Tag Archives: Relationship Marketing

SEO for Cable TV

Riffing off a great post by George on marketing measurement, here’s a very specific example of how Marketers have to think differently when they are dealing with interactive environments, from my days at HSN.

We spent about 5 years and $100 million dollars trying to prove offline media would drive new customer acquisition and sales.  We tried everything.  Billboards.  TV.  Radio.  Newspapers.  TV Guides – local, national, and cable.  Flyers,  Shoppers, FSI’s.  Spot cable.  All of it, in just about every combination you can think of.

Each time we did these tests, we set up control markets and looked for Incremental sales in the media markets versus those with no media, based on revenue per household.  We found incremental sales in just about every case. 

The problem was this: even though the media created incremental sales, these sales were never enough to pay back the media on a net basis, meaning (roughly) (Gross Margin – Campaign Cost) – Variable Overhead was negative – even when you took into account the LifeTime Value of a new customer.  Even when you looked at the test markets versus control 3 months, 6 months, and 12 months later, for those who might be thinking about “Brand” or “Awareness”.

If you’re thinking perhaps the campaigns were weak or light on exposure, I offer you this: when the campaigns included coupons, the redemptions were absolutely huge.  That’s good, right?

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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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Good Time for Marketing (Re)Alignment

What’s Marketing Alignment?  Search Google for this phrase and you will find a lot of discussion on aligning Marketing with Sales, the old B2B chestnut.  I’m not going in that direction.

I’m talking about making sure all the Operational interfaces to the customer have Marketing input, that the messaging and interactions with customers reflect the Marketing Strategy.

Marketing Alignment is making sure Marketing as a discipline is always facilitating Demand Fulfillment across the entire enterprise.  If Management is looking for a “big idea” during these times of change, a new way to approach the business as opposed to simply cutting budgets, Marketing Alignment just might be the ticket.

This Marketing Alignment issue can be a particularly important for growth companies.  When you started out, it was all about the customer – when there was less than 10 of them.  Now that you have 1,000 or 100,000 customers, you have probably created processes, procedures, and goals that unintentionally create barriers to closing new customers and fostering repeat business.

Here’s the basic argument for the Marketing Alignment idea:

Continue reading Good Time for Marketing (Re)Alignment

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Relationship Marketing Economics

Just opened up a carton from a manufacturer we use in the Lab Store.  Every unit inside looks like this:

Bad nozzle

Here’s your challenge:

Would anybody in your business recognize this as a problem?  Or would they just shrug and transfer the item to the picking racks?

In other words, finding this, would you or an employee:

1.  Ship to the customer as is, let the customer figure it out

2.  Cut the nozzle off so customer doesn’t have to even think about it, doesn’t have to send you e-mail or call asking about it

Your answer to this question depends on:

1.  How customer-centric you / your org really is

2.  How much you understand about the financials of your business

Continue reading Relationship Marketing Economics

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Lab Store: Year End Analysis

Some stats from the Lab Store (Background) for the year:

Processed 10,172 orders, up 3% from last year, despite a logistical problem in the business model we did not have control over (breeding of animals).  Fixed that, so should not be an issue going forward.  Merchandise Return Rate of .3% on dollars, which is quite low.

Returns cost money to process, imply negative Social feedback, and increase customer defection by creating poor experience.  We do everything we can up front to keep returns and other negative experiences from happening in the first place by screening products and actually taking action on customer feedback and analysis.  Often, we modify packaging, create our own instructions, or assemble products we know people will have trouble with.  More on this idea here: Marketing through Operations and Panic Pack!.

We retained between 75% – 87% of our best buyers depending on what time frame you use, and further improvement in these stats is pending test results.  More on this idea here: Frequent Buyer Analysis.

Continue reading Lab Store: Year End Analysis

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Web Intelligence

As I said in an earlier comment, I didn’t get to see many of the sessions at eMetrics DC due to a raft of WAA stuff and great interactions with the people at the show outside the sessions.  But I have seen a lot of commentary, notably from Gary, Judah, and Eric, and related, from Christopher, on the overall message.

I have to say I agree (or is it have agreed?) – web analytics is headed for the BI shop.  In what form, we can only speculate.  But I have a few ideas, and a great resource that could be quite helpful depending on where you want to go with your analytical career.

The Google Analytics API, for one thing, is going to be huge from a BI perspective.  Just exactly what you have access to and in what format will be an issue for some BI folks, who tend to want “all of it”.

If BI really wants all the data, WebTrends was talking about cleaving the reporting from the processing – just like a traditional BI scenario, where the analytics app sits on top of any warehouse.  But I think in general most BI folks are over-thinking this issue and in time, they are going to be more satisfied with the “right” data, as opposed to “all”.

