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Ask the Right Question to Get Closer to Customers

October 5, 2010 in marketing, strategy by George | No comments

Why do we continue to ignore the clues around us and repeat the same tired CRM strategies? The vast majority of company/artist sites that I see, if they have any way to connect with their customers at all, use the lame “approach” of: “Sign up for our email newsletter.”

Why, why, why would anyone do this?

A call to action with no meaningful value proposition is not a call to action. It’s easily-ignored noise.

Even the so-called email-for-content revolution, in which some de minimis value proposition is created — a customer will hand over their email in exchange for some content (in the music business, it’s typically a download) — is hardly an innovative approach.

More importantly, this approach doesn’t give the firm/artist any knowledge of who the customers are, nor what it is they want. What do we really know from a customer via their email? Some firms ask for a zip code, and that’s a bit better, but still woefully inadequate and increasingly antiquated.

I suggest you introduce a different mechanism for CRM/customer engagement.

With respect to how to do this, again, the clues are all around us.

Do you really think, for instance, that the very successful founder of Flickr, Caterina Fake, would have launched her follow-up start up, Hunch — which asks users to answer a series of questions in order to be provided with recommendations based on their answers — had there not been a market/demand for this type of interactivity?

We like games, we like interactivity, we like answering questions.

One of the most popular user engagement elements of Facebook are the quizzes.

Pandora, I believe, largely succeeds because of the thumbs up/down nature of its UX.

And yet (aside for some poorly orchestrated “surveys”), I have NEVER seen any type of CRM approach where rather than just asking for an email, you’re also asked – ala Hunch, etc. – a series of questions that could not only help the firm understand you better, but (relatedly) improve the odds that you, the customer, receive relevant information from the firm.

For example, suppose you’re an artist. You have a gallery opening. At said gallery opening you provide postcards with one of your images on the front, and on the back a call to action for the holder of the post card to visit your site to get an exclusive hi-res download of an image by entering the code on the postcard.

The customer goes to the url, and, in order to get the downloadable image, they have to give their email address and code, but what if they were also asked to answer a few questions:

    Monet or Ruscha
    Serra or Sally Mann
    Black and White or Color

You get the idea.

If you do it in an engaging manner (again, ala Hunch), it won’t seem like some jive survey; rather, it’ll feel like an engaged conversation between artist and customer.

Create artful questions and not only will the process be entertaining, but will also help you get a whole lot closer to your customer.

This will allow you to gain knowledge, and, if done right, move you from CRM to VRM (Vendor Relationship Management).

Consider a few more questions you could ask customers after you’ve gotten them engaged:

    Weekly emails or monthly
    Emails only from us or from [insert photographer who is likely value aligned here]

In this way, the customer is managing their relationship with the vendor by granting permission and terms by which they’re willing to engage with you.

If a number of artists/bands/firms – all value aligned – asked their respective customers if they would like to receive updates from their favorite artist/band/firm, it would accelerate growth for these firms, while creating value for customers.

Doing it the other way – i.e. selling your email list – will only piss off your customers.

In terms of implementation, there are plenty of free or cheap survey tools out there, such as Survey Monkey.

With artful questions, we can not only engage customers, but learn more about them, and improve our interaction.

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A Challenge: One Player to Rule them All

September 12, 2010 in design, marketing, tech by George | 1 comment

I believe we’re increasingly heading to an era where filtering of the unlimited sources of stuff that is thrown at us is the holy grail in terms of apps, etc.

For music, iTunes is a perfectly fine player so long as you’re playing music found on your hard drive. Certainly, it appears that Apple will move to a streaming service at some point. However, as much as I love Apple, I doubt seriously that it’ll be a solution for anything beyond the streaming of songs purchased from the iTunes store (and, candidly, why should it be?).

However, most of us now get our music from a variety of sources. As above, we play what’s on our hard drives via iTunes, and many of us also stream from some service (rdio, spotify, emusic, pandora… whatever)

Some of the above are sort of applauded for their “iTunes-like interface.” The problem is that even if these interfaces are exactly like iTunes, we’re still dealing with interfaces, plural.

