In direct marketing, few enterprises understand that it’s more profitable to market to your best customers than to attract the millions of potential customers who aren’t yet buying your product or service – or even those infrequent buyers.

Let’s pop open your database and take a peek at The Good, The Bad, and The Ugly. It may not be a nice thing to say, but in truth, most of us have a mix of all three.

• Your good customers are the ones who buy your product time and again. They tell their friends, family and colleagues about you, acting as spokespeople. You love these customers. If you could, you’d clone them.

• The bad customers are the ones that buy just once; then they just disappear. They’re often cherry pickers – they change mobile services over and over, lured by cheaper rates and bigger incentives; they hop from bank to bank, chasing higher interest rates and free toaster ovens.

• And the ugly customers? Don't get me started! They’re never satisfied. They’re never going to be. They cost more than they’re worth. Let them drift over to your competitors, and be thankful.

Successful companies identify and satisfy their ideal customers, doing everything they can to please and retain them. Simply stated, you should target most of your marketing to these best customers, developing relationships with them, bringing them closer to loyalty – and advocacy.

Example: A telecom operator in South India, struggling with high customer churn, planned to develop a blanket rewards and relationship program with mobile subscribers – but realized that rewarding all subscribers may not be the answer.

Why? The bottom 28% of their subscribers were actually eating up half the profits generated by the others, in operational and servicing costs. Another 12% did not generate any profits. And 30% were only slightly profitable.

By deciding to focus on this top 30%, the operator saved 70% of his marketing budget, and was able to retain 98% of these high end customers in a market that was witnessing over 50% churn.

Bottom Line: It can actually be more profitable to lose bad customers than to gain new ones! The Bad and the Ugly cost more money to service than they generate.

Retaining the right customers is common sense. And one day, it will be common practice.

San Francisco shined brightly as the host city and our AT&T Park took the spotlight for these two back-to-back events.

Which sponsors muscled up to flex their marketing dollars? Here are just a few examples:

• The DHL FanFest at Moscone Center offered five days and three floors of hosted souvenir shops, pitching, catching, and throwing exhibits that accommodated a few hundred thousand fans.

• Fans paid $100+ per ticket to watch glorified batting practice for the State Farm Home Run Derby, with the insurance company using gold baseballs with its logo for the 10th out for each participant. You can now buy the souvenir balls for $39.99 each on each team’s Website through www.mlb.com. The stadium had over 42,000 fans for this three-hour exhibit.

• The Chevrolet All-Star Game Red Carpet Show literally rolled out a red carpet along The Embarcadero to the ballpark with All-Stars Cal Ripken Jr., Tony Gwynn, and Willie Mays (among others) parading down the street in Chevy convertibles.

• MasterCard and Visa created special TV spots and newspaper ads for the game.

• Chevy also made a splash hit with its giant floating baseballs in McCovey Cove beyond the right field fence, also a huge logo baseball stuck in the mitt sculpture in left-center field, next to the perennial Coca-Cola slide.

• The game itself drew a huge TV audience at AT&T Park and a record San Francisco crowd for a thrilling game that went down to the last pitch –– and the final branded marketing sponsorship.

This media blitz fed the ravenous appetite of the legendary Apple fan base, which camped out at his retail stores for days – coping with 90-degree heat, humidity and thunderstorms in New York City, and braving the conditions in other major cities worldwide.

And it again captured the magic in the bottle that Apple has created over the past few years with its $10 billion iMac business and its $10 billion iTunes/iPod venture.

Now, with an estimated 950,000 phones sold in just the first two weeks, Apple and its exclusive carrier AT&T are basking in the positive media glow of the initial product reviews, hoping to sell up to 14 million phones by the end of 2008 and become a major player in the cellular market.

Is Apple the only company that could have engineered such a marketing coup? Not necessarily. Behind the larger-than-life media blitz were some very basic, if pricy, elements:

• A PR blitz of major proportions that created story after story in newspapers, magazines, broadcast news, editorials, blogs, and more, so that Paris Hilton, Lindsay Lohan, and other media darlings became a footnote instead of a headline.

• An extremely strong TV demo showcasing the amazing capabilities of the touchpad all-in-one device containing an iPod, organizer, camera, email reader, Web browser, and phone with a horizontal/vertical screen.

• An integrated marketing program with print, outdoor, and digital ads -- in synergy with the TV spots -- to further propagate the Apple “too-cool, gotta-have-it” brand message.

