It’s no secret that in many categories brand loyalty is declining faster than the price of Facebook’s stock. Kevin Clancy believes poor targeting and a lack of consistent, compelling positioning are major reasons so many companies struggle with connecting customers to their brand. In this webcast, Kevin will outline a process that considers profit-related criteria such as retention potential, level of satisfaction with current brand, likelihood to try or usage of a competitor’s brand, and problem potential when assessing the value of current and prospective customers. He will also explain the relationship between the magnitude of the problem a brand solves for a customer and market response in the form of sales and advocacy.

1. Priming the Pump: Driving Loyalty with Targeting
and Positioning
It’s no secret that in many categories brand loyalty is declining faster than the
price of Facebook’s stock. Kevin Clancy believes poor targeting and a lack of
consistent, compelling positioning are major reasons so many companies
struggle with connecting customers to their brand.
In this webcast, Kevin will outline a process that considers profit-related
criteria such as retention potential, level of satisfaction with current brand,
likelihood to try or usage of a competitor’s brand, and problem potential when
assessing the value of current and prospective customers. He will also
explain the relationship between the magnitude of the problem a brand solves
for a customer and market response in the form of sales and advocacy.

2. Priming the Pump: Driving Loyalty with
Targeting and Positioning
Kevin J. Clancy, Ph.D.
Chairman
Copernicus Marketing Consulting and Research
November 15, 2012

3. Request an e-copy of ….
To request a PDF, send an email to
ami.bowen@copernicusmarketing.com
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4. “CMOs see customer loyalty as their top priority in
the digital era.”
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5. Net Promoter Scores—Allegedly the only metric a company needs
Score
9 -10s
Less 0 - 6s
= Net Promoter Score
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6. Customer Loyalty is a Priority; With Good Reason….
The highest NPS recorded across all brands and industry sectors is 83%.
The highest NPS recorded across all brands and industry sectors is 83%.
2012 Top Net Promoter Scores Across Measured Industries
“Companies with the most
efficient growth engines
operate with an NPS of 50 to
80. The average firm sputters
along at an NPS of 5 to 10—in
other words, their Promoters
barely outnumber their
Detractors. Many firms—and
some entire industries—have
negative Net Promoter
Scores.”*
*Satmetrix

7. These Findings are Scary!
The lowest NPS recorded across all brands and industry sectors was -21%.
The lowest NPS recorded across all brands and industry sectors was -21%.
2012 Lowest Net Promoter Score Industry Benchmark
Mediacom
Wachovia
American
Airlines
-25% -20% -15% -10% -5% 0%
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8. Marketers tend to agree that fostering loyalty among current customers and
Marketers tend to agree that fostering loyalty among current customers and
motivating advocacy behaviors is an untapped opportunity to improve profitability.
motivating advocacy behaviors is an untapped opportunity to improve profitability.
Acquiring a new Over a 5 year Businesses which
customer can cost period customer boosted
6 to 7 times more attrition rates customer
than retaining an could reach as high retention rates by
existing customer. as 50% if as little as 5%
customers are saw increases in
ignored. their profits ranging
from 5% to a
whopping 95%
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9. Happiness is Contagious
Customers that express a high level of satisfaction….
Have a lower A higher likelihood A great chance
likelihood of of repeat purchases they’ll enhance
switching away from marketing activities
you
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10. The Real Ultimate Question
How do you integrate growing
loyalty and advocacy into your
marketing strategy to take
advantage of this untapped
First Purchase opportunity?
Satisfaction
Ongoing Loyalty
Advocacy
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11. Give All Your Customers a New Car
Find More of the Customers You WANT to Keep
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12. Businesses Benefit When They Keep PROFITABLE Customers
Our own research has repeatedly found the relationship between customer
Our own research has repeatedly found the relationship between customer
retention and profitability to be curvilinear because the costs of keeping
retention and profitability to be curvilinear because the costs of keeping
some customers exceeds their value to the brand or business.
some customers exceeds their value to the brand or business.
High $$$
Profitability
($ Sales Less Costs)
Low $
0% 50% 100%
Customer Retention

13. A Profitable Customer Target Decreases the Cost of Acquisition AND Retention
Marketing Costs Per Loyal Customer*
Undifferentiated All A Good An Optimal
Market Prospects Target Target
Private Banking $50,000+ $12,100 $6,300 $3,500
Software Services 1,000+ 644 357 216
Automobile Dealerships 1,000+ 325 150 99
Utility Companies 600+ 417 132 75
Personal Computers 300+ 266 155 83
Credit Cards 200+ 102 66 39
Packaged Goods 60+ 43 20 9
*These figures are based on a small number of cases in each product category and
hence are meant to be illustrative rather than definitive.
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14. Get on the Right Train
Find More Profitable Customers, Particularly Those
Predisposed to be Loyal to Your Brand
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15. “If you’re on the wrong train, every stop is the wrong stop.”
“If you’re on the wrong train, every stop is the wrong stop.”
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16. A Better Approach: Profit-Directed Segmentation
A systematic process should be employed from start to finish
Create
Hundreds of Ways
to
Segment Undertake a
the Market projectable
• Advocacy survey and test Enter into Evaluate
• Attitudes and Values all of the ways taxonomic different
• Decision-making of segmenting analysis (e.g. solutions using
• Motivations the market neural network, statistical,
• Brand Perceptions latent class,
against managerial and
• Buying Behavior proprietary
• Personality Traits rigorous, profit- financial criteria
and loyalty- cluster)
• Media Profiles
• Demographics related criteria
• Lifestyles to identify key
•Internet Behavior drivers of value.
• Political Factors
• Job Descriptions
• Personal Optimism
• Social Media Profiles
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17. 10 Examples of Profit- and Loyalty-Related Criteria
• Current spending patterns
All can be
• Price insensitivity
used in
• Pre-disposed to be loyal to the brand algorithms to
• Problems you can solve predict
• Satisfaction with current brand profitability
• Switching potential for each
respondent
• Personal influence in a survey
• Social sharing propensity and power and every
• Advocacy for your brand target group
• Inexpensive to reach and engage identified
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18. Identify Financially Optimal Market Targets For a New American Express Payment
Vehicle For Women
ROI
% of All % of % of Index
Prospects Current Revenues Potential Profits
Young Up
and Comers
217
Over 50’s
Super
Moms 100
34
Careful
Spenders 44
18

