BRANDTHINK Malaysia » #Marketing

Trend Watch: Apple launches iAd – Mobile Advertising with Emotion

BRANDTHINK Malaysia — Fri, 09 Apr 2010 08:36:07 +0000

Steve Jobs previewing the iAd. Image from Engadget.com

At its Developer Preview of the iPhone 4.0 software, Apple launched the iAd. iAd, Apple’s new mobile advertising platform, combines the emotion of TV ads with the interactivity of web ads. Today, when users click on mobile ads they are almost always taken out of their app to a web browser, which loads the advertiser’s webpage. Users must then navigate back to their app, and it is often difficult or impossible to return to exactly where they left.

iAd solves this problem by displaying full-screen video and interactive ad content without ever leaving the app, and letting users return to their app anytime they choose. iPhone OS 4 lets developers easily embed iAd opportunities within their apps, and the ads are dynamically and wirelessly delivered to the device. With the iAd, Apple intends to milk opportunities from impressions on their devices.

Is it game-changing and revolutionary? Time will tell but we believe that it is definitely a market mover for many of us who works in a marketing function.

How will that affect mobile advertising?

It’s no secret that consumers largely have embraced the mobile life. The smartphone market is exploding thanks to the likes of Apple’s iPhone, RIM’s Blackberry and Google’s Android. Steve Jobs have rightly observed that on the phone, the Web plays a less important role compared to the desktop where it is the primary interface. Interaction with the phone happens primarily on the app, and that is where opportunities lie. Having a standard platform that enables us to create interactivity and advertising is always welcomed because it helps us focus on the engagement aspects with the consumer.

Another note to observe is that the implementation of this platform will be on HTML5. With many technology companies championing HTML5 instead of Flash, is it time to milk the opportunities and ramp up the development of HTML5?

Questions to come

There are still questions left unanswered and the details would surface in the next few weeks.

How will Malaysian advertisers buy ad space?

Will the ads be Cost per click? Or by impressions?

Our take

The dust have not settled yet from the launch of the iPad and Apple’s has thrown a curve ball at us. In Malaysia, the iPhone market is still relatively small, but we expect Apple’s approach to mobile advertising will be copied by other platforms and the entire market will move in that direction. In a not too distant future, almost all major smartphone platforms will have its own implementation of the iAd.

As marketers, we will need to consider the implications of reaching consumers on the mobile platform and there are now a variety of ways to do that – via an Branded App (such as Gap’s) or through iAd-like platforms.

In preparation, we should begin exploring and sharpening our methods in creating an experience for our consumers. We will need to understand how consumers will interact with our Apps, or our Ads. We will require data, insights and information to analyze and optimize.

If you believe that the market is still birthing and it’s too soon, consider this: what value will you place on experience, insight and knowledge gathered from real-world results? That power comes only from seeing how your brand engages the consumer in this platform.

Trend Watch: How will the Apple iPad change marketing?

BRANDTHINK Malaysia — Sat, 03 Apr 2010 15:00:53 +0000

The moment has come, Apple today shipped the iPad — billed as a game changer in the tech world. Few product launches have received as much attention as the iPad since the iPhone or the iPod, and those two examples radically changed the music and phone industry permanently.

There are of course those who rubbish the launch of the iPad as nothing more than just an oversized iPhone. They have gone as far as claiming its demise. It’s easy to understand why: the iPad looks like a bigger version of the iPhone and runs the same operating system. However, dig deep into the product and you’ll uncover that many negativity surrounding the iPad stems from comparison with other netbooks and standard notebooks. The real power of the iPad comes not from hardware, but from software. The iPad’s allure will come from its power to change traditional media and consumer behavior along with it.

How will these developments affect you as a marketer? Here are some key areas to consider:

1. The iPad will change printed media

The biggest hopes for the iPad is its potential as a game-changer for publishers. The possibilities range from creation of magazines and books that have the ability to marry the traditional ease of use of a book or magazine and add in the interactivity of digital.

Suddenly, each press, magazine or book comes alive with the ability to add in video, animation and connectivity. The iPad’s relative ease makes the “pick-me-up” factor a whole lot easier.

If the iPad succeeds in changing publishing, it will also change advertising. Advertising in an iPad world will mean integrating into such an environment. The winner will not come from simply making a banner ad within an ad space, but product placement potential, interactivity and targeting to make the ad relevant and alive.

Take a look at Wired magazine’s iPad edition to see the potential.

2. The iPad will change television

It’s no secret that many consumers have become dual-users of media. One eye would be fixed on the television while the other their computers. The iPad will make interactivity a big possibility. It’s easier for consumers to carry in their hand and the intuitive nature of touch screens makes it more natural.

What are the possibilities? Interactivity can be added into all TV programs. Consumers can access sports scores, live statistics and timing during live sporting events. Additional information and images can be viewed following a news story. Voting can conducted during a reality TV show. While there are already applications created for the iPhone and the Blackberry, the iPad provides a bigger canvas to make content easier to consume. It will change the entire experience of watching TV.

3. The iPad will change marketing literature

What’s the current arsenal of sales tool do you have at your disposal? Brochures? Leaflets? Price lists?

The iPad will change the way salespeople do sales calls. You can replace bulky computers with sleek iPads for presentations. The battery life and the size wins any computer hands down and the form factor makes it infinitely more agile than a computer.

You can replace heavy brochures, catalogues and leaflets with the iPad. Plus you can add interactivity into the iPad that makes your brochures come alive. You can help customers customize their products on the spot or fill up an order form. Finally, It is infinitely more updatable than a printed brochure or leaflet.

Gap's iPad application - Digital catalogue and e-commerce site

4. The iPad will change your Agency

Here at BRANDTHINK Malaysia, we’re beginning our own exploration on how the iPad can be utilized for greater marketing purposes. Smart phones have already shown us the great potential of marketing beyond the traditional media and even past the standard computers into the realm of mobile and smart devices. The iPad will add an interesting new dimension.

That means new challenges for us. Our team will will be undergoing new training to adapt. We’ll have to partner with our clients to explore potential applications. How our client’s customers respond to this new era will have to be taken into account and our strategies adjusted accordingly.

5. The iPad will change you.

How are you responding as a marketer?

Are you taking steps to prepare for changes in print and electronic media?

Are you studying the potential of interactivity in your ads, your brochures and your sales tools?

Have you started imagining the possibilities?

– END

To see how the iPad will change business, you can also visit a story by the Huffington Post. Time Magazine also ran a cover story on the iPad in time for the iPad’s launch. Its review is also published here.

To learn more about the iPad, visit Apple’s website at: http://www.apple.com/ipad

BRANDTHINK Tapes, Live on BFM 89.9

BRANDTHINK Malaysia — Sun, 08 Nov 2009 09:32:53 +0000

Recently, we sat down with the kind folks over at BFM89.9 and shared our thoughts on marketing, advertising, agency life and our business. Listen in to our interviews on Malaysia’s business station, BFM 89.9. These interviews were aired on Wednesdays at 1pm on BFM’s Resource Centre.

Episode 1: Marketing 101

Is marketing simply an advertising campaign? This episode explores the basics of marketing for SMEs and how different real-world marketing is from the textbooks.

