Monthly Archives: November 2007

Al Gore & Warren Buffet: Marketing Gurus

Um, following up on the post Research for Press Release, we have this gem from eMarketer and Anderson Analytics, who apparently did not even read the results of the survey they conducted.

Some highlights from this group of “Senior Marketers”:

Most important thing they are concentrating on:

Mastering the Basics

Seems unusual for Senior Marketers, to me.  

My guess: the members of MENG are not Senior Marketers, and should not be referred to as such.  Of course, nobody would pay attention to a press release about a survey on a “bunch of pukes”; this is the Source of Sample problem.

Asking “which demographic segment is most important to target” generically without supplying the product to be marketed is a ridiculous concept.  “Senior Marketers” probably wouldn’t even answer this question.

And the biggest gut-splitter: the list of “Most Important Marketing Gurus” includes Al Gore & Warren Buffet.  Now, these are both smart gents in their own ways but I’m not aware of their status as Marketing Gurus.

Of course, an alternative reality is possible: the members of MENG are Senior Marketers.  If that’s the case, I simply don’t know what to say, other than Marketing has probably already Deconstucted.  Or Imploded.  Or something worse.

You can learn a lot more from this really useful Research for Press Release (RFPR?) piece here.

Comments?

Commerce Channel Management

Jim answers questions from fellow Drillers
(More questions with answers here, Work Overview here, Index of concepts here)


Q: We are a manufacturer with a cool product not really on the net and right now, but we are entering stores. I wonder, is it wise to try to sell on the net before retail markets have the products or not – is it better to hold off until the retail markets first have the products and then launch them onto the net? Does the net really help sell products or does it create copy cats?  Trying to find the best way to go – any advice would be greatly appreciated.

A: Great question. Answer is “it depends” and it difficult to be more specific without knowing more about the product and your marketing plans. But in general, if you want to optimize the profitability of the product launch and you are paying for media, you should think about these choices as a “chain” or series of events each with a specific but interconnected strategy for each channel.

An example would be DRTV or infomercial products, which generally are launched at a higher price into the spot TV channel (cable networks, etc.). Here sales are made at a very high margin but the volume is generally low; the Objective is to generate awareness and hopefully make a profit, but breaking even is OK because you essentially have the media “free” and that will help drive the next step.

Based on all the awareness you have generated with TV spots, you then can go to the TV shopping channels and say, “Look, people know this product because we have already pre-sold it for you. We will let you sell it at a lower price if you will drive volume. And that’s typically exactly what happens;most of the profit on the product is made here.

From the spot TV, the audience knows the product sells for $19.95 or whatever, so when it is offered at $14.95 on the shopping channel they think it’s a great deal and the volume is tremendous. Typically, the spot TV would still be running at this stage, though sales from that channel will have peaked.

Once sales get soft in the TV shopping channel, you then introduce the product online and in stores. This is essentially “end of lifecycle” for the product, where you are simply trying to make sure you don’t get stuck with any. You sell that at cost plus to the onliners / retailers and they blow them out at $9.95 or so. You don’t end up wearing the inventory and everybody is happy because the spot TV / TV shopping has generated plenty of awareness, people pounce on the product, and it moves very quickly through retail. Typically no TV would be running at this stage because you couldn’t sell any at the original price.

Now, I’m not saying you should follow this model. But what I am saying is the decision you are trying to make is more complex than “should we”, it involves understanding which channel can do what for you and at what price.

For example:

You said you are “entering stores”, but did not say if you / the stores are running any media to support this effort. If you are not running any media then I would get on the web and sell the product for retail price or higher. This generates some awareness / demand / trial but preserves the margins of the retail partner, and hopefully your direct profits will cover costs.  You basically get “free media” from the web (as in the spot TV example above) and the retail folks will love it because it will drive sales in their channel.

If you / the retailers are doing a lot of paid media support, then I would not sell on the web until sales through retail get soft. Then you are in a position to undersell them or liquidate on the web based on the awareness you have generated offline. This doesn’t mean you should not have a web site, you should, and it should tell people which retail outlets they can buy the product in.

On the other hand, if there is a razor / razor blade model built into the product (think a doll with add-on sets of clothing), you could sell the primary razor product and some of the blades in retail, then develop more targeted / segmented / rare blade offerings that are exclusive to the web for online stores.

Again, it’s very difficult to make the “right” judgment on this question not knowing anything at all about the product, whether there are supplemental / follow-on products, whether there are continuity pieces involved (collections) and so forth; and especially not knowing what the nature of the retail relationship is.

But I think you get the general idea. You play the strengths of the channels off each other, generally in some sequential way, depending on what the marketing / media plan is and the characteristics of the product. That is, if you are interested in optimizing media spend versus sales. If you have an unlimited media / PR budget, then sure, sell it everywhere!

