I want to share with you guys a real world marketing example and show you how this company – Grooveshark.com – is leaving money on the table.
First, for those of you who don’t know – Grooveshark.com (http://www.grooveshark.com) is a streaming media company that allows you to access your favorite artist or type of music on your computer and most mobile smart phones.
A friend of mine mentioned this app to me a few weeks ago and I decided to try it out.
Once I downloaded the Grooveshark app I was able to access it for 20 or so songs for free before having to make a purchasing decision.
Now if you don’t have a smart phone or are only looking to stream music at your desk – good news Grooveshark is free but if you want the Grooveshark anywhere package (this allows mobile phone usage) then it will cost you.
My friend told me the cost was $3 a month which I was prepared to pay but when I went to purchase it I noticed that effective 12/1/10 they had raised their prices to $9 a month. Yikes.
As a result I bailed … until I did a little searching on the net. I was typing in Grooveshark Discount, Grooveshark Coupon, and some other keyword when I noticed that Grooveshark was offering a deal.
They were offering the ability to buy some swag (fancy term for clothes) and get a year free of Grooveshark Anywhere with your purchase. Not only that when my year was up I could renew at $30 a year instead of $90 under the new plan.
So instead of costing me $90 for the first year, I was able to score the first year PLUS a shirt for just $24.
So lesson #1 – make a killer offer. I wanted the service and this offer made it a no brainer. Not only do I get to save money up front, but I also get to save money every year I renew. In addition I get a cool t-shirt in the process.
So I place my order for the shirt, they send me my access code for Grooveshark Anywhere and we’re in business.
Well I get back into town on Monday and my shirt has arrived (not bad since I bought on Dec 28th and got it the 3rd). So far so good.
I open the bag to pull out my shirt and an invoice (no big shocker there).
Click on the photo if you want to make it big kid sized.
Now the first thing I notice about the shirt is this – it’s thin. So thin I start comparing it to tissue paper. I even hold it up to the light to see if I can see through it. I can’t – but not by much.
That’s a bummer. The shirt is cool (minus the 3 quarter sleeves – what guy wears 3 quarter sleeved shirts) but I can’t wear it outside my house without fear of public indecency charges being pressed against me.
So they’ve lost out on free publicity and my friends and family asking about the shirt and the company. Not to mention the fact I point out my disappointment on my Facebook account (all 7 of my friends were informed).
Now notice the invoice – someone was nice enough to hand write me a thank you. SUPER rare these days – and as a result I remembered it. So rare in fact that is one of the main reasons I decided to make this post.
They could of taken it a step farther and actually used my name in the thank you comment but I digress.
But lets talk about how they are leaving money on the table.
Grooveshark is awesome. I love it. I use it daily and I’m a big fan.
But I have no incentive to tell my friends that or give them a reason to try it out.
What I mean is there isn’t a discount code, a refer a friend, a $10 off your next order coupon with my order.
There’s nothing.
No coupons, no postcard to give others, etc.
Just here’s your stuff, thanks, time to move on.
So even though I’m a big fan and think all my friends who like music should know about them – most of them won’t.
Here’s what else they’re doing to lose money.
When I signed up and entered my activation code they didn’t give me an option to sign up for reoccurring billing. Actually they should make it mandatory and leave it up to the customer to cancel (with appropriate email reminders of course).
Most people will forget about it, and when they can’t access their music go to the site, see they have to pay 3 times the price they did when they first joined and bail out.
By allowing your customers to automatically renew you give them peace of mind and keep them away from the competitors (think 2 year phone contracts, gym memberships, etc).
Finally, the shirt quality. Yes I know it was on sale, yes I know I got a great deal. But at the end of the day it’s money wasted by them and as a result of the poor quality that shirt will never see sunlight. Also if I wasn’t such a raving fan – the crappy shirt might make me think twice about referring them to other people.
What does a shirt have to do with a music company? Everything – because it all relates to a customer experience and how every interaction is a chance to build on your experience or take away from it.
So a quick recap/take away for how you can profit from Grooveshark’s mistakes.
1. When a customer buys give them a chance to spend more money right away. They will never be hotter than they are at the time of purchase so give them every chance to spend as much as they want with you.
2. Make it easy for others to tell their friends about you. Give discounts, coupons, free trials, and more. One hairstylist I know offers a $25 discount per hair cut when you refer someone to his business. Get 4 friends to visit and the next cut and color is on him. He tracks the referrals on fancy 3×5 cards
Too simple you say?
Well he went from nothing to several dozen clients a week doing little more than this.
My point is make it easy for your champion customers to do battle for you and give them all the tools they need to do so.
3. Focus on the total customer experience. Remember that you will be judged on everything you do and send to your customers.
What are your thoughts? Post a comment below and I’ll be sure to respond.
I agree boss. They need to do much better at streamlining their processes. It’s like they got some cool ideas and just threw them together instead of turning into a system that will grow their business.
And the techniques you mentioned would not have been much more work, or that hard for them to implement either. Probably some big wig ad company did the work thinking they had a brilliant idea. Either way it was definitely not thought through with.
