Friday, September 28, 2012

Football Metrics and Marketing KPIs

What's wrong with ranking on simple metrics?

A common way to rank things is based on a straightforward metric.  For example, football teams are ranked on their total, offensive and defensive performance.   Consider the Tampa Bay Buccaneers; they are currently ranked 1st in the NFL in terms of being the stingiest defense based on the yards allowed per game - a measly 47 yards per game or about 2 feet per minute played. 

Are they that good or is that the result of something else? 

In contrast, when viewed in terms of pass defense they rank dead last giving up more yards per game than any other team.  This ranking in turn comes from two contributing factors: the opposition completes both longer plays and a higher percentage of attempts.  The result is 353 yards given up by passing.

So, could it be that they are ranked so well in terms of rush defense simply because other teams know they can be successful passing the ball?  It turns out that opponents run the ball 32% of the time (5th lowest). So, yes the numbers are skewed based on the distribution of the events themselves.  They have good run defense metrics in part because teams don't run the ball.

We tend to like simple numbers, but they can be hiding something important or possibly misleading.  Consider typical marketing metrics:
  • Conversion rate
  • Response rate
  • Attribution
  • Market share
All are highly summarized metrics, just like 'yards per game' that attempt to roll up the details into a comparable key performance indicator.  Thus, they all run the risk of hiding the important insights; and it is the insights that drives changes in marketing plans.

The trick to communicating insights is to find the right way to present the information; and that usually comes in story book form.

And by the way, Tampa Bay does give up the fewest yards per attempt in the league so they may be that good. 

UPDATE: Stats found here

10 Different Kinds of Shopping Trips

Why do we go shopping?

A recent white paper by Jim Barnes of BMAI Strategy describes 10 different scenarios for shopping at the mall, each with different goals.
  1. Recreational: where the outing and entertainment choices are what's important
  2. Purposive: planned and with a goal in mind to buy something specific
  3. Social: spending time with others is more important than actually buying things
  4. Reconnaissance: looking for inspiration or 'what's new'
  5. As a Treat: driven by a mood and desire to reward oneself
  6. As a Quest: looking for a 'great find' is the end result
  7. As Entertainment: people watching and window shopping
  8. Word-of-Mouth: following up directly on the advice of others
  9. Event-Based: a subset of 'purposive trips' where an occasion drives the search and purchase
  10. "Going-to-the-Mall": the place itself is the attraction.  Like Starbucks, it is the "third place"
Many of these types also relate to individual retail stores and on-line shopping.  And in all cases the information needs of the consumer are very different. As a result a mix or blend of content is required to help them decide.  For those trips where transacting is actually the goal some are emotional (Reward) and some are promotional (Quest) while others are informational (Purposive) or communal (Word-of-Mouth).

So in addition to thinking about channel and device as part of our communication blueprint we need to look how we can serve the right blend of content in these situations.   And yes, we have to figure out intent and context first.

Thursday, September 27, 2012

Marketing Ecosystem: Direct-to-consumer

What does the landscape look like?

The marketing landscape is cluttered.  Just look at any of the Lumascape diagrams (here is their one for social) and we're astounded by the sheer numbers of players involved and thus the complexity of it all.   A spate or recent discussions about partnerships, competition, positioning, and offerings all led for the need to put some sort of structure together that covered the major types of players as well as their respective offerings as it relates to direct-to-consumer marketing.  

Here's a synopsis of where we ended up...

The offerings were divided into consulting versus implementation and the players were allocated to one of four types.
  • Management Consulting - focused on crafting unique solutions based on a practice
  • Business Consulting - delivering the infrastructure, including organizational, to execute
  • Agency, Boutique Firms - charged with taking a brief and transforming it into campaigns
  • Platform Providers - providing the execution and tracking tools
Now it is clear that a given company may span up and over in order to grow and increase its own value proposition, e.g. enterprise platforms adding professional services.  And it is likely that start-ups will look at one of the deliverables from a fresh perspective as a way to define their white space. 

The implication is one needs to understand the core business itself when looking at a company from the outside, either as a potential client or a competitor/partner.  Depending on the frame of reference, there will be trade-offs and distinctive points-of-view.   Certain options provide unique or exclusive solutions while others provide economies of scale.  

There are a few dimensions missing from this view, maybe another post...

Wednesday, September 26, 2012

More Cowbell is Not the Answer

Is the best way to understand consumers to collect more data?

The idea for this came from note sent by a colleague who spoke at the CMA "Evolution of Direct Marketing Conference" this week.  The closing keynote was on the future of marketing where the answer is not more data, but rather the algorithm.  Alex Leavitt talked about the need to tell stories with data so what you do with it, and how, is more important than the amount of data on hand.

The digital world leaves an unimaginable amount of breadcrumbs that we should try to use to infer intent and context in order to improve consumer engagement.   Yet the vast majority is what can be considered "dark data" - we know its out there but have no idea where or how to use it.   So maybe we should be asking ourselves some qualifying questions first:
  • Where along the journey are we likely to have the most impact?
  • What decisions can we operationalize and embed in the appropriate touch points?
  • What do we need to know as opposed to what could we know?

