Marketing challenges


“When Cultures Collide”

Thanks to Rod Rothwell – an Aussie doing business in Korea – for bringing this to our attention.

According to  “When Cultures Collide“ by British linguist Richard D. Lewis,who has mapped out leadership styles and cultural identities, cultures have different approaches to communication in business negotiations.

Lewis speaks ten languages, so he realistically warns of the danger of cultural comparisons and generalizations. However, he finds that there are also “national norms:”

By focusing on the cultural roots of national behavior, both in society and business, we can foresee and calculate with a surprising degree of accuracy how others will react to our plans for them, and we can make certain assumptions as to how they will approach us. A working knowledge of the basic traits of other cultures (as well as our own) will minimize unpleasant surprises (culture shock), give us insights in advance, and enable us to interact successfully with nationalities with whom we previously had difficulty.

Lewis’ communication diagrams follow these conventions:

  • Wider shapes show greater conversational range
  • Obstacles are marked in gray
  • Cultural traits are also noted.

Vive la Différence!

How do the different nationalities compare? Here’s how they tend to communicate:

  • Americans tend to launch straight into negotiations, respond to discord confrontationally, and resolve with one or both sides making concessions.
  • Canadians, while similarly direct, can be more low-key, and inclined to seek harmony.
  • English may avoid confrontation in an understated, mannered, and humorous style
  • French often engage vigorously in a logical debate.
  • Germans rely on logic, while amassing more evidence and laboring their points more than the British or French.
  • Spanish and Italians “regard their languages as instruments of eloquence and they will go up and down the scale at will, pulling out every stop if need be to achieve greater expressiveness.”
  • Scandinavians can have entrenched but often reasonable opinions formulated “in the long dark nights.”
  • Swiss tend to be straightforward and unaggressive negotiators, obtaining concessions by expressing confidence in the quality and value of their goods and services.
  • Hungarians value eloquence over logic and are unafraid to talk over each other.
  • Bulgarians may take a circuitous approach to negotiations before seeking a mutually beneficial resolution, which will often be screwed up by bureaucracy.
  • Poles often have a communication style that is “enigmatic, ranging from a matter-of-fact pragmatic style to a wordy, sentimental, romantic approach to any given subject.”
  • Dutch are focused on facts and figures but “are also great talkers and rarely make final decisions without a long ‘Dutch’ debate, sometimes approaching the danger zone of overanalysis.”
  • Chinese tend to be more direct than the Japanese and some other East Asians; however, meetings are principally for information gathering, with the real decisions made elsewhere.
  • Hong Kongers negotiate much more briskly to achieve quick results.
  • Indians speak English in a way that “excels in ambiguity, and such things as truth and appearances are often subject to negotiation.”
  • Australians tend to have a loose and frank conversational style.
  • Singaporeans generally take time to build a relationship, after which they can be shrewd negotiators.
  • Koreans tend to be energetic conversationalists who seek to close deals quickly, occasionally stretching the truth.
  • Indonesians tend to be very deferential conversationalists, sometimes to the point of ambiguity.
  • Israelis tend to proceed logically on most issues but emotionally on some.

 

communication styles

 

 

 

losing_contact

NewLink Consulting, Toronto found: 29% of U.S. life policyholders lost contact with the agent/financial planner who had sold them the policy, and 41% if the policy was purchased from an agent/broker.

Guest blogger Mark Weishaar

An orphan can be defined as “One who lacks support, supervision or care”.
How many do you have in your CRM database? How many customers have simply become dormant and shuffled into an inactive or unassigned category?

In a recent conversation with my client from a major life insurance carrier, I was appalled to learn that her company had well over 100,000 orphaned policyholders. In insurance-speak, these are folks who originally purchased a policy from an agent, but were never re-assigned after that agent left the company.

Many industries have a similar category in their database. Inactive bank accounts, infrequent flyers, one-time visitors… the list goes on. It gets me thinking: how many organizations could use a shot in the bottom-line? This category represents a huge untapped asset:

  1. Orphans are never contacted. You have forgotten about them, and they have forgotten about you. How likely are they to ever upgrade or buy another product or service from you? 
  2. If your competition is effectively marketing – and you know they are – how many competing offers can your orphans resist? Retention rates suffer when customers are ignored. 

The ROI of Marketing to Orphaned Policyholders

Let’s put some dollars and sense behind a simple illustration exercise: 

With the potential for this scope of increased revenue, it makes no sense to me that so many insurance companies do not devote any attention to their orphaned policyholders. Political turf issues over account re-assignment? Possibly. “Don’t rock the boat” and “Let sleeping clients lie” mentality? Maybe. Inertia? Most likely. 

Case Study: A short while back, I worked with a major hotel chain to develop a multi-pronged marketing campaign. Our objective was to revitalize their “dormant” clients: those who had not booked a room within the previous 24 months. Of the many successful initiatives we launched, the highlight was going back to the dormant customers.

After modeling their data against the frequent guests and re-soliciting a predictive-modeled group with an offer, we generated an ROI of 1,090%!

Unheard of? Yes. But true. And I could predict similar successes in your own organization.

So take a look at your entire customer file. Find those pockets of orphaned customers who have been ignored for whatever reason. Develop a strategy to solicit them with a product offering using a predictive model-driven approach. The incremental revenue generation and low acquisition costs are likely to amaze you, and will demonstrate once again the truism that:

Your Best Customer is Your Current Customer.

