Online retailers have a uniquely difficult challenge in building relationships and creating customer loyalty. Without a store-front to rely upon, most online retailers lead with product selection and price to attract first time buyers.

This leaves many to rely on ad words and keyword search as their only acquisition funnel. Generating repeat business, building trusted relationships, and retaining valuable customers? Those three goals can become esoteric concepts to the marketing department as they  continually focus resources on acquisition for fear of muffling the principal sales driver that works.

The first wave of internet business placed the hurdle for marketing very low. Building traffic and gathering eyeballs was all that mattered and it seemed that selling this portfolio of traffic was more the goal than creating a business model on fundamental business principles.

Web 2.0 is different. The online stores that are working operate like a traditional retailer in the sense that they have to provide product choice, quality, and good service as a minimum to succeed. The business models adopted are generally sound and the achilles heel for those single channel, pure online, retailers remains price. Price as in LOW price.

Hammer Nutrition is one pure online retailer that caught my eye. The company caters to a well defined passionate customer group, endurance athletes. But they are not allowed the privilege to compete in a vacuum as many of their supplement and fueling products (electrolyte drinks, energy bars, joint formulas) are sold by larger, heavily branded, and more widely marketed companies from GNC to Power Bar (owned by Nestle) and Clif Bar (distributed through major grocery chains, Costco, and specialty shops).

How does Hammer Nutrition compete? It stays true to the values of its founder, Brian Frank. Brian grew up in California in a progressively-minded household and caught the action sport bug early on, riding bikes, skateboards, swimming, and racing BMX and motocross bikes to the point where he won Montana State Motocross Championships in the late 90’s. Frustrated by the sparsity of quality, naturally formulated products to meet the needs of endurance athletes, he founded Hammer Nutrition during the 80’s.

His mantra from those days has survived the passage of time:  Deliver naturally formulated quality products and cement customers for life with product knowledge and trust.

A little guerrilla marketing was at the core of the Hammer strategy: provide “Race Bags” at events around the country as a cost effective way to meet the core audience for Hammer products at their moment of highest interest. If you’ve participated in any organized athletic event from a local 5K walk to an Ironman, one of the “bennies” received for your entry fee is the race day bag. The bag itself carries branding on the outside and is kind of like the athlete’s version of an Easter basket – lots of product samples and surprises inside. When I spoke with Brian a few months ago, he told me that the program now distributes over 750,000 bags across 2,200 events in North America. That’s some powerful grass roots marketing – Word of Mouth advertising at its best before the term was coined.

The impressive part of the marketing strategy at Hammer Nutrition is its constant flow of educational and product information materials, part of an overall communication stream designed to build engagement and increase customer retention. A first order will usually trigger sending of the “Little Red Book” (product descriptions and usage instructions) and a “Welcome to the Family” letter signed by Brian Frank or one of his guru partners Steve Born or Dr. William Misner.

Triggered by an array of qualifying metrics, new customers receive monthly product-focused brochures, quarterly Endurance News magazines with articles highlighting athletes of all types who have competed successfully using Hammer products, and reminder post cards with previous orders outlined to facilitate easy reorder. Invitation to join the Autoship program is packed with benefits and discounts and the Referral program has a dual benefit feature where both existing and new customer earn a discount.

An open call to any athlete to use Hammer products is made via the HammerBuck$ program which challenges customers to “Turn race day into Payday”. Over $36,000 in cash and credit was awarded to 36 winners during 2009. The program is simple, race in Hammer gear, place highly in your race, and win some cash or credits for future purchase. Talk about crowdsourcing, just think about motivating gobs of your best customers who fit your ideal profile to wear your logo on race day and give it their all to stand on the podium at the end of the day!

Granted that I may have lost some of you who hate to run, or for whom the idea of an open water swim, adventure race or ultra-marathon is greeted with a wry smile while muttering “they’re nuts!”

Look past the issue of endurance sports and you will see a sophisticated, if not home grown, communication stream that delivers on the company’s brand promise while driving business goals. There are lots of good lessons for any pure online retailer to take away from a visit to the Hammer Nutrition web site.