Yea and on a final note if you can get your customer’s to sell for you that is pure GOLD! That and the recurring was probably their biggest mistake.
p.s. I love Grooveshark as well. The actual service rocks! They just need to make it spreadable.
Brandon -
What the hell are you drinking in the photo? Coffee??
Ha Ha. Yea that’s coffee! Been accused of it being something else before though.! I only make it irish style when it’s really cold. Which it is.
Tim,
Your point about referrals is dead on. I have been a franchise owner in the income tax business for over 8 years and the second best source of new customers is our referral program which is a coupon we give the customer that if he sends a friend in with a coupon we give the friend a discount and we send the original customer $20 cash.
Our best method is a costumed figure waving to cars in the street. Which after eight years still freaks me out that it works that well.
Anyway thanks for all the great info over the past year and have a super 2011.
Referrals are huge and should be used more in every business.
It’s sad that more businesses aren’t using their perfectly happy and satisfied customers to get their name out there.
Tim
Hi Tim,
I loved the post. Don’t worry if you don’t get a lot of comments, we are all probably out using your great tips and were to excited to comment.
I guess that should be sufficient A*# kissing.
I’m off for 8 days cruising with Mike Filsaime and 400 other top marketers, You need to join us next year
If you’re not cruising with Tim, you’re cruising alone.
This is my favorite comment of 2011!
Thanks Michael!
Yes, For an outfit that uses the term social in their invoice, they did nothing to promote social promotion of their service.
Thanks Tim, Good advice. I will apply the concepts to my own business. The initial cost will be outweighed by (hopefully) increased revenue and optimum customer satisfaction. After all, isn’t that why we are in business in the first place?
I wonder if the auto-renew is a prudent idea with our beloved FTC eying forced continuity programs.
I am not a lawyer and never played one on t.v. (argued with many) but think if you are going to use auto-renewals that an email or postcard or something should go out expressing thanks they stayed with you…they are smart cookies locking in their lowest rate for membership…and contact you for praises, wishes, concerns, unsubscribe, yada yada yada…
Good advice Tim. Hope you shared it with Grooveshark
Rob -
I did. I sent them an email and posted on their twitter account. There is a marketing lesson in that as well that thanks to you I’ll share soon.
Maybe someone needs to forward this post and refer YOU to THEM!! Sounds like you are just the one to help them get their groove on!
I’m with you on this one. I have bought several things online and noticed how the more market savvy companies will get you while your hot. Had they sent you a higher quality shirt, no doubt it would have impressed you enough to get you to tell your friends about the experience. They had a great opportunity to make a compelling first impression.
Tim, this Case Study is a great format for a regular type of blog post. I’m sure you think all the time about companies or individuals you do business with and what they are doing right or wrong. The takeaways you can present to your readers are pure gold and will give them reason to remember you as the presenter…! All the best in 2011! Dr. Dave
Tim :
WOW – how did you get 7 Facebook friends :>)
The key to success is providing great service, content, products and then giving your customer the opportunity to buy more now and in the future. If we all just keep that in mind we will also be successful.
Tim:
Happy New Year!
Your post is right on. In the fitness business referrals are 80% of the business generated within the first year of opening. It is a structured, well-maintained and visible process that is worked by every employee. Incentives are given and tracked and all the successful clubs have them. I remember Jay Abraham saying every business should have a minimum of 5 referral avenues going to keep a steady flow of traffic. In the movie industry, all the advertising done initially pales in comparison to the word-of-mouth(positive and negative) after it is released. Moral: Review your referral program, or start one if you don’t have one.
don
I had a whole story that I was going to pass on but after I got half way done with it I realized that you wouldn’t like it at all.
So here is the candy coated version;
You are so right about making sure that the customer gets a good experience when making a purchase from you.
There is many ways to do that, and you have covered a few of them for sure.
I know more than a couple of marketers that seem to forget that.
Hey Tim,
Another great lesson that we get to learn at the expense of someone else. Hopefully Grooveshark is paying attention. To contradict a popular phrase – Sometimes good enough isn’t good enough!
My wife did a lot of shopping online for Christmas, so I got to see many people’s marketing ideas. There were some that absolutely were spot on. They had the right amount of response and upsell to make an excelletn lasting great impression on both of us.
And there were others who makde it virtually impossible to order from the website and who only had a live chat icon on their site, Nobody was ever online to take your call.
Sometimes great coupons came in the box, along with the company’s website, facebook and twitter. But only once, maybe twice was there an incentive added to get her to become a fan on FB.
Those are two entirely different things. Be our fan on Facebook. And go to our fanpage, click Like and we’ll make sure you get a great coupon on your next order.
With most of them, though, it was just, buy the pants and be our friend.
A lot of missed opportunities.
It’s amazing how short-sighted some companies can be. They see only the immediate gain, not the long-term advantages and benefits. Great post, Tim!
Nice example and good usage of the term swag : )
Hi Tim,
Fantastic detailed marketing plan that hopefully Grooveshark will take note of….and I’ve taken note of them also.