So whether you own an iPhone, want to buy one, love reading the critics’ comments, or even couldn’t care less, there is no escaping the media snowball that Apple generated for its largest product launch ever.

On top of all this, Steve Jobs launched another major product the same day: “Ratatouille,” a Pixar-Disney movie about a rat that loves to cook. But that’s another Brand Perspectives success story...

But even if you’re unfamiliar with this phrase, don’t ignore the dynamics of marketing to your base. Politicians do this especially well. But no one does it better than the TV networks.
A few years ago, ABC was in last place among the big three. But now, by giving its base what it wants, Disney’s network has runaway hits like Lost, Desperate Housewives, Dancing With The Stars, Ugly Betty and Grey’s Anatomy.

In fact, many companies totally ignore the impact that loyal customers can have, when the benefits of increasing it are so dramatic:

> A 5% increase in retention can create an 85% increase in profits;

> A 10% increase can translate to a 20% increase in sales;

> Extending customer lifecycles by three years can triple profits per
customer.

As you’ve no doubt heard, it's difficult to improve what we cannot measure. So it's even more difficult to accurately project how much you should spend to acquire, service and keep your customers if you actually don't know their value.

But it’s ALWAYS far less expensive to reach out and market to your current customers than to your prospective customers. That's why tracking your CLV will help you –– and your organization –– find, keep and profit from the right customers.

It was launched by the brand geniuses at Procter & Gamble in the early 1930s. But in today’s über-competitive marketplace with an increasing number of media channels ––digital, print, broadcast and mobile –– brand management is more critical than ever to product and corporate success as organizations attempt to communicate promises, build preference, and create other barriers to competition.

But brand management isn’t just about enabling multiple brands from a single company to compete in the same product category. You know that. I know that. Heck, even my kids know that with the Apple iPods or the Abercrombie & Fitch clothes they buy with their weekly allowances.

But building brand equity is even more imperative to organizations with just one single brand that must overcome the odds and out-market their competitors to create stronger bonds with their customers. This fact is key to the relationships between your divisions or product groups who are constantly cross-selling, up-selling, and trying to corral as many customers as possible within a branded family.

So whether your organization is large or small, multinational or regional, statewide or local, each article in Brand Perspectives can provide insights, guidance and counsel as you contemplate the various ways to manage ¬¬¬–– and grow –– your brand.

You may know it. I certainly know it. But many brand experts don’t know that customers can provide you with a myriad of intriguing insights into building your brand –– and boosting your business. You just have to offer them an open channel of communications.

After all, once you’re privy to what your customers are thinking through ongoing customer research, you can truly enhance their relationship with your brand.

• Example #1: For 50 years, Japanese car makers have catered to their growing customer base who love driving peppy, fun, fuel efficient vehicles. So savvy brand marketers like Toyota, Honda and Nissan have carved out an increasingly larger share of the global vehicle market by constantly researching what their loyal customers want.

• Example #2: These non-traditional companies kept listening to what their customers wanted, not what their Board of Directors demanded. In early May, Toyota passed General Motors as the world’s largest auto seller. That’s quite a coup considering Toyota only makes one brand, while GM produces 11!
• Example #3: The merger of Daimler-Chrysler has slammed into the guardrail and is careening off the cliff. Further proof that a poorly run US car company can’t be saved, even by a flashy European import.

These three case studies are perfect examples of being able to measure relevant customer metrics over the long-term to gain accurate, actionable results. Brand research helps you understand more about your prospects, your customers, your shareholders, and others, so you can step up your sales pitch to the loyal ones and stop wasting your money on those who aren’t as faithful.

With the right tools and the proper step-by-step guides to improve your research practices, you can more easily capture, codify and interpret information to move your marketing strategy forward.

So whether you need to present perceptual brand attributes to a data-oriented board, to make a case to extend a product line, or to justify some long-delayed pricing updates, brand research can serve as the foundation to build your case, get better mileage out of your marketing budget, and enjoy more sales.

Throw emotional contagion into the mix, and we’re going to brand-based STD’s next… (are phishing and pharming the equivalent?) Maybe it’s a little too much to ask, but I’m a little uncomfortable with this kind of language. Love, Relationships and Intimacy. Call me old fashioned, but these are all just new ways to describe the same old thing: Build a product that solves a need. Support it with honesty, integrity and quality, and make sure you respond quickly to customer needs. Make sure your market knows that you do this.

