In a period of unprecedented marketing innovation like we’ve experienced since the mid ‘90s, it’s very tempting to dismiss many of the true principles for building customer loyalty and to, instead, rely solely on perceived panaceas or "silver bullets." We’ve seen plenty. From loyalty card schemes and point programs to CRM software to massive data warehousing efforts, firms have plowed millions of dollars into such areas in search of quick fixes. But not surprisingly, many firms report disappointing results.

Fact is, the average company is still losing 20 to 40 percent of its customers every year. Why? Because many companies are delivering an "under-whelming" customer experience that falls well below the today’s customer expectations. As a result, many buyers unhappily migrate from one vendor to the next in search of better value. 
 
Don’t be fooled into thinking "sexy" marketing tools like the Internet and knowledge management breakthroughs rewrite the Laws of Loyalty. They don’t. Your best insurance for building loyal customers is to make sure all your programs are built around tried-and-true principles of loyalty. Consider these Twelve Laws.

1. Build staff loyalty.

It’s a fact: Firms with high levels of customer loyalty have also earned high levels of staff loyalty. It’s darn near impossible to build strong customer loyalty with a staff that is in constant turnover. Why? Because customers buy relationships and familiarity. They want to buy from people who know them and their preferences. Key rule of loyalty: Serve your employees first so they, in turn, can serve your customers.

Market leaders have learned that half the battle to winning staff loyalty is in recruiting the “right” employees in the first place and these firms are meeting the challenge of hiring smart. For Southwest Airlines, that means getting staff and customers involved in spotting high potential applicants. In addition to standard testing and screening, Southwest uses teams of staff and customers to interview and select individuals for employment, seeking candidates who are personable, demonstrate creativity and staff loyalty proclivities and are energetic. Southwest hires only about 3 percent of all applicants.

2. Practice the 80/20 rule.

In building customer loyalty, the 80/20 Rule is alive and well. Roughly speaking, 80percent of your revenue is being generated by 20percent of your customers. All customers are not created equal. Some represent more long-term value to your firm than others. A smart company segments customers by value and monitors activities closely to ensure high value customers get their fair share of special offers and promotions. Unlike many firms who simply measure overall redemption, these savvy loyalty builders pay close attention to who redeems.

Syracuse, New York grocer Green Hills Farms (GHF) practices the 80/20 Rule with great success. This family-owned store of 22,000 square feet has a heritage of more than 75 years of outperforming the competition and, in doing so, earning weekly sales of $16 per square foot, while the industry average is roughly. $8 to $10. The firm categories its customers into four buyer groups: diamond, at the top of the spending scale; followed by ruby, pearl and opal. Roughly three hundred customers qualify as diamonds, regularly spending $100 or more weekly, while about a thousand customers are rubies, spending $50 to $99 on average each week. Although some customers consistently shop the store every two months or so, some top spenders visit three to five times a week. When the store first started categorizing customers, Management was convinced lots of customers could be graduated to a higher level, but experience proved otherwise. The gap proved too wide and trying to get lower spending households (many of which were price shoppers) to spend more was ultimately self-defeating. So the company works hard to make sure big spenders get lavish attention. For example, the company hosted a black-tie party in the store to get better acquainted with more diamonds and rubies. More than two hundred customers attended. GHF does ongoing tracking of whether best customers are truly getting their fair share of discounts. If they are not, the grocer simply devises a new promotion to make sure they do.

When GFS faced two new competitive supermarkets opening stores on the same day, the grocer used the 80/20 Rule to insulate its best customers. Generating a list of best customers by department, the grocer sent a letter thanking the customers for their patronage and enclosing a Green Hill gift certificate for a gift basket tied each one’s favorite department (produce, meats, bakery, etc.) The result? GFS not only held its own against the new competition but also even gained sales.

3. Know your loyalty stages and ensure your customers are moving through them.

Customers become loyal to a company and its products and service one step at a time. By understanding the customer’s current loyalty stage, you can better determine what’s necessary to move that customer to the next level of loyalty. Our Profit Generator ™ Loyalty System comprises six stages: suspect, prospect, first time customer, repeat customer, client and advocate.

The rule of thumb in working within the Profit Generator ™ is that the goal for you within each stage of development is to grow the relationship into the next stage of development. The goal of interacting with a prospect is to turn a prospect into a first-time customer, a
repeat customer into a client, a client into an advocate. Once you reach the advocate stage, your job is to keep the person buying and referring. As we saw earlier with the definition of loyalty, a company can enjoy real profits once the customer has evolved into the latter stages of the Profit Generator ™process. Failure to grow a customer into an advanced stage robs the company of profit and valuable referrals.

Today’s customers are smarter, better informed and more intolerant of "being sold" than ever before. They expect doing business with you to be as hassle-free and gratifying for them as possible. When they experience good service elsewhere, they bring an “if-they-can-do-it-why-can’t–you?” attitude to their next transaction with you. They believe you earn their business with service that is pleasant, productive and personalized and if you don’t deliver, they’ll leave.

Delivering a great customer experience is achieved by doing a lot of little thing really well. As a board director of the publicly traded restaurant chain, Luby’s Inc., I’ve had a ringside seat as the CEO and his management team have made numerous changes to improve the customer experience. And I’ve happily watched the upward trend in same store sales that has followed. From the introduction of small-batch cooking techniques to a food menu that includes seasonal specials, to the launch of a Kids Club for families, to a 1-800 line for customer complaints, Luby’s is a living case study on how no one thing drives business success. Instead, delivering a successful customer experience requires paying attention to many, many little things. Together, these many small improvements help create compelling and consistent value that "sells" the customer.

5. Aggressively seek out customer complaints.

For most companies, customers articulate only 10percent of complaints. The other 90percent are unarticulated and manifest themselves in many negative ways: unpaid invoices, lack of courtesy to your front line service reps, and, above all, negative word of mouth. With the Internet, an unhappy customer can now reach thousands of your would-be customers in a few keystrokes. Head off bad press before it happens. Make it easy for customers to complain, and treat complaints seriously. Establish firm guidelines regarding customer response time, reporting and trend analysis. Make customer complaint monitoring at the front lines a key input tool for identifying loyalty improvement initiatives.

At IBM Rochester, the Customer Partnership Call process thanks customers for purchasing IBM systems. A call is made 90 days after a system is shipped and the customer is asked what she likes about the system, what she dislikes about it, and what suggestions she might have for improvements. These comments are then compiled into a database, analyzed, and distributed regularly to engineering, programming, marketing, manufacturing, and service teams to guide them in their work.

6. Get and stay responsive.

Research shows that responsiveness is closely tied to a customer’s perception of good service. The advent of the Internet has changed the customer’s perception of responsiveness. More and more, customers are coming to expect round-the-clock customer service. Moreover, customers now arrive at Web sites time-starved and eager to locate answers. Technology tools such as customer self service, email management and live chat/web call back are proving increasingly critical for companies as they address the demanding customer’s responsiveness needs.

Consider the case of the California Chamber of Commerce which had three hundred to nine hundred callers lighting up the phone lines each day seeking answers to topics ranging from customer service to tourism. The staff adequately managed the call handling, but the process lacked efficiency for both callers and staff and there was no tracking mechanism or means to effectively route questions and issues through the chamber’s various departments.

The Chamber established an answer center on its Website with question-and-answer pairs on a host of subjects. E-mail queries were available to customers who needed assistance beyond the FAQs. Callers were directed to the online answer center by the Chamber’s after-hours and on-hold phone system messages. The result was that messages on the after-hours phone system dropped by 50 percent. Moreover, an incident summary is now run once a week, reporting the FAQs that are requested the most, giving the Chamber a handle on what information is most important to its constituents.

