to be kept up to date onprogress, and to have assurance thatsenior management is staying cur-rent on the status of the fix adds tocustomer satisfaction.

Customer satisfaction is an eas-ily measurable and monitored vari-able. Occam performs twice yearlycustomer surveys to ask a series ofquestions about how the customerperceives we are caring for themthrough sales, order administration,customer support, and training. Theexecutive team also monitors aseries of metrics weekly concerningnumber of voice mails received bycustomer support (all calls are to be answered by a person, not amachine), number of open customertickets, and average length of timeto close a customer issue.

Showing CustomerAppreciationMarketing should also drive a cul-ture in which people at all layers ofthe customer organization aretreated with respect. Sometimesmarketing is so focused on gettingmessages to the senior managementlevel that they ignore others in theorganization.

At one point in my career, I metwith a senior executive who toldme, after we had won the deal, thathe always asks his receptionistabout potential vendors. “Do they treat you with respect? Do theyengage or see you just as a gate-keeper?” His thinking is that afterthe decision the vendor will beworking with many layers in hiscompany, and he wanted to be surethey would interact properly withnon-decision makers. For market-ing, this means the need to thinkmore broadly about direct market-ing, helping the company brand tobecome familiar at multiple layersof the organization.

For example, one practice that hasworked well at Occam is to sponsora BBQ lunch for all of our customers’employees after successful commis-sioning of a network. Many of themeither had a part in the deploymentor will have going forward. Burgersand beers are an inexpensive way forthe employees to be thanked, and todevelop goodwill.



Expert Advice

We have never measured our ROI for loyalty strategies, but it would be very high.About 75 percent of our annual business is from repeat customers. While we domeasure the volume of sales per customer, our investment in loyalty is across theentire base of our customers, so individual measures are not possible. To get atrue ROI we would also have to take a baseline of what our customer repeat busi-ness level would be without loyalty programs, and I am unwilling to risk businessto build this baseline.

Encouraging ActiveConsumerismThe final piece of customer satis-faction is the customer themselves.Marketing should open up venuesfor the customers to interact includ-ing newsgroups on the Internet,users groups, mixed gatherings ofprospects and customers (possible ifthey are not direct competitors),newsletters, and executive briefings.If customers feel that they have anactive voice, my experience is theywill use it responsibly.

To a degree, marketing wants tobuild the customer base into a“social network” of connected

individuals that want to see yourcompany succeed. After all, everyindividual that selects your productover a competitive one wants reas-surance that they made the rightchoice, and therefore if they have hada good experience will want othersto make the same commitment. Thisrationale, the same that drives suc-cessful testimonial campaigns, can beput to good use to harvest customergood will and involve more voices indelivering a positive company story.No matter what product your com-pany sells, you are ultimately in the people business, satisfying thedemands and desires of humanbeings in their endeavors.

Occam is strengthening our usersgroup with more active participa-tion by the users. We want to usethe Web and news groups to enableeasier methods for customers toreach out and give us feedback. Weare also working to automate moreservice, so customer can handlemany of their problems themselves.Our customers take pride in solv-ing problems, and we want to helpthem to do that. We chose these ini-tiatives to focus on because of feed-back from a user steering group. Wehope to accomplish greater loyaltyresulting in the ability to transitionthem from current to next genera-tion technology. ■



Defining LoyaltyOur primary definition of a loyalcustomer is someone who has beengiving to the United Way for fiveyears or more. Loyal customers rep-resent 77 percent of our total cus-tomer base, which is about 12.2million individual investors. We alsohave “super loyalists,” who havebeen giving to the United Way forover 20 years. These people repre-sent an astounding 26 percent ofour customer base.

Having a large base that has beensupporting United Way for so longis not atypical for some non-profits,like a church or an educational insti-tution. Other large national non-profits probably have a smallerloyal following. The unique rolethat the United Way plays in theworkplace lends itself to greaterongoing contact and solicitation.

Strategic ChangesIn the next year or so, we are plan-ning to make some changes to ourloyalty strategy. We are becoming

more aggressive in this area. UnitedWay relationships have historicallybeen initiated through the work-place. We run annual workplacecampaigns, but we don’t have a lotof specific donor information. Eventhough we know quite a lot aboutattitudes and behavior in general,we don’t actually have a lot of indi-vidual names and personal contactinformation due to corporate pri-vacy policies.

Despite the fact that 77 percentof our contributors have been loyalfor five or more years, we have apretty high churn rate. Our datasuggests that the rate may be as highas 30 percent.

