Want to see the answers to previous questions? Here’s the blog archive; the pre-blog newsletter archives are here.
Q: First off, I very much appreciate you sharing all this wonderful content on your blog and conferences such as eMetrics.
A: Thanks for that!
Q: My question is a simple one, but I think the answer may be hard: When does a visitor “need” a coupon? *Need* defined as: visitor would not have placed an order unless presented with the coupon.
A: Hmmm…methinks we’re going to have to define a few concepts and be clear on the goals to make sure we are nailing this down… visitor versus customer, sales versus profit, etc. In other words, answer is not hard, but could be complex without defining context.
Q: It’s still a mystery to me why so many retailers seem more than willing to hand over all their margins to Groupon or give coupons to basically all visitors. I am curious whether you would approach this question using observational data (eg web analytics) or experiments (eg AB testing), or both.
A: Right – is a mystery to me too!
There are certain situations where this approach might be appropriate, but the problem with much web “marketing” (which often is really just advertising without much thought about marketing) is often there is success in a narrow or special situation. Then the pundits jump on and say “if you’re not doing this you are stupid”, regardless of the business situation and / or without recognizing the special circumstances that are driving success. This is all the real Marketing stuff people leave out; understanding why it works, under what circumstances, for which segments, involving which products.
When you’re in the business of measuring the effects of Marketing programs, certain patterns begin expressing themselves over and over. One of the oldest in the contribution to success of various parts of a Marketing effort, sometimes called the 60-30-10 rule:
60 percent of success is determined by the audience quality
30 percent of success is determined by the offer
10 percent of success is determined by the creative
Where do these stats come from? Continuous improvement testing. Over the years, if you run a lot of different tests, you just begin to see this pattern. And the pattern holds across a very wide variety of business models – online and offline.
The key takeaway here: audience quality is the most important component of success in a results-oriented Marketing campaign. This is why the CPM’s for niche Magazines, for example, are so high. These Magazines are tremendously efficient marketing vehicles because they have high audience quality, which drives end behavior – results.
And the primary reason the audience quality is so high?
People pay for these Magazines. When people pay for something, they value it with more Attention. Why? Simple.
In a magazine like Hot Rod or Concrete Decor or Vogue, the percentage of content that is interesting to the niche audience is very high. In fact, the Advertising is viewed as content.
Smaller audience, very high quality. Ads work like gangbusters.
Clearly, there are other ways to run a media model. At the opposite end of the media spectrum, there is free.
What if what the media / agency complex has been telling you all along about online advertising is not really true. What if Advertising – from the end user (visitor) perspective – performs a fundamentally different job online than it does offline? What if the entire game is different than you think it is? Might that explain why it’s so difficult to get any agreement on the value of online advertising?
Please bear with me; see if this makes any sense to you.
Offline, it’s important that you remember an ad. That’s because you are rarely in a position to take advantage of or act on the ad when you are exposed to it – unless you are sitting in front of a computer. Awareness, Recall, all those nice measurements the offliners do are important for offline Advertising, because the job of offline Advertising is get you to remember it so you can Act on the Advertising when you are in a position to do so.
Online, you can immediately investigate the products or services advertised, get 3rd party opinions, and so forth. You can convert Awareness to Intent and Desire in a matter of moments, if not take Action as well – if you are interested in what is being Advertised.
The fundamental answer to every question you have about online advertising might be really simple, if you think this way:
Online Ads are Navigation
They are not Advertising, in the traditional sense of offline Advertising.
Content sources serve the role of traditional Advertising online.
Here are 3 free webinars you might want to take advantage of. You might not agree with these opinions, but hey, it’s a good idea to get out of the echo chamber once and awhile, don’t you think? Try these online sessions for a little brain stretching:
With 10% of marketing executives being perceived as strategic and influential by the C-suite there’s clearly a crisis of confidence. I’ve mentioned Jonathan’s blog and book before and here’s a chance to hear a bit of the inside story. You’ll learn how to exceed expectations of both C-suite executives and customers, neutralize political feuds by organizing cross-departmentally, and how to stop thinking like a reporter and start acting like an advisor
Are you sick and tired of reading the same old blah, blah, blah, from the so- called marketing experts who just tell you stuff you already know? Then you need to attend this session as the grumpy old man cuts through the morass of bad advice and introduces you to the must-dos in the new world of marketing. I know Ron personally (as in offline) and even if you disagree, you will be entertained.