Mark Weishaar is a veteran financial services direct marketer and senior executive delivering broad range of leadership responsibility, experience and accomplishment across brand strategy, marketing, loyalty programs, customer data analytics, distribution, CRM, and social media on a worldwide basis.  He has directed the sales & marketing of a wide variety of financial services products and programs and held senior level roles in start-ups and  Fortune 100 companies in direct marketing environments, and  traditional agent/advisor companies. He has a unique ability to analyze and develop actionable marketing and sales programs with measurable ROI improvements.
Want to chat with Mark? Reply to him here or leave a comment on the blog.

CM-Barriers-06

What Stands in the Way of Compelling Content?

Nasheen Liu, VP of marketing at The  IT Media Group,  discusses hindrances marketers face in creating compelling marketing content and and recommends three strategies to overcome them.  Two key problems she identifies are:

  1. Lack of control over the subject-matter.
  2. Feeling too removed from their audience.

She shares some approaches for overcoming those  challenges that allows markerters to more effectively create and repurpose compelling content.

Three Strategies

Strategy 1: Be an avid journalist to your internal  audience

In brief, there is no substitute for interaction with your field organization and customers.  Your notes from these interactions should include insights  from customers that can be summarized in a report and communicated to  your stakeholders.

Liu’s recommendation is to repurpose these valuable insights as “Industry Newsflashes,”  “Customer Insights,” and “Opportunity Analysis” for your internal audiences.  Why is this important?

Marketers often fail to realize that their most important audience is the  internal one. To market anything successfully, one must first and foremost  create as much visibility as possible internally. Every employee is your message  carrier. You will not become a rock star marketer if you don’t have the support  of your internal stakeholders.

Strategy 2: Insource your content, but control the  output

To get a good handle on your subject matter, it’s important to identify the domain experts  – at least one person in each cross-functional area who can serve as your go-to resource. This will give you a ready supply of content.

Getting subject experts to be responsive is a key challenge. You’ll need to schedule some time interviewing them in person. The conversation should be targeted to extracting content from them in 30 minutes or less.  One way to set this process in motion is to create an editiorial calendar.

If you promote your experts and give them visibility, you can gain you loyal sponsors and  support for your endeavors.

Strategy 3: Outsource your topics to industry  experts

One of the most common failures that I see marketers make in trying to promote themselves as thought leaders or impress audiences with their products and services is the mistake of “singing your own praises.”  To gain the attention and trust of the customer, it’s much better to get someone else to do the praising in an indirect way.

In the technology space, I engage industry experts, media personalities, and  well-known bloggers. The kind of perception you are trying to create is this:  “Wow, these guys are associated with her? Impressive.”

To build on this,  you can build  an onging campaign in which your expert can help you in various activities. Some ideas:

An initial article can turn into a moderated customer forum. The  findings from the forum become a whitepaper. The whitepaper can be used to  develop a video case study. And so on. Such linkages can continue to develop and  mature over the life of the catmpaign.

As Liu points out, “content is the bread and butter of what we do in the world of marketing.” Yet it often seems to get lost in the flurry of planning and execution, and becomes an afterthought. A successful marketing organization exists as part of a larger context of consistent messaging accross all touch points, internal and external. Nothing promotes an organization’s brand value more effectvely than shared messaging.

visualizing-seo

Economist  explained why you shouldn’t shop at Walmart on Friday (Black Friday.) A dumbed-down America wasn’t listening. He laid out the hard truths about American labor:

A half century ago America’s largest private-sector employer was General Motors, whose full-time workers earned an average hourly wage of around $50, in today’s dollars, including health and pension benefits. Today, America’s largest employer is Walmart, whose average employee earns $8.81 an hour. A third of Walmart’s employees work less than 28 hours per week and don’t qualify for benefits.

A Nation Sliding Backwards

One of the reasons for the decline of the middle class in America is the decline of labor unions. Membership is down from 33% of private sector workers in the 1950s to fewer than 7% today. Walmart’s employees have no union to represent them, and have been receiving a tiny portion of the corporate earnings compared to that the United Auto Workers members received in the 1950s.

Last year Walmart earned $16 billion, reporting a 9% increase in earnings ($3.6 billion) in the third quarter, but most of the profit went to Walmart’s shareholders, including the Walton family.

  • The Walton family earned more on their Walmart stock than the combined earnings of the bottom 40% of American workers.

The employee strike on Friday was a show of protest against wages as low at $8 an hour, unsafe and unsanitary working conditions, excessive hours, and sexual harassment.

A Company In Denial

Walmart fought back, filing a complaint with the National Labor Relations Board to ban the strikes. OUR Walmart, the worker organization that is coordinating the protests backed by the United Food and Commercial Workers Union, estimates that nationwide, there were more than 1,000 individual actions. But Walmart chose to put out dishonest talking points, saying that less than 500 workers absented themselves. Bill Simon, president and CEO of Walmart U.S. issued this lie:

Only 26 protests occurred at stores last night and many of them did not include any Walmart associates. We estimate that less than 50 associates participated in the protest nationwide. In fact, this year, roughly the same number of associates missed their scheduled shift as last year.”

On a conference call Friday, Dan Schlademan, director of the union’s Making Change at Walmart campaign, said that, while his organization does not yet have a precise count of the number of workers who walked off since the strikes are ongoing,  there were hundreds of workers and thousands of supporters. Many cities around the country had higher-than-expected turnouts. According to The Huffington Post’s  and 

At the Walmart in Paramount, where The Huffington Post counted 600 people at one point, organizers later said that a total of 1,500 people had shown up. Nine people were arrested for sitting in the street, which had been blocked off for the protesters. Those arrested included three Walmart employees, a father of a worker, a former worker, two clergy members and two other supporters, according to organizers.

