Promotional Offers as Brand Icons

How should we think about offers?

A colleague recently wrote a good piece that describes with facts and figures the evolution of the consumer into a "Value Shopper".  This goes along with the idea of Dealer Chic, one of trendwatching's Trends for 2012.

The discussion around promotions is typically about short term effects such as incremental sales or margin erosion.   But if consumer psyche has shifted to deal hunting and the smart use of money then the offer is no longer just a temporary inducement but rather a part of something new and different.

This shift raises questions that at first appear to be odd and out of place.

• How do coupons support our brand promise?
• How do offers support the reason to believe?
• How do we leverage promotional content to build loyalty?

Offers may in fact be addictive.   When asked, consumers are often quite willing to have their personal information used for "deals, freebies or offers in the future".  This sacrifice of anonymity allows for a relationship to be built and again that is brand territory.

So, it seems that merchandising tactics merged with marketing strategy, and we might not have even noticed.

To paraphrase Prince Hamlet, 'the offer's the thing.'

Segmentation and The Joy of X

Just what are trying to figure out with all this data?

"The right abstraction leads to new insight, and new power."

This idea is in the beginning of "The Joy of X" - a guided tour of math from one to infinity.  It is made in the context of explaining that addition is the creative shortcut for counting by anything.

In marketing we are inundated with talk about garnering insights from the data being collected, but rarely do we hear about the abstraction or problem side of things. So, before we go digging around in the dirty data, it might help to define a shortcut marketing is looking for based on two perennial challenges.

1. Efficient and effective allocation of scarce resources
2. Aligning solutions and needs to the mutual benefit of consumer and company

Segmentation represents the most powerful level of marketing abstraction that works in both areas. By transcending the peculiarities of individuals, segments scale easily and quickly.  By recognizing differences it eliminates the potential waste of broadcasting.

As a definition, a market segment is a desirable set of homogeneous entities that can be communicated with efficiently.  Notice, I didn't say consumers since we can segment web visits, digital promotion sessions, distribution routes, etc. as well for marketing purposes.   This point is quite important in the digital realm where consumers are and often wish to be anonymous.  In fact, segments offer a basis of recognition when integrating offline behavior and online activity.

The job of segmentation requires a thorough understanding of the business and data realms. Segmentation approaches can be...

• strategic thru the use of descriptive attributes or tactical based on behavior, or better yet, the combination of the two.
• focused on a business outcome, e.g. sales or conversion, or discovered based on natural combinations attributes, eg. technology adopters or "pets are my children".
• static where migration between segments is important or dynamic in cases where group behavior is likely to change rapidly

And there is no reason why there should only be one segmentation scheme.  In fact, most companies view consumers in a set of different lights. Nor do they have to be exhaustive, there are always some outliers - it is okay to ignore them.

So, before trolling in the data exhaust for that single nugget start with understanding what segments might be found and assess whether they're likely to respond to marketing. 

Brand Fans: Anonymous or Revealed?

Should a brand reveal its fans?

Continuing the theme of the impact of communal content on consumer perceptions, recent research from the Journal of Marketing looked at the question above. The study looked at whether the demographics implied by pictures of supporters influenced purchase intent and related brand metrics.

The answer depends on the overlap between our target market and our fan base. 

Here are the two summary points:

• Reveal the identity when the  profiles are similar to your target audience.
• Maintain ambiguity when the fan base is different than your target audience.

The research makes more nuanced recommendations, but it seems that 'birds of a feather' and inclusion works: if people like me support a brand, then my perception rises.  Conversely, if I sense either a different or very mixed audience then my perceptions may be dampened. 

This thought clearly has implications when a brand is running contests or extending into new demographic markets.   For the latter we'd likely want to run a targeted acquisition program to enlist support from the new demographic group first.

So, what can we do to determine whether the groups overlap?

1. Augment our customers and CRM data with both social and demographic indicators.  Three key social metrics are presence, engagement with the category, and influence.
2. Ask your supporters for permission to look at their interests and profile.
3. Develop two personae or detailed profiles, one for each group, and then determine the degree to which they overlap.

Not only will this approach help with the tactical question about identity, it might reveal some other useful insights about the brand promise and whether the target matches reality.

Two Perspectives of the Purchase Pretzel

Just what is a 360-degree view of the consumer?