7. Know your customer’s definition of value.

The loyalty password is “value.” Knowing how your customers experience value and then delivering on those terms is critical to building strong customer loyalty. But knowing your customer’s true definition of value is not easy because your customers’ value definitions are constantly changing. Invest in customer loyalty research that enables you to understand; through the eyes of the customer, how well you deliver value.

Getting actionable results is the key to any customer loyalty research. When working with your research firm to design quantitative loyalty research, consider a plan by which your survey’s attributes are grouped into four actionable categories:

1) Loyalty drivers. This area is most important to your customers; this is where your performance is highest. Stay the course. Your efforts are already producing loyalty.

2) Improvement candidates. This area is important to your customers, but your performance is lacking. To improve loyalty, invest more resources to improve here.

3) Hidden Opportunities. Your customers may have emerging needs in this area that they themselves are yet to identify. Additional investigation may be warranted.

Research shows that a business is twice as likely to successfully sell to a lost customer as to a brand new prospect. Yet, winning back lost customers is frequently the most overlooked source for incremental revenue in many firms. Why? Because most firms consider a lost customer a lost cause. With the average company losing 20percent to 40percent of its customers every year, it’s imperative that firms create hard-working strategies, not only for acquisition and retention but also for win-back. Since no customer retention program can be 100 percent foolproof, it follows that every company needs a process for recapturing those high value customers who depart. Think of it as loyalty insurance.

In our book, Customer Winback: How to Recapture Lost Customers and Keep Them Loyal, my co-author, Michael Lowenstein, and I share these win-back strategies:

First, determine the lost customer is "worthy" of win-back. If so, apply these four steps to reactivate lost customers:

1. Grade and segment defected customers according to second life-time value and reasons for defection.
2. Research the customer's present needs.
3. Create a plan that reinstates trust.
4. Measure win-back rates -- understand, evaluate, and refine.

9. Use multiple channels to serve the same customers well.

Research suggests customers who engage with a firm through multiple channels exhibit deeper loyalty than single channel customers. But take note: This finding assumes customers get the same consistent service whether coming into the store, logging on the Website or calling the service center. To accomplish this, your firm must internally coordinate sales and service across multiple channels so that customer preferences are accessible no matter how the customer chooses to interact. Today’s customers expect to hop from channel to channel and they expect good service to follow.

But many companies need to be much more aggressive in improving their customers’ multi-channel experience. I recently advised a client in the direct/catalog industry. Industry studies showed that 68percent of all online customers who receive a catalog, first shopped the catalog, then bought online. Recognizing this cross-channel significance, I did some quick and dirty research from my home one evening. I picked up the phone and called the customer service lines for the 8 miscellaneous catalogues I had laying around my house (all ‘big brand’ clothing and gift catalogs). I was stunned by my findings: 7 of the 8 did not offer instant call back on their web site (the one that did checked requests only every 30 minutes---an eternity for web customers); 7 of the 8 did not offer web chat (the one catalog that did, offered it 9 am to 9 pm EST only!) Want to win more loyalty? Optimize your customer’s cross-channel shopping experience.

10. Give your frontline the skills to perform.

Increasingly, for many companies, the employee ‘front line’ is a call center where agents interact with customers. These agents will be the “loyalty warriors” of the future.. Converged call centers that bring together multi-channel access points (phone, fax, email, web) are on the rise. Gartner Group estimates that 70percent of North America’s call centers will migrate to multi-channel contact centers by 2005. This means these agents need to be as equipped to write a well-written email reply and navigate the company Web site as they are in being helpful and friendly on a phone call. To optimize agent performance:

• Keep an agent’s workload balanced. Agent burnout is a common problem in many call centers. To help combat agent overload, many companies are using departmental or workgroup e-mail addresses rather than individual ones. This allows a dedicated group of representatives to monitor inbound activity and balance its distribution.
• Have agents to contribute to online knowledge bases. Many companies have an agent knowledge portal or knowledge base which is a single point of access to multiple information sources. Because of their customer contact and direct experience, frontline agents should be key contributors to this knowledge base.
• Help agents provide exceptional service. Nordstrom Inc. lives by three principles of
  online service: Provide the right products, make them easy to find, and ensure help is quickly available. To help online agents provide exceptional multi-channel service, many items in the online catalog remain shelved in a “clothing library” so representatives can see and touch the products while responding to customers.
• Carefully measure an agent’s performance. Self-serve Web sites are designed to let customers resolve for themselves questions that have simple answers. That’s why building a self-serve Website with the sole intention of reducing agent talk time can backfire. In fact, self-serve Web sites can actually cause talk time between customer and agent to rise. (That’s because when customers call they are often calling with questions that require a more complex explanation.) Yet, many companies discourage the agent from spending adequate time with a customer by rewarding agents who have the shortest call cycle. A customer survey that measures the agent’s performance (Was the issue fully resolved for the customer? Was the customer pleased with the outcome?) is a better gauge. Measuring the rate of the agent referral of questions to others is another meaningful metric. You want the agent answering as many questions without referral as possible.

11. Collaborate with your channel partners.

In today’s complex marketplace, most every firm is dependent on suppliers to help serve its customers. Embracing these supply chain relationships for the greater good of the ultimate customer creates customer value that is hard for competitors to match. For example, a European auto manufacturer converted its customer data base program into a system that could be shared by all channel partners. By refusing to hoard the information, the manufacturer helped create a blended- channel strategy that built greater customer loyalty through out the distribution chain.

Dell may be the ultimate role model in channel partner collaboration. Dell’s "keep it simple" philosophy has driven all areas of operations including channel partnership. The technology giant has worked to simplify its channel relationships by doing business with as few as 40 suppliers (which provide more than 90 percent of Dell’s material needs), but to equip those preferred suppliers with all the information they need to make “informed”, collaborative decisions. “Complexity kills” is a familiar refrain within Dell and shrewd channel partnership management has helped this industry leader achieve operation simplicity and, in turn, drive significant sales and profits.

12. Store your customer data in a centralized data base.
 
Most firms lack a 360-degree view of their customer because they have no centralized database. Billing departments, sales divisions and customer service centers might all have their own databases with no effective means for creating a complete customer information composite. To effectively implement a sound customer loyalty strategy, data from all customer touch points must be combined into a centralized customer database. Without it, the firm is greatly handicapped in its efforts to serve the customer.

It’s a lesson casino operator, Harrah’s Entertainment, has aggressively leveraged. In the mid '90s, while most other casinos invested money in creating glitz, Harrah’s took the road less traveled and built a winner’s information network (WINet) that provided the backbone of the firm’s Total Rewards Program. Harrah’s coast-to-coast customer database is an industry first and enabled the company to have the first integrated, nationwide system that allows real-time communication between all of its properties. This means that Harrah’s in Las Vegas can know a visitor from New Jersey’s gambling, eating and spending preferences. This customer insight enables the company to tailor services to the visitor through customized comps such as free dinners, hotel rooms, show tickets and the like. Bottom-line, when the New Jersey customer comes to Harrah’s in Las Vegas, customized service can follow.

Are you evaluating your loyalty strategies with a keen eye on digital touch points?

You should. Here’s why.

In the U.S., a whopping 70 percent of the population (adults 18+) now use the Internet. In the U.K., it’s 63 percent. In the European Union, it’s 50 percent.

