CHAPTER 9
Gathering Customer Intelligence
Examining the Botany of Individual Leaves
We’ve already established that the majority of companies spend the majority of their time on new customer acquisition expeditions. And while new customers are critical to an organization’s growth (I hope you’re not getting the impression I would ever suggest otherwise!), you should know by now that new customers are, without a doubt, the most difficult and expensive (not to mention exhausting and inefficient) way to grow a business. In fact, I would go a step further: I believe strongly that many companies are literally destroying themselves from the inside out by having such a backward and myopic view of business growth.
I’m not suggesting that you entirely disregard your “new customer” focus. Far from it. I’m merely hoping I can help you strike the Evergreen Marketing Equilibrium that I introduced in Chapter 1. This chapter is all about taking a good, hard, inward look at the systems you have in place within your company to manage your growth efforts with your existing customers. After all, your existing customers are the source of massive business-building potential—and your time, energy, and money are much better spent on taking care of and establishing stronger relationships with those customers than on chasing new ones. For any business, at any stage, this is critically important for a number of reasons: focusing on your existing customers will allow you to create new profits faster and more easily than you would with new customers, and building a retention/relationship culture in your business will ensure that you maximize the potential value of every customer.
Remember, though, that every existing customer was a new customer at some point. You want to ensure you have the right systems in place to allow new customers to grow with your organization. This chapter will help you put the systems in place to do just that. But first, let’s address all that money that has been left on the table…
RECOGNIZING WHEN CUSTOMERS LEAVE MONEY ON THE TABLE
Remember the story about Rachel Brown’s bakery, Need a Cake, and its disastrous experience with Groupon? I believe promotional-based tools such as Groupon can be highly effective at driving new customers through your doors. However, as a business, you need to be crystal clear about what you aim to achieve with this opportunity before you embark on it. And (it goes without saying) you also need to be fully prepared for the potential onslaught of new customers. Otherwise, you run the risk of losing your shirt—and in the end not having much of anything to show for your efforts. The difference between businesses that make this type of dramatic promotion work vs. those that don’t is major.
I’ve purchased a number of ultrahigh discounts and have enjoyed most of them. I’m always shocked, though, at just how much money is generally left on the table after the transaction (in other words, how much in potential future profits the company forgoes by not making moves to establish a long-term relationship with me). Whenever I visit a restaurant that’s intrigued me enough to try it and that establishment doesn’t take the opportunity to try and learn about who I am, or to capture my details into some sort of database, I think the business owners have entirely missed the boat. They’re not focused on systematically building a relationship with me. Instead, they are relying on their content to bring me through their doors again—and, as we know, the content alone is almost never enough. Sure, the food might be extraordinary, but out of sight, out of mind. People are busy. We forget or quickly return to old habits. Why not put retention systems in place to bring customers back? It’s simple.
A few years ago the owner of a small local restaurant came to me and explained that while things were busy, the business wasn’t growing. When I asked about the customer database, I discovered, to my surprise, that one didn’t exist. I helped my client create a very simple system for capturing customers’ names, and just four short years later, he maintains a database of more than 6,000 customers. Those customers have literally become the lifeblood of the business. The customer database has allowed him to go from stagnation to growth of more than 30 percent year after year.
If you have a small to medium-size company and you’re not building a customer database, you have a serious hole in your business model. You’re doing nothing short of missing one of the crucial components of success in business. Just as the customer is your most valuable asset, that asset is useless if you have no way to access it. How can you strategically and methodically market to your customers if you have no way to reach them? You need to be able to harness the power of your database. You need to be able to e-mail, call, or tweet your customers. Whatever is appropriate—even send them snail mail, if that’s right for your audience. This is one of the keys to building an Evergreen business, and it can’t be overlooked.
Many larger organizations now have very sophisticated customer relationship management (CRM) systems in place. Many smaller companies have nothing in place. Still others have all their customer information in files in a cabinet, or in databases on a computer, but they’ve never done anything useful with the data. A database is only useful if you actually use it. The problem, though, is that many people don’t know how to use it—or maybe aren’t inclined to because they don’t fully understand what the database has the potential to do. If that’s the situation you find yourself in, I’m glad you’re reading this book. Carry on.