Hope that helps!

Jim

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Messaging for Engagement

Or Behavioral Messaging, as we used to call it. 

Much has been written about Measuring Engagement, but once you measure it, then what do you do with this information?  Most folks know the idea driving the Engagement Movement is to make your messaging more Relevant, but how do you implement?  Perhaps you can find the triggers with a behavioral measurement, but then what do you say?

This is the part Marketing folks typically get wrong on the execution side.  They might have a nice behavioral segmentation, but then crush the value of that hard analytical work by sending a demographically-oriented message, often because that is really all they know how to do.  So as an analyst, how to you raise this issue or effect change?

Marketing messaging can be a complex topic, but there are some baseline ideas you can use.  Start here, then do what you do best – analyze the results, test, repeat.

You want to think of customers as being in different “states” or “stages” along an engagement continuum.  For example:

  • Engaged – highly positive on company, very willing to interact – Highest Potential Value
  • Apathetic – don’t really care one way or the other, will interact when prompted – Medium Potential Value
  • Detached – not really interested, don’t think they need product or service anymore – Lowest Potential Value

Please note that none of these states have anything to do with demographics – they are about emotions.  The messaging should relate to visitor / customer experience as expressed through behavior, not age and income.

These states are in flux and you can affect state by using the appropriate message based on the behavioral analysis.  Customers generally all start out being Engaged (which is why a New Customer Kit works so well), then drop down through the stages.  The rate of this drop generally depends on the product / service experience – the Customer LifeCycle.

Generically, this approach sets up what is known as “right message, to the right person, at the right time” or trigger-based messaging.  Just think about your own experience interacting with different companies; for each company, you could probably select the state you are in right now!

OK, so for each state there is an appropriate message approach:

Engaged – Kiss Messaging: We think you are the best.  Really.  We’d like to do something special for you – give you higher levels of service, create a special club for you, thank you profusely with free gifts.  Marketing Note: be creative, and avoid discounting to this group.  Save the discounts for the next two stages.

Apathetic – Date Messaging: We’re not real clear where we stand with you, so we’re going to be exploratory, test different ideas and see where the relationship stands.  Perhaps we can get you to be Engaged again?  In terms of ROI, this group has the highest incremental potential.  Example: this is where loyalty programs derive the most payback.

Detached – Bribe Messaging: You’re not really into this relationship, and we know that.  So we are simply going to make very strong offers to you and try to get you to respond.  A few of you might even become Engaged again.

Can you see how sending a generic message to all of these groups is sub-optimal?  Can you see how sending an Engaged message to the Detached group would probably generate a belly laugh as opposed to a response?  You’ve received this mis-messaged before stuff, right?  You basically hate the company for screwing you and then they send you a lovey-dovey Kiss message.  Makes you want to scream, you think, “Man, they are clueless!” and now you dislike the company even more.

Combine this messaging approach with a classic behavioral analysis, and you now have a strategy and tactic map.  For example, you know the longer it has been since someone purchased, clicked, opened, visited etc, the less likely they are to engage in that activity again.  Here’s the behavioral analysis with the messaging overlay:

Click image to enlarge…

Kiss Date Bribe

Please note “Months Since Last Contact” means the customer taking action and contacting you in some way (purchase, click) not the fact that you have tried to contact them! 

So does this make sense?  Those most likely to respond are messaged as Engaged – as is proper in terms of the relationship (left side of chart).  As they become less likely to respond, you should change the tone of your communication to fit the relationship up to a point, where quite frankly you should take a clue from the eMetrics Summit and not message them any more at all (right side of chart).

Example Campaign for the Engaged: At HSN, I came up with the idea of creating some kind of “Holiday Ornament” we could send to Engaged customers.  If the idea worked (meaning it generated incremental profit), we could do it as an annual thing; we could put the year on the ornament and create a “collectible” feel, which is the right idea for this audience.  No discount – just a “Thank You” message “for one of our best customers” and “Here’s a gift for you”.

These snowflake ornaments were about $1.20 in the mail (laser cut card stock) and generated about $5 in 90-day incremental profit per household with the Engaged, test versus control.  Why?  Good ‘ol Surprise and Delight, I would bet.

We had some test cells running to see how far we could take this, and as expected, the profitability dropped off dramatically based on how Engaged the customer was.  If the customer was even minimally dis-engaged – no purchase for over 120 days – there was very little effect. 

Interactivity cuts both ways; it’s great when customers are Engaged, but once the relationship starts to degrade, folks can move on very quickly emotionally.  That’s why it is so important to track this stuff – so you can predict when your audience is dis-engaging and do something about it.