10 years on this still makes the BIG point. Most businesses spend considerable time and effort getting customers. But how many work at keeping those customers? View II examines the ways in which even big brands like Nike and Disney fail to get a grip on customers, and offers real-world solutions to help businesses keep their most profitable customers hooked. More at www.peterlevitan.com

1. G R AY M A T T E R
RALSTON360
VIEW 2: GET A GRIP
FALL 2004

2. VIEW II: GET A GRIP
E X E C U T I V E S U M M A RY
Most businesses spend considerable time and effort getting
customers. But how many work at keeping those customers? View
1 V I E W II
II examines the ways in which even big brands like Nike and Disney
fail to get a grip on customers, and offers real-world solutions to
help businesses keep their most profitable customers hooked.
G R AY M A T T E R
RALSTON360

3. Y O U G O T TA K N O W W H E N T O H O L D ‘ E M .
Remember the Seinfeld episode where Jerry tries to pick up the
rental car he reserved only to find that the rental company had
“run out of cars”? The secret, Jerry said to the rental agent, isn’t
so much in taking reservations; it’s in holding them.
The same could be said for customers.
Many businesses spend a serious amount of time, money and energy
getting new customers. The problem is that most forget to “hold”
onto new customers once they’re in the proverbial fold, instead
letting them slip away and into the arms of a waiting competitor.
Marketers seem willing to spend money to acquire customers, but
not to retain them. In fact, a recent Gartner study of the financial
services category shows that marketers spend, on average, $280 to
recruit a new customer compared with just $57 to keep one. My
guess is that this is the rule rather than the exception.
This issue of View is my story of baffled befuddlement, as well as a
call to get our collective acts together to create Delighted Customers
that stay put. It features my personal experiences with six big brands
that should’ve known better but didn’t, and is followed by simple,
2 V I E W II cost-effective solutions to stimulate me to purchase more and then
retain me as a customer. It’s a classic story of The One That Got
Away that serves as a cautionary tale to all of us to nurture customer
relationships, or risk losing them completely.
ICE MACHINE? CHECK. DOWN COMFORTER? CHECK.
I N T E R E S T I N R E P E AT B U S I N E S S ? N O T S O M U C H .
Situation
A few weeks ago I stayed at the Hotel Lucia in Portland, Oregon,
a trendy little boutique of a hotel where the art is modern and the
guests wear black. I was there to do a little “secret shopping” for
some friends whose client owns the hotel.
The verdict? The service was great. The lobby was au courant. The
room was nice, albeit a bit cozy. What really amazed me, however,
was how quickly I slipped in—and then out—of the hotel’s grip.
G R AY M A T T E R
RALSTON360

4. Here’s how my visit went:
I booked on-line.
The hotel sent me a conformation via email.
I checked in.
They smiled.
I smiled back.
I checked out.
At no time did the hotel, either via my two face-to-face contacts or
via email, attempt to determine if I was a frequent visitor to
Portland. I did not receive a follow-up email thanking me for my
visit or asking for any data related to my wants and needs. The
hotel failed to identify me as a “good prospect,” or worse, an
existing customer worth nurturing.
Between personal, family and employee business trips to Portland,
Ralston360 represents approximately $20,000 in annual
revenues for a Portland hotel. While not the GNP of a small nation,
it isn’t exactly pocket change, either. It would’ve been worth a
little extra effort on the hotel’s part to ensure that I remained the
Delighted Customer they had already created.
3 V I E W II
Solutions
The hotel had three opportunities to learn more about me—two as
I stood at the front desk in a face-to-face meeting with reception.
The reception area wasn’t busy and I was willing to have a brief
conversation. No hotel communication beyond “thanks for stopping
by” was offered. The hotel should provide valuable incentives for
the staff to learn more about their customers. They should politely
question me to find out if I am a frequent visitor to Portland. If I’m
deemed a potential repeat customer, they could then enter this
information into a database to help guide further communications
and offers. A successful hotel I know offers very powerful incentives
(including trips and percentages of incremental sales) to their front
desk employees to act as lead-generators.
Another opportunity was lost by not staying in touch via email. I
booked via email and they confirmed. That was it. Why not put me
in a database, say thanks for visiting via a follow-up email and ask
me questions to start learning more about me? Permission
marketing works, period. Segment me, predict my future value,
then nurture me. That’s the only way to build Delighted
Customers—clientele that has already entered your universe and
G R AY M A T T E R
will drive your business at lower cost than new acquisitions.
RALSTON360