Episode 2: Exploring Non-traditional Forms of Marketing

Are traditional forms of marketing dead? Join the discussion on how new marketing techniques like social media are changing the way businesses communicate with consumers and whether traditional forms of marketing are still relevant today.

Episode 3: Measuring Returns on Investment

How do you measure the success of your marketing campaign? Explore the different ways businesses should measure their entire marketing function – from ad campaign management, PR campaigns to branding activities – and how measurement can aid in business success.

Episode 4: What Makes a Great Agency, What Makes a Great Client

How do you create a successful partnership between an agency (ad agency, pr agency or events company) and a client? By being pairing a great agency and a great client. In this episode, we discuss about our ideas on what makes a great agency and a great client.

For more about BFM89.9, visit their website at www.bfm.my.

Values of A Really Great Agency

BRANDTHINK Malaysia — Fri, 23 Oct 2009 12:47:14 +0000

In about 10 weeks from today, BRANDTHINK Malaysia will celebrate 10 years in the marketing communications industry. What started as a boutique ad agency in the year 2000 has grown into an integrated communications group that includes PR, interactive and activation. BT2010 is a passion project to highlight our thoughts and aspirations as we draw closer to our big year. Over the next 10 weeks, we’ll share our List of 10 on what we believe in, our hopes and our dreams for the future.

10 Values of A Really Great Agency

10 years is a really long time in this industry and in that time, I am often asked what differentiate us from other agencies. What makes us unique? Rather than the tired notion of how creative we are, or how good we are at providing great solutions or best thought-out ideas – things that every agency should already be good at – we thought we’d share with you what we believe are values that define a great agency.

1. Integrity
With the recent backlash in financial markets that resulted in the worst economic crisis of our time, the quality of being honest and having strong moral principles is more important now than any other time. Integrity must become a central part of any agency’s DNA in a world that is increasingly dishonest. It used to be tough in our earlier years when we refuse to offer kickbacks, or create illegal transactions as a precondition to win businesses, but in the long run, the trust that is gained from our reputation is the ultimate reward. Great agencies have integrity.

2. Only do something when you know you can do it well
It took us 7 years before we officially marketed our PR unit just because we couldn’t do it well enough until we established a winning team who can. I remember the pain of having to turn down projects because we don’t have the resources to run it or simply referred prospects to other agencies that specialize in their exact need. When we do have the ability to deliver, we made sure our capability is top notch. Only then would clients trust in our ability to deliver. That’s how a great agency gains a great reputation.

3. Love All Thy Clients
The most obvious of values: when you love the client – whether it is the brand, or the person working behind it – you’ll do what you can to help them. You’ll do work that’s better because the clients matter. And you’ll seek out the rush you feel when your clients are delighted by your work. That makes the agency a great agency to work with.

4. Remember the small things
We always look for the big in things. Big projects. Big ideas. Big budgets. But it’s the small things that make all the difference. Sometimes that means doing that extra little things that others will dismiss as insignificant distraction. It means taking small steps and consistently achieving mini-goals. It means never ever letting small mistakes put a mark on your otherwise flawless execution. Only when an agency excels in doing the small things can they become entrusted with the great things.

5. Zero Bullshit
A client once told me that if they have a penny for all the bullshit that walks through their door, they’d retire rich by now. A grave reminder to us that great agencies know that if there isn’t anything good to say – say nothing at all.

6. Be willing to roll up your sleeves and dig in
It’s 8am in the morning and it’s about 3 hours before the looming deadline. The press release has yet to be finalized, and the setup is in a complete mess. Agencies face obstacles like these all the time. It’s the nature of our business. But what separate great agencies from good agencies are how we respond. Great agencies will do whatever it takes to overcome challenges because they know all to0 well that when they are responsible for something, they will never be too high up there to roll-up their sleeves and dig.

7. Everyday is a learning curve
In our years growing up, we remember the countless amount of battles we faced with bigger, more established agencies in new business pitches. We’ve had our fair share of wins and losses but the pertinent thing I remember with all our wins was that we let our expertise, experience and skills trump the day. In the face of established agencies many times our size, what gave us the winning edge was simply that we knew the subject matter better than our competition. Those experiences taught us that great agencies never overestimate themselves no matter how big they grow and continually challenge themselves to learn new skills and acquire new knowledge.

8. Never give up. Never surrender.
If we had given up, we wouldn’t be working with some of our clients now whom we courted repeatedly for years before they hired us. If we have surrendered to stress of projects, we would have accepted sub-standard work simply to escape. If we had taken “no” at face value, we wouldn’t have convinced our clients to embark on unconventional ways to deliver exponential sales. If we were complacent, learning new skills or acquiring new knowledge will never be a habit and we wouldn’t have seen the need to be better versions of ourselves. If we just bow out, we will never become a great agency.

9. If you must give something up, quit gracefully.
Let’s face it. You can’t be good at everything you do. The brick wall is a familiar sight for us and that wall could represent anything. It could be a mismatch of client/agency personalities or conflicting views on the direction to take for a particular project. Sometimes, it may even be caused by an internal dilemma over integrity and legality. We sometimes have to decide whether the cost of scaling that wall is worth the reward beyond it. In that dire of circumstance, great agencies know when to quit gracefully and part ways with dignity and respect.

10. I will confess all my sins and repent.
No agency is 100% perfect. Great agencies however never shifts blame or find excuses. When mistakes are made, great agencies come clean quickly. They take responsibility for mistakes without justifying them; learn from them so that they’ll never repeat; and understand that failing to do this will quickly become another mistake.

What do you think? Do you have your own list of values of great agencies, or feeling we’ve left out any important values? Look forward to hearing from you.

Sincerely,

Jui Hong Teoh
Managing Director
BRANDTHINK Malaysia

Our (Work), Presented in Cases

BRANDTHINK Malaysia — Tue, 29 Sep 2009 15:38:42 +0000

Case studies are a great way to learn new things. Over nearly 10 years, our agency has slowly built a collection of cases that we draw on every year for inspiration, for insight and for principles of success.

Highlighted below is a sample collection of the experiences we have shared with our clients. From our work in advertising, or PR to our recent exploration of social marketing, we hope you’ll find a case here that spark an insight on your own marketing campaigns. (If not, we’re simply a call away. *wink*)

Advertising & Interactive

Apple – The Mac Minute Show – Making radio fun again
We have been working with Apple -- one of our largest clients -- since 2002 in helping them build the brand in Malaysia. The Mac Minute Show represent perhaps the most fun we had in creating a radio campaign – and we really had plenty of fun with it. To date, it’s still the radio ad the sound engineers over at the radio station remember us by.

HotelClub – Who Says You Can’t Enjoy Business Trips? Campaign & Birthday Sale – Promotions help you sell
One of our new regional clients, HotelClub is giving us the opportunity to work on the creative over many countries, and Singapore is just the start. From digital marketing to print advertising, we hope to see the brand continue its rise as the premier destination for hotel reservations online.

JetstarAsia – Plus! Plus! Plus! Campaign
JetstarAsia – KL-SIN Launch Campaign
JetstarAsia represent our second budget airline client in our stable, and the first we have officially launched. The timing could not have been better as Malaysia’s travel industry saw the most aggressive marketing war between the national carrier and the national budget airline. Against the odds, we created a campaign that helped the airline jumpstart its awareness level amidst a highly competitive market and more importantly fill their seats.

