And things only get worse when talking about Internet based companies. For example, Groupon and Facebook have both shown interest in an IPO, which could push out other, weaker tech companies. And this is not good news for Pandora, whose biggest weakness is monetizing their service. For example, the two main revenue streams are ads and membership fees that eliminate ads. But the membership fees only make up 14.5% of their revenues, and that’s a problem since advertisers haven’t put their full trust in Internet based advertising.

This brings us back to our original topic. Yes filling a need is crucial to success (look at the great depression which was partially created and fueled by overproduction of unwanted and unaffordable products). Pandora has met a need, but if they are going to be successful going forward (and receive my investment in their stock) they need to find ways to bring in more revenues from more avenues. It will be interesting to see what they do.

-Austin

Related posts:

1. Ever Wonder Why Exactly Google Dominates?
2. Find a need and fill it
3. Find a need and fill it

David v. Goliath (who once was David)

As I was growing up, Best Buy was unquestionably a place you would beg to be dropped off while your mom visited the nearest clothing outlet or mall, as was often the case. You would spend hours walking through an endless display of mystical, amazing, and ‘necessary’ technology. Best Buy was one of these fabulous success stories eventually rising to the top of the consumer electronics industry (and for many good reasons).

They were, without a doubt, at the top of their class.

However, as I came of age there was a David in the making. By the time I was at college in 2006, there was this cool website where you could order some of that mystical technology you had put your hands on in middle school and dreamed of owning growing up… but there was a conflict of interests.

When you were younger, you always pictured yourself buying that laptop, that external hard drive, and that flash drive from Best Buy.

So naturally, you head to Best Buy. As you arrive you are greeted by some pretty un-helpful employees. You ask about the famous price match that you used to use as the reason for coming to Best Buy instead of say, Circuit City. They ask which store you found a better price, was it Circuit City? Target? Wal-Mart?

You respond, ‘Newegg has them for $50 less. That exact product.’ The employee looks back at you oddly… I wrote about this story in February of 2010 and pointed to the fact that if something didn’t change, companies like NewEgg and Amazon were certainly going to win that race (the original blog found here).

Like I said in the previous blog, I had mad respect for Best Buy growing up. I fully expected them to figure it out and make adjustments to be competitive with online companies. Well, a recent event has forever forced me to give up hope on Best Buy and officially claim NewEgg king. Best Buy clearly doesn’t get ‘it’ and on so many levels.

The New(Egg) King

If you don’t know about the fiasco involving Best Buy issuing a cease and desist to NewEgg… well you should. NewEgg made a pretty hilarious commercial, featured below:

First off, that is a pretty classic commercial. Secondly, it is of note that in marketing it is a general fact that as long as you are not the top dog in an industry or category, poking fun at the leader is an acceptable practice.

Best Buy issued a cease and desist to NewEgg after this commercial was met with much On Air and Internet success. What happens next is something that is probably going to be the stuff of social media legend. Instead of ignoring it or hiding it or actually removing the commercial, NewEgg posted the cease and desist documentation to their Facebook Fan Page! How crazy is that! They also posted their response to their Facebook and Twitter.

Between the two posts (of both documentations on Facebook), there were over 2,000 comments and 3400 ‘likes’ on Facebook. Not only that, but the views on the YouTube commercial spiked, were imbedded in blogs like this, and the whole story covered here and in like places. This is viral in about as many ways as is possible and this is only talking about Facebook. I saw countless people tweeting and retweeting this stuff.

So What?

There is no reason, at all, that Best Buy should be losing to NewEgg. Their brand was so deeply ingrained in my brain that I literally went to their store to ask for the price match before I would even consider buying from NewEgg. They had me, my money, my word of mouth, and my loyalty… and they squandered it.

They use their social media channels to blast you with sales, deals, and new products. All the while, NewEgg is using theirs to actually interact and connect with their followers.

But so what? Why do they care about my business or my loyalty? Don’t they have 3 million fans to NewEgg’s 600 thousand? Don’t they make more money than NewEgg?

Certainly, they do. But the game is changing and NewEgg understands the new rules. In fact, they are creating them.