5. TA K E A P I C T U R E . I T ’ L L L A S T L O N G E R T H A N T H I S R E L AT I O N S H I P.
Situation
Eastman Kodak is in trouble. The world is shifting from film to
digital, and Kodak is scrambling to maintain market share in the
photography industry. According to the Photo Marketing
Association International, “It (2003) was a pivotal year for the
industry as digital cameras outsold traditional cameras for the first
time ever. By the end of this year, digital camera penetration is
predicted to surpass 42 percent of households.”
Kodak knows this trend well and is trying to reinvent itself as a digital
company. Meanwhile, however, there are still millions of people who
continue to use film and who send their film into Kodak or a Kodak-
licensed film lab for processing. People like me, for instance.
I returned from vacation and filled out one of those ubiquitous
yellow Kodak processing envelopes at the drug store. (We are a
blended family: half digital/half film.) Kodak, via their agent,
asked for my name, address and telephone number. They had me.
They had most of the big data points. They even knew that I asked
for the images on a disc for use in my computer, a sure sign we
are moving away from film. Did Kodak capture my personal data
4 V I E W II
to stay in touch? Did this new digital company ask me for my
digital email address on the form? Did they provide any incentives
for me to provide it? Nope. What a missed opportunity to build a
direct relationship, a relationship that will totally slip out of their
grip as we become a 100% film-free home.
Solutions
Add an email address space to the film deposit form. Then stay in
touch and offer incentives to buy more film. A company that is
reinventing itself because its category is in decline should at least
say thank you and try to keep the relationship ball in play.
Track my usage. Predict my future behavior. Begin to re-position
Kodak. If Americans are moving away from film, become our
digital instructor. Create a stand-alone Web site learning center.
Send out newsletters with advice on digital choices ranging from
camera usage to editing tools. Provide a connection to Kodak’s
Ofoto website. Use this “expert positioning” to re-brand the
company to existing film customers and the wide world of
confused digital camera owners. I need this help. I’m as confused
about digital options as the next guy. I’m sure I’m not alone.
G R AY M A T T E R
Hey Kodak. Smile and give me a hug!
RALSTON360

6. Y O U H A D M E AT H E L L O .
Situation
BMW launched BMW Films in 2001. This Internet-based film
series, which was viewed over 41 million times in its first two
years, is lauded as one of the best examples of Internet marketing.
BMW created the ultimate in content-driven entertainment by
developing its very own series of short, Hollywood-quality dramas
staring their cars. This program was built on the recognition that
85% of today’s BMW buyers use the Web for research and that
they are watching less television—and therefore fewer BMW
commercials. BMW turned the usual advertising model around and
spent 80% of their budget on production and only 20% on
Internet media. Smart, no?
Well, no.
Although the program had me at hello, it forgot to invite me in.
Sure, the film series generated over $20 million in free publicity
and, as their advertising agency said, created the impression that
“BMW is young. BMW is cool. BMWs go like hell. BMWs are safe.
Lexus and Mercedes are for wussies.”
5 V I E W II They just didn’t ask for the order.
They had me in their world, but never asked me if I wanted to find
out more about BMW, or if I was currently in the market for a car.
They never sent a follow-up email or letter. They didn’t ask my
local dealer to make contact (with my permission). All this despite
this unique 1:1 opportunity to garner my contact information.
BMW’s agency states that that their strategy was to not sell to me.
I understand that this film series was created to sell attributes,
to build good will and polish the brand. I really do. That said, call
me crazy, but I thought the point of all of this work was to
actually sell me a car.
So what’s a cooler-than-thou brand like BMW supposed to do?
Solutions
First of all, get over being too cool. Don’t get smug because you
have a multi-media success on your hands; it doesn’t necessarily
sell products or services. Instead, make a little effort to really use
the time I have just spent with your brand to be more proactive.
G R AY M A T T E R
RALSTON360

7. Stay in touch and build a dialog. Ask me if I would like to receive
an email notification for the next film. Give me an incentive to
provide a bit of personal information. Maybe even ask if I am in
the market for a car. How about a “VIP test drive” of a model
highlighted in one of the movies? After all, I have just spent nine
minutes being entertained by BMW and have a nice warm feeling
for the brand. Bring me further inside the world of BMW. Who
knows? I might just be in the mood to buy a car.
MICKEY MOUSE MARKETING.
Situation
In October 2001, one month after September 11, I visited Disney
World with my wife and two kids. (We were living in New Jersey at
the time and there was no way we were going to be deterred from
traveling by Al Qaeda). We researched the trip, purchased our
airfare, reserved our rooms at a Disney Resort hotel and bought our
tickets and passes to the park on-line at www.disney.go.com. In
addition to booking online, we used a Disney World card (our room
key) to make all of our in-park purchases.
By the end of this trip, Disney knew us almost better than we knew
6 V I E W II
ourselves. They knew how to contact us by email and mail, where
we lived, our economic status, the ages of our kids and our
interests. They even knew that we liked South African wine
because we used our Disney card to buy our meals. This is the
kind of granular data that most direct marketers would kill for.
Great story, but unfortunately there’s no fairytale ending. Disney
didn’t stay in touch despite collecting a huge amount of personal
and family data. They never re-marketed Disney World (despite
experiencing the post 9/11 travel downturn), never sent us advance
information on their films or DVDs and never sent a promotion to
get us to visit one of the Disney Stores in Manhattan. They never
even asked if we enjoyed our trip. Simply mind-blowing.
Solutions
First of all, say “thank you.” These two little words have an amazing
impact on the psyche—and ultimately loyalty—of customers. I’m
sure Walt understood the power of “Thank You” and would have
used these simple words to maintain our relationship.
Stay in touch. I mean, what’s up with not staying in touch and
G R AY M A T T E R
RALSTON360