The shopping journey is now best described as a "Purchase Pretzel" a term used by Jessica Angell, head of marketing for PayPal's Media Network at the recent DMA conference. In the smart phone era there is no reason to believe in an orderly or linear progression from awareness to advocacy.  It all kind of happens simultaneously, or at least in a circle, especially in retail.  And since my interactions are likely different than yours the result for marketers is a bag of pretzels. 

So, how to make sense of it?

We often talk about the desire to have a 360-degree view of the customer. Most often this is relationship to the interactions with a brand or retailer along the path to purchase. There is also the broader view of 360-degrees that looks at the consumer, rather than customer, in terms of shopper marketing - across the space top to bottom trying to understand how she comes to a decision.   Consider one view 'horizontal' and one 'vertical'.

The retail shopping experience is often depicted as a timeline, or horizontal activity.   And in this case we want to remove the impediments to purchase, i.e. reduce transactional friction.   To achieve that we tend to focus on the identification of the individual in order to serve the appropriate content to satisfy the needs as we see them.  This is the genesis of 1:1, CRM and other personally addressable programs. 

Yet, if we look at the world from the consumer's needs, there are a multitude of options that she could choose, including doing nothing.  So a publisher or media company might take an informational approach and ensure interesting content, of all types, is available where she might turn. In this world, we don't know the consumer, and probably won't since they tend to prefer anonymity until a relationship is established.  In fact the vagaries of digital technology means we're dealing with what can only be described as guessable media.  Thus, we need to recognize segments of behavior - a staple of behavioral targeting and ecommerce optimization.

The new marketing opportunities come from connecting the two views.  To do so we need to marry identification with recognition and develop the means to traverse two different sets of operating guidelines.  

For identification purposes, the email address is the leading candidate to work with. It satisfies not only the identification issue but also fits well with campaign objectives because the consumer has opted in for something.  However, we need to think not only in terms of communication, but also what can be linked to the email.   From social influence to web visits to ad impressions the digital landscape is full of potentially valuable information for use in 'relationship targeting' (a term Responsys focused on in their view of New School Marketing.)

For segmentation purposes, each visitor, visit or session needs to be classified according to a set of common dimensions that can be deployed across various properties and networks.   Those dimensions are apt to focus on the likelihood of the visitor trying to achieve some task, e.g. research, browse, buy, etc.  Once we have a handle on their intent we can think about what to serve.   Mapping segments to offers is old hat for the CRM crowd, the difference here is that they are aligned based solely on propensity rather than identify. 

By combining the two disciplines we can at least attempt to follow the logic of the pretzel as we link offline sales with online activity.

Changes in Retail Marketing

Where is retail headed?

The folks over at Retail Systems Research (RSR) recently summarized a conference focused on the next generation of retailing.  The key take-away is the blurring of what is retailing, or marketing in general, and what is technology.   With the smart phone now the de facto decision support platform, shopping has a decidedly cyborg nature to it.

The article lists 16 different themes in the emerging storyline.   Some that caught my attention:

1. "Consumers don't 'see channels" - the sooner we stop thinking in terms of channels (multi-, cross- or omni-) the better.   The appropriate device, channel combination will be determined by the consumer, the context and the intent at the moment.
2. "retailers need to understand the path to purchase" - given the interactive nature of digital, the path is only evident in the rear view mirror.   The implication is that we have to design programs that provide different types of content at different times.  Thus, we're moving from 1:1 to Many:One communication planning to cover pre-to-post shopping.  
3. "Big Data is often 'dirty', and ...  more exploratory in nature ('tell me something I didn’t know before')" - suggests a complete rethinking the role (and funding) of analysis functions.   For the advanced companies, it will be just like a phone system.  You don't ask what the ROI of making phone calls, do you?

 The rest is also worth a read....particularly around transparency and the social aspects of shopping.

Guidelines for Developing a Big Data Strategy

Where should we begin?

Yesterday the DMA was bookended by two well-attended sessions on Big Data.   In the morning Bruce Biegel of Winterberry Group covered the flow of ad spend and the trends they are seeing.  In afternoon Yahoo and Acxiom collaborated on a discussion of linking display ads to offline sales.  In combination they provide some structure for developing a big data strategy for marketing.

An organization must address the following areas.

