1:1 magazine ran a cover article not long ago titled If You Want Loyalty, Get A Dog (the site tells me the article is no longer available), and now, in my inbox, comes an article from a company called Vox that poses the question “Is customer loyalty a thing of the past?”and claims that “old business tactics don’t work on today’s savvy customers.” The article goes on to say:

Today’s customers don’t hesitate to switch where they do business if they feel their expectations aren’t being met. In fact a recent survey conducted by Thunderhead, found that 61% of insurance, and 63% of banking customers polled planned to switch providers during the next year. The reasons? 76% want more personalized options when it comes to how providers communicate with them.”

My take: First off, no where near 63% of banking customers are going to switch providers during the next year. Second, among those that actually do switch, the desire for “more personalized options when it comes to how my bank communicates with me” is not going to be at the top of the list of reasons why they left.

There’s no shortage of articles and blog posts proclaiming the death of customer loyalty. While it may very well be true that “today’s customers don’t hesitate to switch” and that people want “more personalized options,” these articles rarely explain why.

The reason, in my opinion, is impacted by — but not caused by — the Internet. No, the root cause of this goes back well before the advent of the Internet, and social media, and all the other so-called “disruptive” technologies that some people like to rant about.

Instead, the reason is rooted more in societal changes and globalization. As we’ve become a more affluent and highly educated society, we’ve had an increasing desire to have more control over our lives. It’s an insult to our intelligence to think that we can’t make decisions for ourselves and that someone else has to tell us what products and services to use. Globalization, however, has had a negating impact on that feeling. As news from around the world reaches us daily, hourly, and now on the minute, we’ve increasingly felt that things are happening so fast that we’re losing control of what goes on around us.

Switching providers — whether it’s banks or firms from other industries — is an act of independence. We switch because we can. We switch to make a statement. We switch to demonstrate that WE are control of our lives and our business relationships.

While having the ability to “personalize communication options” is a demonstration of personal control of the relationship, let’s get real here — in the scheme of things, it’s simply not that important. Despite all the market research that purports to show a decline in customer loyalty there are still plenty of examples of firms with fiercely loyal customers. Do they all allow “personalized communication options”? Doubtful.

Successful firms approach customer relationships as just that — relationships. A two-way street. It goes far beyond “customization” and “personalization”.

Technorati Tags: Marketing, Customer Loyalty, 1:1, Vox

I’m sure by now that you’ve heard that ICANN has approved a plan to create an unlimited number of top-level domains.

I know which one I’m buying: The .SUCKS domain.

Here’s my plan: I’m not going to make money by charging people to create www.usair.sucks or whatever company they want put into the URL. Oh no. I’m going to charge companies like US Airlines and other firms that treat their customers like sh*t for preventing people from creating those URLs.

Technorati Tags: ICANN, Top-level domains

No, not that election. This one. The contest for who gets to present at the upcoming Forum Symposium conference in October.

Here are your choices:

• The Vendor. Andrew Taylor, CEO of Jwaala will certainly have something interesting things to say about how CUs can leverage PFM tools and approaches to improve member relationships.

• The Director. As a member of the board of directors at UFirst CU in upstate NY — and a blogger herself — Ginny Brady brings an interesting perspective to the conference.

• The Loop. The CU Loop, that is. Also known as Andy LaFlamme from Maine State Credit Union. Which you’ll never see — because you can’t get there from here.

• The Warrior. Matt Davis, from Members CU in NC, promises to bring his own brand of thought exhibitionism to the conference. And get Shevlinated in return.

But seriously, this is an important decision, so please vote.

It’s important for the attendees: They’ll only get to hear one of the candidates present. And it’s important to the candidates, as well: The losers will be flown to Fishers, IN and forced to watch the conference looking in through a window from the outside. (I’m just kidding, but now that I give it further thought, it’s not sounding like such a bad idea)

It seems like just about every marketing-related blog post I read mentions at least one of the three most overused words in the business world today: Death, Disruption, or Innovation.

I can’t help but wonder if some of these bloggers are trying to demonstrate their prescience by writing about the death of this or the death of that. There’s the death of traditional media, death of old marketing, and my favorite, the death of direct marketing.

My take: These death claims are reminiscent of those from the dot-com era, when pundits were proclaiming the death of everything traditional. Oh, there was a lot of death, alright — mostly among the dot coms.

The reality is that the new almost never swiftly replaces the old. In fact, the old often doesn’t even completely die. The new blends in with the old, and the parts that no longer work — from both the old and new — get left behind. Granted, more from the old gets thrown away than from the new. But it takes time, and it happens imperceptibly.

Then there are the folks who attach the label “disruptive” to every new technology announcement that comes along. And I’m not even referring to the people who sell those technologies.

One of my favorites in this category is the claim that P2P lending is “disruptive.” In an article titled Here Comes The P2P Economy in Harvard Business Online’s Conversation Starter, the author claims:

Peer-to-peer, or P2P, networks have thrown the media industry into turmoil. A shock like the one that jolted the media is poised to strike other industries, perhaps more disruptively. It is already being felt in financial services. It is only a matter of time before these digital systems close the arbitrage enjoyed by large banks, which lend at up to 15% interest but pay only about 5% on capital.”

