When the Best Marketing Is Keeping Your Mouth Shut

I've run into a couple of interesting stories of marketing. In one, an organization sponsored a class at Hunter College, with the class content being a covert marketing campaign. The other came from a friend who owns an HP computer and who recently received something about extending the warranty - but said invitation explicitly excluded hardware. Leaving what? Telling her to reload software in case of trouble?

There are times that companies make the most horrendously stupid mucks of marketing communications. They lie, they twist things, they try being clever, and the upshot of all that effort is egg on their faces. If marketing isn't about the customer, then it's essentially a con game, in which the company tries to extract revenue without providing any benefit. And if a company's marketing communications is designed along such practices of trickery, it is probably costing the company more in good will and long term financial value than company management will ever realize. If the managers did get it, they'd replace the marketing staff immediately.

Facebook Re-learns Basic Customer Lesson

I'd ask when will companies learn, but the answer is usually never. Facebook decided, again, to try and "monetize its assets" - that is, the users. It wanted to track what people did and exploit what it learned for its own ends. And, as newspapers like the Washington Post are reporting, those customers have forced the company to back down. Read the article to see how a man's surprise Christmas present for his wife (at least, I hope it was for his wife, and if it wasn't, it is now) became known to her and many others, as Facebook broadcast his purchase. Here's a quote, in the story, from a MoveOn.org rep:

"Sites like Facebook are revolutionizing how we communicate with each other and organize around issues together in a 21st century democracy," said Adam Green, a spokesman for MoveOn.org, a liberal activist group that has launched the petition drive to pressure Facebook to stop broadcasting members' purchases and using their names as endorsements without explicit permission. "The question is: Will corporate advertisers get to write the rules of the Internet or will these new social networks protect our basic rights, like privacy?"

It's not just about privacy, though. When you start dealing with customers, you are entering a contract. It's not written, but it's stronger than any piece of paper, because it involves their expectations and demands. Flub enough on your end, and you're ended, because the people who make your business possible will walk away with their money.

Unfortunately, businesspeople who damned well should know better let greed and wishful thinking get ahead of them. That's why there was a dot com blow up, and why the current credit crisis is in full bloom. And unless online companies start getting street smart and people wise, they're going to find that the market and even government step in to put bounds on what they can do. And no one should look to have those forces registered as friends that watch your every move.

Customer Service and Self Interest

I just received an email from the Financial Times informing me that I needed to update my credit card details to maintain my subscription. Simple enough, I thought. Ah, maybe not. The directions in the email had me click on a link and told me to update the credit card details. Unfortunately, nothing on the page mentioned credit cards. So I figured that I might try updating the account information. Fair enough, it seemed right, although I had to remember the answer to one of the security questions rather than just providing my password. (I wondered how many legitimate people were screened out and if the company ran into any poseurs.) Then I looked and there was still nothing saying credit card, though there was a link for payment details. Ah-hah! Success. This time.

But I've seen this problem many times before. A company will email a customer, asking for updated information or instructing them to do one thing or another, and then the instructions turn out to be wrong. Strategy is important, but companies gain and lose customers on the details. Those customers are rarely interested in the strategic directions. They want things done when they need them done. If a company isn't going to spend the short amount of time ensuring that instructions actually correspond to reality, then it's going to find that some number of people walk away because of frustration. This is unnecessary and it's far more expensive than the small amount of time needed to do thing correctly. A good proof reading would cost all of maybe $50, and a single subscription in this case is worth over $200 annually. A little attention to details is profitable, indeed.

Early Results of Microsoft Buying Search Audience

An InformationWeek story notes that MSN and Microsoft Live slice of search volume jumped from 8.4% in May to 13.2% in June, according to Internet metrics company Compete, and that what has increase business is prizes for users:

"A good portion of the additional Live searches are coming from the Live Search Club, where you can apparently play games for points which you can redeem for fine Microsoft products," said Steve Willis, a Compete analyst, in a blog post Monday. "All of the games involve using Live's search engine - to get the points, you have to search with Live."