1. Use Cases: defining your area of focus within the marketing landscape helps not only navigate and prioritize the business requirements but also highlights organizational alignment challenges.   Calculating ROI via cross-channel attribution in order to make media mix decisions to reach audiences based on their behavior in real-time while staying compliant needs a fresh perspective. 
2. Acceptable Use:  the most critical step is to articulate the boundaries of permission, tolerance, risk and privacy by each combination of channel and audience.   Three distinct lenses need to be applied to each area - consumer, marketer, and publisher.   For some use cases safe harbor functions need to be created and probably from scratch since firms aren't typically organized across such large gulfs. Communication of your intentions must be transparent along with sufficient choice mechanisms given to each of the other parties in the system.  
3. Integration: the alignment of anonymous behavior with personally identifiable information requires a new way of thinking about data structures, management and analysis that is neither digital nor direct to consumer focused.   The current key to linking sales and activity is the email address since it satisfies both requirements marketers have - recognition and activation.   The data architecture must start from a much higher level than any delivery mechanisms used today as well as cover new forms of content that typically were beyond the remit of the data team.

For example, while the idea of replicating direct mail online sounds simple the governance and integration issues are vastly different.

Still a good time to be a marketing technologist.  

Styles of Campaign Management Platforms

How should we approach campaign planning?

Here at the DMA I watched three vendors address the same retail campaign scenario - use multiple channels to invite customers to an event, follow-up and track their responses.  At one level the pltatforms are very much the same.   They use templates, flow charts, and allow for a variety of data integrations.    What struck me though was the underlying philosophies of these companies as well as those in the exhibit hall.

First, some grew via acquisition while others grew internally.   This is similar to the HR policy of hire the best talent or promote from within.   Neither approach is inherently good or bad, but they do indicate the kind of relationship and challenges you will have with any integration.  With the acquisition path the portfolio will likely have the functionality but integration may only be perceptual.  With home grown, what you see is what you get and it will be tightly linked to one point of view; often the vision of the founder.   Early adopters and risk takers may prefer the lateral thinking of the horizontal tools.   Those looking for consistency and less technical risk may like the vertical stack.

Second, there are two philosophies circulating as to how to build a campaign.  In one camp are the "build to rules" platforms.   In essence these allow someone to implement what others have decided.   In the other camp are the "explore to build" platforms that provide the marketer with the ability to take action directly as part of the planning process.   This functionality comes from the genesis of these tools - they were analysis platforms first.  

Both of these differences impact the adoption of campaign management within an organization because they tie directly to the skills, roles and responsibilities of the user community.

So, what are we trying to accomplish and what we will empower the team to do?

DMA 2012 Overview

What's in store this year in Las Vegas?

The tag line for the 3-day annual conference is: big data, customer engagement and marketing accountability. The nine tracks give a sense of how the direct marketing association views the world. Here's a snapshot of the sessions starting today.

• Aquisition and Lead Generation - although in this day and age where consumers have more control the idea that we are "leads" doesn't seem to strike the right balance.
• Brand Content and Social Marketing - still unchartered territory for most of us, particularly in terms of connecting all the dots.
• Creative and Production - a focus on both the online and offline worlds to ensure a consistent and seamless message.
• Cross-channel Strategy - asking us to rethink the design of campaigns in the light of channel blur.
• Data, Measurement and Attribution - focused on the changing velocity, volume and variety of data. Hope the sessions shed light on dark data.
• Direct and Digital Fundamentals - it wasn't too long ago that the DMA had the Interactive Pavillion in a separate hall on the other side of a dark tunnel in San Francisco. Glad to seem them merge.
• Connected Customer Straregy - all things mobile. As the new, personal decision support platform the path to purchase is getting interesting.
• Real-time and Triggered Marketing - clearly need to rethink the role and place for analytics. No longer are they projects done by the folks in the back room; they embedded into marketing operations.
• Retention and Loyalty - given that 40-70% of customers never repeat this topic should foster loyalty among attendees.

Looking forward to learning what others are thinking. I'll be posting more throughout the conference.

The Evolution of Marketing Channels

Where does a channel lead us?

At one time channels were divided between sales channels, e.g. brick 'n mortar, catalog, and ecommerce, and marketing channels, e.g. email, direct mail, advertising, and search.  Over the years the term 'channel' has taken a lot of twists and turns as it has coursed its way through the marketing landscape.  The evolution has gone thru several stages.