My take: Disruptive, my foot. If and when the large banks start feeling the pain from P2P upstarts, what do you think they’ll do? They’ll close the gap. Any major FI in the US could replicate what the emerging P2P lending platforms are doing in a heartbeat. Not that they will, but they could. It’s simply a business model (and, to a certain extent, risk management) issue to them.

Finally, the calls to “Innovate or Die!” are deafening. One blogger recently claimed that “firms will not survive and succeed if they don’t innovate.”

My take: Nonsense. There are two secrets to survival and success. You don’t need to write them down, because I wrote them down for you:

1. Find a problem. Fix it.
2. Find an opportunity. Exploit it.

If it takes an “innovation” to fix the problem or exploit the opportunity, so be it. But “innovation” is not a prerequisite for accomplishing #1 or #2. My point is that there’s too much focus on innovation — as if it’s a panacea — and not enough on identifying underlying problems and opportunities.

Bottom line: The underlying motivations in the overuse of these terms run the gamut of reasons. But collectively, the excessive use of death, disruption, and innovation contributes to a “boy who cried wolf” or “the sky is falling!” kind of feel. More selective use of these terms would give them credence and weight. In my opinion, at least.

Technorati Tags: Marketing, Disruption, Innovation, P2P Lending

One of the most frequently debated topics in management circles is organizational structure. In many firms, org structure is a constantly swinging pendulum, shifting back and forth between varying degrees of centralization and decentralization. Is one approach better than another?

A report I recently published at Aite Group, based on a study of marketers conducted by Epsilon, identified high-performing integrated marketers — firms that have achieved a 10% or greater lift in their marketing performance as a result of their integrated marketing efforts. Of the four characteristics that distinguished the high-performers, not one of them involved org structure.

My take: Organizational structure doesn’t matter. Every approach to structure has its strengths and drawbacks. What matters is whether or not a firm recognizes — and compensates for — those weaknesses.

Among survey respondents, 70% of marketing departments are centralized — that is, one person controls both the online and offline marketing budgets. And among these centralized organizations, 68% believe that they’re properly structured to execute integrated marketing campaigns. On the other side of the coin, however, 64% of firms with a decentralized approach to channel budgets also believe that they are properly structured.

There isn’t, however, any correlation between high-performance and organizational structure. Among centralized firms, 40% are high-performers — the same percentage of decentralized firms that have achieved a 10%+ lift from integrated marketing.

Comparing centralized and decentralized marketing organizations yields very little differences in terms of their abilities to make use of customer data. But firms that believe that they’ve properly organized to execute cross-channel marketing — regardless of whether or not they’re centralized or decentralized — are far more likely than other firms to make effective use of customer data.

Of those that say they’re properly structured to deliver integrated marketing, nearly all have processes in place to ensure good data hygiene. And the overwhelming majority say that customer data is easily accessible for marketing efforts within and across lines of business, and that their firm’s employees have a good understanding of what customer data they have.

The analysis helps confirm my belief that any approach to organizational structure can succeed as long as there are processes and mechanisms for overcoming its shortcomings. High-performing integrated marketers have re-allocated budgets from acquisition to retention, and from offline to online channels, in the past few years.

Bottom line: Successful firms find ways to do what’s right for the bottom line — regardless of their organizational structure.

UPDATE: For a PDF version of this that includes graphics with survey results, click here.

Technorati Tags: Marketing, Aite Group, Epsilon

Harris Interactive released the results of its EquiTrend study which purports to measure and rank brand equity across a range of product categories. The brand with the number one equity score in 2008: Heinz Ketchup. In the financial services industry, the leader was Visa, and in the airlines business it was US Airways. Meanwhile, Microsoft took top honors for software.

My take: Viewing the results of this study left me with just one thought:

What the hell is brand equity, anyway?!@#$!@”

According to the article, this particular study of brand equity supposedly measures familiarity, quality, purchase consideration, brand expectations, distinctiveness, and trust.

Maybe so, but these results are a little hard to take. The winner in the financial services category has no physical presence, provides no direct customer service or support, and its product is always co-branded in one way or another. And it has the highest brand equity in the industry?

As for US Airways, have the survey respondents flown at all in the past 12 months? The customer experience on just about any airline sucks, and US Air has got to be towards the bottom of the pack. Have these people heard of Southwest Airlines? Except for the people who experienced JetBlue’s Valentine’s Day meltdown last year, most people I know think JetBlue is head and shoulders above US Airways.

And Microsoft? The “evil empire” has the highest brand equity in the software business? Did the study systematically avoid surveying Apple users?

Bottom line: What this study goes to prove is that the concept of brand equity is far from being science. When pretty much any research can do a study, and describe its methodology as having measured brand equity, then you know that it isn’t science (”they blinded me with science…”).

The problems with studies like these are two-fold:

1) They give marketing a bad name. Or, at the least, they don’t help to improve its credibility.

