The Loyalty Robot Learn how to increase customer loyalty and grow online sales automatically Adam Dorrell Webinar 10 Mar 2010 Adam.dorrell@directness.net
Agenda & Hosts Introduction Why build a Loyalty Robot? Economics of returning customers Identifying Valuable Customers Segmenting using Net Promoter Score Using customer feedback Continuous Improvement Rescue/Reward Model The Robot (step 1) The Robot (step 2) Adam Dorrell CEO CustomerGauge 12 years+ e-commerce Melanie Otersen Net Promoter Expert Net Promoter, NPS, and Net Promoter Score are trademarks of Satmetrix Systems, Inc., Bain & Company, and Fred Reichheld.
What we do: Directness We provide technical solutions to help companies add strong metrics to marketing activities CustomerGauge: Automatically measure, understand and analyse customer sentiment, using Net Promoter Score. Identify and grow your most loyal customers. DemonstratorGauge: Collect and analyse field marketing events, demonstrators, mystery shoppers. Track activities and show ROI on budget Used by global organisations +1 million end-customers measured since 2007 +25,000 marketing events tracked since 2008 Company background: hi-tech marketing: Sony, Dell, Compaq, HP, KPN etc Privately funded, based Amsterdam, NL Selected Clients B2b customers Field Marketing events Consumers
Why Build a Loyalty Robot? Traffic costs $$$ New customer acquisition is expensive Customer Database ~$1 Adwords etc E-commerce site 50 cents a keyword @ 1% conversion = up to $50 for a new customer sale Returning customers Lower marketing costs More profitable Lesson: Hold on to your customers but how to do it effectively 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% ~~$50 Returning Customers New Customers
Lesson in Inequalities 95% of Guinness consumed by 5% of customers 5% of Guinness drinkers 95% volume Pareto Principle (80-20 Rule) 80% of revenue from 20% of customers Source: Malcolm McDonald, CIM
E-Commerce Economics Total Revenue 80% 50% 20% 10% Number of customers 30% 10% 5% 1% Actual results (from CLIENT X) 7% of customers (1540) account for 50% of revenue 1,5% of customers (326) account for 20% of revenue Just 0.6% of customers (129) account for 10% of revenue Average customer value is 15x higher in top 1% Results from blend of results from 10 e-commerce companies, 2009-2010
Finding the Value of Repeating Customers Take a sales report (last 6m or 12m), open in spreadsheet Group customers together by email address (or customer number) Sum up the order values by customer 100% 90% Customers v. Revenue Sort total order value from high to low Divide customers into sensible segments: LOW/HIGH or 5/10/85% 80% 70% 60% 50% 40% 30% 20% 93% 50% 50% Repeating Customers New Customers 10% 0% 7% Number of customers Revenue Data Fact: Best Buy found that 7% of its customers accounted for 43% of its sales.
