Starbucks’ New WiFi Plan: Building Customer Loyalty

Howard Schultz’, CEO Starbucks, announcement yesterday on two changes in Starbucks’ WiFi services demonstrates how even a large corporation must pay attention to customers on a local basis. The announcement took place at the Wired Business Conference “Disrupted By Design”. I’ve written about Starbucks before and how they shift their business model to meet customer expectations.

There is a lesson for small and local businesses in this change at Starbucks.

First, starting July 1, 2010, WiFi service at Starbucks will be free. This move reinforces the neighborhood/community aesthetic at the heart of Starbucks’ marketing. The free model follows a trend already instituted at most airports and many other public spaces. Moving to a for-pay model is a disconnect in the “public plaza” feel Starbucks customers expect, especially after experiencing the free model outside the Starbucks store door.

This is the second step to free WiFi service at Starbucks, a couple of years back they shifted from a pure for-pay model with T-Mobile to ATT with a model featuring  two-hours free daily with a registered Starbucks card and small service charge following the first two hours in a day. Granted, that’s not an expensive proposition, but just typing it cramped my fingers and it confuses many less technically comfortable customers. This change is much easier for customers to understand and act on.

Second, a new Starbucks Digital Network will be introduced later this fall. A partnership with Yahoo! and featuring free access to paid sites such as the online Wall Street Journal and other premium sites, the Starbucks Digital Network offers a new reason for Starbucks to be the preferred choice for customers. McDonald’s wired up 11,000 of their restaurants in 2009 and offered free access to customers and McDonald’s coffee business is major competition to Starbucks, so this new Starbucks access model is probably a response to McDonald’s marketing.

Main Street businesses are always looking for a way to build loyal customer relationships and gain an edge over their competition. Small businesses can use this example from Starbucks as a guide for another way to find a way to differentiate themselves from their competition. Of course, a small business will probably not get the national or international news coverage nor will they probably be able to swing a deal with Yahoo! or other major corporations to present exclusive offerings, but small businesses can find equally enticing draws for their local customers.

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Best 2010 Super Bowl Ads

Yep, once again the Super Bowl stuffed us with new ads: Betty White and Abe Vigoda took turns getting stuffed on the playground gridiron: Budweiser vacillated between celebrating their brand’s glorious past with another Clydesdale ad, and it was nicely done, and celebrating the dumbest party scenes imaginable with Bud Lite (full disclosure: Bud Lite is my favorite summer beer for closing out weekend chores in hot weather, the main advantages being that it is cheap and watery); and Danica Patrick helped GoDaddy.com dose us with really low level sexual humor.

But two ads stand out in my mind as something special and, even though the ads are built around huge brands, they teach what small business can do in advertising; David Letterman and Google.

Why Google?

This is simple, and that is the Google ad’s strength. Google told us a story, a very familiar love story, and demonstrated how their product helped this story happen. With only a simple music track and some background sounds (check the baby giggle at the end of the ad), a quiet track compared to the rest of the overblown loud ads, Google told the story through the search field of their own home page. They kept their brand in front of the audience during the entire commercial and showed how their suggested search terms lead the protagonist through an entire love story, first meeting through married-with-kids, set in Paris. The whole ad demonstrated Google’s effort on keeping things simple, staying centered on search, and on being relevant.

Google’s ad was an obvious response to Microsoft’s Bing ads showing how Google’s search can bring up too broad a response. Google showed how that broad response can bring serendipity. What will be important is seeing whether Google will follow this up with more advertising to counter the Bing ads, one ad will not hold back the tide (Apple’s “1984” ad notwithstanding).

Why David Letterman?

Because each ad for these two large brands worked on a human scale, they told a story, and they were smart.

Personally, I am no fan of David Letterman’s humor. I am more of a Leno-O’Brien-Fallon kind of guy, I like the positive. To me, Letterman just has too much of a nasty side to his humor. But this ad was smart, it used surprise, and it used a pretty negative situation and turned that into a positive. Jay and Oprah appeared with Dave, they even appeared on the same couch.