We need an interface, singular.

There are some sort of half attempts at this (some only in the Windows, UNIX world): Fubar, Amorak, Songbird, etc. Even Boxee sort of tries to address this (though more for video).

None of these interfaces/clients really give a user what she should have: an interface that pulls in your streams/queues/songs-added-to-collections and songs on your hard drive all in one place.

I should, for instance, be able to play a song I have on my hard drive from the same interface I stream a song I’ve added to my rdio collection.

This isn’t a rights issue, by the way. I pay the $10 a month to stream whatever I want from rdio; I’d be happy if I could stream Pandora from this interface even if it meant having to see ads/hit a paywall if I go over the limit. However, when I do this now, not only do I have to switch interfaces, but I also have to quit iTunes (to make sure I’m not connected to an Airport Express speaker – soon to be AirPlay), then connect Airfoil to the new interface, and re-connect to the remote speaker. Drag.

I believe the net result of this would be far more music consumed, and, thus, far more revenue generated for rights holders, services, etc.

This is at the essence of VRM: Customers must be able to manage relationships with their vendors/suppliers on their terms.

Anything short of this leads frictions that are not beneficial to anyone.

So…someone hack one of these things together for me, please.

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Inch by Inch: VRM can’t be stopped

June 29, 2010 in marketing by George | No comments

I was at an interesting mobile presentation today.

I’m finding that increasingly, while they don’t yet know the terminology, many firms are increasingly thinking in terms of VRM.

To be sure, CRM continues to rule the day. There’s a zealous adherence to CRM, and it makes sense: it’s been related to KPIs forever.

What’s interesting is how VRM has sort of backed its way into the conversation (of course, when I’m in the room, it doesn’t exactly back its way into the conversation; it comes charging in).

Little subtle shifts in thinking about how customers interact with brands are driving this.

Consider, for example, a conversation from today’s session ostensibly on the topic of QR codes and AR. It led to an aside comment that went something along the lines of, “Customers are using these tools to feature and price shop; they scan a bar code, and then decide from which vendor to make the purchase.”

Or:

“We’re building a control panel that will allow users to opt in to the precisely offerings they want to receive from us.”

Not earth-shaking, I know, and in the scheme of some of the more high-level VRM conversations, this is child’s play.

However, children grow up.

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What I’m on about: Why VRM matters to the music business

December 30, 2009 in music business by George | No comments

I apologize for my sort of recent obsession with all things VRM. It’s actually not very recent; it takes me longer than the average bear to organize my thoughts on these types of topics, and so I mull and mull in the scary silence of my brain until things start to emerge. Once they do emerge…oh boy, stand back, because all that pent up crap in my brain starts spewing forth. These types of happy explosions of interest and connection are what I live for.

So, all that preamble behind, you, Dear Reader, will have to suffer through more of this VRM hullabaloo (or not; I would understand completely if you un-RSS me, stop following…really, it’s cool, and actually very consistent with everything I’m talking about: you the customer (though I by no means think of you in that way) have the power – not digging my scene, by all means find one you do).

I had a conversation today with one of the smarter people in the music business, Dick Huey, in which I was going over some details of a project I’m working on. Dick was correctly pointing out some issues when I rudely interrupted him and said, “All I’m trying to do is move the needle here. I just want desperately for customers to have more control over where they buy/how they interact with the music that moves them, because I believe that will benefit the artists.”

I continued, my eyes rolling slightly back in my head, “How do we defend the fact that we give credence and validity and importance to “filters,” and send traffic to them, and reward them for traffic, but then when one of these filters does their job and compels a customer to want to engage with something, we require the customer to take a series of unnecessary steps to do so.” Want to buy a book, album, whatever from a trusted source….shoot them over to Amazon/iTunes.

