In the old movie rental days I always knew my family was paying a lot in late fees. Apparently, we weren't alone. Netflix, highlighted in Businessweek as number 29 on their Hot Growth list, changed all of that. Here's another great story about an innovative company not only competing with the big boys, but completely changing the rules.

How well is it working? Last year Netflix's profits doubled to $41 million while Blockbuster and Movie Gallery lost a combined $1 Billion! Now get this, $400 million of that billion was due to late fees that Blockbuster had to give up in order to compete with Netflix. Netflix is getting close to 5 million customers and is expected to do nearly a billion in revenue this year. Not bad for a company that many thought would never succeed because we all want "instant gratification" when we rent movies. Apparently, some of us are willing to plan ahead a little.

Perhaps even more important than dropping late fees, Netflix competes by understanding its customers and their tastes and building customer loyalty. Seventy percent of Blockbuster's rentals are new releases. For Netflix the number is only 30 percent. Instead of pushing whatever Hollywood's latest offering is, Netflix actively looks for films that it's customers want (what a concept). The average user on Netflix rates over 200 films (talk about customer feedback). Combine that with rental history and Netflix can predict pretty well what will rent and what won't. This information allows it to actively pursue films from independents that others won't take a chance on.

Of course the future of movie rental is sure to change. While there is plenty of debate on the timing, it is almost certain that web distribution of movies will grow. Netflix plans to be there and will bring along its 5 million loyal customers...

Interested in doubling your sales? That is exactly what Proctor & Gamble did with their Dawn Direct Foam dish detergent. How did they do it? With a word-of-mouth marketing program called Vocalpoint. According to a recent article in BusinessWeek, this is how it works:

Procter and Gamble looks for customers that match their target criteria, in this case moms and particularly those with large social networks. They find most of them by advertising online and through referrals. Participants are asked to talk to their friends about new products. In return, P&G promises a stream of new product samples, "a voice that is going to be heard," and specific messages to share. So far 600,000 moms are participating.

According to Steve Knox, the CEO of Vocalpoint, the most difficult challenge with word-of-mouth marketing is making it predictable. His solution: find a strong reason why a person would want to share product information with a friend. The article goes on to say--and this is very important--that the message given to the participants is always different from the one P&G uses in traditional media.

For example on the Dawn campaign, traditional ads stressed the grease-cutting power, But the message sent to the Vocalpoint mom's focused on how fun the foam was for kids to use--so fun they would be asking to help wash the dishes. They also received a sponge shaped like a foot and a dozen $1.50 coupons. The result: sales in the three test markets were double those in markets where Vocalpoint was not used.

Sound expensive and difficult to manage? I don't think it has to be. Here are five simple steps to get your Buzz Force going and your sales increasing:

1. Make it worth their while. Proctor and Gamble offers two things: product samples/discounts and a sense of empowerment. Both make their participants feel like a VIP or an "insider." That is your goal. Price the coupons such that you will be happy to see your "buzz force" using them and remember the pay-off is not just your participant coming back in with the coupon but the friends they are talking to and the feedback they are giving you.
2. Invite your customers. The need to invite is obvious, the method can vary. Proctor & Gamble places ads to attract those interested. That can be expensive. Why not just invite your customers as you complete your transaction with them? There are several ways to do it. You can start by asking for feedback and then follow that up with an invitation to stay in touch. Another option is to invite them to join a birthday or some other kind of club and then develop the relationship from there. Finally, is the direct approach. "Interested in joining our fan club? You get discounts and sneak previews you can pass along to your friends."
3. Give them a message worth telling. Hopefully your business is so remarkable that your customers will be anxious to tell their friends about you, but don't leave it to chance. Remember Proctor and Gamble always gives their buzz agents a specific message that is easy to share with friends. Put yourselves in your customers' shoes--what would be an easy way for them to tell their friends about you? Maybe it is "privileged" information: "Did you hear Subway is coming out with a new sandwich?" Maybe it is a great deal. "Hey, next time you need a hair cut let me know, Sport Clips gives me great coupons." Or maybe it is something just plain remarkable, "I got two movie tickets today from my insurance guy!"
4. Give them another message worth telling. This shouldn't be a one time campaign. Stay in touch regularly. Those who have "opted-in" want to hear from you. The more ideas you give them to talk to their friends, the more likely one will work for them and you'll start seeing their friends.
5. Listen and Learn. Perhaps this one should have been first rather than last, because it is very important. Those who join your buzz force can become your best source of market intelligence. They know and like your product, they know how people react to your product, and they are willing to put some effort into your product. Ask them what they think and listen carefully. Look to their feedback for message ideas and ways to improve your offering. How do you think the Proctor and Gamble folks figured out kids like the foam? It didn't happen in a board room.

