The Marketing Executive Center

Yes prior to the great and powerful weekend, I received this in my inbox from the Center for Media Research – Blog Link....

A recent Compete survey (Source: Compete, Inc. May 9, 2008) on segment-driven marketing found that marketers are focusing their segmentation efforts in online and search engine marketing activities,

This is good. Segmentation can drive better customer value and revenue over time. Excellent, we as marketers are evolving, getting smarter…

...and while only 39% of US marketers surveyed believe segment-driven marketing is very important in their organization today, 84% indicate that it will be more important three years from now.

Yes, exactly. It will be and is..

Additional highlights from the survey include:

• 92% of respondents say they are using segments to manage their online advertising and/or search marketing
• 76% of respondents say that their segment-driven strategy will be ahead of their competitors in three years
• 77% of respondents are having trouble demonstrating real business results from segment-driven marketing

WHOA Demonstrating results.  If you can segment, why aren’t we measuring?   Real business results, can mean anything.  To me it means.. “we’re spending money and doing what someone told us to do, but we can’t tell if it’s working because we’re moving too fast or don’t care (possibly both)”

To me – there’s a flaw in the measurement.. ok.. what else…

• 27% of respondents aren’t seeing improved marketing results from their segment-driven marketing efforts

Ok, something is really wrong here.  If 77% can’t demonstrate it’s working and 27% can’t see improved results…. the other 50% can’t demonstrate it’s working but “say it is???” Wow I’m confused.

• Among the respondents, the most consistent obstacle to successful segment-driven marketing has been identifying the right segments

Now the “right” segments.  What does that mean? Shouldn’t you know what those segments are?  Typically they start as your customers?

But, says eMarketer in an overview of the study, “...this is precisely where behavioral targeting promises to help, since the “right segments” are created by the users and their actions, not imposed on them.”

Ok, enough. Behavioral marketing is not “the” way to define your segments. Yes you can see trends and start to understand them, but it should be the experiment – not the hypothesis. If you are trying to figure out your segments this way – you are losing and throwing away your money.

And finally, profiling your customer data is not imposing anything. The customer has acted and by definition created the profiled set of actions based on their demos and psychographics.

The Blueprint for Defining Your Marketing Segments – It’s Really Not Hard

1. Start with what makes your company money. Not the best response.

Note this is where most companies get it wrong. Most go for volume, orders, sales.  Step back and look at revenue and contribution margin.  Sales are short term figures that should be linked to selling, acquiring the right customers.

If a certain purchase makes you the most revenue and it is part of your core competency, good.   If acquiring customers on a cycle and keeping them for 11 months makes you the most revenue, good.  These are your target customers – start there.

Probably, they are 20 – 30% of your business. You are acquiring them along with other customers.

2. Profile High Value, Revenue and Low Value customers (with specific attributes)

Identify who makes you money and who does not.  When you can identify the people who make you the most revenue on one sale and those that cost you money you start targeting.    This means mining your customer data for the information and if you don’t have age, sex, interests, etc.. Get a research organization to profile them and ask your customers.

Obviously then market around the losers and hit the winners.

3. As you profile the high and low value – you will find the customers in-between.  Group them.

Identify the middle ground of customers you will take and those you will pass on.  You may only target 2 segments out of 5 and 5 is the most you should group to in the start.

4. You may give up market share? Yes, if you can afford it. This is where the middle ground is important – they will shape your share of the market.  Do you want share or to maximize EBITDA? or both… greedy!

It’s a tough choice, but knowing the segments gets you:

1) Through the good times with hyper revenue flow and..

2) Through the tough times, by knowing which segments to cut and who to guard as low cost and high revenue.

When I see these listings for the Top Digital Agencies (Online Agencies) of 2007 I have to sit and wonder, for Ad Age, is it really all about revenue?  Being the top agency, is it really about awards?

How about the top award goes to the agency that completes the following:

1. Achieves Their Client’s Goals
2. Listens to their Clients



3. Delivers quality work on time, under budget, exceeding response/return/etc..
4. Has EXPERIENCED not educated people working with them and their clients

Shall I go on?  This tends to hit the heart of the matter and you can’t blame agencies for focusing on revenue – they absolutely need to make their money or good people will lose their jobs.  However, it tends to be marketer’s faults for rewarding agencies that are all pomp and no substance.