19. Bring Back That Lovin’ Feelin’
Connect Customers to Your Brand
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20. The Quest for the Emotional Connection
Copernicus and Greenfield online surveyed consumers on their “personal or
emotional connection with their brand” across a variety of categories
 Only 25% on average reported even a
“moderate” emotional connection to
a brand
 Less than 10% on average claim a
“strong” connection
 An emotional connection is more
readily formed in certain product
categories
– Colas (39%)
– Beer (37%)
– PCs (33%) I can’t identify emotionally with any brand of anything…
– Coffee (31%)
20

21. Brands build a connection with customers by solving their problems with
problems or services.
The bigger the problem a brand solves, the bigger the emotional—
and market—response.
21

22. The More Serious a Customer’s Problems, the Bigger the Customer ‘s Response
Effect of Implementing a Crush
Marketing Solution Competitors
100
Take Significant
Share
50
Modest
Negligible Effect
Zero Effect
Effect
0
None Small Moderate Large Enormous
Magnitude of the Problem
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23. Positioning Strategy – “Motivating Power”
A state-of-the-science way to measure buyer problems
 Traditional “importance” ratings overstate rational and pro-social responses
 “Derived importance” is interesting, but also has flaws (such as failing to detect
the influence of price-of-entry features)
 Employ a unique three-dimensional approach
“Dream Detection” “Problem Detection” “Brand Preference Detection”
Regression of brand ratings on
Self-reported in the Desires versus satisfaction with brand preference
questionnaire on an 11-point brand used most often
desirability scale
Motivating Power
Weighted Average of the Three Measures
(Computed for each attribute / benefit for each respondent)
A far better approach to measuring problems than any conventional methodology
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24. We’re Looking for a Positioning that is: Highly Motivating to our Target; Our Brand Has It; The Enemy
Doesn’t
Perceptions of Our Brand versus Competitor
Perceptions of Our Brand versus Competitor
Brand Strategy
Brand Strategy
Matrix
Matrix Excellent: Could Acceptable, But
We are Superior Not Be better Could Be Better Unacceptable We’re Inferior
11 44 22
33 66 55
Motivating
Motivating
Power of
Power of
Attribute/
Attribute/
Benefit
Benefit
77
Value of Strategy ranked from 11 highest to 77 lowest

25. Illustrative BSM for an American Express Payment Vehicle for Women
Perceptions of AMEX versus MASTERCARD
Perceptions of AMEX versus MASTERCARD
Brand Strategy
Brand Strategy
Matrix
Matrix Excellent: Could Acceptable, But
We are Superior Not Be better Could Be Better Unacceptable We’re Inferior
11 44 22
33 66 55
Motivating
Motivating
Power of
Power of
Attribute/
Attribute/
Benefit
Benefit
77
Value of Strategy ranked from 11 highest to 77 lowest

26. An example of poor positioning....
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27. Illustrative BSM for Coors Beer
Perceptions of AMEX versus MASTERCARD
Perceptions of AMEX versus MASTERCARD
Brand Strategy
Brand Strategy
Matrix
Matrix Excellent: Could Acceptable, But
We are Superior Not Be better Could Be Better Unacceptable We’re Inferior
11 44 22
33 66 55
Motivating
Motivating
Power of
Power of
Attribute/
Attribute/
Benefit
Benefit
77
Value of Strategy ranked from 11 highest to 77 lowest

28. Don’t Just Fill the Funnel—Use Your Marketing Strategy to Prime the Pump
Start building brand loyalty from the very beginning of the
marketing process.
• Who are you targeting?
– Are they profitable?
– Are they predisposed to stay loyal to your brand?
• How are you motivating them to love your brand?
– How big a problem is your brand, product, or service solving for your target?
– How feasible is it to deliver on your positioning strategy in a way that will foster
loyalty?
– Are you working hard to build an emotional connection between your customers and
your brand?
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29. Questions?
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30. Kevin J. Clancy, Ph.D., Chairman
(617) 449-4200
Kevin.Clancy@copernicusmarketing.com

31. Boston, MA / (617) 449.4200
Thank you! Norwalk, CT / (203) 831.2370
http://twitter.com/marketingfrayer
copernicusmarketing.com