A customer database will allow you to better understand your customers. You’ll learn helpful things, such as how frequently they shop with you, when they last visited your business, and how much they spent. And that’s just the beginning. Once you set up the basic fields, you can start segmenting your customer list. That’s where the fun begins, because that’s when you are able to create even more effective marketing based on the archetypes you developed and defined earlier.
The client I mentioned a moment ago continually segments his list. He also lets customers choose specifically what sort of information they’re interested in receiving. This brings me to an important point about your customer list. Your list is the most important tool you have for unlocking the potential value in your customers. Your existing and soon-to-be customers should be on different lists, as each requires different kinds of messages. When I talk about segmenting your customer list, what I’m referring to is breaking it up in different and specific ways to match different and specific criteria. We’ll get to this segmentation (and how to use your list) shortly. But first, let’s talk about the various ways you can capture your customer data.
CHOOSING YOUR DATA COLLECTION TOOLS
How do you capture the information about your customers? Data collection is really a personal thing—one that each organization needs to approach in a way that makes sense for its unique character. For example, the size of the company, the type of company, and the nature of the interaction with the customer (online, in-store) all need to be considered carefully. It’s also important to contemplate your customer archetypes and how they communicate with your company. And finally, it is key to recognize the range of options available—from high-tech to low-tech—and that each has unique merits. Let’s talk about a few of the most common options for data collection.
Old-School Inquiry Cards
You can start a customer database on paper. As silly and archaic as it may sound to ask customers to answer a few questions on a simple piece of paper, don’t you think you would be better off with this system than with no system? Remember the earlier example of my local butcher, and how the index-cards-in-the-shoebox system worked for that business? Yes, you would also benefit from this system (if it is right for your character).
I know many companies that use something as simple as a comment card for the main purpose of collecting customer information. Sure, they’re also interested in gaining their customers’ feedback and learning about individual customer’s experiences, but the main goal of offering comment cards is to build the customer database. Anytime I visit a restaurant or service provider that doesn’t take a moment to try and figure out who I am and how to stay in contact with me, I can’t help but think they are just burning money.
Point of Sale (POS) Systems
Many companies use a point of sale system, which might be as simple as a computer that captures numerous details about the transaction. Although somewhat antiquated, these systems can be invaluable, particularly for small businesses. The beauty of using a POS system is that it allows you to track an individual customer’s purchasing habits (e.g., dates of purchases, frequency of purchases, transaction size), which we’re going to talk about shortly.
The traditional POS machine has seen major advancements in the past few years with the advent of new technologies that essentially give anyone with a mobile phone a personal POS system. Jack Dorsey, the founder of Twitter, launched Square in 2010. Square is a small reader device that plugs into the headphone jack of any iPhone, Android smart-phone, or tablet, turning that device into a credit card processing machine. This new technology has been embraced by all sorts of businesses—from the food truck on the corner to the vendor at the farmer’s market. Square offers a merchant a back-end or administrative panel for building a product catalog, managing sales activities, generating reports, and sending promotions to customers.
The Square reader is free, by the way. You only pay a credit card processing fee, and if your business is still operating with a simple bare-bones cash register, this system would be a great way to start managing your transactions and sales activity.
Automation Software
The Internet and cloud computing applications have given many companies the ability to do some incredible things. Dozens of new automation software programs are offered each year, ranging from sales and marketing tools to customer relationship management tools. Some of these tools are tailored to the needs of sales representatives, allowing them to track prospects and where they are within the sales cycle. However, many can also be wonderfully useful for organizations of various sizes (off-line and online) for collecting and managing customer information.
