Category Archives: Measuring Engagement

Adoption and Abandonment

Out of the Wharton School we have a nice piece of behavioral research on the effect speed of Adoption has on longer-term commitment.  The article, The Long-term Downside of Overnight Success, describes research finding “the adoption velocity has a negative effect on the cumulative number of adopters”. 

This research dovetails nicely with a lot of the topics discussed here on the blog lately, so I thought I’d use it (with a nod to Godin’s post on Strategy vs. Tactics today) to provide some fodder for thought.

First, the importance of Psychology in Marketing.  So many of the “discoveries” arrived at through  brute force testing of Online Advertising are already well known in the greater discipline of Marketing through Psychology.  For more on this read “The Other 3P’s” and if you’d like to do something about lack of knowledge in this area, make sure to read this comment on source books.

Second, this research is a great example of isolating the true drivers of behavior.  The idea of looking at baby names to isolate the real behavior from “technology and other commercial effects” while including “symbolic meaning about identity” results in a broad, Strategic-level answer to the question, not a Tactical one. 

Why is this important?  It means the results can be applied across a host of different Marketing situations, rather than only a specific one. 

Continue reading Adoption and Abandonment

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Lead Scoring and Nurturing

The following Q & A is from the June 2009 Drilling Down Newsletter.

Got a question about Customer Measurement, Management, Valuation, Retention, Loyalty, Defection?  Just ask your question.  Also, Feel free to leave a comment.  Want to see the answers to previous questions?  Here’s the blog archive; the pre-blog newsletter archives are here.

Q: I received this article (Norms of Reciprocity, measuring value of Social Marketing) via a friend’s Twitter account.  Very interesting.

A:  Glad you enjoyed it!

Q:  It has made open up my ACT! database, and my Outlook databases and add the metric of Growing / Strong / Weakening / Failed to my normal Sales and Business progress metrics.  If I group those categories and correlate to traditional metrics, it’s impressive how they reflect each other.

A:  Yes, most people are surprised.  It’s a very, very simple idea that seems to work across just about any human activity including crime, attendance, and so forth.  

The more Recently someone has done something, the more likely they are to do it again.  Conversely, the longer since an activity last took place, the less likely the person will do it again.  Often called Recency in Psychology and studied quite a bit.

Q:  Now I have to think about how I really use and apply this. : )

A:  Well, if I can guess you are in Sales from your title, typically one of the best applications is in what Strategic Marketing folks might call “allocation of resources”, which probably translates into “lead nurturing” for you.

Continue reading Lead Scoring and Nurturing

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Norms of Reciprocity

Social Marketing Doesn’t Rely on Social Media

Do you believe human beings share certain fundamental traits that define “being human”?

If so, do you believe that human beings tend to behave in certain ways under certain circumstances?

If so, do you then believe since human behavior has these tendencies, it can often be predicted?

If so, then do you think perhaps the study of Psychology and Sociology might provide you some clues to creating successful businesses, campaigns, products, and services?  While your friends and competitors are all iterating their way into oblivion?

On the web, time and time again, we see the same themes repeating.  Yet with each introduction of a new technology, these themes tend to be treated like a new discovery, even though the theme has been well established in the past.

Norms of Reciprocity is a constant human theme.  You may know the expression of these norms as “Sharing”.  Web old timers will probably recognize this idea as “Give, then Take” from the I-Sales discussion list as early as 1995.  In various forms, this theme goes back to the beginning of human history, all the way back to the handshake and other greeting gestures.  This same theme is embedded in countless Religions all over the world: “Do onto others as you would wish them do onto you”.  At least a couple centuries old, this idea.

Norms of Reciprocity simply means this: When you do something nice for a human being, help them in some way, this human tends to feel Gratitude towards “the doer” and tends to do something nice back.  Gratitude drives the desire to Reciprocate, because it’s just what humans do, it’s normal, a “norm”.

Norms of Reciprocity.

Continue reading Norms of Reciprocity

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Hacking the RFM Model

The following is from the May 2009 Drilling Down Newsletter.  Got a question about Customer Measurement, Management, Valuation, Retention, Loyalty, Defection?  Just ask your question.  Also, feel free to leave a comment. 

