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. “

Hmm…

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.  

Media Weight & Engagement

Why did nobody talk about engagement in the 70s and 80s? Agreed, the media is more participatory today and maybe people seek engagement. But is that all? I think the lack of weight in emerging digital media is an equally important reason for the increasing importance of "engagement" in marketing. The weight of non-linear media like web comes nowhere close to what TV and print had. Marketers cannot capture people’s mindshare using the old media model on digital media – most display ads don’t work; at least not for branding and awareness purposes.

I wouldn't be surprised if somebody told me that this entire idea of "engagement" was created by some smart marketer to hack the weight problem with web!!  If I can’t force people to pay attention to my ads on the internet, let’s find a work-around – let’s engage themJ. let's use "engagement" to add weight to the web media, so that it can at least strive to become as effective as TV and prints were…during the ice age.

However, engagement through ads on web is probably not going to work. Jim makes an interesting point here (Online, the Web Site is the Ad) on why display ad banners on web can never be like TV or print ads; they are just navigational elements; the real ad is the destination (your website, micro-site or FB page). That’s the place where you should pay most attention. How you manage and measure the digital properties you own decides how effective your marketing/enagement is going to be…buying display ad banners is just a small piece of the bigger puzzle.

Read more about it on Jim’s blog and wikipedia:

Conversion depends on “who you market to”!

Here’s a typical eCommerce scenario - 100 people visit your website but only 5 of them finally convert. Now you have two marketing options:

  1. You can spend a lot of money trying to get back people who did not convert, or
  2. You can dig deeper, find what’s common among the 5 who converted and then go after their ilk
Also for #2, if you are really smart, you can isolate the ones who show tendencies of becoming repeat buyers and put your might behind them.

Of course you can/should do both but if your marketing budget is limited (when is it not?), strategy#2 should take precedence. If there are people who are willing (or can be easily persuaded) to do business with you without demanding that you change your product/service/website, why not pursue them first?

(I’m assuming that your website/product/service is at least decent. If you have serious problems there then no amount of consumer targeting will work (in the long run)).

For a very long time, I found it hard to believe that there could be something very intrinsic (pre-disposition) to customers that’d make them do/not do business with you. I believed if you made the right product and marketed it the right way, most of your target prospects would do business with you. Apparently, that’s not true - it’s an established fact that regardless of how good you are, many prospects will choose not do business with you. Also, most of those who do become your customers will leave you over time and your going to have to (1) find new customers and (2) try prolonging the dis-engagement of your existing customers as much as you profitably can. The marketing ROI in both of these pursuits can be drastically improved if you carefully choose who you are going to spend your marketing money on. 

This is the Best Digital Marketing Strategy Framework!!

[Updated later: Don't forget to download the recently released eBook based on this framework from CustomerThink website here]


I didn’t want to just put a link to this super framework on my twitter stream and lose it, so, I’m copying it here for future reference. This framework was developed by Akin Arikan a few months back with inspiration/support from Jim Sterne, Eisenberg brothers, Yuchun Lee, MindofMarketing.net and Digitas. I think it’s absolutely cool. If you’ve never struggled defining a framework for digital marketing, you’ll probably miss the nuances in the diagram below and may pass it on as another fancy McKinsey type but let me tell you that there’s no other framework (google it) that packs so much info in one place and tells you all you need to know about your digital strategy at a high level. No rocket science really...and you probably already know all of it but what you perhaps didn't know was that that's all there is to know:-). 


End-of-social or end-of-the-beginning-of-social?


I think Roger McNamee seems to be confused between what is the “end-of-the-beginning-of-social” with the “end-of-social”. Yes, we may not need any new social networks today but who said social was only about social networks? When Tim Berners-Lee, the creator of the web, was asked why he created it; he said – “The web is more a social creation than a technical one. I designed it for a social effect — to help people work together — and not as a technical toy.

So, you see, social is the super-glue of the internet and it’s not going away!