2) They aren’t actionable. Do you really think the execs at Southwest Airlines are fretting over having lost to US Air in this study’s brand equity rankings? Do you think they’re planning the actions they need to take to unseat US Air from the #1 slot? I don’t think so.

But somehow, I doubt that this blog post is going to dissuade any of the brand equity ranking firms from conducting their “research.” And Jim Novo is going to have to come up with a new term — because this really isn’t what he calls  “research for press release.” How about “pseudo-scientific research”?

Technorati Tags: Marketing, Brand Equity, EquiTrends

“I’m mad as hell, and I’m not going to take it anymore.”

– Howard Beale in the movie Network (1976)

Do you ever wonder why customers say they’ll refer a firm to their family or friends? I’m sure the answer differs across industries, but in retail financial services it’s because they believe that the firms they’re willing to refer are doing what’s right for them, and not the firm’s bottom line at their expense.

In other words, customer advocacy isn’t about “customers advocating for the firm” — it’s about the firm advocating for their customers. Unlike the NPS definition, I define customer advocacy as:

The perception on the part of the customer that the firm does what’s right for the customer, and not the firm’s bottom line at the expense of the customer.”

When you realize this — and consider that effective management measurement techniques strive to understand the root cause of desired and undesired effects — then you begin to understand why NPS is a flawed technique.

And that’s why I’m mad as hell. As for not going to take it anymore, that’s where projectADVOCACY comes in.

In my role as a senior analyst Aite Group, I’m teaming up with Neville Billimoria from Mission Federal Credit Union and Paul Schwartz of CONGRUITY to launch a multi-credit union study to measure the degree to which credit union members perceive that their credit union looks out for their best interests.

Why launch this effort to measure member advocacy and compete with NPS? Because our definition of customer (or member) advocacy:

1. Is a better predictor of growth and loyalty. Research that I’ve done in the past (and continued on at Forrester Research) has shown that the strongest predictor of the likelihood of consumers to do more business with their financial providers is the extent to which consumers believe those firms are advocates for the customer or credit union member. Likelihood to refer — while correlated with growth (in at least some studies) — isn’t the root cause of growth and loyalty. Credit union executives owe it to themselves — and their CU’s members — to understand the true drivers of growth and loyalty.

2. Is more actionable. To make NPS actionable, even its most ardent adopters admit you can’t ask just the one “likelihood to refer” question. But what other questions should be asked? No one agrees, and there is no theory or research to support an answer to that. But my research has shown customer advocacy (as I’ve defined it) does have operational, customer support, and marketing underpinnings that guide managers to ask the right questions to understand why a customer believes the firm is a customer advocate. Understanding these operational, support, and marketing dimensions — and which ones are most important to which members — helps execs take the right steps to improving their customers’ advocacy perceptions. That’s something NPS can’t say.

3. Enables a two-way perspective. In addition to surveying credit union members about the extent to which they believe their CUs are member advocates, we’ll be surveying CU executives, as well. We’ll ask them which of the advocacy dimensions they believe are most important to their members, and what they believe their members’ perceptions are of how well the CU delivers on those dimensions. What we”ll help CU executives understand is how well their own management team is aligned with each other and with their members. And again, that’s something NPS can’t do — you can’t ask the management team to simply predict the percentage of promoters or detractors.

4. Is more comparable across firms. Sure, when you ask the NPS question, that score is comparable across firms. But when the other questions asked vary, comparability is lost. Not only will projectADVOCACY compensate for this NPS weakness, but by capturing demographic information from CU members who are surveyed, we’ll be able to provide yet another level of comparability across participating credit unions.

5. Requires less investment. Net Promoter Syndrome Sufferers love to tell me that it doesn’t cost anything to implement the NPS methodology. The consultants and software vendors that have sprung up to support the methodology laugh all the way to the bank (or credit union) when they hear that. Participating in the projectADVOCACY initiative won’t be free — but no CU will be asked to invest more than $900 to participate.

6. Is just as simple. Please don’t tell me that NPS is superior to everything else because it’s so simple. Simple isn’t better. And even if it was, NPS isn’t any simpler than asking CU members if their credit union does what’s right for them or what’s right for the CU’s bottom line at the expense of its members.

A number of smart credit unions have already signed up to participate.

For more information about the study and the benefits or participating either go to the projectADVOCACY web site or email me at rshevlin at aitegroup dot com. Let me know if you want a copy of the study’s premise document or if you’d like to get on the phone to talk about the study.

Technorati Tags: Credit Unions, Customer Advocacy, projectADVOCACY

Relevancy is the mantra of email marketers, and I’m very interested in finding marketers that aren’t just chanting it, but measuring it. While chatting with the EVP of Business Operations at one of the leading email marketing vendors the other day, I asked if any of the firms he works with is doing anything creative or interesting when it comes to measuring relevancy.

He chuckled, and said: “Oh gosh, no. But really, when you think about email marketers are first beginning to move from completely irrelevant to just barely relevant. I’m not sure there’s a lot to measure there.” After further discussion, he suggested that relevancy might be measured by tracking response rates.

