The Death Of CPM , The Death Of The Retail Store , The Death of Affiliate Marketing , The Death of the Open Web , The Death of Video Rental Stores , The Death of the Landline , The Death of the Book , The Death of the Desktop , The Death of Newspapers , The Death of the Press Release , The Death of Advertising , The Death of the Pageview

What’s going on here?  More importantly what can we learn from it? After studying these articles I have come to the conclusion that no, business isn’t dying…but it is evolving.  We’re evolving; as consumers and as marketers.

As consumers, we want to be marketed to as the individuals we are. “Technology is fueling the consumer’s desire for personalization.1″  As marketers, we are seeing that treating people as ‘the masses’ is no longer appropriate.  It’s no longer about measuring our audience size but about how relevant we are to our audience1. We must become more sophisticated in our targeting efforts.  One-to-one marketing is the key now, whether we are talking to other businesses or to consumers.

In One-to-One Marketing: The true promise of Dynamic Offer-Content Customization it states: “Customizing offers based on customer segments involves a sequence of steps, beginning with identification of meaningful customer segments. Any method of customer-specific message optimization requires knowing ‘who’ your customers are, beyond just their names and email addresses. You must also have some insight into what they ‘want,’ how they think, the words, terms and images that attract and inspire them (as well as those that repel them), and ‘how’ they think.”

There are two ways I know of to develop customer segments.  One involves analyzing the people who come to your website, or who you want to come to your website, and developing it around their needs.  In Online Customer Segmentation Made Easy it says “the easiest approach is to ask the five basic questions that all news reporters know:  Who, What, Where, Why and How. By taking time to answer these five questions up front, you will be able to make the most effective use of limited resources, as you build a website that meets the needs and wants of all your customers.”  While creating segments based on online behavior may yield actionable insights for your website, it also doesn’t truly represent your customer base if you sell in other ways, such as direct and retail.

In that case, there is another method that involves surveying your customers.  The company I work with, C.A. Walker, does this type of segmentation analysis.  We design a questionnaire that allows us to group customers as similar or dissimilar based on their attitudes, behaviors and demographics, yielding those segments that are most valuable to target.  Segmentations are a valuable look into customer groups’ beliefs,  lifestyles and habits.

Another point I picked up from these articles is to not be afraid to launch evolutionary products and services, even if a larger company could launch a competitive product/service with greater advantages.  Far too often “industry leaders are usually so focused on maintaining existing profit centers and business practices…they ignore the threat.”4

Lastly, measures of marketing ROI are evolving also.  In The Death of the Pageview it makes a great point: “The most important thing is that you are gathering actionable data. By this I mean that you have to be able to use the information you gather to make a decision and take action.  If you’re not going to use it to make a decision, it’s a waste of time to even look at it.” Consolidating what these articles are saying, the important ROI metrics to gather and take action on are:

• Cost Per Customer (CPC)1
• Customer Lifetime Value (LTV)1 (links to my prior post on how to calculate and increase Lifetime Value)
• Value delivered — e.g. customers or inquiries1,  less stress2, saves time2, original products3
• Average Revenue Per User (ARPU)5

In summary, it is my belief that businesses don’t truly die; they simply evolve and may become a stepping stone into something more relevant to people’s lives.  Marketers must become savvier in order to evolve with these trends and must monitor only those marketing metrics that can assist to improve conversion rates and gain a deeper understanding of  customer behavior.

Sources:

1 The Death Of CPM

2 The Death Of The Retail Store

3 The Death of Affiliate Marketing

4 The Death of Video Rental Stores

5 The Death of the Pageview

As stated in my previous post, measuring soft ROI is a challenge because it is highly qualitative.  In fact, many of the activities of creating soft ROI are often stepping stones in achieving hard ROI.  To differentiate soft ROI from hard ROI, hard ROI refers to savings related to time, head count, improved quality and subsequently increased dollars. Hard ROI is also tracking how many clients and new assets are brought in based on nurturing and converting prospects into new clients. While hard ROI may be the goal, adding soft ROI benefits to a business case is key in proving true profitability of an strategic business investment.

