Monthly Archives: December 2008

A Budget for Discounts?

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

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.

Continue reading A Budget for Discounts?

Crime of Social Passion

Ron Shevlin killed his blog. It was exactly 2 years old.

I started blogging about a week after Ron did, and somehow we found each other, along with Adelino. For a time there, it seemed like the 3 of us were the only ones reading each other’s blogs.

Ron’s blog was uncommonly good and very well liked by his followers. He says he set out to create a “Top 10 Marketing blog”, not really knowing what that meant. You know, Technorati and all that. As part of his sign-off, he states:

Needless to say, I failed miserably in achieving my goal.

And thank God for that. Because if I had really wanted to this to become a top 10 blog I would had to have written about a lot of things that I don’t really care about writing about.

So true. In fact, those of us who write a lot of material that runs against what is taken for “common knowledge” in Marketing – as Ron did – feel his pain. I’ve done the same since 2000 in my newsletter.

So, what is the point of Social Media? If people are only going to listen to what their “friends” say, and if people only subscribe to authors they agree with, then you get this massive group think effect that is impossible to penetrate when the quality of the material is ranked by “popularity”. And on top of that, the absolute crap that is published over and over begins to be taken for the truth.

It’s no wonder onliners are not learning anything.

And keep repeating past mistakes.

You can’t disagree with popular bloggers.

Telling the truth can even get you blacklisted.

Continue reading Crime of Social Passion

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.