Public Relations

Although less than 2 years old, our public relations agency has been a true star in the industry. We have been blessed with incredibly wonderful and challenging opportunities with great clients. Here are some highlights:

Cortina Watch – Launch of Penang Boutique by the Penang Chief Minister
Max Mara – Official Press and Customer Launch, the party was indeed fun!
Caran d’Ache’s Beautiful Writing Instruments
Breitling’s Instruments for Professionals
MAX&Co – Private Preview
Cortina Watch Jewellery Time 2008 – all the way to Singapore
Facet Fire Media Explosion
Davidoff – Official Media Launch

On top of that, we have created a special NewsFeed site that serves as a wire service for our clients to reach the media. Visit BRANDTHINK NewsFeed and preview all our client press releases!

Activation

What is work if you can’t party a little, eh? Well, we are in the best positions to enjoy some of the most dazzling parties of the year. After all, we helped made it successful!

Breitling’s Party of the Year in Malaysia – How did the guest react to the appearance of the VIP in a custom made WWII-era Mustang?

Mac+iPod DiscoveryWeek – iPod Dancers – Imagine those iconic iPod ads coming to life right in the streets of Kuala Lumpur! We had the traffic grooving to our mojo.

www.youtube.com/watch?v=wEc8j-HUFB0

Apple iPod U2 Launch Party in 2005: One of our earliest and biggest events. To date, we still believe it single-handedly marked the start of the meteoric rise of the iPod in Malaysia. Since then, we have done another iPod Party, and an iMac Party.

How do you reach the highly affluent individuals? With a touch of class and plenty of exquisite wines, that’s how. Moet Hennessy Estates & Wines’s Flavors of the World & Riche Monde’s Cape Mentelle Winemaker’s Dinner.

Social Media

Mac+iPod DiscoveryWeek – Blog, Facebook, and Twitter Campaign – It started out as a quick & dirty way of promoting the DiscoveryWeek event. Today, the DiscoveryWeek blog, Facebook fan page and Twitter are fast becoming a sweet spot for marketing innovation. Next steps? Seeing how to integrate the social media aspects into the on-ground event!

Gap Malaysia & Guess Watches Social Media Campaign – When we first published the Facebook page for Gap & Guess Watches, an industry magazine ran a story on us. At the time, we had 200 odd fans each, and the target was 2000 by the end of 2009. Lo and behold, we hit our target in less than 2 months!

For both our featured campaigns, it marked some of the new initiatives that our client is beginning to explore, including custom Facebook pages and applications. The future landscape of social media is yet to be defined but these initial steps would prove to be a great enabler in the future!

Self-plug: Now is a good time as any to encourage you to join the BRANDTHINK Facebook fan page! Simply click on the Facebook Be A Fan button below and get instant updates on all our agency’s activities!

Interested in hiring our Agency for your marketing, advertising or public relations needs?

Let’s face it: every business is different. Even if your business is in the same industry, you’ll no doubt face unique challenges. Are you looking for a specific case study that is more related to your business? If what you are looking for is not listed here, call us! We might have a case study tucked somewhere we can share.

Call us at 603-22872255 or email us from here.

Insight: Five principles of a great fan base

BRANDTHINK Malaysia — Thu, 27 Aug 2009 12:13:29 +0000

We all know the scenario:

Contest objective that targets a gazillion unknown people.
Competing for media coverage that appears in unknown corners in as many unknown magazines as possible.
Two teenage girls competing with one another to see how many friends they both have.
Database vendor bragging that they have more data than the nearest competitor.

The same with marketing. Every client marketer we know face the looming titanic metric: Numbers. Traffic. Readership. #.

If you start a social media campaign, you’ll probably be tempted to do the same as well: get as many fans, followers, retweets, blog post, etc, as possible.

That’s where you’ll stumble upon the trap of herding quantity with no regard to quality. Sure, a large fan base looks impressive on the outside, but at what cost? It’s a complete effort waster that will ultimately eat into your resources.

How do you stay on the path and avoid a herding mentality? The truth is, doing it right isn’t easy and there isn’t a magic formula or thing that can automate this for you. Over the years, our agency has built upon 5 principles that guide us in our quest to build quality fans.

Principle #1: Make a decision from the start: Quality or Quantity?

Giving quality the lip service is always easy. But when faced with calls for your head at board meetings or post-mortem evaluations, will you still stand firm to your value of quality or quantity? Everyone faces the pressure from higher-ups for quantity. More visitors, more eyeballs, more fans, more followers – generally in the belief that “more” will translate to more sales, more returns, more ROI.

But having “more” isn’t good enough for more ROI. Quality is what generates real ROI. The real focus should be on those who matter: real fans who are real buyers, a great story in a quality publication, and a group of highly potential clients following you on Twitter.

After all, it’s pointless to have thousands of people following you on Twitter or your Facebook page simply to hawk their “insert the latest affiliate/money-making scheme here” idea. In fact, sites like Facebook and Twitter are filled with such individuals that avoiding them will be a huge challenge.

Don’t scramble at the last minute to justify even the best decisions made. Make a decision early on. Write it down. Pin it up on your wall. Have torturously long meetings with your stakeholders and repeat throughout. When crunch time comes, you’ll be able to defend your position that quality matters.

Principle #2: Know when to BUY, SELL or HOLD

Great sales people will tell you that timing is everything. When do you give customers room to move (HOLD)? When do you provide relevant information that assist customers in making the right decision (BUY)? Or when do you aggressively close the sale (SELL)?

Timing is crucial to your success. For example, don’t make every blog post about the latest discount offer, or a sale. There’s definitely room to educate about product features, or even to solicit feedback and conversation.

These same principles apply whether you’re pitching for a sale, or pitching for a story to an Editor, or updating your status on Facebook or Twitter. Don’t simply stalk an editor simply to get your story across, but be a great source of material, even if it doesn’t benefit you one bit.

The right timing will result in building the one most important commodity in business: TRUST.

Principle #3: Invest in Quality

It is in our nature to go with the largest. The largest audience, the largest readership, the largest circulation. Do remember that hidden inside the mass are nuggets of gold. Invest in them. Invest in quality publications that reach quality audiences. Cultivate great bloggers who have great, but not necessarily the most fans. Seek out customers who may not be the year’s most famous socialite but hold their own nevertheless. When you do that right, you earn quality relationships.

Principle #4: Be patient

If you take the time to cultivate solid relationships with your best customers, and repeat the process over and over with your next best customer, sooner or later, you’ll have a lot of good customers.

We learn a huge lesson with several social media campaigns we ran on Facebook, that if you’re not prudent, you’ll end up with a list of fans who’re there simply to hawk their own websites, products or latest schemes. Taking the time to build quality fans and resisting the urge to mass invite and canvas for clicks resulted in a growing fanbase that loves the brand.

Principle #5: Know when to move on

Finally, even the best list requires pruning. Our agency for example, from time to time take stock of our relationships, from our Twitter followers, media lists, suppliers to even our customers and decide if they are worth keeping in the list. Pruning overgrown leaves is essential in keeping a beautiful tree healthy. It gives you amble opportunity to place proper focus on the right people.

