Customer Acquisition Marketing
Product Wow Marketing
Customer Retention Marketing
Customer Insight and Metrics
Marketing Consulting Services
Five Lessons from the Netflix Startup Story
- Five Fundamentals for Useful Marketing Metrics
- Branding and the Customer Experience
- P13N: The Power of Personalization
- Inside Intuit: A Customer 'Wow' Case
- Marketing Metrics
Five Fundamentals for
Useful Marketing Metrics
Five Lessons From
the Netflix Startup Story
by Jim Cook with Suzanne Taylor
When we began building Netflix in 1997,
most people thought we were nuts. DVD players had just started selling
in the US in March, and by October we started executing our
billion-dollar business plan with only $2 million in seed funding.
Even with the dot-com era in full bloom, the idea of renting movies
via mail struck most as somewhat ludicrous. Despite the odds and the
obstacles, we persevered to create Netflix, which has revolutionized
the movie rental industry.
Looking back on Netflix's startup story,
five customer-focused lessons stand out as critical in creating this
innovative Internet business.
1. Don't let the naysayers get you
Starting a new company takes a lot of
persistence, positive thinking, and a never-say-die attitude. Many
experienced people gave us long lists of reasons why our business idea
Why would people wait for movies to come
in the mail when they could just go down the street to Blockbuster?
How can you cost-effectively mail out movies? Won't they get broken,
stolen, or damaged? Seeing the negatives is always the easy part.
Solving such problems requires a special kind of creative
One by one, we went through the list of
objections and eventually figured out each of them with unique
solutions. Our customer research led us to several key customer
insights, including the fact that over 60% of customers planned their
video rental decisions. They knew what they wanted over a week in
advance. We obsessed on our customized mailer packaging, our
"per-package" economics, and 1-2 day delivery. The weight (and
therefore cost) of the package was critical. We built everything from
the ground up, step by step, and always with the end in mind.
We mapped the processing logistics of each
package backwards. We started with the intimate knowledge of US Postal
Service operations, then customized our software and operational
technologies to automate our picking/packing/shipping and finally
linked it all to our customer-facing Web site. We defined our
operational culture by speed, weight, and daily process improvement.
In short, we figured out a way to make it all work. If we had listened
too hard to the naysayers and not stubbornly found a way around their
objections, there would be no Netflix today.
2. Build operations for a 'wow'
We knew that if we didn't find a way to
work within the US Post Office's systems, we wouldn't succeed. We had
to build operations to create an exceptional customer experience (the
"wow!"). To understand how the Post Office backend worked, I spent
hundreds of hours at a few of the largest regional Postal Centers,
observing and asking tons of questions.
I noticed letters being sorted by several
high spinning circular drums. While these crushing metal drums enabled
the separation and processing of over 40,000 standard size letters per
hour, it was obvious that a thin plastic DVD would not survive the
journey. With a sinking stomach, I felt the business idea slip away.
But then I noticed a separate conveyor belt sorting magazines and
other larger pieces of "flat mail." How would I ensure that the
package always used this flat mail machine and not the letter sorter?
I found out that if an envelope had
certain dimensions and other characteristics, it would be sorted by
this alternate system instead of the large, crushing metal drums.
Better yet, this flat mail sorting machine would read a bar coded
delivery address and could automatically sort the item into "carrier
walking route" sequence. Now the wheels were really turning. The fact
that we could provide the right-size packaging, bar code, and other
characteristics would make it possible for extremely fast processing
of a mail piece with absolutely no human intervention or other
Our resulting "Netflix envelope" was one
of our biggest "customer wows." Its design was critical not only for
the customer experience but also for our operations and business
model. We had to design the envelope so that it met several criteria:
- Naturally, it had to effectively hold
and protect the DVD.
- It had to meet stringent Post Office
criteria so we could mail with the equivalent cost of a first-class
- It had to transform into the return
envelope so that DVDs would find their way back to Netflix quickly
and in good condition.
