The most important digital (consumer behavior) idea is…

Is this:

People who normally buy 1 book a month offline, when introduced to online, buy 12 books in 3 months, then stop buying for 9 months.

This happens because interactivity reduces friction. Reducing friction compresses the LifeCycle, resulting in the relative value of the customer being "exposed" more rapidly. 

Implication – You can design your entire digital marketing strategy based on this single idea (Recency). Yes, it's that powerful. Bet you didn't think digital was only all about SEM/SEO/Social.

This is such a profound insight. There's no way I could have come up with something like this on my own. Hate to reveal the source. Found it here.

Harvard Prof’s View on the Intersection of Marketing & Technology

Here’s a neat little article from HBS Working Knowledge on what’s happening at the intersection of marketing and technology worlds.

Key points:
  • Within a few years, chief marketing officers will spend more on technology - digital marketing - than CIOs. 
  • Within the $1 trillion marketing industry, the impact of software eating marketing has now reached the board room.
  • Marketing leaders and agencies now carry the burden of understanding technology's impact on their business, the entire customer experience, and leading innovation within their enterprises, not simply following a course set by their IT department.

Interestingly, it took Harvard folks a while to get to this topic. Scott Brinker over at Chief Marketing Technologist has been talking about this topic for over 3 years nowJ (with far more depth I must add).

See these 2 interesting diagrams from CMT blog.

My views:
  • The problem with non-tech folks is – they tend to either grossly underestimate or grossly overestimate the complexity of any tech solution. So, if you are a marketing guy with no-tech background who needs a tech solution – you can be easily taken for a ride by techies or you could miss a gem of a product because of your ignorance.
  • Since marketing folks don’t do a good job of learning technology, techies who have identified niche tech needs of marketing, are taking over. It’s actually very difficult to cross over from marketing to tech, the learning curve is just too steep. On the other hand it’s not too difficult to learn marketing; seriously, most marketing functions are anyways outsourced to agencies and whatever is left in-house is handled by specialists such as web analysts and database marketing consultants, which leaves marketing heads with ample time to go to conferences and share earth shattering insights about social media!
  • But techies who are doing these wonderful things are in minority. In most places, IT is the slowest and the most non-business focused department – according to studies done by Forrester/Gartner (not my view, though I completely endorse it). And who would know this better than the engineers themselves – so, what would they do? The smart ones are starting companies that can empower marketers – without support from IT. Take a look, most of the marketing-tech innovation (the $1 trillion industry referred above) is about taking control away from IT teams and giving it to marketing teams. Examples - allows marketing teams to put fancy applications on websites without any IT support. SkyGlue allows marketing teams to track/create events in Google Analytics without any support from IT, HubSpot  takes things to an entirely different level. You can create landing pages, microsites, orchestrate an end-to-end digital campaign with zero support from IT if you have HubSpot…there are hundreds of such examples.

click+brick+kiosk = amazon locker = can’t delay gratification

Somebody should give me an award or something…you know…what if I told you that I predicted the arrival of Amazon Locker a solid 2 years and 2 months before it was actually launched (last month). Huh!

May 20th 2010: Real-time Market Hypothesis by Yours Truly:
...When this real-time need becomes dominant...and trust me we are not too far from retailing as we know it...will slowly give way to a new business model...I don't know what'd that be but I believe brick and click retailers might be able to adapt themselves with much more ease than the pure plays. Perhaps a new business model "click+brick+kiosk" will become popular... (Read all of it here)

And here’s the interesting part. Almost everyone who has covered this story (SlateWiredWSJ, whoever) has missed the underlying theme. Guys – it goes deeper, it’s not about an over-ambitious Amazon trying to take over offline retail world or trying to save on shipping charges / taxes; Locker thing is going to help them cut down on shipping time drastically - of course the money they'd save by avoiding to run to people's houses will be there but that's not the reason why they are doing it - they don't have a choice; it’s about what digital technology has done to human beings – people with mobile phones and 24X7 internet connections can’t “delay gratification” anymore. The opportunity cost of waiting for anything is just too high in an always-on interactive environment. I bet, in near future, when you place an order to Locker, Amazon will do some magic and deliver your stuff in hours to your locker; if they can do same-day delivery to your door, delivering to a locker in 6 hours shouldn't be that difficult. Additionally, the fact that you can collect your merchandise any time you want (2 am in the night) gives you exactly the kind of freedom that digital generation seeks.

Our decreasing ability to "delay gratification" is the key here. Somebody, please ask that Marshmallow Experiment guy from Stanford to do a brand new research on the impact of digital tech on “deferred gratification”.