In my own company, I use a tool called Infusionsoft. This sales and marketing automation tool allows me to create some pretty sophisticated marketing funnels. It’s brilliant. In a nutshell, people can visit my website and sign up to learn more about me or my company or to receive my newsletter. Once a potential customer subscribes, that person is instantly placed in an automated sequence. The automation is thoroughly customized, which allows me to create a personalized experience for the customer. I have multiple sequences based on why a customer has subscribed to my site, from which web page, and what options were chosen. The possibilities are endless. If a customer makes a purchase, the automation will engage in a new customer sequence to ensure complete and total satisfaction. All the while, I can—at any time—instantly find out where a customer is within the sequence or suspend the sequence should a customer require personal attention.
Before you get all bothered—“But, Noah, you just finished telling us we shouldn’t automate, and that we need to build real relationships with our customers!”—let me explain. You need to maintain an authentic and personal tone with your customers at all times. You also need to treat each customer decently, with respect, and you must continually offer immense value and forbid the sending of “roach letters.” However, there’s nothing wrong with automating aspects of your marketing to get customers accustomed to who you are (i.e., your character). The key is that you can do all this in a very smart and methodical way. Let’s face it. No company will be able to have a one-on-one relationship with each individual customer, so you need to get smart about how you maintain those relationships. Always remember, any automation must match your corporate character and be mindful of the customer archetype you are speaking with.
GETTING YOUR CUSTOMERS’ INFORMATION
The easiest way to get your customers’ information is to simply ask for it. You might use a simple comment card or take a more high-tech approach. Retailers have gotten better at this information gathering over the years. My wife loves to buy clothes for our daughters at the Gap. We can’t check out at this store without being asked to provide our e-mail address. Most major retailers have gotten on board. Some companies now offer to e-mail you the receipt, collecting your e-mail at the time of purchase. Apple was perhaps the first to do so, but now it’s common practice.
I could list a million ways for you to start building your customer database. The point is this: If you’re not building your customer database, then you are leaving hundreds, thousands, or even millions of dollars on the table. What more can I say? Remember Nike’s tagline and “Just Do It!” Start today. Here’s how.
Step One: Be Specific About What You Need
Organizations want to be collecting three types of data: demographic, purchase behavior, and psychographic data. If you have nothing at this point, you should definitely start by collecting the basics:
• Name
• Address
• Home phone
• Cell phone
Before we go much further, let’s take a careful look at that first data point. It’s such an obvious one, but so many companies get it wrong. Do you really believe a company that spells your name wrong really cares about an ongoing relationship with you? Do you know how many times I’ve received material for Noah Flemming (spelled with an extra m)? Really? Am I expected to believe that this company cares about establishing an ongoing relationship with me if it can’t even spell my name right?
And let’s dwell for a moment on the benefit of knowing zip codes and postal codes. A good friend of mine wasn’t thrilled when he started receiving phone calls at five in the morning from the parent company of the gym he had joined. A simple time zone or location field in the customer database might have allowed this company to identify which customers were likely to still be sleeping and shouldn’t be bothered for a few more hours.
Depending on what type of business you are in, you might request additional demographic information from your customers. For example, it might be worthwhile to know their gender and education level.
Okay, so now let’s move on to the other data points. If you are using a POS system or automation software of some sort, your customers’ transactions are being systematically documented, which means that you are already capturing:
• Date of purchase
• Total spend
• Items purchased
Everything up to this point, however, is standard operating procedure for most companies. One of the most critical aspects, though, of building a successful customer database for an Evergreen business is learning about each customer in a more personal way. You’ve spent so much time creating your corporate character and ideal customer archetypes. Don’t drop the ball now! Even if your company doesn’t want to invest in (or take the time to learn about) more sophisticated systems, you can still build a customer database in a relatively low-tech way, just like my local butcher did.
The key elements of your database will be specific to who you are and what you do. Furthermore, every business will be different. But the basic idea is that the more actionable information you can generate about your customers, the better.
By way of example, here’s the type of information any number of B2C companies might like to collect:
• Birthday
• Spouse’s birthday
• Kids’ names and birthdays
• Anniversary
• Pets
• Special interests
Regardless of whether you’re operating a B2C or B2B company, wouldn’t it be useful to know this type of information? What other questions could you ask?