Best Buy’s bottom line might look good right now, but we’ll see who still stands in 5 years. My bet’s on NewEgg. It’s a shame they are private, or I know what shares I would be buying… My money would gladly rest in the laurels of David.

Zach

P.S. NewEgg got a little crazy after those two postings. To further the ‘Geek On’ marketing campaign as featured in the video ad above, they gave away 5,000 shirts with the Geek On logo on it (also seen above). The first 5,000 customers to order it from their store got it absolutely free. At the same time, if you head over to the Best Buy fan page you can catch the online only, one day sale of that Flip Mino I bought from NewEgg last year…

Related posts:

1. #Winning with Twitter
2. Sales Increase
3. Three Lessons from ‘The Social Network’ Movie

Have a great Cinco de Mayo,

Zach

Related posts:

1. Ever Wonder Why Exactly Google Dominates?
2. Super Bowl or Super Bust?
3. Google +1: This is Huge

Today Google announced +1 and I’m telling you now, this is Google’s biggest and best move since their search engine. This little addition is going to COMPLETELY change the way we interact with and use search. You can find the full announcement here and you can catch the 1 minute video about it below.

I don’t know about you, but my mind is racing. I guarantee that this is the biggest shift for Google and for Social Media that we have seen in a long time. If you aren’t amped about this, you are crazy.

Zach

Related posts:

1. Ever Wonder Why Exactly Google Dominates?
2. Google Your Company + “Sucks”
3. The Value of Facebook

This past weekend, I had an interesting experience and decided to blog about it (Kafe Bonehead). When you call out a small business, especially one that is a local coffee shop frequented by many of the people that follow you on Twitter or are friends with you on Facebook, it would be silly not to expect some disagreement or backlash.

After reading some of the tweets directed at me and also some of the responses on the blog itself, I took another look at what I had written. I don’t think I expressed clearly enough my side of things and I took for granted that everyone reading it sees things the way I do. Of course you don’t. I don’t expect or desire that you do see things the way I do. To this end, I felt obligated to offer one final response to the experience.

An Opportunity of a Lifetime

There are three ways the employees of Kafe Bona could have responded when I walked into Kafe Bona this past weekend:

1. They could have done exactly what they did. I walk in and the employee enacts some policy about me not being able to have an outside drink in their store.
2. I walk in and the employees say nothing.
3. I walk in and the employees use me having a cup of Starbucks as an event that could transform me into a lifelong customer.

I don’t think most people see it this way… and I think this is why many small businesses are set to lose in the next few years. There are two things going on here. By doing the first one, you are risking offending a customer. Obviously, you don’t want to be walked on but offending people is not a great way of promoting loyalty. Regardless, I think my last blog focused too much on this.

The point I was making was that they are missing a HUGE opportunity.

The opportunity is in number 3. First off, instead of treating me like I was five they could have treated me like an adult. More importantly, they could have easily used this to make a connection with a customer (or even just a potential customer). You know, something you might expect from a small business.

Instead of having your employees trained to walk up to customers and tell them they have to throw away their drink or leave, why not have them trained to walk up to the customer and engage them?

For example, what if instead of engaging me in the way she did the employee had sat at the small table across from me and introduced herself. She then asks about what I am drinking. She can ask if I’ve ever tried their *insert comparable drink here* and offer me a free cup of it.

After walking away and fixing my new drink, she comes back and has me try it. She can ask me about which one tastes better, why, etc. At the end of the day, even if I don’t like the drink she made for me she could say, we actually don’t allow Starbucks cups in our store (making a joke of the competition) and telling me that I can keep my drink, but I have to put it in one of their cups.

You might be thinking. Why in the world would I, as a business owner, EVER give a person who brings a competitors product into my store and buys nothing something free? You want to win, right? Well… you had better start thinking like this, especially if you are competing with a company like Starbucks.

Beating Starbucks

Let’s face it. If you are in the local cafe or coffee shop industry, you’ve got a few very serious competitors. First off, you have Starbucks (who also owns Seattle’s Best). You’ve also got Peet’s coffee. On top of all of this, you have every other local cafe and coffee shop. Looking at the competition, you’ve got to be doing some things seriously awesome to compete.