- It had to be "operational"—easy to
insert and remove the discs and something that could be pre-printed
in mass quantities.
- Above all else, this envelope was our
"product." It was the only thing that our customers would touch and
see. Therefore, it had to have all the key features of a great
Since 1998, there have been over 150
versions of this little red package. It wasn't always red, but we
determined that red was the easiest color to see in the post office.
It wasn't always paper thin—our first package was much thicker, and we
shipped 3 DVDs in the same envelope. By testing, learning, and
improving, we did such non-intuitive things as print the inside return
address upside down to make processing more efficient. We had to build
a mini "pocket" inside the package to ensure that the Post Office
stamp-canceling machine wouldn't break the DVD inside. A very recent
change added a little cut-out on the outside of the package, enabling
one to check the disc in by "seeing" the inside disc barcode without
having to open the package. The amount of time and motion this one
little step saves is enormous given today's processing volumes of over
20 million DVD returns every month.
3. Develop three-step solutions
When I worked at Intuit in the early days,
cofounder Scott Cook used to espouse the value of three-step (or less)
solutions. Many high-tech products build in unnecessary complexity for
consumers. By contrast, the most successful products take tedious and
difficult chores and make them easy—so easy that consumers can solve
their problems in three steps or less.
A great example of Netflix's three-step
solution is the now famous and patented Subscription Queue. We knew
our success would be limited if we required customers to come back to
our Web site every time to place their next rental order. Our research
told us that the average video rental customer rented 5-7 movies per
month. Why make that customer come back to our Web site each and every
time to rent something they already knew they wanted and could simply
put on a list?
So, in 1999, we created the first ever
online queue—a list of movies that customer knew they wanted to
eventually watch. Within a few short months, our customer base had an
average of 20-25 movies in the queue—the research was right! Of
course, now, we literally had to re-customize our operational software
and Web site to enable this new subscription queuing process.
Our new ability to automatically send out
the next movie on the list also served another key customer goal of
reducing delivery time and always ensuring a customer had at least one
Netflix movie to watch at all times. This offered service customers
could get nowhere else. It was fast and it was easy.
4. Copy the best
Why reinvent the wheel if someone has
already come up with an easy-to-use, useful, and elegant solution?
When designing the Netflix Web site, we turned to the best: Amazon.
Some of the ideas that we adapted for the Netflix Web site:
- Product and button placements
- Overall color schemes
- Size of DVD images for fast page
- Customer reviews and movie reviewer
- Easy-to-use search with categorized
searching by movie genre
- Overall Web site navigation
5. Focus on rabid early adopters
It's hard to believe, but Netflix launched
and operated for the first five years without spending any significant
advertising money. We had two secret weapons.
First, we had a meaningful connection with
the rabid early DVD adopters on Usenet groups, the equivalent of early
90s bulletin boards and today's blogs. When we launched our Web site,
we made no public announcements. We hoped that this soft launch would
bring in volumes of more than 10 or so "friends and family" orders per
day. Unexpectedly, 500 orders arrived the first day, almost
exclusively from our Usenet advocates who noticed the site was live
and announced it to their networks. Within 30 days, we were
consistently processing 1,000 orders per day, within three months over
2,000 orders per day, and thereafter continuing ahead of Amazon's
historical growth curve.
Our second key weapon was securing a
coveted "ten free rental" coupon in every single DVD player sold by
the big three manufacturers: Panasonic, Sony, and Toshiba. Combined,
these big three had 85% market share. Ordinarily, it is extremely
difficult to persuade major manufacturers to put promotional material
in their packages. But at the time, these DVD player manufacturers
were actually in fear of becoming another failed LaserDisc or Betamax.
It was far from a foregone conclusion that DVD would catch on.
By offering 10 free rentals to consumers
when they opened up their new DVD players, we gave consumers access to
a breadth of titles that were very hard to find in traditional retail
stores. We paid nothing out of pocket for the placement of the 5" x 7"
purple branded coupon inserts. It was in the manufacturers' interests
to promote our service so that DVD technology wouldn't die. We made
sure that the coupons were the "last in" on the assembly line and
therefore one of the first items a consumer would see upon opening
their new DVD player.