What’s more, reports Pew Internet Project, on a typical day, 38 percent of U.S. wired adults use a search engine, and 30 percent go online just for fun or to pass the time. And how about all those potential buyers who carry a mobile phone or some other digital tool? By the end of 2006, research firm IDC predicts there will be 223 million cell phone users in the U.S., up from 127 million in 2001. Research in Motion, maker of the BlackBerry, reports it had five million subscribers in March, up from about one million users just two years earlier. Bottomline, every marketer should be thinking about customer loyalty strategies through the ever-expanding digital prism, because customers are increasingly wired for touch.

In my book Customer Loyalty: How To Earn It, How To Keep It, I examine in detail the six customer stages of loyalty development---suspect, prospect, first time customer, repeat customer, client, advocate---and the relationship-building requirements unique to each stage. These fundamental requirements for building loyalty remain steadfast and not meeting those requirements, will cost you customers. But with the continual array of breakthrough technologies, matching the best tools and techniques to each customer stage requires constant diligence.

I recently toured four Northern Tool & Equipment stores in Houston in preparation for a customer loyalty keynote I’ll deliver for the firm’s annual conference. Northern Tool has brilliantly positioned itself as the “man’s tool store”. (Where else can you find a 23 inch wrench and huge posters with teresterone-inspired witticisms such as “Sawdust is as close to potpourri as we get”?) As I walked the aisles of generators, pressure washers, electric tools, etc., I was reminded of my wood craftsman friend back in North Carolina and his fervent belief that success depended largely on his ability to match “the right tool to right job.”

In today’s digitized world, finding the “right tool for the right job” is a key challenge of every marketer. It’s imperative that CMOs and their teams wisely survey the ever-expanding array of sexy, new tools and techniques for touching customers and from that, search out effective, new ways to turn non-buyers into fierce, loyal advocates.

Loyalty Stage One Attracting Suspects:
Create Genuine Interest

Loyalty Fundamental: Customers that come to you referred have a higher propensity to get and stay loyal than customers that come to you any other way. Why? Two reasons: One, “birds of a feather flock together” as the old saying goes, and referred suspects are typically more demographically and psycho-graphically aligned to your target than other suspects. Two, referred suspects typically come pre-sold, by a highly credible source: your happy customers.

Wired Application: Research shows the wired buyer has a propensity to gather information from other customers, rather than traditional media sources or from the vendor, itself. This means that in order to attract quality suspects, you, as the marketer, must find ways to spread positive word-of-mouth through current customers and supporters. Three key elements drive this process: (1) simple ideas, which are . . . (2) word-of-mouth friendly and are supported by... (3) tools to facilitate customer conversation.

Example: When Proctor & Gamble launched its Secret Sparkle body spray products in February 2005, the package goods giant also launched, three months later, the blog, SparkleBodySpray.com. By July, the body sprays, targeted to teen girls, had captured 0.8 percent of the $10.4-billion global antiperspirant/deodorant market. Fanning this flame of introductory success was the blog which receives 12,000 visitors per week, with each visitor spending, on average, 25 minutes each visit. What attracts this level of involvement is four teenage site authors, writing under the identities of Vanilla, Tropical, Peach and Rose (cleverly crafted to also be the names of the four body sprays) who blog about such teen hobbies as music, fashion, sports, dating and party-going. The site is peppered with interactive activities such as building a dream date using mouse clicks to select a young male’s hair style, choice of eye frames, etc. And when the visitor is ready to share her creation with a friend, the ‘send a friend’ button is close at hand, ready to oblige.

Loyalty Stage Two Converting Prospects:
Make Prospect Qualification Quick and Rewarding

Loyalty Fundamental: A key challenge facing any company is how to cut through market minutia to find high-value prospects to nurture into customers. Lowering sales costs and increasing closing rates are paramount to winning the loyalty game.

Wired Application: Search engines can be great sources for prospecting. But, to weed out high-potential prospects from mediocre suspects, it is vital that a firm’s online search campaign be as ‘spot on’ as possible in three areas: (1) Who to target, (2) How to position your products and services, (3) How to effectively qualify prospects.

Example: In an effort to generate better sales leads, in early 2006, Citrix Systems, a US based infrastructure software maker, began using real-time, post-click analyses (conducted by Ion Interactive), to maximize paid search campaign conversion. This campaign was designed to attract buyers to Citrix’s new HIPPA-friendly (Health Insurance Portability Act) software product. The campaign’s purpose was to generate high quality leads for follow-up by the Citrix Systems sales force. Based on post-click marketing segmentation analysis, Citrix immediately learned that more than 70 percent of search engine respondents were not in the target audience of hospital decision makers. But even with only 30 percent of the respondents in the target audience, conversion rates still soared 525 percent, based largely on the new campaign’s use of directed click paths and audience-specific messaging. Within 10 days of launch, RTP analyses (Respondents, Traffic sources, and Paths) enabled Citrix to confirm Google as the best performing search engine and by week three all other search engines were eliminated from the budget. The sales lead campaign launched with two test paths. Immediate real-time analysis revealed that Path A was performing significantly better than Path B. Based on real time data, path C was crafted and launched with nearly double the results of the already successful A path. This segmented traffic converted at a sales lead rate of 12 percent, or almost 2500 percent better than the previous campaign launched in 2005. All in all, this campaign recalibration was impressively achieved within the first three weeks of campaign launch.

Loyalty Stage Three:
Capturing First Time Customers: Pass the Trier Test

Loyalty Fundamental: Loyalty research has long confirmed the importance of a seller’s accuracy, reliability and responsiveness in transacting with first time customers. Afterall, first time customers are triers and their perception of the value they receive from their first purchase will drive their repeat purchase decisions. Bottomline, you better get it right.

Wired Application: Mobile phones, PDAs (such as a Blackberry), laptops, etc. can provide easy access to customer feedback, alerting a firm that a customer problem awaits attention.

Example: Automation and Control Solutions (ACS), an $8 billion unit of Honeywell whose 40,000 employees provide environmental sensing and control expertise for corporations, employs a wired alert system tied to customer feedback. That means that new customer (as well as established customer) feedback can be closely monitored. When a customer survey score falls below ACS specified thresholds, or if the customer asks to be contacted, the system sends a detailed action alert to the Blackberry, mobile phone, laptop, or desktop PC of people responsible for that customer, including ACS field service leaders, customer care advocates, sales representatives, and regional general managers. Second, the system automatically opens cases and, using business rules, assigns them to case managers and teams. Online case management enables team members to share information and coordinate response actions. ACS control group studies found that cancellations were 40 percent lower in the pilot group that received alerts and cases than in the group that did not. This wired alert system (provided by research supplier, CustomerSat) is credited with preserving several million dollars in ACS service contract revenue.

Loyalty Stage Four
Monitoring Repeat Customers: Demonstrate True Care

Loyalty Fundamental: Repeat customers expect to be known and their preferences remembered. In my seminars, I call this the “Show me you know me” customer payoff. But truly empowering the front line with this capability is an often arduous, on-going challenge for many companies.

Wired Application: Now, more than ever, wired capabilities enable large corporations to equip front line employees with real-time, actionable information to create a ‘wow’ experiences for their customers.