We are simply moving to a new phase of social maturity where we may not need new social networks but we'd be spending years…maybe decades redefining all our business processes (and society and governments...pretty much everything) to make them more social (more transparent...more accountable...more fun and more human) - that's social for you.

Ironically, Roger was the guy who asked Zuckergerb not to sell FB to Google when Google offerred around a billion dollars for FB in 2006. I don't want to conjure up a conspiracy theory here but is Roger afraid of his investments in FB now that G+ is getting traction? Maybe he doesn't want too many players in social business!!

Rethinking Segmentation!!

If averages are useless and site-wide KPIs thwart real issues from surfacing on executive dashboards; and if your analytics expert gets to keep his job only because once in a while he can drill down and segment your data across hundreds of dimensions to tell you what’s going on, then maybe there’s something wrong with the entire approach itself; perhaps all your KPIs should only be seen in some actionable contextual segments.



Why content curation is over-rated ?

I really don’t know what’s the big deal about paper.li or scoop.it or 10s of other content curation platforms! As a user, what'd you value more? paper.li (curation) or wikipedia (collaboration)?

I think content curation as in what you see in paper.li or scoop.it or even Alltop is grossly over-rated!! Where’s the value add? What I get is a list of links - sometimes relevant but mostly useless. If content curation tools were supposed to solve my information overload problems, I’d say paper.li is certainly not making the cut. Now compare this to Wikipedia (a collaborative effort), where some people actually take the responsibility of going through a number articles/literature and offer me something that’s coherent and easy to digest. That’s a real value add. Just crawling the web for keywords and getting a list of loosely connected articles in the name content curation doesn’t add any value to anyone. 

Purchase Funnel vs. Customer Lifecycle

Ok, so, I’m not the only ignorant guy around, who’s confused about seemingly marketing 101ish concepts like - purchase funnel and customer lifecycle. In a recently published Forrester report “Make the switch to customer lifecycle”, the author Steve Noble says:

“The customer life cycle provides a better explanation of modern marketing than does the traditional marketing funnel, but most marketers have not yet moved their organizations to the customer life cycle. Problems with the traditional marketing funnel are quite visible, but the model is pervasive and entrenched, which inhibits change. To manage the necessary shift, marketers should start small and ask, “Where is the customer in our marketing effort?” From this base, they can gradually shift their entire marketing plan to the customer life-cycle model. As they progress, they must guide a process that involves mobilizing the three main marketing resources: people, tools, and agencies. To maximize momentum from the start, marketers should begin with steps that have the highest chance of success and/or the greatest business impact.”

He quotes 3 examples of why/how this is happening:

3 Pillars of Digital Business!!


Depending on where you are coming from, this may be so obvious to you that you’d wonder why anybody bothered writing it down; but it doesn’t hurt, does it? I think at least the notes (yellow) will be useful; notes are either sub-topics or references to what I believe are key resources for the topics. 

More traditional concepts such as marketing, positioning, pricing etc. apply everywhere, so, I’ve not mentioned them here. These pillars are more specific to digital business (though any interactive B2C business can benefit from these ideas). Hope it helps!!


Why “Social CRM” should be called “Social CEM”?

[Update (30-June-2011): There's another more insightful article written by Bob Thomson, CEO of CustomerThink, on this topic that you may want to check out - http://bit.ly/kKBlAK]


CRM essentially represents a transactional mindset. People who get CRM (a huge majority) generally have tough time getting CEM (customer experience management); it’s also one of the reasons why CEM isn’t as popular as CRM is but that doesn’t mean CEM is not as useful or as important. In fact, many studies have shown that managing/understanding customer experience is a more effective strategy for inspiring loyalty than just analysing transaction data from CRM.

In the old days, measuring experience was a challenge but things have changed now. Using social media monitoring tools or web analytics tools (e.g Tealeaf), you can measure customer experience to fairly sophisticated levels. The focus of CEM is experience (interactions), which is fundamentally different from transactions (CRM) in both how it is measured (time, volume) and how it is used (interactivity, designing experiences).

Great, so you’ll send us actionable (web/social) insights every week?