Today, word of mouth still drives over 80%
of all new customers. The customers are no longer early adopters, but
they are just as rabid.
* * *
We started with an initial company goal of
being bigger than the biggest single Blockbuster store in the US.
Today, the company's market value is twice
as big as Blockbuster's. Netflix now boasts over 4 million customers
and a market value of over $1.5 billion. Eight years later, the
company is still quite young and services only 4% of all US
While the company faces many competitive
pressures and a changing landscape of digital movie delivery, one
thing is clear: Netflix's relentless focus on customer-driven
innovations will continue to provide the golden keys to unlock its
revolutionary and evolving business.
Jim Cook and Suzanne Taylor: Jim is
a Netflix cofounder and managing partner at BenchBoard Financial
Management; contact him via
firstname.lastname@example.org or visit
www.benchboard.com. Suzanne is a marketing strategy consultant and
coauthor of Inside Intuit; contact her via
email@example.com or visit
in MarketingProfs.com newsletter on 4/11/06. Rated #1 most popular article
for the week.
November 2, 2004
marketers figure out how to make their customers' lives better, with the
goal of attracting lots of profitable and happy customers. To measure how
well marketing efforts help build a large and loyal customer base, it's
essential to identify and use the metrics that matter most.
A recent poll
conducted by the Silicon Valley American Marketing Association (SVAMA) among
3,500 of its members and their friends found that while 88% of respondents
reported measuring their marketing activities, only 52% of them measure at
least half of those activities. This finding means that marketers spend
millions of dollars without accountability for results.
Why do half
of Silicon Valley marketers measure half of their marketing programs?
need to take a disciplined approach to using accurate, timely and meaningful
marketing metrics. To help develop more insightful and useful marketing
metrics, focus on these five fundamentals:
Metrics Criteria Simply put, useful and meaningful metrics help marketers
track how well their marketing objectives are being met. Using a set of core
metrics will not only help to determine goals but also serve as the
yardstick by which success and progress are measured.
important not to have too many metrics. Focus on those that best meet the
drives business results.
reflects business results.
- Metric is
something you can influence.
- Metric is
- Metric is
- Metric is
measured cost effectively.
stakeholders agree that key metrics meet these criteria.
want to acquire new customers. So what metrics should be used to measure the
effectiveness of acquisition marketing efforts? Key acquisition metrics
include the following:
- Rate of
- ROI of
- Cost of
spending over $700 million on Amazon television ads, Jeff Bezos realized
that probably over half of that money was wasted. He now says, "Developing
over one million affiliate sites is one of Amazon's best investments, and it
is totally measurable. We have scaled back on TV and wish we had come to
that conclusion earlier because television is simply not as measurable."
product or service is the most important element for building an exceptional
customer experience. Without a great product, customer acquisition efforts
are a waste of time and money and customer retention efforts are futile.
Examples of product "wow" metrics include the following:
- Ease of
- Ease of
Satisfaction versus expectations
user experience metrics
Longitudinal usage metrics
nothing more powerful than a customer's first impression when using a new
product. Making this first experience one that satisfies or even delights
the customer reinforces the purchase decision and ensures the customer will
continue using the product.
element for continued product usage is product usability. Whether a software
program, new pair of jeans or household cleaner, the product must be
designed for easy and enjoyable usage. And, of course, the product
absolutely must deliver on the benefits promised in marketing materials so
that customers are at least satisfied and hopefully delighted in relation to
customer retention remains one of the most effective ways to drive profits
to the bottom line. Marketers want customers not only to continue using
products on an ongoing basis but also to buy other products and services.
Current customers are also vitally important in spreading positive
word-of-mouth, which attracts new customers.
loyal customers into advocates, marketers can significantly reduce customer
acquisition costs and significantly increase the value of current customers.