In places where fewer strikers than expected joined the protests, one reason is that the company intimidates anyone who considers joining a labor group. Three workers who did not participate strike told The Huffington Post that they shared the concerns about low wages, lost benefits and retaliation for speaking up, but they were too afraid of losing their jobs to strike.  Jaime Durand, a Walmart human relations manager  said:

In Texas, we own our parking lots. We won’t ask them to stop what they’re doing, but we will be asking them to leave private property so we can maintain a safe area for our customers.

Why It Matters To All

What happens at Walmart has far-reaching economic consequences. Its pay scale and working conditions set the standard for competitors. Today, the median wage is 8% lower than it was in 2000.  Without a vibrant and growing middle class, the economy will continue to falter. This is especially true now that most new jobs in America are in personal services like retail, and have low pay and bad hours. According to the Bureau of Labor and Statistics:

  • The average full-time retail worker earns between $18,000 and $21,000 per year.

“But Walmart Labor Policies Keep Prices Low”

A new study by the think tank Demos reports that low salaries actually depress the economy. The report finds that even raising the salary of all full-time workers at large retailers to $25,000 per year would lift more than 700,000 people out of poverty. The cost: only a 1% price increase for customers.

But what would the wage increase cost retailers? According to the report:

  • the cost to major retailers of raising salaries would be 1% of the sector’s $2.17 trillion in total annual sales – $20.8 billion.
  • Yet the increased purchasing power of lower-wage workers would generate $4 billion to $5 billion in additional retail sales.

Whatever Happened to Smart Management Practices?

The real costs of Dickensian labor policies like those practiced at companies like Walmart and Hostess are more than our economy can afford. At Hostess, labor unions were unfairly blamed for a pending bankruptcy that was caused entirely by this kind of mismanagement. The end result is that the workers, company and consumers all lose.

The Real Story At Hostess Brands: Hostess Brands, Inc., maker of Twinkies, founded in 1930, is about to permanently shut its doors, putting 18,500 people out of work. While management has been placing the blame on the BCTGM (Bakery, Confectionery Tobacco and Grain Millars International Union), the union representing Hostess employees, the real cause was inexcusably poor management.

  • The company has had two bankruptcies since 2004 due to poor management, as witnessed by the fact that it has had no less than six CEOs since 2002.
  • A Wall Street private equity firm and two hedge funds made matters worse, burdening Hostess with $800 million of debt.

Yet, the company was never moved to employ sound business practices to improve it’s market position.

  • In the 1990s, Hostess overextended itself, doubling its production facilities and employees.
  • In the early 2000s, ignoring the advice of market analysts, it bought back numerous shares of its own stock, which caused enormous debt described as “balance sheet degradation.”
  • During the 2000s, Hostess shut down 21 production facilities and cut its total workforce from 35,000 to 18,000.

To make matters worse, rather than face the fact that they were a company in distress, and working to improve their market position and rationalize their management, the company chose to ignore its fundamentals:

  • Hostess failed to invest in upgrading technology that was growing obsolete.
  • It failed to address the fact that it continued to lose market share.
  • It continued accruing debt.
  • It generously rewarded its top executives, doubling and even tripling their annual salaries.

Hostess’ Union Pitches In To Rescue The Company

Even so, following In the wake of Hostess’ 2004 bankruptcy, the union (BCTGM) did what they could to help, giving back $110 million in concessions. They showed more business acumen than the highly paid executives. They provided the give backs in exchange for the company’s promise that it would invest in new machinery and new technology, and improve it’s market position.

Hostess Fails To Do Their Share

Hostess broke that promise, and failed to follow through on those long-term investments. Instead they continued to churn their assets and their CEOs, rewarding themselves bigger bonuses. Rather than address their failing business model, here’s how they hey attempted to keep the scheme going by doing the following:

  • Management approached the BCTGM with unrealistic demands for pay and benefit cuts of between 27-32 percent.
  • They began looking to “harvest” as much of the company’s assets as it could on the way out.

The union and workers by now understood what was going on.  Hostess management could not be counted on to run a business. By a 92% vote, the union rejected the massive cuts, knowing the company was no longer sustainable.

Lessons Learned: Labor Has A Stake

Labor has a huge stake in the operations of a company.  By excluding them from the table, American businesses have written their own epitaph. While the corporate propaganda machine would have you believe that mismanagement of the American economy is the fault of the government and regulations, this is not even close to the hard economic truth that large corporations are running their businesses as cash cows for their top executives without regard for the real long-term interests of the company, it’s employees, consumers or the economy at large.  sums it up well:

Hostess is a cautionary tale. It’s a company that was not only systematically picked clean by Wall Street vultures, it’s one whose executives lavishly compensated themselves during its death throes. For Hostess, it’s been one reckless, greedy move after another — one management fiasco after another — and yet they’ve been unwilling to blame themselves. They blame the union for this whole mess.

Given the increased power of these vulture capitalists, Americans increasingly feel powerless to do anything but express angst in unfocused displays of tea party revolt. Rather than learn the lessons of history, our anger is increasingly coopted by corporate populist fronts like the tea party. The very fact that incompetent heirs like corporate vulture Mitt Romney and George W. Bush were considered to be viable presidential candidates is indicative of the extent of the problem.

So what can we do? Stand with the workers of Walmart, as they express their grievances.

The Economist article, “Data, Data, Everywhere” discusses the fact that the digital universe is growing faster than the capability to store this information. In the graph below you can see a representation of this phenomenon measured in Exabytes. (5 Exabytes = all of the words ever spoken by mankind.)