I know I gave you a big dose of Donald Trump in Chapter 8, and I apologize in advance, but I need to talk about Trump again: When customers sign up for the hotel chain’s free Trump Card Privileges Program, they are asked to provide a ton of information, including (but not limited to) household income, names and birthdays of pets, children’s information (names, genders, birthdays, special dietary requirements), snack preference (salty, sweet, sour, spicy), beverage preference, floor preference (high floor or low floor), room temperature preference, music preference, pillow preference (airway, body, junior body, leg bolster, synthetic, calm, balance, purify, heal, revitalize, foam), newspaper preference (Wall Street Journal, New York Times, Financial Times, USA Today, or a local newspaper)—and anything else you could possibly think of.
You see, the Trump Hotel Collection recognizes that even though it manages some of the most luxurious hotels in the world, the content isn’t enough. Those little personalized emotional extras are what make the content that much more appealing and create a customer experience that’s memorable beyond just another stay in a hotel.
Returning to my restaurant client for a moment. Hypothetically speaking, what if he asked the right questions and some of his customers had the opportunity to divulge that they were interested in craft beer and special events only? Then he could segment those customers accordingly and build marketing programs centered around those specific interests. Does that make sense? Sure it does! And this is precisely the kind of thing that is both easy and effective. What questions should you be asking? What data would be useful for you to collect?
Step Two: Incentivize It
This same restaurant client holds a contest every month for new subscribers to his e-mail database. The winner of the contest receives free lunch for a month. There’s no limit to how many times the winner can visit—no questions asked. Each month, my client receives hundreds (sometimes even thousands) of new entries. To enter the contest, a customer needs to fill out a comment card, provide a variety of information, and check a box that gives my client permission to contact the customer with regular e-mailings. Do you see how many great marketing opportunities were created with this simple form?
What will you give a customer in exchange for signing up for your e-mail list on your website? Think of some sort of specific value you can give each customer. If you sell European-style kids clothes, it might be a coupon that can be redeemed in your brick-and-mortar boutique. If you are an accountant, you might offer a free report called “The Top 10 Tax Loopholes the IRS Doesn’t Want You to Know About.” If you’re a web service provider, it might be a free subscription to your monthly newsletter or a two-month trial to your paid service. The way to generate sign-ups is to offer something of immense value.
Step Three: Segment Your List
Why should you segment your list? The answer is simple: All of your marketing with prospects and customers should feel as close to a genuine human conversation as possible. Just as you collected your customer data in three specific areas—according to demographic information, purchase behaviors, and psychographic interests—once you’ve collected the data, you should also be able to segment it along these same lines. When you start slicing and dicing your data to tailor your messaging to customers’ specific needs, desires, and interests, you are able to curate each customer’s experience. This doesn’t need to be complicated, but the more closely you are able to match your marketing, words, and ongoing communication efforts to specific customers, the more responsive they are going to be. It’s as simple as that.
Social media experts are always talking about the “conversation”—how we need to join in on the conversation our customers are already having, or else we need to be the ones steering the conversation. We can create a conversation, but let’s not lose sight of what it really means.
Whenever we create a newsletter for our community, or build a community structure, or segment our list to deliver specific and personalized marketing to our customers, we are communicating with them. So how do they communicate back? Do they respond to our e-mails? Do they write a newsletter and send it back to us? Of course not. Our customers respond with actions. In the analog world, they shop, they buy, they tell. In the digital world, they visit, they click, they tweet, they like. When your customers act, that’s when you know you are in the conversation and that you’re creating effective marketing.
Our clearly defined character helps customers know how to perceive us in the marketplace and allows them to embrace our brands. Our community structures allow our customers to come together around our brands. The conversation needs to be ongoing. True. However, the relationship between a company and a customer isn’t the buddy-type that you might have been led to believe it is. When a customer responds with action, we must respond with value. Customers want to do business with companies that are responsive to them and are willing to go beyond the transaction. That’s it.