There’s a secret society that I wish to unmask. It’s not as menacing as the Knight’s Templars, but if you are tasked with selling consulting services, marketing technology or loyalty marketing solutions, you will immediately identify society members by their common behaviors.

It’s the “Society of Graduate Buyers“. These are the folks who, in the course of a sales or capabilities presentation, ask the tough questions and take “poker face” to a whole new level. Ask them for a detailed description of next steps at the end of the meeting, and they will immediately defer to the procurement officer sitting at the end of the table or indicate that the decision makers are going on vacation for the next week or two and “we’ll get back to you”.

Seasoned salespeople are used to the process and have developed thick hides, therefore you’ll understand that I’m just having some fun here. In fact, if you don’t get frustrated by the white collar version of a “stiff arm”, you can learn a thing or two.

In a recent meeting, one of the client group threw me a curve ball, asking if I had experience with both “Big L and Little L” loyalty programs. He went on to explain that, by his definition, Big L programs feature an explicit value proposition with a promotional currency (points, miles, stars, credits) while Little L programs score member behavior and use the data to trigger promotions, offers, and communications without full transparency to the consumer.

The answer of course was “yes” as I’ve worked to leverage behavioral and attitudinal data to create value propositions articulated in many forms besides points. I would include viral, word-of-mouth, and social media programs with a data backbone in this group. The client must have been a consultant somewhere in his past as giving something familiar a catchy name is part of the trade (ever hear of the Loyalty Asterisk™?).

The lesson I learned from this encounter was simple:  loyalty marketing is anything but business as usual these days and practioners need to constantly test themselves to stay abreast of how the market perceives our craft. We also need to expand our definition of how customer loyalty can be created, and embrace that we have the tools to achieve multiple goals across the business from acquisition to retention and cross-sell.

I’ve added the “LIttle L” to my loyalty glossary and have pledged to give the next set of Graduate Buyers the benefit of the doubt. Never know what I’ll learn next!

There’s a secret society that I wish to unmask. It’s not as menacing as the Knight’s Templars, but if you are tasked with selling consulting services, marketing technology or loyalty marketing solutions, you will immediately identify society members by their common behaviors.

It’s the “Society of Graduate Buyers“. These are the folks who, in the course of a sales or capabilities presentation, ask the tough questions and take “poker face” to a whole new level. Ask them for a detailed description of next steps at the end of the meeting, and they will immediately defer to the procurement officer sitting at the end of the table or indicate that the decision makers are going on vacation for the next week or two and “we’ll get back to you”.

Seasoned salespeople are used to the process and have developed thick hides, therefore you’ll understand that I’m just having some fun here. In fact, if you don’t get frustrated by the white collar version of a “stiff arm”, you can learn a thing or two.

In a recent meeting, one of the client group threw me a curve ball, asking if I had experience with both “Big L and Little L” loyalty programs. He went on to explain that, by his definition, Big L programs feature an explicit value proposition with a promotional currency (points, miles, stars, credits) while Little L programs score member behavior and use the data to trigger promotions, offers, and communications without full transparency to the consumer.

The answer of course was “yes” as I’ve worked to leverage behavioral and attitudinal data to create value propositions articulated in many forms besides points. I would include viral, word-of-mouth, and social media programs with a data backbone in this group. The client must have been a consultant somewhere in his past as giving something familiar a catchy name is part of the trade (ever hear of the Loyalty Asterisk™?).

The lesson I learned from this encounter was simple:  loyalty marketing is anything but business as usual these days and practioners need to constantly test themselves to stay abreast of how the market perceives our craft. We also need to expand our definition of how customer loyalty can be created, and embrace that we have the tools to achieve multiple goals across the business from acquisition to retention and cross-sell.

I’ve added the “LIttle L” to my loyalty glossary and have pledged to give the next set of Graduate Buyers the benefit of the doubt. Never know what I’ll learn next!

The Word of Mouth Marketing Association held its “WOMM-U” event earlier this month in South Beach.  The conference report which follows was originally published at www.TheWiseMarketer.com on May 28, 2009 as filed by Bill Hanifin, North American Contributing Editor.