To attempt to deal with all this data, Oracle, IBM, Microsoft and SAP have spent more than $15 billion in the past few years buying software firms specializing in data management and analytics – an industry  estimated to be worth more than $100 billion and growing at almost 10% a year, twice as fast as the software business as a whole.

This produces a significant problem for Marketers as well.

More Data Than Talent = Bad Marketing

 writes in New Media Media and Marketing that brands, like consumers are overwhelmed with too much data to know what to do with. And when it comes to Marketing, a new study shows that companies don’t have enough talent to know how to use it.  Rich sums up the problem:

With too much data, a lack of funding and resources and a scarcity of talented individuals and it’s not hard to understand why there is so much bad marketing out there.

The Problem: A Shortage of Marketing Talent

A study by MarketingSherpa conducted among small, medium and large businesses found that the most significant challenges facing marketers are:

  • Lack of funding or resources.
  • Lack of skilled individuals.

Here’s what the companies surveyed said were the major marketing problems they faced:

The Causes: Old Paradigms

Corporate politics:  A majority of respondents said that “there is at lest one wrong person in a critical position.”

Traditional Marketing Mindset:   Companies are still throwing money at traditional marketing tactics that are don’t engage today’s empowered consumers who don’t want to be interrupted with irrelevant ads.

No Clear ROI: Companies continue to do elaborate “branding” without demonstrating “a clear path to ROI.” In today’s cost-conscious environment, executives therefore see marketing as an expense rather than an investment in the brand.

The Solution: 5 Steps to Better Marketing

Companies need to find real marketing talent real fast. And Rich provides 5 steps to do so:

1: Hire Different:  If you want to “think different” then hire different. Instead of hiring people based on a close fit for a job description put together with the help of Human Resources, hire people for their passion and commitment to creative solutions.

2: Hire Outside the Boxers: Seek out those who question the status quo and adopt to them, rather than bring in those who fit in too well.

3: Hire Influencers: People who are creative and engaged and can influence others within your organization can get others excited about using data creatively to market to micro segments.

4: Hire Ego Challengers: As Rich puts it: “always hire someone smarter than you.”

5: Hire Non Technicians: Hire someone who knows how to use technology to maximize business objectives rather than someone who is just great at technology.

Do you want to read a 647 page report on data deluge?

Don’t be ridiculous. Rich Meyer’s last piece of advice is this:

Finally hire someone who can take a 60 slide Power Point deck and condense it down to one page of actionable recommendations against key brand objectives.   Either your organization is going to change or you’re going to become more and more irrelevant to consumers.

End of Story!

, motivational psychologist and author of ‘Succeed’ and “Nine Things Successful People Do Differently” writes a must read article for HBR.org and the Huffington Post titled “The Presentation Mistake You Don’t Know You’re Making.”

Dr. Halvorson discusses an important principle in behavioral economics – a pervasive bias in presenter thinking (“more is better”) that actually runs counter to an equally pervasive consumer perceptual bias (less is more). The implications for marketing are significant.

The Presenter’s Paradox: More is Actually Not Better

In 2012, psychologists Kimberlee Weaver, Stephen Garcia and Norbert Schwarz undertook a robust series of seven studies into  the “presenter’s paradox” in the Journal of Consumer Research, Inc. Their findings in impression formation demonstrate that:

Perceivers’ judgments show a weighted averaging pattern, which results in less favorable evaluations when mildly favorable information is added to highly favorable information…We show that presenters…instead design presentations that include all of the favorable information available. This additive strategy (“more is better”) hurts presenters in their perceivers’ eyes because mildly favorable information dilutes the impact of highly favorable information.

The Effect Explained

We assume when we present someone with a list of accomplishments  or a bundle of product and service benefits, that consumers will see what we’re offering additively. The example Dr. Halvorson gives is this: In applying for a job, we may list the following qualifications:

  • Graduating from Harvard.
  • Having a prestigious internship.
  • Demonstrating a record of successfully applying rigorous statistical skills.

Knowing that the company does business in Latin America, we add the following skillset:

  • Having taken 2 semesters of Spanish in college.
The result: The first 3 skills all rank a “10″ on the scale of impressiveness, but the last skill ranks only a “2.” So how is this perceived by the interviewer?
We reason that more is better. Added together, we believe we have enhanced the effectiveness of our presentation:
  • 10 + 10 + 10 + 2 = “32″ in impressiveness.

But the client or buyer reasons differently:  Consumers don’t add up the impressiveness, they average it,  seeing the big picture by looking at the package as a whole, rather than focusing on the individual parts.  Their perception:

  • (10+ 10+ 10+ 2)/4 = “8″ in impressiveness.

The better proposition is to not add the less impressive benefit or accomplishment (2 semesters of Spanish.)  The consumer averages this as follows:

  • (10 + 10+ 10)/3 =”10″ in impressiveness.

So mentioning an additional benefit of lessor value makes you a less attractive candidate than if you’d said nothing at all.

The Effect Also Works “In Reverse

The same effect emerges in creating deterrents to discourage bad behavior. Another study asked participants were asked to choose between two punishments to give for littering: 1) a $750 fine plus two hours of community service, or 2) a $750 fine. Results:
  • 86% of participants administering punishment felt that the fine plus community service would be the stronger deterrent.
  • However,  participants who were handed these punishments rated the $750 with the two hours of community service as significantly less severe than the fine alone.

They reasoned that the overall punishment was on average less disparaging because two hours of community service isn’t really that bad.