Segment by value Customer Segmentation Value (spend, profit) $$$ $ Hi-spending customers 7% of total, 50% revenue, 1500 customers AVE VALUE: 1150 LO-spending customers 93% of total, 50% revenue, 20,300 customers AVE VALUE: 163
Loyalty Measurement: Net Promoter Score Becoming a standard in Fortune 1000 companies Simple to implement and understand Ideal for surveying e-commerce transactions
Segmenting Customers by NPS Detractors cost money Promoters are profitable
Net Promoter Score and e-commerce Invite by email: all customers to rate you on Every order! Usually NO permission needed, but explain up Front AND add unsubscribe option WEB SURVEY: ASK NET PROMOTER QUESTION & ASK FOR COMMENT You can ask other questions about specific issues and ask if further action needed, but keep it short. Plot the results Lots of spreadsheet work! GRAPH, segment etc. GOAL IS TO IMPROVE OVER TIME ACT ON THE COMMENTS DISTRIBUTE COMMENTS to those who can use them. EXPECT 20 30% RESPONSE
Becoming a customer focused organisation Best practices: Communicate to entire organisation Publish regular nps results - Weekly/ monthly updates Bonus managers on NPS improvements Delegate responsibility to departments Net Promoter Champion STructure for success Assistance in scoring and admin Logistics Champion Customer Service Champion Web Champion Product Champion Finance Champion KEY ISSUES: - Checkout - Help pages - merchandising
Acting on Comments Best practices: Get regular feedback so you can manage it: Daily/weekly is best! Classify comments to help prioritise issues GET COMMENts to the right people Act on customer feedback within 24 hours Logistics Problems! Service issues Logistics Returns etc Suggestions Service Improvements Praise Testimonials FINANCE WEB
Segment by Loyalty Customer Segmentation 20,000 surveyed 25% response DETRACTORS 20% TOTAL 1012 customers, 19 gave 0 score 459 comments promoters 45% of total, 2250 customers 1643 gave 10 score 833 comments Detractors Promoters LOYALTY (Net promoter score)
Value & Loyalty Matrix Customer Segmentation Value (spend, profit) RESCUE REWARD LOWER PRIORITY Detractors Promoters Take actions to Rescue Key customers IN DANGER OF defecting & Reward Key customers who can help grow sale LOYALTY (Net promoter score)
Building your Loyalty Robot by hand? Set up processes to continually monitor customer scores and feedback Survey customers automatically Data in from e-commerce system Find urgent customers to be rescued Prioritise customers to be rewarded we d like you to trial our new product What do you think of this? You said you would recommend us thanks! We d like to offer your friends a 20 voucher to try us! Call center feedback Measure referred sales Regularly report nps results, returning customers etc Learn from customer feedback Publish testimonials to the web
Can it be automated? Can you survey customers automatically? Can you make sense of customer input with a machine?
A real Loyalty Robot: CustomerGauge CustomerGauge is a system that Plugs into your ecommerce system to automatically survey customers about their experience, every day Brings voice of customer feedback into your organisation Measures customer loyalty with industry standard Net Promoter Score Shows results on dashboard in realtime to help improve customer experience and retention sales Simple to use, quick to implement No hardware or software needed Optional extras: Workflow module to guide feedback to appropriate department Marketing Robot to help you segment and automatically target offers to most engaged customers Coming soon: Automatic sentiment detection Survey every transaction, automatically
Automatically segmenting returning customers Built in rules to help rescue and reward customers CustomerGauge helps you measure and understand your VIP customers Analyze the response history from your most prolific customers - J. Smith@directness.net Look at individual customer spending patterns, and past comments/scores
CustomerGauge Customer Rescue Automatic workflow rescue message SENT to call agent queue ATTN: THIS CUSTOMER REQUESTED HELP: WHERE IS MY SHIPMENT? I CALLED 3 TIMES! j.smith@... AGENT CAN IMMEDIATELY RESPOND, UPDATE CUSTOMERGAUGE SYSTEM You CAN check customer issues are being closed From survey to solution, CustomerGauge helps you solve customer problems one by one
CustomerGauge Strategic change management SURVEY: CUSTOMER gives multi-choice feedback on likes/dislikes Understand root causes SURVEY: VOICE OF CUSTOMER comments To help make strategic change: Identify root causes of issues Put a value on impact of each issue Set up projects to Close the loop Track NPS improvement as a result Track NPS improvements Assign to project managers Understand value / NPS impact
Summary Identify your most valuable returning customers Continually ask for feedback using Net Promoter Score methodology Rescue & Reward the most important customers Automate the process wherever possible: build a Loyalty Robot Make it part of your company s DNA use the best tools out there! More information: info@directness.net Directness BV, Silodam 253, 1013AS Amsterdam, The Netherlands Telephone: +31 208 20 21 60 Thank you CustomerGauge 2010 *Net Promoter, NPS, and Net Promoter Score are trademarks of Satmetrix Systems, Inc., Bain & Company, and Fred Reichheld.