Monthly Archives: October 2013

Churn

We have a statistic in the television business called churn.

English: Butter churn, Dunserverick Museum One...

(Photo credit: Wikipedia)

Actually, it’s more about the cable TV business and it’s short for churn rate.  As is sometimes the case, Wikipedia defines it nicely:

Churn rate, when applied to a customer base, refers to the proportion of contractual customers or subscribers who leave a supplier during a given time period. It is a possible indicator of customer dissatisfaction, cheaper and/or better offers from the competition, more successful sales and/or marketing by the competition, or reasons having to do with the customer life cycle.

Obviously, if a company is to grow, that growth needs to exceed its churn rate – you need to gain more customers that you lose.  Simple, right?  It points out pretty clearly that keeping customers is at least as important as adding new ones.  That simple thought is what popped into my head as I read the results of some research from the Accenture Global Consumer Pulse Survey.  You can look for yourself here.

What they found was that companies are not working hard enough to stop consumers from switching. In fact, among people who changed service providers – banks, phone companies, retailers – 81% said that the company could have done something differently to prevent them from switching.  Maybe it’s not as simple a thought as it might appear?  As MediaPost reported:

The report says that while service providers… have more data and insights into consumer desires and preferences than ever before, providers have failed to meaningfully improve customer satisfaction or reverse rising switching rates among their customers.

Ouch.  So what does that mean specifically?

  • 91% of respondents are frustrated that they have to contact a company multiple times for the same reason
  • 90% by being put on hold for a long time
  • 89% by having to repeat their issue to multiple representatives
  • 85% of customers are frustrated by dealing with a company that does not make it easy to do business with them
  • 84% by companies promising one thing, but delivering another
  • 58% are frustrated with inconsistent experiences from channel to channel

Marketing is often focused on growth.  However, as any financial person will tell you, improved profitability can come from cutting expenses as it does from growing revenues (and I’m a strong advocate for the latter since those cuts often kill growth and revenues but that’s another screed!).  Churn is the cutting of losses and helps reduce costs – I think it’s cheaper to keep a customer than to acquire one.  It’s also something that businesses can fix if they focus on it.  None of the study’s findings are difficult to address IF there is an awareness and a commitment to do so.  Is your business ready to do that?

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Turn The Chair

I was having a coffee with an old friend the other day.  We plopped ourselves down in a couple of overstuffed chairs at one of the local Starbucks to chat and it became apparent in a couple of seconds that the sun was streaming right into her eyes.

Free chair, new fence

(Photo credit: Kentucky Photo File)

I mentioned that fact and asked if she wanted us to relocate.  She sat forward and said “no, if I sit like this it’s not an issue.”  It wasn’t, but since I had no desire to watch her contort herself nor to see her back go out from sitting in an awkward position, I suggested she do something to remedy the situation: turn the chair.

That, in three words, is pretty much what I do.  I help clients to come up with solutions that might not be obvious to them in the moment but which are readily apparent to someone who isn’t caught up in the problem.  Questioning the underlying assumption and changing the paradigm is what many businesspeople fail to do on their own (and what just as many of us do in the “real” world outside of business as well!).  It gets back to the “what if” conversation we explored here a little while ago.

My friend could have sat sideways and waited for the sun to move so it was out of her eyes.  That would have distracted her from our chat at best and left her with a sore back or half blind at worst.  In a sense, it would have been the equivalent of blaming a business failure on a bad marketplace.  When the market turns – when the sun moves – things will be fine.  I don’t think any business really has the luxury of that sort of thinking and turning the business’ figurative chair is how the enterprise can carry on despite unfavorable circumstances.

I’ve been told that consultants are a luxury in good times and unaffordable in bad times.  As you might expect, I disagree.  We’re the folks keeping the sun out of your eyes and the sun is always shining in business.  While we might know a lot about your business (in fact, we need to!), we’re not caught up in the day-to-day, in the politics, or the latest office drama.  We have a different perspective.  Not better – different, and sometimes, that’s all that’s needed to move forward.

That’s my take – what’s yours?

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Lou

How can I write about anything this TunesDay but Lou Reed?  He passed away the other day from liver disease and it’s a huge loss to any fan of rock music.  Lou was a founding member of The Velvet Underground, a band most of you have neither heard nor heard of.  As with several other members of the Rock & Roll Hall Of Fame (they’ve been in since 1996), their influence goes way beyond their commercial success, and Lou’s went even beyond that.  He also points out a few things that are relevant to business too.

First, a little Lou to get us energized:

Lou’s efforts with The Velvet Underground were a bomb.  Not the bomb – a bomb, as in commercial failure.  While the world is littered with businesses (and don’t kid yourself – no matter how artistic the band, it’s a business too) that fail, we sometimes don’t recognize that contained within that failure is a ton of success.  Obviously, since they’re a Hall Of Fame act, the artistic side of the venture was working.