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Onliners Return to Start

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:

Continue reading Onliners Return to Start

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Chief Friction Officer

Speaking of the Friction Model, I came across an article based heavily on work done by Bruce Temkin of Forrester Research reviewing the state of the Chief Customer Officer position.  You know how I feel about this idea; this CCO function should be performed by Marketing.

Why?  Because Marketing has the ability to measure, predict, and act on the Friction in the system which causes dis-Engagement.  Heck, lots of the time Marketing (examples) causes this Friction.

Here’s an interesting quote from the article:

“This job is about helping the rest of the company improve, not taking responsibility for the improvement,” Temkin said.  “At the end of the day, you still have to have an executive team responsible for running the business.  The only way to proceed is to get customer experience embedded into what they’re doing.”

Continue reading Chief Friction Officer

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Off to the Oriental Institute

Oriental Institute

I’ll be spending next week at the Oriental Institute in Chicago leading a good ‘ol Marketing Makeover featuring Database Marketing.  While non-profit environments can be challenging from a resource perspective, fortunately there are grants available to these Institutions, and very fortunately for me sometimes these grants can be used to increase Marketing Productivity.

Continue reading Off to the Oriental Institute

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Desirability, Satisfaction

I didn’t talk about Satisfaction, the 5th component of the AIDAS model, in the last post on Desirability.  That’s because it’s the most difficult for folks to get a grip on and I wanted to treat it separately.   There’s a reason for this difficulty: Most Marketers (and many analysts) think they’re “done” when they get through the Action part of AIDAS. 

They achieved Engagement, don’t you know.

So even though Interactivity is different, these folks are still using the old offline models to run their Marketing programs.  “Satisfaction” isn’t their problem, Action is.  Satisfaction is somebody else’s problem, a longer-term issue.  Marketers have no control over it.

Now, I’m pretty sure most folks reading this know Marketing plays a big role in Satisfaction and have seen live examples of it.  Everything from over-promising in the Sales pitch to Products with known faults that are still sold to Service Policies that don’t make any sense. 

And most Marketers say, “That’s not my problem, my job is selling.”

This attitude is so old school, offline thinking again.  Interactivity is about the Exchange, it’s not a one-way, always Outbound kind of thing.  Interactivity, by definition, says there is a Relationship.  So if you are going to be an Interactive Marketer, you have to be in the Relationship business.

And this means Satisfaction is part of your job. 

You’re not only responsible for creating Engagement, you are responsible for managing / correcting Dis-Engagement as well.  Because that’s how you have a Relationship, that’s Interactivity – you analyze, and react.  If you don’t, this is what can happen.

You wanted Interactivity, right?  What part of the Interactive premise says you can walk away from the Customer Relationships you have created?  That you’re “finished” after the Relationship is created?  That attitude is so old-school Marketing.

For many Marketing folks, what this all means they need to change from understanding “who the customer is” (demographics) to “what the customer does” (behavior) as being the primary segmentation concern.   Understanding Desirability means understanding how people use or consume products over time.  It’s about the behavior of consumers, regardless of how old or young, rich or poor, or what their zip code is.  

What’s happening at a higher level is this:  There are business models that are truly customer-centric, and there are those that are not.  People prefer dealing with a model that is customer centric – and they always have.  But over the past several decades, they have not had much choice in this matter.

Insert your favorite “Corner Grocery Store” tale here.

Then came the web.  The web represents interactivity on a mass scale.  People like interactivity.  But it’s a different kind of relationship, and demands a customer-centric business model to be really successful.  You can’t just put a topping of interactivity on the old mass Marketing model most folks are using online and expect it to work for you.

That’s called a Meatball Sundae

In the past, the number of companies in the “not centric” category dwarfed those in the “centric” category.  Then the web happened, and companies that never had contact with the end customer before, and were insulated from interactivity, now all of a sudden had to open contact centers.  Interactivity was forced on them.

It’s not that customers did not want direct relationships, and the web somehow gave them “power” or put them “in control”.  It’s just now people have experienced these kind of relationships with more companies than they ever could before, and they want this kind of relationship with every company they deal with.  So the environment at companies not used to the customer-centric idea feels like customers are taking control.

The customer is only in control if you are using the wrong Marketing model in an interactive world.  If you are using the right model, there should be no reason customers would want to take control in the first place. 

This is what customer-centricity really means.

Ladies and Gentlemen, Choose Your Marketing / Business Model.

Update:  See this post from Alan on why Marketing might need to Analyze and take Action on dis-Engagement.

———

Now that we’ve powered through the Strategic landscape, on to the Tactical “OK, so what do we do now?” part of the program in the next couple of posts.

Comments on these ideas?  Or are you all waiting for the Tactical stuff to jump in?

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