Want Loyal Customers? Make Them Owners

By Mike Gorun  //  2013  //  Comments Off on Want Loyal Customers? Make Them Owners

A man holding a present for you isolated on white backgroundThe LA Times reported this month that, in an interesting move, AMC Entertainment, the owner of over 300 movie theaters including 25 of the 50 highest grossing theaters in the United States, is offering its most loyal customers a chance to own a piece of the company prior to their planned $368 million initial public offering. According to the article, in a letter to members, Chief Executive Gerry Lopez said “We’re offering this exclusive employee benefit to our AMC Stubs members to express our sincere gratitude for your loyalty.”

This ingenious idea does more than just offer its loyalty program members a special perk typically reserved for employees. It allows them to become stakeholders in the business. Nothing reinforces and strengthens loyalty more than when you own part of a company. These customers have been given an opportunity to achieve something that the average household wouldn’t be able to. Considering that many people don’t have investment accounts or stockbrokers which would allow them to buy minimal shares without incurring fees or requiring initial deposits to fund the account, the ability for the normal consumer to own a piece of the pie is attractive.

Disney runs a similar program that allows investors to purchase stock directly through them investing a minimum of $25 per month. Once the account has enough to purchase a share, Disney purchases it at the current market price for them and credits their account. As dividends are earned, they get reinvested into additional stock. One cannot argue with the level of loyalty in which Disney enjoys, that’s for certain.

Getting creative with how you reward your loyal customers is a great investment. As loyalty programs continue to flourish in retail, consumers now expect them. Sure a free bucket of popcorn is great but a owning a piece of the company is fantastic. Many of these loyalty members won’t buy stock in any quantity that would even register them on AMC’s ownership radar after the sale. There may even be limits to the quantities a single customer can purchase. Regardless, this is a creative way to get your customers invested in your company’s success with minimal cost.

Creating loyal customers is a challenge that businesses face continuously and also one that many business neglect. Without retention, a business cannot grow unless it’s acquiring new customers faster than it’s losing them and, for the most part, that’s a pricey growth strategy. AMC Entertainment has offered a loyalty program for years and the addition of offering those loyal customers this perk strengthens the sincerity of the program. This helps to elevate their reward program from one that is expected or normal to one that adds sincerity to their message of appreciation.

This is certainly not a replacement for providing a great customer experience. Treat them poorly and it won’t matter if they own a share in your company.


What’s In Your Wallet – The Sequel

By Mike Gorun  //  2013  //  Comments Off on What’s In Your Wallet – The Sequel

CutestFood_com_tumblr_luqeyv4t7r1r5jpaho1_500_largeIn the October 2013 edition of Dealer magazine, I examined a phenomenon that occurred last Christmas. Partnering with luxury shopping site, Starbucks offered an ultra-exclusive steel metal loyalty card for sale on their site for $450. The loyalty cards came pre-loaded with $400 in Starbucks credit and there were only 5,000 available. You might think nobody would want to pay $450 for a loyalty card that they could get for free, but you’d be wrong. The cards sold out in 6 minutes generating $2,225,000 in sales. Almost immediately, these cards were listed on eBay and have sold for $2500 and up. In fact, even a year later, cards with no pre-loaded credit are still selling upwards of $625.

This month, Starbucks again offered these metal loyalty cards for sale. However, this time they only made 1,000 of them.  According to an article in USA Today, “the company made a ‘deliberate decision’ to make even fewer metal cards this year.” Group president, Cliff Burrows, is quoted in the article as saying “It’s now more special. We’ve elevated it to a new level.” This gift bestows upon the owner an instant Gold level status within their rewards program for a year. To maintain that status after the year, they must make purchases that would earn it just like anyone else.

With 5,000 metal cards already in circulation from last year’s sale, you’d think that the novelty of the card would have worn off and that those that wanted one would have found it by now. Introducing 1,000 more into the market simply means that 6,000 people will now own a metal loyalty card. That’s really not a lot considering that the card is good at any Starbucks location worldwide. To put it into perspective, if the cards were only sold in the United States, that would mean that, on average, only 120 people in each state would own one.

The demand for these cards; and the prestige that one gets form being able to whip out this metal card while the baristas and other consumers gawk; is apparently still very strong. This year’s stock of the 1,000 cards sold out in seconds, according to NBC News. The article goes on to say that the website received 2.5 times the traffic it did on Cyber Monday. Within 30 minutes of the cards going live there were over 11,000 people signed up on a wait-list to purchase one.

The Starbucks loyalty card program is one of the strongest in existence. “Our Starbucks card had its best holiday season in history, as measured by any metric, with more than $1 billion loaded during Q1, the most ever loaded onto any kind of Starbucks card.” Said CEO Howard Schultz.