I remember walking into an ad agency meeting room for lunch with a crew we were about to hire.  They had 90 people in the room and they said you may pay for x number of people but you are getting 90.  Nice trick, yes.  However, I bluntly asked if my x people would be in on other client welcoming engagements and if so would I be billed for that time, jokingly.   But of course they would, that is the game.

This is not a dig at agencies, it’s a warning for marketers.  Just know, lists like this are informal (if not formal) way of becoming the top agency.  CEO’s pull out these lists and start calling from the top.  CMO’s do the same.  Just know for some organizations it is about – Revenue.  And the only way to make money is to create work and refer work.

AD Age has posted their Agency Tree.  It’s important to know who your agency is owned by and works with.  I can’t tell you how many times when you enter an agency family that you hear the words … “I know someone…” that is linked to the agency.

Today’s Marketing Executive needs to be scrupulous and second guessing.  Many agencies reward inter organization referrals, therefore you need to think – am I getting a good reference for my organization or a reference for my agency’s partner?

AD Age has listed the top 600 Media and Marketing Blogs, by assessing 8 rankings from different Blog or search repositories and calculating a score.

See for yourself, there are some good ones and some absolutely horrific blogs.

Related Story Do Auto Manufacturers Gas Promotions Work? from the Marketing Executive Blog. 

Brandweek reports another similar story on the gas promotion. 

What’s new is Suzuki’s promo which includes 0% financing and 3 months of gas (varies by model) instead of a cash rebate.   They report sales up for the month of 9%.  Good news for automakers in general, including US AMs.

Remember because these offers are given instead of cash, they delay or reduce the cash incentive, providing real returns for the company and providing the customer with a true value.

The Whine and Whimper of the Brand Marketers

This is not a generic poke at all of you, but you know who you are.  Yes, You do, so NO EXSCUSES. 

I continually hear the following:

“We can’t measure our brand advertising?”

“What is our brand worth?”

“If we only could measure the brand and it’s value?”

“I wonder what the brand contributes in sales?”

Before I go Gordon Ramsey on you, just stop you DONKEY!  These are the Whines of the masses who have NO and I repeat NO backbone.  You must, understand the following for marketing.  And it Applies to ALL Marketing:

If there is no way to measure something, come up with the BEST possible way to measure it.  Bring in experts, colleagues and financial folks to help you be rational, sound and present something that is realistic.

You will say:

“They will shoot it down?”

“They will not accept it?”

“They will say it is not realistic”

And you will say:

“So help me make it realistic, this is a substantial measure we must track to determine if, how, when and where we need to allocate the budget.  It would be irresponsible of you and me to ignore this opportunity.”

We can go on and I can continue to feed you words, but essentially as a Marketing Executive start developing the measure.

Accountability for Brand Spending that Boggles the Mind

Now, I’ve sat and talked with representatives (CMO, EVPs, CEOs) on spending large budgets on brand. Sponsorship, Media, etc.. Often, even at the large companies (EG: a major international overnight shipper and a nation-wide pizza delivery chain to name a few) about their tactics on measuring impact.

Their response is a surprising: “We don’t know but we have FAITH that it is working”

So if the “Big Boys” are not tracking the impact, do you have to? Should you?  Yes, of course.  Why? Because you want to be GREAT at your position and the measurement is there, you need to be creative.

Example: A major beer organization did not know whether their brand sponsorship during a sports event was effective.  How would you measure it?  They didn’t know for a long time, then they decided they needed to identify a connection and they found it.  Simple enough it was the local sales of the beer during the sponsorship.  Sure they found national consumption increased by a little, but local and regional shot up. Purchases increase right before and extended after the event.

That seems easy right? Thinking about it they probably took the annual/seasonal average and then subtracted that from the event timed sales to get their increase… There might be “perception and identity” or “awareness” changes they could measure as well.