To contradict Christopher Walken in the famous SNL skit the prescription isn't more cowbell (data).


Monday, September 24, 2012

Targeting vs. Personalization

What is the difference between targeting and personalization?

Last week we got into a discussion over whether the mantra of CRM - right person, right channel, right time, etc. - was a question of targeting or one of personalization.  It is clear both ideas resonate in any consumer-centric marketing:   What do they actually mean?   Here's where I netted out:
  • Personalization - the use of content that the consumer should recognize as 'hers'.   This runs the gamut from contact information and preferences to product purchase history.   It is a subset of the whole idea of customization that includes selection of content that she might not recognize as hers, e.g. up-sell opportunities. 
  • Targeting - the identification of a group, and that includes the idea of a group of one, that should be managed and addresses as a single entity.  It offers the ability to alter the content delivered while still maintaining the ability to scale the solution.  In short, this is what one does with segmentation. 
Personalization is about content; targeting is about selection.

Now implementing either or both personalization and targeting requires an increase in dedicated resources to figure it out and implement.  So, it is still a matter of analysis as to whether or not this produces sufficient return on investment to warrant the costs involved.  

Wednesday, September 19, 2012

Customer Strategy - Get Emotional

Where should the emphasis be in the planning cycle?

Yesterday Jim Barnes, author of Build Your Customer Strategy, came around after a customer advisory event to share his thoughts.  His emphasis on understanding the emotional reason for shopping as well as the mechanics of developing a marketing plan was a good reminder to remember what marketing is all about - satisfying needs to everyone's mutual benefit.

His three oxymoron points were also worth a note or two.
  1. Planned Spontaneity - the idea is to recognize a consumer problem that she doesn't know she has and then solve it.  Customer service stories abound around this topic but there is merit in thinking about how intermittent reinforcement as a strong motivator actually transforms into word-of-mouth.  We tell everybody about these events.
  2. Future Memories - this is often the real reason we buy, particularly when it comes to disposable income.   That $50 jar of squid ink wasn't just used to make fresh pasta with octopus, it was for a dinner party with friends. 
  3. Proactive Hindsight - by understanding what a consumer will think about after the purchase we can orchestrate the present help to avoid bad decisions.  This often involves providing advice and guidance as much as a product, e.g. financial services.
 In the end, it is about understanding context.

Monday, September 17, 2012

The Marketing of Beef

How does muscle become marketable meat?

In "The Art of Living According to Joe Beef: A cookbook of sorts" the owner relays a story about beef.  The restaurant is proud to serve local products and when their 'Alberta Beef' is revealed as Australian heads role.  While a good restaurant story, a key question emerges from a marketing perspective:  How did Australian beef go from obscurity to being served as a unique product at one of Montreal's best restaurants?

In the last century, beef, as a category, has gone from the tragic world of Upton Sinclair's The Jungle to specialty breeds like wagyu that command a significant price premium. This journey started as a means of protecting consumers when the US passed the Meat Inspection Act over 100 years ago.

Today, the processing of the muscle into meat has to meet minimum requirements which includes on-site inspectors and voluntary grading. The high fixed cost of inspection and the creation of minimum standards has led to an industry focused on supply chain and cost efficiency as a means of producing as much acceptable beef as possible.  There has been little in the way of differentiation until recently with the rise of ranch brands - often based on how the cattle are treated and fed rather than the meat itself.

Australia took another path to market.  While they have stringent quality control, they also focus a lot on consumer preferences.  In fact they have an Eating Quality Assurance program that strives to understand what consumers want to experience when eating meat.  An ethereal quality like tenderness can't be reduced to a formula based on age and marbling (although it can be measured by sheer force).  The other preferences they focus on include juiciness, flavor and overall liking.  

It is likely that it is consumer focus (and its 1,000,000 interviews) more than hard rules that has helped Australia become a major exporter of beef.

Wednesday, September 12, 2012

The Impact of Other Online Reviews on our Own

Do online product ratings reflect only our own experience?

As social creatures, online reviews and recommendations certainly influence our decisions.  Recent research in the Journal of Marketing goes beyond confirming that "what we read shapes what we write" to focus on the interaction between existing reviews and our own rating of a product experience.   Using a highly-rated category - hotels - the authors identified scenarios where we might increase our rating and ones when we might decrease them.

So, imagine the product has a positive rating and you go to write yours.   Here is what is likely to happen based on your experience:

Thus, it appears that social influence of existing reviews mitigates or accentuates our own ratings creating a self-adapting system.   The implication is that we need to understand the context in which the rating was given and act accordingly.   Clearly we should reach out in the event of bad experiences; it has a good chance of correcting overly strong reactions while at the same time building goodwill.

The surprise is that we should be communicating with those who are positive - because their desire to use self-expression to be unique can bring down our rating.

Our contribution to communal content is just that, a reflection of the community.

Paper is entitled: Social Influence Effects in Online Product Ratings by Sridhar and Srinivasan

Tuesday, September 11, 2012

What CMOs Should Learn from Chefs

What chef-like attributes are worth adopting?