Building quality customers requires time. Don’t succumb to the quick-fix of harvesting as many people as you can just to meet some magical number but rather take the time and effort to prune your own tree into something extraordinary. The result is worthwhile.

Do you have a principle that you use to build quality fans? Share it with us, we love to hear from you.

Highlight: Twitter for Business, 101.

BRANDTHINK Malaysia — Fri, 24 Jul 2009 16:51:19 +0000

If your business is looking for ways to leverage on new social media technologies to reach out to customers, then this guide is for you.

Twitter 101: http://business.twitter.com/twitter101

Made by the creators of Twitter itself, Twitter 101 is a friendly instructional guide for any business to create a strategic and effective presence on Twitter. It helps users to foster a collaborative community among customers that are increasingly turning to Twitter as a form of communication. With this guide, you’ll learn the lingo of Twitter, the basics of using Twitter, and some examples and case studies on how Twitter is currently being used for marketing purposes. It starts by answering the first question on any business executive’s mind:

While the technology is fairly nascent, and it will be awhile before it reaches the tipping point in Malaysia, it doesn’t hurt for you to learn more about Twitter now, so you are well prepared to use it when your business is ready for it.

This guide covers quite a variety of topics, which includes:

This guide provides a comprehensive overview on what can be applied in business and gives you a starting point for your own Twitter project. Closer to home, our local clients have began to experiment with ways of reaching their customers via Twitter. Follow a local example at: http://www.twitter.com/discoveryweek. You can also find out more about DiscoveryWeek as a whole here.

Spotlight: How famous do you want to be?

BRANDTHINK Malaysia — Sat, 23 May 2009 15:48:41 +0000

Stage 1: Brand recognition – also known as “ya, I’ve heard of it somewhere” is low level consciousness of your product, service or brand in the minds of your consumers. At this stage, your advertising has made perhaps a small inroad. Some people may have come across it and remember your name. However, at this stage brand recognition may not be enough to be effective, as it does not guarantee a sale. (Fame Level: 1/4)

Stage 2: Brand awareness – also known as “Yes, I know that brand” happens when your brand name becomes familiar to large numbers of people within your target market. At this stage, they know who you are, they are aware of what you do and what you’re selling. They may not have bought your product, but they are aware of it. (Fame Level: 2/4)

Stage 3: Brand recall – also known as Brands with Fans. Brand awareness on its own is not enough to generate a sale. For one, a particular brand needs to be part of the selection list of the consumer at the time of purchase. Brand recall occurs when, at the moment of a buying decision, a consumer is able to produce a menu of options from the top of his or her mind without having to be reminded what those options may be. (Fame Level: 3/4)

Stage 4: Brand preference – also known as Fanatic Cult Status Fame. A coveted place to be, brand preference happens when a consumer purposely chooses one brand over the other. (Fame Level: 4/4)

Being famous, in our minds is that your products, services and brands reach a pinnacle of brand preference unmatched by any other. So, how famous do you want to be?

Be Famous > There is a four-stage process:

Stage 1: Brand recognition – also known as “ya, I’ve heard of it somewhere” is low level consciousness of your product, service or brand in the minds of your consumers. At this stage, your advertising has made perhaps a small inroad. Some people may have come across it and remember your name. However, at this stage brand recognition may not be enough to be effective, as it does not guarantee a sale. (Fame Level: 1/4)

Stage 2: Brand awareness – also known as “Yes, I know that brand” happens when your brand name becomes familiar to large numbers of people within your target market. At this stage, they know who you are, they are aware of what you do and what you’re selling. They may not have bought your product, but they are aware of it. (Fame Level: 2/4)

Stage 3: Brand recall – also known as Brands with Fans. Brand awareness on its own is not enough to generate a sale. For one, a particular brand needs to be part of the selection list of the consumer at the time of purchase. Brand recall occurs when, at the moment of a buying decision, a consumer is able to produce a menu of options from the top of his or her mind without having to be reminded what those options may be. (Fame Level: 3/4)

Stage 4: Brand preference – also known as Fanatic Cult Status Fame. A coveted place to be, brand preference happens when a consumer purposely chooses one brand over the other. (Fame Level: 4/4)

Being famous, in our minds is that your products, services and brands reach a pinnacle of brand preference unmatched by any other. So, how famous do you want to be?

How should you measure success?

Advertising — Sun, 21 Jan 2007 01:00:00 +0000

Someone forwarded me this post, and I can’t verify the source. But I think it’s important enough to share (so if you guys know where the source is, do let me know so I can properly credit the author.

—–
If measurement is so important, what should you and your client measure?

Satisfaction with how well you’re servicing their business, for one. Creativity for another. Strategic thinking. Being proactive vs. saying you’re going to be proactive. Accurate and timely billing. Managing the budget and not going over it. Eliminating surprises, by communicating early and often on all topics. Execution of ideas. Integration of disciplines. Number of media placements, if it’s a PR relationship. Innovative use of media. Number of hits to a web site. And ease of use of the site. Or possibly even number of names captured in an online database that you’ve created for the client. You get the idea.

BRANDTHINK Insight: How to make an offer your customer cannot refuse

BRANDTHINK Malaysia — Mon, 15 Oct 2001 09:38:24 +0000

First published as a two-part series in IT@Work, The Sun, Mon, 8 Oct 2001 and 15 Oct 2001

So, you have already decided on the strategic action to take for your marketing efforts: who to target, where to advertise, what database to use and the promotional mechanism to use. So what next?

At some point, you will have to make an offer that your customer cannot refuse. I’m not talking about your positioning or the value you will bring to your customer once they purchase your product, service or brand. I’m talking about the offer that will make that transaction happen. I’m talking about the elements at which a buyer and seller can shake hands on. Examples of this include the price, product configurations and delivery schedules.

Examining the offer is a crucial part of marketing development. Too many times we expect advertising agencies to weave a magic band and solve all problems. But in reality, that cannot be further from the truth. If you have a great offer, you can get away with bad advertising (not too often though), but if you have a bad offer, no amount of advertising money can make it succeed.

In direct marketing, the offer you make determines the course of action for many of your customers. In fact, the “offer” will contribute about 40% to whether your direct marketing will be considered a success or failure. So, what kind of offers can you construct if a sale is what you’re after?

Pricing

The most common offer is made on the basis of pricing. Typically, during a promotion, you will find that many companies offer discounts off their list prices in order to drive volume. You see this often among retailers of departmental stores. In many cases, you will see retailers run a “loss-leader strategy”, offering a selection of products at a significant discount in order to drive traffic to their store or online catalogue.

Discounts are not the only way to tinker with the pricing. Sometimes, you can offer an introductory price in order to allow new customers to sample your product or service. Usually limited only to new customers, you can focus this offer towards new customer acquisition.

Another way to look at pricing is also to look at ways where you can segment your audience and develop pricing packages specific for each audience. If you look at the telecommunications market, you can see this segment-pricing structure at work with the pre-paid and the post-paid market. Using different tier pricing will allow your business to serve different markets with seemingly different needs (therefore pricing) without cannibalizing the sale of each segment.