Marketing Experiment

The research examines the implications of this effect for a variety of marketing contexts. Buyers were presented with an iPod Touch package that contained either an iPod, cover, and one free song download, or just an iPod and cover. The surprising result:

  • Buyers were willing to pay an average of $177 for the package with the download.
  • But they were willing to pay $242 for the one without the download. The addition of the low-value free song download brought down the perceived value of the package by as much as $65.

Yet, a second set of participants asked to play the role of marketer and judge which of the two packages would be more attractive to consumers overwhelmingly (92%) choose the package with the free download.

Financial Marketing: Humana Cheapens Their Value Proposition

Medicare Advantage products offered by private insurers provide an alternative to traditional Medicare. They are aptly named since have some significant advantages: they are more comprehensive, covering deductibles and copays that traditional Medicare does not, and prescription drug coverage as well, if elected.

They also provide some additional ancillary benefits, including vision care and wellness benefits.

One of the big providers, Humana, aired an infomercial during the end-of-year open enrollment period. The infomercial devoted a disproportionate amount of time to hawking the benefits of, and showing client testimonies about, membership in the Silver Sneakers fitness program. The value of health club membership is rather insignificant in comparison to providing comprehensive care in the event of chronic and life threatening illness. The presenter’s paradox informs us that devoting so much time to calling out this benefit of lesser value cheapens the consumer’s perception of the brand.

Conclusion

More is actually not better, when you add a benefit or feature that is of lesser quality than the rest of your offerings. Its dilutes the favorability of core benefits.

Dr. Halvorson’s advice: to stop ourselves from making this kind of mistake, marketers should think “big picture:

What does the package I am presenting look like taken as a whole, and are there any components that are actually bringing down its overall value or impact?

Related articles by Heidi Grant Halvorson, Ph.D.: click here.

 

Marketing Models That No Longer Work

 of Newmediamarketing.com provides a list of 10 Marketing Principles That Aren’t True Anymore. His core observation is that mass marketing models no longer optimally address the new attitudes and behaviors of the socially connected consumer.  For instance, while TV drives awareness, it is increasingly the Internet that drives conversion.
Of the 10 marketing principles that Rich finds increasingly irrelevant, I will highlight those that I consider to be the top 3.  It is important to consider these consideration points in the context of your own product and marketing environment because principles that work best for one type of product marketing environment may not work as well in others.

3 Marketing Principles To Rethink

1. Mass Segmentation Models - The old mass segmentation models are giving way to micro-segmentation.  Here’s why:  because people have more in common with those they follow on social media than their demographic peers, and because everything happens in real time online. Consequently:

…it’s more a relevant message to a relevant audience at a relevant time.

Customer segmentation is the practice of dividing customers into groups relevant to a particular line of business in order to decide how to relate to customers in each segment. The goal is to maximize the value of each customer to the business.

Micro-segmentation groups small numbers of customers into more precise segments, based on factors, including behavioral predictions in order to direct specific marketing actions to each micro-segment. The goal is to maximize the effectiveness of every contact with each customer.

The Process: For example, customers of an online gaming company might be segmented into Lifestyle Stage Groups, such as: 1) fun; 2) new; 3) active; 3) star; 4) churn; and 5) reengaged. Deeper dives into each Lifestyle Stage Group can be made by segmenting these customers into Segmentation Layers, using cluster analysis on sets of attributes that share a common context, including behavioral and demographic. By associating each customer with a string of different clusters, customers are then grouped together as micro-segments.

Intended Results: Micro-segments, which typically contain very few customers each, allows for highly personalized predictive analysis and marketing action optimization.   Tracking and analyzing how different marketing actions affect the spending behavior of different micro-segments makes it possible to predict the effectiveness levels of different marketing actions on different segments. As a result, marketers can better determine which marketing approaches will have greater impact on each group of customers. Further, since the micro-segments are dynamic, and there is movement through the Lifestyle Stages, dynamism of the customer path can be factored into the analysis. As explained by micro-segmentation company, Micromove:

Most companies  view segmentation as a method of clustering similar customers together at a given point in time, but they completely disregard the path or route that each customer has taken to reach his or her present segment. By analyzing customers based on their movement among segments over time, [micro-segmentation] achieves far more accurate segmentation than any other known method.

Focus on Customer Lifetime Value in segmentation allows for better targeted marketing based on more precise predictive customer behavior models.

2. The Purchase Funnel (Reach and Frequency)

For products where the purchase process is more complex, building awareness through reach and frequency is only a first step. In line with the Consumer Decision Journey as defined by McKinsey, to improve conversion, you need to rethink the “purchase funnel” in favor of a more complex consumer decision model.

My article, The Customer Decision Journey: Research Overturns the Marketing Funnel shows that the old consideration funnel has given way to a decision loop (“the consumer decision journey”) that takes place in a less linear and more complicated purchase environment where there are numerous touch points and key buying factors resulting from the explosion of product choices and digital channels, coupled with the emergence of an increasingly discerning, well-informed consumer. 

consumer decision journey

McKinsey’s David Court has a presentation showing what this means for marketers. He explains:

You have a trigger of some sort, where people start across the decision journey — they are now going to move towards purchase. The first stage is initial consideration. In many industries, people actually start in their initial consideration of a brand with a relatively narrow list, we believe because of the busy lives and bombardment of media — it’s just very difficult to get through all this clutter in this consumers initial consideration set. However, once the consumer decides they are going to buy a product, they move into a stage that we call active evaluation. It is here that the number of brands they are considering increases. Which is exactly the opposite of the premise of the funnel, going from broad to narrow. This is the stage when the consumer is intent on purchasing and they are actively researching the product.