If you are interested in the latest news on Loyalty and Relationship marketing, I strongly encourage you to Register here for a free subscription to the Wise Marketer

Among weekly updates and special reports, the WiseMarketer also offers the Loyalty Guide III,  the most comprehensive resource covering the industry today.

Loyalty Moving from Marketing to Engagement

The Word of Mouth Marketing Association’s conference in Florida earlier this month provided some surprising insights, according to contributing editor Bill Hanifin of Hanifin Loyalty, who notes that the loyalty business is desperately re-engineering itself as programme sponsors look for innovations to freshen up their programmes.

Among the hottest topics concerning loyalty marketers are those of ‘engagement‘ and ‘word of mouth‘, with both having been quickly identified as effective paths to building more frequent and meaningful dialogues between sponsors and consumers.

Among the brands represented at the conference were big names such as Amway, Dell, Disney, Heinz, Kraft, Lenovo, McDonalds, NBC, PepsiCo, Proctor & Gamble, Texas Instruments, Unilever, and Walmart. The Web 2.0 names were also present, including Facebook, Google, MySpace, and Yelp.

Yelp’s Geoff Donaker kicked off the event with an overview of what he called a “platform for lifestyle blogging”. Over 21 million people had used the service to search for local businesses during the previous month, and the bulk of the consumer reviews posted broke down into 31% for restaurants and 23% for shopping. Donaker provided several examples of the power of the Yelp service, such as a carpet cleaning business in San Francisco which had invested in improving its customer service and generated such good reviews that the company was able to save US$100,000 per year in Yellow Pages adverts.

NBC also discussed its social media strategy, noting that community conversations, blog posts, and so-called “tweets” can not only build brand awareness and loyalty but also positively impact search engine results. Charles Edwards, CEO for Federated Media, also confirmed the importance of a strong search engine presence (particularly citing Google rankings): “It used to be that the homepage of your web site was your first digital impression, but now it’s the Google search result. Every marketer is a publisher now, and we don’t just compete with competitors but with any consumer that is also talking about us.”

Lenovo shared the story of how it tackled the challenge of making the most of its US$120 million Olympic sponsorship in 2008. The PC manufacturer chose to recruit 100 Olympic athletes, offering each a free technology solution and asking them to blog live from Beijing. Lenovo chose “long tail” athletes (i.e. those who weren’t in major sports, and who weren’t expected to draw general media attention). The campaign was a tremendous success and the athlete blogs quickly became the “insider’s view of the Olympics” during that highly competitive time.

Jeben Berg of YouTube also highlighted the power of video in marketing, noting that 15 minutes of video is uploaded every 60 seconds, all day every day. YouTube claims to be the largest site in the US (and the sixth-largest in the world), and boasts 81.6 million unique US-based visitors each month. Interestingly, the largest demographic in this massive set of visitors comes from the 35-49 age group.

WOMMA was able to get representatives of both MySpace and Facebook onto the same stage at the same time, and Heidi Browning (MySpace) and Chris Pan (Facebook) compared and contrasted the two social networks in detail. Browning exploded some myths about MySpace (particularly stressing that the site is not “just for teens”), and claiming that more than 70 million of its users are in the 18-34 age group in the US alone. Pan explained that successful Facebook marketing campaigns usually involve “building movements, not campaigns”, with a good recent example being the election campaign of Barack Obama.

Duncan Wardle of Disney discussed lessons learned using social media, and described a campaign that invited people to apply for their ‘dream Disney character job’. This word of mouth campaign quickly became viral and the responses were overwhelming. But Wardle was also practical, noting that “impressions don’t equal engagement” and suggesting that brands who don’t change from marketing to engaging risk soon becoming mere “nostalgia brands”.

The conclusion was that advertising and traditional ‘interruption marketing’ techniques are slowly but surely being replaced with collaboration, co-creation and dialogue with willing consumers.

This article is copyright 2009 TheWiseMarketer.com and is published here with permission.