If you are an online retail shop and can’t do kiosk, here’s a suggestion – Gamify and/or Socialize the waiting time. According to this research, it seems “solo waits feel longer than group waits” and since forming groups is the easiest thing anybody can do these days, you can’t really go wrong with this – send a message to your customer that says – You, 25 of your FB friends and 1500 other people from your city have the same delivery date for the orders placed with us today; here’s a game you can play to locate one another’s orders. Lucky guy gets a jackpot…blah blah know the drill…just kiddin!!

What else. You want to know how Amazon, Apple, Google & Facebook can compete peacefully without stepping into one another’s shoes? You can find a truly creative answer in a not-so-well-known book called - Right Side Up - by Alan Mitchell. Read my hypothesis about it here and here.

You Need Griffin (Alien Intelligence) to Make Marketing Attribution Modeling Work!

Of late, I have wasted a lot of time reading fancy literature on Marketing attribution modeling - which btw has been a hot topic for quite some time.

Even these two very insightful write-ups (Crutchfiled: An Attribution Nightmare & Attribution: What Do We Really Know?) did not deter me from wasting my time. And then I saw MIB3 yesterday. Seriously. Did you see Griffin? The alien character who has the unique ability to foresee the infinite potential outcomes that are dependent on the actions taken in any given scenario. You have to be really naive to even think we could build a Griffin in any foreseable future on earth.

But that's exactly what the digital marketing industry thinks its going to be able to do. Super sci-fi stuff! After all, we have the big data now!! I think it's headed the time travel way for next several years.

As far as I'm concerned, I'm not going to waste anymore time following this sci-fi thing. I'll trust our good old black box control tests. Web data is truly dirty and unconnected - you can optimize yourself to death if you trusted these algorithmic attribution models.

Trivia - Even Griffin failed to predict Boris' arrival, who snatches him on a motorcycle.

Updated on 6/7/12: Here's an excellent explanation of why most attribution models are wrong; if you agree that correlation and causality are two very different things - and determining causality or building causal model for the extremely complex multi-channel ad world requires alien intelligence (I do!) - then the only option left is controlled testing.

Marketing Experiments - Best Practices vs. Testing

The super talented folks at do something very interesting on their blog – they organize these contests where they share multiple versions of an ad or a landing page and ask readers to guess which version would get higher CTR or conversions. Then they conduct actual A/B/MVT split tests with those variations and share the results.

You can see the last few contests here, here and here.

If you plan to go through those links, I suggest you keep some spare time in hand - the most interesting part about those posts are the comments that readers leave.

Now, here’s the thing – a few commenters are exceptionally good at predicting the outcome of these split tests – not just that – they also substantiate their claims with very compelling arguments/theories about why they believe a particular version would be the winner. I think if these commenters were actually designing those ads or landing pages, they probably wouldn’t run those experiments – or even if they did, they’d probably test something more complex.

I think when I split test headlines for an ad or something – most of the time I'm just trying to make up for my lack of experience because a more experienced marketer would probably just know which headline would work.  On the other hand, I know for sure you can’t predict the optimum amount of discount by using just theories or best practices. There are way too many variables involved. Only a well-designed control test can reveal the discount that’d generate maximum profit.

So, maybe there are two types of consumer behavior or factors that influence consumer behavior – those that you can fairly accurately predict if you have the right experience and know the best practices - and those that no amount of best practices / theories will help you predict. You just have to test and find out.

I’m not sure if anybody has ever tried grouping these factors into separate buckets - the grouping will certainly be dynamic and contextual; not a static list – perhaps, something on the following lines:

Best practices bucket:
Ad/E-mail Headline
Marketing Message
(Testing not needed – if you have an expert with 10 years of relevant experience)

Testing bucket:
Communication timing
(Always test)

updated later:
2 of my readers pointed out that there's nothing wrong with testing even if you are an experienced marketer. Well, you see, I'm not really against the idea  of testing but you have to understand that there's always a transaction cost involved whenever you execute a test - so, you must have a damn good reason for testing - it's not like - since Google Website Optimizer is free or my ESP supports A/B testing for free, so why not use the feature. Also, if you have two or three equally good ideas for an ad copy / landing page / whatever, then you have a strong business case for testing but if all your ideas are - losers - because you don't have relevant experience/knowledge/etc. - testing will only help you choose the best of the worsts - that's a local maxima. The sad part of all this is - you and your bosses will think they are really optimizing their marketing.

Just because we the tools to test doesn't mean we should test all our half-baked ideas.

Anyways, the point I was trying to drive was this - I think there are certain things in marketing that just cannot be optimized without testing - offers and timing are two such things that come to my mind - since the variables that influence the outcome of offers/timing are so complex (macro trends, disposable income, latest fad, seasonality etc.) that it's practically impossible for anyone to predict the returns without testing. On the other hand, the e-mail subject lines, ad copy headlines, unique value proposition etc. can certainly benefit from testing but a really good copy writer or marketer can do an equally good job too.

