Fire Your Worst Customers

How valuable are your customers? Maybe a better question is how valuable are your best customers? The quest for the most valuable customers started in the 19th Century with Italian economist, Vilfredo Pareto. Pareto found that 20% of your effort will generate 80% of your results, called the 80/20 rule.

Paul Lemberg applies this 80/20 rule to business. “Determine which 20% are using 80% of your resources,” he writes. “Are they your top profit generators? If not, charge them for the resources you shower on them, or discontinue services to that tier.” These 20% of customers using 80% of your resources can be a drain on your bottom line.

This 80% of resources could stem from customer service, or “sales hunters” (i.e. people that only buy during a sale). “Yes, breaking up may be hard to do, but when a client is costing you money or making you crazy, it can be a smart move,” writes BusinessWeek.

The first step to firing your worst customers is distinguishing them amongst your entire customer base. To do this, consider implementing customer management systems to quantify the resources used by each customer. For instance, does a low-paying customer require more time with a customer service representative than your high-paying clients?

Consider building deterrents to ward off your “worst” customers. Maybe you create a pay wall, whereby if you exceed X amount of customer service time, you’re charged a penalty. Or, create price walls. For instance, if a customer only shops at your store when you have a sale, and your regualar clientel ignore sales for the most part, consider eliminating discount pricing.

Firing your worst customers can help you maximize your resources by catering only to those that comprise the majority of your profit. “Always be conscious of who’s treating you with the graciousness you deserve, and who isn’t. When insolence is staring you in the face, it’s best to cut your losses early, and make the space in your life for those who really matter: your fans,” writes the Pleasure and Pain Blog. Ultimately, after you fire your worst customers, you can continue acquiring those that matter to your bottom line — thus growing your company more efficiently and effectively.

Image by Ahmed Al-Shukaili from Stock.Xchng

2012 Market Trends, part IV

Trend 1-2
Trend 3-5
Trend 6-9

10. Exclusive Access
The popularity of Royal-Class airport lounges and invitation-only Centurion credit cards are just two examples of modern man’s immense need for respect and privilege…This ‘exclusivity for the masses’, or “Massclusivity” can be an instant add-on and revenue booster for many services in the public domain.

Are you on the list? Well of course, isn’t everyone? We’re all members to some “exclusive club.” Whether it’s from the miles we rack up with our favorite airline carrier, or the card we use to basically charge everything—we’re all special because we’re members. Today, it’s this exclusivity that earns brands their fans, and it’s this exclusive access that maintains these fans. Fans come with a price, according to a 2011 study from, 58% of Facebook likers expect both access to exclusive content, events or sales, and discounts or promotions through Facebook. Gilt Group takes this statistic to heart, and offers its Facebook fans exclusive access to sales, as well as the ability to preview the site’s daily flash deals an hour early. Just like consumers play favorites based on exclusive access, companies are taking this exclusivity trend and making it into a competitive advantage. YouTube, for example, recently secured the rental rights on hundreds of Disney movies.
What Others Are Saying
Facebook ‘Likers’ Expect Access, Discounts
YouTube Snags Hundreds of Disney Movie Rentals
Gilt Brings Exclusive Sales to Facebook

11. Power Couple Effect
“Our acquisition of today significantly accelerates our online strategy.”
—Greg Wasson, president-CEO of Walgreens

It could be called the hottest look for the New Year. Digital mergers are in vogue, and making all the difference to organizations large and small. It’s wheeling and dealing in snatching up start-ups. Larger companies are acquiring smaller ecommerce companies. Commonplace are joint ventures and multiple acquisitions to address strategic business initiatives. EBay has already spent billions acquiring a laundry list of companies for its future expansion in the ecommerce realm. Facebook also recently acquired Foursquare competitor Gowalla, a location sharing service provider. These digital mergers demonstrate the benefit of purchasing “pre-packaged goods.” Digital startups already have the dirty work completed, and once both signatures are on the dotted line, a firm’s digital arsenal grows tenfold. This growing trend addresses a few additional movements in the digital arena, like growing digital ecommerce (hint: refer to trend 2).
What Others Are Saying
Twitter Acquires Mobile Security Firm Whisper
Hottest Trend in e-Commerce? M&A.
E-Bay’s e-Commerce Strategy

12. Upping the Game on Loyalty
“As a customer’s relationship with the company lengthens, profits rise. And not just by a little. Companies can boost profits by almost 100 percent by retaining just 5 percent more of their customers.”
—Frederick Reichheld, author of The Loyalty Effect: The Hidden Force Behind Growth, Profits, and Lasting Value