We go from providing the customer with tools to learn about something of importance, and even interact generally (a song sample, a sample chapter), but then don’t provide them with the choice to complete the transaction. Instead, we add in layers of transaction cost to complete the process. The percentage of people who get interested in a product, but don’t complete the transaction on a site where they can is massive (we know this because we can see people who abandon shopping carts with items in them). So consider how exponentially more massive is the percentage of people who never bother to leave a site where they’ve discovered a product, but can’t complete the transaction in order to go to another site, (potentially) enter in new CC information, complete the transaction, etc.

We’ve walled ourselves into this bad CRM world, where Amazon, eBay, or iTunes are the default. As Doc Searls says, “…customers need easy and secure means for expressing demand, with money on the table… Intermediaries can be involved, but they must be substitutable. If they’re not, we’ve just got eBay and Amazon all over again.”

The problem with these default intermediaries is they create arbitrary and capricious terms that become the de facto standard. iTunes keeps 30% of the transaction. This, therefore, becomes the default; content holders are conditioned to “OK” similar terms because they’ve been established by Apple. The problem? These terms don’t necessarily make sense. Apple themselves said for many years that they were losing money on the iTunes store. That was OK by them because they could leverage the sale of music to sell higher-margin items (iPods, iPhones, laptops, etc.). But, if you’re in the business where you’re not using music as a loss-leader, in addition to being insane, you’re probably fucked by these terms. Don’t believe me? How well are the music entities that have had to abide by the terms that Apple established as the terms doing? Not so hot.

The key to VRM is that the customers manage their vendors; the customer puts out a RFP and then selects in what manner, and with whom they’ll interact. I have no delusions that that scenario is gonna get here any time soon. It will arrive, and sooner than people think (to a degree it’s here: Kalido; Informatica).

What I think will lead use closer to there, vis-à-vis music, is for the vendors (in this case, record labels/ content holders) to see “money on the table demand.” This will motivate these content holders to help create systems that allow for the transactions to occur across a vast amount of vendors.

Right now, it’s like pulling a garage door through water. Not only do these content holders demand potentially untenable Apple-esque terms, they want the intermediary to build — at the intermediaries sole expense and risk — the mechanisms to sell the content holders’ wares. Please, for a moment, think about the insanity of this. Think about how well Coca-Cola would have done had they made it fucking impossible for vendors who wanted to sell their product to do so!

In any case, back to Dick for a minute. I finished my rant by saying something along the lines of, “This is about way more than a deal for me; it’s about opening up markets so that we can sustain this whole enterprise of creating, selling, enjoying music.”

That is the particular windmill I’ve been tilting at all my life. What’s making me spur Rocinante with ever-increasing gusto is that this time I’m pretty sure that windmill is going down. Whose with me? Sancho?

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I pledge allegiance to VRM

December 27, 2009 in Uncategorized by George | 6 comments

As my interests continue to shift away from the music business (whatever that is) and towards markets generally, I become more and more convinced that the focus must be on VRM.

The Cluetrain famously stated (10 years ago) that “markets are conversations.” Doc Searls recently amended this by stating: “markets are relationships.”

The fallacy of CRM is that – when done “right” – you could lock the customer in. Nope; remember, markets are relationships, and relationships are voluntary. VRM is the reciprocal of CRM: the customers – when provided with the right tools – engage the vendors in a manner that benefits both customer and vendor.

Note above, that I didn’t say I was moving away from the music business to marketing, but rather to markets. I feel today about marketing the way I felt about building communities a couple of years ago when that was all the rage: you kinda can’t…market or build communities.

What you can do is conceive of markets that reduce friction and increase engagement between the vendor and customer.

Think about the things that have gotten traction; they tend to do so not because of some marketing “guru,” but because their place in the market is one of reduced friction, and one where tools are created for the customer to better integrate with the company (and, please, please note, often these tools aren’t created by the company).