My wife and I looked at each other in shock and swore that Oprah and Jay were celebrity lookalikes, but that theory was dashed almost immediately after the game when a promo came on confirming that all three people were the real item and not dubbed or faked in any way. Jay and Dave together on the couch, after the internecine war when Dave was passed over to Jay almost 20 years ago, still passing barbed comments with Oprah, the queen of togetherness, sitting frustrated between them.

Who wins with this ad? Everyone. David Letterman wins by having himself linked with Oprah and Jay while he is sitting atop the heap of late night television (although Conan was giving him a good run for his money that last two week before he bowed out of NBC and the Tonight show). Oprah wins because she is winding down her show and preparing for some future that will probably not involve her sitting on an island counting her billions, she is too motivated and engaged to waste her time lounging around (I am waiting to her about her second act). Jay wins because he got great publicity on the competing network that might help pull back some of the audience NBC lost with their business-busting moves.

So what did we learn?

Keep it simple. Tell a story. Demonstrate your product or service. Be smart and respect your audience. Stay true to your brand. When everyone else is yelling, consider whispering.

The Losers? (according to me, anyway)

Dockers and CareerBuilder.com. Really guys? The best you both can come up with is people in their underwear? Seems like both creative teams got lost on the No Pants Day public transit movement. At least the creative teams have not seen a Naked Bike Ride (no link, too NSFW, but you can Google it).

Intel. A sad robot? What about the other sad robot commercial that appeared about an hour later? I forget what the second sad robot advertised, but it was a complete parallel.

Punch Buggy? Gee, when I was a kid the VW Beetle was called a ” slug bug”, and for good reason since it came stuffed with some 40 horses in the trunk. Actually, I liked the ad and I think it communicated the brand pretty well, but where did this punch buggy term come from? Maybe it’s one of those “Hellman’s” versus “Best Foods”, or “soda” versus “pop”, geographical differences.

Oh, yeah, that was a great Super Bowl, too. I actually watched the whole thing through without switching channels this year!

UPDATE (2/8/2009): You can get the full story on the Dave-Oprah-Jay ad from the NY Times.

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WordCamp Portland Day 1: Why Am I Here?

I made it through the first day of WordCamp Portland 2009, not the type of conference I normally attend. But I learned a great way to help some of my less-technical customers develop continuously updated content on their web site by using Microsoft Live Writer to add to their WordPress based web site.

This may not seem like a major breakthrough to sophisticated web developers, but making it easy for non-technical people to add content to their web site has been difficult. Most non-technical people quickly choke and their eyes glaze over when presented with a typical CMS or blogging dashboard. Although there are millions of bloggers using similar tools on blog sites, most of these sites restrict the tools to a range of flexibility that meets the needs of the most basic author and avoid confusion.

I support a web site for a dance company, Dance West, where having dancer-created information would be an excellent addition to the site (this is a site built on WordPress using a variation of the K2 theme). The problem is that these dancers are not technically proficient and they already blanched when confronted with the dashboard.

Using Microsoft Live Writer allows them to work within a familiar user interface to “type” in their content, adding photos and videos as they go, in what looks like a simplified version of Microsoft Word, an application they are all familiar with. I’ll be starting them using Live Writer in the next couple of weeks and I think there may be another client or two who will be interested in using this same process to engage their employees and speak to their audience.

This post is my first using this method as a trial.

This is one of the valuable ideas I picked up on the first day at WordCamp Portland 2009. I also enjoyed the talk with Matt Mullenweg, founder of WordPress, and a discussion on plugins used by WordPress designers to extend the capabilities of WordPress for different businesses. More to come tomorrow.

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Answering Why Businesses Should Blog

Earlier this morning I spoke about social media at a small networking group meeting. The question of why to blog came up.