My take: I disagree. While response or conversion might be an good indication of relevancy, an offer or email message might still be relevant even if it doesn’t produce a response. Suppose I’m in the market for speakers, and receive offers from Bose and Koss. If I choose Bose offer Koss, should Koss assume their offer wasn’t relevant? No way.

The challenge, of course, is how would they know.

That’s where transparency comes in. I also spoke with Kenneth Lin, CEO of Credit Karma recently. I had seen him present at the recent Finovate conference, and thought Credit Karma would win a best of show award (I obviously thought “great business model and promising business opportunity” was the criteria, not “entertaining presentation”).

Like many Web sites, Credit Karma presents marketing offers to site visitors. What it does that few (if any) sites do is give visitors the ability to rate those offers, and comment on them. Visitors know that an offer is made to them based on their credit score. And Credit Karma users can sort offers by recency, popularity, or number of comments (see screenshot below).

In other words, marketers who make offers on Credit Karma can begin to measure relevancy. And there’s no reason why email marketers couldn’t emulate this approach and ask for feedback on the relevancy of their offers. Since many offers are repeated in multiple campaigns, the overall score for a particular offer in one campaign could be shown in subsequent campaigns.

Is this a better approach to what email marketers do today? I think so, but I don’t know. And that’s where testing comes in.

Plenty of direct and email marketers test, but most focus on testing creative elements and offers. They don’t test whether the same offer performs better if accompanied by a request for feedback and providing other customers’ ratings of that offer.

So, c’mon marketers: Give transparency a try. Test it out and let us know how it performs.

[Endnote: If, on the other hand, you subscribe to the notion that "customer service is the new marketing", forget my suggestions here, and just sit back do nothing, make no offers to prospects or customers on your Web site or through email, hold hands, sing cumbaya, and pray that customers will require customer service, have a "great experience" and tell their friends and family who will come flocking to you]

Technorati Tags: Marketing, Email Marketing, Credit Karma

The CRMindustry.com blog reported yesterday that:

Research released by WorkLight indicates a strong desire for Web 2.0 banking tools among customers. The survey revealed that a staggering 1 in 4 Facebook users would consider leaving their bank to be able to obtain online banking through Web 2.0 gadgets.”

My take: First of all, let’s put this in some perspective. According to Forrester about 5.5% of adults use Facebook on at least a weekly basis. Twenty-five percent of that 5.5% leaves us with 1% of the population who would, reportedly, “consider” leaving their bank for Web 2.0 banking tools. Oooooh!

The story, however, isn’t about widgets (or gadgets, or whatever). How many times have you seen research that shows that consumers would leave their banks for better security, or account aggregation, or mobile banking, or whatever, you fill in the blank?

That’s the story — that consumers would even consider leaving their bank.

Let me ask the Apple fanboys out there a question: How many of you would consider giving up your Apple products if some other company came along with similar products at a lower price?

Just as I suspected: None of you.

Why not? Because Apple has done a great job of building a loyal set of customers that transcends individual products and features. With the exception of USAA, there aren’t many (if any) banks that have done the same.

So go ahead, bankers, and build that Facebook widget for to steal your competitors’ customers. My bet: If they’ll jump ship for a widget, how long are they going to stay with your bank?

Technorati Tags: Banking, Web 2.0, CRMindustry.com, WorkLight

For the life of me I don’t understand why more firms don’t do what Hamilton Community Credit Union did.

Towards the end of May, Hamilton CU published a post on its blog which alerted its members to the CU’s planned site redesign, to be launched on June 6th. The post included screen shots from the yet-to-be released site. The post also described some of the new features.

This is such a no-brainer thing to do — whether you alert customers to the new design in your blog or on the existing site itself. If the site redesign is good, then yes, people will love the new site. But they will HATE being surprised by a new look and feel on the first day of the new release, no matter how good the new site is, or how bad the old site was.

I hate to bite the hand that feeds me (i.e., my free WordPress blog), but WordPress is guilty of not following this best practice, and it drives me crazy. I hate coming to my site and seeing pop-ups windows when I mouse over a link, seeing some weird icon associated with my comments, or automatically generated links (that are completely irrelevant) at the end of my posts.

Listen up, site designers — take a look at what Hamilton CU did. And do it too.

p.s. Somehow I’m not surprised that a Canadian credit union that blogs is propagating this best practice.

Thanks to The Financial Brand for the heads up.

Technorati Tags: Banking, Credit Unions, Web site design, Hamilton Community Credit Union

Twitter is slowly collapsing under the weight of the growing social media world. That this should happen is no surprise. What will happen next shouldn’t come as a surprise either. The history of business repeats itself over and over: General, all-purpose products and services slowly give way to targeted, segmented offerings.

That’s why I see a migration away from Twitter to a number of new highly specialized “micro-blogging” platforms. The platforms won’t be oriented along traditional segmentation lines — i.e., type of customer — instead, they will specialize by type of message.

Expect to see the following micro-blogging platforms emerge in the near future:

• Bitter: For those whiny, emo messages where you just have to complain about something.

• Mutter: For those incoherent messages that no one can understand.

• Jitter: For those useless, caffeine-induced “I’m at Starbucks” messages.

