Tag Archives: Marketing thru Operations

Measuring the $$ Value of Customer Experience

 Marketing IS (Can Be?) an Experience

Early on I discovered something from the work of leaders in data-based marketing business models: they were always very concerned with post-campaign execution – not only from marketing, but also through product, distribution, and service.  I thought this strange, until I realized they knew something I did not: when you have customer data, you can actually identify and fix negative customer value impacts caused by poor experience.

This means you can directly quantify the value of customer experience, budget for fixing it, and create a financial model that proves out the bottom line hard money profits (or losses) from paying attention to the business value as a result of customer experience.

And critically, this idea becomes much more important as you move from surface success metrics like conversion and sales down into deep success metrics like company profits. Frequently you see the profit / loss from “marketing” often has less to do with campaigns and more to do with the positive or negative experiences caused by campaigns.

Examples

You might think taking the time to provide special treatment to brand new customers would always encourage engagement and repeat purchase.  You’d be wrong.  Sometimes this works, sometimes this does not work, depending on the context of the customer.  Does it surprise you to find out customers often do not want to be “delighted”?

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A Budget for Discounts?

The following is from the December 2008 Drilling Down Newsletter

Got a question about Customer Measurement, Management, Valuation, Retention, Loyalty, Defection?  Go ahead and send it to me here.  If on the topic below, please leave a comment.

A Budget for Discounts?

Q:  For the first time ever, we have a Discount budget built into our financial plan.  We’ve been told this number in the budget is less than we used last year, but our Sales target is a bit higher.  We’re supposed to hit our sales targets while at the same time not going over budget with our Discounts to generate those sales.  This directive comes from Finance.

A:  You have just been offered the opportunity to graduate from Advertising to Marketing!

Q:  We are fairly sure if we reduce the discounts we give, response is going to fall and so are sales, especially from best customers.  Or we could keep the same discounts but do fewer discount promotions, with probably the same effect on sales.  Are there any other alternatives, any ideas on how to manage this discount budget issue? 

We’re an online only retailer.

A:  Sure, ask an easy one over the holidays!

Seriously, I hope you did not take my comment about graduating from Advertising to Marketing the wrong way.  This is really an opportunity for you to shine in so many ways, and to learn a lot of new ideas in the process – if you want to take advantage of it.

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Marketing Productivity Analysts

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.

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Business Prevention Committee

Do you have a BPC (Business Prevention Committee) where you work?

The BPC may not have a formal meeting schedule, so it can be difficult to tell who is actually on the Committee.  But you can often tell who is on the BPC by looking for these signs:

1.  Person has a narrow view of the company or customer, a “my silo” thinker.  For example, a Marketing person who doesn’t care about the negative impact of a marketing program on customer service.

2.  Person is generally averse to testing new ideas, a “this is the way it has always been done” kind of personality.  BPC’ers never admit to being wrong about an idea, especially ones that have to do with “change” of some kind.

3.  Talk of performance-based measurement and compensation makes BPC’ers very nervous.  Not fans of their own skin in the game, getting a little risk on the table.  Like many bloggers, they just repeat what they read.  No data, no conviction, and no responsibility.

4.  A fundamental lack of knowledge about how the business really works.  Worse, won’t take the time to find out what they don’t know because “that’s not my job”.

The best way to go about dismantling the BPC in your company is?

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Friction Model

There’s been another eruption of discussion on Engagement.  If (like me) you’re more interested in the higher level ideas not so oriented towards the “tool” aspects of this discussion, make sure you catch this post and hefty comments.  For more, also herehere, and here.

Friction in Campaigns

At a high level, there really are 2 kinds of Engagement, and I think it would be helpful for us to start differentiating between them.

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Offline Path Analysis

It’s always a treat to work with bright, committed people and I’m happy to say this was the case with the folks at the Oriental Institute.  These higher ed environments can be exceedingly complex from a Marketing perspective, and the OI is way up there on the complexity scale.  So much to do, so few resources to do it with.

That said, we came up with a crackerjack plan that should significantly boost paid Membership at the OI without additional time or money resources.  How?  Path Analysis.

Personally, I have never understood why many web analytics folks don’t care for Path Analysis; I can only surmise these folks are simply not doing it correctly.  For one thing, Paths don’t make any sense without the context of a behavioral segmentation – entry page, campaign, etc.  Just like any other web data, Path is useless without segmentation.  Or perhaps these folks don’t know how to interpret the data they see because they can’t survey a Path for the answers. 

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