• Channel: when used in the singular it refers to an isolated, uncoordinated communication; the term eblast or catalog sales sums up this thinking.
• Multichannel: implies the coordinated publication of a message to reach consumers through several individual channels; the use of preferences reflects this period as does varying assortment by outlet.
• Cross-Channel: refers to a sequence of integrated messages delivered based on a single view of the consumer and her journey; understanding the path-to-purchase is characteristic of this era.
• Omnichannel: exists when both marketing and buying platforms each have not only awareness of the others but are in fact hard-wired together; this is the future and a hot topic of discussion in the retail conference world.

In their Retailing: 2020 report PwC describes one characteristic of omnichannel marketing as the notion that consumers are channel-agnostic.  While directionally correct, it misses the larger point - consumers don't think in terms of 'channels' at all. What they want is a frictionless (and enjoyable) experience commensurate with their own expectations where information flows and transactions happen seamlessly.

Because of this blurring, the sooner we demote "channel" to a minor, technical decision based on consumer intent and context the better.   As a marketing term it is past its sell-by date. 

Four Opportunities to Leverage Data

Why is the interest in leveraging data rising so quickly?

Marketing is awash with a deluge of dark data and needs to figure out how to utilize it.

Yet data-driven marketing isn't new.   In fact its been around for decades ever since we used shoe boxes of customer records, profiled postal areas with census data or looked at bi-monthy audits of sales data.  But the interest in 'big data' took off in the last twelve months as reflected in search traffic on Google Trends.

"Three technology trends — media fragmentation, addressability, and interactivity — are converging on the world of marketing and advertising. .... analytical strategies grounded in deep audience knowledge will rise to predominance."

That was written in a Forrester report entitled "Left Brain Marketing" back in 2004.  Based on newsletters, conferences and posts it appears that convergence is accelerating.  And that change in pace is likely because digital technology has reached critical mass - not to mention having a simple moniker that sounds cool. "Big Data" has a ring to it and conjures up the kinds of imagery that technology marketers just love to leverage.

From a marketing perspective, digital technology...

• moves the decision point about what to deliver to late in the planning cycle because things can be assembled based on business rules utilizing a portfolio of assets.  Content can now be seamlessly repurposed to create new packages that are served to consumers.  Social aggregation strategies like Flipboard and Paper.li are new forms in the delivery of personalized content.  For a synopsis of twitter see the "The Brand Strategy". 
• changes our thinking from Plan - Execute - Track to a world of Execute - Track - Adjust based on refining rules. The emergence of trading desks and real-time-bidding in the digital advertising world exemplify this shift.  An unintended consequence of real time is the increased reliance (not to mention relevancy) of using first-party data as opposed to traditional third-party data which has a natural lag time associated with it. 
• represents a major environment for the consumption of information.  From smart phones to ipTV the delivery platform is addressable.  Thus, the power of targeting will extend to formerly broadcast or published media.
• leaves breadcrumbs that need to be handled differently. The volume, velocity and variety of data is so different than traditional marketing data that it requires a regime change in thinking.   Aggregated and anonymous behavior of segments is a better approach than trying to guess at the identity of a consumer.  And the use of personal information in targeting is likely a non-starter for most companies.

What is truly different however is that marketing now owns the processes that spawn 'big data'.  In the past data were borrowed from other areas of the businesses or licensed from suppliers and thus provided a supporting role to 'solving needs profitability.'   The rise of digital marketing changed all that.   We now generate our own data and thus are responsible for figuring what it means and what to do with it.  There is no curtain to hide behind anymore.

So, where are the opportunities?

In a recent white paper Winterberry Group (reg required) explored four avenues.

• Audience Optimization - identifying who is (could be) interested and reaching out to them appropriately
• Channel Optimization - leveraging the touch points along the path-to-purchase to reduce friction
• Advertising Yield Optimization - maximizing value of inventory thru identification and alignment with high-value audiences
• Targeted Media Buying - purchasing media based on common interests and implicit/explicit behavior 

Since those topics can be viewed as variations on the same theme, the insights need to be drawn from a collective, holistic point of view.

Using Mobile to Pay for Parking

Is there an app for that?

My colleague Brady Murphy at TC Media recently did a webinar on our solution for using mobile technology to pay for parking in Montreal, Canada.