Still sound like a lot of work? There are tools that can be used to greatly streamline the time and effort required to manage a word-of-mouth marketing program (Caution: shameless plug approaching). PromoterZ is one such tool. In simple terms, it gives users a quick and inexpensive way to invite participants, gather feedback, send messages (including online coupons), and even includes an easy online way for the buzz force to pass the word to their friends. It handles the logistics so that you can focus on the message. Check it out at www.promoterz.com.

I took my three teenage sons to see Les Miserables last night at the Gammage Center on the ASU campus. I've seen it several times now. Besides being awed by the amazing talent of the actors, I love the story told by Victor Hugo. Man can change and can make a difference (not to mention the fact that Jean Valjean was an entrepreneur that went from 19 years of corporate--sorry I mean jail--life to found a successful bead factory.) But I digress, what got me to thinking was I would have loved to be able to tell the cast how much I enjoyed it. Sure I stood up and clapped, but I would have liked to be able to tell them specifics.

We also had a local election here in Mesa, Arizona yesterday. The two main issues had to do with increasing sales tax and adding a property tax. It got me to thinking about exit polls. BTW, the sales tax measure passed. The property tax measure didn't.

My point--and I apologize for taking so long to get to it--is that there is real value in the concept of an exit poll for customers. The exit poll in the election world is meant to give an early indication of how the election will be decided. It is certainly not always accurate, but it is helpful. Wouldn't you like an early indication of what your customers are thinking before they vote with their feet and never come back?

Not only would you gain useful information so that you could make operational adjustments, it is also one more opportunity to build the relationship with your customer. I noticed in the Les Mis program that several of the actors had their own websites and were promoting their own CDs. What if the production had a website where I could go give feedback and in the process click on links to cast member products, maybe send a message to my friends telling them how much I enjoyed the production, etc.? Now I'm engaged. Based on the final ovation, I think several who attended would go give feedback and take the next step.

So will an exit poll work for your business? Lot's of ways to find out. You could position yourself at the front door of your business and ask customers as they leave how happy they are with the service. Or you could hire an independent firm to send some folks over with clipboards to ask for you--sometimes people will be more honest for a third party though you may lose something in the translation and it will certainly cost you something. Another option is to put technology to work for you (blatant plug coming) and use a tool like PromoterZ to collect feedback, email addresses and referrals online.

Remember two goals for the exit poll: get feedback and build a bridge to a more engaged relationship.

Came upon an interesting post in the Life Insurance Agent Blog. The title of the entry is The Lie About Leads. Buying and selling leads is big business in the insurance industry. Do a Google search on "Insurance Leads" and you will see what I mean. Just like any other business, finding new customers can be an expensive and time consuming process. Here is a quick primer on lead terminology from the Life Insurance Agent blog:

Cold lead—this is worthless—it’s a name from a mailing list broker. The person may meet certain criteria—e.g., age, income or household value. Above that, it’s just a name, like a name from a phone book.

Warm lead—the person has requested information by completing a card, an Internet form or expressed interest with no coaxing. Your best prospects will always be the ones that take action on their own, with no one convincing, no coaxing, no call from a telemarketer.