But usually it all comes down to amount sold.

Play to the Revenue

This may seem elementary, but it is important to track the measures back to the key performance metrics of your organization.  Revenue, Profit, Churn, Share of Wallet, etc… This makes it meaningful.

The problem some marketers run into is they try to solve for everything. In the beer example, we’re solving for revenue and profit increases in a region. Maybe also churn or penetration, but you can’t hit it all with brand. 

Which is good. Because different brand, response, direct, etc.. types of campaigns are to impact your key areas of responsibility.

Therefore, identifying the KPIs brand hits and affects, now starts to open the holes in your measurement game.

The easy way out, Correlative Advertising Spend

Sometimes you have to be happy with something a little generic.  But you shall not default to this always.  It is irresponsible. 

For example: If you secure a product placement in a movie, there is a way to identify the actual cost of spending to reach the audience through the media.   This in itself, if the placement is FREE or there is a cost…. You can identify if it was worth it and if it should be pursued in the future.

However, this is not always best and is not directly attributable to revenue (unless you make the argument that you saved the company the difference, but you haven’t proved an increase in sales? and then we say SO WHAT!), and therefore still an expense without a return.

You may need to start out with: ” Here’s what we would have spent to get this…” in the first phase, but develop the ability or reporting to track the impact.  If it is media – what happened during the media or the exposure to the media over time?   Did website hits go up/down? Leads up/down? Where, how why?

Start Guessing.  Start thinking what could have happened? Then you need to go find it, test it and re-test it.

Who said marketing was NOT a science?   I have said and will continually say: Marketing brings all the aspects of life, psychology, behavior, math and science  plus creativity into one department.   Marketing is a true multifaceted discipline. 

UPI Reports a Dealership in Butler, Mo: Article here – is offering a different spin on the well – received gas promo from manufacturers/dealers like Chrysler.  This one offers a choice or GAS or a GUN. The dealership is offering customers the choice of $250 in free gas or a free semi-automatic handgun, KMBC-TV, Kansas City, Mo., reported Wednesday.

“Like I say, it’s a choice—protection or gas,” Moore said. “We got high gas prices, theft, carjackings, innocent people getting hurt.”

Telling as it is, Moore reports 80% are going for the Gun.

Shall we ROI this Puppy:

Dealer Incentive/Promo: $250 per car.  Gas or Gun.

Since we do not have any additional sales or lead data, we can conclude that the “publicity” is really the ROI that will turn into additional sales.

People like you and me, reading and picking up this story via UPI and NPR:  ~2 Million @ $20 CPM for Advertising = $40,000 in advertising. Not bad.

Sales - Sure people will learn about this (locally) and it will generate more leads and sales.

Let’s say conservatively in MO, an additional 100,000 people hear the publicity (we assume it’s folks who can drive to the dealer)
- Response rate: .15% – conservative = 150 people or additional leads
- Sales at 1% of leads = 15 additional sales
- Revenue at $12K avg car cost = $180,000 in additional revenue

Roundup:

It really goes to show that something shocking can get you good publicity and add to your bottom line. Ask the CEO of Virgin International – Bransen. That was his trademark, he would create the news, publicity and drive for his brand.   People would follow. 

What are you doing to shape your brand?

Mediapost recently ran an article on the Gas Promotion from Chrysler http://publications.mediapost.com/index.cfm?fuseaction=Articles.showArticle&art_aid=82909 FYI – you need to login or create an account.

Does this work? Well according to the article, Chrysler is extending the promotion.

The Promo details: “Chrysler launched the effort to get consumers to buy cars despite gas prices by dangling cards locking in $2.99-per-gallon gasoline for three years or 36,000 miles. The program enables buyers of Chrysler, Dodge or Jeep vehicles to apply for a “Let’s Refuel America” card that they can use at participating gas stations. Instead of paying the pump price, the consumer is billed $2.99 a gallon for either regular gas, E85 or diesel fuel. Chrysler pays the difference. ”

The effect: Website hits up 25% over previous week, web leads up 34%.  So effective yes. And gas prices since the begining of the campaign are up 20 cents. With no end in sight to rising gas prices this could be a home run for Chrysler.