Some key customer retention metrics include:
- RFM (recency,
frequency, monetary value)
promoter score measures the difference between customers who spread positive
and negative word of mouth about your product. An accurate measure of
customer loyalty, the net promoter score has recently gained momentum as a
key retention metric. As Loyalty Rules book author (and Bain & Co.
fellow) Frederick Reichheld states, "The net of promoters minus detractors
doesn't show up in profit and loss statements, but detractors destroy your
imperative to tie marketing metrics to marketing strategies. By measuring
marketing effectiveness through quantifiable, insightful and useful
benchmarks, you'll have the information you need to focus efforts and
resources on what best builds the business. You'll also improve ROI, since
you'll be able to spend on those strategies and programs that bring in the
highest return for the money.
metrics also allow you to own accountability for your marketing efforts.
What better way to prove the value of your work than to show how your
marketing strategies, ideas and programs have directly built the business?
Even if your
metrics are not as strong as you'd like, they can help you understand where
you want to go and how you're going to get there. As revealers of true
performance, metrics give marketers credibility and responsibility for the
bottom line. Simply put, marketing metrics should be considered powerful and
essential tools in every marketer's toolbox.
in MarketingProfs.com newsletter on 11/2/04. Rated #1 most popular article
for the week.
in a book called Measuring Marketing Performance from the Magnus
School of Business in August 2005.
Branding and the Customer Experience
November 16, 2004
What makes a
customer's experience with a brand great? What makes it awful?
Think back to
your own experiences. When were you wowed with an experience or, conversely,
I had a "wow"
customer experience when the bulb in my car's brake light burned out. I
dreaded having to take my car into the shop, and on a whim stopped at the
nearby Shell station to see if they could replace it.
no-nonsense mechanic, with a bushy mustache and grease-smeared uniform, took
a look. Quietly and efficiently, he replaced the bulb in just minutes. I had
neglected to ask him how much this service would cost. To my surprise, he
charged me only $11 and change.
Wow! I will definitely consider this Shell station for car tune-ups, and now
buy my gasoline there as well.
At the other
extreme, I had a miserable experience at the Department of Motor Vehicles. I
received a notice in the mail that I had to go in person to the DMV office
to renew my license. Fortunately, I was able to make an appointment ahead of
arrived at the DMV on a Saturday morning, I couldn't believe the crowds of
irritable people waiting there. One woman in line in front of me started
swearing at the hapless and weary customer service representative, who had
clearly seen and heard it all before. Even though I had an appointment, I
still had to wait 30 minutes to be served.
Once I met
face-to-face with a service rep, the process went smoothly. But while
waiting, I heard numerous people complain about how long they had been
there, some for more than four hours.
matters worse, since licenses expire on birthdays, many people were forced
to come in right before or even on their birthdays. What a sour way to
celebrate your special day!
All of us
have our own examples of great and terrible experiences as customers. These
delightful and dreadful stories show that a brand stands for much more than
a name, logo or image.
And a brand
means much more even than its product and service features. Brands are built
from nothing less than the sum of a customer's experiences with a product,
service or company. Customers' total brand experience will determine whether
they will buy anything more from the company and, just as importantly,
whether they'll spread awesome or awful word-of-mouth to friends and family.
excellent customer experiences, it's essential to gain deep insight into
customer needs and wants. Just as imperative is developing a core set of
customer metrics that (1) accurately measure where your brand stands in
areas most important to customers and (2) best reflect the health of your
metaphor is one way of thinking about a brand's multifaceted nature: you're
house-hunting, and a brand is a house you're considering for purchase.
you want the house to have a solid foundation. (The foundation of a strong
brand is customer insight and metrics.) Naturally, you also want a house
with high-quality construction. Without strong building blocks, a house will
eventually fall down. (The building blocks of a brand are its product and
hunters know about the house for sale and its location, they can consider
buying it. (This knowledge represents a brand's awareness levels.) They may
already have an opinion of the house based on the quality of the
neighborhood and its proximity to good schools, restaurants and shops.