These new metal cards are currently selling on eBay for upwards of $1,700+ dollars; and that’s before a single card has even been shipped by Gilt. With Christmas quickly approaching, the demand for these will only increase as people scramble to find that one-of-a-kind gift. The fanaticism and demand for these exclusive, hand-made loyalty cards, is testament to the strong brand and loyalty program that Starbucks has been able to develop over the years. For a company to transform its loyalty card from one that is hardly top of mind other than at the point of sale, to that of a coveted status symbol, is phenomenal.

Starbucks has proven once again that customers want to feel special. B offering an elite limited edition loyalty card, they’ve transformed 6,000 people into brand advocates while generating publicity that money can’t buy.


How Do You Solve A Problem Like Generation Z?

By Mike Gorun  //  2013  //  Comments Off on How Do You Solve A Problem Like Generation Z?

studentsIn the past, the right mixes of traditional and media buys wrapped up in the bow that is your demographic was all it took to catch consumer’s attention and bring them into your dealership. Then Al Gore invented the Internet and everything changed. Not all at once, mind you, but it did and still is. Attracting attention to your business today is more difficult than ever. It will continue to get more difficult and your options will continue to expand. The youth of today are growing up and these young people are becoming the consumers that brands are courting.

The discussion around Millennials and how to effectively market to them and create loyal customers has been going on for years. Those Millennial are in or nearing their thirties now and we have Generation Z replacing them in marketers’ minds. Millennials used to be a Rubik’s Cube that could be solved with enough study. However, as the digitization of the world has increased, reaching Generation Z has become a more daunting task then ever.

Chegg, a student hub that is a leading provider of homework help for high school and college students, released a study during Advertising Week in September 2013 titled “Engaging the Made-to-Order Generation.” The results were generated through an online survey of over 4,000 college students. According to the study, college students consume an average 47 hours of media per week. While that might not surprise you, consider that 32 of those hours are via online or from their mobile devices. Mobile device use has grown 250 percent since 2011 and 84 percent of college students say they use a smartphone; and which 43 percent of those reported that they’d used it to make a purchase within 30 days. Tablet use has also doubled from 16 percent in 2011 to 34 percent in 2013. The young people of today are heading online for just about all of their activities; including communication, media consumption, shopping and information

The consumers of tomorrow are migrating to technology to satisfy that instant gratification desire they’ve become accustomed to. As a result, technology companies are adapting to accommodate them. Transparency is increasingly demanded and companies are meeting those demands. You would think that for the generation that made “selfies” a trend it would be difficult to win over their business. However, according to the study, that would be wrong.

The study found that college students are eager to give their loyalty to a company and to also become a brand advocate. In fact they were pretty forthcoming on what they’re looking for in order to back a company.

  • 88 percent said it was important that companies give back to the community.
  • 84 percent are willing to advocate for brands that reward their loyalty.
  • 82 percent were willing to be frugal in some areas so that they could spend more in others.
  • 80 percent expect real-time customer service
  • 80 percent said that it was important to buy from companies with responsible business practices.

Generation Z is decisively willing to award you their loyalty. However, they have what may seem to be some pretty steep demands in return. When you drill it down to basics, the formula is simple: Do the right thing. Pay attention to your customers needs. Give back. Show them that you appreciate them.

These young consumers aren’t any different than consumers of the past. What’s changed is that information is instantaneous and expectations have evolved along with it. These young people expect to be treated right and appreciated by businesses that care.


They want to feel special by receiving discount offers and coupons. They like free stuff like everyone else. The students surveyed reported that they “notice timely communication and appreciate gentle reminders.” They’re loyal but they expect that loyalty to be rewarded.  The only difference between Generation Z and past generations is that technology has opened up a world of near instantaneous communication and information.


Long gone are the days of sending a letter and waiting a response. Today, young consumers expect your business to be available via any communication channel they choose whether that’s phone, e-mail, chat, text, or social media. Be there for them and they’ll be there for you… and be pretty impressed.


Generation Z is not the Rubik’s Cube that we think it is. They are there, ready and willing to be courted by a company that is willing to adapt. Don’t think for a second that they are asking businesses to adapt to them. They are a product of technology just as text messages are.


They simply want a business that understands and utilizes the same technology that they do.



Would Your Customers Get a Tattoo Of Your Brand?

By Mike Gorun  //  2013  //  Comments Off on Would Your Customers Get a Tattoo Of Your Brand?

Would your customers get a tattoo of your brand?apple-logo-tattoo-e1345660648950

A recent Forbes article told the story of Swiftwick, a sock company that had such a fervent following that customers had the logo tattooed on themselves. According to the article, this company does little to no advertising. It acquires new customers mostly through recommendations and word-of-mouth advertising. The writer interviewed Chris Cooper, the first customer to get the logo tattoo to find out why. His answer was that it wasn’t just because he loved the socks, but that he also connected with the company. “Most of the people I work with wouldn’t know what my tattoo stood for. But I have a connection to the product. I know the people behind it, their attitude, and I like the company,” said Cooper. The article goes on to explain how Swiftwick “visibly support(s) charities, events, and trade shows that move their employees and their customers.”

