Customer Relationship Marketing
Ernan Roman Direct Marketing guarantees double-digit response rates using consensual opt-in customer relationship marketing solutions, customer relationship management and creating integrated marketing solutions
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Issue No. 19   SUBSCRIBE » CONTACT US »
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  INSIGHTS FROM ERNAN
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Dear Colleagues,

Like you, I keep reading about the power of social networking. But, I haven’t seen many case studies which show how to make money from this phenomenon.

The company featured in this issue has built its entire revenue model on the power of social networking.

This young company, Amie Street (www.AmieStreet.com) provides a discovery service for independent music, online. All songs start at 0 cents. Pricing is driven by members to a maximum of 98 cents.

In just 18 months, Amie Street has grown its catalog to nearly 1 million songs and is experiencing rapid sales growth. Average spending by customers exceeds the average spend on iTunes.

The company was started in 2006 by 3 college buddies, Joshua Boltuch, Elliott Breece and Elias Roman (my son). Amazon.com led the company’s Series A financing round and Business Week named them among the Top 25 Entrepreneurs Under 25. Amie Street represents a significant breakthrough in Customer Relationship VOC Marketing and Management.

The following case study will show you how Amie Street used Voice of Customer Research to improve its customer experience. Included are 10 Must-Have Tips for marketers.

With best wishes,

Ernan

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Converting Social Networking Into Revenue: 10 VOC Research Based Must Have Tips

Aimme StreetAbout AmieStreet.com
By Josh Boltuch, Co-Founder and CMO, AmieStreet.com

 

I. Background

The FoundersLike most students in college, we listened to a lot of music, but unlike generations before for us, almost all of it came from a computer. Everyone could get all the music they wanted for free and very fast. So from the very beginning of the business, we focused on the question: what would get us to buy music? The answer was a service that would help us filter and discover new music from the tens of millions of songs on the Internet. You could go to a number of different places online when you knew the song or artist you wanted, but where did you go when you weren’t sure what you wanted?

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We wish you the best of luck in using the Voice-of-Customer-driven 3-Step Marketing Process to achieve double-digit response.

A key factor driving the structure of Amie Street was our belief that music is a social experience. Music is about much more than acquisition or accumulation. It's about the joy of discovering something new and personal, and then being able to share that experience with others.

From those initial discussions came AmieStreet.com, the first digital music store where members determine the price of every song. Founded in the spring of 2006, AmieStreet.com offers music fans a community driven music experience. Every song starts out free and increases in price based on the frequency of purchases. The community determines the value of each song, giving fans true ownership over their music, and making the price of a song a meter of its popularity.

Whether a member wants to spend two minutes or two hours discovering new music, he or she is connected to an entire community of music lovers. Amie Street further encourages interactions between members by rewarding them with credits for more music when they recommend tracks that increase in price. This provides members with an incentive to find and recommend good music. Artists can sell their music on AmieStreet.com, using its platform to connect with a larger audience and build momentum and buzz for their music.

Amie Street announced its Series A financing led by Amazon.com in August of 2007. Amie Street Japan began operations in December of 2007 and will be applying Amie Street’s business model to Japanese anime video, and Manga, a popular form of Japanese comic books.

AmieeStreet.com
II. Challenges

As a start-up, everything from our brand image to the web site itself was in flux and being forged in real time. Due to our rapid projected growth rate, we had to answer some critical questions early in our lifecycle as a company.

Given their experience in improving the on-line customer experience for NBC and Microsoft, we asked Ernan Roman Direct Marketing to conduct their Voice of Customer Relationship Research process and develop strategies to address the following issues:

  • How do our customers and prospects currently experience music online?
  • What drives people to Amie Street?
  • How does their experience on Amie Street compare with their expectations?
  • What will motivate customers to buy more music and increase usage?
  • How can the Amie Street site be significantly improved so it becomes a meaningful destination, customer experience and connection to Amie Street?
  • What is the perception of Amie Street?
  • What do people identify as Community building components?
  • Which areas of content have the greatest potential for Personalization?

III. VOC Research Learnings and 10 Tips for Marketers

TIP 1: CONTENT IS KING. There is no faster way to lose a customer than not having “in stock” what they want. Even if you do not have the specific product they asked for, you must let them know that you recognize what they want and will at least guide them to similar products.

TIP 2: Do not undersell your product. If you have unique features or a competitive advantage clearly communicate these in customer friendly language. Do not assume they understand these benefits. Watch out for internal jargon!

TIP 3: Focus your web site and experience to your specific customers. Even though we are trying to appeal to a broad audience of music customers, we still must communicate a unique brand. Per the VOC research, in our case playing it safe in terms of web site design and copy did more to turn off customers than if the site had been “out there”. So, focus the experience and design to your specific customers.

TIP 4: Social networking and commerce are still uncharted waters. Developing a product that is both a social discovery engine and a seamless e commerce solution is very difficult. Per the VOC research, our focus needed to be less on e-commerce and more on the member experience of community and interaction.

TIP 5: Members feel a true connection and this must constantly be reinforced. Members feel a special connection to Amie Street. Per the VOC findings, we needed to do more to acknowledge how much we valued these members. Customer appreciation was identified as a welcome and golden opportunity to build rock solid brand loyalty with these members.

TIP 6: Every customer is important and must be serviced within hours. Because we started as three guys in a house, we treated every customer as if they were the only customer, an attitude that has served us extremely well. Even though we now have hundreds of customer inquiries daily, every customer request receives an in-depth, personal response from a member of our team within 24 hours. Per the VOC research, this is seen as an important competitive differentiator compared with other “corporate” music sites.

TIP 7: Each section of the web site should only focus on the key messages customers want to see at that point. Per the VOC research, customers were confused or turned off by certain parts of the site because we were trying to jam too many things into certain pages or sections. Just because the internet offers infinite choice doesn't mean your web site should. Figure out the one message and action you want to convey at each point in your site, to deliver the best customer experience!

TIP 8: Word of mouth is important, so give customers easy ways to promote you. Amie Street has grown almost entirely through word of mouth, yet per the VOC, we were not giving members easy and convenient ways to talk about Amie Street and the artists they discovered and love.

TIP 9: Price is not the most important factor! The VOC helped us understand that even though we usually offer the lowest prices compared to other music stores, this was often not a major concern to customers. They were more excited about discovering a song first and being able to tell friends than the fact that it was free or very inexpensive. Lesson: It's all about the experience you create on your site regarding all aspects of doing business with you. The better this feels, the less important price is, even in a very competitive market.

TIP 10: People will opt-in and self-profile their interests and preferences. The VOC surprised us regarding how much information people were willing to share regarding their preferences in order to receive a more personalized on-site experience and relevant on-going communications. We will use opt-in self-profiling to drive much more targeted communications.

 

IV. Results from Implementing the VOC Research Based Strategies

Within the first 60 days of implementing the VOC research based strategies, we have tracked the following improvements:

• New customer enrollment has increased 16%,
• Average repeat purchases have increased 16%,
• Overall sales have increased 13%.

With results like these, Amie Street has achieved a breakthrough in Customer Relationship Marketing and Management.

    To read previous newsletters, click here.
    For additional case studies, click here.

     
Ernan Roman Direct Marketing | 3 Melrose Lane | Douglas Manor, NY 11363 | Phone: 718.225.4151 | Fax: 718.225.4889
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