Key learning:

• Adoption driven by iTunes, QR and SMS in that order
• Be ready for feedback (positive and negative)
• User Experience compliant with PCI (credit card) is a must
• Avg. Revenue per User unlocks support and further investment
• Use push messaging to improve consumer experience

The PSA for Stationnement de Montreal is from YouTube.

Using Lenses to Segment

How can we align segmentation with the business view of customers?

We know that segmentation, targeting and personalization are the right thing to do - well most of the time anyway.  And we know that this logic can ultimately lead us to potentially segments of one.  And we know all too well that we can't manage the business at that level.  So, where do we start along the path of segmentation?

In marketing 101 we should have learned that a segment is simply a group of consumers with common needs who can be reached efficiently via marketing tactics.  And if we make the assumption that behavior is a reasonable substitute for needs then we can leverage purchase history (or digital breadcrumbs) as the basis for segmentation.

Now comes the challenge of sorting that data into useful buckets in order to fuel the targeting of campaigns as well as understanding their impact.   A good place to start is to identify the ways the business currently views customers and use these lenses as the basis for straight-forward segmentation.

Here are some typical ways a business could look at a consumer:

    •    Value and transaction history
    •    Product and category usage
    •    Interaction and engagement

Each of these lenses reflect two separate dimensions resulting in a classic 2*2 matrix that is easy to explain. For example, the Value - History pair results in a variant of RFM segmentation (recency, frequency, monetary) and it looks like the following:

In this example, the break points are typically the average/median values for each metric, i.e. above and below the average spend plotted against above and below the avg. number of orders.  We typically trim the outliers so as not to skew the results too much. 

The "Best" customers spend more and shop more frequently whereas the "Uncertain" are literally that - too few transactions and too little revenue to know where they are heading.  While sounding a bit like "duh" it is amazing that few companies actually design their campaign tactics around the simple economic value of their customers.  

For the second lens of Product and Category usage, the variables might be the number of categories shopped vs. the number of individual products bought per visit.

    •    Multi-category:  high categories, high products
    •    Cherry Picker: high categories, low products
    •    Intensive Buy: low categories, high products
    •    Top Up Staples: low categories, low products 

And the list can go on.  

A set of simple segmentation schemes that cover the basic business points of view can result in a large number of potential segments.   A recent project using a similar approach using four different stakeholder views resulted in 256 possible ways that a consumer could be classified.  In this case, that was plenty of variations to drive the initial communication blueprint and creative needs for starting a 1:1 program.

A "Frequent - Cherry Picker" would likely get different offers, incentives than a "Spender - Top Up Staples".

Understanding the Customer Journey

Why are analytics important?

For merchandising and channel operations, a transaction is the end goal - either the purchase or delivery of products, or the sale of products.

For marketing, the transaction is where their work begins.

The above quote came from a recent research report among retailer marketing executives conducted by RSR and highlights why marketing is a different breed of animal.  Marketers are paid to change history, or at least improving the odds of a consumer choosing the products they're charged with growing. 

As such, marketers are in the business of influence.  And to do that they must understand how consumers come to buy a product or service in the first place.  Today's shopping experience consists of a myriad of ways and places that might lead a consumer along a path-to-purchase.  And those paths are probably very different across the major marketing campaign objectives.

• Acquire: how do people become aware and put us in the consideration set?
• Retain: what convinces them to stay with a brand?
• Migrate: why are they willing to give us a larger share of wallet?
• Convert: at what point do they consider themselves loyal?  how do they show their loyalty?
• Win Back: given they have a history with a brand, what entices them to return?

In a digital world where everything is interactive, all of the above happens pretty much haphazardly.  In fact, the path-to-purchase is only evident in hindsight via the breadcrumbs consumers leave behind. 

To provide structure to this fragmented landscape, it is helpful to think about four specific things a marketer can leverage.

• Touch Points - where along the path-to-purchase is the decision made?
• Content - is it brand stories or promotional offers that trigger the decision?
• History - how does previous experience with the brand change the way decisions are made?
• Social - what role does influence and self-expression have on the decision?

These questions are precisely the kind of things analysts get excited about.  We are adept at breaking complex things like the consumer journey into composite parts in order to understand them.

Because, if we understand we can influence.