Posts Tagged ‘cost of customer acquisition’

Direct Marketing and SPAM: If you are not an approved IP address, you can’t message to this server

June 8th, 2011

Email email email Its amazing how many BtoB marketing communications, direct marketing,and demand generation firms claim that they do social marketing as well as the 50 other things that they drop on their list of “specialities”; “We do SEO, website building, marketing automation, demand generation, telemarketing, lead qualification, marketing analytics, web content development, and SOCIAL MEDIA MARKETING.”

Ok, after reading 50 of these websites, I am not even sure what social media marketing is…. I gather that they think it is Linkedin, Twitter, and throw in Facebook for good measure. Oh, throw in videos, blogging, podcasts, and webinars to be safe… Oh, also throw in our standard suite of services and something about ROI. Then let’s connect to everyone like crazy on twitter and make sure that we blog on a regular basis, show up to a bunch of marketing events, and put out a couple of press releases.

In truth, most of them don’t really know how to create inbound lead generation from social marketing. It isn’t easy, actually in many ways much harder than traditional marketing. It is a lot easier to load up a database, create a newsletter, and watch the “opens” rate and the hits to the websites. Oh, and add the ubiquitous, connect to us on (pick your platform) widget at the bottom next to the “do not contact” link.
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Social Market Research Will Save Marketing

October 15th, 2010

Even as I write the title, I cringe. As I am a late convert to the value of formalized market research. I still have flashbacks of my market research class in grad school. All I remember is statistics, database, demographics, statistics, blah, blah, blah… all I retained is that mean and medium are somehow different and important. I got lucky in that my immediate neighbor in the first class was an actuary so when they formed teams, he became my best friend.

As I progressed in Sales and Marketing management, I realized the value of asking customers what they really wanted and how they felt. I also realized there are limitations in that process. Not that customers lie, but I can’t always tell you why I do something instinctively. I just do. In asking me to explain, you may or may not get to the heart of “why.” Also, depending on “when” you ask me my opinion will vary greatly.

That is why good market research leverages statistical sampling to make sure the sample size is large enough to represent a target population. We use sampling techniques because the population is too large to cost effectively poll or they are too difficult to get all of the responses.

Shocker Statement: Traditional Market Research has a Fundamental Problem

If you know anything about political polling, they have lots of discussions about the difference between likely voters and registered voters, etc. They also beat each other up about polling techniques; whether it was phone based, did they include cell phones, the average age of the respondent, etc. What they really are trying to do is correct for the impact that the process of polling has on the outcomes. Minor differences can radically shift the results of the poll.

Corporate market research has the same challenges. Not that they don’t account for much of it, the state of the art is pretty sophisticated and gotten much more so with algorithms, etc. What the challenge for corporate marketers is always who constitutes “likely buyers” versus potential buyers. If I poll based on demographics, I can’t really tell who is likely to be a potential buyer. On websites, they spend a lot of money on predictive algorithms and website “cookie crumb trails” to try and predict potential buying behaviors.

But the challenge in primary market research is that it is an approximation of the market. A sampling set if you will. The challenge that I contend is that we sample the wrong sets in market research.

Ok, before I get lynched by a bunch of analytics, let me explain. We have been doing social market research over the last year. We probably surveyed the landscapes of 60+ markets — probably 100+ sub-markets.  Everyone of them is showing a difference in the way buyers are approaching markets versus sellers. Not talking subtleties, but in most cases, the majority missed the mark —buyers are talking over social media at a 10:1 clip versus vendors. AND they are using completely different language. Vendors are focused on the “solution stack” -– features, functionality, benefits. Buyers are focused on pain, experience, exploration, decision support, value, etc.

What it is telling us in aggregate is that vendors are only focusing on a subset of the market; those who understand the industry jargon. The vast majority of buying markets are not being serviced with the right information. I would guess somewhere about 80% of buyers or potential buyers don’t know what they don’t know and therefore cannot perform structured searches or clarify their buying interest to market researchers.