TRACKING (AND CHANGING) YOUR CUSTOMERS’ BEHAVIOR
Right now, it seems as though everyone loves to talk about big data—specifically, how massive amounts of data enable us to make critical business decisions. The problem is that most of the time we don’t really need that much data to make decisions that will have a big impact. The even bigger problem is that too many companies are combing through vast forests of data without knowing what they want to find.
Here’s the thing: Big data will allow you to validate and justify what you already know. But don’t get so engrossed with the idea of big data that you lose sight of the low-hanging fruit and the potential big profit opportunities directly in front of your nose. In Chapter 7 we discussed how Starbucks needed the data from more than 6 million cardholders to come to a pretty simplistic conclusion that should have been self-evident. But what do I know?
Your inquiry cards, POS system, automation software, and any other sales and marketing tools that you use will help you capture knowledge and gain insights about your customers. You can, in turn, use this information to create better and more targeted marketing offers for them. For example, some major insights can be gained by knowing these few things about individual customers:
• When did the person first become a customer?
• How often does the person visit your business?
• What’s this customer’s average spend?
• Which products does the customer purchase the most?
Even more insights can be gained by knowing these few things about your customers in the collective:
• Which customers make up the top 20 percent within your business?
• Which customers have done business with you recently?
• Which customers haven’t shopped at your business in the past 30, 60, 90, or 120 days?
The major difference between collecting loads of data and what I’m suggesting that you do with the data you’re collecting is that I’d like to help you gain insights and knowledge about your customers based on their actual behaviors—mainly, their purchasing patterns. I’m also suggesting you consider the low-hanging fruit for quick, painless business improvements and profit maximizations. I’m not suggesting that you build an endless database by simply knowing who your customers are, when their birthdays are, and so forth. Instead, I want you to be able to gain actionable insights based on your customers’ actual behavior. This is the most powerful aspect of building a customer database, and it offers the greatest opportunity for future profits.
The big data buzz is about capturing large amounts of data and using modern-day computing power to sort through it. Most companies get so whipped up by the excitement of capturing loads of data that they lose track of articulating what they really want to learn. The thing to remember is that it doesn’t need to be big data to be big. You simply need to know what you would like to discover about your customers. Know the information you want. Ask the questions you want answered. Work backward from the outcome or result you are trying to create.
Let me share with you one of my golden rules of business: If you cannot articulate what action you will take based on the data you’re collecting, you do not need that data. Start by articulating what you are trying to learn and what you want to accomplish. Luckily, the process is not difficult—and it can be massively profitable. Now, let’s take things to the next level.
The Recency, Frequency, and Monetary Value (RFM) Model
Keeping an eye on purchase patterns can be helpful for a variety of reasons—perhaps the most important of which is that it can alert you to the fact that an existing customer might be defecting. This information, of course, can give you an opportunity to win back that customer. For example, if a customer hasn’t visited your business in six months, is this person really still your customer? Purchase patterns can be helpful in other areas as well, such as when one customer’s purchase frequency is increasing and when another is suddenly spending a lot less. Be sure to keep a close eye on these different signals.
Companies use three key criteria—recency, frequency, and monetary value (RFM)—to determine who their best and most valuable customers are. This RFM model is a standard method that has been embraced by a wide variety of retail and professional service industries. Here’s how to establish the metrics:
• Recency. How recently has a customer done business with you? Compare someone who did business with you six months ago with someone who was there last week. Who do you think is more valuable to you right now? Obviously, it’s the customer who has done business with you more recently. Past behavior is always a great predictor of future behavior. Those who have done business with you most recently are your best potential customers.
• Frequency. How often does a customer do business with you, and how many purchases does the person make? Those who do business with your company more frequently are more likely to continue these behaviors.
• Monetary Value. How much money does the customer spend with you over a certain period of time? The more money a customer spends with your company, the more likely that person is to continue that behavior.
The real magic to the RFM model comes when you marry all three areas together so that they form one key indicator. Let me give you an example: Your data might identify a customer who typically purchases from you twice a month (frequency), and who specifically just purchased from you three days ago (recency), and who spent more than she usually spends on an average purchase (monetary value). Now, at this moment in time, this is an extremely valuable customer, the type of customer who needs more marketing, better marketing, and more attention from your company.