3. Acquisition Only

Your business model will naturally continue to depend on new customer acquisition goals, but not exclusively. Marketing models based on new customer acquisition alone that do not also have strategies for retention and engagement break down over time, and the reason that pyramid schemes ultimately collapse is that there are a limited number of new customers to be sold.

Brand loyalty is important because brand enthusiasts will reengage and repurchase, and influence others to whom (s)he is socially connected to purchase and engage. So it’s vitally important today to keep the customers you have happy by delivering on all brand touch points, and creating a social context for them to become brand ambassadors.

Apple is the oft-cited example of a company whose brand loyalty-oriented model has been extremely successful. While not the PC market share leader, Apple has leapfrogged other PC makers in profitability because their customers are willing to pay more for a better brand experience. 

Lessons For Marketers In The Age of Socially Driven Conversion

Strategy: Traditional messaging is geared toward trying to get into the consumer’s initial consideration stet. However, rather than continue to push ads and promotions out to broad groups of consumers, marketers need to be sure that their marketing activities are aligned against how their consumers research and buy products.

Consider the likely results if the customer reaches out during the active evaluation stage but is not provided the facts and testimonials that (s)he is looking for to make the purchase decision. The budget spent on gaining recognition and getting into a customer’s initial considerations set will not only fail to result in conversion, but will effectively deliver the client to a competitor who delivers on the customer’s pre-purchase expectations.

In essence, this means that the customer has moved past a brand’s promise to a brand’s value in the consideration phase.  So marketers have to bridge the gap between consideration and conversion sooner by developing ways for people to talk about your product, and making word of mouth work in the age of socially driven conversion.

Social engagement doesn’t mean that, as Rich Meyer puts it, consumers necessarily “want to have a relationship with their salad dressing or butter…You also need to think more about your brand as media than just providing sales information online.”

In other words, since the joy of the purchase itself is often more than that derived from the product itself, what value are you delivering in the customer’s purchase experience? You need to emotionally connect to your customers and give them an emotional reason to select your brand.  The choices consumers make are not rational ones.

Tactics: Tactics include being represented on independent internet sites where people go and research and buy products. If you don’t have enough presence on those types of consumer driven approaches, when the consumer is reaching out during active evaluation, you’re not there for them to find.

Rich Meyer summarizes the customer-centric approach in the age of socially-driven conversion extremely well:

I believe the greatest strength any marketer can have is his, or her, ability to understand the dynamics of their brand/product from a consumers POV.  This means understanding what are the key drivers to conversion and where and when consumers want to interact with the brand.  I love Oreo cookies but I don’t want to friend them on Facebook.   Organizations that prepare for change and implement new marketing thinking will be ready to leverage new business and customers.

Marketing Mitt

Bill Lee, president of the Customer Reference Forum, Executive Director of the Summit on Customer Engagement, and author of The Hidden Wealth of Customers: Realizing the Untapped Value of Your Most Important Asset (HBR Press, June 2012) has written an interesting article for Harvard Business Review’s blog on The Marketing of a President.

Partisanship Aside…

Bill,  a Republican who has worked in a presidential campaign as well as the George H.W. Bush Administration, offers critiques to his own party, although he holds that much of this can also be applied equally to the Democratic Party as well.

As an independent myself, I greatly appreciate Bill’s willingness to step outside the political box and offer an objective perspective. To balance his criticisms of the Republican marketing tactics, I will inject some criticisms of the Democratic tactics.

In short: Bill observes that if neither candidate really connects with voters or truly inspire them,  that’s a problem for the party brand. Taking a step back, he also points out that the way that we traditionally market businesses is broken. Applying this to politics,  Bill asks two core questions:

  • How referable are your candidates for president? “By which I mean, how likely are their followers to passionately advocate for them to their family, friends, neighbors, and peers?”
  • How inspiring are their ideas? “How much do they move their followers? Can their followers even really say what their core ideas are?”

Following the Wrong Business Model

Top Down Marketing: Bill notes that the model for selecting a candidate is heavily weighted towards a relatively small number of huge donors who don’t understand or share the interests of ordinary voters but control the ideas the party generates. The results:

And what has this model delivered? After hundreds of millions of dollars spent, and interminable months campaigning against a clearly vulnerable incumbent president presiding over a persistently weak economy, the best we can say is that Mitt Romney and Barack Obama are in a dead heat. We can’t say that Romney has cultivated a growing number of passionate and inspired citizen advocates for his candidacy and its ideas. And in the final three weeks, his success will depend on some dispiriting, high-risk combination of the final debate performance, the hopes of exploiting some possible “October surprise” (and avoiding one of his own), and most of all, negative ads.

Voice of the Institution: I have referred to this as the Voice of the Institution, as opposed to the Voice of the Customer. It’s Company Centricity, vs. Customer Centricity. Bill rightly faults the Republican model for this. They unabashedly represent the interests of the 1%, and attempt to tie this to the interests of the average voter by making the old, economically discredited supply side claim that wealth “trickles down.” The term “job creators” is the latest reincarnation of this disproven construct.

Disconnected Voice: Democratic marketing can make the same mistake of sounding disconnected from the interests of the common person when discussing government initiatives to help those who are struggling economically. To the average employed citizen, this raises the specter of increased taxation, and the notion that his/her meager, hard earned wealth will be confiscated to help others. While the average voter may not want to have his/her pocket picked to support the wealthy, the notion of an inefficient and corrupt government siphoning  off his or her money to support pet projects whose benefits do not accrue to him/her is also unpalatable.