I also think this is why major brands are shifting much of their new product innovation to social media and online communities. P&G has dictated something like 50% of their new product innovation will come from its customer community. Staggering, but also a recognition that the traditional market research approach cannot get to those who don’t self identify as being part of the market.

10 Really Cool Insights from Social Market Research

  1. Disconnect between buyers and sellers in markets
  2. Difference in buyer types leads to different online buying processes
  3. Most buying processes now intersects online and goes non-linear via social media at some point; research, validation, comparison, transaction, etc.
  4. Sellers are still trying to push a linear buying process that they think they can actually influence
  5. Estimated 80% of potential buyers don’t know that they are in the market and are engaging outside of the vendor communities traditional venues.
  6. We can see language differences in different types of buyers and vendors
  7. We are using this analysis to segment and target specific types of potential buyers who would not normally consider themselves as active in the market.
  8. Good social market research allows organizations to identify gaps in their approach to the market, focus on the psychographic buyer behavior, and eliminate the high-cost/low return marketing expenditures that they have had to cling to because they produced critical volumes of sales albeit at higher cost of acquisition.
  9. Customer experiences for good or bad are now bleeding into the non-linear buying processes. Vendors who don’t get control of their poor experiences will experience a different kind of bleeding; profits.
  10. We haven’t even touched the tip of the iceberg as the semantic analytics and market research techniques get updated.

Today Social Market Research is largely a blend of qualitative sampling and quantitative support. Just because you can measure it doesn’t mean you can derive meaningful business impact from it. The qualitative analysis allows us to overcome the challenges with the state of the social media tools. We can sometimes use up to 16 different tools for just one function. It isn’t about clicking a button and “poof” you have your answer to grow market share overnight. Also, having your own community allows you dimensionality of insight versus just polling public social network sites. Add in structured customer data and you have the backbone for some amazing buying behavior analysis. Over the next couple of years, the semi-automated process will mature and give way to more automated, trending, and analytical driven systems that integrated with the current business intelligence systems.

For us today, Social Market Research is the first step in building a social business plan. Not just for marketing, but all of the customer facing touch points and all of the customer support functions. In short, pretty much all of the business. You don’t know what you don’t know.

The challenge is can you figure it out before your competitors do.

Trouble Justifying the Social Business Impact to Organization

October 4th, 2010

If you are like most business executives, you are struggling to justify the value of all this social business stuff in your heads let alone across the table from the rest of the management team. Don’t get me wrong, there are folks getting some good wins from the social media marketing on Facebook, LinkedIn, etc.; but we all know that mainstream business isn’t buying the “build it and they will come” in a recessionary economy. Most senior executives bought the farm on the “web” and realize that much of the hype needs to settle before setting sail on the good ship “social business”.

All true… however, justification is the least of your problems. See, the customer isn’t waiting for your organization to figure it out. The problem for your organization is that the customers are still figuring out what the social business impact is on their buying process and how that will translate to their customer experience and perceived value. The savvy ones are already leveraging the social technologies to become “smarter” and to club the crap out of brands that provide crappy service. But, this is still in the realm of anecdotal. When buyers punish a major brand with rapid market share loss, then we will all wake up to real value of social business. The problem is that it may take your organization a while to do something about it.

I don’t think behavior changes well based upon fear. I believe that change comes from real desire of the perceived benefits. Let me share the opportunity side of this equation. Social business, if done right, has the potential to bring large numbers of customer opportunities at a fraction of the cost of traditional customer acquisition. You have the ability to significantly lower costs throughout the customer delivery process, and drive a huge impact to the bottom line in terms of organizational productivity. The web gave a huge boost to organizations. Remember how many administrative assistants used to run around organizations?