• Quitter: For those messages that say “OK, I’m heading home now.”

• Gutter: For messages that contain curse words.

I imagine that there will be a few more, but my strategy will be to hang around Twitter and wait for everybody else to leave.

Technorati Tags: Social Media, Twitter

In response to my earlier post, in which I said “customers don’t care about channels.” Tomas Kohl writes:

Agreed, though if I indicate my preference for e-mail over telephone, I damn well mean I expect NOT to phoned. Plus, 99% percent of the time, e-mail will suffice; the possible exceptions being: your credit card has been skimmed, or: you’re 3 months behind on your payment schedule and we’re sending a death squad your way; not much more I reckon.”

Thanks, Tomas — you helped me to see me comment in a new light, and went on to make another good point.

When I said “channel preferences don’t matter,” I was reacting to market research which asks consumers their channel preferences in a generic, abstract sense. But Tomas is right on. If a customer specifies a channel preference specific to certain interactions, and makes those preferences clear to the specific firms he or she deals with — then that preference damn well matters.

Tomas also raises another good point which many firms don’t seem to explicitly understand. There are times when the rules have to be broken. You have to use judgment (human or system) in certain cases, and call, email, or send regular mail if its warranted.

Good advice, Tomas. Thanks.

Technorati Tags: Marketing, Email, Tomas Kohl

eMarketing and Commerce reported on a Habeas study which found that:

67% of consumers prefer email as a communications channel over other online vehicles, and 65% believe this will continue to be the case in five years.”

This contradicts my own research. I telepathically contacted 10,000 consumers and found that telepathic communication was the preferred method by 100% of them, and that 100% expected that preference to continue, not just for the next five years, but for the next 500.

OK, I’m being facetious, but to make a point: Channel preferences don’t matter.

So what if 65% prefer email? First off, it’s 65% that prefer email to other online vehicles — like video conferencing, IM, SMS text messaging, and Web meetings, all of which have much lower adoption rates.

Second — and more importantly — is that asking about communication channel preferences ignores a critical factor: The content of the message.

I’m reminded of a joke I heard long ago:

A woman hears a knock on her door, and it’s the mailman.

Mailman: Good morning, ma’am. I have a telegram for you.
Woman: Oh. Is it a singing telegram?
Mailman: Uh….no, it isn’t.
Woman. Oh, that’s too bad. I’ve never received a singing telegram. Would you mind singing the telegram to me?
Mailman. Uh….um….well, OK. La la la la, your mother’s dead.

My point: Some messages/communications just aren’t appropriate for email, regardless of how many people “prefer” the channel.

Duh, you say. We knew that already. So why, then, do managers continually cite studies highlighting consumers’ channel preferences?

Because they use them to justify spending in their preferred channel. And because somebody surveyed a bunch of their customers, they claim to be customer-centric. But they’re not, they’re simply being channel-centric.

The Habeas study misses the point about consumers. They don’t care about “channels”. They care about convenience and appropriateness. They’ll use whatever channel is most convenient at the time they want to do something. And they want to be communicated to through the channel for which the message is most appropriate.

In addition, you can’t ask consumers about five years in the future. If you don’t IM, Twitter, or send text messages, then you haven’t experienced the convenience and ease of these channels. Will many people try and adopt these new communication channels? You betcha. Will many say that these newly tried channels are their new “preferred” channel? You betcha. Will it be appropriate to send all messages through that channel? No.

So then how will marketers be able to determine how much to spend on or invest in different channels? By first understanding which customers they’re trying to attract and keep, and which messages work best to attract and keep those customers.

Some marketers will find that email is an — if not the most — important channel after doing that analysis. But it won’t come from a study that shows 65% of consumers prefer email. And I wouldn’t count on you figuring this out if “customer service is the new marketing” in your organization.

Technorati Tags: Marketing, Email, Habeas

One of the blurbs in a recent Adweek/IQ Daily Briefing email posed the question: Is customer service the new marketing? According to the email:

Nowadays things are changing. Customers looking for products simply type them into Google. Assuming you can get customers this way, the hard work then begins: keeping them. That’s why, according to Andy Ridlinger, customer service is now serving the role of marketing. “Companies need to start treating customer service as an investment rather than an expense. The necessary ‘white glove’ level of service required to create raving fans is more expensive in the short-term, but in the long term you not only spend less supporting current customers,” he writes. “Their free word-of-mouth marketing will help you add more customers.”

My take: This is a ridiculous, terrible, and misguided idea.

If customer service is now serving the role of marketing, then who’s planning and executing campaigns? Who’s determining the allocation of marketing spend across channels and programs? Who’s figuring out which customers the firm wants as “raving fans” in the first place?

The customer service department? The department in which it isn’t unusual to see 40-60% annual turnover among personnel? The department that is increasingly outsourced to some offshore service provider?

I need to stop, I’m laughing too hard to continue.

The notion that “customer service is the new marketing” is the epitome of cumbaya marketing. “Let’s just be really really nice to customers and they’ll tell all their friends and we’ll make money hand over fist.”

