Marketing Tactegy

Revenue Performance Management - a new term in the Marketing ROI space

I was asked a few weeks ago to think about the term revenue performance management and determine whether it’s different from other terms in the marketing ROI space.  Initially I was thinking that it was more about revenue management, which uses CRM, loyalty and other tools to optimize utilization of a fixed capacity offering.  Typically used in hotels, cruise lines and airlines.  There are only so many seats or beds and developing demand once the utilization has reached 100% is wasted marketing.  It comes at the topic of marketing ROI and effectiveness from a different angle, because of the hard capacity limitation.  It’s not like you could build additional capacity very quickly and may not want to build incremental capacity very quickly to respond to the incremental marketing developed demand.

With revenue performance management it is a new twist on the term marketing ROI.  Marketing ROI has been defined many ways, but we see it as the end-to-end ROI developed in terms of short and long term profit due to an incremental level of marketing.  There are many other uses and definitions, mostly about what gets included and other details that may be limited by the available data sets.  In any case, an ROI performance based approach can help at the overall level and at each of the phases of marketing (see below).  A good definition that I’ve seen has three bullets to it (thanks to Lauren Carlson, Software Advice):

• Revenue Performance Management adds more sophisticated functionality in the area of analytics and data integration.
• This enhancement provides a more holistic view of the revenue cycle from the earliest stages of marketing through sales execution.
• Because of this, companies can see what's working and what isn't, making it possible for marketing and sales teams to optimize their efforts in order to achieve the highest return.

What I like about the term is the sales orientation and focus on revenue.  It will be interesting to see how it progresses in the future.

I was just at the Technology Driven Market Research conference in Chicago and looking forward to the MeasureUp Conference in Boston, June 6, 7 and 8 (www.iirusa.com/measureup - hope you can make it!) and P&G was presenting their view of the phases of the ‘moments of truth’.  Here they are:

• Phase 0 is the initial marketing touch. 
• Phase 1 is the actual choice point at the shelf in the store
• Phase 2 is the post sale product/service experience.

If we’re looking at a complete marketing ROI approach it is these three phases that would need to be included in a holistic approach to marketing ROI.  You could potentially even add a phase 3, which is the social media advocacy phase.  That is, what is the value of marketing in terms of getting consumers (and maybe non-consumers) to advocate about your brand?

With this in mind marketing ROI and ROMI need to make sure they cover from phase 0 to at least phase 2 if not phase 3.  Revenue performance management on the other hand is great to use when talking specifically about direct sales and revenue conversations relating to marketing effectiveness.

Let me know what you think.  I would love to hear.  

Don't forget to check out our new book  ROI of Social Media.

 

 

The Full Measure on MeasureUp (4 of 4)

MeasureUp is a great conference for all things marketing ROI and return on marketing investment ROMI put on by the IIR.  They put on some great events and I highly recommend you take a look at their site for some upcoming events.  To summarize this series of 4 posts the Measureup conference there were a few major points that I came away with:

1. Marketing Mix Modeling may have peaked. Marketing Mix models have provided great insight over the years, but lately many have been shown to only deliver short term insights. When used in a competitive, mature category, such as, for the Oreo brand, MMMs typically deliver short term insights in that temporary price reductions can increase sales. Unfortunately, they also lead to loss of brand value. MMMs don’t include the long term brand value that can be destroyed through continuous price actions. Consumers simply get trained to always buy on ‘deal’.
2. Social media although is growing and is important for many brands, it still has a long way to go to be a major contributor for some of the top consumer brands. For the rest of us, though social media can still drive a lot of brand engagement, it can be measured and will continue to grow in importance.
3. Analytics and measured insights are becoming more and more important in marketing decision making. Marketers are finally embracing analytics and using them to their advantage. There is still a long way to go, but it is progressing swiftly.

There were many more insights and I hope next year you’ll have a chance to participate as well.  Just let me know if you would like further information on any of these topics.