It’s the loyalty game. But today’s winners aren’t merely rewards program. Today’s winners are engagement champions, as this is what ultimately creates brand loyalists. Various aspects of marketing can help increase loyalty. Many companies are expanding their rewards programs to provide further incentive for interaction. Southwest recently launched an enhancement to its Rapid Rewards program—aimed at making the brand more engaging. Facebook has also been called the ultimate loyalty tool. As your fans are the prime consumers, those who you want to further develop and maintain a relationship with. Gilt City used Facebook Groups to establish a private loyalty program for its users. Justin Kistener the social-media products director of web analytics firm Webtrends said, “Facebook is really the anti-Groupon, because it’s more about preaching to the converted than getting new converts.” Corporate responsibility is another way many companies are tipping the loyalty scales. Pointers to develop loyalists—listen to your consumers. They are the voice of the brand, you, are not.
What Others Are Saying
Building Brand Loyalty Among Fickle Digital Consumers
Does Corporate Responsibility Build Customer Loyalty?
How Brands Should Think About Facebook: a Loyalty Program

2012 Market Trends, part III

Trend 1-2
Trend 3-5

6. Super Healthy
“Our intention is to reinvent this category in the same tonality that we have reinvented over the last 40 years the basic commodity of coffee. We see a lot of white space.”
—Starbucks CEO Howard Schultz on the acquisition of Evolution Fresh Inc.

It started with the explosion of Cross Fit. It progressed with the success of health foods stores nationwide. And once coffee juggernaut Starbucks was on the super health bandwagon, “health” as we knew it ceased to exist. Nowadays, simply being healthy and fit is not enough. Today’s goal is to be “super healthy.” Goodbye calorie-portioned microwavable dinners and 30 minutes on the elliptical. Hello vitamin-enriched juices, fortified protein bars, and stretching your body’s limit with cutting edge fitness. The trend of super health is upon us. Extreme fitness has now become the norm rather than the exception. Cross Fit and Tough Mudder have helped shift society’s view of fitness as recreation, to fitness as a lifestyle. Starbucks has even acquiesced to the super health trend with its $30 million dollar purchase of Evolution Fresh, with plans to reinvent the premium juice segment. Whole Foods, once a niche grocer, is now a main player in the super health
movement with fiscal Q4 revenue growing to $2.4 billion, on 31% earnings
growth. 2012 earnings are projected to grow to over $11 billion.
What Others Are Saying
Top 2012 Food Trends
Tough Mudder: The Future of Grueling Obstacle Event
Can Starbucks For Juice What it Did for Coffee?

7. Lean and Mean
“Increasing pressures on organizations to be more competitive, agile, and customer focused—to be a ‘lean enterprise.’”
—Judith Heerwagen, Ph.D., J.H. Heerwagen & Associates

A fundamental shift has occurred in the marketplace. The initial change stemmed from the volatile economy. The recession setback even the most stable of firms and overpowered giant enterprises. The unexpected downturn forced many companies to rethink, redesign and reposition themselves. Companies are now turned toward “lean” endeavors—constantly trimming fat where they see fit. Starbucks contributed to this lean movement, cutting close to 7,000 jobs and closing 300 stores in the past few years. Also, according to Bloomberg, companies in the Standard & Poor’s 500 generated free cash flow over the past 12 months of $883.4 billion, 119% more than in 2006. This excess of cash demonstrates that firms recognize they can no longer afford to waste neither time nor money. Today’s lean organizations are more agile. They can react to change fast and keep up with the ever-dynamic marketplace. This is key to remaining competitive. Consumer perception can shift on a dime; therefore, companies today have to be able to keep up.
What Others Are Saying
Simplification of Lean
A New Way to Teach Entrepreneurship
The Changing Nature of Organizations

8. Green Revolution
“This is a great development—an indication that leading businesses are beginning to define their roles as true stakeholders in the future of our planet.”
—Jens Martin Skibsted, founding partner of KiBiSi, a product design consultancy, and Rasmus Bech Hansen, director at Venturethree, a global brand consultancy

They’re starting a revolution. And no, there are no radical protests or occupying of any main streets. The revolution is a green one, an eco-friendly one if you will. Businesses—large and small, national and worldwide—are starting a revolution of sustainability. We’re not talking a few feel-good green initiatives, but green company initiatives, that will ultimately better the earth as we know it. The best way to create educated consumers is to lead by example, and that is exactly what a number of corporations are doing. PepsiCo recently donated $8 million to to provide 800,000 families in India safe water by 2016. AT&T recently offered $20k for its “Power Your Future” contest to create an eco-minded mobile app that delivers an environmental or energy efficient benefit. We’re seeing an ongoing trend of companies bettering the world, not just their country or even company, and helping to build sustainable societies. Welcome to the evolution of “Green” into the foundation of corporations.
What Others Are Saying
US Airlines Getting Greener as Biofuels Rule the Air
Why Standardized Rules About Sustainability Don’t Make Sense
The 7-Stage Evolution of a Socially Responsible Brand