Unit of X?

You can change the pricing of your offer by developing a special pricing that is based on volume. For example, instead of offering a 20% discount on a t-shirt, you may offer 2 t-shirts for a lower price. You may also bundle several related products together into one special price. This can also be in a form of special product bundles (think Microsoft Office) or collection sets (think First-day Covers). A client of mine often does this during the festive seasons.

The advantage of pricing it this way is that you will be able to maximize your profits (the margins for selling two items is more than selling one) while at the same time still offer your customers an offer they perceive as valuable. However, you will have to consider this in lieu of your marketing objectives. A larger order requirement will mean less volume of customers and vice versa. You will have to balance between building a large customer base or driving large amount of sales.

Shipping and handling

Perhaps a more appropriate factor to consider if you’re running a direct sales or an e-commerce sales program, is to offer to waive shipping and handling charges. This can be done to encourage sales during a slower period, or can be an incentive for a large order. For example, you can offer free shipping for orders over a certain amount. That way, you can drive action towards a result that would bring in better returns.

Limited time offers

Remember those “buy now and save”, or “for a limited time only” offers? Well, placing a time limit on the offer can help drive action within a specific time frame. What it does is create a sense of urgency surrounding the offer, psychologically influencing your customers to react to the offer as soon as possible. After all, people hate to have missed out on a good offer, right?

Guarantees

E-commerce sites, or direct sales channels for that matter depend on guarantees to drive sales. The guarantee serve as a way to build trust and assurance among their customers that the product or service they buy would be able to meet their needs. Guarantees lower the risk of try-outs for customers, especially if you’re a fairly new company or have a product or service that is not well known yet. Even large branded companies are also offering money-back guarantees for their products.

Incentives

A relevant incentive will most likely pull added response. Incentives can be in the form of gifts that accompany the purchase of the product or contests. Be sure to make that incentive appeal to your target audience. Make it relevant to the needs, wants and desires of your customers.

Incentives don’t have to be completely tied to simply a product purchase. You may offer incentives for an action that you would prefer your customers to take. For example, you may offer an incentive for buying more products, buying it now or in desired quantities. Although incentives can be a great way to drive action, there is still an issue you have to be wary of. Sometimes, customers may be too attracted to the incentive rather than the product. This is a problem if your business depends on repeat business (it should). You will have to ask yourself this question: Are they buying your product or the incentive? You will most likely not see the customers who are more attracted to the incentive than your product again unless of course, you offer them similar incentives.

Valuable Information

Popular among business marketers, an offer for information that is useful to the customer can be a great incentive for a prospect to respond. Although it may not generate immediate sales, an offer for information sources such as white papers, articles or events such as training or seminars may place the prospect into the buying mode. They may not buy now, but at least you’ve put them into the process to do so in the next few steps. Most importantly, you’re beginning to identify the need and the solutions you can offer.

Such offers become even more effective with complex, highly configurable products or services such as consulting, large enterprise systems and even advertising. The prospect may need to go thorough numerous buying decisions such as vendor evaluation and selections before they commit to a purchase. If the information offered directly benefits the daily work of the prospect, you may have positioned yourself to benefit from that relationship.

Deferred payout

Remember those offers from music CD clubs? To be honest, I’ve never seen one in Malaysia, only while I was overseas. The offer I’ve seen is simple: Buy 6 CDs (or books) for $1 and agree to buy six more in 12 months. Frankly I think the idea is brilliant. Another example is a magazine offering 4 trial issues for consumption.

As the marketer, what you’re really putting your foot in is the classic acquisition versus retention approach to marketing. Deferred payout means you’re willing to invest in obtaining the prospect as your customer and patiently reap the rewards over a period of time. You may not see the immediate profits right away. After all, how much can you make selling 6 CDs for $1? On the other hand, what you’ve gained instead is a long-term customer.

Usually, you will be able to break-even on offers such as these after the minimum agreed period is over. The crunch comes when you continue to receive orders from those customers long after the required 12 months. If you remember my article some weeks back about the benefits of customer retention, this is a good example on how to increase the customer lifetime value. Convincing these customers to stay will be a much easier job since they already know who you are, the level of service you provide and your reliability.

Payment terms

Finally, a great way to drive action is to offer flexibility in payment arrangements. Flexible payment arrangements may include offers such as credit terms and payment deferments such as “Pay nothing for 6 months” type of offers. Aptly suited to larger ticket items, the objective here is to make it easier for the customer to purchase from you where he or she may otherwise not be able to do. Auto vehicles, homes, entertainment systems, even furniture businesses usually offer such programs. Offering flexible payment terms could also mean offering your customers a variety of ways to pay for the purchase. This could be accepting major credit cards or other payment methods such as Direct Debits, Cash on Delivery or via Telegraphic Transfers.

Conclusion

That completes an overview of elements you can customize for an offer that you can present to your customers. One of the most exciting things about marketing is that anything is possible. This is where it gets interesting; you can improve the offers on the table (and more complex no doubt) by combining several options into one dynamic offer.

Your offer doesn’t even have to be groundbreaking or terribly original. You just have to be in a position to offer a very good deal to your customers. The best way to determine that is to test them out. Testing factors within a direct marketing campaign has always been the crux of a successful campaign. By testing the elements, you will be able to see which element works best for you and you will end up with happy customers and a healthy bottom line.

[Written by Jui Hong Teoh, Managing Director, BRANDTHINK Malaysia. First published as a two-part series in IT@Work, The Sun, Mon, 8 Oct 2001 and 15 Oct 2001]

Insight: Evaluating third-party mailing databases

BRANDTHINK Malaysia — Mon, 01 Oct 2001 09:33:23 +0000

A Guide to Identifying, Evaluating and Selecting High-Response Mailing Lists – originally published as “Mailing Lists under the microscope” in IT@Work, The Sun, Mon, 1 Oct 2001

It will come a time when your business will have to seek out new customers. Whether you are introducing a new product or expanding your market, new customers will be key to your growth and expansion. One of the ways to do just that is by using direct marketing to target key markets who are more likely to be interested in your product, service or brand.

In direct marketing terms, choosing the best media or mailing list is the key to reaching the right target group – audiences that are most likely to respond to your offer. This is true whether you are mailing to a physical address, using television, radio or print and last but not least, if you’re using e-mail.

Many firms offer mailing lists that have been compiled from offline sources or from the Internet. These lists represent opportunities for your business to reach new customers who may not have purchased from you before. Third-party mailing lists are not sold but rented, typically for a onetime use.

However, before you use such lists, it is advisable to do a background check on the mailing lists and gain an understanding of how the lists were compiled. In many ways, evaluating a mailing list is no different from evaluating advertising rate cards (media kits) for media sites. There are additional factors that you will need to examine.

List Size
Description
List Source
Available Selection Criteria
Frequency of Updates
Active versus Inactive users
List Usage
Costs

Evaluation Check-list

1) List size: Many marketers would rather rent a large mailing list rather than a small one. A large mailing list gives the option to invest a small portion of the budget to test the success rate of the list. By testing a sample percentage of the list, we will then be able to determine whether to improve on the offer, the creative or whether to continue using the rest of the list for the campaign.