Look at the comment below from D Bnonn Tennant (the winner of last marketing experiment contest). When you are done reading this + the original post, you'd know what I was talking about.

March 14th, 2012 at 06:52 | #5

Unlike the previous commenters, I’m not convinced the treatment is the winner.
The treatment’s eyepath is lousy. Readers have to choose between reading the left or right column first. The natural inclination is to read the right column, which leads to the bottom of the page — so there’s friction in coming back up into the red box. It’s going the wrong way (bottom to top).
There’s also the fact that the treatment has its headline in inverted text superimposed over an image — both techniques which, even alone, massively reduce readership.
However, there are clear problems with the control as well. Although all the text is in a single column, the copy is much poorer. The lack of specificity could well be the deciding factor — the treatment’s headline is far more compelling (concrete value, “your choice” etc).
There’s also the fact that the left-hand image draws the eye straight down the page into what look like quite unrelated numbered options. Potentially bypassing the signup form altogether.
I’m going to pick the treatment for the headline (should have the greatest effect on conversions), improved copy, and reduced distractions. But I’m not going to be surprised if this is a surprise underdog win.

Why B2B rocks and B2C sucks?

Short answer: Because B2B is (usually) customer-centric and B2C is (mostly) campaign-centric.

You’ll hardly find any B2B marketing guy uttering these words - “page views”, “time spent on site”, “campaign optimization”... Most of the time they talk about customers, their lifetime values, and their relationship with brands; it’s amazing; it’s almost always about customers.

B2C on the other hand is always about campaigns, products, PRs, likes, hits, time-spent, whatever… a self-created mess that takes away the focus from where it should really be – “on customers”.

I’m not sure why it’s this way. It doesn’t have to be. It's certainly not technology. We already have the tech. to manage B2C marketing the way we manage B2B marketing and even if something’s missing, how difficult is it for somebody to build a B2C version of Hubspot/Whatsnexx?

One-Minute Guide to Direct Marketing Data Analysis

Are you done solving usability problems (in the name of marketing) on your website? Feel like doing some real (customer) data analysis? Here's a list of things you can start focusing on right away. Found it in the book "Commonsense Direct & Digital Marketing"; the list is by Jon Epstein of r-cubed.

  1. Define the ends exactly - only then talk data
  2. Find the 20% of effort that delivers 80% of results
  3. Never talk about the average customers
  4. Deselect your worst customers
  5. Contact your best customers more often
  6. Spend more on new customers and new prospects
  7. Ask your best enquirers and lapsers to come back
  8. Sell when your customer is ready to buy
  9. Keep and use your contact history with individuals
  10. Use silent controls to prove real incremental impact
  11. Ruthlessly keep demanding "why did they do that?"

Cohort Analysis - Big Deal!!

Check out these two interesting/amusing posts: “Cohort Analysis – Measuring engagement over time” and “Measuring engagement over time”.

If I’m getting it right, “engagement” IS what happens over time, so, “measuring engagement over time” is sort of superfluous because “over time” is part of the definition of “engagement” itself. There’s no other way of measuring engagement; at least the engagement that translates into business value.

Check these snippets from the first link:
“One reason why the cohort analysis is valuable is because it helps to separate growth metrics from engagement metrics. “
“This is important because growth can easily mask engagement problems.”
“In reality, however, it may be that people stop being engaged after a couple of weeks on the service. “


Looks like another case of UX/WA folks discovering something that Direct/Database marketing people have known for decadesJ

If you found those posts on “cohort analysis” interesting and useful, do yourself a favour and read the bible on this topic - it’s here (Framework for Engagement & Measuring Engagement Series) and send a "thank you" note to Jim

What’s wrong with social shopping? Part-II

Part-1 is here. So, I had a first hand experience with an Indian clone of Groupon recently. Received a whopping 50% off at a new restaurant but the entire experience was like one of those end-of-season sale where you get 80% off on all items except the ones that are really worth buying!!

I’m not sure how it’s being done in other countries but I think the businesses that use Groupon-like service should understand the difference between using it as a marketing channel and/or as a sales channel. If you just want to get rid of your old/useless inventory, then maybe Groupons are not the right vehicles. I was under the impression that you’d use Groupons (as a marketing vehicle) to introduce your best stuff to people (who otherwise may not have walked into your store); with the belief that, they’d get impressed with you and will become regular/loyal customers. I bet your not making any profit when you offer 70% off, so, you do really need people to come back. Isn’t that the whole point?

Well, I don’t think that’s happening.