In The Business Case: The Hard Realities of Soft Benefits, it states, “Labeling a benefit as soft doesn’t necessarily mean that hard ROI payoffs don’t exist. It only means that its tangibility is not apparent and/or acceptable to the decision maker.”  Furthermore, it states, “A successful technique [in business case building] is bundling groups of quantified soft ROI benefits together into categories called ‘high impact benefits,’ ‘medium impact benefits,’ and ‘low impact benefits.’ Strive to make the total calculated value of each group at least equal to the tangible savings that have already been identified.”

To do this, you have to be able to identify those additional benefits that don’t necessarily factor into the “hard ROI” equation but nevertheless achieve desired results, and then sort them into high, medium, and low impact buckets.  Does the option being considered…

• Improve customer service?
• Reduce implementation pain (vs. other options)?
• Reduce training pain (vs. other options)?
• Provide more functionality?
• Improve employee morale?
• Increase employee commitment to a process?
• Optimize use of resources (labor, space, etc.)?
• Lead to improved billing?
• Reduce carbon footprint?
• Increase employee collaboration/customer engagement?
• Improve competitive position?
• Reduce confusion against competitive products/services?
• Increase customer satisfaction/loyalty?
• Expose your company to new, potential clients?

As mentioned in my previous post, many of the activities that go into creating soft ROI are, in fact, branding exercises.  Increasing brand value/equity creates on-the-books value for a company and is measured as an intangible.

There has been a lot of discussion lately about whether Facebook and Twitter are being valued too high.  Naysayers believe that since both are not making the hard ROI revenue that they should be, they are being overvalued (see Facebook’s valuation: The cheat sheet and Is Twitter’s Valuation too High?).  What some people don’t get is the soft ROI benefits that are being added to their brand value/equity.  A brand with high soft ROI (brand awareness, usage, differentiating strengths and brand loyalty, to name a few), which has potential high-growth hard ROI, may be a better investment, in the right leadership hands, than a company that has higher hard ROI results but fewer growth opportunities, for whatever reasons.

Getting back to the point of this posting, there are ways to measure soft ROI results.  The company I work with, C.A. Walker, does B2B and B2C survey research that can be used in the process of calculating soft ROI benefits,  therefore, I feel qualified in pointing out some of the ways this can be done.

