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Monday, October 31, 2011

True Value: Measuring Marketing (Part II)

(Part II of a two-part post)

Photo from jannoon028
As started in my last post, measuring marketing performance has always been a challenge to marketers due to the vast number of mediums to execute against, as well as determining what metrics are meaningful.  Marketers have come a long way; today, marketers have the ability to capture data elements from almost every stage of the buying process from awareness to satisfaction. As a result, we face a flood of data, making the identification of meaningful data overwhelming.

As marketers do better jobs at measuring their efforts, they are using KPIs (Key Performance Indicators) more religiously. KPIs are quantifiable measurements, agreed to in advance, that reflect the critical success of a firm, group, practice, product, etc.   KPIs for marketing vary according to specific areas of responsibility, but are essential for valuing effectiveness of initiatives.

What you Can Measure

The question I get a lot is "what can you actually measure?"  You can measure almost all of your efforts - the key is your objective for using a medium and setting KPIs to measure effectiveness of marketing mediums in achieving your objectives.  Below are a few examples of areas that can be measured - just the tip of the iceberg.  I stress, it is important to set objecitves for your efforts, otherwise you will not know what initiatives to execute and what to measure.

  • Website – ensure you develop KPIs for analyzing your success (hits, page vies, time on site, number of downloads, etc.).  These will help determine if your online efforts are yielding results that help you with your objectives.
  • Social media – based on your objectives you can measure your blog subscribers, email subscribers, Twitter followers, Facebook fans, YouTube subscribers, SlideShare followers, social bookmarking followers/friends, etc.  If you keep track of your community stats you can analyze increases or decreases and where you need to spend more time.
  •  Advertising – the hard one to measure, especially for B2B - as most advertising is to increase awareness.  To be most effective, ensure you have a call-to-action on advertising to provide easy connections for access to information.  For B2C, the call-to-action is critical (phone number, web address, promotion code, toll-free number, etc.).
  • Direct Mail/Collateral – targeting is key for measurement in this area as it is voluminous - especially for B2C.  Ensure you know what you are measuring so you know if the piece is effective.  A few tracking ideas include, response rate (via use of personalized URLs, campaign page on website, use tracking codes on coupons or reply cards/forms/envelops, use specific toll-free numbers for a campaign, create a specific e-mail address for the campaign, etc.).  
  • Events - remember that there are event metrics as well as post-event metrics. You can measure desired vs. actual attendees, evaluation of attendees, sales that the event helped generate, number of attendees followed-up with, business generated from event, etc.
  • Public Relations - the key is how these are helping reach set objectives of the organization.  Examples of KPIs: Number of articles, subscribers, posts, visits, number of 500 word+ features, cover stories, executive quote inclusions, company and executive profiles, percentage positive/neutral articles, comments in Twitter, number of negative @messages, etc. 
  • Client Satisfaction - companies should set their KPIs for understanding clients' impressions of our product/service.  KPIs can also uncover needs or areas for up-selling/cross-selling business.

Examples of specific KPIs:
  • Account Expansion -   Measures the increase in business from existing clients
  • Acquisition Cost - The cost of a single response to a promotion or total cost divided by total number of responses
  • Customer Churn - The retention to attrition ratio in a given period
  • Lead source – when a deal closes or sales are made, determine where the buyer originally made contact (via event, direct mail, newsletter, etc.). This can help identify channels that work more efficiently than other channels for business acquisition.
  • Market Share - Product or service sales as a percentage of the sales across all competitors
  • New Customers -  Percentage of new customers over existing client base
  • Price Sensitivity - Price flexibility of each product per market segment. How much are people willing to pay for the product in given industry, geography or application based on survey results.
  • Reach - The percentage of potential ad viewers who will be exposed to at least one ad in a given period
  • Sales Per Customer - Number of sales made by a given customer in a given time frame

Marketing is more than an expense to an organization - it is investment that should lead to increased opportunities for revenue generation.  As marketers, it is our job to help demonstrate the effectiveness of our strategic initiatives and execution of tactics.  Here's to planning and analyzing the effectiveness of your marketing efforts.

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Thursday, October 27, 2011

True Value: Measure Your Marketing Effectiveness (Part I)

Photo from Renjith Krishnan
Marketing is not just an expense to an organizationit is an investment.
(Part I of a two-part post)

Over the last 20 years, the range of marketing options and opportunities for marketers has expanded dramatically.  Once there was only a limited choice - print and TV.  Now there is a whole range of media from direct mail to video to new technologies (social media, QR codes, etc.). As marketers, we know that executives are asking us to justify the effectiveness of our efforts - demonstrate the ROO (return on objective) or ROI (return on investment) of how we spend a company’s marketing dollars.  With the proliferation of new marketing mediums to invest in, marketers struggle to understand which options deliver the greatest returns. So, how do marketers approach measurement?
As a marketer, my success with measurement is in defining relevant metrics and measurement criteria to demonstrate the value of my efforts to help advance business objectives.  The metrics must correlate the marketing activities (cause) with the marketing performance, financial results, and customer impact (effect). 