The Full Measure on MeasureUp (3 of 4)

Here are continuing remarks and key notes from the MeasureUp conference.  This is the third in a series  (You can also read my Twitter stream at #ROMI)

1. Melanie Davis, Director of Marketplace Insights at American Express had some great insight as to how American Express uses modeling to support their brand.  They analyzed their presences on Twitter and Facebook with the goal to track online buzz compared to their competitors (primarily bank credit card issuers) using share of conversation and sentiment.  It was modeled using Structured Equation Modeling to determine how online buzz drove their funnel (Awareness, Engagement and Consideration, Conversation, Loyalty and Usage).  This is a great example of using the community engagement funnel (described in our social media white paper.  Download now.  One of the other interesting findings was that even though there was a lot of buzz it was relatively small compared to the number of purchased impressions made using traditional media.
2. Building a business case for marketing, social media and ROI were discussed in my session. With Ted Molter, Director of Marketing at the San Diego Zoo and Wild Animal Park and Nick Popielski, Director of Marketing at Atlanta Gas Light Resources.  Both had compelling stories on how they were able to drive analytics and numbers into their marketing organizations with some astounding results.  Nick Popielski showed how ROI was the only way to get the attention of the C-Suite and provide a solid foundation for the marketing business case.  Understanding the causes of churn led to significant growth in their net customer base.  Ted Molter spoke primarily about online marketing ROI showing how online media including social media was able to drive high conversion rates and ROI.  The numbers reached into the 1,000% range for ROI.
3. Ed Keller of Keller-Faye provided some great insight on their TalkTracker tracking survey.  This service provides both on and offline measurements of word of mouth.  Social media must be looked at from an online and offline perspective when comparing online and offline word of mouth conversations.  77% of them still take place offline according to studies and research conducted by Keller-Faye.  They estimate that over 3.3bn brand conversations take place every day in the US alone.  The top talked about brands are:
   • Coca Cola
   • Verizon
   • Walmart
   • Pepsi
   • AT&T
4. Ellen Stone, SVP of Marketing at the Bravo Network gave probably the most complete discussion on calculating ROI for social media.  There is no question that social media marketing can be very effective at driving buzz and delivering value for Bravo network.  They were using a number of fascinating tactics to drive buzz and deliver incremental viewers to their programming.  This was especially true for the launch of new programming.
5. Unfortunately I wasn’t able to capture the name of the presenter from Publicis, the agency for Denny’s restaurants.  My apologies.  Nevertheless he had some great statistics from their superbowl campaigns.  Denny’s super bowl offer of a free breakfast after the 2008 Super Bowl was wildly successful driving value and sales for the brand.  Unfortunately the advertising campaign was not sustained after the first quarter and it lost its momentum that could have been easily and cost effectively sustained.  Here are a few interesting facts:
   • Add-ons and late arrivals paid for the cost of the ad and the food at the 1,500 Denny’s restaurants
   • 2 million guests enjoyed the meal
   • Restaurant locater on the web was a key metric to determine interim success.  The ad delivered over 14,000,000 hits to website in 12 hours.  It generated over 2,300 news hits, 500 newspaper articles.  It was even mentioned by Jay Leno and Jon Stewart.  “Denny’s” became the 2nd most googled word.
   • Many guests heard about the free meal through text, calling, Facebook and mass emails to friends
   • It took over a million chickens to lay the eggs required.
   • Through this ad, Denny’s was able to meet its financial goals for the quarter.

Still more to come. Stay tuned for the next installment. Let me know what you think of the insights gained.

The Full Measure on MeasureUp (2 of 4)

Here are continuing remarks and key notes from the MeasureUp conference.  This is the second in a series  (You can also read my Twitter stream at #ROMI)

The second day focused more on optimizing traditional media.  The keynote was from Avanish Kaushik, Analytics Evangelist at Google, Inc.  He is also the author of Web Analytics: An Hour a Day  and Web Analytics 2.0 

Avanish is a lively, engaging speaker.  Definitely worth the price of admission.  His primary message relating to web (and of course, Google analytics) is get started, make mistakes, learn and improve.  That is, learn to be wrong but do it quickly.  He provided an impressive array of tools that could be used to quickly analyze the impact of web-marketing on conversion and web design.  There were so many examples of using google analytics to increase conversion it was hard to keep up.  Here are a few:

• How to reduce bounce rates by pointing to design flaws
• How to use experimental design to continue to optimize page layout and design.

With the keys to the kingdom Avinash was able to show that sites could easily be significantly more effective.  One of his thought provocations was, “don’t have opinions, have hypotheses.” 
Avanish also introduced a new term, Hippo decision making.  The Highest Paid Person’s Opinion.  How often is this true when there are no analytics to back up the conversation and decision making. 
His last bit of advice was to continuously ask for feedback from your consumers about their experience with your website with the following three simple questions:

• Why are you here?
• Were you able to complete your task?
• If not, why not?

Here are a few more notes from the other speakers:

1. Scott Deaver, EVP Strategy for Avis Budget Group had a few good insights about his business. Unfortunately I wasn’t able to catch his entire talk but he mentioned a few interesting comments concerning metrics:
2. • Linear metrics
   • On/off metrics
   • Good enough metrics

   He left us with the statement “Don’t fall victim to the tyranny of the measurable.”

3. Dominique Hanssens has a fascinating message in that great marketing doesn’t just drive revenue and profit but it also drives the share price. If marketers can get it right, they can deliver long term incremental share prices. He also pointed out a few potential flaws in the valuation on the stock market. For example, he found that differentiation was not well understood (that is, not reflected in the stock price) but awareness and brand equity was. He also found that customer satisfaction clearly has a long term impact. It would be interesting to find out though whether positive customer satisfaction has a long term impact on share price, but does a negative have a short term impact. For example, how does the negative impact of the recalls for Toyota impact the share price? Is it a long term impact as well or has it hit the stock price in a short term way.
4. Lisa Wellington of Coca Cola and Greg Michaels of Kraft provided some great insights into their methodologies relating to marketing ROI and ROMI. Coca Cola puts the rest of us to shame when we look at how they have a comprehensive system applying globally. They are a big user of Baysian regression, pooled models, conjoint testing, copy testing and scenario planning with highly granular models, looking to understand the relative influence of brand, flavor, pack type, pack size and region. Even in the face of the imprecise nature of the data, they are still able to make great decisions to drive their business forward based on good consumer and modeling insights.
5. Kraft, not far behind showed how modeling has helped them to drive great decision making with their brands. Greg’s point of building a good model now as opposed to a perfect model later illustrates how they are able to use modeling to structure the decision making and conversations marketers have when they endeavor to build their businesses. One of the books he recommends is The Black Swan by Nasim Taleb.
   
   One of the interesting points highlighted by Lisa Wellington related to the great social media divide. Although social media wasn’t discounted for its value to help many brands, the problem is that it is still, for some of the major global brands, such as Coca Cola and American Express miniscule. For Coca Cola in particular, even though it has one of the largest followings on Facebook (5Million, I believe is the quoted number), that represents less than 0.1% of the world population (their target audience). Traditional media is still very valuable and will remain that way for a long time at reaching the masses when and where they want to be reached.

Still some great more insights from the conference. Stay tuned for my next post.

The full measure on MeasureUp (1 of 4)

The MeasureUp conference in Chicago was the latest version of the former ROMI Conferences and it had some great insight on measuring, proving and improving marketing and social media ROI (You can read my Twitter stream at #ROMI). MeasureUp is a great conference for all things marketing ROI and return on marketing investment put on by the IIR. They put on some great events and I highly recommend you take a look at their site for some upcoming events.

The first day was primarily on social media and some of the interesting marketing and customer service applications being employed.  There is certainly a lot to understand with social media but each of the presenters provided some valuable insight into social media strategy, tactics and measurement.  The second and third days emphasized traditional media marketing ROI with some social media ROI sprinkled in.  One of the things that I’ve found, now that I’ve trained a few thousand marketers around the world in just about every vertical, is that in order to measure marketing ROI and ROMI you must first have a good understanding of marketing strategy and tactics.  This is definitely the case when we start to measure the response to social media marketing.

Here are some of excerpts from the first day of social media:

1. Social media is very valuable for customer service and support. PitneyBowes’ Aneta Hall had a great presentation on how their company has been able to effectively utilize social media to minimize the number of calls to the call center. This is both true for ongoing support issues and for support events, for example a postal rate change requiring updating of the postal machines. Hall calculated that PitneyBowes was able to deflect about 50,000 calls to the call center and at $10 per call, represented a savings of about $500,000. Please visit a series of podcasts on a pre-conference workshop with Aneta Hall.
2. Measuring the ROI of innovation is a fascinating topic. Luisa Uriarte, Partner at Maddock Douglas and Ainslie Simmonds, VP, Innovation at Maddock Douglas gave some interesting insights in their three by five process. Just developing new brands and products without doing your homework can lead to disaster, both for the brand and your career. Their process systematizes the research and decision making in order to reduce risk and increase returns. Where their process leaves off our agent-based modeling can deliver some great insight to make certain the new product gets properly launched into the marketplace.
3. Esmee Williams, VP Marketing of AllRecipes, one of the top recipes communities boasts 2.5bn pageviews per month. They are #1 18 million pieces of user generated content and are now #1 in the number of iPhone recipes. It is a great site for the food category, because when users make comments they are more often than not going to make a brand mention. They use a unique method of measuring message association and purchase intent in order to deliver higher quality advertising to their advertisers. In addition to their consumer centric approach they also have branded subpages where brands can build sub communities. Advertisers have many options with which to reach the community. It can be done through relevance, effectiveness, videos, traditional banners, sponsorship (editorials and user generated content), branded profiles, widgets (users can give and get widgets) and newsletters.
   
   AllRecipes’ research illustrated which types of advertising delivered the highest purchase intent scores between banners & newsletters (mid level purchase intent), sponsorships (low purchase intent, profiles with (high purchase intent) and without a logo (low purchase intent) and give (high purchase intent) & get (mid level purchase intent) widgets. (If you would like a white paper on the ROI of Social Media which uses the concept of a community engagement funnel.  Download it here now.)
4. Matt Moog of Viewpoints Network which manages the ratings and reviews for Sears.com provided some fascinating insight on how to optimize the use of ratings and reviews in an e-commerce site. The question asked ‘is a reviewer more valuable than a customer because they drive sales because of their reviews?’ For Sears.com, for each review it drives 4 visits (=readers) per month or 48 readers per year. Matt’s contention was that it may actually be that the ratings and reviews are so valuable to drive conversion of other visitors that the reviews themselves are more valuable to the company than had that reviewer actually made a purchase.
   
   Matt made the comparison of reviews creators that will write content and have 150 Facebook friends, thereby delivering 150,000 impressions, versus the cost of paid search to deliver 150,000 impressions.
   
   Ratings and reviews can be used in many ways. They can be used to change the assortment and improve customer service. By coordinating with search to reviews can be written based on what visitors are searching on to help them more easily find what they’re looking for.
   
   In my opinion ratings and reviews are one of the hidden gems in social media strategy and tactics. By fully utilizing ratings and reviews marketers can easily increase conversions without having to develop new marketing initiatives. Combined with some of Matt’s tactics, ratings and reviews can then be improved even further.
5. Scott Chappell of Sessions College of Professional Design gave some great insight on targeting specific messages through specific social media channels. Sessions College is selling something very different from a consumer packaged good. It is a two year commitment. He also showed how you can increase the number of touches to a prospective student without having to risk an unsubscribe, nor having to risk a de-friending. Instead of being able to email a prospect only once a week or once per month, with Twitter and the combination of Twitter, Facebook and LinkedIn Sessions College of Art and Design may reach out to some individuals up to 48 times in one month.
   
   He also showed how you can use different social media channels to deliver different types of messages. He focused primarily on Facebook, Twitter and Linkedin, each focusing on messages of Culture, Industry and selling with little overlap between them.
   
   Of course social media comes with its challenges. Those outside of marketing wish to use their social media assets to do more than engage. They want sales. For example their blog has 33,000 subscribers. He has to constantly protect this engagement channel from those in the organization that wish to change it into a selling channel thereby violating the trust of the subscribers and devaluing what has been built up over the last few years.
   
   If you would like to hear a pre-conference interview with Scott please click on the link.

There are 3 more posts on this topic.  Please stay tuned.

Building a business case for social media marketing

I will be moderating a panel discussion at the upcoming Measure Up Conference in Chicago March 10 - 12, ( http://bit.ly/4zkuuD ) on this topic. If you have any thoughts or questions you would like to ask the panelists, please let me know. It would be great to start a LinkedIn Discussion on this and use the issues brought forward here as input for the conference. 

Actually, there are also a bunch of sessions on WOM and social media, and measuring results so this will be a great way to start the discussion ahead of the actual physical conference. 

The panelists include the VP of Marketing at the San Diego Zoo and the CMO of Atlanta Gas Light. 

It should be pretty interesting. 

The top 3 Marketing Inventions/Innovations

Last week I kicked off a short survey of what the top 3 marketing inventions/innovations are.  The answers break down into a few categories.  You may disagree with my classifications, but here are the results:

Historical (not listed in historical order)

• The Internet
• Television & radio
• The Gutenberg printing press
• The wheel
• The microprocessor
• Fire

Market modeling related

• Predictive modeling/churn modeling
• ROMI/ROO, MMM, Return on Brand Investment

Great marketers

• Steve Jobs
• Guy Kawasaki
• Mark Cuban

Technology and tools

• Internet (also mentioned above)
• LinkedIn
• Spell Check
• Personalized broadcast Integrated email and CRM
• Internet
• Social Media
• Twitter
• Online advertising
• Infomercials
• FSIs

Marketing Concepts

• Understanding consumer behavior
• Value appropriation
• Adaptation to new technologies
• Fully integrated Marcom processes
• SPIN
• Unique Selling Proposition
• Lead nurturing
• Strategy
• Retention
• Innovation
• SWOT Analysis
• Ansoff’s Matrix
• The art of differentiation
• Become part of the customer’s life
• Continuous product innovation
• Listen to the customer
• Alphabet soup:

The 4Ps (Product, Price, Place, Promotion)

The 3Cs (Customers, Channel, Competition)

The 4Cs (Customer needs, Cost to customer, Convenience to customer, Communication)

+3Ps (People, Process, Physical evidence)

The 4Rs and a P (Referrals, Retention, Repeat business, Reactivation, Prospecting)

The 16Ps

• AIDA (Awareness, Interest, Desire, Action)
• Changing people’s attitude

Blatant self-promotion

• (none repeated here)

It’s great to see the diversity of input on various marketing terms and techniques.  I also like the historical references which make it all possible.  It is also a pretty good list of different concepts that marketers feel strongly about.

As for the three top marketers offered, they represent sources of great ideas and to stay abreast of hot new topics we should be following their blogs and other writings.

Thanks to everyone that provided feedback.  Let me know if you have any other thoughts.

The long term value of advertising – The dark side

As I gather notes on the long term value of advertising one of the things that also needs to be considered is the negative value that advertising can have on the brand.  The biggest negative advertising effect is in email, but it can also apply to Facebook and other social media channels.

The negative value of email advertising is the unsubscribe and the junk/spam mail designation by prospective customers.  The problem with any of these is that the junk/spam/unsubscribe designation can last forever. 

Let’s take a simple example.  Let’s assume that a brand executes a monthly email to 100,000 prospects and has an 3.3%  junk/spam rate and a 3% unsubscribe rate for each mailing (See Center for Market Research ).  By the end of the year, after 12 emails, the list will have the following breakdown:

	Active recipients (from 100,000 after 12 drops)	45,801
	Unsubscribe’s (@ 3% per drop)	25,809
	Junk/Spam (@ 3.3% per drop)	28,390
	Total	100,000

The point is not to calculate the number of active recipients, but to show the loss in long term value that occurs due to advertising.  This takes place with email, but can also take place with other media, such as Facebook® fan page subscribes/unsubscribes, Twitter® followers and others.  And, especially with email, once the email lands in the junk/spam or unsubscribe list it can take a lot of effort to reverse the designation by the prospective customer.

Let me know if you have any comments.  I look forward to your feedback.

The long term value of advertising

I put together a white paper on the long term value of advertising.  It was kind of interesting, because it represents some of the software we have used to determine the real value of marketing.
The key question to ask in refining this paper is:  ‘What is the incremental or decremental, long term effect of advertising if advertising were halved or advertising were doubled?’  Here is the link:

Click now:  Long Term Value of Advertising.pdf

The paper differentiates between short, medium, long and very long term effects of advertising but focuses on the medium and long term value.  The key items in determining the long term value of advertising is broken down into:

1. Purchase funnel and emotional effects (e.g., awareness, consideration and purchase intent)
2. Brand imagery – the value of the brand attributes in the minds of the consumer
3. The ‘memory of the web’ (e.g., cross-links that drive SEO and social media clouds)
4. Brand equity – e.g., any advertising this year drives value in the following years
5. Customer equity – a newly won customer is more likely to re-purchase from you than a non-customer
6. Consumer preferences – the education of the consumer that leads to higher preferences for certain brand and functional attributes
7. Creative concept – there are some great creative concepts (“Two scoops of raisins in a box of…”- Kellogg’s Raisin Bran or ‘I’d like to teach the world to sing..” – Coca Cola)

The definitions are currently defined for consumer packaged goods, but can be applied to just about any industry.  I will be writing a separate paper including the differences in the long term value of advertising between consumer and business-to-business marketing.

If you get a chance, let me know your feedback.  If there is anything I left out of the framework to analyze the long term effects of advertising, please let me know.

MarketingProfs B2B Forum 2009

I just got back to my desk after a week of vacation and 2 days of conferencing at the MarketingProfs B2B Forum and I must say, the conference was one of the best I've been to. I haven't figured out what the underlying reasons were for this reaction, but it was nevertheless a great opportunity to network and change the way you think.

Top events at the MarketingProfs B2B Forum

Here are a few things that absolutely stood out:

1. Sandy Carter's talk (from IBM) on the actions they are taking in the social media space. What a great set of examples. (http://www.booksbysandy.com/)
2. Amy Africa's website optimization 'family feud'. The format was put on as a family feud instead of the typical PowerPoint and speech with case studies. It was filled with facts and ideas that might not even fit into Santa's gift bag. What a great, invigorating way to get key concepts across.  (http://www.eightbyeight.com/)
3. The 20 minute one-on-ones put on by experts in different fields. These included web usability, SEO, social networking and others. These were free and certainly give you some great ideas to get you out of your rut.
4. he keynotes were great.  Steven Johnson certainly made clear how he has been successful at social media and the effects of being of the cover of Time magazine.  Barry Schwartz had some interesting points about bringing forth a new moral order.

Key B2B marketing problems

But the interesting question was the difficulty B2B marketers have in determining marketing effectiveness.  Especially since they are trying to improve their marketing mixes, deliver better on corporate objectives and finally prove marketing’s contribution to sales. The key areas still looking for answers include:

• Last touch attribution
• Objectives-based budgeting v. media-based budgeting
• Sales and marketing alignment and collaboration
• The definition of a lead
• An inward-looking view of marketing as opposed to a consumer-centered approach

I’m sure there are many others.  If you have any thoughts, I would love to hear from you.