Example: Continental Airline’s first big step in achieving the “Show me you know me” outcome for its customers began in the late 90’s. That’s when the company embarked on its arduous, 4 year journey to consolidate 45 customer databases into an enterprise-wide customer data depository that would provide nearly every Continental employee wired access to customer information. But what particular customer information could most help a specific front line employee achieve the ‘you know me’ outcome for a customer? To continually provide fresh answers to that question, “ambassadors” from the airline’s CRM department instigate regular think tank sessions with representatives from every ‘vertical’ in the company including flight directors, managers, ticket agents, flight attendants, baggage handlers, etc. The result? Scores of fresh, new ideas to delight customers are constantly generated and delivered by Continental’s ‘wired’ front line. For example, the Continental President’s Club Manager can now be notified when a high value customer who has experienced a lapse in Continental service (major flight delay, etc.) in the last 30 days has swiped into his Club. This allows the Club Manager to personally approach the customer and offer a face-to-face apology.

Loyalty Fundamental: Demonstrating true care (by adhering to the customer’s definition of value) has always been the means by which true customer loyalty is created and sustained. But delivering customer value is more complex now than ever before.

Wired Application: Today, when you’re ready to send your customer a message, many options exist: For example, should you send the message via a phone call, email, Instant Message, or fax? And where should you send it…. land line, mobile line, Blackberry, etc? Your choice had better reflect an understanding of your customer’s preferences. That’s because in today’s marketplace, four distinct generations of people ---Traditionalists, Baby Boomers, Generation X, and Millenniums --- co-exist. And what “true care” means to one generation does not necessary translate to another.

Loyalty Stage Five:
Anchoring Clients: Master the Art of Cross-Selling

Loyalty Fundamental: I have long defined a client as a buyer “who feels a real commitment to buy from you and proves it by buying every product or service of yours he thinks he can reasonably use.” So how can you consistently earn maximum share of wallet with a client? One way is to continually educate your client about your full breadth of products and services.

Wired Application: Some savvy online merchants have devised creative ways to reward clients for their willingness to try new products and services.

Example: eBay did this with its “Camp eBay” promotion. It awarded merit badges based on various activities users performed on the site. The badges aren’t based on simple purchases. They’re based on how purchases are made and what’s purchased. Merit-badge-worthy behaviors included using the “Buy It Now” button (instead of bidding on an item), shopping in several different product categories, and posting feedback. By rewarding users based on behavioral changes, the promotion encouraged more profitable multi-category behavior and extended the brand into product categories some regular customers didn’t associate with eBay.

Loyalty Fundamental: Generally speaking, the more channels (Internet, store, catalog, etc.) your customer uses to buy from you, the better. Why? Because a multi-channel customer typically spends more than a single channel customer.

Wired Application: The Internet is an especially effective vehicle for helping customers achieve multi-channel efficiency and value.

Loyalty Stage Six:
Advocates: Ensure Customers Are Skillfully Heard, Not Aggressively Sold

Loyalty Fundamental: There’s an important difference between a client and an advocate. Simply put, advocates do more than simply buy from you. Advocates are engaged customers who demonstrate their vendor allegiance through such activities as spreading positive word-of- mouth, recruiting new prospects and helping their vendors improve.

Wired Application: So, how can a firm build stronger advocacy in the wired world? One way is to create a secure environment in which customers can be listened to and engaged over a finite period of time. Online technologies provide just that opportunity. Here’s one scenario: A group of people with desirable demographics agrees to provide feedback, insight and advice though a facilitated online community. Surveys, discussion threads, brainstorms, chats and other activities engage community members on a private branded and secure Web site and community members agree to visit the site regularly to participate in the dialogue. Most importantly, the site supports and encourages interaction between members. These interactions are usually very robust and frequently provide novel, unsolicited insights into the opinions, emotions and behaviors of community members.

Deeply engaging customers by soliciting input on products, messages, ads and other topics not only results in better offerings and more efficient use of marketing dollars, but the very act of listening can also deepen customer loyalty. Want proof? Control group diagnostics show statistically significant positive shifts among community members on such loyalty measures as ‘likely to recommend’, ‘would matter if I could not purchase from’ and ‘committed to’.

Example: Brokerage giant Charles Schwab uses by-invitation-only, online communities built and hosted by Massachusetts-based Communispace. Reports Jack Hawn, Vice President of Schwab Retail Brokerage, “We can get an idea…and within a week, we can get back to the originator and say, “We took your ideas out to 400 clients and here’s what they said….” Continues Hawn, “[Our customers] know their ideas and suggestions are being listened to, and that what they are saying is being considered by Schwab management up to and including the chairman.” The power of that understanding became apparent when the chairman, Charles Schwab, became involved in a set of online customer interactions on his own. Mr. Schwab wanted up-to-the-minute information about his clients’ investing strategies and views of the market in preparation for an upcoming press tour. Working with Mr. Schwab, the site design/facilitation team prepared a questionnaire and wrote a letter addressed to the community. Reports Hawn, “He had the highest response to date. Clients were literally writing essays to him about what they liked and what needed improvement.”

But Schwab has found its online community’s truest value is most often seen in the more serendipitous discoveries that surface from the community’s everyday activities. For example, Schwab was surprised to learn that frequently active traders really used Schwab Equity ratings. (The firm had previously thought that relatively few people actually used them.) Reports Hawn, “Based on that unexpected finding, we were able to put together a strategy that used that information. It was a marketing program we would not have done under other circumstances.”

Plummeting Effectiveness of Traditional Marketing Channels

Since the rise of direct marketing, companies have relied on outbound channels such direct mail, telemarketing, inserts, and catalogs to reach consumers. More recently, marketers have increased their use of lower-cost outbound channels such as e-mail and SMS messaging to accomplish their goals. Regardless of channel, total spending on direct marketing has consistently increased every year over the last 50 years – despite a number of economic downturns – and now totals over $2.0 trillion annually, according to studies by the American List Counsel and The Direct Marketing Association (DMA).

However, even as marketers have relied more and more on traditional outbound channels, they are becoming less and less successful. Between 1980 and 2000, marketers grew their total advertising budgets by 365 percent and their direct mail budgets by more than 400 percent – even though consumer spending grew only 283 percent in the same period. Today, the typical consumer receives roughly 1 million marketing messages a year, according to Seth Godin, author of Permission Marketing.

The problem, Godin argues, is that the traditional outbound marketing channels such as direct mail and e-mail use “interruption-based marketing”. These marketing campaigns are only effective if they interrupt whatever the customer is doing at the time to gain his attention. The problem, however, is that today’s world has such a glut of information and demands on consumer attention that the typical consumer would rather ignore all marketing messages than sift through the onslaught to find the relevant ones. These overwhelmed consumers are getting better at tuning out marketing messages – whether through e-mail filters to block spam, digital video recorders to skip commercials, caller ID to prevent unwanted calls, or the recycling bin to throw away direct mail pieces without opening them. Of course, these filtering techniques block legitimate, responsible advertising as well. By one count, there are more than 170 different spam filters on the market – and these block up to 37% of all legitimate e-mails at some ISPs. In fact, Jupiter Research estimates that legitimate e-mail blocked as spam will cost companies as much as $419 million in 2008.

As consumer resistance to traditional outbound marketing channels increases, marketing effectiveness and productivity decreases. According to the DMA, click-through rates have declined from 6.8 percent in 2001 to 5.5 percent in 2003, and response rates to traditional direct mail have fallen as low as 1.6 percent. Additionally, the number of television viewers who could name a brand or product advertised in the show they just saw has dropped from 35 percent in 1965 to less than 10 percent, according to Nielsen Media Research.