Referral plans for your current customers is a great way to get new customers and make your current customer a life long one. You have to work a lot harder to get a new customer than keep the one you have.
P.S. I’d be watching how much Irish Coffee Brandon is drinking….especially if he starts taking a mid morning siesta! (Also love the cruising with Tom comment… brilliant!)
Hey Tim,
I see this occasionally from local businesses in my area. Mind you, not many of them even attempt to start a referral program, but the ones that do have totally missed the point.
One local garden supply center comes to mind where in order to be credited for a referral, the customer has to -
1. Mention that they were referred by somebody (by name) when they visit the business on the first occasion. If they forget, then no referral is recorded. They also have to have all sorts of invasive details recorded on that first visit, or they didn’t qualify
2. If they are an existing customer (even if they have not visited for years) no dice, no referral is recorded no matter what
3. In the direct mail letter I received asking me to refer people, they had EIGHT other lame, boring offers for different products and services as well
4. The process for getting credited for a referral was so convoluted that I would imagine nobody was ever going to bother
5. The reward for sending them a referral? 10 bucks off your next purchase… Since people regularly send hundreds of dollars on stuff, 10 bucks was so lame it made me laugh
6. There was no option to register for EMAIL updates so you had to physically visit the business to register. Moron…
All they had to do to make it a kick butt promotion was include a coupon for me along with a couple of vouchers, with a space where I could record my name as the referrer. If the reward for giving them away was worth it, I’d be happy to give them to friends and family.
He’s probably sitting there thinking to himself that direct mail doesn’t work…
LOL
Cheers
Rocky
Awesome and timely Tim,
I have just finished nutting out my offline site and business plan – finally!
I decided that I need to get my online affiliate program up and happening so it could run in the background while I was offline – I also wanted something that could handle offline purchases and rewards to offline referrers – I have found some great software to achieve the outcome – just doing the last comparisons before I buy (which aff program software did you end up going with? and when is it ready to join?)
This post is just the extra kick I needed to see even more opportunity and some of the comments have added even more value to the topic you started here.
I think # 3 just says it all…..”Focus on the total customer experience. Remember that you will be judged on everything you do and send to your customers.”
I was pretty focused there but after reading this I know there is even more that I can do to nail this aspect of the game which of course has to be the be all and end all!
Some times I get annoyed at myself for taking too long to accomplish my goals however there are other moments – like the ‘ah-ha’ moment I had whilst reading this, that makes me happy I waited to find the last little golden nugget I needed to feel totally confident in my thought process and journey to the end result – success!
Really great post today Tim – thanks – Kym Robinson
“Not to mention the fact I point out my disappointment on my Facebook account (all 7 of my friends were informed).”
And now all of the people on your email list, which I suspect is a few more than 7
And it’s funny, after reading this I’d probably think twice about ordering the T-shirt deal, even though it sounds like a great offer.
I actually just came across Grooveshark myself a week or so back, and loved it but they don’t offer an iPhone app (Apple’s issue, not theirs) so I never looked any further into paying for it.
And you’re right about those little things that can make a huge difference in customer experience. I’ve been having an issue with my car for the last few months, and it’s been into the dealer 6 times for the same problem.
The last couple of times I picked it up, they hadn’t set the clock after disconnecting the battery when they were working on it. That one little thing was as annoying to me as the fact that I’ve had to go back 6 times. It only takes me a few seconds to set it, but on that same note it would have only taken THEM a few seconds as well.
Another great marketing lesson, Tim! Their UI leaves a lot to be desired, too. Or maybe I’m just an idiot and don’t know how to use it. There’s always that.
Yes Tim, they could have used a polo shirt and at least you would have put it on outside of the house. Simple but it is ‘stupid simple’ that works.
AJ
Amazing! And then there was a local contractor (a young fellow in his late 30′s) that we were made aware of through a friend and the guy did such a nice job re-flooring & carpeting our family room, after a nasty bout with termites, I offered to put a website up for him (no charge because his cost was so reasonable & it wouldn’t have killed me to do it). He declined.
He wasn’t even listed in the phone book, so when we had a situation develop with our roof 3 months later, I had to completely tear my office apart to find his number. Found it and had him replace our roof. Again … he did a great job and once again I offered. He said he didn’t own a computer. Aside from the “Acme Builders” (not the name, but just as generic) sign he put in our front yard, while doing the job, he acted like he was in the witness protection program!
He MUST get a lot of referrals, but he didn’t seem to have a whole lot going on while doing our work. I know, I probably should have “pressed” him on why he needed a site, but didn’t want to put in the time to educate him (not so much lazy as much as these seem to be the clients I end up struggling with). There are plenty of business owners locally that “get it”.
Great post for an exchange of ideas Tim and the responses have been excellent as well.
Thanks for the post Tim. I came across Grooveshark a couple of weeks ago also. Thought it would be a nice addition to Pandora and Slacker Radio. Like you, when I went to sign up it seemed a bit pricey so I just deleted the app. I didn’t bother checking for coupons and such. I wonder how many potential customers they have lost overall with their strategy?
Anyway, great real would post Tim, thanks and keep’em coming!