The obvious example is Twitter. The traction occurred because it reduced friction. Essentially, it made blogging dead-simple and instantaneous. Friction was reduced at the point of creation (no wonky CMS – just type and post) and friction was reduced at the point of delivery (no going to a url; the tweet/blog post just shows up).

Second, tools were created to allow for better integration. An entire industry has sprung up around Twitter: desktop clients; url shorteners; mobile apps; geo tagging services; etc. The goal of all of these tools is to help the customer better relate to the vendor. Tumblr is aspiring towards the same thing, but until additional tools emerge and friction is reduced (it’s still too much of a pain in the ass to post to a Tumblr blog), it won’t work.

Some time ago my friend, Chris Skinner, said that the whole idea that the percentage of the online market would cap out at around 12% was crazy. Chris correctly reasoned that what would expand the online market share was better tools; essentially, easier ways for the customer to manage their relationship with the vendor. This was pre-explosion of the iPhone and (lesser) explosion of the Kindle. Both of these tools (iPhone and Kindle) allow for a better experience between the customer and the vendor. The customer – using a Kindle – can now determine how they want to interact with the vendor rather than the vendor telling the customer how she will interact. The consequence of this is that online sales break through the 12% threshold, and keep marching on.

As with so much in my life, my obsession with music and the music business (whatever that is) provides an easy way in for me; a way to take something of a complex concept and understand it by applying it to something (maybe the only thing) that I deeply understand. To a certain degree this is already happening in music. The tools (the iPhone, for instance) are allowing me (the customer) to have a better relationship with the vendor. If I want a record while I’m a passenger in a car, I can – with relative ease – download it from iTunes.

The promise of the cloud is simply that I won’t have to download, I’ll just access it. It seems apparent that Apple bought LaLa because they wanted the tools that LaLa had created (apparently, LaLa’s deals with content holders don’t allow them to be assigned, so I can’t imagine what else Apple bought). LaLa works well currently because it’s a tool that allows me (customer) to manage my relationship with vendors (record labels) in a mostly-palatable manner. The net impact: I (and others) engage with and purchase more music than ever before.

Let me tell you, it ain’t easy. The larger content holders tend to arrive at the conclusion to allow easier engagement with their content only when they are given many millions of reasons to do so. These payments either come in the form of advances or royalties. The current system clearly isn’t working. LaLa, for as great of a tool as it is, clearly didn’t just sell to Apple because they wanted to; they weren’t making it on their own financially. The fire-sale prices for iMeem and iLike both represent another failure of VRM; the agreements with the labels that those companies had to enter into made it impossible to remain going concerns even while their tools were being used by customers to better interact with vendors.

The lack of an iPhone app for Mog; Spotify’s failure to (yet) launch in the States; etc. These too are due to untenable transaction costs. The end result: less decent tools, less decent engagement between customer and vendor, and less potential for revenue growth. Well done.

My hope is that content holders will make it even easier for their customers to engage with their content. That is my single-minded obsession with a variety of the projects I have the privilege to work on. I was asked by my friend Jason Feinberg to comment on a recent excellent post of his predicting what might transpire in the music business in 2010. My only real contribution to his piece was – even though I didn’t use the phrase – about VRM:

My big prediction, however (and I’ve buried it here, assuming that no one will have bothered to read to this point), is that we’ll leave the dark ages of online retail, and – via APIs, widgets, etc. – content filters (i.e. blogs, etc.) will be able to sell directly to their readers rather than directing them to amazon/itunes. In the not distant future we’ll look back on the time when we would introduce people to music and then send them *away from our site* to some other site for the purchase as unbelievably stupid.

I feel safe in predicting this will happen because one of the sites I work on is going to launch this very practice in 2010. This is how I like to make predictions, knowing the outcome.

So, that’s my goal: help the companies I work with provide more and better ways for their customers to engage with them. One of the principles of VRM is that “Customers are born free and independent of vendors.” Another is, “Customers can assert their own terms of engagement and service.” It would behoove all of us on the supply-side to remember these things.

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