Want to see the answers to previous questions?  Here’s the blog archive; the pre-blog newsletter archives are here.

Q:  First of all thank you for your help.  I have some questions I would be pleased if you answer them for me.

A:  No problem!

Q:  1. RFM analysis – is it possible to use some other ranking technique rather than quintiles? Using quintiles for bigger databases will cause many tied values, isn’t it a problem?

A:  Sure, you can use it any way it works best for you.  There is no “magic” behind quintiles, you can use deciles or whatever works best. It’s the idea of ranking by Recency, Frequency, and Value that is the key concept in the model.

I’ve seen dozens and perhaps hundreds of variations on the core RFM model, depending on how you classify a “variation”.  One change that’s common is changing the scaling, as you mention above, to accommodate the size of the database.  Smaller databases use quartiles or even tertiles.  Larger databases, choose the ordered distribution that meets the need.

Continue reading Hacking the RFM Model

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Got Discount Proneness?

Discount Proneness is what happens when you “teach” customers to expect discounts.  Over time, they won’t buy unless you send them a discount.  They wait for it, expect it.  Unraveling this behavior is a very painful process you do not want to experience.

The latest shiny object where Coupon Proneness comes into play is the “shopping cart recapture” program.  Mark my words, if it is not happening already, these programs are teaching customers to “Add to Cart” and then abandon it, waiting for an e-mail with a discount to “recapture” this sale – a sale that for many receiving the e-mail, would have taken place anyway. 

The best way to measure this effect is to use a Control Group.

When I hear people talking about programs like this (for example, in the Yahoo analytics group) what I hear is “the faster you send the e-mail, the higher the response rate you get”.

That, my friends, is pretty much a guarantee that a majority of the people receiving that e-mail would have bought anyway.  Hold out a random sample of the population and prove it to yourself.  There is a best, most profitable time to send such an e-mail, and that time will be revealed to you using a controlled test.  The correct timing is almost certainly not within 24 or even 48 hours.

That is, if you care about Profits over Sales, and trust me, somebody at your company does.  They just have not told you yet!

When you give away margin you do not have to give away on a sale, that is a cost.  Unless you are including that cost in your campaign analysis, you are not reflecting the true financial nature of the campaigns you are doing.  If you are an analyst, that’s a problem.

If you are using cart recapture campaigns, please do a controlled test sooner rather than later.  Because once your customers have Discount Proneness, it will be very painful to fix.

Continue reading Got Discount Proneness?

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Use Discounts for Customer Retention?

The following is from the March 2009 Drilling Down Newsletter.  Got a question about Customer Measurement, Management, Valuation, Retention, Loyalty, Defection?  Just ask your question.  Also, feel free to leave a comment. 

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.

Continue reading Use Discounts for Customer Retention?

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Visitor Retention Mapping

The following is from the January 2009 Drilling Down Newsletter.  Got a question about Customer Measurement, Management, Valuation, Retention, Loyalty, Defection?  Just ask your question.  Also, feel free to leave a comment. 

Want to see the answers to previous questions?  The pre-blog newsletter archives are here.

Q: The research folks in my company are trying to convince me that measuring sessions and Page Views per Session is more effective than using Recency and Sessions, as you advocate in your book, for a retention metric.

A: For a content site, the Page Views / Session measure can be used as a measure of visitor quality and appropriate marketing to the right audience – a customer acquisition idea – not retention.  And it really needs to be broken out by Source – the average has little actionable meaning.  You want to know the Visitor Sources, and then look at this metric by Source.  This is still Frequency though  – what about visitors who don’t come back?

Q: I am having some difficulty in making a decision regarding this. They want to give me a matrix with Page Views per Session on the Y axis and Total Sessions on the X axis as the “customer retention map”.