• To measure improved customer service, a survey can be emailed out following an exchange with the customer service team.  For example, a company may be interested in evaluating the soft ROI benefits of new call center software.  It would be wise for them to query customers prior to and after the upgrade to determine if there is an improvement in customer service satisfaction ratings, current brand perceptions, and willingness to recommend the product/service to others.  It can also be determined if resolution times are shortened (hard), if there are increased up-selling opportunities (soft/hard), and whether fewer customer service employees are needed due to improvements (hard).
• To measure implementation pain, a company could evaluate expected pain across departments – those performing the implementation and those expected to utilize the new program – vs. other options.   In The ROI on IT investments, it is stated, “For many IT projects, the resulting value does not occur immediately but rather over a period of time.  Some of the other factors include how many people will be affected (either positively or negatively) by the investment, and how often the new application/system will be used.”
• To measure training pain, a company could evaluate employees’ training experiences currently vs. that in a new program.  They can be interviewed post-training for feedback on how they feel about the new program, effectiveness of the trainer, persisting product/service confusion, difficulty using the program after training, and other qualitative measures.
• To measure improved functionality, a company could evaluate, in advance, those functions that will be made available in the new product/service, however, those benefits won’t be fully realized until it is in the hands of its users.  They could survey (heavy/medium/light) users of the product/service to provide feedback on how the new functions have affected them (positive/negative) and suggestions for further improvements.
• To measure improved employee morale, companies can conduct regular employee satisfaction surveys, which has the added benefit of sending a message to employees that they are open to receiving input and their opinions about likes/dislikes/challenges are valued.  Every employee should be included, or else a self-selected group of disgruntled employees may have the loudest voices and skew results.
• To measure increased employee commitment to a process, employees can be interviewed to uncover reasons why a desired process is not being followed.  It can then be determined whether implementing a new program is likely to increase adherence.  Policy-breakers can be engaged in evaluating the new program, sending the message that this issue is important to management and hopefully increasing adherence once the new program is in place.  Post-measurements of adherence can determine success.
• To measure optimization of resources (labor, space, etc.),  measurements should be gathered before and after changes are made.  Taking labor as example, certain departments may be over-worked and putting in long hours,  resulting in hard ROI losses if on an hourly wage, and certainly in soft ROI losses with decreased employee satisfaction.  Reconfiguring department and/or job assignments could improve this, thus potentially improving both employee and customer satisfaction.  Taking space as example, in There’s more to ROI than meets the “I” it states, “Installation of a new transportation management system might lead to improved freight billing, better route management and denser loads – all very real improvements, albeit tough to quantify.”  In this example, if shipping containers were packed differently to improve efficiencies, it could lower shipping costs (hard), and customer satisfaction improvements could be made due to receiving shipments faster or at a reduced rate (soft).
• To measure improved billing, employees and customers could be interviewed to determine billing problem areas.  A new billing system could improve accuracy resulting in faster payment, and reduce stress (soft) and man-hours spent (hard) by sales teams who have to correct statements with the billing department.
• To measure effects of decreased carbon footprint, it can be determined, for example, that a grocery store that replaces its lighting equipment with a less carbon-emitting option can result not only in cost savings (hard), but also in happier customers who prefer less harsh lighting and patronizing eco-friendly retailers (soft).
• To measure increased collaboration, a company has to know what type of collaboration they are looking to improve.  It can be increasing customer engagement via their own online community, or employee collaboration using a CRM (Customer Relationship Management) solution or even a Wiki.  As example, in Quantifying Your CRM Investment, it states, “Measuring a CRM solution’s ROI can be a daunting process…a piecemeal approach involving smaller projects, however, can allow companies to easily measure factors such as increased call-center efficiencies and improved sales response times.”
• To measure improved competitive position, it has to be evaluated whether a new program can create efficiencies that allow a company to better compete. In The Business Case: The Hard Realities of Soft Benefits, it states, “Wal-Mart’s decision to employ [a cleverly automated logistics system] was not justified with hard benefits…[but] led to an eventual takeover of retail leadership from K-Mart, [which] is a prime example of a ‘competitive-edge-based’ soft benefits business case reaping hard benefit rewards.”
• To evaluate improvements in confusion against competitive products/services, a research survey may be conducted before an ad campaign to determine the competitive landscape, the brands in that category that stand out and why, competitive brand perceptions (strengths/weaknesses), and differentiating strengths of the company’s brand.  Post-campaign, a survey can again be conducted within the same target market(s) to see if these measurements have improved.
• To evaluate increased customer satisfaction/loyalty, a research survey may be conducted to determine customer satisfaction measures, how well the brand’s products and competitive products fit into their lives, whether they would recommend the brand/product to others, and likelihood to switch to a competitor’s brand/product.  These  measures can then be monitored over time, in conjunction with the measures in the above bullet, as part of a brand tracking study to determine key drivers of loyalty, likelihood to use/purchase/recommend, monitor awareness/image/value-add trends over time, and provide a perceptual map of the company’s brand vs. competitors.
• To measure exposure of your company to new, potential clients, it really depends on the marketing activity, but some soft ROI measures are:  number of business cards obtained, number of calls/meeting made (tied to a particular activity), number of people who view a presentation, source given for a sale, number of people who register for an e-newsletter, unique visitors to a website, number of responses to a blog posting, number of pingbacks (links) to your blog posting and the traffic they create, number of requests for more information and proposals, amount of daily traffic past a billboard where your ad is located, number of listeners to a radio program where your ad is run, number of incoming calls to a unique phone number, number of people who submit a promotional tracking code with their order, number of people who download a whitepaper, and so on.