Let’s breakdown the ROI:

Promo cost per car: 36000  miles / 15 miles to the gallon = 2400 gallons.

Difference in gas cost avg: $1.00 = $2,400 dollars total over 3 years, or $800 per year.

Less that the current Cash back offer of $3,000, if the consumer uses the card and keeps the car for 3 years.

Now the Leads and Revenue impact:

– If the leads are up 34%.. and lets say graciously that 1% convert into car sales = .34% increase in sales due to the promotion. – Provided all costs are still flat. Chrysler has actually amortized their cashback promo (in the form of a gas card) over 3 years, and not paid in one.  Less than 2/3rds of the cash back ($1600) can be applied to the bottom line revenue for the year. – This does not take into consideration that gift cards have a low redemption rate, however you can expect a better redemption as this is directly tied to consumer fears, emotions and pockets.

 Again -some of these assumptions are generous.  But $1600 per car addition to the bottom line on new car sales plus an increase in sales will add to the year on year revenue for Chysler. 

Definitely a promotion worth watching through the summer.

Alright so nobody is perfect. Sales nor marketing.  I’m more of a marketer by trade, but marketers and salespeople are fooling themselves if they don’t acknowlege the assets within themselves and each other.

Each marketer needs a sense of how to sell. Every salesperson needs to know marketing.  But marketers don’t need to know how to cold call, and salespeople don’t need to know how to manage media and formulate campaigns.

Still with me, here’s where it gets good….

Much like brothers (or sometimes sisters) they two fight. One blames the other, one says the other doesn’t know what the other needs, blah blah blah.

The Problem 

Marketing Departments don’t know sales, the technique, what it takes, how to apply it, or what it’s like day to day with the customer. Plain and simple. Marketing thinks it knows. They think because they listen they know, but you don’t know what it’s like until you have done it.

Sales Departments don’t know marketing. Sales assistants may create flyers, and mail out post cards to customers.  Good for you. That’s not marketing.  Face it, you don’t know it on a mass scale.  Market yourself, yes, market and brand the company, no.

The Realization, Epiphany

Walk a mile in the othe’s shoes. Yes, get out and do it. Go for a week and cold call, walk into customer’s offices, upsell, manage etc… Salespeople, take a week and run email, manage the website, get sales materials created, whatever.  Get in and get your hands dirty.

One of the worst Sales Jobs I ever had 

Really the worst was selling Meat Door to Door. And you say – “How do you do that?”, “How can you?”.  It’s possible and it does or did happen. Yes, I was 15 and my mom dropped me off at the job opening and they said – hop a truck.  So I did, next thing I know I’m walking door to door.

The guy, Sam who was may mentor in door to door meat said “the best approach is to knock on the door and quickly ask ‘Do you like meat?’ ” Simple but easy. If they said yes, they were a customer. If no, move on.  Stay out on the route until you emptied your truck.

It was brutal, and yet guys did this everyday. And for the customers it was a good deal and a good product.  For me I learned what possibly could have been one of the worst sales jobs to take.

The point- I can empathize. I can understand.  Can you? You can’t unless you’ve gone out with the salesmanager and sales  associate.  You can’t unless you’ve sat in the marketer’s chair.

Fix, or Manage 

First, both departments need evangelists for the other.  Influential sales people need to get into the marketing function, sit in one week a year, be active on steering committees, etc.  Marketers need to spend more time in the field in different regions.   The markets are important so marketers at higher levels may need to be in the field 4 – 6 weeks if not more with regional managers and sales associates.

Next, Manage Expectations and Meetings.  At every meeting one should ask, should a field level sales person be involved or marketer?  They may not participate in the beginning but over time, people will.  Especially if you ask them for their opinion.

Finally, they both need one supervisor. Yes Really. The time has come.   Instead of full separation pushed into the CEO, combine and have one person with marketing and sales experience run the departments.  It will be hard to find.  They will need either an expert marketing professional or sales professional to be their right hand person.