(These preconceptions represent a brand's image.)
first see a house from the outside, its curb appeal makes an important
impression. (Similarly, the outer appearance of a brand, such as a logo or
symbol, communicates something to its prospects.) When a prospective buyer
enters a house, he or she receives a strong first impression, positive or
negative. (Likewise for brands; the first-time user experience is a critical
customer experience touchpoint.)
house buyer must decide whether he or she wants to live in that house for
the long-term. Of course, this requires living with the house's quirks and
improving or personalizing it to make it a home. (For brands, this long-term
commitment and experience over time represents customer loyalty.)
words, brands are multifaceted and complex—certainly much more than a name
or image. If you aren't aware of a brand, you'll never consider it even
though it may be just what you want or need. First impressions and
appearance are very important, and so is the quality of the foundation and
building blocks, especially over the long term. Brands, like houses, have
unique personalities. Customers develop relationships with brands that
change over time as their needs and expectations evolve.
As you think
about how your customers' experiences add up to create their overall brand
experience, it's helpful to focus on the three most essential marketing
objectives and the metrics that reveal how well you're meeting those
- The first key objective for marketers is customer acquisition, with a
goal of acquiring the right customers in a cost-effective way. Three
critical customer experiences in the acquisition process are awareness,
learning and persuasion.
- Next, marketers must focus on product "wow" in delivering a "wow"
customer experience that exceeds expectations. Three critical customer
experiences required for product "wow" are great first-time usage,
usability and benefit delivery.
- Finally, marketers must focus on customer retention—retaining and
nurturing loyal customers, and turning them into advocates. Three critical
customer experience elements in the retention process are long-term usage
and satisfaction, the purchase of more products and services, and positive
Evaluating these essential business-building drivers within the customer
experience framework will help you focus on the most important levers for
achieving marketing results.
What critical few drivers of customer acquisition, product "wow" and
customer retention are most important for building your brand? What are the
most vital customer experience strategies for you to focus on?
What metrics do you need to use to know how well you're doing and where
you want to go? How will you ensure that your customers' experiences
increase their loyalty so they will not only buy more from you but will also
spread great word of mouth?
Brands are so much more than a name, logo or image. They represent
nothing less than a customer's complete experience with your product,
service or company. Kevin Keller, Professor or Marketing at the Amos Tuck
School of Business Administration, says, "The power of a brand lies in the
minds of consumers and what they have experienced and learned about the
brand over time."
What will you do today to build your brand?
(Published in MarketingProfs.com newsletter on 11/16/04. Rated #3 most popular
article for the week.)
P13N: The Power of Personalization
June 21, 2005
walking into your favorite neighborhood store. The owner greets you by name
with a smile. She knows right away what you're looking for and helps you
find it. Helpful and knowledgeable, she answers any questions you have. She
shows you some delightful new items that you didn't even know you wanted.
store, you get just what you want when you want it. You get attentive,
personalized service, and you discover and learn new things. In other words,
you're a happy and loyal customer who will be back for more.
that this entire interaction took place online. Instead of a friendly
storeowner, a Web site gives you the relevant information you seek. With
ever-evolving Internet technology comes a new era of personalization (or
P13N for short).
sticky Web sites find out what's most important and relevant to their
customers—and then customize their experiences in a meaningful way. By
giving customers more of what they want, when they want it, Web companies
can use the power of personalization to increase customer engagement and
Let's look at
some personalization principles that work, and Web companies that are doing
a great job of applying them.
Keep it simple
done a masterful job of keeping personalization simple. Returning customers
get recommendations based on previous site purchases and browsing. One-click
ordering makes repeat shopping a breeze. Customer reviews and related
purchases help customers find more of what they're looking for. Emails give
customized alerts and reminders of new products. And an easy-to-use account
page lets customers quickly view and change their orders and personal
If you work
on an e-commerce site, why reinvent the wheel? Look and learn from Amazon's
simple and effective approach for giving customers a personalized shopping
Make a great first impression
We all know
that first impressions make a big difference when you meet someone. The same
holds true for Web sites. Companies making a great first impression have a
better chance of holding on to customers for the long term.
a standard, especially for a service quite different from its
bricks-and-mortar alternative. First-month-free trial offers lower the risk
for new customers. The Web site makes it easy to find specific movies and
browse by genre, popularity and actor across a wide selection of DVDs.