The Foundation

A successful metrics framework is used to understand the correlation of marketing campaigns to defined corporate goals and objectives. For any measurement to be meaningful, you first must define goals and objectives of the business and determine how marketing can build strategies and tactics to help advance the businesses objectives.  Prior to embarking on new marketing initiatives, develop a plan with specific, quantifiable objectives, e.g., achieve $5 million incremental sales, 10,000 inquiries, 10 percent of coupon redemption, receive 15 percent increase in web traffic, sell-in displays at XYZ account, etc.

Second, ensure you have a way to “measure” your efforts.  Develop and utilize a customer database that captures promotional responses, website registrations, advertising and trade show inquiries, etc.. Ideally, the database should integrate with your corporate information systems to report sales transactions, purchase history, new customer gains and losses (acquisition and retention), and other detailed information.  Consider testing your metrics to ensure you can gather the information that will be beneficial to driving business.

Third, to improve the effectiveness of marketing you need to not only improve the measurability of your marketing programs, but also ensure you are measuring the right things. Don’t simply look at how much is spent.  Look at how the activity has helped you reach a goal that leads to bottom line revenue. Remember to figure out how to value a customer and how much to invest in acquiring and maintaining that customer.

Finally, ensure that you are reporting back on the effectiveness of your efforts - in aggregate and at a campaign/initiative level. Includes lessons learned and quantify, as you can, revenue that is connected to the efforts. Remember, it's not always a straight line between marketing and revenue, but measuring your efforts can help determine efficiencies of your efforts to help drive business. Marketers can't always draw a line between content creation and financial return. An investment in words, visuals and online media that drive site visits, Facebook fans, retweets, video views and positive ratings is not reflected on the balance sheet. But, that doesn't mean these activities are without measurable value. Instead, they are leading indicators that the brand is doing something to create value, and that can drive financial results in the future.

As there is a lot of meat to this topic, I plan to continue my thoughts in Part II (next week) - examples of what can be measured.

Here's to planning and analyzing the effectiveness of your marketing efforts.

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Wednesday, October 19, 2011

First Impressions: More than just Human Interactions

We have all heard this warning: "You never get a second chance to make a good first impression."  In business, a positive first impression is crucial for forging sustainable, long-term partnerships with buyers to keep it thriving. Businesses spend a great deal of time and resources on keeping their existing clients. Consistently, making a strong first impression is essential for gaining new customers and clients.

Photo from renjith krishnan

There are many aspects to marketing, but one of the most important is in being able to quickly capture the attention of potential customers and clients. The field of marketing relies on good first impressions. 

It is one thing to grab the attention of a potential client or customer and another completely to grab their attention for all the wrong reasons. The art of attention seeking, without being overly persistent or irritating, is an important art to learn- really capturing the interest of the consumer.

It is almost important that, after grabbing the attention of your audience, you don’t lose sight of what the product or service that you’re offering really is. This has been a common problem for marketers, and has given rise to the common customer complaint that while they were entertained by an advertisement or a gimmick they were left without a real understanding of what the advertisement was trying to sell.

Keep in mind your marketing first impressions:
  • Brand – Do your key messages convey how your product/service will help your buyers (not just support your firm)?
  • E-mail Marketing – Many firms deal with lackluster open rates of e-mail communications.  Are you subject lines engaging to your target?  The right message at the right time does little to benefit the brand if it is never opened.
  • Website – Is your website easily navigated from a customer’s/buyers point of view? Is it easy for people to contact you if they have questions? Do you have a mobile viewable website for easy of today's technology savvy buyers?  Should you invest in a mobile application to ease the buying process?  What web/technology channels are important to your targets?
  • Social Media - Do you need to utilize social media?  If so, are you posting consistenty?  Are your messages important to your targets?  Do your messages engage your targets or get them interested in a product/service?  As marketers, we need to determine what our strategy is for using social media and ensure that our first impressions are not hurting our overall brand and positioning.
  • Collateral – Firms spent time and money writing, designing, and printing various pieces of collateral to communicate your firms products/services.  Does your collateral grab your viewers’ attention and encourages them to read the information you've worked so hard to put together? Or keep your business card in their files, bookmark your website, consider your proposal, or whatever the goal for the marketing piece may be? Are your "sales" material focused on benefits and ways your product/services help your potential buyers?
  • Phone messages/Receptionist Greetings – Part of making first impressions include voice messages of the firm and how the receptionist answers the phone.  Are these consistent and professional?
  • Store Layout/Displays – Is the design of your store or your display logically attuned to your buyers (not just appeasing to your design preferences)?  For displays, does it grab the attention of your buyer?
  • Product Packaging/Signage –  This is critical for B2C.  Enough said. For B2B, are you bundling services to make the buying process easier for your buyers?
First impressions are important for your employees and your marketing efforts.  Here’s to making positive first impressions with your marketing efforts. 