First, just like launching new products restaurants may be one of the hardest markets to exist in.  The urban myths are that 90% of restaurants and 80% of new products fail. The reality is that the success rate in both categories is well above 50% for the first year.  So while the odds of success are longer than those in Las Vegas, they are still worthy pursuits and quite possibly have things in common. 

There seems to be a common set of characteristics that chefs bring to the table...
  • Clarity and focus - the passion, single mindedness and very often the standards are what makes them leaders.  
    • This is no different than insisting on a clear, crisp brand promise.
  • Consistency - eating is a ritual, we come back for the memories, we don't want to be rudely shocked and have to reevaluate our choice.  
    • This is no different than guaranteeing a consistent message and experience along the shopping journey. 
  • Customer satisfaction - the best have a relentless goal of ensuring guests are enjoying themselves.  
    • This is no different than being the voice of the customer. 
Some of the most interesting thinking and inspiration (not to mention food) comes from those developing street food or running food trucks.  Here are two videos of chefs talking about their craft.
  • Richie Nakano of  Hapa Ramen talks about goal driven and focus based on the love of his craft.
  • Roy Choi of Kogi BBQ embodies the mixing of emotion into the product and exudes a passion for what he wants to eat.
What is clearly different is that this is very personal for the chef and possibly only a day job for the CMO.

Friday, September 07, 2012

Marketing Must Deal with Turbulent Times

Why is marketing getting harder?

There is an underlying implication behind media fragmentation, social expression, and digital interactions that it is tough to be a marketer these days.  A recent report by Boston Consulting Group on how to deal with turbulence confirms this trend at the macro, industry level. 

Change is happening faster.

Over the past several decades four measures of financial performance have become  more volatile.
  1. Demand is increasingly unpredictable
  2. Positioning is more unstable
  3. Profitability swings are larger
  4. Market expectations are over/under-stated
The report goes on to highlight firms that have done better than average during turbulent times and describes five potential success factors.  Two of the five, recognizing signals and experimentation, are clearly marketing functions.   The other three, organizational, systems and ecosocial, are more likely the responsibility of the CEO.

Identifying market-changing signals can either be at the macro-level or individual level.   Services like trendwatching offer insights into how consumers are changing.  And internally, customer behavior can often be used to isolate shifts in life-stages, as Target's work on identifying pregnancy illustrates.  The function responsible for bringing insights to the table is typically in the marketing research, consumer analytic areas of the company.

Taking products to market that leverage insights is clearly a marketing function.  However, coming up with ideas to take advantage of those insights in the first place should not just be a marketing function.  It should be in the fabric of the corporate culture.   3M and Google are known for their allocation of 'think time' so that people can work on problems that interest them.   This then becomes a social exercise.   And supporting that claim, McKinsey just reported that the majority of the value of social technologies will be found in facilitating internal collaboration.  

An interesting approach would be the creation and use of 'human libraries' where the business can check out an expert.  Originating as a way to discuss prejudices, the idea easily extends to the corporate environment where new perspectives are valuable in solving challenges.   A recent viewpoint in Marketing News (not yet online) described several cases of using subject matter experts from varied disciplines - including jazz musicians to discuss improvisation with a multi-product manufacturer that had several sales people calling on one retailer. 

While marketing may be harder because what used to work might not work now, it is still filled with opportunities to help both consumers and thus companies.

Wednesday, September 05, 2012

Vendors Need to Think Beyond the Report

Where does a vendor's value lie?

One of things we do at work is to distribute our clients' promotional content thru a number of channels and platforms.  And a recent project we were requested to work on was simply entitled 'extract business insights'.   Since we already produce reports on activity, this left us wondering just what that might mean. 

A bit of brainstorming left us with three potential questions that could form the basis of the analysis.
  • Tactical:  What worked and what should I do next?
  • Acquisition: Who is a good customer and where do I find more of them?
  • Strategic:  How do I compare to other players in the category?
Each of these questions could produce answers that change how we market, and thus qualify as 'insights'.  Plus, they seem to cover the potential range of interests a marketer is likely to have.   And if we can answer them satisfactorily then we have the opportunity to be a consultative partner rather than just a vendor.

Since we're a 3rd party, one of the advantages we have is to look across the market as consumers interact with various brands.   This normative view, even without identifying brands by name, is one of the key things of value we can bring to the table. 

The data requirements and time horizons are likely to be quite different than traditional reporting solutions provide.   For tactical questions - it is granular, short term and requires financial knowledge.  Did last week's offer of 'grapes' generate store traffic and sales?  Would it be better to promote 'lettuce'?  At the other end of the spectrum, strategic questions take a longer term and higher level view.  Is our merchandising strategy engaging customers better than other approaches?   In between lies the acquisition work - what consumer characteristics appear to be associated with events generated by digital content? 

Each of the questions is framed to foster discussion.  And in the end, that should be the goal of any vendor with a professional services staff.

Yet, there are still things to consider and work on:
  • How does consumer behavior change over time?   (this requires a means of identifying someone across time and space)
  • What is the ROI of not only the promoted item, but the basket? (this requires linking from the offer all the way thru to the basket)
  • Are deal sensitive consumers valuable in the long term? (this requires both of the above fixes)