9. Seeing is Believing
“…The resume infographic is a trend that foreshadows the future because one thing is certain: the way we consume data is changing, fast.”
—Jen Jenkins, founder of the Punctuation and Language Appreciation Society & Social Media Manager for LIME Marketing

We live in a skeptic nation. Nowadays, distrust towards news organizations, the government and big business are at all time highs. With shorter attention spans and a need for instant gratification, an infographic movement has transformed the way we take in data. Today, a picture is truly worth a thousand words—as the public generally trusts photos and visual representations more than the written word. We are also in an age of engagement. Words on a page do little to engage a reader. A visual graphic, however, does. Retail giant Saks has taken this train of thought into their holiday displays by creating the world’s longest outdoor video mapping experience with “The Saks Fifth Avenue Snowflake & the Bubble” projected onto their New York store. Even resumes have taken to the infographic trend. Images engage and captivate an audience. But it doesn’t stop there; the future of infographics is boundless. Many believe HTML5 will create interactive-rich creative, others reason real-time data visualization will come into play; and there are also those who presume user-interface design will once again transform the infographic trend.
What Others Are Saying
3 Trends that Will Define Infographic Future
Saks 3D Holiday Display
Content Marketing to the Next Level

Check back for the rest of the 12 Trends of 2012 next week…

2012 Market Trends, part II

Trend 1-2

3. Interactivity is Key
“This ad unit takes advantage of how users interact and explore with the iPad as opposed to other digital and mobile devices.”
—Dionne Colvin, national manager of media for Toyota on its new Yahoo Living Ad

Gone are days of passive consumers, who were content with being spoon-fed brands. Today, it is consumers who tell companies what brands stand for. They are now key players in the branding process. Consumers want to be engaged, and companies acknowledge this trend by making interactivity paramount in new initiatives. This key engagement creates brand loyalists. Domino’s Pizza Tracker allows pizza lovers to follow their pizza from order placed, to baking, to delivery. Taking interactivity to the next level, Domino’s also developed the Pizza Hero mobile game for iPads. Even print ads are now upping the game on interactivity. Murat Paris’ interactive jewelry ad allows a smartphone to be placed over the hand in the ad and try on different bracelets and rings. Television is also changing with this trend. CBS Sweep Week is a chance for fans to interact with their favorite CBS stars as they take over the network’s social media. Yahoo’s new Living Ad for the iPad grabs users with photos and videos—creating an entirely new digital experience.
What Others Are Saying
Yahoo debuts “Living Ad”
Interactive Jewelry Print Ads
CBS Stars Take Over Social Media Accounts

4. The Connected World
“Humans crave other humans inside of search.”
—Bing chief Stefan Weitz on Facebook in search

It’s accomplished a lot more than simply the ability to “poke” someone. Facebook—while revolutionizing social connectedness—has shifted the renowned 1967 study that hypothesized everyone in world was separated by 6 degrees. Today, that number is 4.7 based on a new study of over 720 million active Facebook users. This isn’t hard to believe, since if Facebook were a country, it would be the world’s third largest after China and India. Taking social connectedness to the next level, Facebook is now partnered with Bing to allow search results based on the “likes” of your friends. Search-engine optimization will now be returning results customized to the individual user. “We are, first of all, not solitary creatures and second of all, we are deeply embedded in the lives of others,” states physician and social scientist Nicholas Christakis. Today, connectedness is a way of life, and influence is more important than ever before. In order to adapt with this trend, companies must realize who influencers are and how they carry their message.
What Others Are Saying
How Facebook’s Partnership with Bing will Change SEO
Q&A w/ Nicholas Christakis, Our Modern, Connected Lives
Infographic: Mobile Statistics, Stats & Facts 2011

5. Scaling the Great Wall of China
“I would anticipate that China would become our third market quite quickly and within a few years will be our second-largest market.”
—WPP chief executive Martin Sorrell told AFP. At the moment, China is WPP’s fourth-largest market in terms of revenue, behind the U.S., Britain, and Germany. The company’s annual revenue in greater China—including Hong Kong and Taiwan—is around $1.1 billion.