Regulation

In addition to causing declining response rates, the consumer backlash against outbound marketing techniques has led to increasingly strict government regulation. At the forefront of U.S. government regulation is the National Do Not Call Registry. In its first year, over 62 million consumers signed up for the list, and 428,000 complaints were filed against more than 130,000 companies. In addition to the federal law, marketers must also comply with a complex layer of state and local regulations laws, making the prospect of marketing by outbound telephone calls both complex and risky.

Regulation, however, does not stop at telemarketing. On December 16, 2003, the U.S. federal government passed the Controlling the Assault of Non-Solicited Pornography and Marketing (CAN-SPAM) Act. Among other things, the law requires e-mail marketers to use legitimate subject lines, headers, return addresses, etc.; makes it illegal to send e-mails to addresses that have been harvested from websites; and requires e-mails to have a working unsubscribe system. The law includes both criminal and civil penalties and allows suits by the Federal Trade Commission, State Attorneys General, and Internet Service Providers. This federal law is in addition to approximately 25 individual states that have passed even more aggressive anti-spam laws.

Marketing Transformation will occur in four phases: 

• Increased inbound marketing. Marketers will make greater use of inbound customer contacts as a channel to present offers. 
• Smarter outbound marketing. Marketers will replace many batch campaigns with more relevant event-driven campaigns.
• Seamless customer conversations. Once marketers have mastered inbound and outbound contacts as separate functions, they will begin to coordinate their activities across channels to create seamless customer conversations. 
• Marketing everywhere. The final phase of marketing transformation will occur when marketing not only makes offers, but also enhances all customer interaction channels with marketing guidance to make each contact more intelligent – and more valuable.

Increased Inbound Marketing

As traditional outbound channels become less effective and more regulated, leading marketers are shifting their focus to inbound marketing – the process of delivering cross-sell, up-sell or loyalty offers when the customer initiates an interaction over channels such as the contact center, website, point-of-sale, or Interactive Voice Response (IVR).

Unlike outbound marketing channels, inbound interactions necessarily occur by the permission of the customer. There is no feeling of interruption. The customer controls when the interaction occurs and, more importantly, provides the mindshare necessary to receive the message. (Of course, no matter how good the offer, if you don’t take care of what the customer called about first, you don’t have a sales opportunity.) The three key items missing from outbound marketing – the customer’s time, permission, and attention – are by nature given during the inbound interaction. The result is an uncluttered interaction with the customer, leading to more effective marketing. In fact, Gartner estimates that inbound channels have ten times higher response rates than traditional outbound channels.

Such impressive results are possible only when offers are timely and relevant. An irrelevant offer will annoy the customer, not improve the relationship. It is still common in many call centers, for instance, to find an "offers of the week" sheet—a static list of marketing offers that do not reflect the personal attributes of the customer or the context of the interaction. This is where the real-time nature of the inbound interaction creates opportunities. While decisions about batch outbound interactions are often made days or weeks in advance, inbound interactions can be made with the most up-to-date information – an important advantage since up to 50% of the customer decision-making process transpires in real-time. With inbound marketing, offers can reflect the most the recent preferences, interactions, and transactions of each customer. The result is an unprecedented ability to match up the right offer to each customer at any specific time.

The move to inbound marketing requires real-time analytics. What product should be recommended while the customer is on the phone? How should a complaint from a high-value customer be handled? What opportunity is presented by a meaningful customer event? Rules-based systems and offline analytics cannot handle complex scenarios like these.

Rules-based customer interaction systems simply cannot account for the thousands of customer scenarios likely to be encountered, and result in inflexible, time consuming, error prone systems and ineffective marketing programs. In addition, since rules lack analytics, they provide no insight about the customer behaviors and attributes that drive certain behaviors, such as why customers react favorably to certain messages more frequently than others. Rules are also difficult to maintain, multiplying quickly and typically leading to mistakes.

Similarly, offline analytics using statistical experts are not up to the task, since the analysis takes place prior to the interaction and cannot take information about the interaction itself into account. Because of this, it is virtually impossible to provide a message or offer that matches all that is known—and knowable—about the customer. In addition, batch systems require manual analysis of results and periodic re-deployment of new models to avoid becoming stale, both of which require more resources and lead to lost opportunities.

Over the next few years, leading marketers will respond to consumer resistance to traditional techniques by getting smarter about how they use outbound channels. Batch, unconnected campaigns will give way to more frequent event-driven campaigns that respond to key customer activities and life events with timely, relevant, and personalized messages. Birthdays, marriages, births, promotions, and graduations are important events in a customer’s life, as are significant financial transactions, new purchases, and repeated complaints. Organizations will need to invest in their capabilities to sense these key life events when a customer is most open to receiving an appropriate marketing message. If done properly, the customer may even appreciate a timely message from a trusted company. In fact, Gartner reports that event-driven campaigns can have dramatic impacts on marketing performance, producing response rates five times higher than batch outbound campaigns.

The key to creating a seamless customer conversation is to focus on the customer, not the channel. Customers don’t distinguish a business by its various communication channels. Whether interacting through the mail, via a Web site, or with a call center representative, the customer views the business as a single coordinated entity. Many businesses use distinct and separate processes for communicating with customers through different channels. A customer may receive a marketing offer in an outbound mail piece, while the company’s inbound channels—the Web site or call center—may have no way of providing further information or fulfilling the offer.

Instead of campaign management solutions, marketing departments that embrace transformation will use multi-channel customer management solutions in order to ensure the customer obtains a seamless experience. They will plan customer strategies and marketing efforts that optimize the relationship at every stage of the customer lifecycle, without regard for channel. Then, they will let customer preferences and behaviors – as well as predictive analytics – determine when and how the customer should receive each message. A sophisticated ability to arbitrate amongst all the possible options and make the best decision for any customer – taking into account both the customer’s needs and preferences as well as corporate goals and constraints – will be a requirement in the marketing infrastructure of the future.

Marketing Everywhere

True marketing transformation will occur when marketers can take the analytical understanding of customer value that they use when extending offers and apply it to the broader enterprise. When this happens, marketing will do more than create brand awareness and generate leads; marketing will be the conductor that unifies customer-oriented strategies and processes across every channel.

To do this effectively, companies must break down the traditional silos of Sales, Service, and Marketing. In the past, CRM focused on automating the functions of various departments in the front office—first the sales force, then the call center. These efforts often reduced costs and delivered new efficiencies, but they lacked a marketing-driven focus to understand and build the value of each customer relationship. In many cases, these efforts actually damaged the experience the customer received over every channel. As a result, more often than not these CRM projects resulted in an undifferentiated customer experience—one that failed to build loyalty, to strengthen profitability, and to deliver competitive advantage.

Now, the customer relationship is at last being given the care and attention the term “CRM” has always implied. As opposed to focusing only on the automation of internal activities, the new generation of CRM is outward-looking and customer-facing. Indeed, the success of CRM now hinges on embedding marketing intelligence everywhere in an organization.

After transformation, marketers will continue to create demand and awareness, but they will also design customer-centric processes that deliver intelligence throughout the organization. Every function and process – including sales, customer service, fulfillment, order management, even finance – will be able to make better decisions about how to interact with the customer. Should we route this customer to a top agent? Should we upgrade this customer? Should we refund this customer’s late charge? These are just a few examples of the estimated 3.5 trillion consumer-related decisions made by U.S. businesses in 2001, according to Fair Isaac Corporation.

Lead Management is the process of rapidly and effectively creating, nurturing, distributing and analyzing leads. The ultimate goal? To increase the likelihood that a lead will convert to a qualified opportunity and then a new, satisfied customer.