Engaging the Consumer With the Appeal to Individual Initiative: The marketing challenge of either party is to show how the tax policies benefit the taxpayers themselves. I believe that the general strength of the Republican Party in national elections, despite their outmoded ideas, derives from the appeal to the notion of individual initiative and financial independence. The voting public would like to believe that they can make it on their own given the opportunity to do so, and, further, experience upward mobility. This is the core appeal of the Republican brand, even if their policies achieve the opposite.

The Democratic Positioning Dilemma:  Democrats have tried to challenge the Republican appeal to individual initiative by pointing to the dry economic facts and figures that show that Republican policies are actually antithetical to economic improvement. The main problem with that approach is that it is intellectual, rather than heartfelt. It is a defensive strategy, and it is more difficult to prove a negative because this is itself an abstract argument.

The problem that the Democratic Party needs to solve is how to either coopt the Republican appeal to individual initiative, and appropriate the brand for themselves (which is unlikely), or create an economic brand that captivates the voting public with an appeal to their core values and beliefs. Leaving social issues aside, what argument can the Democrats make that can overcome the conceptual bias that the public has that they do not create, but redistribute wealth? Although the economy tends to thrive more under Democratic administrations, it’s a hard case to make for one very important reason: the Republican economic brand is deeply instilled.

There’s a Better Way to Pick the Nation’s Leader

Create An Advocacy Model: Bill’s observation is that progressive businesses are increasingly abandoning the old marketing model that uses hired professionals to market and sell to consumers, and are beginning to build organizations that depend on customer advocates for their growth and success. Contrasting that approach to the Republican Convention in Tampa, he asks where the Republican citizen advocates who could appeal to the voters were:

What we saw was a parade of entrepreneur after entrepreneur trying to inspire voters with their stories of how they took a risk, built their business and accepted responsibility. What the vast majority of voters — who have no desire to start a business — got was a lecture from people they don’t relate to.

Where was an average worker Republican who is thriving in the new job he got as a result of first-rate training from a community college, built with the help of Republican-led initiatives? Where was a Republican soccer mom whose kids are thriving after moving from a hopelessly broken, politically fractured school system to a vibrant charter school, made possible by Republican reforms?

Best practicesinclude businesses like Salesforce.com and SAS Canada, who are moving toward a new marketing model in which customers sell, market and participate heavily in helping develop innovative solutions for them.

Inspire: Businesses like Salesforce.com, who use cause marketing (they donate one percent of all top line revenues to charity) and companies like Apple that appeal to the passion of the technology of the future available here today, can inspire consumers. Bill bemoans the fact that America seems to lack “another Big Goal that a president can rally all Americans behind — such as John F. Kennedy’s goal to land a man on the moon?” Instead, he finds that:

It’s a sad day when the party of Reagan trots out a Power Point-toting Paul Ryan to inspire voters, with his message of small government and individual responsibility straight from the pages of Ayn Rand. How inspiring is that to, say, Jeremy, the college student at Tuesday night’s debate? Not very, I suspect.

We can also applying this principle to President Obama, who has been criticized for appearing “too professorial.” His failure in the first presidential debate derived from his inability to rise to the grandiose occasion and match the spirited tone of his rival.

Position: While neither political party, given the political polarization, could have led the nation to a full recovery from the Bush recession, President Obama’s initiatives have not been well presented. As a result, the narrative was coopted by an opposition that portrayed the jobs bill as pork and health care reform as a bureaucratic nightmare and a drag on the economy. Even though the stimulus has been judged a success by economists, the average citizen sees the bailout of large institutions, rather than feels the effects of the economy having been brought back from the brink of disaster.  While the Obama administration has an impressive record of economic results, including jobs recovery and the lowest spending of any recent administration, it’s hard to prove a negative. The argument that things would have been much worse given the austerity policies of the Republican Party is a difficult one to make stick.  Vital initiatives that could have been heralded as amazing accomplishments could have been better positioned to resonate with and inspire the average citizen.

Resonate:  An important principle in organizational communication is that a marketer needs to understand how to cascade communications through the organization and to position accomplishments by aligning them so that they resonate with the values and beliefs that people hold. Even coopting the anger of the audience is a way to relate to them, per Mitt Romney’s campaign approach. While Mitt Romney may not be a very inspiring candidate, President Obama’s failure to captivate the imaginations of people, as he did in his first presidential bid has proven a major a marketing deficit. And the failure to present a strong case has allowed the Romney campaign to coopt the anger and frustration of the public, a dynamic that candidate Obama had formerly tapped into in his first campaign.

Conclusions

It is easy to oversimplify or overgeneralize, and I do not mean to trivialize or take a cynical view of the issues behind the politics. However, there are general marketing lessons that we can take away from the political arena. In focusing on the marketing aspects of the politics, it is clear enough that the parties have a brand problem.  And the reality is that the way in which a candidate is positioned can greatly impact the outcomes of the election, and the policies. As Bill puts it:

I say “market” presidents rather than “select” them because the way in which an organization commits to market its products and services can substantially determine the quality of the product it produces and sells.

It’s only Marketing!

Cartoon Source:  www.savagechickens.com

It’s Only Marketing

Rich Meyer of New Media Marketing writes that Marketing is not rocket science. It’s nothing more than a process of identifying consumers’ problems and finding a way to communicate how your product or service solves it.

It’s Only Social Media

How about social media? Rick simplifies that too. He says that if it isn’t a repeatable process to make money, it’s just a hobby – and one of the biggest hobbies seems to be the obsession with social media marketing:

Can you walk into your pantry and honestly tell me that you want to have a social media relationship with any of the brands that are in there?

How does he support this?