In this case the questioner had employees tracking billable hours and he was not interested in losing billable hours to blogging or other social media activities. We quickly worked through a couple of scenarios that might meet his needs using current staff and then looked at what he could do through outsourcing or adding overhead. He immediately understood the idea of his company becoming a thought leader in his business through blogging and that his employees would showcase their acquired knowledge to customers and prospects.

What I failed to point out at the time, and covered in a subsequent email, was the added benefit that his blogging employees were also sharpening their relationship selling skills by applying conscious effort in writing about their professional expertise. A tweet in my Twitter stream reminded me of this sharpening effect when the tweeter linked to this 1:37 YouTube segment of Seth Godin and Tom Peters discussing the core value of blogging.

Listen near the end of the clip where Tom Peters says, “No single thing in the last 15 years, professionally, has been more important to my life than blogging. It [blogging] has changed my life, it has changed my perspective, it has changed my intellectual outlook….it’s the best damn marketing tool by an order of magnitude I’ve ever had.”

This video is now in my favorites and I’ve added the quote to my slides for presentations. Maybe the best part about this is that it also proved the value of the Twitter stream and the serendipity that comes with checking the stream instead of always having completely narrow focus.

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When Is It Time To Fire A Customer?

I get asked this question a few times a year. Right now I get this question every week or so. I always ask people why they want to fire a specific customer and if they know the lifetime value of that customer, or if they know the lifetime value of any of their customers.

Right now I get questions relating to customer who pay slowly. The economy is poor and many customers are hurting, you may need to revisit payment options  or you may want to lose those slow-paying customers. Payment options might include, 2%/10, a straight monthly fee deducted from a credit card or checking account, or a penalty period.

American Express just released How To Fire A Customer in the small business area of their web site and they present pretty clear conditions and process for firing a customer.

But before you undertake any of the process they discuss, you must clearly understand the value a specific customer brings to you, whether that value is profit, proof of performance, or some other measure. Do your homework first and then look at whether this customer is costing you more than they are worth.

Just make sure that whatever direction you turn the result reflects properly on your business or you may find that it would be better to have kept that slow-pay customer.

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Five Reasons Small Businesses Should Use Twitter

Small business marketing can be tricky, it needs to reach your customers quickly and easily without costing an arm and a leg. Twitter, no matter what the buzz you’ve heard, is a great communication tool that can help you with marketing and sales. Here’s why:

1. Most business is small business.
More than 99% of business in the U.S. is small business, defined by the SBA as under 500 employees (more staggering, the percentage is actually 99.7%). But 500 employees is a really large business in most of our eyes, so a more important number for this discussion is that over 98% of businesses in the U.S. have fewer than 100 employees. Mike Clough, a serial entrepreneur and SCORE consultant, has a very readable blog post that helps parse the dense SBA figures (and you might want to read Mike’s blog on a regular basis).

Why are these numbers important? They show that if Twitter can be used in business, and I’ll write more later on businesses using Twitter, then the overwhelming majority of businesses using Twitter will be small businesses.

2. Your customers are using Twitter.
And more will begin using it this week. According to Nielsen, Twitter grew 1382% between February 2008 and February 2009, rapidly expanding from less than a half-million to over 7 million users. The overall numbers are still small, but this growth rate means over 91 million people using Twitter next February.

Twitter users are not kids. Better yet, the sweet spot of Twitter use is in the 35-49 age group, this group represents roughly 42% of all Twitter users and the core age group of the working world. This number will definitely change as Twitter use continues to grow, but it is an important age group for small business sales.

3. Your competitors are probably using Twitter and they are talking to your customers.
Come one, you already know this. When was the last time you tried some marketing or sales activity and you didn’t find out or know that a competitor was already doing this? The boom in Twitter business use followed the boom in Twitter users, it’s an organic growth curve, but you can still get started now.