8. building loyalty with someone who just dropped six grand on a
Disney vacation? Disney had my email address, my home address
and was privy to my every move. They should’ve stayed on top of
us to keep a good thing going. Trips to Disney World are built on
the idea of shared family fun. We might have gone again before the
kids move on to college. Just a nudge could make the difference.
Deliver time-released offers based on our behavior (from toy-
buying to entertainment), demographics (we are adults and kids
with different interests) and calculated lifetime value to anticipate
and drive future sales of Disney Resort visits, Disney movies,
Disney toys and viewership of the Disney Channel. Disney is known
as one of the great, integrated marketing machines. Integrate me.
Stimulate referrals. Give me an incentive to tell my friends and
family about our experience. Give us a template and we’ll send it
on. Team up with Kodak and help me send out my snap shots. All
viral marketing does not have to be in the sprit of Burger King’s
“Subservient Chicken.” Sometimes all you have to do is to ask
customers to tell their friends about you and your services
Want more? We traveled in October, at the start of the holiday
season. We lived outside of New York City. Disney should have sent
7 V I E W II
us a coupon to go shopping at the Disney Store in New York. This
was a gimme. Or at least should have been.
J U S T M I S S E D I T.
Situation
My son was 12 when he went to Nike iD to custom build a pair of
Nike Shox. In case you don’t have a teenager at home, this is the
Nike Web site (www.nikeid.com) where you can use an interactive
tool to create your own Nike shoe. He chose the model, the colors
and the words. He was one of the first people I knew that bought
into the promise of mass customization that the Internet is
delivering and Nike pioneered. He also spent over $120 of his own
money to make this purchase and, with my help, provided enough
personal information to complete the order. He was thrilled with
the experience and was one of the coolest kids in town when he
toured in his custom Shox.
The problem was, Nike dropped him like 3rd period geometry. Nike
never followed up or kept him in the loop—any loop—about upcoming
offerings he would have been interested in. Two years later, he wears
G R AY M A T T E R
RALSTON360

9. skateboarding shoes from Vans. This hardcore Gen Y advertising-
shunning dude will be hard, if not impossible, to get back.
Solutions
Just think of how easy it would have been for Nike to keep in touch?
How great it would have been to receive a personal letter from the
designer of Nike Shox or even Phil Knight? Maybe there could have
been a Nike iD club, where membership does have its privileges.
Twelve-year-old boys don’t get much mail. I think that a bit of
personal attention might have kept him in the loop and, more
importantly, held him as a Nike customer.
I N T E R E S T I N G LY, T H I S V I R U S I S N ’ T C AT C H I N G .
Situation
I subscribe to McAfee Security’s VirusScan. It is easy to use, has
kept my computer virus-free and is a good deal at an annual
subscription of $39.99. (If you have ever had your hard drive
blown away, you’ll agree that $39.99 is a small price to pay for
virus protection.)
8 V I E W II McAfee knows who I am and even sends me update notifications
via Security Alerts. However, they don’t make a valiant effort to up-
sell me. Yes, they occasionally tell me that they also have firewall
protection, but it’s a weak sales pitch. In fact, McAfee, a company
that I now love, has lots of other products and services that I might
want. Cool-sounding software like Antispyware, Spamkiller and
something called Quickclean to keep my computer running at peak
performance. All of these products would be worth a good, hard
look if McAfee ever tried to grab me. McAfee has a great business
model. It has a direct on-going digital relationship with me. It could
make a pretty compelling sales pitch borne of safety-from-fear. But
they don’t. And I’m not in their grip.
Solutions
Play up the fear factor. I already receive McAfee virus alerts sent
directly to my home computers. Why not tie in alerts that also
drive incremental sales? Tell me about the potential problems
associated with spam. Tell me about spywear. Make me nervous
and give me a great deal on new products. At least test it.
G R AY M A T T E R
RALSTON360