Now what if the same data showed you a customer, or group of customers, who typically purchases from you on a monthly basis (frequency), and then suddenly two months pass without a single visit or purchase? Those customers may have defected. Don’t you think it’s worth asking why? You can also set thresholds to classify certain levels or to increase where they reside on your Evergreen Ladder of Loyalty, as discussed in Chapter 7. Consider, for example, a customer who purchases every month for twelve months. That could be the threshold that designates this person as being a great customer.
There are, of course, tools to help you track this data. If you operate a small to medium-size business, there’s a good chance that you are already running a system that’s tracking this data. (And if you’re not already doing so, you should be—starting today!) The next step to being smart with your data is to use it to guide your marketing decisions. Let’s keep looking at how to use the RFM model in your business.
Determining Optimal Frequency
Think about the last time you took your car in for an oil change. Unless you have a new car, chances are you follow a pattern very similar to most people. The little sticker in the window says you should change your oil in October. You know you are two months overdue and that you have driven 4,000 miles too many. But you wait, and wait, and wait until the very moment when it is finally convenient (sort of) to take your car in.
Here’s a question: When was the last time your favorite, or most convenient, oil change shop actually reached out to remind you that it was time to bring your car in for its regular maintenance? I’m willing to bet that virtually nobody has received communications from their oil change shop. I haven’t. That’s not to say it doesn’t happen, but very few do. That’s just one example. How about your florist? How about your eye doctor? How about your insurance professional? How about your favorite restaurant?
Virtually nobody follows up with customers enough. More important, we don’t follow up at the right time. So let’s ask the important question: Why don’t we follow up effectively and when we should? Could the answer be as simple as we don’t really know when is the “right time”?
If that’s the sticking point, then let’s dig deeper and answer this question: What’s the optimum time frame for a customer to purchase from you or do business with you again? What’s the ideal frequency for a customer? And, once you determine this time frame, how might you use this knowledge to more effectively communicate with your customers? Well, it depends on the nature of your business.
Here’s what I mean: The car dealer isn’t going to sell you a new car every three months. The dealer knows that for some customers the time frame between purchases is going to be a couple of years. For others, such as those customers who prefer to lease, it’s a shorter time period. But wouldn’t it be valuable if the car dealer kept customers apprised of new models or special leasing deals or opportunities to upgrade—regardless of the typical buying frequency? There’s value in the content and value in the relationship. If you continuously deliver value, then it won’t appear as though you’re simply trying to get your customers to open their wallets whenever you communicate with them.
For restaurants, I would consider the ideal time frame to be fewer than thirty days. Sure, some customers will become raving fans and eat at a certain restaurant weekly. Your more typical customers will come less frequently, but are they even considered customers if more than thirty days have passed? You need to be proactive!
And what is the optimal frequency for customers of a hotel? Well, this depends on a number of factors, I suppose, such as whether the establishment is patronized by a customer for work or pleasure, and the nature of that customer’s schedule, for instance. But let’s consider one scenario: Last October I spent a week with my family at The Breakers, the famous and historic resort in Palm Beach, Florida. We swam in the pool for hours each day and thoroughly enjoyed the other amenities. Do you think we’ll go back again next year? We might. But what if The Breakers started communicating with me in August to remind me that October is quickly approaching and to ask me if I might want to consider booking my vacation? What if the hotel offered me some sort of promotion? The offer doesn’t matter—what matters is that this is the type of customer communication that should be automated and triggered in your business at the correct time. It’s up to your company to decide what the frequency is.
Have you determined the optimal purchase frequency for your business? When answering this question, you should consider your various products or services. Some products might have a very different purchase time frame from others. Do you see how powerful this idea is? Most organizations don’t think about this type of stuff. You can’t assume your content (your product, service, or information) is enough to keep your customers coming back. It’s not enough.