Here are some of the areas of impact as examples:

  • Customer Acquisition - if your cost of customer acquisition via traditional marketing run in the $XXX per customer, we can assume that number is based upon a large number of false leads along with a large number of abandoned ones along with the fact your staff can only handle Y amount of leads comfortably. The challenge is that you cannot figure out who is a shopper who will lead to a buyer versus a browser who will lead to nowhere fast. The problem is we can’t tell which is which. We also assume that we can’t, but what if we could? What if they were encouraged to self-identify? What if we spent very little money until they did? Would your marketing and customer acquisition costs become much more streamlined?
  • Distribution Channels- there are only a few real reasons to partner with a distribution channel; 1. cost of acquisition can be much lower because they already have a relationship and 2. see #1. So, the problem most organizations have with channels is that they are inefficient and not aligned with our mission. They carry multiple products (many of their own) and don’t have the same level of training and expertise as our own. For many channel organizations, the partners still bring more sales and better market positioning. Many organizations are struggling on how to drive more leads through channels, convert at a higher rate, and train their people to do better. A little fix could go a long way to producing better channels. Social has the opportunity to build better channels if done correctly; better, faster, cheaper, and easier.
  • Customer Experience – Conventional wisdom is that it is less expensive to maintain customers than to acquire new ones. Unfortunately, for many organizations they do such a mediocre job of managing the customer experience, you have to wonder. I suspect that 20% of calls into a call center account for 50% of the costs. When a customer gets off the script, there isn’t a computer system smart enough in the world to solve that problem. However, what if you could go to a semi-automated system that could cost 20% of your costs? What if you could improve the customer experience at the same time? What if you didn’t require them to log into your website or sit on hold for 20 minutes? I know the customers are saying “bring it on.”
  • Organizational Collaboration- a lot of organizations are trying to make themselves more productive – say just 5% savings in resources has a huge boost to profits and market value. Unfortunately, many organizations are trying to work harder by doing what they are doing a little more efficiently. But, the fix isn’t do what we are doing better, but rather starting with “why are we doing it?” Many of our current business systems are designed to make the organization scalable, but not necessarily make the customer experience better for the users or the customers. If your systems are 5-10 years old, much of the latest generation of business systems are rethinking the idea of collaboration. Many of the latest business systems have moved to reuse-able, re-purpose-able components that enable users to assemble solutions in real-time based upon their needs. Social business systems; social networks and online community applications have the ability to allow organizations to bring the right information to people based upon their needs, not a generic web template. How much time is spent looking for information or the right people who know an answer? How many business processes have been broken by a frustrated customer? How many exceptions do you have to allow?
  • Hiring and Maintaining the Right People -Anyone who has gone through a hiring process lately knows that the recruiting process is broken; job boards, applicant tracking systems, deluge of resume cramming recruiters, managed service providers, resume services, etc. all are seeing the commoditization of the hiring process. When did hiring the right people become a commodity? When we move away from getting our people to find and connect with the right employees to protecting their time from the volume of crappy candidates; you know that the systems are broken. Used to be that hiring was a competitive advantage and that hiring the right people was seen as a “must do”, now seen as a luxury. What if we could screen out the masses and allow our people time with the right potential hires? What if we could empower our employees to bring in other people who share their values and work ethic? What if we got the organizations to support employees the right way by empowering them as individuals and not “risks” and “costs.”

Social business isn’t about social media. Just like the web wasn’t really about HTML. The real value is in the humanization of business. Social is about swinging the pendulum back towards the center. We automated our businesses for growth and efficiency, but we gutted the hearts right out of them. Nothing I described above is new in business, but is impossible in large businesses today. Or at least not consistently and beyond the exceptional; ie the employee who goes out of his/her way to satisfy a customer, a colleague who stays late to help you find the right information, the hiring manager who connects with a seemingly unqualified candidate, but who has the intangibles they need.

I am not into squishy business feel-goods, but I do believe that the social technologies will humanize business and I do believe that the organizations that can leverage these technologies to improve the customer, partner, and employee experiences effectively on an efficient basis will receive tremendous market opportunities.

We saw that 62 of the top 100 businesses get caught and passed from behind in a 10 year span from 1989 to 1999 in large part due to the web’s disruptive impact in distributing information more efficiently. I believe that we are in the current 10 year cycle that will see similar impact with the ability for the web to deliver better collaboration experiences at a fundamentally lower cost of delivery than traditional means. Those who can leverage these technologies to lower the costs of transactions and relationships will receive higher market share and valuations.

Call it “feel-good with an edge.”