People tend to leave the UnitedWay less because they become dis-appointed, but more because theymove out of the workplace channeland we don’t have their contactinformation. We are working onsome very rigorous new strategiesto deal with that challenge.

Typical CustomerRelationshipsOur typical relationships with loyalcustomers are positive, though a bitdistant and impersonal. We have asubset of donors that we call activecommunity investors. Active com-munity investors care about theircommunity and are actively engagedin improving it with their time andmoney.

The active community investorgroup represents only 6.8 percent ofour total donor base, but accountsfor 38 percent of $4.07 billion inannual support. For this group, wehave more individual informationand can build more personalrelationships.

Most of our communications aredone through the workplace or

© Books24x7, 2008 Cynthia Round ExecBlueprints 10

Cynthia RoundExecutive Vice President, Brand Leadership, United Way of America

We do an annual public opinion and customertracking poll that gives us much of our marketinginsight.

Cynthia Round

Executive Vice President, Brand Leadership


Cynthia RoundExecutive Vice President, Brand Leadership


“We would like to build an engage-ment metric that gives us an indicationof the depth of involvement beyondfinancial support.”

• More than 20 years of building andmarketing corporate brands

• Former senior partner and executivegroup director at Ogilvy & MatherAdvertising; led account teams forGeneral Foods, AT&T, Unilever,Maidenform, and others

• Member of the Advisory Committeeof The Advertising Council

Ms. Round can be e-mailed at [email protected]

Expert Advice

Our best practice for instituting new strategies has historically been channel dom-inance. We are in front of our customers on an annual basis in their workplace.There is no question that this has been the most important aspect of sustainingloyalty. This is important but insufficient for the future. We are trying to do a bet-ter job of understanding what is driving individual behavior so we can address dif-ferent preferences.

mass media. We do have direct con-tact with active communityinvestors through electronic andpersonal communication.

We have over 1 million sup-porters who also are volunteers.They attend regular meetings at oneof 1300 United Ways across thecountry, so we have an opportunityfor more in-person contact.

Market ResearchWe do an annual public opinionand customer tracking poll thatgives us much of our marketinginsight. Even though we don’t haveindividual data files on all 12.2 mil-lion of our individual investors, weknow a fair bit about them as awhole from ongoing tracking.

Increasingly, within the smallersubset of active communityinvestors who are giving $500 ormore to United Way, we are able todo segmentation and qualitativeresearch. We meet with them at thecommunity level and have one-on-one interviews or focus groups. Wetalk to them about their interests,how United Way can better servethem, and how we can connectthem with their desire to make a dif-ference in the community by givingmoney or time.

ChallengesThe biggest challenge that we facein developing loyalty strategies ishaving limited access to the dataand personal contact information ofindividual investors. Another chal-lenge is the increasing competitionfor charitable contributions.

The 77 percent of people whohave been giving to United Way forfive years or more are also sup-porters of other charitable organi-zations. Having a variety ofcharities in their portfolio makesthem good community citizens, but the increase in the number ofnew charities every year leads toincreased competition for eachcharitable dollar.

Benchmarking SuccessWe are trying to do a better job oflooking at churn and retention. Weare looking at the sales volume orrevenue that we generate andadding other aspects of engagement.

We have just started using theNet Promoter Score to measure sup-porters’ likelihood to recommendUnited Way to a friend or colleague.We have seen a lot of data from thebusiness world that suggests netpromoter is the best indicator offuture loyalty and revenue. We hopethis also applies to the non-profitsector and will use it as a newbenchmark and ultimate loyaltymetric for United Way. ■

© Books24x7, 2008 Cynthia Round ExecBlueprints 11

Cynthia RoundExecutive Vice President, Brand Leadership, United Way of America (continued)

Our Customer Loyalty

51%Loyal Customers

(5+ years)26%Super Loyalists

(20+ years)

23%Regular

Customers

I. Understanding YourCustomerThe first building block in a customerloyalty strategy is to segment your tar-get audiences in order to understandthem. • Segment by demographics,

firmographics, andpsychographics.

• Also look at value, vulnerability,satisfaction, persistency, and —ultimately — loyalty.

Properly managing your customerdata can be a major factor in deepen-ing your customer relationships. • Understand what information you

have about customers, and whatinformation you need, to helpimprove customer relationships.

• Determine how accessible the datais, and how you can make it moreavailable for analysis.

• Identify the customer contactstreams and touch points that willhelp you further the relationship.