In summary, I quote again from The Business Case: The Hard Realities of Soft Benefits, which says, “You need to believe in the power and relevance of soft ROI benefits. Many of the world’s greatest business success stories are built on the back of courageous business-case creators who convinced…executives that ‘hard to measure’…investments don’t automatically mean ‘bad’ investments.”

Happy ROI hunting!

In reviewing what others have to say about soft vs. hard ROI, soft ROI is described as those activities that lend a human face to a company, earn trust for a brand, increase positive image, increase collaboration, help to recruit and retain high quality personnel, shorten costly cycles, and so on.  Generally, it is those benefits that are difficult to measure but help to achieve worthwhile objectives.

Some activities of soft ROI, being more qualitative, may be:

• Engaging people as part of something larger then themselves.
• Making people proud of who they are and their values.
• Providing an experience, rather than just a product/service, that can be passed down to their children.
• Giving people a voice in how resources are used or treated.
• Soliciting the best of the character in a person.
• Allowing people to participate in a process that improves a situation.

So how can we put increasing soft ROI into business practices?  I’d like to using as example a product that could benefit from a focus on the softer side of ROI: eggs.

• I would rather buy eggs, even if it costs me more, that are Certified Humane Raised and Handled®.
• I would like to participate in a community that believes in and promotes the purchase of Certified Humane Raised and Handled® products.
• I would like to visit farms that participate in this program and share that experience with young people.
• I would like farms that participate in this program to install video cameras in their facility to view their treatment of animals online.
• I would also like those farms to enlist their community of purchasers in discussions about how to improve their treatment of farm animals  (e.g. hens beyond their prime egg-laying years could be adopted).

In the effort of creating hard ROI we have to be mindful to create soft ROI results as well, which is also good for business and creates long-lasting results.

With how competitive the market is now, I don’t think any company can afford to have too many rock chippers in their organization.  I believe if you are in a leadership position and you’re not actively training your people to think strategically, you’re putting your business at risk.  People at every level should be in training to think like a marketer/sales person and be rewarded for behaviors that improve the position of the company collectively.

I met with a nice group of folks this morning from TDWI LA, which is made up of Business Intelligence and Data Warehousing professionals.  This time, however, they invited marketing folks to participate in their discussions so I went.  I admit, I get excited when put into the same room as people who are coming from a different business area and a different mindset, especially when we’re talking about marketing. I want to listen and understand what it’s like for them on their side of things, so as to better integrate the things that I am doing now and in the future with every facet of business.

In a nutshell, the first half of the discussion was about how IT is having more and more responsibility for marketing metrics, and how all this data is now coming in from disparaging sources, or even housed outside the company with vendors, so there has to be a new, more open way to manage it.

The second half was a presentation given by Betsy Lenahan, CMO for YMCA Atlanta.  She explained how for many, many years she was asking her IT staff for specific data cuts, but did not get what she needed until she found an outside company’s product, Birst, to assist.  She suggested to the IT folks in the room that they could help Marketing, and themselves, by incorporating their needs into processes early and often, as well as not take it personally when Marketing points out something that is deficient in the organization that they have responsibility for.

I totally get what she was saying.  People have to put their heads together to accomplish objectives, but cross-functional meetings rarely take place that should.  It is also an unfortunate fact that often people can’t differentiate that THEY are not deficient when it is pointed out that something needs to change in things that are being done by their team.  It is just ‘fact’ that in order to create marketing ROI, management has to get everyone involved in that process and make it a priority to communicate the reality of where the company is at currently and the hope of where they’re headed.  They need to facilitate cross-learnings, train people who don’t behave in a sales- and group-oriented way, as well as share with everyone the immediate and long-term sales goals of the company.  It can make such a difference, even down to what people do with their time day-to-day.  It helps people to stay focused if they know that a specific activity on their to-do list supports a short or long-term goal of the business.

Instead of having rock chippers chipping away at their own little rocks in silos, companies can provide the right motivations, communication and inspiration to create a group masterpiece that is squarely based on the sales and marketing of that business.