2) Description: Who is on the list? Are they current customers of the list owner, contests participants or subscribers of magazines? Determine an accurate profile of the type of people on the mailing list. It is important to know the description of those on the list so you may be able to accurately match the offer to the target group. For example, if the mailing list belongs to a magazine publisher, examine the editorial content of the magazine. If you’re selling music CDs for instance, you may find a more willing buyer among list members who reads music magazines.

3) List source: I cannot emphasize this more: thoroughly check the origin of the names on the mailing list. You would have to ask the list owner how the list was generated, including any policies and procedures they may have to generate those list. Are they their customers? Subscribers to a particular publication or attendee at a seminar? Were they part of a pool of contest entrants? Are they opt-in or opt-out?

There are two reasons why this is important. Firstly, it is to ensure that you do not rent a list from a spammer. The list you are renting may not exactly be what you were told they were and you may end up spamming the people on that list. Secondly, it is to determine the relative quality of the list. For example, a mailing list of customers of an online store is more valuable than a mailing list of people who entered a contest. The real difference? Customers of an online store have already shown their willingness to purchase something, while the motive of customers who are bent on getting free stuff may not necessary generate the results you want.

4) Available Selection Criteria: One of the main benefits of direct marketing is the ability to accurately target the audience that are more likely to be interested in your product, service or brand. The list owner should indicate to you the selection criteria by which the list can be segmented. The more selection criteria a mailing list has, the more they know about the people on that mailing list. Therefore, the better you will be able to select the segments of customers closest to your target audience.

5) Frequency of updates: Find out how often the list is cleaned. Over time, a mailing list can have bad addresses, duplicate entries and so on. A frequently updated and clean mailing list could ensure that you do not waste your marketing dollars on errors or sending out the same message to the same people twice. Although many email list owners will not charge for e-mails that cannot be delivered, you should find out right at the start to ensure that bad addresses are kept to a minimum and duplicates are weeded out.

6) Active versus inactive: List owners may not like you to know this but not all their list members are created equal. Some of the people on their list are more active than the rest, and by that, I meant they are more active according to the nature of the list. For example, if the list belongs to an e-commerce merchant, active users would be those that buy often from the merchant. Active users are also those who either spend more time on the website, read a newsletter more often or use more functions on a website. A lot of list owners will hype up the huge list they own. The number of people on the list would be totally worthless if none of them are active users.

7) List usage: It will be worth your while to determine the number of times the list is used. Lists that are rented more often usually suggest that the list could be bringing in desired results. A word of caution, the number of times the list is used could also spell trouble. This is especially true if the list owners continually sent email messages week in week out to the mailing list. High frequency of advertising messages could cause email fatigue among the people on the mailing lists.

Cost: Mailing list prices are usually charged per thousand names. In traditional direct marketing, the typical price you might pay for a mailing list ranges between RM200-RM500, sometimes more if the list is valuable. The more responsive the list, the more valuable it is and more likely to be rented often. At present, email lists cost around RM800 to RM1200 per thousand, a price point that is way too high to pay for in my opinion. Certain list will be able to justify that level of pricing, however the quality of the list would have to be proven in order to warrant such a premium price.

There are more factors that can be further scrutinized to ensure the most optimum use of mailing lists. I have highlighted only the basic elements that you should be wary of. Truth is, the number of variables that you can examine is limitless. The best way to extract the best results from your marketing dollars is to continually test the variables of each campaign and adjust your strategy accordingly.

At the end of the day, the most valuable list you can tap into is your own house list. Thus, for every campaign that you run, remember to add on to your house list. Any responses you get from your rented list should be added to your house list. Over time, you will be able to balance your marketing budget between new customer acquisition and customer retention, knowing full well that keeping existing customers loyal will be far more rewarding than getting new ones.

[Written by Jui Hong Teoh, Managing Director, BRANDTHINK Malaysia. Originally published as "Mailing Lists under the microscope" in IT@Work, The Sun, Mon, 1 Oct 2001]

Insight: Growing your customer list

BRANDTHINK Malaysia — Mon, 27 Aug 2001 09:28:49 +0000

First published in IT@Work, The Sun, Mon, 27 August 2001

The biggest question I get these days is where do I get an email database? Many businesses today are not sure where to start when considering an email marketing program. The chief concern being the lack of a customer database, or a lack of email addresses in their current database. Without an email list, many businesses are unwilling to invest in a long-term program, despite its benefits.

This is a classic example of the chicken and egg story – which comes first? The email marketing program without the database or wait for the database before starting an email marketing program? Unfortunately, if you don’t start either, neither will get done. Nobody will sign up if there isn’t a program in place and to start a program with no individuals on your database means sinking some costs at the beginning.

The best solution is actually making a commitment to sow the first seed. Then work quickly to grow your list to a size where the cost will begin to justify the means.

Your Interaction Points

The best place to start is actually at your point-of-sale. If you run a retail store, it is where you meet your customers. If you run a hotel chain, your guest check-in point is the best place to start. At any point where you interact with your current or potential customers, that is where you are given the opportunity to say, “hey, would you like to sign up?”

Borders Inc, a bookstore chain in the United States, runs an email marketing program called “The Borders Store Exclusives” mailing list that has more than 1 million unique subscribers. Borders built this database by asking customers at the point of sale whether they wanted to sign up for the newsletters and store exclusives. Then, when they give their address, within 48 hours they receive a welcome, letting them know that they are signed up for a particular newsletter. With that database at hand, Borders email marketing campaign brought in double-digit response rates for the company’s best-seller list.

Ask people in your company for the email addresses of customers. Your sales and marketing team have probably collected large amounts of customer contact details. Do not overlook your customer service people and those who are in the “front lines”. They handle most of the incoming requests for information whether over the phone, in person or via your online forms or suggestion boxes.

Last week, I walked into a small boutique bookshop and the first thing they did (it was my first time) was greeting me and saying hello. Imagine what opportunity lies in taking advantage of that first initial rapport by asking me “would you like to stay on our mailing list, and be the first to know if anything interesting comes in?” The opportunity could not be sweeter if I actually bought something (which I did).

Other areas that you should also include a sign-up form is on your company website, your guest book (some businesses have those funky things you place by the door), on sales invoices, brochures, customer surveys, feedback forms, even at special events.

Advertising Materials

One great area you can place invitations to join your list is through advertising copy. Your advertising probably reaches thousands of your target audience and you may solicit response by placing a strong call-to-action.

Taking a chapter out of direct marketing textbooks, encouraging your customers to take action can yield desired results. For example, you may include a response card, fax-back coupon, or an instruction (or a click if it is an online ad) to visit your website where your form resides.

Create an incentive

Sometimes, just asking may not be enough to entice potential customers to sign up to your mailing list. This is when hanging a carrot over them might prove effective. Some ideas to throw around is offering your mailing list members “exclusive privileges” that may range from private members-only sales, special discounts or admission to special events. If the lure of private sales or promotions isn’t enough, customer sign-up success can be achieved with contests, sweepstakes or the likes.