II. The Bottom LineCustomer satisfaction is an easilymeasurable and monitored variable. • Marketing leaders should be

aware constantly of the company’slevel of loyalty, and how it ischanging.

• Perform regular customer surveysto determine how the customerperceives your company.

Monitor and analyze every customertouch point.• Measure the number of calls

received by customer support, thenumber of open customer tickets,and the average length of time toclose a customer issue.

• Stay aware of how customers arerepresenting your company in theonline community, and activelyengage them.

Assess the current and potentialvalue of your customers, and modeltheir behaviors.

• Measure and model around eachsegment and within each of youraudiences.

• Determine common characteristicsof your most loyal customers andyour most vulnerable customers;then develop predictive models toanticipate likely behaviors of themand similar customers.

III. Must-Haves for Marketingfor LoyaltyService-oriented culture• Nothing can substitute for a

strong service culture.

• Take your promises seriously andkeep them.

• Stay transparent in your servicesand work to fix any problemsquickly.

Relationship building• Put your marketing efforts to

work to develop and deepenrelationships.

• Building a relationship andreputation takes investment oftime and resources, and demandsongoing commitment from themarketing department.

Personalized communication• Communicate with loyal

customers about their future needson a very personalized basis.

• You should be able to convey aunique value proposition to thecustomer.

• This personalized communicationis a key part of your company’svalue proposition.

Culture of ambassadorship• Engage your own employees as

ambassadors of your company.

• Make employees brandambassadors, and allow them inturn to empower customers asbrand stewards.

IV. The Golden Rules forCreating Active ConsumersOpen venues for customer interaction.• This includes newsgroups on the

Internet, users groups, mixedgatherings of prospects andcustomers, and executivebriefings.

• If customers feel that they have anactive voice, they will almostalways use it responsibly.

Build your social network.• Build the customer base into a

“social network” of connectedindividuals that want to see yourcompany succeed.

• The customers who choose yourproduct over your competitors’want reassurance that they madethe right choice, and therefore willwant others to make the samecommitment.

• This energy can be enlisted toinvolve more voices in delivering apositive company story.

Give your customers customized self-help tools.• Customer-only access to value-

added tools and self-help featuresdrives loyalty.

• Use the Web and newsgroups toenable customers to reach out andgive feedback more easily.

V. Essential Take-AwaysCustomer loyalty is a byproduct of aculture of service and customer-centricity. No matter what product yousell, you are ultimately in the peoplebusiness — satisfying the demands and desires of human beings in theirendeavors.

Marketing for loyalty should focuson relationship building and interac-tion. Provide opportunities for cus-tomers to interact with you and witheach other, and involve their voices inthe company story. ■

© Books24x7, 2008 Ideas to Build Upon & Action Points ExecBlueprints 12

Ideas to Build Upon & Action Points

© Books24x7, 2008 Ideas to Build Upon & Action Points ExecBlueprints 13

Ideas to Build Upon & Action Points (continued)

ExecBlueprints is a subscription-based offering from Books24x7, a SkillSoft Company. For more information on subscribing,please visit www.books24x7.com.

10 KEY QUESTIONS AND DISCUSSION POINTS

How does your company define a “loyal customer”? What percentage of your totalcustomer base could be considered “loyal”? Is this percentage typical for yourindustry?

In the next 12 months, what changes do you plan in your loyalty strategy to retain and increase this type of customer? Why and how were these chosen?

What is the nature of your company’s typical relationship with its loyal customers? Is this style of relationship standard for your industry? In what ways does this style ofrelationship differ from that with your less engaged customers?

How do you communicate with your loyal customers about their future needs?

How do you use market research to shape your enterprise loyalty strategy? How werethese methods developed? How do they serve company goals? What could beimproved?

What are your best practices for instituting and administering loyalty strategies? Howdid these practices evolve? What criteria do you use for determining what type ofstrategy will be most valued by your various customers?

In what ways does your company utilize your market research on loyal customers todrive product/service development decisions? How has your company specificallybenefited from developing products or service intended for your loyal customers?

In developing loyalty strategies, what challenges do you face? What hasn’t worked?What sort of pressure do you receive from your other customers to receive similarbenefits? How are these pressures addressed?

What is the ROI for your loyalty strategies? To what extent have they driven customerengagement? How has this engagement translated into increased revenues and/orprofit?

What were the three most effective loyalty strategies your department launched in thepast five years? Why were they especially effective?

10

9

8

7

6

5

4

3

2

1

?

necessary alterations

Documents