According to Datamation.com, “For the most popular businesses on Facebook, those with more than a million “fans,” fewer than 3% of those fans are seeing the companies’ daily updates.  In addition there’s no correlation between interactions with a customer and the likelihood that he or she will be “sticky” (go through with an intended purchase, purchase again, and recommend). Yet, most marketers behave as if there is a continuous linear relationship between the number of interactions and share of wallet. That’s why, as the Wall Street Journal recently reported, you see well-established retailers like Neiman-Marcus, Land’s End and Toys R Us sending customers over 300 emails annually.

It’s Only ROI

What Rich is saying is that social media has it’s purposes, but should not be confused with the basics of marketing – enhancing hard ROI metrics through a well integrated marketing strategy.

The findings of a study by the U.K.-based Fournaise Marketing Group drives this home. In its 2012 Global Marketing Effectiveness Program,  it interviewed more than 1,200 CEOs and decision-makers in North America, Europe, Asia and Australia. The findings:

  • 80% of CEOs don’t really trust and aren’t very impressed by the work done by marketers.
  • In comparison, 90 percent of the same CEOs do trust and value the opinion and work of CFOs and CIOs.

What’s the problem?

  • 80% of CEOs believe marketers are too disconnected from the short-, medium- and long-term financial realities of companies.
  • 78% of them think marketers too often lose sight of what their real job is: to generate more customer demand for their products/services in a business-quantifiable and business-measurable way.
  • 69% of B2C CEOs believe B2C marketers now live too much in a creative and social media bubble, and focus too much on such parameters as “likes,” “tweets,” “feeds” or “followers” – parameters they can’t really prove generate more business-quantifiable customer demand for their products/services, which these CEOs  judge “interesting but not critical.”

For B2C CEOs, more customer demand means more products off the shelves, more sell-in, more sell-out, more sales volume, more sales revenue. For B2B CEOs and B2C CEOs in such prospect-driven industries as education and insurance, more customer demand means fueling more qualified or sales-ready prospects to the sales pipeline who can then be converted faster into actual revenue by sales forces.

It’s Only Technology

Of course, B2B marketers would respond that they are increasingly focused on the latest marketing technologies such as marketing automation, lead management and CRM to generate customer demand. Still, the CEOs are not impressed. Why?

  • 71% of these CEOs believe that these tactics are still failing to deliver the level of incremental customer demand expected of them.

These CEOs feel marketers are too distracted and by the technological elements, and have forgotten that technology is only a support tool that does not create demand – only accurate strategies and campaigns for promoting product benefits, content and customer value propositions that generate results.

It’s Only Performance

But haven’t B2B and prospect-driven marketers focused more on performance indicators, such as prospect conversions and revenue? Yes, but the CEOs say that these marketers have lost sight that these are primarily sales force-related performance indicators, not customer demand-related indicators for which marketers have 100-percent control.

Study: Are the CEOs Right?

Forrester Research report titled “The Purchase Path of Online Buyers In 2012″ analyzes conversion paths on 77,000 orders to determine what sources returned the most revenue.

Results: The data showed that the top performing sources were direct visits, organic search, paid search and email campaigns, but social media fell far behind the rest:

  • Fewer than 1% of transactions are traced to social links.

The top sources of new customer transactions were:

  • Direct visits: 20%
  • Organic search: 16%
  • Paid search: 11%

The top sources of existing customers (an area where many think social would shine) were:

  • Direct visits: 20%
  • Email: 13%
  • Organic search: 6%.

What’s the Problem? Forrester suggests that the low numbers could be due to measurement periods required since a 30-day attribution model was used in this report,  and company sizes. Social media has been known to have more dramatic results on SMB sales and this report lacks data from a small to midsize e-commerce site.

Overall customers viewed social media favorably, but use the medium as more of a discovery method than an acquisition method. Based on a survey from 2011:

  •  48% of respondents think social media is a great way to discover products & brands.
  • 40% of respondents think that social media is a great way to discover sales and promotions.
  • But only 17% have bought something based on a friend’s post.

Getting Marketing Right

What are Marketers doing wrong? According to the CEOs surveyed, Marketers Just Don’t Get Key Marketing Metrics.

  • CEOs want marketers to zoom in on a few critical key business performance indicators to precisely measure, quantify and report on the level of customer demand they are asked to deliver, instead of drowning everybody with data and analyses that are too remote from the P&L.

How To Become “ROI marketers”: CEOs say that too prove that they can be solid business generators, Marketers must Focus on tracking, reporting and boosting key marketing performance indicators, including:

  • Market share
  • Prospect volume
  • Prospect quality rate
  • Marketing effectiveness rate (percentage of marketing spending that directly generated prospects) or Marketing ROI (the correlation between spending and the gross profit generated from it).
  • BizPM (business potential generated by marketing).

Jerome Fontaine, CEO & chief tracker at Fournaise says:

It’s not a game of data, but rather a game of the ‘right & relevant’ data for the right purpose and the right decision-making, with no fluff around. Marketers will have to understand that they need to start ‘cutting the rubbish’ if they are to earn the trust of CEOs and if they want to have a bigger impact in the boardroom. They will have to transform themselves into true business-driven ROI marketers or forever remain in what 65% of CEOs told us they call ‘marketing la-la land’.”

Social media has a place. But Marketers must acknowledge that the greatest looking Facebook page with high engagement does not necessarily lead to making money by selling products.

So If Marketing Isn’t Rocket Science, What Is It?

It’s a process of identifying consumers’ problems and finding effective, efficient and quantifiable ways to communicate how your product or service solves it. Marketers need to focus on bottom line results: selling products, and justify that they are getting results.

Related Post:

CEOs: Marketers Just Don’t Get Key Marketing Metrics

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