One statement Swiftwick CEO Mark Cleveland made in the article was an extension of the saying we’ve all heard countless times… “People do business with people they like.” His take on creating a company that resonates with its customers begins with this philosophy. However, he also extends it to: “People do business with people they like, so hire people who are worth liking!” In addition, the article illustrates how Swiftwick protects its company culture no matter what it costs.  “Culture is the most difficult thing to build and the easiest to tear down. It takes years to acquire and you can lose it in 10 seconds,” says Cleveland.

Companies and brands like Apple and Disney have millions of fans worldwide because their focus is on everyone that is involved with or connected to their company.  From their CEO to their employees to the consumers – they understand that to truly create a culture and experience that engenders a cult-like loyal customer base, it is important have buy-in from everyone.

Swiftwick seems to have captured the essence of their customer base by ensuring that they have a clear vision of their culture; that they hire people who compliment and support it; and create high quality products which they then deliver to their customers with exceptional service.

By making their vision reality, they’re able to create clearly defined core values to compliment their mission, vision and culture. The “About” page on their website says it all in the “Living It Out” section:

1. We have fun, enjoy our jobs and make Swiftwick a company that is easy to do business with.

2. We display positive attitudes and hearts of service internally and with our customers.

3. We are a company that is ready, willing, and able to quickly adapt to change.

4. We value the growth of our team by training, teaching, and coaching so that everyone understands their responsibilities.

5. Whatever the job, we show initiative in our work and finish what we start.

6. We value good communication by listening attentively to our consumers, our distribution partners and to members of our team.

7. Each person at Swiftwick is empowered to identify problems, discover the solution and follow it through to completion.

8. We bring to market high quality, innovative products with technology and features that set us apart from our primary competitors.

9. Protecting our assets is the responsibility of everyone at Swiftwick.

10.Working safely takes priority above getting the job done.


Setting Something Free Doesn’t Mean It’ll Come Back

By Mike Gorun  //  2013  //  Comments Off on Setting Something Free Doesn’t Mean It’ll Come Back

free-dove1I am sure many of you will have heard the saying “If you love something, set it free. If it comes back, it’s meant to be.” While this may be good advice for relationships, it’s certainly not good advice for business. A recent whitepaper examined how many companies focus too much on share-of-market and the resulting damage. Market share has always been the leading measurement of success. The article examines why using only this measurement is faulty, and why a focus entirely on market share is actually bad economics.

The focus on market share, according to the article, is a result of feeding our egos. It’s certainly an easy measurement. One could assume that capturing market share is an indication that their business is not only successful, but also growing. As I, along with countless other experts have said in the past, it is much less expensive to retain and sell to current customers than it is to acquire new ones.  In addition, existing customers spend 67 percent more with a business than new ones do, according to Inc. magazine. If it costs up to five times more to make a sale to a new customer; yet it’s easier to sell to an existing customer; and they also spend more; why do we continue to focus on new customer acquisition?

According to the article, there’s a feeling of accomplishment in market share growth and new customer acquisition, whereas “focusing our attention on customer relationships often makes us feel like we’re doing less – even though we’re usually accomplishing more.” Marketing to new customers is actually the “fun” part and acquiring new customers often generates more income for sales reps than retaining existing ones.

Customer retention, on the other hand, is considered the “trench work.” There is less sense of satisfaction in upselling an existing customer and, typically, the compensation is lower for sales reps. Therefore focus and quotas tend to be based on new customer sales, rather than on customer retention sales and actions.

Have you ever examined your fixed ops revenue to find out what percentage is derived from existing customers versus new ones? How much of your sales are from repeat customers or referrals from them? By focusing your marketing efforts and growth strategy on new customer acquisition, you are leaving money on the table. Your existing customers are the “low hanging fruit”, according to the whitepaper. It’s certainly understandable for salespeople to focus more on new sales than retention. It’s much easier to be fed leads and wait for ups to come to the dealership than to follow-up with past customers. Yet, the truth is that by following up with your existing customer base, your success ratio will increase. Assuming the customer had a great experience at your dealership, you’ll have already established rapport and trust with them and will typically see higher gross profits than you would from a new customer.

Don’t wait for sales to decrease before you begin retention and loyalty marketing. Ignoring your existing customer base will increase your defection rate and detract from any growth you may have experienced through new customer acquisition. It’s your loyal customers that keep your business in the black when sales are down. If you fail to pay attention to them now, they may not be around when you need them.

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