There are a host of problems with the notion of the customer service department as a profit center. First and foremost is that it can incent service reps to focus on selling rather than problem resolution. Example: How many times have you called in to your credit card provider with a question or problem, only to be barraged with balance transfer offers? Second, the people who are trained to resolve problems often lack knowledge about the products, and typically aren’t trained in selling techniques in the first place.

I don’t mean to diminish the importance of great customer service. In the scheme of things, it’s critical to retaining customers — and establishing a reputation that helps win new customers. But it isn’t the same as marketing. And it hardly is a substitute for existing marketing functions.

I expect to hear crap like “customer service is the new marketing” from vendors trying to hawk their technology, and from people who have a year or two’s worth of business experience. But for Adweek to legitimize this notion is irresponsible. And I couldn’t help but groan when I saw a Web page recently for a conference called Customer Service Is the New Marketing (I won’t honor it with a link). It pained me to see somebody I respect on the speaker slate.

This really begs a deeper, more fundamental question: Why would Adweek put this in its daily briefing in the first place?

The answer, I’m afraid, has to do with a lack of understanding of, and often disagreement about, what marketing is in the first place. Unlike the accounting or manufacturing functions in an organization — which are well defined, understood, and undisputed — the marketing function is often interpreted differently by different types of execs and by different types of firms.

It’s what I’ve referred to as marketing’s civil war — the culture clash between the brand-oriented marketers and the quantitative-oriented marketers. The customer service-oriented marketers are just a new faction — thankfully unarmed, underfunded, and for the most part unable to participate in this war.

Technorati Tags: Marketing, Customer Service, Adweek

June 4 Update: I’m not going to change the original text of the post, because what’s out there is out there, but I’d like to apologize to Adweek and retract the comment about it being irresponsible for including this in its email. The original email asks “Is Customer Service The New Marketing?”, not states “Customer Service Is The New Marketing.” The rest of my thoughts on the topic remain unchanged.

If this is your first visit to this blog, this post might not be for you (I don’t know you well enough to determine its applicability).

However, if you’re a repeat visitor, then it’s definitely for you. Because one thing that I do know about frequent visitors to this blog is that, while they are diverse in many ways, they have at least one thing in common: They’re nerds.

How can I be so sure? Because the cool kids don’t read a marketing blog written by a flabby, aging (but thankfully nowhere close to balding) guy in his late 40s. Oh no — only a nerd would do that.

And as we approach the summer season, we nerds begin to ponder the most important decision we’re going to have to make all summer:

Which books should we read at the beach while we fry?

I’ve read some good books lately. But I’m not sure I’d want anybody to see me reading Predictably Irrational or Nudge on the beach. Not exactly the kind of titles that are going to entice passers-by to start a conversation.

One person I know is taking Naked Conversations with her to the beach. I advised against that, but she wouldn’t listen. If she’s going to a nude beach, I guess that would make it alright.

Another person I know plans to tote along Guy Kawasaki’s Personality Not Included. Oh yeah, I’m sure that will attract members of the opposite sex (NOT).

I hear that one guy is taking Swim With The Sharks to the beach with him. That’s kind of like watching the movie “Snakes On A Plane” while flying.

Then there’s the guy planning to bring a book called Here Comes Everybody. Its subtitle is “The Power of Organizing Without Organizations, but, to me, it sounds like a book about the beach itself.

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By the way, all the links on this post go to a web site called Experts Choice, which was established by a group of MBA students at the University of California at Irvine. It lists book recommendations from folks like myself, Guy Kawasaki, John Seely Brown, and others. All the proceeds from the sale of books purchased from this site are donated to Kiva.

p.s. If I offended you by calling you a nerd, you clearly don”t understand a compliment when you get one.

Technorati Tags: Books, Summer Reading, Predictably Irrational, Nudge, Naked Conversations, Personality Not Included, Guy Kawasaki, Kiva

I published a report called The Hallmarks Of High-Performing Integrated Marketers In Financial Services which analyzes the integrated marketing practices of 175 firms across a range of industries. I thought I’d share some interesting findings from the report, which looked at just the financial services respondents.

Not surprisingly, 83% of financial services firms said that they have made a strategic commitment to integrating marketing campaigns across the channels in which they market in. Interestingly, financial services firms are split — almost down the middle — between those that have achieved a 10% or greater lift in their marketing performance as a result of their integrating marketing efforts, and those firms that haven’t.

My report looks at the business practices and strategies that distinguish the high-performers from the rest of the pack. One finding that I’ll share here relates to the use of performance metrics: High-performers have a different view of what constitutes integrated marketing success than other firms.

High-performers are more likely to measure the lift in customer satisfaction and average customer spend than other financial services firms. And less likely to measure likelihood to refer the brand and brand awareness.

My take: Measurement costs money. It doesn’t matter how simple the metric is. The act of collecting data, measuring results, and making a metric actionable and usable takes time, effort, and money.

The findings from the survey shows that high-performing firms put their emphasis on measuring the metrics that matter — those that measure and drive bottom-line performance. The under-performers can continue to look at NPS and brand awareness at their own risk.