Members can rate movies already seen, which Netflix then uses to offer
customized recommendations. Similar to Amazon, Netflix offers customer and
critic movie reviews, and it lists rentals made by others who have rented a
given movie. It's easy to update rental queues and save movies not yet
released on DVD in a separate queue.
Netflix's 35 shipping centers across the U.S. enable the company to provide
one-day service for 90 percent of its customers. All these factors together
create a "wow" first impression.
Make it relevant
Having a baby
certainly qualifies as one of the most meaningful life changes a couple
experiences. BabyCenter does a great job of offering personalized
information for new and expectant parents. And the company does so by just
asking one simple question: "When is your due date or baby's birth date?"
With that one
fact, BabyCenter sends free personalized emails informing parents of what's
going on, month by month during pregnancy or with their new baby, based on
the child's age. The Web site offers answers to the numerous and varied
questions that new parents have.
both expert and parent community opinions, BabyCenter offers a range of
credible information for customers to evaluate. BabyCenter's online store
offers parents' picks, checklists and buying guides to help customers wade
through the large number of baby items available. By offering highly
relevant information to customers at a critical life stage, BabyCenter has
become a trusted resource for millions of new and expectant parents.
Keep it fresh
While the Web
offers reams of information at your fingertips, many people feel overwhelmed
with information overload. How can they get the information that matters
most to them in an efficient way?
My Yahoo has
created a free, easy-to-use personalized Web page with over 250,000
information sources. Customers simply choose their areas of interest and My
Yahoo sets up their page in seconds. Customers can add specific news,
sports, finance and other content they want. Options range from big brands
like The New York Times and USA Today to blogs like BoingBoing and Engadget.
get Yahoo Mail previews, local weather forecasts, TV guide listings and an
online calendar. They can customize the look and layout of their page and
easily delete, add or edit content. RSS feeds continually update information
so customers get the latest and greatest information. Many features change
daily such as "word of the day," "recipe of the day" and cartoons.
consolidating all this content on one easy-to-use page, My Yahoo gives its
25+ million customers the stuff they want all in one place.
Make it viral
customers, personalization can increase positive word of mouth, which can
both drive customer acquisition and lower the costs of doing so. One Web
company that does a great job of making its personalized product viral is
WSJ.com. An online counterpart to the Wall Street Journal, WSJ.com offers a
lower cost and a quicker, more personalized read of financial news that
doesn't kill trees. Customers can input the stock quotes they're interested
in, and get the company, industry and topic news they want. WSJ.com invites
viral activity by making it easy to email articles to others, even if they
are not paid subscribers.
Not only does
this allow customers to pass on well-written, informative articles to
friends and colleagues, it helps spread word of mouth about the service.
Once an article is emailed, customers see a list of the most emailed
articles. This list of popular articles in turn helps promote content on the
site by surfacing articles that other readers find most valuable.
* * *
proven its power not only in helping Web companies acquire, engage and
retain customers but also in increasing positive word of mouth. With new Web
technologies, more customers will experience the power of personalization,
which will cause them to expect even more customized services.
what's most relevant and important to them, customers save time, discover
more and want more. The companies described above have done a great job of
applying personalization principles that work. One size does not fit all.
Intuit: A Customer Wow Case Study
By Suzanne Taylor
Intuit, Inc. has not only
survived but also thrived since the company’s inception in 1983. Maker of
best-selling financial software products Quicken, QuickBooks, and TurboTax,
Intuit went from near bankruptcy and universal rejection from VCs, customers,
and retailers to become a 7,000-employee company with an astounding 25 million
customers. How did Intuit beat the odds, and what can other companies learn from
Intuit’s story to “wow” their own customers?