I mean no offense, but let's save the sweet nothings for our wives, husbands and significant others. When I want this kind of involvement, I know where I’d rather look to find it.

In his article Traditional Brand Positioning Can't Last, Adamson waxes eloquent on the subject: “If you look up and see rafters, consider a bit of visual positioning. What you'll discover as you look and learn is that you can't really say what you mean about your brand until you can see what you mean.” Adamson visualizes a drive through (now highly-developed) Colorado, seeing thousands of identical rooftops. “In order to position your brand above the vast see of rooftops, one cannot merely string Hemingway like sentences along a product; one must visually capture the essence of what your brand breathes.”

Yes, brands are driven by pictures. Emotive, captivating, exhilarating, and more; depending entirely on your brand’s position. The fact is, brands are driven by words and experiences as much as – if not more than – pictures. It’s driven, in short, by anything that will help your audience (a marketing speak way of saying your customers, your prospects, employees and investors, in one short word) “connect” with your organization.

To be honest, I kind of wish he’d used a picture for this article instead of all these “Hemingway-like” sentences. I mean, I’ve been reading this stuff (along with student essays) for years. Deep stuff. But don’t forget: Brands also have to get to the point…..

Apple, Dell and other technology companies are routinely vilified for the abhorrent quality of their outsourced call centers. And it gets worse: as this article from the San Francisco Chronicle points out, call center employees are regularly abused themselves. As a woman from Texas recently told 22 year-old Saurabh Jha – thanks to outsourcing, "You are getting money, food, shelter. You should be starving."

Nobody wants customers like this. But face it. If these are your customers, you need to know what’s driving them. Forcing callers to India and elsewhere, when rage against outsourced tech support or an inability to listen to anyone with a foreign accent is a driving emotion, will kill your satisfaction levels and negatively impact your brand. Psychographic and demographic research can help you segment based on attributes other than recency, frequency and zip code. No, this is NOT a red state/blue state issue, it’s an issue of understanding your customers and what the hard and soft drivers of brand loyalty are. (Hint: Rage at your outsourcing policies does not engender strong loyalty. Maybe somewhere in Alberta is a better choice…?)

After all, if someone is predisposed to get angry easily, they’re going to do it no matter what. You just want to make sure it’s directed at someone else.

So where do you fit? Is your company one of the 20% that KNOWS it isn’t delivering a superior experience? One of the 8% whose self-perceptions is congruent with your customers experience? Or are you among the deluded 72% that thinks things are going much better than they really are?

The companies that garnered praise from the 8% have these three things in common:

1. They design the right offers and experiences for the right customers – those customers who are both highly profitable, and who are most likely to be advocates.

2. They deliver on these propositions by focusing the entire company on them with an emphasis on cross-functional collaboration (for instance, marketing/sales, originations, underwriting, closing and servicing working together).

3. They develop the ability to please these customers again and again, by doing things like continually improving processes, internal training, and establish direct accountability for the customer experience.

It comes down to this: focus on understanding what’s important to your customers, what’s important to you as a business, and find ways to improve your performance in these areas. In brief, identify any gaps in your brand experience, and then close them.

Blogs are here to stay; Technorati now indexes 22 million of them. So how does Blogging affect brand attitudes and corporate communications? Either they’re a great new communications tool “Blogs Will Change Your Business” (Business Week 2nd May 2005) or they’re a first step to brand obscurity, with a stop on the lower levels of PR hell “Attack of the Blogs” (Forbes 14th November 2005).

With a nod towards the Forbes perspective, all we need to do is examine blogger Jeff Jarvis and his blogsite Buzzmachine. Jeff Jarvis had a faulty Dell laptop and a negative experience with Dell’s customer service. He blogged about this and brought the story into mainstream coverage from The Washington Post, The Wall Street Journal and the New York Times among others.

The report we came across is a study from the UK that examines whether Mr. Jarvis has had any impact on the public perception of Dell’s customer service. The short story? Don’t tick off a Blogger. “Dell Hell”– an expression coined by Jeff Jarvis – has become shorthand for the customer service issues he experienced.

To benchmark performance against competitive industry leaders dictates a certain approach. If you wish to benchmark functional performance against non-competitive functional leaders (e.g. mortgage broker experience and satisfaction at a financial services institution vs. meeting planner experience and satisfaction with Ritz-Carlton) it dictates another.