Technorati Tags: Banking, Marketing, Marketing ROI, Net Promoter Score

American Banker reported on JD Power’s 2008 Retail Banking Satisfaction Study, which surveyed more than 19,000 people in January of this year. According to the article:

“Rising fees and poor complaint resolution were people’s chief gripes in a retail banking customer satisfaction survey that gave the industry poorer grades than a year ago.”

Sounds reasonable.

But what the article failed to mention was that in February, American Banker reported on the latest American Customer Satisfaction Index study which found that, in a survey of 18,000 consumers, satisfaction with banks was higher than the previous year.

So, is satisfaction with banks up or down?

My take: It’s hard to believe that consumer satisfaction with banks is up. The impact of the credit crisis, rising fees, and tough economic conditions overall have been building for a while now. The Consumer Confidence Index has steadily declined for at least a year now. It’s hard to believe that any consumer-focused industry would be experiencing increasing satisfaction in this environment.

Debating if overall satisfaction is up or down, though, obscures some more important questions:

1) What’s Wachovia doing right? As banks’ index dropped 3.5%, Wachovia’s score increased by about the same percentage. In the ACSI study, banks as a group scored 78. Excluding the five largest banks — of which Wachovia is one — the score was 80. Wachovia’s performance flies in the face of other firms’ declining scores, and is in sharp contrast to the other large banks which dragged the industry down.

2) What’s up with credit unions? According to the American Banker article, the JD Power study included credit unions, which “accounted for 9 points of the drop in this year’s overall score.” That’s very counterintuitive, and seems to contradict plenty of press releases from CUs themselves touting their astronomically high member satisfaction rates.

3) Is satisfaction the right thing to measure? Trust me, the last thing I want to do is give the Net Promoter Syndrome sufferers an opening here, but we’ve got to face the facts: If two large-scale studies that purport to measure “customer satisfaction” with banks can produce directionally-different results, maybe there’s something wrong with the measure that’s being used.

Bottom line: While you can’t blame the firms whose satisfaction scores increased for tooting their horns, I do hope that behind closed doors that the banks are giving a bit more scrutiny to the JD Power and ACSI findings, and doing what any good marketing analyst would do: Trying to accurately attribute the change in results — whether negative or positive — to the factors that influenced those changes, whether they be internal effects (like improved or diminished service levels) or external factors (like economic conditions).

Technorati Tags: Banking, Customer Satisfaction, American Banker, JD Power, ACSI, Credit Unions, Wachovia

Used to be, if you had a question about etiquette, you turned to Emily Post. But who do you turn to for expertise on Twitter etiquette?

I have some Twitter etiquette questions that I need answered. For starters:

How do you tell Twitter friends that their tweets are irksome, vexatious, nettlesome, and sometimes just plain irritating?

Maybe that’s not the right question. Maybe it’s “should” I tell these Twitter friends about how I feel in the first place? After all, they may have other Twitter friends who want to know that they’re currently spreading butter on their toast.

I know what you’re thinking: Just unfollow this person.

But it isn’t that just as offensive as telling them that their tweets are annoying? After all, for those of us who use Twitter to have conversations (as opposed to those Twits who seem to just want run up the total number of people that they follow, or worse — be followed by), the mutual act of following each other creates a kind of bond between two Twits.

In one regard, Twitter is a form of “permission” communication. By following you, I am permitting you to interrupt what I’m doing with your Tweets. And it’s the same when you follow me. Before I tweet, the unwritten/unspoken criteria for determining if a thought is tweet-worthy is “will this add to, or start, a conversation?”

I recognize that not everybody is going to use that criteria, and that I may have to compromise. But really, what’s going through someone’s head that makes them tweet every damn thing they do during the day? Are they that self-centered to think that somebody cares? Or just clueless?

And where is Emily Post when we need her?

Technorati Tags: Twitter

At the CUES Experience conference in Minneapolis this past week, conference attendees went offsite to visit firms with a reputation for delivering a great customer experience. I went on the tour of Summit Brewing in St. Paul.

No, I didn’t go just to sample the beer (I’ll keep telling myself that until I really believe it).

Founded in 1986, the brewery has cultivated a loyal following. It’s strategy and philosophy should resonate with financial services executives. Here are some of the comments from Summit CEO Mark Stutrud which resonated with me:

“We’re selfish — we only make what we like.” Stutrud takes pride in repeating his firm’s slogan: We only brew what we love to drink. Whatever’s left over, we sell.” There was a subtle message here that is quite subversive in today’s marketing world. With all the focus today on “voice of the customer” programs, Stutrud seems to be saying that he doesn’t listen to his retail customers. But that’s a wrong interpretation. Stutrud stresses his firms efforts to “be on the streets.” His staff spends a lot of time out in pubs talking to bar owners, bartenders, and end customers about how Summit’s beers.

Instead, the comment refers more to Summit’s adamant refusal to produce a lite beer — regardless of how many customers ask for it. He says it wouldn’t fit with Summit’s strategy or philosophy. I can’t help but wonder how many FIs have the clarity of strategic direction to make that kind of decision.