This isn’t an unusual phenomenon, by the way.  Two examples that pop into my head are Galileo and Thoreau.  Galileo, the father of science, was locked up as a heretic and looked upon as a failure in his time.  Thoreau’s works were mostly ignored for 100 years and his influence on many folks in the latter part of the last century is undeniable (check out Civil Disobedience and Walden if you don’t believe that).  Smart businesspeople look in the ashes of “failures” for embers of success.

Back to Lou.  I chose the song Rock And Roll because it too makes a business point.  First, the music.  It’s a very familiar chord sequence.  Slow it down and you have Sweet Home Alabama.  Add a droning lead guitar and you have Sweet Child Of Mine. We don’t always need new, innovative or unusual chord sequences to make magic either in music or in business.  Second, the lyrics:

Then one fine morning, she turns on a New York station
she doesn’t believe what she hears at all
Ooohhh, she started dancin’ to that fine fine music
you know her life was saved by rock ‘n’ roll
yeah, rock ‘n’ roll

Anyone who has had that experience – feeling as if they had their life saved by music – knows how powerful an emotion Lou is tapping here.  That’s a business point as well.  Lou describes a typical young adult who can’t relate to her parents or situation in life and yet finds hope and salvation in music.  Using subjects to which the target audience can relate and expressing yourself in honest, simple language are good thoughts to keep in mind as well.

Finally, Lou didn’t have classic rock looks nor a great voice yet he was able to succeed.  Many of us tend to dwell on the obvious shortcomings our businesses may have instead of focusing on how to use the assets we do have to grow.  In Lou’s case, those assets were a fantastic vision, fearlessness, and  his intellect. While we’re all a little worse off for his departure, we have his music and the things he showed us through it.  For that, I’m appreciative and glad.  You?

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The Scenic Route

I’ve been doing a bit of driving in places with which I’m unfamiliar lately.

Map of Gray's Inn Road

(Photo credit: Wikipedia)

Way back in the dark ages of the 1980’s, doing that sort of thing required one of two actions. Either one bought a map from someplace such as a gas station or the AAA or one called ahead for directions. I vividly recall a moment of panic on a business trip years ago when I thought I left a folder full of routing instructions to get me through a day’s worth of appointments in a hotel room.  The thought of finding a pay phone (remember them?) and having to write down turn by turn directions when I was already on a tight schedule gave me agita before the day was very old.

Today, of course, getting from point A to point B is as simple as pushing a button and announcing the destination. Every “smart” mobile device (which means about 60% of the mobile phones out there) has some sort of mapping/driving directions program.  The device speaks, we listen, and somehow we arrive despite having no clue as to where we are or how we got there.  Occasionally the devices are even smarter than we are.  While we might know a shorter route than the one we’re being told to take we don’t know about traffic, construction, or other delays en route.

There is no doubt that Waze, Google Maps, and other software are great for when we’re driving.  I am fond, however, of “getting lost” a little bit when it come to taking about business.  Have you ever just got in the car and driven around?  Maybe you see a sign for a town you’d heard of but never seen.  Along the way there might be a diner or fruit stand.   It might not be the most direct route and if you get lost for real you can announce to the GPS system you want to go home, safe in the knowledge that you’ll get there.  But discovery often comes when we get off the fastest route and maybe try the scenic route.

The pace of business is demanding but turning off our business GPS and “wandering” can often pay off handsomely if we can be disciplined enough to get off the beaten path.  Oxymoron?  No – imagining new things and being creative is hard and takes discipline.  Losing our directions without getting lost is tricky.  Can you do it?

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The Godmother

Foodie Friday is a bit somber this week since our topic today is the passing of Marcella Hazan.

Marcella: will she peel my beans too?

(Photo credit: kattebelletje)

You might not be familiar with the name but I can assure you that you are familiar with the influence she has had in the food world.  Her obituary in The Times was entitled “Changed The Way Americans Cook Italian Food” and that may be an understatement.  Let me explain and point out a few things we can take away from her that might just apply to your business.

The comparison is often made between Marcella and Julia Child.  What Julia did for French food in this country, Marcella did for Italian.  I think that’s where the similarities end.  Julia was formally trained, Marcella was trained as a biologist, not a cook.  Julia was an American who went to Paris while Marcella was an Italian immigrant to this country.  Much of the food Julia prepares is complex; Marcella’s food is very simple but, as she wrote,

Simple doesn’t mean easy. I can describe simple cooking thus: Cooking that is stripped all the way down to those procedures and those ingredients indispensable in enunciating the sincere flavor intentions of a dish.