Starbucks has a lot going for them. They have one of the most recognized brands in the world, have the largest number of stores (resulting in some seriously insane economies of scale), offer free internet (that also includes free access to sites like Wall Street Journal, New York Times, and the Economist), a very good quality of coffee, and an impressive rewards program.

Looking at the list, what could possibly be their weakness? Well, I don’t think they have many formal weaknesses. However, there is one thing that a local coffee shop has over Starbucks. Any guesses?

At the end of the day, Kafe Bona has only one thing they can do that Starbucks can never do. That is simply be local… and small. They can move faster and be more personal than Starbucks. This isn’t just about remembering your customers names, but actually engaging with them. This is understanding what is going on in the local community and in your customers lives. This is being super nice to everyone that walks in. And this is taking EVERY opportunity anyone gives you to turn them into not just a customer, but a supporter.

So What?

Even if in the example above I didn’t happen to like whatever coffee they had already brewed, they spent all of 2 cents to gain some valuable information. Companies pay a lot of money to get data like why a customer does or doesn’t like a particular product over another one. They also spent that 2 cents to potentially turn me into a huge customer.

You also have to realize that I took the time to come to your store. Obviously I at the very least like Kafe Bona. Without even asking if I would or planned on buying something, your first response is telling me I cannot have the drink? I think that is poor form. It is also notable that there was lots of space available at their store. If it had been crowded or I was taking up a large space and wasn’t supporting them at all, obviously you might question that.

Worst case, what do you think the odds are that I would tweet or facebook the fact that I just got a free cup of coffee from Kafe Bona (and that it tastes great)? As I see it, Kafe Bona had a chance to turn a semi-frequent customer into a very loyal supporter. What they did was lose that customer forever.

Zach

Related posts:

1. Kaffe Bonehead: How to Lose Customers
2. Attracting Customers
3. Sales Increase

I woke up bright and early this morning with a full slate of client meetings planned. One of them happened to be at a Starbucks. Due to how much I love the new Tribute Blend, I had no choice but to start the day off with a coffee. Anyways, after my meeting at Starbucks I had another at Kaffe Bona (literally about 100 feet away).

It was cold and raining, but I decided to just walk anyway. I sit down inside of Kaffe Bona and start getting my computer out. One of the ladies working there walked by and said, ‘Sorry, but we don’t allow outside drinks in here’ with a smile on her face. I kind of just laughed in response as she walked away.

A few minutes later, she walked up to my table and said, “Hey. I wasn’t kidding. You can’t be in here with an outside drink.” I respond, “Really?” She just looked at me as though I were a little kid.

I said, “Alrighty.” as I began to pack up my computer.

So What?

Now, I only had about a fourth of my coffee left. I could have just thrown it away. At this point though, there was no way I was going to stay there. I had two meetings slated to happen at Kaffe Bona and had intended on eating lunch there myself. I was NOT going to give them a dime of my money.

I walked back to Starbucks and texted both of the people I had planned on meeting that I’d prefer to meet at Starbucks. The first person I met with ordered a drink from Starbucks. The second actually brought his wife and both got drinks and a snack.

Instead of eating lunch, I was able to hop on the Starbucks Network and browse through the New York Times, Wall Street Journal, and The Economist for free while waiting on people to arrive.

The sad part, I’ve had countless meetings both professionally and for school at Kaffe Bona. They have a drink and a sandwich that I love to eat and can hardly resist getting when I have a meeting there. But, I will never be going back. I almost emailed them through their site to tell them this story and how offended I am. However, they don’t deserve that. I’d rather just see them fail.

And this is why I go to Starbucks…

Zach

Related posts:

1. Transforming Customers into Supporters
2. Attracting Customers
3. Customer Loyalty: The Gold Standard

On twitter I follow the CIO of Starbucks, @StephenGillett. I don’t remember how I found him, but he is definitely one of my favorite people on twitter. Not only does he post links to great content (and it seems as though he posts several an hour), he is also very responsive.

Below you can see one of his tweets:

Naturally, I responded with this (a link to my blog on The Gold Standard of Customer Loyalty):

Here is where the fascinating thing happened. For starters, the CIO of Starbucks read something I wrote. That’s pretty cool. But notice that in his tweet he mentions @StarbucksCard. The next day I get mentioned:

So, I send them an email and then get a free Starbucks gift card.