“We had to overcome the perception that local beer isn’t good.” Stutrud talked about the perception that existed in the market when he started the brewery that imported beers were better than domestic beers, and the [mistaken] impression that the big national brands had a higher quality product than the few smaller, microbreweries that existed.

Stutrud gives Jim Koch of Samuel Adams credit for the success of its ad campaigns that showed off the foreign awards it won, helping to change long-held perceptions about domestic beers. And Stutrud educated the group on how the very nature of brewing a more flavorful beer means that the shelf life of that beer is very short — in effect, showing that the big national brands can’t be higher quality.

The connection to financial services is perhaps the reverse. Smaller banks and CUs have long tried to show that smaller is better — that they’re able to provide better, more personalized service that bigger banks. But not every customer or prospect wants that. Smaller FIs still have work to do to prove to certain segments of customers that they can provide high quality advice and guidance, and a high level of operational effectiveness that larger firms may be perceived to provide.

“We look for people who are passionate about the product.” The people that Stutrud was alluding to were both employees and customers. There aren’t a lot of people working at Summit, and Stutrud wants people who do work there to not only be good at their job, but into the product. And it’s the same with the et of customers Summit tries to attract. In Stutrud’s words, it’s people with that “pub/beer culture.” It reminds of REI, where the folks who work there are not just knowledgeable about the products, but avid participants in the sports and activities those products represent. And it seems like I every time I go into my local REI store, I feel like I’m not worthy to be there, since all the other customers are accomplished hikers, snowshoers, or bikers.

Contrast that with your typical financial services firms. First off, walk into pretty much any bank branch and you’re lucky if you speak with someone who has more than four hours training on any particular product, or any knowledge of what the competitors’ products or rates are. On the customer side, the Summit lesson is something most FIs simply do not get. To engender strong loyalty to a bank or credit union, it takes customers who are deeply involved in the management of their financial lives. Nobody is going to care about your bank or credit union if they don’t first care about financial products and services.

Bottom line: Summit’s story offers lessons for FIs regarding strategic direction and commitment.

Final note: I hope that anybody that reads this post is sufficiently impressed that I recalled all this despite the glasses of Extra Pale Ale, Extra Special Bitter, and Porter that I tried.

Technorati Tags: Marketing, Financial Services, Banking, Credit Unions, CUES, Summit Brewing

I had the opportunity this week to hear the story of Commonwealth CU’s Young and Free Alberta (Y&F) Gen Y marketing campaign not once, but twice. Not only did I get to sit in on Tim McAlpine’s presentation (co-presented with Morriss Partee) at the CUES Experience conference, but I had lunch with Tim on Tuesday and heard the back story in all its goryious detail (typo intentional).

The Y&F story is a great example of how one financial institution successfully attracted new members from the Gen Y generation to its credit union. It’s definitely a best practice (just kidding).

Apparently, though, other FIs do think it’s a best practice. CU Tomorrow recently called attention to some marketing campaigns from both Scotiabank and Utah Community Credit Union aimed at attracting Gen Yers. Ben points out that both efforts incorporate a lot of interactivity (”don’t want to launch a young adult site without video these days”), an access card, and “surreptitious but constant marketing.” In other words, just like the Y&F campaign.

Will Scotiabank’s and Utah Community CU’s efforts succeed? Maybe. Probably. I have no reason to believe that they won’t succeed, at least to a certain extent.

But I’ll tell you what I do have reason to believe: That the more FIs that go to market with this approach, the less likely it is that they will succeed.

Just as my generation didn’t want its father’s Oldsmobiles, Gen Yers don’t want their fathers’ financial institutions, nor do they want to be marketed to the way FIs marketed themselves to Gen Yers’ fathers (I’m not being sexist, here, banks just don’t do much marketing to Gen Yers’ mothers as far as I can tell).

So let me ask you this: How long will it take before Gen Yers realize that the Bank of Fill-In-The-Blank’s Gen Y marketing campaign is a direct ripoff of the five (or ten or twenty) bank/credit union campaigns that came before it?

And let me ask you this: Do you think Gen Yers will really consider those efforts to be truly authentic appeals to engage them, and win their business?

My answers: Not very long and NFW.

My take: The window for “me-too” marketing campaigns from FIs targeted at Gen Yers is rapidly closing.

Nearly four years ago, I wrote a report called Why Banks Can’t Afford To Ignore Gen Yers: Understanding The Financial Needs And Behaviors Of The Young Consumer. The response to that report was the closest thing to hate mail that I ever got. One senior marketing exec at a large bank told me, in not so many words, how stupid I was for suggesting that her bank focus on Gen Yers.

From my perspective, FIs have had four years to figure out how to attract and market to Gen Yers. Today, it seems like they’re falling over each other, and copying the same pages out of the playbook in order to attract this market.

Me-too marketing isn’t going to work for long with this segment. Sloppy seconds might still make a decent meal. But I wouldn’t want to be the third bank or credit union in a particular market rehashing the Y&F approach.

Technorati Tags: Banking, Marketing, CU Tomorrow, Young and Free Alberta, CUES Experience