Change is sweeping through marketing organizations everywhere. Expectations are rising – “give us more, better quality leads, more quickly” – while budgets and headcounts shrink. The mandate of doing more with less has never been more apparent, and pressure is increasing for marketing teams to draw a direct line drawn between their activities and the bottom line.

The good news for marketing professionals is that lead management technology, one of the key tools that demonstrates marketing value in the charts and stats that executives demand, is now widely available. It’s no longer merely the ‘Fortunate 500‘ who can afford to buy and implement this powerful capability, and have marketing teams that are intensely, quantitatively accountable.

As lead management strategies - and the processes and technologies that bring them to life - come within the reach of mid-sized and smaller businesses, the value proposition and timeliness of these tools is becoming irresistible to those marketers who need to prove their worth to their organization.

Marketing Today

Traditionally, marketers have been ‘idea’ people, experimenting with creative ways to generate leads and create awareness. For some time, it was accepted that the benefit of marketing would be soft and qualitative in nature –  “We know half of our marketing activities are useful – we just don’t know which half.”  “We know marketing is necessary, we just don’t know how good we are at it.”

ROI-based reporting had long been an inexact science. But as our collective understanding and visibility improves, what we see is alarming. Gartner recently released studies suggesting that the vast majority of all sales leads – “more than 70% are never acted on because they do not reach the right person or organization at the right time”.1

This is a sobering reality for marketers everywhere.

The ultimate goal of any marketing department is to generate qualified leads for sales. Sales then converts leads into customers. The rate at which deals close is the final yardstick by which every marketing investment should be measured – but it’s not easy. In the past, the ability to track the cause and effect of marketing campaigns has been elusive.

And the pressure is on. In a recent report, Boston-based research firm Aberdeen Group revealed that marketing departments are now being held to demonstrate the same level of quantitative value as other departments.

“The era of operational accountability has arrived,” states the report. “Coupled with the maturation and growing effectiveness of marketing technologies, [a] focus on quantifiable performance promises to accelerate a measurable shift of an organization’s marketing spend away from traditional media-based advertising processes and towards technology-centric, interactive marketing services.” 2 

Marketers are now judged by the same criteria as other line-of-business managers and executives. They are held accountable for their spending, their headcounts and their contribution.
 
Enter Lead Management

The quantity of leads delivered by marketing initiatives is not the only criteria for measuring marketing value. The quality of leads is just as important, if not more important.

Rather than asking how many leads were generated, executives are asking for conversion rates, or what proportion of leads resulted in closed sales. Answering this question means analyzing the entire lead lifecycle – from how the lead was generated to how the lead was distributed to sales and what happened once it got there. Teams are accountable to show investment return and solid performance at every step, and over time, to show quantifiable improvement. As executives ask tough questions, lead management technology gives marketers the visibility and the answers they need to consistently show they’re on the right track.

To implement a lead management strategy, marketing and sales must work closely together.

For best results, a lead management system must bring together the right people, processes and information at various stages:

• Identify hot leads and automatically route to direct sales or channel partners
• Actively engage the remaining leads and nurture them through the pipeline to eventual sale
• Track leads to closure and evaluate the ROI of marketing campaigns
• Integrate the external channel including value added resellers (VARs), other resellers and strategic partners
• Integrate offline qualification resources such as call centers

1. Lead Planning & Generation
This stage consists of planning the entire campaign – determining lists, developing messaging, selecting the medium, setting the timing, planning the marketing project, then specifying lead qualification and distribution mechanism with Sales. 

2. Qualify Leads
In this stage, leads are qualified, scored and processed according to pre-determined criteria. Typical lead process points and ‘flags’ are defined, including qualification questions and process, distribution rules, lead scoring (specific definitions of A, B and C-level leads), components and duration of the sales cycle, how to deal with atypical or out-of-profile leads, and ownership of each stage of the process.

Once lead qualification criteria are determined, they can be automated. For example, surveys can pose questions like, ‘Does this prospect have a budget in place for a product like ours?” When this information is known, the lead can be passed to sales as a ‘hot’ lead requiring rapid follow-up, or a ‘cold’ lead requiring further nurturing and communication.

3. Distribute Leads
Lead distribution is the process of getting leads to the right person at the right time. There are many distribution systems - according to territory, product, lead source, level of urgency, or new vs. existing customers. They can also be escalated if, for example, they have a short timeframe to make a decision, or a ready-approved budget, or if they have a particular urgency or a high value associated with them.

With the right technology infrastructure, companies can automate the distribution of leads according to predetermined criteria. This removes the burden from support staff, and ensures that leads really do reach the right person at the right time.

4. Nurture Leads
Lead nurturing allows companies to remain in touch with longer term leads until the lead is ready to be advanced into the sales cycle. When the lead is closer to making a purchase, it can be passed on to sales.

Planning a successful campaign begins with a strong sense of what has and hasn’t worked in the past with a particular audience. It also starts with lining up the necessary resources and processes to handle the leads when they come in. This is at the heart of today’s lead management – teams need to go beyond meeting lead quotas, and focus on what it will take to close the loop and foster sales success.

In the following illustration, the funnel on the left shows a traditional sales and marketing organization. The funnel on the right shows an organization with automated lead management.

Leads feed into the top of the sales funnel as a result of marketing campaigns. Then, they are distributed to pre-sales professionals for qualification, and finally to the sales team for closing. Only when a lead has moved far down the funnel do sales professionals begin working to close the most qualified leads.

However, many companies have holes in their sales funnel, through which leads and opportunities can slip and be lost.

In the funnel on the left, the marketing reach in a traditional marketing department is much narrower than that of a company using a marketing automation solution.

This wider reach means more leads, but also means more highly qualified leads of the right kind. After all, it’s expensive  to move a lead through the funnel and into sales. By the time a sales rep is assigned to engage with a prospect, that prospect needs to be deeply qualified. If a ‘cool’ lead – or the wrong lead -- is sent through prematurely, valuable sales resources can be wasted. Smart lead planning and tracking ensures that the most thoroughly qualified leads are given the green light to move forward, and also helps marketing to advance the most profitable leads at the optimal moment.

To bring a lead management system like this to life, sales and marketing teams need to work together to create a lead  processing plan.  Together, they should define:

• Qualification questions and processes
• Lead distribution rules
• Lead scoring: specific definitions of A, B and C-level leads
• Components and duration of the sales cycle
• How to manage atypical leads or out-of-profile leads
• Ownership of each stage of the process

Far too often, marketing teams focus on generating large numbers of leads, but fail when it comes to qualifying those leads. By making effective use of marketing automation tools, together with an appropriate lead management strategy and process, it is possible to bridge the gap between quantity and quality.

The ideal result is a high number of qualified leads that are likely to convert to sales. Leads will be uneven or of indeterminate quality if the strategy, process and technology used in qualifying them is inadequate. An unqualified lead will distract sales representatives with low-value leads, while high-value leads languish at the bottom of the pile getting cold. ‘Raw’ leads can also distract the additional resources, especially if you use a live person to call into a lead that has a high chance of being cold or non-pursuable.

With proper lead qualification, leads are captured, collected and consolidated. Then they’re enriched with any existing data the company may hold about the prospect (Marketing automation solutions can help amass progressive profile data and large amounts of behavioral data in activity logs, surveys, and other vehicles).

Finally, leads must by qualified and prioritized – either manually or in an automated fashion according to predetermined business rules. Lead prioritization - or “scoring” - will determine how leads are distributed.