Final Thoughts – Ending the War

It may not be a real war. But the two can work together.  The motivations are different, but the right leaders can monetarily and emotionally lead the two teams to success.  It’s possible. It takes work and the metamorphosis is not overnight.  But when the two fire together it can be magic.  It is worth fighting for the right people, the right departmental organization and compensation structure, otherwise expect in-fighting and a degradation of interaction, efficiency and teamwork from sales and marketing.

Managing Large Departments can be challenging.  Often as a manager you need to rely on your managers to properly motivate and oversee the day to day operations, especially in marketing.  The article examines the diversity of a marketing department and the challenge in motivating different types of people.

Think for a moment of the departments in an organization like:  Accounting, HR, Sales, Finance, etc..   There is an expertise required for these positions, but managing the skill sets is not a diverse task.  Many are cut from the same cloth.

Within a marketing department there are many faculties of expertise that  people overlook, here are a few:

1.  Creative Services -creating day to day marketing from design, copy to concept.
   

   1. Skills in this department: Project Management, Design, Web Design, Print design, Copywriting, Proofing, vendor management
   
   



2. General Marketing – Managing the Client interaction and pro actively fulfilling on the marketing strategy
   

   1. Skills: Project management, diplomacy, client service, strategy, vendor management, Presentation Skills, Media knowledge, Customer Knowledge
   
   



3. Analytics – Measuring and managing the marketing response data.  How much, when, from where and why.
   

   1. Skills: Advanced Analytics, Database Management, Reporting, Presentation Skills
   
   



4. Research – Dedicated to understanding the business and the customer.  Note here, if research is only interested in the customer and not the interaction between the business and the customer, it is a lost cause.  One cannot function without the other.
   

   1. Skills: Analytics, Customer knowledge, Business Knowledge, Creative Thinking and Strategy
   
   



5. Business Development or Partner Marketing – Creates meaningful revenue driving partnerships
   

   1. Skills: Networking, Persistence, Sales Background, Contracts, ROI Evaluation and Creative Thinking
   
   



6. Other departments:
   

   1. Trade Events – Project management, Vendor Management, Event planning
   
   
   2. Sponsorship management – Project Management, Event management, Talent management, Event Planning
   
   

The List can go on. The purpose here is to show two clear items:

1. Marketing is not all about being creative and the “creatives” in marketing, you can see it is a diverse set of skills


2. The Diverse Skill sets engender a certain type of person who needs to be managed according to their stregnths and build their weak points.

How is it done?  How do you manage a potentially large group or event diverse set of individuals?

Sorry, there is no easy answer. It is mostly a trial and error game. Testing in my mind.  Figuring out what people respond too.   However, there are some common themes to follow:

1. Recognition – Most people like and strive for recognition.  A common recognition program can help morale and motivate people.  Face it, many managers don’t recognize people.  They don’t have time or know how to do it.   They often go day to day and let excellence slip in and manage mediocrity.
   

   1. Several forms to try out – individual recognition (one on one), group or monetary.  If you are the head of the department, one on one can work very well as can group.  Monetary Recognition has to be carefully managed not to start a feeling of entitlement or equality. Sales teams often need monetary with group recognition.
   
   



2. Collaboration – Some people need and want to be part of new, innovative or large projects.  Let them in, if they’ve earned it – even if it is outside their expertise.  You’ll be surprised how they learn and get up to speed, they will ask questions and you need to support their queries.


3. Responsibility -Some people align more responsibility with money.  You want to encourage people to view more responsibility as an opportunity to lead, excel and gain experience that will lead to more reward.   It is a privilege to lead a project

Finally, large team building events are often viewed as lackluster and days spent wasted in which people have to make up for time lost.   Are they good for teams to communicate and meet, yes.  But realize you are also asking your team to put down their work.  Make sure there are objectives to team building.

1. Working with cross-functional or other departments, increasing communication ties


2. Communicating with leaders they often do not have access to work with

Again, this is a template to get started.  Once people start to understand there are tangible and intangible rewards and feedback, they start to become motivated and have goals.  This is helping people to have more fun, rewarding careers while making the environment enjoyable.