Building Lifetime Value: Acquisition and Retention Strategies in the Digital Age
First session, day three. Just six sessions to go and we can call this Ad:Tech a wrap. I have coffee and a bagel which makes this morning just about great. Less great, my hair which is doing some sort of weird thing right now. [This is where I'm supposed to cry, "Pictures or it didn't happen", right? - Lisa]
If I’m in the right room, we should have Darryl Gehly (Molecular) moderating a panel of Dan Felter (OLGA), Sandor Marik (CondeNet), Joe Ventura (Nikon) and Jeff Fleischman (Citibank). And huzzah, the gang’s all here. Let’s get rolling, guys.
Darryl’s from Boston, he’s filled with glee that he gets to corral four New Yorkers. It’s an East Coast thing I guess? Lisa? [It's a New England thing. - Lisa]
Oh heaven’s he’s going to do this all Q&A.
But first he tells us a story about his adorable son’s DS and how it broke at the hinge. He hopped online (behavior change number one) and found that it was a known issue. They had him call an 800 number with a call volume so high, they just tell him to go back. He continued looking around, found pages, videos on YouTube, blogs all about this cracked hinge issue. He found people who had gotten it fixed for free so when he called back to the number, he was able to get his fixed for free as well, but only after he’d been told that he could pay $75 to get it fixed. If he hadn’t done research, he’d have had to pay.
The problem he says is that it trains your customers to not listen to you. Now the first behavior is to do research online so they have ammunition to make you help them. We need to encourage dialogue between you and your customers. They have so many choices; they don’t have to pick you.
You have to stop thinking ‘how to I drive people to me?’ It’s got to stop being about putting it on your Web site and on your own Web channel and start being about pushing it out to consumers, big time.
Dan Felter gets to go next. [Apparently the Yankees beat the Red Sox last night. Sorry, Lisa!] Yeah, it was pretty sad. Go Sox! He’s responsible for lead generation. He says what’s surprising to him is how big the crap got. That they’re giving away $500 gift cards and it takes 35 pages to get through that. If you can earn $2 off each person who clicks through and you only pay $.50 for that click, why wouldn’t you do that? It got huge.
He’s seen a lot of advertisers who don’t know where their offer is running and what it looks like. You need to know where your offer is and on what Web sites. Don’t let lead generation go under your radar. Keep it a clean user-centric process. Don’t force them to opt into the offer. Then chances are you have at least a relatively interested customer.
Sandor Marik from CondeNet is up next. They have an interesting problem. They’re traditional media, with a traditional subscription model. How does that transition online where traditional subscription doesn’t work? In his job, he focuses mainly on the online side. He goes through a list of online sites that they own. Epicurious, Wired, Style, NutritionData. For him, it’s the quality of the traffic that matters. They have to determine what the lifetime value of a customer is; it’s not as solid as the print magazine side.
He said he had multiple ways to handle this panel. He could point out how he could do lead generation for everyone else or how they do it for themselves. They’ve been using more performance-based tactics like paid search. They’re specifically targeting user sign up. They’re focusing away from pure traffic and towards value.
Darryl asks how they monetize RSS feeds. Sandor says they’re working on that. If he said they had it figured out, he’d be lying but they’re working on a few things. He doesn’t know if he can point to the place on every reader where the investment goes to return but in general it’s an extremely good way to build a brand. If you pick up the magazine before a flight, then you probably paid for the price of reading through RSS for a year.
Joe Ventura starts off by paraphrasing Eddie Van Halen. Over time things get really complex and things start to break down. He was saying this right before grunge happened. It got too big and then it collapsed.
He says that’s what happens. For Nikon, the average tenure of an employee is 25 years. [OMG, that's like my entire life to date. - Lisa] You get a lot of wisdom out of that but at the same time, you also have that sense that it’s already been thought of and discarded. They did an outreach program to talk to the stakeholders, the consumers, the bloggers, the PR people. They needed to not only show the results but also how to get there. They’ve started an initiative to connect the dots for the consumers. It’s about a value exchange, giving value to the customers so they would give value back to you.
They needed to listen and cut the noise out. It was about selling in the right channels. They recently revitalized the Web site but it wasn’t about the site, it was about getting the channel right.
The third insight was that it’s never finished. After you cut the crap and after you start listening and reaching out, you have to know that you’re not done and you never will be. Nikon hasn’t traditionally been a very transparent company but they’re working on that. They’re trying to establish a dialogue. He’s getting company buy-n slowly and he can see how it’s filtering through the organization.