Lead qualification, since it triggers which path a lead takes (whether the lead is passed to sales, moved into a longer-term nurture campaign, or dropped), is critical to sales success. It’s all about timing, and being able to identify when a lead is ready to buy.

For example, in the early stages of reviewing its lead handling and management process, Sharp Electronics surveyed the buying history of a representative sample of prospects, and they made a fascinating discovery. Of the prospects tagged as “cold” leads, 58% of them actually did make a purchase of a Sharp LCD product within six months of making contact with Sharp.

The consequences of this mistake were huge – consider all the opportunities that were lost. The only reason prospects made a purchase is because they took the initiative to engage with the company, rather than the company being proactive at the right time. The question for Sharp was then, “how much revenue did we let slip through, by not reaching out to prospects that needed us?”

Step Three: Distribute Leads

Time is of the essence when a customer is ready to buy. Any delay may mean losing a sale. After all this effort, can companies afford not to distribute leads effectively?

Lead distribution is more than simply e-mailing or faxing leads off to sales teams or channel partners. Lead distribution consists of routing leads to the appropriate member of the sales team or channel partner based on predetermined rules -- not only to the right person, but at the right time.

The distribution process should include methods for the sales team to interact with those who have assigned the leads to them. They may need further information or lead enrichment. Likewise, this interaction will help marketing refine the lead generation, qualifying and distribution process.  Both marketing and sales teams should be able to track the progress of leads as they progress through the sales cycle.

Moving forward means taking a hard look at how leads are distributed - and what might be done to do this more effectively. Some companies distribute leads to dealers by fax, depending upon their ranking. This is not the most effective distribution mechanism. Technology can – and often does – fail, with fax machines running out of paper, transmissions getting lost or buried under others, or transmissions getting stuck in the fax machine’s memory buffer. But even worse, there is no clear view into what happens on the other end of the fax machine. Even if leads were successfully faxed and received, what happened to them? Were they even followed up?  Many companies discover that  leads sent to dealers and VARs were never followed-up.

The problem with manual lead distribution is clear. Different processes are always required for different channels; however, and that with manual processes there was not only technology failure but lack of coordination and integration. Moving to a marketing automation solution helps re-engineer the process on the strength of the technology, eliminating many of the manual elements and providing a framework for co-ordination and integration. This increases the visibility into marketing’s impact on the end result: closed deals, which means more business for everyone involved, and better, faster service to end customers.

Step Four: Nurture Leads

Not everyone is ready to buy the first time they hear about a product or service. Many are only in the early stages of the purchase process when they enquire – and they can be passed over by sales teams eager to pick only the ‘low hanging fruit’ – or prospects who appear to want to buy quickly.

The best lead management practice is to nurture leads over time through segmenting them by product, service and purchase readiness, targeting them with further communication relating to their interest – and then tracking responses and promoting leads to a higher level of sales opportunity at the appropriate time. Throughout this nurturing process, all communication with the prospect should again be held in the CRM system.  Marketing automation enables this critical business function that supports, encourages and assists the creation of business processes and strategies around nurturing and developing customers.

In a recent report, Gartner estimates that “enterprises routinely spend 10 percent to 30 percent of their revenue on marketing and sales activities, without being able to demonstrate a positive return on investment from those investments.” 3

A lead management program provides a way for companies to measure and see that ROI – and learn what’s working, and what isn’t. Analysis feeds backs into planning for the next marketing campaign, and the whole cycle starts again – smarter.

With marketing automation, all of the data required to conduct that analysis is collected in real-time while campaigns are under way. Rather than relying on data that comes after the fact – or is highly subjective – management, sales, marketing, finance and call center operations can quickly see what is happening within marketing and sales cycle at any point in time – and feed back what they learn into strategic and business process improvements.

Conclusion

Companies that follow lead management best practices powered by marketing automation can expect to increase their return on every lead generated. By managing the process from the first stages of planning through the qualification, distribution and nurturing process, marketing teams gather meaningful data on what works, and what needs improvement. This continuous process of planning, execution and evaluation ensures that ROI is maximized on marketing activities and prospects are engaged right up to the purchase decision.

Implementing lead management best practices through marketing automation reduces the cost of marketing, fills the sales pipeline faster with better quality leads, and grows revenue. So every marketing organization can finally discover the real gold amongst their leads.

The combination of always-available content and convenience-based access makes mobile marketing an ideal vehicle for interacting with prospects through games, surveys and direct response programs. On average, surveys delivered via mobile marketing deliver a 10 percent response rate, far exceeding the results of online, direct mail or telemarketing surveys. Mobile marketing also produces recall rates twice that of television advertising, average click-through rates five times that of standard online advertising and 10-20 percent conversion rates. Why are response rates so high? It’s all in the medium.

The Mobile Audience

While teenagers tend to be the biggest cell phone users, PDA and smartphone users tend to be tech-savvy professionals, who frequently use their devices during downtime—while waiting for an appointment, during their train commute or when traveling on an airplane, for example. More so than traditional or even Internet marketing target audiences, high-end mobile device users represent an undistracted, highly attentive and engaged audience. In the best scenarios, the customer has invited the advertiser or marketer to interact with him/her on the most personal of devices. In this open, relaxed frame of mind, customers are more receptive to the messages being communicated. In fact, more than 60 percent of respondents to a recent AvantGo survey said they paid more attention to mobile advertising than to other marketing methods. By contacting prospects when and where they are most open to receiving marketing information, companies can realize unprecedented marketing and sell-through success.

Brand Marketing

Mobile marketing is an interactive medium that provides a variety of options for increasing corporate brand awareness. It helps influence purchase decisions by offering consumers in-depth information such as product showcases. In addition, mobile marketing is ideally suited to deliver “infotainment,” enabling businesses to educate consumers about their brand in fun formats, including games, puzzles or quizzes.

Mobile Internet services deliver tailored messages to specific demographics, allowing companies to offer content that both relates to users’ personal interests and applies to their everyday lives. The end result is that prospects receive the content they want, in a format that is convenient and fun. Furthermore, since mobile campaigns can be launched relatively quickly, it’s easy to deliver programs tied to current events or holidays. For example, a flower delivery service could promote the “Top Ten Romantic Gifts” around Valentine’s Day, or a personal financial software company could offer tax tips in the early spring to generate goodwill with prospects as they approach tax time.

How it works Auto manufacturers are aggressively launching mobile components to their brand marketing campaigns. Automotive giant General Motors (GM) has launched many different domestic and international customized web sites, or “channels,” via AvantGo. The GM channels are designed to appeal to several different customer subsets, including: GM customers, prospective customers and those with affinity to a specific GM brand, such as the Corvette.

One of the GM mobile web channels is a customer service oriented site that enables current GM owners to access and update their mileage, maintenance schedules and service history. It also supplies vehicle reference cards full of important contact information, as well as roadside assistance information and advice on steps to take after a collision. GM OnStar customers can use My GM Link to access digital versions of the OnStar reference cards.

By linking a traditional brand such as GM with a cutting-edge medium, marketers create a positive association and foster customer loyalty—as they move prospects down the sales path by providing just the right information at the right time.

Mobile marketing brand campaigns are limited only by the imagination. In fact, the campaign possibilities are endless and companies looking for ideas should rely on the expertise and creativity of mobile Internet service for inspiration and direction.

Direct Marketing

Direct marketing campaigns conducted via PDAs and smartphones provide an opportunity to collect customer leads, deliver coupons and communicate promotions to a very targeted demographic. Mobile marketing’s tracking and reporting capabilities provide fast, detailed campaign results, enabling quick prospect follow up.