So What?

Starbucks is using Twitter in all of the right ways. For starters, their CIO is using it perfectly. Posting relevant content and being responsive to followers. On top of that, they have an account set up for their rewards program. They also have a standard account for their company that they use brilliantly.

Let’s take a peak at a screenshot I took of their twitter stream:

Just looking at a small section of their stream, they have the following:

1. Retweeted a tweet about their CEO’s upcoming book
2. They have responded to four separate followers
3. Tweeted a link to a free iTunes download
4. Tweeted a link to a new product (Cake pops)
5. Tweeted a general question to engage followers

But it’s more than just doing all of these things. They are doing them in the right quantities. They aren’t just blasting out links to new products. They do some of that, but they actually engage their followers. They also offer free things like music downloads.

Honestly, Starbucks is killing it when it comes to social media. Even if you aren’t a huge fan of Starbucks, I highly recommend following them. Why? Because they are awesome at social media! If you are confused about how to use Twitter, all you have to do is follow @Starbucks for a few weeks.

Zach

Related posts:

1. The Power of the re-Tweet
2. #Winning with Twitter
3. Friend or Follower

Obviously, a re-tweet of this magnitude is not always common. In fact we have @mentioned plenty of companies and have not been re-tweeted or responded to. But all the times we have, we have killer posts, and just so happen to have the company notice our @mention.

The Other Side

Twitter is obviously a great way for customers to have their voices heard, and for companies to hear what people are saying about them. In today’s world this can be great or horrible. I want to focus on the great aspect. Last weekend, I went on a double date to Pei Wei, which I love. Their food quality alone keeps me coming back, but my last experience ensured I would be a lifetime customer. The other three people with me received their food in a timely manner, but mine didn’t come for about ten minutes. I didn’t say anything about it being late, but the food runner noticed how late it was compared to the other meals. Within 30 seconds the store manager came and sat down next to me, informed me that my meal and my date’s meal had been refunded, and handed me a $10 gift card for a future visit. WOW!

What a great testament for Pei Wei, and without the utilization of Twitter, Pei Wei and its customers would never know how great the situation was handled. The opposite can happen too though, as Twitter can be your nemesis if your delivery isn’t near perfect. For example, a few months ago I had a horrible experience at a restaurant and nothing was done to solve this problem. Lucky for them they didn’t have a Twitter. But imagine if they did.

Basically what I’m trying to say is learn how to use Twitter in the best way that benefits you. If you write a blog, a re-tweet can be great. Listen to what your followers are saying about you, and interact with them on a personal level. You’ll be surprised how amazing a tool in can be.

Also, I highly recommend you start following us on Twitter if you are not currently doing so. Trust me… it will pay off soon.

Related posts:

1. Still Don’t Get Twitter?
2. #Winning with Twitter
3. The Power of a Suggestive Sale

Twice in this past week, I visited 2 chain type restaurants that I hadn’t been to in over 2 years (one of them I’ve never been to). I didn’t have anything against the places, they just don’t usually attract my demographic. But a group of mine from school needed to meet somewhere that had food and large tables, and didn’t mind us staying for a few hours.

At the first restaurant, the employee of the store was actually the General Manager. I could tell right away he knew what he was doing. I asked for something that wasn’t on the menu, and without hesitation, he immediately rung up my meal and put in the order. He understood a few things: 1) If he told me that wasn’t on the menu, I might leave and 2) Adapting to customer needs is crucial, especially in an industry such as dining. Also, It was a little slow that day due to the recent blizzard, so he decided to close shop a little early. He generously let me and my group stay as long as we wanted, and continued to ask if we needed anything, long after we initially ordered.

The next restaurant was a place that gives you a pager when your food is ready. There was a customer at the main register ordering (she was taking longer because of an issue she had), so I waited patiently behind her. The person who usually prepares the food noticed I was waiting and immediately stopped what he was doing, and motioned for me to come over to another register. He took my order and said it would be a couple minutes. He didn’t give me a pager, so I asked him if he forgot. He said “no, I see where you’re sitting.” The funny thing was I had only been to my table once, and that was to put my coat down.