They used personas (Perfect Moment Patti) to model what their consumers wanted and what they cared about. It was eye-opening for them to realize that they had people who didn’t care about how red eye reduction worked or how many megapixels, they just wanted better pictures of their kids. So they’re gearing content to talk about the images, not the technology.
Jeff Fleischman says that traditionally they’ve had two challenges: new entrants and brick and mortars. Also it’s really easy to lend money but it’s not so easy to collect it. It’s taken banks a while to get onto the Web. First it was just brochures, then slowly they started to get services online. Then ING launched their online banking. They made it extremely easy to move money around from bank to bank. He thinks that it’s really the first time that large amounts of money started to move around from bank to bank. Now everyone has a high yield savings account.
The latest wave is the financial services social media companies like Mint and Wesabe that are aggregating your financial life. They’re adding value because they’re trading on trust. People want to know that they’re getting a good deal but don’t have time to do the research. These services do the research for you.
Customers first and foremost want trust.
Stats: Social networking sites were visited by 44% of people last year. He was blown away by that. He thinks that companies need to get engaged because that’s a huge number.
Joe comments that that’s a really good point. They’d go out and go to forums and networks and find a comment there and their natural reaction would be ‘okay, we’ll go back and put the answer on our site’ and it was like ‘wait, that’s not where they were asking the question.’ That’s like hearing a question and going back to your office and answering it and hoping that somehow it gets back to the people who need the answer. You have to answer where the people are.
Do you go back to the forums and say ‘hey I’m from Nikon, here’s the answer’? Doesn’t that get into legal issues?
Joe: Yeah, we’ve had to be careful about it. We try to identify true sources. We’re doing blogger outreach in addition to traditional PR outreach. We wanted to get our products into influential hands. We didn’t want to go out and answer everything in every forum but we wanted to answer questions that were meaningful. (He doesn’t mean literal forums, btw. Their blog is a ‘forum’.) Yes, it gets hard to manage all those messages otherwise.
What’s the threat of sites like Mint?
Jeff: Five years down the line, banks could just become places to put your money. He’d like to be the company that when people need counseling and financial trust, they come to them. They don’t want to become a commodity. They want to compete on trust.
Dan: Speaking of trust, we’ve all seen that spam that’s ‘log in and change your password’. How do you draw people to you to engage their attention and how do you keep that trust and retention?
Jeff: People don’t come to you unless they need something. We’re trying to figure out how to respond to that. Trying to figure out how to go to people instead of waiting for them to come to you.
Sandor: For us, content is our product and now everyone is a content creator so now we have to compete with everyone, your friends and your family. How do we differentiate ourselves becomes a major issue. We need to keep up that level of trust so that we stay the authoritative content.
What’s the lifetime value of your customer and what’s the top two or three retainers?
Dan: We think our value and trust is the retention. You need to be completely transparent to them.
Sandor: For the publishing print side, lifetime value is pretty easy but for us, that’s a little harder. We don’t have that figured out yet. A lot of our users because of the free content, it’s hard to put a value on a single user. We think we add specific add on value.
Joe: We have four or five broad segments of customers. Their values are wildly different and he can’t talk about the specific numbers. The most important thing to keeping them involved and happy is shutting up and listening and also reading between the lines and answering their needs before the customers can even realize they were there. It’s about simplicity. How do you simplify things for your consumer? It’s in everyone’s best interest to push themselves outside of their own interests and try to apply insights from other areas. It’s that idea of never stopping. We want to inspire and educate and we never had a place where once we’d done that they could bring it back and say ‘here’s what I did’ and that’s in the pipeline now. He thinks the mindset is more important that specific actions.
Jeff: They can pretty easily determine lifetime value. Ease, recognition, and relevancy are his three top retention points. He thinks TiVo is the greatest American invention because it changed the way people watch TV. He tries to bring external information in. He plugs Ted.com and says it’s great for ideas and inspiration. Also read Blink.
So…three out of four of you didn’t know the answer to lifetime value. What are the metrics that you guys are using to decide?
Joe: For us, it’s time spent with the brand. We have a number of different platforms for customers to interact with the brand and we try to measure all of that and pull that stuff together. It’s a balance of crunching the numbers and gut feel. It’s a little bit of a leap of faith. It’s not transactional, intentionally.
Dan: We’re B2B, we know what the lifetime value is but we can’t actually answer it here. It’s too loaded.
Sandor: If we wanted to, we could come up with a number but I was trying to highlight was how to increase it. The actual number isn’t important. It’s about the larger picture.