Our western eyes are set on the east. Visions of new profit markets are encouraging many companies to turn to China, while American consumers continue to recover from the economic downfall. Just last year, Levi Strauss was the first Western clothing company to launch a new line in China—called dENiZEN—before launching in the US. Gap has stores in both China and Vietnam, with plans to have 15 more open by year’s end. Abercrombie & Fitch opened its first store in Japan last December with two more stores in the works. Arguably, companies are beginning to see the buying power and potential of the east, which is embracing many “American” ideals, including social media. Mark Zuckerberg has been in talks with China’s search engine giant Baidu to bring Facebook to China. Rovio Entertainment, the creator of “Angry Birds” is opening its first retail store in China, which happens to be its fastest-growing market. Starbucks recently partnered with the Foursquare of China—Jiepang—for its holiday promotion, rewarding customers for check-ins. China’s growing fast, and for many companies, scaling its Great Wall is an idea that’s growing even faster.
What Others Are Saying
Starbucks Taps China’s Foursquare for Holiday Check-in Push
China Must Innovate to Keep Up
Infographic: Asia-Pacific Social Media Stats

Check back for more of the 2012 Market Trends next week.

Email Marketing in Social Media World

The following is the summary of our interview with Justin Premick of AWeber, an email marketing software company.

1. What role does email marketing play in creating or supporting a brand?
A common belief about email marketing is it’s purely a direct response medium. And while it’s true that email is a highly trackable marketing medium with an excellent return on investment, its value extends beyond conversions generated directly from emails.

Email’s true value lies in the permission that people on your brand’s email list have given you to talk to them. Sure, sometimes that’s going to involve you sending coupons, sale notifications and other promotional emails, but it doesn’t always have to be that. Email can:

  • Thank customers for their orders.
  • Teach them how to use the products they’ve purchased.
  • Highlight lesser-known features and benefits of your products.
  • Ask for feedback on your products, customer support or other parts of your business.
  • Share success stories of other customers.

All of these emails are opportunities for your customers and prospects to form or reinforce their impression of your brand. Well-executed emails, even those that aren’t selling something, can improve your brand’s image, while poorly done emails can hurt it.

2. A lot of brands are experimenting heavily with social media. Does email still matter if brands are reaching customers via social?
Social media has indeed become a popular marketing tool. No wonder, given the low cost and potential to reach large groups of customers and prospects.

However, to suggest that the rise of social means there’s no need for email in your marketing mix would be foolish.

For that to be the case, not only would more consumers (or about as many) use social as do email, they’d have to want to use it to communicate with brands, and they’d need to be equally or more responsive to communications with brands.

The data simply doesn’t suggest those things have come to pass:

  • In 2010, CrossView reported that only 9% of US in-store shoppers prefer to get promotions on social media sites.
  • In Chadwick Bailey’s 2010 “Social Sharing Research Report,” 86% of internet users in the USA claim they’ve used email to share content. The number that did the same via Facebook? Just 49%.
  • In a 2010 study, AWeber found that the most common benefit (reported by 33.71% of respondents) that businesses realized by integrating email marketing and social media efforts was increasing their email subscriber base.
  • In the same AWeber study, email marketing was reported as having a greater, more easily measured and more quickly realized ROI than social media.
  • In Merkle’s 2011 “View From the Digital Inbox” study, it was found that social media users are more likely (42%) than non-social media users (26%) to check email at least 4 times per day. Even the people who are using social are using email… and they’re using it even more than the rest of consumers!

(Source on above studies:

The picture that emerges appears to be this: while social is hot right now, by and large consumers aren’t currently using it to replace email, either for personal or marketing communications. So if your brand abandons its email marketing program in favor of social, it’s going to suffer.

Of course, that doesn’t mean don’t do social. Just don’t do it at the expense of email.

3. What should I keep in mind as I start sending a newsletter?
The most important thing to ask yourself is, why would someone want to get your email newsletter?

To adapt the tree-falls-in-a-forest question, if you send a newsletter but nobody reads it, is it making an impact on your bottom line? (Not likely.)

It’s not enough to say “OK, let’s send a newsletter” and then put any old content in it and send it out. You need to ask yourself a hard question: who is going to care about this email, really? If the answer’s “nobody,” well… why is that, and what can you put into your emails that they will care about?

Once you’ve figured out what’s important to your customers and prospects, you’ll know what to put in your first few newsletters. From there, you can look at opens, clicks, traffic, blog comments, “likes” and other metrics to figure out what kind of content really resonates with your readers.

4. How often should I send my newsletter?
Most companies suffer from a lack of content, not a glut of it, so my answer is usually “as often as you have something to say that your readers will find valuable.” Typically, if this doesn’t happen at least once a month, you have a serious content problem that needs to be addressed.