If you are interested in measuring your performance (e.g. importance vs. importance on key experience or perceptual attributes) you’ll need to understand which segments to measure against. For instance: is the benchmarked opinion of an entire industry (e.g. 50,000 plus brokers) the measure you should be tracking and improving? Or is it the opinion of the top 20% of the segment that are the most profitable? How do your customers deviate from the industry overall?

If you improve performance against key metrics industry-wide (let’s say – just for example – speed to negotiated quote and commitment letter for commercial mortgage brokers), will that make you more profitable? Or, should you focus on improving the experience on the metrics that matter to the segment that represents your most profitable customers?

In our opinion, benchmarking is relevant only in so far as the metrics you benchmark are linked to key financial, business and customer objectives, and the metrics that define success in these areas.

Although linking various metrics can be difficult to do, it is critically important for several reasons. If the cause-and-effect relationships are identified and understood, then these measures begin to provide the ability to serve as predictors of future organizational and financial performance.

Understanding the cause-and-effect relationship is relatively easy. Identifying leading and lagging indicators is typically more difficult, though critical.

By regularly monitoring the leading and lagging relationships among various metrics, you gain the ability to identify problems well in advance of their affecting overall financial performance. At the same time, the ability to understand these relationships can have a direct effect on the ability to predict financial performance.

If you have response rates of 4% in a traditional DM program, the other 96% of recipients still have the ability to be positively influenced by your brand. By driving brand messaging and key attributes throughout the visual and verbal elements of your package or email, you can start building awareness, knowledge and preference.

By all means, sell your product or service. Testing will show you how to best do this. But be sure to educate all recipients on your brand. Though the results won’t show up on your ROI dashboard today, the seeds you plant may sprout when you least expect it.

After a (very brief) pause to see if they were serious, I quickly dove in. But the question was illuminating. How many marketers – in this age of management focus on ROI and performance measurement – wonder what to track to prove how well they’re doing?

Our definition of benchmarking is the act of comparing a specific measurement (or set of measurements) to a benchmark. External benchmarking compares internal measurements to measurements from external sources (prospects, competitors, non-competitive functional leaders). Internal benchmarking compares internal measurements (typically by division, process, unit, customer or segment) against other internal measures.

A recent engagement on the process of identifying, codifying and transferring internal best practices fell into the internal benchmarking category. The question we answered was, “How can we (organizationally) find out what we (individually or at the business unit level) already know?”

Once they got it, this client was really interested in external benchmarking, followed by a dialogue around what they’re trying to accomplish: Would you like to benchmark yourselves against best practices in your industry? Or would you like to benchmark yourselves against perceptions of the ideal? Or do you want to benchmark performance against the ideal as perceived by the most profitable, loyal customers you have, and others like them?

The answers, unsurprisingly, were yes, yes, yes and yes. But we’ve been able to narrow this down somewhat to those metrics that really matter, with the objectives of helping them adopt best practices and increasing performance. But benchmarking should be treated as a continuous process in which organizations continually seek to challenge their practices and improve upon them. While many organizations benchmark on weekly or monthly performance data, we’ve found that quarterly measures are most manageable, while still occurring often enough to incent positive change.

The approach you’ll take is driven by exactly what you’re trying to accomplish, and what you plan to with data once it’s been gathered and analyzed.

The question we’d like to ask is this: Do you know what’s driving your customers through your Customer Relationship Lifecycle (CRL)?

Do you understand their needs?
What do your customers seek, require or expect in each lifecycle stage?

Do you understand which marketing levers “move” them?
What are the Touchpoints, actions, factors or emotions that motivate advancement from one to a subsequent stage of the CRL?

What are the barriers to movement?
What’s impeding progress through your CRL? Where are you “losing” customers and prospects?

To answer these – and related – questions, you can build a view of the CRL unique to your company, and identify and map Touchpoints (what we term Touchpoint MappingTM) along appropriate CRL stages. As a result, you’ll:

> Have a perspective from which to understand efficacy, cost and potential redundancies
> Be able to identify and map specific customer Needs, Levers and Barriers to progress across each lifecycle stage.
> Articulate specific, defensible recommendations for the strategies and tactics that will optimize your Touchpoints to better meet identified needs, levers and eliminate barriers to a positive relationship with your organization.

Marry this process to a true understanding of your brand and how it influences, motivates and resonates with prospects and customers, and you’ll create a powerful set of “lenses” through which to view, manage and maximize the value of all your Touchpoints.