Well, if you have been living under a rock, every piece of web/social analytics that we show you will look like an actionable insight. “Delivering insights” is really really contextual folks!! I’ve been seriously thinking of a new name for our “insights delivery services” (suggestions?).

Also, if by looking at a web/social analytics report, you get a feeling that you are in control of things and that no immediate actions are required – then congratulations – you’ve been doing a great job!! Of course, it doesn’t mean you don’t need analytics anymore. One part of any analytics service is similar to an insurance (that helps you avoid/deal with surprises), it’s not always meant to deliver insights; especially if you’ve been doing analytics for a while and have taken strategic actions to fix things. In fact, if after 2 years of web/social analytics, you are still seeing huge “insights” in every report, then something’s wrong somewhere. Perhaps your “insights delivery provider” is playing tricks with you; you know, like Microsoft removing 25% features before a windows release only to add them back in the next release!!

So how exactly do you define Engagement & Customer Lifecycle?


I've spent days trying to understand the discussion about engagement that happened here. I’ve also read Drilling Down a couple of times but I still don’t seem to completely understand the meaning of engagement - I mean I do understand the part about realized value being different from potential value and why measuring the “likelihood of activity” is more important than measuring activity alone. I think I also see the point about “activity defines value” and “likelihood to continue defines engagement” but I know I’m missing something very basic... I do have a point to make here tho.

I think one of the reasons for this confusion is how customer lifecycle is defined in general and how Jim Novo and Regis McKenna define it. The general definition of customer lifecycle is based on AIDA  and is more inclined towards new customer acquisition; it’s about how a new customer goes through various stages of a purchase funnel before he makes a purchase. But for making a second purchase (for a similar product), I doubt if the customer would have to go through the entire decision cycle all over again. In this definition, the customer lifecycle is usually about a relatively shorter period of time that customer spends in the upper purchase funnel stages for making decisions.

Is Dimensional Hierarchy the Key to Web Analytics?

The process that a web analyst uses in developing a WA report and the process that a client manager uses while looking at a WA report are sort of diametrically opposite.

Someone looking at a WA report will probably always start with a KPI and then work downwards (using various dimensions for segmentation) to narrow down on specific items – for instance, if conversion (KPI) is decreasing, let’s look at various sources that are bringing us traffic; is there a specific persona that we are losing on? etc. etc.

On the other hand, a web analyst while developing a report will almost always start with dimensions and work upwards to KPIs –  five sources are bringing us traffic and our website has items to engage them, how do we measure (or define KPIs) for assessing the level of engagement and conversion etc. etc.

Is social the most independent behavioural variable?



When you want to predict how your consumers will behave in near future, you look at behavioural clues. From database marketing perspective the key behavioural variable is recency (mostly transactional recency).  Transactional recency may not be the most independent variable but it does encapsulate a lot of things and gives you a powerful variable to work with. In fact, for offline channels, recency is by and large the only predictive variable available. In online channels, especially your website, many behavioural clues get lost with call-to-actions (natural structure) of your website. Though the functionalism approach from Semphonic solves this problem to some extent, there’s only so much you can do; after all, your website cannot be completely fluid. Social, on the other hand is totally fluid. So, behavioural clues obtained from social media can be immensely powerful. Perhaps they represent the most unadulterated behavioural patterns of your consumers that you can ever lay your hands on. The problem, as you’d have guessed, lies in linking these social clues back to individual transactions; and we are not there yet!! But if we continue to work with social data at an aggregate level, we are certainly leaving at lot on table!!

In any case, I think, marketers searching for independent predictive behavioral variables will find reasonably good answers in social.

Looking at Social data from database marketing perspective!

Gary Angel in one of his blog posts alludes to an interesting aspect of using social data from database marketing perspective and I think it raises many intriguing questions.

