Customer Referrals Start with the CEO – Part 2

“The best compliment you can give me is the referral of the people who trust you”

–  Unknown

In a previous post I addressed the need for every CEO to see their customers as their number one asset. I also touched on the need to create relationships with outside influencers like analysts and journalists that cover the space you are in.

If you are like most CEO’s you realize this effort is going to take time and it is going to take resources to accomplish. The last thing you want to do is make this a big focus and have it wash out.

You can rest easy there is a way for you to get your referral program up and running quickly without a large cash expenditure and lots of resources involved.

Assuming you have taken my advice and have already started executing on the 6 strategies for launching your referral program, I am going to dive a bit deeper into the steps you need to follow to make this a reality within your company.

Step One – Customer Compensation

After running referral programs for many years one thing I can tell you is, most customers don’t want cash compensation. Your customers are referring additional business to you because they love your product and they know it takes more revenue to make your product offering(s) even better. Therefore they are interested in non monetary compensation that will draw them in closer to your company.

Step Two –Internal Champion

This is where most initiatives die as you know all too well. As the CEO your initial instinct is to look at your customers as a lead generation engine for your organization. Therefore you naturally want to hand this over to Marketing and call it referral marketing.

Guess what, that’s wrong! Why, you don’t need to sell your customers on giving you a referral, your product and your customer service speaks for itself, if your customers love you they will refer you, if they don’t they won’t! Give this to the director that is in charge of customer satisfaction and metric that person as I outlined in Step 4 in my last blog post.

Step Three – Technology

If your customers find it difficult to refer their friends and peers to you, they just won’t do it.

I have done the leg work for you, there is a great technology platform created by zferral that will help you setup your custom referral program in minutes.  Unlike many other affiliate marketing platforms it won’t cost you an arm and a leg to get started, they even offer a free plan. 

Through their unique “Pay as you grow” model your payment only goes up if your referrals (and sales) are increasing. The other unique item about zferral is their ability to setup the non monetary campaigns that I referred to in step one. 

For those who want a deeper integration, utilize zferral's open API.  This will allow you to keep a consistent look and feel of your website while enjoying all the benefits of the software.

Step Four – Measure Success

“Say what you are going to do, then do what you say”. The only way to know if this initiative is working is to measure this on a monthly basis. Put it on a whiteboard outside of your office and track the number of customer complaints, your customer SAT % (I know you have that worthless number, more on that later), and the number of customer referrals.

If after reading my previous blog post and this one, and you are having that “Oh Crap” moment of why am I not doing this, then I have made some progress. However  if you have gotten to this point and had that “Oh Shit” moment of wow this is so much more than customer referrals, then I have done my job.

Remember, long lasting success for your business depends on these two factors: Happy Customers & Happy Employees!

Do you see the Market Divide?

Imagine this, you are the CEO of an organization that has been realizing exponential growth, I mean 200% + growth year over year in both revenue and customer acquisition. Life is good and as the CEO you are ecstatic. You have established a great beach head to work from and have a bunch of successful customers and great partnerships you are leveraging.

Then it happens, the killer of men, the destroyer of businesses, the downfall of many, the emotion of "Pride" and the feeling of invincibility become part of your daily routine. We can do better, our product is amazing, we just need to expand our market and drive harder.

The next step you take becomes the largest stumbling block in your organizations history; you decide to reinvent yourself into a much larger market. The first step, decide a new category that you feel you can own, change your marketing message to fit the market, update the website to reflect your change, and train your sales personnel how to sell in this new market.

You are excited to see the shift happen so quickly, people are excited, the message seems to be resonating with a new market, sales are increasing and you think "man, why didn't we do this sooner". Then it happens, your new target market customers start complaining or even cancelling, you think to yourself what is going on here, our existing customers are happy, why aren't these people?

Next step you start doing is throwing people at the problem, hire more people to help our new customers, they just don't get it, and we need to help them understand. You start to see adoption rise a bit so you throw more people at the problem thinking that is the cure. However as time goes on your cancellation rate levels out at levels that are 8 times as high as they used to be, however sales are only 1.5 times higher.