So in a matter of seconds, this employee saw me

1) walk in (this is a large restaurant in terms of size)
2) put my coat down
3) get in line
4) wait behind a person who would be longer than usual

…all while preparing the orders of other customers.

For some reason, this was amazing to me, especially considering one can get so used to repetition, they don’t think to be aware of customers. Well this guy was.

So What

I know I haven’t said anything so profound that your life will be changed. But look how easy it is to create loyalty. Don’t act like a big chain that doesn’t care, even if you are. As a business, don’t ever lose touch with your customers. Keep to the core of who you are, and be great at it. When you think about it, creating loyalty isn’t really that hard. You just have to care enough to try.

P.S. Good job Camille‘s and Panera.

-Austin

Related posts:

1. Sales Increase
2. The Root of Loyalty
3. The Power of the re-Tweet

As an entrepreneur, it is a dream to have customers this loyal. As a consumer, we can only sit and watch in awe as every few months Apple releases something that once again gets their customers to line up.

But how do they do it? Why do their customers keep coming back? How is it that these customers aren’t just coming back, but loyal to a point of almost always promoting the brand and it’s products. Isn’t this the level of loyalty we all seek?

This loyalty has been created over a long period of time. There are several components to it. Hundreds, potentially thousands, of pages could be written on the topic of Apple’s customer loyalty. I want to address a few of the keys reasons for this loyalty, none of which include a rewards program.

Marketing

There is no question that Apple has what are quite possibly the world’s greatest commercials. Above you can see them showing off their FaceTime feature in what is one of my favorite Apple commercials of all time. What makes their commercials spectacular is an intricate combination of amazing and revolutionary products combined with a deep understanding of how to connect with customers.

At the end of the day, Apple’s commercials are simple, elegant, and meaningful… Just like their products. There are countless commercials I could show, but I don’t think I can stray from the topic of Apple marketing without also including the commercial that really started it all… Apple’s 1984 Super Bowl commercial that set the stage for decades of brilliant marketing.

Leadership

Apple doesn’t just have a Chief Executive, they have a leader. From the beginning Steve Jobs has been front and center at countless keynotes leading not only his company, but the drones of minions ready to protect and serve this brand. Love or hate the man, of all the things anyone can say about Steve there is no question that he has and continues to just be Steve.

Steve Jobs is one of the primary reasons for the success of Apple and the loyalty of their customers. His understanding of his customer and his relentless pursuit of a great user experience builds a level of trust with customers few companies ever reach.

Products

Apple has and will continue to revolutionize industries. Apple introduced the iPod and iTunes and completely changed the face of the music industry. They released the iPhone and the App Store and have completely changed what when think of as a phone. They released the iPad and netbook companies trembled. No one can question the design and quality of the products released by Apple.

Values

When it comes down to it, there is only one reason that Apple’s customers are and continue to be loyal: values. The company connects with it’s customers not because of the marketing, not because of their leader, and not because of their great products. Apple connects with it’s customer because at it’s core it believes in on thing: People with passion can change the world for the better.

It is because of this belief that their commercials, leader, and products become relevant. I actually found a really cool video about Steve Jobs discussing how to build and grow a brand. Want to create loyalty? Take five minutes and watch this video.

So What?

Apple has the world’s most loyal customers not because of their commercials, not because of Steve Jobs, and not because of their great products. Apple has the most loyal customers because they have stated clearly and simply their purpose and values… and they have found millions of others that share those unwavering core values.

You want customer loyalty? Become more than a company, become purpose.

I leave you with my favorite quote:

“Here’s to the crazy ones, the misfits, the rebels, the troublemakers, the round pegs in the square holes… the ones who see things differently — they’re not fond of rules… You can quote them, disagree with them, glorify or vilify them, but the only thing you can’t do is ignore them because they change things… they push the human race forward, and while some may see them as the crazy ones, we see genius, because the ones who are crazy enough to think that they can change the world, are the ones who do.” – Steve Jobs

Think different,
Zach

Related posts:

1. Loyalty: Imported From Detroit
2. Customer Loyalty: The Gold Standard
3. Will Apple Enter the Gaming Console Market?