If, on the other hand, your company suffers from the welcome problem of having too much content, I favor the approach of sending once every few weeks, then slowly increasing frequency until it appears (based on all the previously mentioned response rates, plus spam complaints and unsubscribes) that you’re emailing too often. Once you find that point, dial back the frequency slightly and go with that, continuing to monitor your stats to see whether spreading the messages out further is appropriate.

5. What does AWeber do to help companies with their email newsletters?
At AWeber, we help over 100,000 businesses deliver email newsletters to their customers and prospects.

We’ve developed our tool based on customer feedback over the last 13 years, and while our customers all use it a bit differently, some of the things they use the most are:

  • Automatic sharing of your newsletter on Twitter and Facebook.
  • Using the RSS to email tool to generate newsletters based on blog posts.
  • Scheduling of newsletters for immediate or delayed sending.
  • Option to send newsletters to all subscribers or just a given segment.
  • Detailed email analytics showing how well the newsletters performed.

2012 Market Trends

Swimming in a sea of data, the Sparxoo Agency team is taking a cue from Web 3.0 to filter the noise and offer up the Top 12 Trends for 2012. Our trend summaries feature quotes, facts, and recommended reading to spark ideas as you seek innovation and competitive advantage.

Indeed, the web 3.0 drumbeat is getting louder as the social web matures. Will Facebook reach 1 billion users in 2012? With nearly 1,000 apps submitted per day just for IOS, mobile has arrived and is ready to take center stage. We note Facebook’s recent acquisition of Foursquare competitor Gowalla.

Companies must evolve to stand out in this increasingly digital world. From engaging ad campaigns to exclusive access such as Gilt sales on Facebook, companies are becoming clever to stand out from the crowd. In the spirit of standing out, our Seeing is Believing Trend is based on the increasing importance of photos and video in communications. Don’t just rely on the written word!

Onto macro trends, we are all aware of the obesity issue in the US. With one out of three adults being obese, the rising trend of the Super Healthy gives hope that consumers will proactively manage their health. Finally, we cover macro trends that continue to stay in the forefront, including the Great Wall of China and the Green Revolution. If your company is lean & mean, put innovation at the top of your agenda and grow with the trend in 2012 and beyond.

1. Web 3.0
“If Web 1.0 was all about companies selling stuff to you, and Web 2.0 is about information sharing and user-participation, then what’s Web 3.0 going to be? It might be a whole new angle on browsing, for one: In three dimensions.”
—Kit Eaton, writer, Fast Company

They say the first phase was all about information. They called that Web 1.0. Next came the era of socialization powered by networks, what we now call Web 2.0. After these periods we were left with an onslaught of byproduct clutter. Welcome to the next phase. Welcome to Web 3.0. In a world literally laden with data, Web 3.0 is a shift in the “live” Web experience, aimed at filtering this info. There are various speculations as to what exactly Web 3.0 will evolve into. Here are some of our best bets. Mobile will undoubtedly be a large part of Web 3.0; as the way we have come to consume information has changed. Stagnant web pages have been replaced with “live feeds” and media streams. Technological changes will also be much of the driving force behind Web 3.0—aka the semantic web. Databases are a main pillar of Web 3.0’s expectations, intended at deciphering much of the information overload. Linking data—to be exact—will power Web 3.0.
What Others Are Saying
LinkedIn Founder, Web 3.0 Will Be About Data
Web 2.0 is Dead, Eclipsed by Data-Driven Content & Live Feeds
Web 3.0 Explained with a Stamp

2. Digital Commerce
“If I had to guess, social commerce is next to blow up.”
—Mark Zuckerberg

According to Wired Magazine (UK), 90% of all purchases are subject to social influence. states 67% of consumers spend more money online after such socially influenced recommendations. Suddenly, we’re in the realm of a real game-changer—social commerce. As more traditional and retail stores are moving into the ecommerce field, we see all digital players suddenly vying for headway. When we say “digital commerce,” we don’t simply mean online sales, even though those are at an all time high. As proof to this, consumer spending was 31.3% higher on Cyber Monday compared to Black Friday this year. There have also been some real wins for F-commerce (Facebook shopping) lately as well—Pampers sold 1,000 diapers in 1 hour on its Facebook Store. In 2015, social commerce is predicted to reach $30 billion in revenues. Starbucks recently announced that one in four transactions are now done via mobile. Like all things digital, commerce is experiencing an ongoing transformation. This trend is predicted to change the way consumers spend, including on their mobile devices.
What Others Are Saying
Can Social Shopping Finally Take Off
The Value of Social Commerce
Infographic: The History of F-commerce

Check back next week for more 2012 Market Trends…