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???

What's Your PageRank?

There has been a lot of talk in the multi channel marketing world about the use of social networking sites like Facebook, Linked In and My Space for commercial purposes. How do you use the power of the "group" to help deliver sales? While marketers continue to struggle with this notion, Google is developing technology that might actually do the trick. Their patent pending technology will rank "influence" akin to the notion of page ranking to determine who truly has the ability to influence their friends to do something. Google's new technology would track not just how many friends you have, but how many friends your friends have, your ability to get people to read news stories or watch videos. The Business Week article has some great ideas for marketing applications.

Agency of the Future?

According to AdWeek, "Forrester Research believes today's ad agencies are not well-structured to take on tomorrow's marketing challenges, needing to move from making messages to establishing community connections. In a new report, the research firm paints a grim view of the current state of advertising, which it believes is in "a world of hurt" because consumers are tuning out the messages the industry is predicated on producing. Instead, it believes shops need to be organized around communities, not disciplines. What it is calling "the connected agency" would not only know certain communities but also be active members of these groups. Pushing messages would give way to encouraging voluntary engagement, and ongoing conversations would replace time-based campaigns."

This arguments creates an interesting issue for clients of agencies. If they don't currently exist, how to clients select partners to work with who can deliver messages that are relevant, meaningful and lead to action? Does this mean that advertising is dead? Clearly, changes in social media as well as consumer behavior indicate that the traditional notion of advertising has changed dramatically and if agencies have not kept up to pace with those changes what options are out there for clients who need the assistance of 3rd party resources?

Twitter For Business?

It's been said that Twitter is a cool tool/application for keeping track of your friends. I don't currently use this nor have I ever really thought about using it to keep my friends updated on my status or activities. Perhaps I am a little old school in thinking that if anyone cared about where I am they would just pick up the phone and call...or send an email. But apparently there is a lot of conversation about the uses and application of such tools for business.

Here's a great list of things to do with Twitter - courtesy of DoshDosh.

Personal Branding
Get Feedback
Direct traffic
Make New Friends
Business Management
Take Notes
Event Updates
Time Management and Analysis
Acquire Votes

Check out the blog for details on how to effectively apply these concepts to Twitter usage - and if you think it works for business let me know!

Web 2.0

Everywhere I turn these days, I hear the term Web 2.0 and have no clue what those "in the know" are really talking about. Here's the official definition from Wiki - click the link for more detail.

From Wikipedia, the free encyclopedia....

Web 2.0 is a living term describing changing trends in the use of World Wide Web technology and web design that aims to enhance creativity, information sharing, collaboration and functionality of the web. Web 2.0 concepts have led to the development and evolution of web-based communities and hosted services, such as social-networking sites, video sharing sites, wikis, blogs, and folksonomies. The term became notable after the first O'Reilly Media Web 2.0 conference in 2004.[2][3] Although the term suggests a new version of the World Wide Web, it does not refer to an update to any technical specifications, but to changes in the ways software developers and end-users utilize the Web.

Huh?

Multichannel Marketing

-Refers to using several methods to sell products and services. The term has become popular since the advent of the Web, because it adds a prominent new channel to storefronts and catalog sales. One consideration of multichannel marketing is that each channel reinforce the other. For example, information taken from sales on one channel be used to help the customer when making a purchase on another channel of the same vendor.

Branding

- The process of creating a unique, positive and recognizable identity for a product or service. Along with marketing and advertising, creating a visual identity through signage is an important part of the branding process.

Social Media

- The use of electronic and Internet tools for the purpose of sharing and discussing information and experiences with other human beings. The term most often refers to activities that integrate technology, social interaction, and the construction of words, pictures, videos and audio. This interaction, and the manner in which information is presented, depends on the varied perspectives and "building" of shared meaning among communities, as people share their stories and experiences.

Mad Men

The new prime time television show Mad Men is a take on advertising agencies in the 60’s and clearly shows how different things were then vs. today. Historically, marketing was defined by the 4 P’s – Product, Place, Price and Promotion. Ad agencies simply decided how they wanted to promote the product, developed catchy copy to get the consumer excited and moved to action. Unfortunately, the 4 P’s fail to position the customer as the center of this mix and while it may have worked for the Mad Men it certainly isn’t going to work today.

Booz, Allen, Hamilton published a study titled HD Marketing 2010 and they argue that consumers are now media producers, publishers and distributors and with this convergence of media there are more opportunities for direct dialogue between marketers and consumers. Additionally, the balance of power has shifted and consumers are the new marketers and this shift in control makes traditional strategies, channels, relationships and metrics less useful and possibly completely irrelevant.

The study contends that marketers have to use a new set of trends to achieve their objectives including the following;

1. Marketing as Conversation (Don’t push messages at consumers rather find ways to co-create experiences with them)
2. Media as the New Creative (Message distribution is just as important as content)
3. Marketing and Math (Use insight to create foresight)
4. Mind The Gap (Focus resources on where the consumers are not where you have historically been)
5. Digital Savvy (Need to align technology with the right talent, progressive culture and functional skills)
6. Network (Partnership and collaboration with various partners will grow)

Clearly the 4P’s are becoming ancient history and marketers need to focus on how to use consumer behavioral shifts to redefine marketing communications in their own organizations. However, the big question remains – How do you effectively do that while continuing to ‘mind the store’ and deliver results?

Which Half?

Lord Leverhulme, the founder of Lever Brothers, is credited with the famous aphorism — ‘one half of advertising does not work but nobody knows which half.’ Unfortunately this is still an ongoing issue for many marketers -- particularly those focussed on brand building. How do you convince the CFO to allocate resources when you have a hard time measuring results? Direct marketers have been able to circumvent this issue somewhat by quickly being able to show ROI based on results of various campaigns. However, it's also been shown that to generate really good results, sometimes you have to give up on the "branding." How can you combine the two without losing branding opportunity or response rates? Here's a great example from Polo. Genius!

Ralph Lauren has introduced the quick response codes into print ads, mailers and store windows aimed at sending traffic to their new mobile commerce site. The codes, when scanned with a mobile phone with QR software will direct the phone’s browser to a website where you can shop for RL products.