A WAA event, open to both members and non-members. Web analysts are not the first to grapple with multiple channels. Traditional marketers have always had to illuminate customer behavior across stores, call center, direct mail, etc. So, rather than reinventing the wheel in each camp, what proven methods can you teach each other? Three different but aligned approaches on solving the multichannel puzzle, should be something for everyone here.
Want to see the answers to previous questions? Here’s the blog archive; the pre-blog newsletter archives are here.
Q: Most CRM experts agree that discount is a terrible way to attract new customers. They seem to all agree that these “transaction buyers” are money-losing customers and have no loyalty.
A: I think using discounts profitably for customer acquisition depends a lot on your “Brand Personality” and your business model. That said, often people screw this up and attract the wrong kind of customer.
Q: But, I have seen a lot of different opinions on the use of discounts to increase loyalty and retention among current customers. I have seen experts contradicting themselves on this subject saying that discount is a terrible way to reward gold customers or to move up customers to a “better segment” and after some time they contradict themselves mentioning a successful discount case study (points are a common method used). Jim, what is your opinion about using discounts as a weapon in a retention program?
A: First, we have to define “discount”. Price discounts have the effect of reducing margins, but so do “better service” ideas like “VIP phone lines” and loyalty programs. So you can take your discount on the top line or the operational line, the fact is it costs money to provide good service to best customers in hopes of keeping them. I mean, what’s the $10 million you spent on a CRM system? Choose your poison, it costs money to retain customers.
Then, in an even more spectacularly unexpected move, you have C-Level folks at 2 gargantuan Advertising Agencies (though both part of WPP) co-writing an article declaring that Brand and Response are the Same. Here’s the opener: “the value that brands bring to a company’s total business value is exaggerated.”
Holy Branding Batman, that’s one heck of a thing to say for an Ad Agency, know what I mean? But they are absolutely right, the nature of a Brand has changed, this ain’t the 1960’s.
This is how they get to “the singularity”:
“What was once sales is now enhancing the brand experience, because through direct marketing technology and strategies, a brand can reinforce its ability to listen, customize and learn from the consumer. This is not just direct marketing, its direct engagement with every potential customer, sometimes at the moment they’re introduced to the brand. In fact, in a world of compressed consumer decision-making, direct response is now a potent form of branding.”
Businesses usually have some analysts around, even if the business is not particularly “data-driven”.
The term Business Analyst has been around for a while, usually referring to a person who is a translator of sorts between Business Units and IT. These people try to make sure “requirements” from the business side are implemented as desired on the IT side.
Sometimes there are Operational Analysts, who are typically IT folks or Engineers, depending on the business. This is the world of Six Sigma and process, where the business is trying to improve throughput or cut down on waste. But we know that just because Operations is Operating Just Fine, we don’t always get the result we would like from a Marketing perspective.
A similar Analyst might be present in Marketing Operations Management. This is really about the process of Marketing execution though, not Acquisition / Retention / Customer Value.
I don’t think I have ever seen a decent-sized business without Financial Analysts. These folks look for variances or unusual activity in Financial Reporting and seek to explain why. Sometimes they actually get involved with Marketing analysis, though usually not for something like “Campaigns”. Instead, they look for structural problems that manifest as a “problem with Marketing” in the Financial systems.
If you’re not familiar with the Liu Xiang and his injury, see here.
In a brilliant, and stunningly swift move for a large org, Nike has managed to get full page “Just Do It” print ads into this morning’s China papers supporting Liu Xiang. The “Love” treatment, which you can see more on here, has this copy (translated from the Mandarin):
With thoughts on what this means for offline media and planning
I wonder how many of today’s online marketers, and particularly the evangelists in Social, have read Permission Marketing by Seth Godin (1999) or The Engaged Customer by Hans Peter Brondmo (2002). Why? Because these two books tell you why Interactive is different, explain how it is different, and provide the background you need to be successful at it. For example, they explain how Social works before Social even existed in its current form.
How could these books predict the current climate? Because “Social” – the Interactive behavior and psychology that drives it – is what happens when you create Interactivity. These ideas are fundamental to Interactivity, they exist regardless of the tools to enable them.
Social, the tools and applications, are simply software iterations around these fundamentals. Software continues to morph and evolve. But the emotions and behavior driving today’s Social activity are fundamentally no different from the emotions and behavior that drove the proper use of interactivity for Marketing in CompuServe or discussion boards or e-mail discussion lists. Community. Sharing. The rules and etiquette of good Interactive relationships.
What I’ve come to realize after a lot of discussions and thought is this: