Marketing Analytics

In this tough economy, what can a CEO do?  The more I think about it, the more I am convinced that a CEO’s options are limited.  The CEO can try to increase revenue through participating in and supporting sales efforts; however, he cannot be everywhere and he does not control customer spending.  In addition, there is the problem of information asymmetry.  He must rely on sales and operations to provide feedback on revenue generation.  The CEO has more control over costs and companies large and small have announced layoffs, wage freezes and reduced benefits.

However, the CEO also has the power to bring the company together to survive and possibly achieve competitive advantages in this tough environment.  I have been thinking about an HBR article I read in my business school strategy class, “Leading Change: Why Transformation Efforts Fail” by John P. Kotter.  It describes eight steps for transforming an organization and it is extremely relevant in today’s turbulent environment.  It all starts with the CEO.  She can form a guiding coalition that assesses the company’s problems and opportunities.  In addition, her vision for how the organization can effectively react to the challenging economy will ground all of the company’s efforts.  The guiding coalition may develop a list of plans, projects and initiatives but the CEO’s vision will determine the priority of the projects and keep everyone on the same track.  Further, her vision will reassure employees as they will know where the company is heading.  The CEO will need to reiterate her vision across multiple channels in order to empower others to act upon it.  Change is hard and will almost certainly involve sacrifices.  However, employees will pull together to help the company survive if they understand the CEO’s vision and are inspired by it. 

This is a crisis too good to waste.  CEOs can do more than just survive until the economy recovers by using this opportunity to transform their organizations.

“I think that playing the same music over and over again is irresponsible, uninteresting, and somewhat immoral.”  This morning I caught an interview with Gil Rose, the Artistic Director of BMOP, on WGBH.  I could not resist quoting him.  The interview mentioned that BMOP has started an independent record label, BMOP Sound, for their recordings.  It seems slightly quaint to be starting a record label when consumers are buying downloads rather than compact discs.   However, vertical integration, in this case expanding into the business of recording and distributing music, makes sense.  They want to create awareness both of the music they champion and their brand.  Most record labels are unlikely to be interested in their music or be willing to invest in it or them.  In addition, vertical integration enables them to reap more of the benefits from each compact disc.  They can also leverage their concerts and subscriber base to promote or sell compact discs.  It is yet another innovative way that BMOP is addressing the challenges of the music industry.  An earlier post dealt with an inventive approach BMOP has adopted to market itself.

I have been thinking about a conversation I had recently.  I was talking to someone from a prestigious Boston cultural organization about her subscriber base and the catch 22 they are facing.  The subscriber base is aging so the organization needs to bring in new, younger subscribers.  However, younger subscribers do not like the repertoire favored by the existing subscriber base.  She described a challenge that companies face all the time.  How do you acquire new customers while retaining loyal customers?

In this difficult economic environment, it is hard not to focus on protecting and defending your most loyal customers. They represent the life blood of your company. However, they will not be there forever. You need to balance acquisition and retention efforts.

In the case of the cultural organization, I think she has at least three options:

1. Focus on the loyal customers for now. Once the economic climate improves and budgets ease, begin courting high potential prospects. For example, a local opera company performed Carmen on the Boston Common and used the opportunity to collect lead information from attendees. In this case, they collected information on cards distributed before the performance and then sent a targeted follow up mailing about their upcoming season. 
2. Create a new sub-brand. The organization could develop a sub-brand that would leverage their considerable name recognition and reputation. For example, Boston Modern Orchestra Project (BMOP) has concerts at the Jordan Hall in Boston as well as concerts some Tuesday nights at Club Café. They may play Elliot Carter at both types of venue but the club concerts are in a more intimate and less intimidating space. I imagine that they attract a different crowd as a result – probably younger and less well-versed in classical music. I haven’t yet made it to a club concert but the next one is February 3! By providing an alternate venue and experience, BMOP caters to their current subscribers and reaches out to new customers who will become future subscribers.
3. Try to please to both segments. It can be hard to meet the needs of both new and loyal customers. James Levine caused a stir in Boston by including new and contemporary compositions with traditional stalwarts of the repertoire at the Boston Symphony Orchestra (BSO). However, the BSO did not give up. A new program provides $20 tickets for those under 40; it is another innovative way to bring a younger demographic to the symphony.

These are my thoughts. Is there anything you would suggest?

Direct mail marketers face several challenges. First and foremost, they get no respect. Almost everyone refers to direct mail as junk mail and many think it is bad for the environment. Second, their business has been negatively affected by the current economic conditions. The credit card companies who were responsible for mountains of solicitations have fallen on hard times and reduced their mail volume. Third, e-mail is replacing some direct mail as it is cheaper and offers the same measurability as direct mail. And now there is news of Postal Service carriers who did not deliver the mail entrusted to them.

According to a recent Associated Press article, one Postal Service carrier stored third class mail in his garage for six years. He was placed on probation and fined $3,000 but an e-mail marketing firm, MailChimp, paid the penalty. AP reported that Ben Chestnut of MailChimp said, “We’re doing everything we can to stop junk mail.”

In the Wall Street Journal recently, Ann Patchett wrote “recommend the books you like, even to strangers.” So I am recommending “Then We Came to the End” by Joshua Ferris. Before you buy it, let me tell you that I enjoy gallows humor. This book is about an ad agency in Chicago in the midst of a business downturn.  Sound familiar? The book may resonate with its painful, incremental lay-offs and staff trying their best to keep busy and desperate to look good at their jobs.

I laughed out loud at the controversy over an office chair. When someone left the agency, his chair was appropriated. Eventually, the office manager tried to retrieve the chair but by then no one knew who actually had the original chair, given the many rounds of lay-offs. It was even funnier after I received an e-mail at work asking who had taken a former co-worker’s chair. This was followed by a second e-mail stating that the chair recently placed in her cube was a poor substitute and not the real chair. In this case, life imitates art.

Reading provides a portal into another person’s experience and enables us to “feel empathy for people we’ve never met”, as Ann Patchett so simply and elegantly stated. Empathy is needed in these difficult times as is a good laugh.

Last night I saw an episode of an upcoming cable television show in my local movie theater.  The lead character is played by an actress I have enjoyed in movies in the past so I thought I would go to the screening despite being the wrong “demographic”.   I do not have cable and average less than 5 hours of television a week.   When I want to watch cable, I go to the gym! 

The television show was disappointing and slightly disturbing.  The experience itself was wholely unsatisfying.  Once the episode aired, the lights came on and that was it.  No one wanted to know what the assembled audience thought.  There was no mechanism to provide feedback.  I was left wondering why the cable channel bothered.  If this wasn’t an opportunity for market research, perhaps it was part of a viral campaign?  If so, it worked.  I have told two friends how terribly disappointing and unfunny I found the show to be. 

I have since read that an integrated campaign to introduce the show included more than just screening episodes of the show at movie theaters in major markets.  The first episode is available on websites like YouTube and on some mobile phones.  Since I went to a screening, I am surprised that I needed to find this out using Google.  While I applaud the use of multiple channels and delivery devices, more integration could have been done.  Why not let the audience at the movie theater know about additional ways to view the first episode?  Why not enable viewers to take an on-line test to determine which personality featured in the show best fits them?  At a minimum the channel could have informed the audience at the screening I attended when the first episode would air.

During the holidays a friend of mine was complaining about the number of solicitations she received from one charity.  She had sponsored a friend who was raising money for a good cause.  Now, she received solicitations every few weeks from the same charity. 

I became excited thinking that she objected to the same things I did.  I assumed that she was angry because there appeared to be no communication strategy, no plan with respect to contact recency and frequency.  Immediately I wondered, did they provide a suggested donation amount based on her past gift?  Would they ask for a donation near the same time of year as her original gift, recognizing that some donors give at the same time every year?   Was she getting multiple mailings to increase the likelihood of a response, as some credit card companies do?

