Flipping the Funnel and where it does and does not work

This post was driven by this very funny video with Brian Posehn doing stand up at SXSW poking fun of Joseph Jaffe and New Media.

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Flip the Funnel is Mr. Jaffe's Book which is linked here:

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The premise is that it costs less to keep customers than get new ones. This idea goes back to the stone ages when the first spear tip maker had his first competitor for business. I have 16 years of Customer Service and Account Management experience. I have seen from both sides companies not investing in quality or customer service and thus losing clients while replacing them.

Where this specifically works is in Service Industries and High Ticket Item OEM's whether consumer or industrial. Service is easy. Your not taken care of you flee to another company or person. Big ticket items have the highest potential for buyers remorse. Try a new soda flavor and you don't like it, you toss it but do not cause pain to the Brand. Will you really stop drinking Coke just because Coke Vanilla tasted like Waste Water? No. But if you are upset you bought that car and your stuck with it for awhile, your never going to buy that Brand again.

But does this work for consumer brands? Yes and No. Whenever there is an equal out there it is very hard to Flip the Funnel. Can Coke win all my business Flipping the Funnel? No. Never. Not anyone's. People will substitute Pepsi when the deal at the market means saving money. (See previous blogposts on how Point of Sale trumps Ad Spend every time). But Coke can do this at their Wholesale Clients like Restaurants that usually only offer one brand. That is someplace that Coke can Flip the Funnel because service will often trump a pure price play and their retail patrons can't choose the 'or equal'.

What about other Brands? I personally think we patronize certain Brands or Products and do not know why. We try something, like the price point and found no problems using it so we go back and don't actually think about trying another Brand or Product for a long time. I really don't think the Brand did anything besides get lucky. But often this is price driven. And when you sell on price often you are vulnerable to someone else's better price.

Now with Store Brands coming in with almost equal taste and quality it is really hard to win and keep customers without a constant effort of coupons and rewards. Super Markets and anyone with a Loyalty Card Program do this the best. It doesn't mean they are truly Flipping the Funnel with superior attention or service, but the bribe of something back for the patronage is very strong. Think Frequent Flier Miles or a buy 10 sandwiches get one free at your local Sub Shop. But again we do patronize places that are cleaner, happier employees, better quality stuff and know we have to pay more gladly. But I don't think the products themselves can Flip the Funnel because service is not involved. Service is required.

See my post on Skullcandy

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High end brands definitely have an edge. They can combine quality with cache/image to keep you. Often this brings great service to the mix. Higher end products are sold at more upscale retailers that spend more to ensure the value proposition is there. And while a Brand might lose me if they product turns out shoddy, I won't blame Nordstrom's who gave me great service. Unless I specifically ask a sales person an opinion that turns out wrong.

For Service Industries or Big Ticket Items Brands MUST Flip the Funnel. For other consumer product Brands maybe spending a bit more on quality vs focusing on price will help them win more business.

Customers Rule. Examples of Great (Skullcandy)and Piss Poor (Facebook) Business Ethics

I was blessed today to read a great blog post from AdScam that enabled me to add Facebook to this blog post. I apologize to Skullcandy but I think it creates a great contrast to my reader(s). Consumer Businesses forget that the Consumer Rules. without people buying your product (or alive to buy your product in the case of companies that destroy and poison our earth) you have no business. And sometimes the little things can destroy a reputation or enhance it dramatically.

So do you prefer me to start with the good or the bad? The good? Ok Skullcandy. I discovered Skullcandy's really by accident.

http://www.skullcandy.com/

They sure did not advertise to me in any way. I was living in Venice Beach on a gorgeous walk street in the summer of 2007 and was enjoying some time in between jobs. I was riding my mountain bike everywhere and taking long rides down the bike bath from Marina Del Rey to Malibu a few mornings every week and my IPod ear phones kept falling out when I would do jumps or tricks.

So I went to Target to get some 'earbud' style earphones and saw this new brand Skullcandy. I loved the style and the price which was around $17. The sound quality was incredible for this price point and I got hooked. At $17 an item to me is almost toss away if I only need to replace it every year or even twice a year. The INKD's Buds would usually fail where the wire meets the connector for the MP3 player. Normally after 4-6 months and I would just get a new pair. Over time Skullcandy came out with new colors that to me were rad. And I could match the colors to my IPod. I never thought that based on the price point or the product type that Skullcandy would have any type of warranty. Sorry I was an ignorant dumbass I admit it.

Why should a brand that sells $17 items to skateboarders and snowboarders warranty products that would get beat on!?? Unless.....let me think...maybe Skullcandy decided that it was worth it since they might win customers for life? Customers in the 14-30 year age (vs me an old 42 year old fogey)?

So my last set of INKD's failed but sadly after just 2 months and right now I just jog and use them in the gym or while on Amtrak/Walking around NYC. And I thought I should write them and give them feedback on how to improve the product. And sure enough I notice on my new package of INKD's it says go to the website to see the warranty info. Incredibly not only does Skullcandy warranty against defects for life with a replacement service. They actually refuse to flip the finger to users who beat on their product. They just want honesty. And if your an Extreme Sports Fan who blasts head first into a wall or mountain thus destroying the product, they will still take back the product and issue the owner a 50% off a new set coupon. This totally amazed me. I could not believe the level of dedication to their customers are. Above and beyond and this needs to be a shining example of the consumer comes first.

And because of this I will recommend their brand and products to everyone.

Now the bad? This will be short and easy. Facebook's business model is two fold. Advertising revenue and finding ways to profit on users information and content. They will pimp your content any way they can make a penny. Users are meat and nothing more. They only respond when there is a serious backlash from the community and then they do things on begrudgingly. So in effect they have created a situation where by the moment a new social media network pops up that can replace Facebook. They will be toast.

First it was Beacon. Then they keep trying to have everyone open up their content via privacy changes in very weaselly and slimey ways. Because of this I am what Business Calls a Vocal Terrorist. While I use Facebook I rail against these moves openly every chance I get. The latest version of them being slimes can be read in the following Blog Post from the great George Parker from AdScam.

If you want take How To Screw Your Customer 101 in college just read this post!

AdScam Blog Post