Monday, October 10, 2011

WHAT'S THE BUZZ? Overused Words Impact Differentiation

As marketers, it is important that we differentiate our companies in the eyes of potential buyers. A way we differentiate is through the words we use to communicate the benefits of the products/services our companies sell.  Choosing words that buyers connect to is essential for top of mind awareness and recall during the buying process.   The words are not only used in print, but also by employees when communicating the companies products/services.

Photo from Idea Go
I recently ran across an article the highlighted words that are overused in the workplace and through it would be good to share some insights as a reminder of the key for differentiation.

When business or industry terms become overused, people stop paying attention to them,” said Max Messmer, chairman of Accountemps.  “The best communicators use clear and straightforward language that directly illustrates their points.”

The market and workplace is overwrought with clich├ęs, buzzwords and industry jargon, often leading to a “disconnect” between coworkers and buyers. A survey, funded by Accontemps, was conducted by an independent research firm - telephone interviews with 150 senior executives from the nation’s 1,000 largest companies. Executives were asked, “What is the most annoying or overused phrase or buzzword?” Their responses included:
  • Leverage: As in, “We intend to leverage our investment in IT infrastructure across multiple business units to drive profits.”
  • Reach out: As in, “We consistently reach out to customers impacted by the change....”
  • Viral: As in, “Our video has gone viral.”
  • Game changer: As in, “Transitioning from products to solutions was a game changer for our company.”
  • Disconnect: As in, “There is a disconnect between what the consumer wants and what the product provides.”
  • Value-add: As in, “We have to evaluate the value-add of this activity before we spend more on it.”
  • Circle back: As in, “I’m heading out of the office now, but I will circle back with you later.”
  • Socialize: As in, “We need to socialize this concept with our key stakeholders.”
  • Interface: As in, “My job requires me to interface with all levels of the organization.”
  • Cutting edge: As in, “Our cutting-edge technology gives us a competitive advantage.”
  • Results:  As in, "Our product is top rated and provides you results that drive change."
  • Innovative:  As in, "Our innovative approach to solving problems leads to faster implementation."
Other words that surfaced included:  Solution, synergy, paradigm, customer centric, accountability management, core competency, alignment and incremental. 

Everyone is guilty of using buzzwords from time to time.  The problem is that these generic terms force buyers to interpret what you mean when you say them.  Choose your words carefully!

Learn more
Here's to differentiation!

Tuesday, October 4, 2011

Budgets: What do you Spend on Marketing?

Photo from Stuart Miles
 The age-old question is how much your marketing budget should run in comparison to firm budgets or revenues. Should you set them top down?  Bottom up?  In alignment with what your competitors spend?  Should they be a percentage of revenue or profits? As marketers, we know the key to establishing a successful marketing budget is to have an actual plan (in writing) so we can establish specific dollar amounts to spend each month to support our business.  We know that creating an effective marketing program means investing in it on an ongoing basis regardless of how good or bad business is.  

 Go-to-Market Strategies recently published a study that released normative levels for marketing budgets.  According to their research 30% of companies spend between 3-5% of revenue on marketing, with 45% spending over 6% (most of those between 6-10%). They indicated that if a company is launching a new product, or are expecting to launch into a new market or territory, budgets jumped to approximately 20% of revenue.

As marketers, we can take these percentages as a base.  What percentage you use is determined by a number of factors such as, industry (some industries trend higher), how mature is your market (how much education do you have to do), how well known is your company to your targets (are you a new or established business, how much brand awareness do you have to do), and how fast do you intend to grow.   
  • When building your marketing budgets, here are things that I take into consideration:
  • Activities to support the overall brand and the initiatives to support channel activity. These include logos, Web sites, blogs, e-mail campaigns, sales presentations, brochures, ads, etc.
  • Activities to support Business Development.  These include targeting, RFP, events/webinars, proposal efforts, newsletters/e-communications, etc.
  • New developments.  Take into consideration new market expansion, new product/service launches, M&A, downsizing, rebranding, significant announcements, etc.
Note: For those firms that do not have a marketing budget, I recommend that you take a bottom up approach (to gauge what is needed - don't just assign an industry percentage.  Many firms starting out will have smaller budgets as they build their efforts.

Remember to build in some flexibility.  Many marketers include a 1015% contingency in marketing plans because you can never predict 100% what will happen over the coming year(opportunities and challenges). 

Happy Budgeting!