Take Borders again, the company sends a promotional email blast called “Borders Store Exclusives” once or twice a month to its brick-and-mortar customers, offering exclusive promotions, specials and discounts. The goal of each email campaign is to drive customers back to the stores and at the same time give their store customers special offers and sales information that they are not giving to the rest of the country at the same time.

For businesses targeting corporate audience, a method that has worked well for many companies is offering information. This could be in a form of a newsletter filled with tips and secrets, access to industry white-papers or reports that contains valuable information.

Make sure your incentive is closely related to your brand, product or service. That way, you’ll end up with an audience interested in you, not just the latest gadget.

Buying or Renting Lists

Another way to build your database is to rent a list from a list provider. There are two ways to go about it. You can either source from individual websites or via a list provider.

Sourcing individual websites may be time consuming and takes a lot of effort. You may also miss out on potential gems that could perfectly fit your audience profile. List providers can help you save time by searching for the audience you want and help you monitor and execute the placement. Their entire role is to keep a lookout for potential lists and connect you with them.

Ask how your message will be placed in the email messages. Some list owners will allow you only advertisements in the form of banners or text messages, while others allow exclusive emails dedicated to your interest. There are pros and cons to both approaches but remember to ask before you commit. Bear in mind that the lists do not belong to you and in most cases you will never see the names of the recipients to protect their privacy.

In the end

A good lesson to imprint here is to focus efforts on active mediums; methods that proactively go and get the result you want, rather than passively waiting for people to come. When collecting email database via your website, understand that unless your website itself carries a lot of traffic, you may see slow registrations there. A friend at a local dotcom on the other hand drove registrations for her company by the thousands just by standing at a PC Fair and asking people who is entering the fair to sign up.

Finally, remember that the key to successful database building is being consistent. Gather email addresses every day and in every way. Make it part of your daily routine. It is never too early to start building your database. You will be pleasantly surprised at the size of the list you are able to compile and how quickly it can grow.

[Written by Jui Hong Teoh, Managing Director, BRANDTHINK Malaysia. First published in IT@Work, The Sun, Mon, 27 August 2001]

Insight: Customers are not created equal

BRANDTHINK Malaysia — Mon, 20 Aug 2001 09:26:12 +0000

Improving advertising effectiveness via segmentation methods – First published in IT@Work, The Sun, Mon, 20 August 2001

You’ve probably heard this phrase a million times. Not all your customers are created equal. The art and craft of creating advertising that compels your customers to buy in droves depends on your ability to dissect, analyze and glimpse the lifestyles of the people you will be selling to.

Even if your product targets a huge market, grouping them into segments can help you create advertising messages that are relevant to each group. Take for example bottled water. Although you can say that the target market for bottled water is everyone who drinks water, naturally that is not the case. Some people expect water to be free, while others will fork out RM5 for an Evian.

With good segmentation, you will be able to position and craft advertising that speaks your product benefits to those who value them most. You will be able to be more specific rather than resort to vagueness or clouding your advertising with too many messages, a classic case of trying to be everything to everyone.

By Geography

The most simplistic form of targeting is by geography. This basically means targeting based on where your customers live. Some of the key factors you may consider when targeting geographically include region, climate, season or city. Some businesses, especially smaller retail units would target its customers based on how far they live. Petrol stations for one depend on their local traffic for business. Thus, they may place advertising around the area that guides potential customers to their stations. As long as somebody lives in the area owns a car, they’re a good prospect.

If you’re an Internet business, targeting by geography is an excellent method. You may want to limit yourself to Malaysian businesses as you may not be able to service foreign customers. In terms of numbers, most Internet users are centered on urban areas, most notably the Klang Valley, Penang and Johor.

By Demographics

Targeting by demographics is the most common segmentation technique in use. In other words, it is targeting your advertising messages based on attributes such as age, sex, occupation, education and race, among others. Usually, demographic attributes are combined to create a profile of the customer. By using demographic profiles, advertising messages can be better created as well. For example, when you are advertising to women audiences, the tone and delivery are slightly different and in most cases appeal to emotional attitudes. Even if you’re selling the same products, demographic targeting can help differentiate the audience so you may compose slightly different messages to those audiences, such as between parents and children.

In many instances, demographics and geography groups are not enough to draw an understanding of your customers. After all, two 20 year olds living next to each other are hardly alike. They may have different shopping habits, their Internet usage could be different, as well as interests and hobbies. Beyond where your customers live and who they are, you may also employ more advanced techniques including segmenting based on “behavior” and “psychographics”.

By Psychographics

Psychographic segmentation is identifying customer profiles based on interests, society divisions and personality. You may be able to market to people who share similar interests. ClickZ, and online publisher does fantastic work with their site by targeting professionals who are interested in marketing and advertising. Marthastewart.com on the other hand builds up an audience of women (and some men) who are interested in home-making. Another good example is Apple Computers, who have managed to group together a diverse range of people around an avant-garde personality.

By Behaviors

Behavioralistic segmentation on the other hand is focused on crafting groups based on the behavioral characteristics such as purchase occasion, user status and loyalty status. Often, understanding customer behavior is important in order to fashion highly targeted advertising. For example, you may run advertising campaigns around specific occasions, capitalizing on normal behaviors such as cakes during birthdays, flowers during Valentine’s or neck ties during Father’s day.

Think about the benefits sought as well. Is your audience looking for economy, convenience or prestige? What else could they be looking for besides those attributes? You may also divide up your audience based on user-status and usage rate. Find out whether they are first time users, regular users, or experts. If they have used your products before, are they using it regularly or just occasionally?

Another behavioral trait you can examine is their buying process. At which stage of the buying process are you targeting? Different stages require different messages to be sent to your audience. If they are unaware of what you sell, your message could be educating your audience about your products, your business and how it will benefit them. If they’ve heard about you before, your message could be geared towards immediate purchase with special offers or samples. When you segment out the different stages, you will be able to carefully guide your prospect along the buying process to close the sale.

Why is it segmentation important?

Segmenting your audience into profile groups will help primarily in two ways: develop creative advertising messages that appeal to your target groups and to develop a niche position for yourself that your audience can readily identify and get accustomed to. Over time, this will help your business develop strong branding and most importantly, loyalty.

At the end of the day, creative mixture of segmentation methods will be able to help you develop better marketing strategies and advertising messages that will really make a difference. So the next question will be, where do I find all these people?

[Written by Jui Hong Teoh, Managing Director, BRANDTHINK Malaysia. - First published in IT@Work, The Sun, Mon, 20 August 2001]

Insight: Loyalty: The Currency of Business

BRANDTHINK Malaysia — Mon, 16 Jul 2001 09:21:21 +0000

Enhancing the value of your customers through a loyalty program - First published in IT@Work, The Sun, Monday, 16 July 2001

There are many types of loyalty programs and they are all limited only by the imagination of marketers. Examining the various types of loyalty programs – the most common one that comes to mind is the point-system program. When a customer signs up for a point-based loyalty program, he or she is given a loyalty card. The card can be used for immediate discounts or to collect points that can later be redeemed for prizes, gifts or other goods or services.

We identify with this type of loyalty program for the simple fact that there are so many of them! Our credit cards entice us with points for every dollar spent and we’re constantly seduced by the possibility of a good holiday for pumping petrol with some-branded card. Not to mention the upgrades to first-class seating, if you fly long enough with a particular airline. If you’re part of a loyalty program, you can imagine how difficult it is to switch to another provider. Would I jeopardize losing all my points?

