ROI or ROMI or Neither

Interesting story today from Direct Magazine - they claim that direct marketers need to stop talking about ROI and ROMI and focus on selling more products to more people. The writer says that both measurements are flawed, as "neither measurement addresses marketing's fundamental mission: driving incremental response."

Additionally, it does not explain why something happened and it does nothing to help a marketing team drive behavior. Rather, then focus on these old metrics direct marketers need to start examining collateral and trying to understand why consumers do something different than you intended.

Coupons, Response Rates and Customers

I am taking a class in multi-channel marketing at DePaul as part of my MBA requirements - which incidentally is the reason that I started this blog - but last night we had a speaker who presented the concept of database marketing. In his presentation he basically argued that the best predictor of future buying behavior was previous buying behavior. I can't argue with his logic - he makes perfect sense since neither demographics nor psychographics can truly predict buying behavior.

And according to today's Wall Street Journal - other marketers also agree with this logic. In "Personalized Store Ads Take Off" the writer argues that while smaller brands have used in store coupons presented to customers at the cash register for future purchases for several years, the large brands including Nestle, Coca-Cola and Kraft Foods are now starting to buy them in significant numbers. This practice encourages shoppers to try a brand that competes with one they just bought, or to try a new flavor of a product they currently have in their cart. The CPG industry seems to think it's a good way to reach consumers and they've found that their response rates are significantly higher using this method then FSI or other coupons.

Guess he was right....

Customer Life Time Value

Marketers must have a focus not only on selling a product, but ensuring that customer satisfaction contributes to an overall positive experience with the product or service. In too many cases, multi channel marketers are sometimes too focussed on the ROI of a particular campaign to allow sufficient focus on what happens after the customer makes an initial purchase. About a year ago I purchased a Dell - while the experience of buying the new laptop was satisfactory there was no WOW factor to that transaction. Recently, and incidentally about a week before my warranty expired, the laptop went dead. My experience with their customer service team was terrible. After long waits and being connected to a call center in Asia, I was offered a "tech support" package which I could try out for $49. The package included priority service and access to a North American support team. (Their words NOT mine!) In order to save myself additional aggravation and to quickly get the laptop running, I paid the fee and after several hours my laptop was back in shape. Lesson learned here - with Dell - if I want customer service after purchase I have to "pay for it." No thanks.

According to Wikipedia, "In marketing, customer lifetime value (CLV), lifetime customer value (LCV), or lifetime value (LTV) and a new concept of "customer life cycle management" is the present value of the future cash flows attributed to the customer relationship. Use of customer lifetime value as a marketing metric tends to place greater emphasis on customer service and long-term customer satisfaction, rather than on maximizing short-term sales." Are you listening Dell???

Needless to say - they've lost my CLV, LCV and LTV. My next computer is a going to be an Apple. Cause they do it best.

Check out this new ad from Apple - pretty good summary of Microsoft's approach to the market as well.

Page Rank - It's all about Larry!

PageRank

PageRank relies on the uniquely democratic nature of the web by using itsvast link structure as an indicator of an individual page’s value. In essence,Google interprets a link from page A to page B as a vote, by page A, for pageB. But, Google looks at considerably more than the sheer volume of votes, orlinks a page receives; for example, it also analyzes the page that casts thevote. Votes cast by pages that are themselves "important" weigh more heavilyand help to make other pages "important." Using these and other factors,Google provides its views on pages’ relative importance.

Named for Larry Page, it's his contribution to Google!

Meauring ROI for Websites

There are four components that one needs to look at when measuring ROI in order to increase revenue

- Traffic
- Average Order Value
- Conversion
- Frequency

Theoretically you could increase one and ROI would/should increase. However, what if your site doesn’t measure return in that way?

These elements are all tied directly to a site that “sells” something to a consumer. But what about sites that don’t sell anything or have a paid advertising model? How do you place a value on that? The company I work for provides a web site as a consumer service. It provides information, directions and contact numbers for retailers. It has a value to the organization but not one that is measured by average order or conversion. How does a marketer in such an organization develop analytics to support investement?

Web Metrics

One of the key elements of any successful multi-channel initiative is knowing the numbers. Time and time again we've been told that marketers need to get better at measuring ROI and reporting on the success that a campaign delivers. But how do we really measure impact? And how can we show success?

Yes, most merchants keep a close eye on site traffic, abandonment and conversion. But can one really explain why they go up or down for that matter? Is it site features, errors or navigation?

At the end of the day, we know that getting a handle on important Web metrics can help improve site performance. But how do we do that?

Multichannel Merchant has a great white paper that addresses these issues and provides insight on which numbers matter, how to track problems, and ways to figure out what's causing changes. Understanding what's behind the numbers can ultimately help you reduce abandonment and boost conversion rates.

Are You Kidding Me!?!?!?!

This morning I received this special offer from Restoration Hardware. I was actually rather ill when I saw it. The economy is in a tail spin, we're in a recession and 'some' are angry about the bail out. Is it really in the best interest of a retailer to use this type of message to solicit new business? Really...so Wall Street gets a bail out and I'm supposed to buy furniture and pillows? Come on. What do you think? Should email marketing use government policy as a means to drive sales? Does it work? Does the bail out make you want to spend???