Telemarketed lead. This is supposedly a warm lead with interest in meeting—they tell you that the prospect is waiting for your call. I doubt it. Few people have the time and inclination to talk to telemarketers on the phone and sales people.

Set appointment—this can be a very valuable lead but ask how the appointment was made. Did the prospect first call from an ad or direct mail offer and then a telemarketer set an appointment? That’s good because this prospect took the initiative.

I think he makes some great points but may have left off the most important lead of all: a referral from a happy customer. Even the most qualified lead listed above has no clue about you--your honesty, your integrity, your ability to deliver great service. On the other hand, a lead that comes from a happy customer, that lead comes with your customer's reputation attached. That is, your customer likes you enough that they are willing to put their reputation on the line with their friend on behalf of you and your business. Countless surveys have shown that referrals are without a doubt the most powerful influence on just about any purchasing decision.

Does that mean that there is no place for buying leads? No, not at all. Especially when you are getting started. You have to keep your funnel full. What it does mean, is that every lead that you successfully turn into a customer is a golden goose. Your highest priority should be to take care of that goose so that it continues to lay the golden eggs of referrals well into the future.

Think it doesn't work? Tyler Slade of Canyon Lands Insurance, one of our PromoterZ™ customers, gets a 9 or 10 from 95% of his clients when asked how likely it is they would recommend him to a friend. Not surprisingly, he has received referrals from 60% of his clients. It works.

So here is my blatant PromoterZ plug: Apply some modern technology to your client care tools to make sure your geese are being well tended. PromoterZ™ will make sure they are happy, send information to them regularly, send them a birthday greeting, and collect referrals. Check it out: www.promoterz.com. End of blantant plug.

From Japan comes the tradition of oshibori. Oshibori is the Japanese word for the rolled up hot towel you receive after eating at an authentic Japanese restaurant or at the conclusion of an international flight. If you have never experienced a hot towel after a long flight, it is as close as you can get to a refreshing shower in the comfort of your seat with all your clothes on. What does it have to do with growing your business? It's remarkable.

As noted, you might expect a hot towel in a Japanese restaurant or on a flight but how about in the dentist chair just after the hygienist has stretched your mouth into unnatural shapes to chisel that last piece of plaque from your teeth? Nice and warm, with the light sent of lemon--that would be remarkable wouldn't it? How might that change what you tell your friends about your trip to the dentist? Simple thing. Only costs a few cents. But it could lead to a number of referrals. What would your customers tell their friends if you gave them a hot towel?

According to Jason Stark of White Towel Services, the majority of his customers are dentists. Dentists that understand that filling your cavity is a commodity--any one of a thousand dentists could it. But having a remarkable experience in their office--that is something that nobody can compete with.

So what do your customers remember about your business? Do they experience something remarkable enough to tell their friends about? For some businesses it might be their concept. For example, Entrees Made Easy provides the ingredients and recipes for several meals to its customers making it easy and quick for them to create great tasting home cooked meals. The concept is new, innovative, and needed in today's hectic world. Those that try it can't wait to tell their friends.

Thankfully, an innovative new concept isn't the only way to be remarkable. The sad fact is that good service is so rare, any company that does provide it is remarkable. I read just yesterday in a column by John DiJulius about Cameron Mitchell Restaurants (27 restaurants in 7 states). What I read wasn't about their food or their concept (though with further research I learned both are amazing). What I read about was their customer service. They seem to realize that indeed the customer is the emperor and the emperor doesn't like to be told "no." Their promise: "The answer's yes..now what's the question?" Given their growth, I think their customers remember that kind of service and find it remarkable enough to tell their friends.

Still wondering what is remarkable about your business? Here is a suggestion: ask your customers. Ask them if they would recommend you to a friend and if so why? Then listen carefully.

How ever you figure it out, do it quickly. Being remarkable is not just a good idea--it is absolutely required for any business to both survive and grow.