Not all loyalty programs are point-based programs. Many loyalty programs involve some sort of currency that customers earn and redeem for rewards, but more often programs don’t include a program currency. Loyalty programs come in lots of guises and points are merely one type of loyalty program.

My mobile phone operator for instance offer me good rebates for remaining a customer as well as discounts on my call charges depending on the duration of my subscription. At the rate of my usage, I have chalked up such huge amount of rebates to the point that it covers my access charges completely (that’s RM75!). With that kind of program, I wouldn’t even consider switching to another mobile network. After all, I don’t want to start from ground zero again.

A reader wrote to me after last week’s article and pointed out that running a customer loyalty program is expensive and takes massive amount of resources to run. It requires massive systems to develop and maintain just to keep track of all the transactions and purchases so that appropriate points can be properly awarded. While I agree with her, there are quite a few ways you can run a loyalty program that is cost effective and still generate the desired result.

Ellen Reid Smith, President of Reid Smith & Associates, a research and consulting practice specialising in e-loyalty strategy suggests some examples of loyalty programs that don’t require large amount of resources. Some of her suggestions include premium service programs, unexpected “thank-you” gifts, member-only exclusives on new content and advice as well as member-only access to experts, advisors or events.

For e-commerce ventures, the issue is pretty much moot. Most e-commerce sites have already invested in infrastructures and systems that are able to track customer purchase history. Adding a program that rewards customers based on purchase history is a matter of a simple addition to the system.

Issues to consider

Before embarking on a customer loyalty program, take extra steps to address one important issue: Long-term commitment. A loyalty program is a long-term strategy and you will need the foresight and strong commitment to embark on this program. Don’t expect immediate sales from simply starting a loyalty program. However, do expect a steady increase of sales over time. Setting up a loyalty program is only the first step and over time, you will be able to use benefits, privileges and rewards to influence customer behaviour.

Secondly, offer something of value to your customers. You won’t build a successful program by offering benefits your customers don’t want and don’t value. Your offer may not be expensive, but it must be something that your customers value so much, they won’t want to give it up in order to shop with the competition. A good way to figure this out is to simply ask your customers. That act itself could jumpstart your relationship with your customers!

Also, make sure you are actively promoting your customer loyalty program. Make it official and make it known. I’ve seen so many programs fail simply by the lack of awareness amongst customers! So, take your time to highlight that every time you have an opportunity to talk to your customers as well as training your frontline employees to do the same.

One of the areas that sometimes escape the minds of businesses is recognising those benefits to customers in a loyalty program as liabilities, especially if it is a point-based system. You can run into serious trouble if the point accumulation and accounting forecasts weren’t built, forecasted or executed properly. Forecasting point liability is a difficult process and only very few in the industry have experience in building these models.

Finally, remember that a loyalty program is not a substitute for bad product quality, brand image and poor service quality! Therefore, develop a program that enhance the values most important to your customers and continually provide those values in a manner that exceeds their expectations.

[Written by Jui Hong Teoh, Managing Director, BRANDTHINK. First published in IT@Work, The Sun, Monday, 16 July 2001]

Insight: Welcome back shoppers!

BRANDTHINK Malaysia — Mon, 09 Jul 2001 09:15:49 +0000

Measuring the value of regulars in your business — by JHT, first published in IT@Work, The Sun, Monday, 9 July 2001

Much has been said about the demise of dotcom e-commerce businesses. Poor business model, unchanging consumer behavior, references to huge losses by Amazon.com all seemed like valid reasons.

Perhaps – putting forward my hypothesis – the real failure in most e-commerce businesses is that they spent way too much time and energy trying to build “brand” and getting “lots of customers” and not enough time making sure all these customers come back to buy from them again.

I’m sure there are many more valid reasons, but for today, let’s examine this important factor. I believe the lessons learnt here can be applied even to physical retail business or even the latest hip word “clicks and mortar” retailers. After all, there are a lot of retailers who do spend way too much money attracting new customers rather than keeping existing ones. They spend a lot of money on mass advertising, packaging, store designs, good location among other considerations. Don’t get me wrong, all of those are important, but I have a suspicion that many of these high-flying look good businesses don’t really consider the all-important question of “will they buy again?”

Central to today’s theme is the underlying fact that most businesses will make a loss on its first sale to each new customer. Research has shown that attracting and getting the first sale from a new customer costs 7-8 times more than actually getting repeat business from a customer who had already purchased something from you.

In fact, many businesses depend on “the regulars” for profitability and sustainability. According to consulting firm Bain & Company, repeat customers spend, on average, 67% more than new customers. To understand the long-term impact your customers have on the bottom line, you must evaluate the customer’s lifetime value.

What is this “customer lifetime value”? It is the present value of the net future profit stream from a customer. In other words, how much a customer is worth to you today when taking into account all the future profits that customer will generate for your business over time.

Suppose you run an advertising campaign designed to generate new customers. Say out of a 4-week campaign that costs you RM50,000 and generated 1,000 new customers. You would have spent RM50 for each new customer. If the average order for each new customer were RM50, then you would have gained revenue of RM50 per new customer. You may have broken even on your marketing investment, however in terms of margins, you would have made an initial loss. To make this example simpler, let’s assume there is no variable cost involved.

Out of this 1,000 new customers, imagine 10% buy from you again the following years at an average order of RM50. That would be RM5000 yearly in additional revenue without much of an advertising cost. That 10% represent repeat buyers. At this point, you will begin to see some return on your earlier advertising effort. In calculating your lifetime customer value, these customers would represent an average value of RM55.04, in other words, how much these 10% of your customer is worth to you over a lifetime. For the financial-savvy readers, I have used a net present value of 15%.

Suppose I manage to increase my repeat customers by 10% to a total of 20%. In calculating lifetime value, the average value of the customer increases 11% to RM61.00. The yearly revenues if increased from 10% to 20% retention rate are RM10,000! Considering this, how much would you spend to increase the retention rates from 10% to 20%? You would probably spend up to a maximum of RM11.00. Compare that to the RM50.00 you have to spend on attracting new customers. See the difference?

To make things even more interesting, how much do you think each customer is worth over a lifetime if you could increase both the retention rates AND the average order size? At the 10% retention level, increasing from the average order RM50.00 to RM100.00 would result in RM10,000 in yearly revenues, a 200% increase.

What I have discuss here is key in the success of all types of business, whether it may be fast moving consumer goods or high consideration products such as automobiles, mobile phones, homes. This is the same reason why I believe Amazon would be a hugely profitable online retailer, because it has a huge base of loyal repeat customers. Naturally, the following question would be, “how do I ensure my hard-earned customer become repeat customers?” The answer lies in the following areas:
1. A customer loyalty program
2. Analyzing customer behavior and patterns (especially if you’re an online retailer)
3. Cross-selling and up-selling

If you have any specific question regarding today’s article or any feedback, I gladly welcome it.

[Written by Jui Hong Teoh, Managing Director of BRANDTHINK Malaysia. First published in IT@Work, The Sun, Monday, 9 July 2001]