In fact, she was upset for a different reason.  She was concerned that so much of her gift (and others’ donations) went toward marketing.  By sending multiple mailings, it only diminished her likelihood of donating again.  After she first donated, the charity could have sent her a thank you letter and directed her to their on-line preference center.  By enabling her to provide feedback on the type of communication (e.g., e-mail or direct mail) and the frequency of contact, the charity saves money by avoiding superfluous mailings and increases the chances of a second donation.  In addition, it deepens the relationship because the charity has asked for her input and directed her to their website where she can learn more about their mission.

Creating a preference center and following customers’ preferences, one of my suggested new year’s resolutions for e-mail marketers, also applies to direct mail.

Today’s Wall Street Journal had the following comment by Colleen DeCourcy, chief digital officer at Omnicom’s TBWA:

“Banner ads will be the new junk mail.  More and more, reputable companies won’t be buying up the space around the Web sites you visit.  Clicking these ads will become less and less legitimate as brands will endeavor to do things that add more value to you in the social-media and customer-service space.”

SodaHead.com seems to be the exception to the conventional wisdom that click through rates for banner ads are low.  SodaHead is an online community and according to a Wall Street Journal article a few weeks ago, “SodaHead ads enjoy click and conversion rates of as much as 10 times the industry average.”  As I wrote in an earlier post, click through rates for banner ads are typically much less than 1%.  The click through rate refers to the number of times a banner ad was clicked.  For example, if a banner ad was displayed 100 times and it was clicked on once, the click through rate would be 1%.

There are several ways that you can try to increase the likely click through rate.  You can optimize placement by displaying your banner ad on a website with synergy.  Alternatively, you can use rich media to make the ad more noticeable and engaging.  Personalization is also likely to increase clicks.  So how does SodaHead do it?  They ask provocative questions and engage viewers by asking for their opinions.

Though SodaHead has a high click through rate, what is their return on investment (ROI)?  My question remains.  What is the value of a banner ad?  As the Wall Street Journal article points out, SodaHead has yet to make money.

Most of what I have written this year about e-mail marketing has been complaints.  So these are my New Year’s resolutions for e-mail marketers:

1.  Target your e-mails.  Resist the temptation to blast everyone on your list regardless of whether they will be interested in what you have to say.  A good e-mail is timely and relevant.  If you send out too many e-mails, your recipients will report your e-mails as spam, hurting your reputation and possibly your ability to send e-mails in the future. 

2.  Send trigger emails.  I am a big fan of Barnes and Noble.  I love purchasing books on-line and they make it so easy for me.  For example, their website indicates how quickly each book typically ships.  When I place an order, I receive confirmation almost instantaneously and then am kept abreast of the shipping status of my order.  I love knowing exactly where my books are and when I can expect to receive them.  As a result, I appreciate trigger emails and expect them to be timely.  If I sign up for a new service on-line, I expect to receive a welcome e-mail within 24 hours, if not sooner.  I am amazed and disappointed by organizations that do not send trigger emails as they are important for reinforcing the relationship and offer an up-sell or cross-sell opportunity. 

3.  Create a preference center and follow it.  Allow subscribers to determine the frequency, content and even form of communication.   DailyLit is a great example I wrote about.  DailyLit allows subscribers to choose the amount of text they receive, the frequency and timing of communication and whether users receive emails or RSS feeds.  Thus, their communication is more likely to be read.

4.  Create your emails with image blocking in mind.  I wrote about image blocking in one post and then had to resist doing it again and again as I received more and more e-mails that clearly were not designed for e-mail providers who automatically blocked images.

5.  Reactivate or eliminate inactive e-mail subscribers.  As I noted in an earlier post, it is nice to be asked if you want to continue to receive emails from an organization.  This gentle reminder reengaged me and reestablished a relationship.  Alternatively, marketers could create a formal reactivation campaign as part of their campaign cycle. 

6.  Measure your campaigns and continuously learn.  I believe strongly in testing and measurement, comparing campaigns to benchmark rates or past campaigns, and determining the return on investment (ROI) of campaigns.  In the end, everyone one wants to know what worked, what did not work and whether the campaign was successful.  If you are interested, past posts have provided sources for e-mail metrics and a discussion of A/B testing. 

Happy New Year!