Building your Loyalty Robot


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We wanted to share our current thinking on how you can build “robotic” systems to enhance the e-commerce customer experience. The key elements:

* automated customer surveys to understand voice-of-customer and Net Promoter® Score in real-time
* automated customer segmentation by lifetime value
* automated customer segmentation by loyalty (using Net Promoter Score)
* process to help customers needing immediate response
* clustering customer issues together for longer-term strategic fix
* close-loop monitoring of results (Net Promoter Score and other metrics)
* Responding to customers with updates on your actions

You could roll-your-own solution, but we believe CustomerGauge has all the parts you need to start this now – and we have proof points from our major e-commerce clients including Canon, Philips and Vodafone.

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Building your Loyalty Robot

  1. 1. The Loyalty Robot Learn how to increase customer loyalty and grow online sales automatically Adam Dorrell Webinar 10 Mar 2010
  2. 2. Agenda & Hosts •  Introduction Adam Dorrell CEO CustomerGauge •  Why build a “Loyalty Robot”? 12 years+ e-Commerce •  Economics of returning customers •  Identifying Valuable Customers •  Segmenting using Net Promoter® Score •  Using customer feedback •  Continuous Improvement •  Rescue/Reward Model •  The Robot (step 1) Melanie Otersen •  The Robot (step 2) Net Promoter Expert Net Promoter, NPS, and Net Promoter Score are trademarks of Satmetrix Systems, Inc., Bain & Company, and Fred Reichheld.
  3. 3. What we do: Directness B2b customers •  We provide technical solutions to help companies add strong metrics to marketing Consumers activities –  CustomerGauge: Automatically measure, understand and analyse customer sentiment, using Net Promoter Score®. Identify and grow your most loyal customers. –  DemonstratorGauge: Collect and analyse field marketing events, demonstrators, mystery Field Marketing shoppers. Track activities and show ROI on events budget •  Used by global organisations –  +1 million end-customers measured since 2007 –  +25,000 marketing events tracked since 2008 •  Company background: hi-tech marketing: Selected Clients Sony, Dell, Compaq, HP, KPN etc –  Privately funded, based Amsterdam, NL
  4. 4. Why Build a Loyalty Robot? Customer Database E-commerce site •  Traffic costs $$$ ~$1 •  New customer acquisition is expensive Adwords etc –  50 cents a keyword ~~$50 @ 1% conversion = up to $50 for a new customer sale 100% •  Returning customers 90% 80% –  Lower marketing costs 70% 60% –  More profitable 50% •  Lesson: Hold on to 40% 30% Returning your customers 20% Customers 10% New •  … but how to do it 0% Customers effectively
  5. 5. Lesson in Inequalities… 5% of •  95% of Guinness Guinness drinkers consumed by 5% of customers 95% volume •  Pareto Principle (80-20 Rule) –  80% of revenue from 20% of customers Source: Malcolm McDonald, CIM
  6. 6. E-Commerce Economics Total Revenue 80% 50% 20% 10% Number of customers 30% 10% 5% 1% •  Actual results (from CLIENT X) –  7% of customers (1540) account for 50% of revenue –  1,5% of customers (326) account for 20% of revenue –  Just 0.6% of customers (129) account for 10% of revenue •  Average customer value is 15x higher in top 1% Results from blend of results from 10 e-commerce companies, 2009-2010
  7. 7. Finding the Value of Repeating Customers •  Take a sales report (last 6m or 12m), open in spreadsheet Customers v. Revenue •  Group customers together by email address (or customer number) 100% •  Sum up the order values by customer 90% •  Sort “total order value” from high 80% to low 50% 70% •  Divide customers into sensible segments: LOW/HIGH or 5/10/85% 60% 93% Repeating 50% Customers 40% New Customers 30% 50% 20% 10% 7% 0% Number of Revenue customers : Best Buy Data Fact its at 7% of found th t ed s accoun customer s. f its sale for 43% o
  8. 8. Segment by value Customer Segmentation Hi-spending customers $$$ 7% of total, 50% revenue, 1500 customers AVE VALUE: €1150 Value (spend, profit) LO-spending customers $ 93% of total, 50% revenue, 20,300 customers AVE VALUE: €163
  9. 9. Loyalty Measurement: Net Promoter® Score •  Becoming a standard in Fortune 1000 companies •  Simple to implement and understand •  Ideal for surveying e-commerce transactions
  10. 10. Segmenting Customers by NPS Detractors cost money Promoters are profitable
  11. 11. Net Promoter Score and e-Commerce Invite by email: WEB SURVEY: ASK Plot the results ACT ON THE all customers NET PROMOTER COMMENTS to rate you on Lots of spreaDsHeet QUESTION & ASK work! GRAPH, segment Every order! FOR COMMENT etc. GOAL IS TO DISTRIBUTE COMMENTS IMPROVE OVER TIME to those who can use Usually NO permission You can ask other them. needed, but explain up questions about Front AND add “unsubscribe” option specific issues and ask if further action needed, but keep it short. EXPECT 20 – 30% RESPONSE