The New York Times recently covered business use of Twitter and mentioned some small retail business uses along with the typical array of large corporations, but they left out the backbone of American business. They left out the business-to-business, industrial/commercial aspect of business. Twitter talks to and through your distribution chain, reaching your reps, distributors, and retailers, as well as your end customers, affecting end-to-end marketing along your entire distribution chain, no matter how many tiers and branches in that chain.

4. You can extend customer loyalty.
There’s a period following the purchase process where the customer becomes loyal to your product or company. Continuing that loyalty can be hard for small businesses, especially when repeat business is spread over longer periods. You can use Twitter can keep customers in the loop on your product or service, keeping them in a positive purchase state long after the sale is complete, possibly through to the next sale. And the word-of-mouth

Even better, it doesn’t matter whether your customers are local or geographically dispersed. Your regular sales skills are the main requirement in Twitter, the same as the conversation on the phone or in the office. One good difference is you can reach multiple customers at one time and then handle individual conversations through other methods appropriate to the customer need.

5. You determine how much time you spend using Twitter.
Twitter use grows organically, it is a self-defining use responding to the conversations surrounding your business. Yes, there is the group that tweets what they had for breakfast, but far more serious questions and discussions also happen on a minute by minute basis. Finding these discussion depends on your customers and their habits, but the best place to start finding them and listening to their discussions is by using a form of search.

Use TweetDeck or Seesmic, desktop applications that will continually track and report uses of searchable terms used in your business. Or use TweetBeep to get search term uses emailed directly to you (be careful with TweetBeep, it’s great for lower search activity but can overwhelm your email inbox if a search term is heavily used). These tools can get you started effectively using Twitter in business, but there are many other methods as well.

So that’s five reasons to start using Twitter today. There are many more reasons, but they will be specific to your business needs, feel free to comment here or email me with specific questions and I’ll try to give you some quick general answers to your possible uses.

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Let’s Exploit The Difference Between Facebook & MySpace

OK, the word “exploit” may have a charged meaning to some people, especially in light of the recent CNET article by Chris Matyszczyk discussing a presention by Danah Boyd, of the Harvard Berkman Center for Internet and Society, on how organic demographic separations appear in groups using technology.

Danah’s speech, given to the Personal Democracy Forum, was intended to deflate the somewhat rosy view that technology is a great demographic equalizer, and she used a comparison of Facebook and MySpace users as an example. According to Danah, Facebook users tend to be higher income, higher educated, and racially separated (white) from My Sapce users (lower income and education, non-white). She spends lots of time in her speech differentiating between the two groups. Chris asks, “Do we care?”

I think we do care and here’s why: From a marketing perspective, we need to reach our audience, so understanding the differences and exploiting those differences is important to our business operations. Rather than bemoan the fact that people search and choose their online community, or not caring that there are differences online, we should celebrate those differences and work to meet those differing audiences on their terms.

This is something that large corporations do in traditional media purchases and we can put this to good use for small business in new media. Rather than commiserate over the differences in audience, we can use the differences to more effectively market our products and services to different market segments.

If I want to reach a market segment that tends to have higher education and a suburban lifestyle, then Facebook may be a good choice for my marketing strategy. But if I focus my products and services on a more urban group, a group that spends more social time with new music, then MySpace might be the answer to reaching my core audience. I already notice this effect in pro-bono work I do for a small dance company, Facebook generates better response and greater interest than MySpace delivers. There are many communities outside of Facebook or MySpace, and other examples of this differentiation that we can also exploit.

Now for the caveats. There are many ways to slice this demographic inforation and none of them are perfect matches. There are no hard and fast rules, and no specific quantitative research. Also, things change swiftly in the online world and what is currently true may be completely false and ineffective in a mater of months. But the point is that by carefully considering our audience we can match our message to the environment and the audience to gain the greatest efficiency of effort.

The question of whether or not technology is the great equalizer is a valid discussion, but it is not a marketing question. Our only marketing question is “are we reaching the right audience with the right message?” Anything else is neglecting our business.

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