Now you are losing lots of sleep at night thinking what is it these people want? Why is this new market so difficult? They need what we have, why aren't they adopting it? 

By embarking in on this new market you have introduced a product that was built for a different subset of buyers, you changed your marketing message and go to market strategy, and your sales personnel are selling what your new market wants, but does your product live up to the what is being messaged and sold?

Think back when you created your original product, it wasn't created with an inside out point of view, it was created by talking to your perspective buyers and you found out what they needed. You created a product they would use and be proud to tell others about.

The answer to this lies in the "Market Divide", and it has escaped you. The "Market Divide" is delivering a product to a market that the expectations in the market are different from the product you deliver.

The critical mistake too many software CEO's make is missing the Market Divide, the key to not falling into the divide is the understanding that embarking in on a new market starts with market research, then evolving your product to deliver on the new market expectations, market testing for true adoption, then marketing message and positioning along with sales training.

Don’t lose sight of what made you successful in the first place, go ahead and embark into new markets, just mind the “Divide” and don’t let your aspirations get ahead of what your organization or product can deliver.



Listening - Purposeful or Passive

I was reading Miles Austin's blog,  the owner and author of Fill The Funnel and I was intrigued at this basic concept that most of us forget. I thought I would take a moment to share how important it is to be known as a purposeful listener.

Listening is a Key to Sales Success
April 21, 2010

    

Success in sales has a direct correlation to our ability to listen.  I use the term “listen” here to describe the act of listening with our ears and/or listening by reading the words of others.  There are two types of listeners:

1. Purposeful listeners - A purposeful listener is one that listens intently to learn and apply what they learn.  They listen with a purpose of learning, obtaining, absorbing and incorporating into their actions, applying what they have heard.
2. Passive listeners – A passive listener hears, walks away and forgets it.  They do not listen with the intention of applying their knowledge.

The next time you are in a conversation, either in person or online, ask yourself which type of listening you are using.  Even more interesting, ask yourself which type of listener the person on the other side of the conversation is.

Would you change your message if you realized your customer is listening passively?  Consider how you are listening during the day and see if it makes a difference.

Listen Purposefully = Win Big

Faith and Reality

This Sunday afternoon, you will find me watching football along with millions of other people. As I gear up for the big game I am remind of how important it is for a business to operate as a team. In football, the need to have a coach focused on winning is important; however, he must mentor assistant coaches and players so they believe they can win every Sunday — no matter what is going on.

This is faith. That is, the undying belief that you can succeed given any level of adversity you may be facing. I am reminded of this by the Stockdale Paradox, written by Jim Collins, found in one of the greatest books ever written,  Good to Great. (It is a great read and well worth your time.)

The overwhelming theme of the Stockdale Paradox is best said by Admiral Jim Stockdale, “This is a very important lesson. You must never confuse faith that you will prevail in the end-which you can never afford to lose-with the discipline to confront the most brutal facts of your current reality, whatever they might be.”

Every business owner should read Good to Great. If you have read this amazing book, you need to go back and review the Stockdale Paradox, now more than ever. During this economy it is imperative for business owners to confront the brutal reality of where their business may be at, but never lose the undying faith in realizing the dream they set out to achieve.

What brutal realities are you facing? How are you keeping faith alive within your organization?

5 Steps to building a “Viral Quotient”

There is a theory of product evolution that states in this new market it is not the standalone job of Marketing to create your brand and find pools of prospects anymore; this responsibility is shared by the Marketing and product teams.

A product developed in today’s environment must be “social” in itself, allowing the people who sign up for the product or service to easily tell their universe of people around them how cool it is and the product must be designed so that your users will need other people (their friends) to participate with them in order to have a “killer” experience with the product (think Facebook, Twitter, LinkedIn, Foursquare).

If you can pull that off, then you have made your product “social”, when this happens the users become your “viral” marketing department and what they say about the product and how it works becomes your brand.

This theory can simply be summed up as your organizations Viral Quotient and it has become one of the top 3 measures used by firms when evaluating your company for investment.