Of the hundred or more cookbooks I own, Marcella’s are the ones that are dog-eared and stained from much use.  If you want to learn to cook, begin with “Essentials of Classic Italian Cooking” which is her first two books in one volume.  In its introduction, she wrote the following about Italian food:

It is not the created, not to speak of “creative,” cooking of restaurant chefs.  It is the cooking that spans remembered history…There is no such thing as Italian haute cuisine because there are no high or low roads in Italian cooking.  All roads lead to the home, to la cucina di casa – the only one that deserves to be called Italian cooking.

What business lessons does Marcella teach us?  First, you can hear how she is confident in her positions and speaks with authority.  Second, she prefers the simple solution rather than the overly complex.  Third, she always seems to cook on a stove rather than in an oven – it’s so the cook can pay better attention to the food.  Fourth, she emphasizes great ingredients and bringing out the best from them.  Interpret that as a management goal with your team as the ingredients!

Finally,  as you read in the last quote, she always emphasized authenticity.  She disdained the use of microwave ovens to speed up cooking not because she was a Luddite but because the texture and flavor of the product was altered.   How many businesses suffer because they cut a corner or speed up a process only to denigrate their product?

Marcella was the Godmother of Italian cooking.  She changed how we eat and her lessons can change how we conduct business.  Does that make sense?

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Sharing Is Caring

As you might have guessed from many of the posts here on the screed, how brands should behave in today’s marketing climate is a big focus of mine.  That focus is due to the questions I get asked by my clients on a regular basis both with respect to media and technology.  Which is why I found a recently released study by the folks at Edelman so interesting.

Called brandshare (they used the lower case, it’s not a typo!), the study sampled 11,000 consumers in the U.S., UK, Canada, France, Germany, Brazil, India and China, and evaluated approximately 212 local and multi-national brands.   You can see a slide deck on the study here.  It found that an overwhelming majority (90 percent) of people across eight countries want marketers to more effectively share their brands. Yet on average, only 10 percent of people think any given brand does it well.  As you know, I believe any time we see gaps between expressed consumer desire and actual brand performance, there’s an opportunity.

So what exactly did they mean by “sharing?”  The study measured six dimensions of sharing – shared dialog, shared experience, shared goals, shared values, shared product and shared history – and found a link between effective brand sharing and business value; the greatest business value coming from shared product and shared values.  Obviously it’s not just companies asking for retweets and Facebook shares!

A large majority (91 percent) of respondents said they want to have a hand in the design and development process, with that desire being equal among those in developed and emerging markets. People also want complete openness about product performance with nine out of 10 wanting to know how they are made and how they should perform against competitors.  We’ve talked about transparency before but this demonstrates the extent to which consumers have come to expect it.

Of the six sharing dimensions, shared values has the highest unmet demand among people. More than nine in 10 (92 percent) respondents want to do business with brands that share their beliefs. In addition, nearly half of the respondents (47 percent) want brands to be more transparent about how products are sourced and manufactured, just over four in 10 (43 percent) want brands to do more to give back to their communities.

I think this quote sums it up nicely:

Marketers must evolve from a traditional linear model of focus groups that ends with the consumer to one that involves people at every stage. Brands must also synchronize their brand marketing and corporate communications narrative into one cohesive message, while redesigning current engagement channels to incorporate higher-value sharing.”

So now that you know it, what are you going to do about it?

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Tossing It

Somewhere along the line it became most cost-effective to throw things away than it is to fix them.

broken ipad screen

(Photo credit: 3dom)

I know people who buy new printers rather than spend the money on the ink – it’s about a wash financially and they get a new printer.   I recently replaced a small appliance (ok, a little wine storage unit) because when I found out how much it would cost to fix the fan that had broken, a new unit, complete with warranty, made more sense.

Tech may be among the worst offending industries.  I mean, if the battery goes on your iPhone or MacBook Air, you can’t replace it.  We toss the unit and get a new one.  TV‘s are so cheap that the notion of repairing one is pretty alien these days, particularly when we consider that the new item will inevitably be better technology than what’s being fixed.

There is a problem with this mindset, however.  Too many people and businesses extend it to their thinking about customers, employees, and others.   When a relationship gets broken, we weigh the costs of fixing it against the expense of replacing it.  Rather than “fix” an employee who might have underperformed, we fire them.  That results in a few things – writing off the investment we’ve made in that person thus far as well as incurring the time and expense to replace them with no guarantee of better results.  Rather than investigating each and every customer complaint about service, we try to placate the disgruntled customer with some token gestures (the hotel room isn’t clean?  Oh, have a free bottle of water!) and don’t really mind when they don’t return again – they’re a pain.  We don’t look at them as fantastic suppliers of information about our failings – we consider them to be pesky children who rouse us from our daily business sleep.

Business relationships – with staff, with customers, with the public at large – are not disposable.  In many cases they are not replaceable and all efforts must be taken to repair them.  It’s almost never more cost effective to toss them.  You agree?

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