10. Look at subscription lengths. Why not a multi-year deal instead of
an annual subscription? Lock me in long-term and reduce both
attrition rates and future marketing expenses.
O F C O U R S E , T H E R E A R E T W O S I D E S T O E V E RY S T O RY.
The companies that I’ve profiled are sure to have a response to
every one of my criticisms and suggestions. In fact, they might
have some very good reasons for not building their Delighted
Customer relationships.
For example:
Hotel Lucia might say that it is difficult to get reception staff to
act as marketers.
Kodak could point to the fact that they do not actually own the
processors and are dependant on third parties to collect those
yellow envelopes and data.
BMW has already said that the BMW Film program has been a
“branding” success.
Disney – well, I have no clue why they let me go so easily.
9 V I E W II
Nike isn’t a direct marketing company and it is focused on next
season’s shoes.
McAfee is already in touch.
So, yes, they probably have some perfectly “legitimate” reasons
for losing their grip on me. The question is, are these reasons good
enough? Is it worth losing the customers they’ve paid so dearly to
cultivate just because of a few challenges, a paradigm shift, or an
unwillingness to get outside of their existing marketing box?
I don’t think so. If these brands want to build real ROI for their
marketing efforts, they need to work smarter, not harder. They need
to take a few extra steps, think like direct marketers and do a little
more active marketing in order to cultivate Delighted Customers
through a system of ongoing stimulation and retention. Period.
G R AY M A T T E R
RALSTON360

11. W H AT T O D O ? S I M P L E : G E T A G R I P.
Change the way you think. Go beyond just getting customers to
holding them. Determine the next step. Then the step after that.
Really spend the time to think through the “acquire, stimulate
and retain” cycle. Nurture the customer and the relationship
through experiences that build goodwill, brand loyalty and an
interest in repeating a pleasurable experience.
Bottom line: work toward creating what we call the Delighted
Customer, that holy grail of patron who buys more, buys more
often, buys at higher margin and tells their friends about your
products and services. Use some of the strategies suggested
above to begin garnering—and keeping—Delighted Customers.
Now that you are in my grip call me. In addition to actually
helping clients think through and deliver retention strategies we
have the direct marketing chops, including the most
sophisticated email management and delivery system in the
business, to help you get the job done. I’d be delighted to help.
And, I will say “Thank You” for your business! I promise.
10 V I E W II
W H AT I S V I E W ?
View is a series of white papers featuring marketing insights
from Ralston360 CEO Peter Levitan. View provides business
and marketing professionals with new perspectives on what
makes marketing communications work. Not yesterday. Not
tomorrow. Not in theory. But in the real world, right now.
To get a fresh outlook on the business of creating, nurturing
and maintaining Delighted Customers, check out Peter’s
next View. You’ll find a visionary approach to marketing
communications. And a 360º view of how to make it work.
Past Views can be seen at ralston360.com.
G R AY M A T T E R
RALSTON360

12. WE DELIVER W H O W E H AV E D E L I V E R E D F O R
Ralston360 is dedicated to helping clients Just a few of our clients in Oregon, Washington,
exceed marketing objectives. We are dedicated and Idaho:
to getting our clients and their messages
A C C E N T O P T I C A L T E C H N O LO G I E S—the global leader in
noticed. We use lots of gray matter to make optoelectronic process controls
this happen.
B A N K O F T H E C A S C A D E S —nationally recognized
Northwest bank
We do not have a one-size-fits-all solution, and
recognize that the most effective program is C L E A R C H O I C E H E A LT H P L A N S —Medicare-Plus
based on the right brand strategy, advertising, insurance program
direct response, PR or grass roots marketing. FA R M E R S & M E R C H A N T S S TAT E B A N K —Idaho’s
largest community bank
Our mantra is simple: We help our clients acquire,
I D A H O P O W E R —publicly traded regional electric utility
stimulate and retain Delighted Customers.
M I C R O N T E C H N O L O G Y —North America’s largest
computer memory supplier
S A F E C O —one of America’s most respected insurers
S U N R I V E R R E S O R T —the Northwest’s leading golf and
destination resort
And some clients from our staff’s deep, dark past:
ADIDAS INTERNATIONAL
AMEX
AT & T
WHY WE DELIVER
COCA-COLA
Ralston360 is a full-service marketing company
GENERAL MILLS
with 19 years experience in national and local
markets. Our management has worked in major JOHNSON & JOHNSON
agencies in San Francisco, Seattle, New York, NORTHWEST AIRLINES
Minneapolis and London. We offer strategic PBS
research and guidance leading to effective
S A R A LE E
marketing solutions for print, broadcast,
SUZUKI
corporate ID, collateral, direct marketing, trade
marketing and the Internet.
We make it easy to reach Ralston360:
www.ralston360.com
877 577 5790 toll free
info@ralston360.com
G R AY M A T T E R
RALSTON360

13. 19797 Village Office Ct. Bend, Oregon 97702 877-577-5790 fax 541-388-4381 www.ralston360.com info@ralston360.com