Here are the 5 steps your organization can follow to determine your Viral Quotient:

1. Think consumers connecting to consumers, users connecting to users
2. Find out what your customers say about your product, do you have a killer product they want to tell other people about?
3. Determine if your customers need other people to interact with your product to make it useful.
4. Make it easy for your customers to promote your product by giving them an easy way to tell their friends about it (think "Like" button)
   
5. Viral does not mean that everyone on the internet should use your product, viral is achieved within specific demographics your are targeting.

Here are some examples of products that have taken Viral Quotient to heart and their products are being talked about within their respective markets:

Kiva – They connect small business owners with people who have money and want to lend it out, they need each other for this to work.

PayPal – They grew very rapidly in a space dominated by big players like MasterCard, why, because you can’t use their product without having someone else involved, you say I have money and I want to buy that, the other person will usually pick up the money.

The Telephone – It’s no fun to talk to yourself on the telephone, you need a participant.

What other products have taken this new approach and are riding the Viral wave?

I share my insights here to help companies explore extraordinary opportunities, manage and sustain growth, and maximize revenue.

It is my goal to help you unlock the potential of your organization.

1.       Think Consumers connecting to consumers, users connecting to users

2.       Find out what your customers say about your product, do you have a killer product they want to tell other people about?

3.       Determine if your customers need other people to interact with them and your product to make it useful.

4.       Evaluate your product for areas where you can get your customers to promote your product for you (i.e. the experience with a certain aspect of your product would be so much better if I as a user could get 10 other people to participate with me)

5.       Viral does not mean Facebook or Twitter, viral can and is achieved within specific demographics your are targeting.

Three Elements of Viral Marketing

Every time I see a business plan with little or no budget for marketing, I get the answer that they will be using “viral” marketing, which costs nothing. The CEO explains that the product is so “buzz-worthy” that usage will spread rapidly through word-of-mouth only, meaning people loving it and recommending it to their friends.

Seth Godin pointed out a couple of years ago that viral marketing does not equal word-of-mouth. Word-of-mouth is an unsolicited consumer action, positive or negative, which usually fades quickly, like a good or bad restaurant review.

Viral marketing is a combination of many events in a well executed marketing plan, designed to grow attention at a compound rate, without further stimulus, by word-of-mouth. It usually implies an opportunity to win big, like a lottery, or experience something sensational, like an incredible video or free product.

At any rate, “viral” is a marketing illusion that can cost big money to create. In a business plan these are called marketing campaigns, which continue to rise in cost. Here are three elements of most viral marketing campaigns:

• Brand evangelists. Think of a brand evangelist team online as people blogging about your product, or posting links to it in every forum. Brand evangelists offline talk up your product lines at cocktail parties or recommend your services to friends while watching their kids' soccer game.

• Develop viral content. Someone has to design and create those entertaining or informative messages that are designed to be passed along in an exponential fashion, often electronically or by e-mail. It’s harder than it looks to exploit people’s propensity to share humorous, enjoyable or useful information - jokes, special offers, and games.

• Seed viral activity. People are more demanding and have more choices than ever before. This means spending more money on search marketing (SEM) to make it look like the buzz is working. It also means making the content appear omnipresent on the web and in the marketplace, including dedicated video sites and blogs. In addition, special offers and competition prizes may be required.

As a result of the rising popularity of viral campaigns, the cost of developing one has increased significantly, and the increased ‘viral clutter’ has made it more difficult to stand out from the crowd. However, despite this, viral marketing can indeed be more cost effective than traditional marketing when done well.

Seeding is the most expensive aspect of a viral marketing campaign, with some video sites charging in excess of $10,000 to be featured on their home page for one week. Only a few years ago a humorous video or unique toy could be seeded into a couple of relevant online communities, and it would be hugely popular. However, the cost of entre has gone up as the concept of viral marketing has become pervasive.

In general a well-executed viral marketing campaign can cost anywhere from $100K to many millions. There is a reason that sites like Priceline.com Europe and Facebook, which everyone believes were made popular by viral marketing, have spent nearly $50 million each becoming a household name.

In summary, the objective of viral marketing is that hopefully it will “spread through the Internet like a cold in a kindergarten.” The intent is for it to continue to expand and pick up momentum as time goes on. These are all good things, but it still costs real money up front. Plan for it.