  12. 12. Becoming a customer focused organisation •  Best practices: •  Communicate to entire organisation •  Publish regular nps results - Weekly/ monthly updates •  Bonus managers on NPS improvements Net •  Delegate responsibility to Promoter departments Champion •  STructure for success Assistance in scoring and admin Customer Logistics Web Product Finance Service Champion Champion Champion Champion Champion KEY ISSUES: - Checkout - Help pages - merchandising
  13. 13. Acting on Comments •  Best practices: •  Get regular feedback so you can manage it: Daily/weekly is best! •  Classify comments to help prioritise issues •  GET COMMENts to the right people •  Act on customer feedback – within 24 hours Problems! Suggestions Praise Service issues Service Testimonials Logistics Logistics Improvements Returns etc FINANCE WEB
  14. 14. Segment by Loyalty Customer Segmentation 20,000 surveyed 25% response DETRACTORS promoters 20% TOTAL 45% of total, 1012 customers, 2250 customers 19 gave “0” score 1643 gave “10” score 459 comments 833 comments ☹ ☺ Detractors Promoters LOYALTY (Net promoter score)
  15. 15. Value & Loyalty Matrix Customer Segmentation Take actions to Rescue Key customers IN DANGER OF Value RESCUE REWARD (spend, profit) defecting & LOWER PRIORITY Reward Key customers Detractors Promoters who can help grow sale LOYALTY (Net promoter score)
  16. 16. Building your Loyalty Robot by hand ? Set up processes to continually monitor customer scores and feedbacK Survey customers automatically Data in from e-commerce system “we’d like you Find urgent Prioritise to trial our new product”… customers to customers to be rescued be rewarded “What do you think of this?” You said you would Call center recommend us – thanks! We’d like to feedback offer your friends a £20 voucher to try us! Measure referred sales Regularly report nps results, Learn from Publish returning customer testimonials to customers etc feedback the web
  17. 17. Can it be automated? •  Can you survey customers automatically? •  Can you make sense of customer input with a machine?
  18. 18. A real Loyalty Robot: CustomerGauge •  CustomerGauge is a system that –  Plugs into your ecommerce system to automatically survey customers about their experience, every day –  Brings voice of customer feedback into your organisation –  Measures customer loyalty with industry standard Net Promoter Score® –  Shows results on dashboard in realtime to help improve customer experience and retention sales –  Simple to use, quick to implement –  No hardware or software needed •  Optional extras: –  Workflow module to guide feedback to appropriate department –  “Marketing Robot” to help you segment and automatically target offers to most engaged customers Survey every transaction, automatically •  Coming soon: –  Automatic sentiment detection
  19. 19. Automatically segmenting returning customers Built in rules to help rescue and reward customers Analyze the response history CustomerGauge from your most helps you prolific measure and customers understand your VIP customers - J. Look at individual customer spending patterns, and past comments/scores
  20. 20. CustomerGauge – Customer Rescue ATTN: THIS CUSTOMER Automatic REQUESTED HELP: workflow “WHERE IS MY SHIPMENT? I “rescue” CALLED 3 TIMES!” message SENT j.smith@... to call agent queue AGENT CAN IMMEDIATELY RESPOND, UPDATE CUSTOMERGAUGE SYSTEM You CAN check customer issues are being closed •  From survey to solution, CustomerGauge helps you solve customer problems one by one
  21. 21. CustomerGauge – Strategic change management SURVEY: CUSTOMER gives multi-choice feedback on likes/dislikes Understand root causes SURVEY: VOICE OF CUSTOMER comments Assign to project •  To help make managers strategic change: Track NPS –  Identify root causes improvements of issues –  Put a value on impact of each issue –  Set up projects to Understand value / NPS impact “Close the loop” –  Track NPS improvement as a result
  22. 22. Summary •  Identify your most valuable returning customers •  Continually ask for feedback using Net Promoter Score methodology •  Rescue & Reward the most important customers •  Automate the process wherever possible: build a Loyalty Robot •  Make it part of your company’s DNA – use the best tools out therE! Thank More information: you Directness BV, Silodam 253, 1013AS Amsterdam, The Netherlands Telephone: +31 208 20 21 60 © CustomerGauge 2010 *Net Promoter, NPS, and Net Promoter Score are trademarks of Satmetrix Systems, Inc., Bain & Company, and Fred Reichheld.