A recent mobile shopping survey showed that nearly 90 percent of people who use a mobile Internet service bring their PDAs with them when they go shopping. These tech-savvy shoppers want to receive product reviews, competitive comparisons and coupons via their mobile devices. By providing shoppers with mobile discounts, promotions and product information, potential customers can be reached at the critical moment of purchase decision.

CompUSA, the national retail chain of 225 electronics stores, recently offered a mobile coupon featuring a 15 percent discount on PDA and cell phone accessories. Five percent of the more than 18,000 shoppers who saved the coupon to their mobile devices used that coupon at a brick and mortar CompUSA store, marking a success rate several times higher than the average response rate for typical paper coupon campaigns. Customers simply displayed the electronic coupon to the sales clerk who input the code and applied the discount. The entire campaign was developed and launched in a few weeks—a testament to how quickly and easily mobile programs can be designed and implemented.

According to Tony Weiss, president of stores and chief operating officer of CompUSA Inc., “The [campaign] results were amazing. Our ad ensured that we reached a very large but very targeted audience that mapped exactly to the people we wanted to reach. And the response rate was far better than what we had expected.”

Another smart tactic to increase campaign reach is to provide consumers with an easy “pass along” message that they can share with family and friends. This can be a note, digital referral card, coupon, sponsored game or productivity application that can be forwarded by e-mail, Short Message Service (SMS), beamed to another PDA or synced to their desktop and printed out. This so-called “viral” mobile direct marketing campaign enlists consumers to help sell a company’s products by capitalizing on the fact that customers are likely to know a number of people who share their same interests, hobbies and high-tech lifestyle.

A mobile direct marketing campaign can easily be integrated with traditional direct marketing strategies. For example, contact information gathered through a request form can be forwarded directly to a telemarketing organization, or even captured automatically in a web database. Traditional brochures and other information can be mailed to each prospect generated through the mobile campaign. And, of course, the unique capabilities of the mobile marketing environment can be leveraged to instantly move consumers down the sales path. For example, a mobile user who interacts with an ad for a discounted car rental can(might?) receive an information page listing local rental offices.

Since mobile professionals tend to keep their PDAs and smartphones with them at all times, mobile direct marketing is a highly effective way to reach potential customers when they are evaluating competitive products or shopping at a store. Furthermore, the interactive nature of the medium enables the development of highly creative marketing campaigns that deliver quantifiable results.

Event Marketing

Event marketing has long been a staple of the corporate marketing world. No time is better to gain attention and raise brand awareness than when consumers are relaxing and enjoying themselves. While television advertising or standard sponsorships at sporting events, concerts and trade shows are beyond the reach of many corporate budgets, mobile marketing creates the ability to reach the same audience at a much lower price point.

Music fans planning to attend an upcoming concert are likely to access mobile event information providing background on the entertainers, information about the event location, listings of local restaurants, etc. By tying a brand to content that is personally relevant to mobile prospects, a company can increase the likelihood of creating positive brand affinity.

On-site businesses can also benefit from mobile marketing tied to a local event. For example, a restaurant chain could offer a special early bird discount to theatre attendees who come by for a bite before the show. On the business-to-business side, companies can use mobile promotions to draw trade show attendees to their booths. It is also possible to tie lead generation to event marketing programs. For example, a mobile marketing campaign can require users of an event-related service application that provides maps, schedules, bios, etc. to answer a short questionnaire including contact information.

One cutting edge concept marries mobile marketing with televised events, preferably those that go on for several days or weeks. Companies can sponsor content or provide interactive services that keep people on top of the action, even when they are away from a television. Many recent reality shows have incorporated interactive SMS message components—particularly voting—into their formats.

An example of a more in-depth, integrated “third screen” campaign was Audi’s sponsorship of a mobile Internet channel that provided coverage of the NCAA Men’s Division I basketball playoff action alongside vehicle advertising. With content provided by Sporting News, mobile users received the latest scores, schedules and bracket information to stay on top of tournament action when they were away from their televisions and computers. This mobile campaign was one facet of Audi’s overall playoff marketing strategy, which also included print and television advertising highlighting the four key components of Audi’s brand: design, performance, technology and innovation.

Customer Relationship Management (CRM)

The interactive, personal nature of mobile devices make them the ideal vehicle for enhancing existing customer relationships. Rather than just one-way corporate marketing messages, mobile marketing provides an avenue to capture feedback and provide valuable services in a two-way dialog with customers.

Companies can host their own mobile channel to provide customers with promotional information but also leverage the channel to secure account information and status, frequently asked questions, customer support, loyalty program updates and more. For example, customers using a channel to check their bank balance or frequent flyer miles can be presented with a survey or short quiz to secure direct feedback about potential new products, customer service or overall performance.

American Airlines provides a good example of using mobile CRM to increase customer loyalty by blending content about the company with customer-specific information. Customers can use a mobile Internet channel to get flight schedules, gate status, details on special fares, important contact numbers and directions to Admirals Clubs in airports. In addition, they can access details about their AAdvantage Travel Awards and subscribe to American’s exclusive Net SAAver fares directly from their handheld devices. By making this information available via a mobile Internet service, customers can find what they need, when they need it most—while sitting in traffic or racing through the airport to catch a connecting flight.

According to Rob Britton, managing director of advertising at American Airlines, their mobile channel is all about customer service. “At American, we are committed to providing a variety of ways to access up-to-date airline information,” says Britton. “In addition to the many wireless features already provided on AA.com, our mobile channel delivers flight schedules according to customer preference right into the palms of our most frequent travelers. For those customers who rely on their PDA as an information resource, our mobile channel is an important way to receive flight schedules, access Admirals Club locations, and tap into important contact numbers while traveling.”

• Content Availability—Unfortunately, wireless service is not yet ubiquitous. Choose a mobile Internet service or application provider that offers an always-available solution.
• Popularity—Choose a service that has a solid, large subscriber base or distribution network. This enables the ability to reach a large number of people with the mobile campaign while also offering the ability to zero in on specific demographics.
• Reliability—Part of offering a well-respected service is ensuring that consumers have reliable access to content. A company should make sure that the mobile Internet service or application provider is not prone to reliability problems, or their brand could end up being associated with a frustrating end user experience.
• Program Development Support—First, a company should gauge their in-house expertise. Selecting a mobile Internet service that offers design, development and implementation support can streamline the process. Choose a service that has an extensive background of successful campaigns from which to draw.

And last, consider the type of mobile technology. The term mobile marketing has grown to apply to a broad range of technologies such as mobile Internet services, SMS, Multimedia Messaging Service (MMS), instant messaging, Wireless Application Protocol (WAP) and standalone applications. It is important to understand the differences between these technologies in order to choose the one that best meets the company’s needs.

Mobile Internet services deliver both text and graphics that can be leveraged for a broad range of marketing programs from simple banner advertisements to sophisticated CRM programs. In many cases they also offer sophisticated tracking and reporting of success metrics. In contrast, SMS or instant messaging deliver a text message similar to an email, though limited to a few dozen words. And like email marketing, although it can reach large audiences relatively inexpensively, SMS does not engage consumers at a personal level, and can only track responses, not delivery. On the other hand, WAP delivers both text and graphics but is, by definition, an always-connected scenario. This means that customers who do not have a wireless connection or have not signed up for data services cannot view the marketing message. Additionally, the message goes away as soon as data subscribers sign off.