And this brings us to the next round of important questions you need to ask: Why should your customers keep coming back? Why should they purchase more frequently? Really think about it. You need to be able to explain, with relative certainty, why a customer should buy more often. What benefits does the customer get? What conditions are improved?
Just saying that your customers should purchase more often is never enough. Just believing that communicating with customers frequently is going to bring them back won’t work. What benefits are added by doing business with you again and again? Evergreen organizations aren’t interested in merely creating new transactions. We are interested in building long-term relationships with our clients while increasing the value they derive from doing business with us.
Encouraging Desired Behaviors
Let’s get back to the example of the oil change business for a moment. Why do we actually (finally!) get the oil change done? Most of us understand that our car needs the oil change. We understand that the manufacturer has recommended it to extend the life of our car’s engine and to keep the car running as efficiently as possible, but we don’t derive any real, short-term tangible benefits by changing the oil. For many of us, it’s simply a necessary evil.
If your company’s offerings fall into a similar category, it can be challenging to build customer loyalty. Challenging, yes, but certainly not impossible! You simply need to take the lead on encouraging the behaviors you want more of from your customers. This is especially important if your content isn’t really differentiated from your competitors.
Here are a couple of ideas: If your business is built on repeating intervals, can you implement a subscription model? Is there another way that you can lock in customers to come back when they need to come back? You don’t have to discount, but what else could you offer to entice customers to shop consistently at your establishment?
There may be other ways to create additional value for your customers when they purchase your content. Get creative! Here’s an on-the-ground, real-life example: A friend told me that her local Honda dealer partners with a local car wash. Every time she goes in for an oil change, Honda stamps her invoice with a coupon good for one free car wash that day. She often finds herself more motivated to change the oil because she knows that she’s also going to get the car washed. Now here’s something interesting. The oil change isn’t really an “emotionally engaging experience,” but the addition of the car wash—the assurance that she’ll have a clean car—instantly creates that impact. Such a small detail can create a positive and profound effect.
There’s no shortage of ways you can set up strategic joint ventures—even with companies in other industries—and share value, and also assist each other in creating an Evergreen experience.
Learning from Costco
Costco is one of the largest membership-based clubs on the planet, and the seventh largest retailer in the world. Total sales in recent fiscal years have exceeded $64 billion. At last check, Costco had a whopping total of more than 67 million paying members. Yet this company of behemoth proportions takes the time to use big data in a manner that provides real value for its customers.
A friend of mine relayed a personal and wonderful story one day that really exemplified the power of targeted customer communications based on buying habits and data intelligence. She and her husband had been members of Costco for years. She said, “We get snail mail regularly, including their magazine and coupons, but I don’t recall ever getting an e-mail. Until one day I received an e-mail from Costco, so I had to open it.”
The e-mail had been sent to warn her of a salmonella outbreak. It was the fall of 2012, and she had heard rumblings about it in the news, read about it in the papers, but hadn’t really thought that much about it. It seems salmonella outbreaks—linked to foods ranging from cantaloupe to chicken—are all too common these days. The peanut butter she had purchased on a recent trip to Costco had been traced back to one of the sources under investigation as being the source of the outbreak. It ended up being a false alarm, but while things were getting sorted out Costco took the preemptive action of recalling all peanut butter produced during a certain time frame. The e-mail essentially said it was in her best interest to dispose of the peanut butter immediately and forgo the risk of sickness or even death. The e-mail, of course, also offered to take the product back and refund her money.
This is an example of the power of big data. Costco was able to separate the purchases that contained a single item from among millions of daily transactions. Furthermore, Costco was then able to promptly notify these individual customers of their potential risk. But most important, this example shows how data can be used to provide immense value. In Chapter 1, I shared the example of how Kmart knew a teenage girl was pregnant before her own father did; Kmart was using that type of data to increase its sales and profits by targeting specific messages and offers to that consumer. In Costco’s case, my friend explained that this was one of the first times she had felt genuinely grateful for a company’s communications. That e-mail provided immense value to her and her family.
Are you starting to see ways that you might use data to provide additional value to your customers? I hope so.