Continue reading Visitor Retention Mapping

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From Audience to the Individual

Prompted by Avinash’s post on Recency (if this topic interests you, there is much more here), I have to return to an idea that keeps running through my head:

Why do so many Marketing people fail to understand the basic underlying dynamics of Interactive / Online Marketing?  Relative to the Comments on Avinash’s post, why would Marketers not be interested in the Recency metric?  If the Marketers are not aware of it, why would Analysts not push it to them, show them the power of it?

The more I think about this issue, as I have been for several years now, the more confident I become the answer is quite simple: Nobody ever taught most Marketers how to communicate properly to Individuals.  Their training, their experiences, their peers, their conferences, all of it is about Marketing to Audiences.  The nameless, faceless hordes represented by GRP’s.

They simply don’t know how to do it any other way. 

And as a result, neither does whoever they report to. 

Which means any Marketing Accountability or Productivity Metrics, if they exist, are about Audiences, not Individuals.

So, all the Marketers care about are Audiences, these one-off blips on the screen, as opposed to Individuals, who carry longer-term, Potential Value to the Company that can be measured with Recency.

That’s why they allow the blasting of e-mails, they buy untargeted impressions.  They repeat what they know from offline, online.

Sad, really.  A one-way thought process in a two-way world.

What can we do about it? 

I’m going to talk about these concepts with a few Marketers during the AMA’s Digital Marketing Lab at M.planet next week.

I’ll let you know how it goes…

Update: I should probably skip Marketing, go straight to the CFO.

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NCDM 08: What was Hot?

With two very intense days of 5-track sessions going at NCDM 08, it was difficult to pay attention to everything that was going on.  Still, by picking up handouts from sessions I did not go to, I could get a sense of what the hot topics were this year:

1.  Web Plays Data Friendly – Almost every session had a web component in it, the BI folks are getting it done.  The data is coming off the web / out of web analytics and into the data warehouse so everybody knows what is really going on. 

Much of this work is being done by the big service bureaus, not the companies themselves, as far as I could tell.  Web Intelligence, baby.

2.  Media Mix Models – which typically show online Display advertising as a poor choice for allocating marketing budget to when you are also running offline media; the yield is quite poor versus almost every other media.  Search, as you might expect, Rocks on Productivity, though TV still rules for Productivity and moving the needle.

The implication here is you’d be much better off running TV to generate / amplify Search behavior than running Display to do the same.  Offline for Awareness, Online for Intent / Desire

3.  Contact Optimization – I’ve written before about what ultimately happens when you don’t have a Contact Strategy.  At some point, BI will measure the bottom line impact of every division in the company pounding customers with the division’s own contact strategy (Hint: you are driving your customers crazy).  Then, move all customer contact to a centralized model which controls contact by source of new customer and value generated, measured through controlled testing.

This movement should not be surprising, given the whole “customer in control” and “social” movements which onliners give so much lip service to but never take action on.  Well, not never, but rarely.

4.  Measuring Engagement – yes, Engagement.  OFFLINE, as well as online.  The overwhelming message was this: it does not make any sense, and actually costs you money, to keep pounding your customers with any kind of communication when they don’t respond / interact.  You can measure dis-Engagement, and when you see it, you should stop communicating – online or offline. 

And these folks proved it, over and over, with real math.  See related #3 above.  If you’d like to see a detailed e-mail example of this concept, check out this case study.

And of course:  Models and more models.  Like Hierarchical Bayesian and Disaggregate Discrete Choice.

Boy, I love it when you talk like that.

 

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NCDM Show – you going?

Next week I will be moderating a panel at the NCDM show. 

Don’t know NCDM?  If you’re a web analyst interested in what happens in BI from a Marketing perspective, this is the show for you – National Center for Database Marketing

I’m moderating a “shootout” panel titled Web Analytics Solutions Showdown: How Do You Measure Customer Engagement? with panelists Barry Parshall from WebTrends, John Squire from Coremetrics, and David Kirschner from Omniture (Jon Gibson / ClickTracks had to drop out).

No right or wrong answers for this session, mostly a demonstration of how different WA platforms approach the challenge of “Measuring Engagement” differently.  Just tell us what you believe “Engagement” is and how it is measured with your tool using a case study.

Continue reading NCDM Show – you going?

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