While working at Intuit and
writing Inside Intuit: How the Makers of Quicken Beat Microsoft and
Revolutionized an Entire Industry, I gained insight into the heart of the
company’s success—the following simple, effective benchmarking practices.
Great ideas come from listening
to customer needs, and Intuit’s most important success factor has been its
relentless customer-driven innovation. The idea for Quicken began when cofounder
Scott Cook’s wife complained about the miserable drudgery of paying the bills. A
light bulb went off in Cook’s head. This would be a perfect task for a computer!
Paying bills is repetitive, time consuming, and monotonous, but everybody has to
do it. A software program could calculate balances without mistakes and save
people time and hassles. With this simple but powerful insight, a product (and a
company) was born.
Focus on Ease of Use
Quicken’s user interface is one
example of Intuit’s focus on ease of use. Cofounder Tom Proulx realized that
using well-known metaphors made it much easier for customers to learn new
products. He studied his Wells Fargo checkbook and copied much of it for
Quicken’s checkbook register, the primary data entry screen. The product’s
“Write Checks” screen also looked very much like a familiar paper check, so
customers felt they already knew how to use it.
Use Proven Best Practices
Cook had worked as a Crisco
brand manager at Procter & Gamble (P&G) and brought many of the same consumer
packaged goods principles and techniques to the software industry:
- The Quicken package had a
bright, attention-grabbing orange color, very similar to the Tide laundry
- Copy on the package and in
advertisements focused on benefits over features and used customer
testimonials to increase credibility
- The company offered the
first rebate coupon and ran the first television ad in the consumer software
Make Data-Driven Marketing Decisions
Intuit has conducted rigorous
customer research to gain superior insights into customers’ needs and wants. One
technique the company has consistently used is the “Follow Me Home” program.
With this technique, members of the product team (including marketing,
engineering, documentation, quality assurance, and tech support) “follow” brand
new customers home to watch them install and use the product for the first time
at their actual computers. By observing new customers and acting as a fly on the
wall, product team members learn in excruciating detail where they need to
improve usability to make the products even easier to use. “We’re not our
customers!” became the clear lesson learned.
The company also created
Quicken and QuickBooks customer advisory panels. The same group of core
customers came to visit Intuit every month to offer feedback on their needs as
well as new products and features. Advisory panel members even ate lunch with
the engineers, who eagerly solicited feedback on their particular focus areas.
Another usability research
study involved watching customers prepare their tax returns using either
TurboTax or the competitive product, TaxCut. Team members often found these
sessions agonizing to watch, yet incredibly useful in revealing customers’
Interact with Your Customers
Intuit also spread customer
evangelism throughout its culture with various programs, such as:
- Customer contact required
all employees who didn’t normally deal with customers on the job to spend four
hours a month answering customer calls in either tech support or
- Every fall during the
Quicken launch, scores of employees headed out to visit retail stores across
the country during the national sales tour, resulting in more informed and
satisfied salespeople, better in-store merchandising, and valuable employee
insight into the purchase experience for retail customers.
Respond Quickly, Honestly, and Earnestly to a
Intuit has a long history of
responding well to customer crises. When QuickBooks accounting software launched
in 1992, customers began calling tech support in large numbers to complain about
missing data. Intuit quickly realized that QuickBooks had shipped with data
damaging bugs, a very serious situation for small businesses that rely on
accuracy and easy access to information. In response, Intuit:
- Identified the problem,
figured out who it affected, and developed a fix
- Immediately notified
customers about the problems and apologized for its mistakes
- Bent over backwards to make
up for the lost data, including setting up a data-recovery team to work on
damaged customer files and paying for people to re-enter data
- Sent out free product update
disks when the bugs were finally fixed
By responding quickly,
honestly, and aggressively to this and other product crises, Intuit found that
it could actually increase customer satisfaction and loyalty instead of lose it
Of course, many other factors
have contributed to Intuit’s success over the years, including great people,
core values, entrepreneurial culture, perseverance, reinvention, beating
Microsoft, and strong leadership. But the most important driver of Intuit’s
success—and the common thread across all its critical success factors—is its
consistent, sincere, and sharp focus on wowing customers.
(Published in Women in
Consulting newsletter, March 2004)
Marketing metrics are standard measurements that help you
track how well your marketing objectives are being met.
Since the goal of marketing is to build the business
through acquiring customers, creating great products, and retaining customers,
it’s useful to identify key metrics in all three of these areas. As you
can see by the various examples below, marketing metrics, not surprisingly, are
all about the customer.
Customer acquisition related
metrics include: awareness levels, purchase decision drivers, rate of customer
acquisition, market share, ROI of marketing programs, and cost of customer
Product quality metrics include:
ease of use, satisfaction vs. expectations, first time user experience, and
longitudinal usage metrics.
Customer retention metrics
include: retention rate, RFM, lifetime value, brand equity, and net promoter
In addition, many important
marketing metrics relate to web site customer activities. Some common web site
metrics include: traffic sources and volume, click through rates,
conversion rates, leads, and online purchase activities.
order to measure how well you are doing in your marketing efforts, it is
essential to identify the metrics that matter most. The metrics chosen will not
only help to determine goals but will also be the yardstick by which success and
progress is measured. Metrics help you determine what marketing efforts are
most effective, and create more accountability for results. The metrics must
measure something that is important to business results and can be measured
accurately, consistently, and efficiently.
also important not to have too many metrics but to focus on those which best
meet the following criteria:
Metric drives business results
Metric reflects business results
Metric is something you can influence
Metric is measured accurately
Metric is measured consistently
Metric is measured cost effectively
Key stakeholders agree key metrics meet these criteria
The right way to measure any given metric depends on what
makes the most sense for that particular metric. Marketing program
effectiveness can be measured by including unique direct response mechanisms and
tracking for each program. Product related metrics can be tracked through
customer research or analysis of product usage patterns. Retention related
metrics may be tracked through surveys and through customer marketing database
analysis. When tracking metrics through surveys, careful attention must be paid
to reliable survey methodology, non-leading question wording, and ensuring a
representative respondent base.
It’s very important to tie your marketing metrics to your
marketing strategies so that the metrics accurately reflect how well you’re
doing. By measuring marketing effectiveness through quantifiable, insightful,
and useful benchmarks, you will have the information you need to focus your
efforts on what best builds your business. Marketing metrics are powerful and
essential ingredients in any marketer’s toolbox.
(Published in Silicon Valley Association of Startup
Entrepreneurs resource library, July 2004)
About Suzanne Taylor
Suzanne Taylor is a marketing consultant
who helps companies acquire more customers, create great products, and improve
customer retention. Her area of expertise is building businesses
through customer driven innovation. A member of Stanford University's
faculty, she has taught seven marketing
classes through Stanford Continuing Studies and holds Stanford AB and MBA degrees. She co-authored a
book titled Inside Intuit: How the Makers of Quicken Beat Microsoft and
Revolutionized an Entire Industry published by Harvard Business School
Press. She also instructs and serves on the Advisory Board for U.C.
Extension in Silicon Valley's Marketing Certificate program, teaching marketing
and executive education classes.
Taylor’s client list includes Intuit, Adobe, PayCycle,
Yahoo!, Palm, Microsoft, and several high-tech startups. Taylor worked for
Intuit, Inc. for eight years in a variety of marketing roles including Quicken
product manager, customer insight, and corporate marketing. She also
worked in brand management at the Clorox Company leading marketing efforts for
Fresh Step cat litter and Formula 409 spray cleaner brands. Taylor has led product teams through
the full product development life cycle and has managed all elements of the
marketing mix, both online and offline. Symantec selected Inside Intuit for a company-wide
management book club discussion.