Much of the story looks at whether this is realistic, but even if it is, this actually isn't good news for Microsoft. This is a classic example of bribing customers - I actually mentioned it here in April. Glad to hear that volume may have increased, but the problem still remains that this is not sustainable customer development. The theory is that if you bribe people to do business with you, some amount will remain out of habit so that when the bribes (whether called rebates, subsidies, or by another name) eventually stop. That might be true, but does anyone check the profitability of these "catches?" Someone drawn nothing more than one company's freebie is subject to being distracted by another's, and so the likely lifetime value of said customer mercenary will be low. Compare that with the acquisition costs, and it could be that you're actually losing money with each increment.

PCs and Customer Disservice

Computerworld has an interesting article about just how bad call centers can be. CFI Group Worldwide LLC in Ann Arbor published a study of customer satisfaction with phone service in six industries. On the top were catalog companies - no surprise, as customer unhappiness means losing sales. And at the bottom were PC vendors. Between offshoring and having inadequately trained people to save money, the companies actually paying a heavy price:

According to the survey, nearly 73% of the people who have bad experiences with their PC companies' call centers said they will consider purchasing their next PCs from another company, while 85% of customers who had their problems resolved by calling a PC call center said they would continue doing business with the company. But only 33% of customers whose problems were not resolved said they would continue doing business with a PC company, according to CFI Group.

The PC industry is particularly bad, but many companies treat customer service as an expense. That is foolishness. Customer service and handling complaints is in reality one of the most effective forms of marketing the business can have. When you satisfy someone, you make it far more likely that they'll do business with you again. That lowers overall costs for new customer acquisition and increases the lifetime value of customers, which should translate into higher profitability. When you think you're saving costs by sending work offshore - and actually, experts say that the real savings is only about 20% of what the business function would run domestically - you're actually undercutting your own business. For gosh sakes, 25% of the callers to the PC companies hang up before they can get an issue resolved. That's a powerfully large group of people to antagonize. It's another example of short-term thinking and not seeing how the parts of a business come together.

Being Honest About Customers

Amp'd Mobile - a relatively new type of cell company called virtual, because it leased capacity from traditional carriers, filed for bankruptcy on June 1. That's not a long time from one measure, given that Amp'd only debuted in the U.S. in 2005, but it's an eternity to show how unwise a business model can be.

Information in a BusinessWeek story suggests that the problem facing the company wasn't a lack of customers. Instead, in a way, it suffered from too many. Amp'd's target market was "an edgy upstart geared to free-spending youths," according to BusinessWeek. It racked up an estimated 175,000 of them.

Certainly the services were designed for a young market, as indicated in the company's Wikipedia entry:

Amp'd mobile's service is built around Amp'd Live, a permanently installed BREW application on all Amp'd Mobile phones, which features downloadable and streaming video on-demand clips, live events such as Super Cross, streaming phonecast radio stations, downloadable content such as games, ringtones, and songs. They are currently the only carrier licensed to show clips from the Ultimate Fighting Championship.

Unfortunately, the youth market it tapped appeared not to enjoy paying its own way, according to the story's quoting of some court filings:

Collecting payments from these subscribers proved to be a challenge, however. "Approximately 90% of the debtor's customers were on 18-month service contracts," according to the filing. "The debtor began to find a host of credit and collections problems (that) contributed ultimately to a liquidity crisis." By May, the number of nonpaying customers reached 80,000.

Almost half of the customers weren't paying their bills, though I would be surprised if the carriers that were wholesaling capacity would be understanding.

Not all growth and not all customers are good. One of the subtle strategies that some business experts use is to allow a competitor to succeed in target markets that are poor customers because of payment issues, high costs of servicing, or any other reason, for that matter. But to pull off such a move, a management team must have undertaken the research and data analysis that would allow such an identification. It comes back to that adage about doing what you know. If you don't really know about your customers, what makes them tick, what they want, and what they're like, then there's not a whole lot you'll be able to do.