First of all, if you have been following web analytics thought leadership for a while, you’d have noticed that there are 2 broad schools of thoughts in this space. On one hand you have people like Gary Angel, Jim Novo and Kevin Hillstrom et al. who come from solid database/direct marketing background and they see very insightful similarities in web analytics and database marketing analytics that others don’t. The other school of thought consists of people like Avinash Kaushik, Eric Peterson et al. who do not see much link between other fields and WA. Of course, the page and visitor level data from web analytics hasn’t traditionally lent itself to customer level data, so, those who’ve pursued WA as an entirely new field weren’t entirely wrong. Personally, after having extensively read Gary, Jim and Kevin, I think, it’d be stupid on the part of a web analyst to ignore the knowledge from established fields of direct/database marketing analytics, and more so when the technology to link visitor and customer level data is becoming a reality.

Measurement is the Strategy

(I know that's a lame title for a blog post but being a huge fan of Marshall McLuhan, I couldn't help it...I'm always looking for "x is y" around me...if you hate this piece, you'll abhor what I'm going to write next...."marketing is the product"..."customer is the business"...eh:-)


“you can't manage what you can't measure” is a bold statement but I think it still undersells “measurement” to people. There are certain aspects of measurement (marketing measurement to be precise)  that are so fundamental to your strategy that they actually decide what your strategy should be; and you can't possibly outsource this part to cheap data crunching analytics companies; but before I talk about that, consider this:
  • Do a Google search for contemporary marketing gurus/strategists and 9 times out of 10, you’ll end up with someone who’s actually a marketing measurement guru. Seriously, try it! I’m not kidding. And while you are at it, see if you can distinguish between a non-measurement-focus-marketing-guru and Deepak ChopraJ


Why measurement is so important for marketing today:
  • There are two parts to any kind of measurement (1) the act of measuring something and (2) deciding what to measure. The “act of measuring” has its own challenges like finding relevant data sources, integrating disparate data types/sources and the availability of tools for processing and visualizing data etc. etc. but these are mostly tactical things (though difficult).  “deciding what to measure” on the other hand is a more strategic/fundamental problem. Internet is full of marketing-measurement discussions about “act of measuring” but not too many people are taking about “what to measure”!
  • “Deciding what to measure” is what forces you to really evolve/refine your strategy. In fact, it could be an acid test that’d decide whether your strategy holds water or not.
  • I’m gonna go out on a limb here and say if you begin by “deciding what to measure” (in the context of your business) and then jump into strategy, you’d save money and have more success.

Deliver insights or Automate insights?

Those are two largely independent pursuits btw! If you want to deliver social insights by capturing social mentions from web and transforming/integrating the captured data with data from other systems, it can be done even without having a hi-fi technology infrastructure in place. In fact, we are so early in the social intelligence delivery game that justifying technology investments for "ERPing of social intelligence" is still a wishful dream; at least for those who want to use a generic off-the-shelf product in that space. We don't even have a decent social CRM product yet!! A better approach (at least for now) is to start small and then build custom technology solutions while leveraging stable off-the-shelf products from market.

Here's our vision for social intelligence program:













Why Walmart bought Kosmix?


What surprises me most is not that Kosmix got sold, but of all the companies in the world why did Walmart buy it? Social/web analytics companies are selling like hot cakes, with almost 2-3 acquisitions happening every couple of months in last 3 years (Twitter, Nokia, IBM are buying analytics companies in dozens) but most of these other acquisitions have been done by other technology companies (if not analytics companies). Last time I checked Walmart was supposed to be a retailer and they were hiring companies like Kosmix for work, not buying them. Does it mean social data is so important and promising for Walmart that it wants to keep of all of it in-house? (especially when there’s so much of it)? Are other large companies (with a lot of social customer data) going to follow suite (if they can afford it)?

Marketing Hypermetropia Part-2


[Update: I'm going to keep updating this post with links that deal with similar ideas:
1. Jeff Jarvis - New rule: Cover what you do best. Link to the rest]


It’s perfectly understandable that if a company doesn’t move in horizontal or vertical spaces surrounding its current business, then somebody else will seize that space. I’m not debating that question here.  What I’m trying to do here is – see if I can come up with some creative ways of making the expansion process more fruitful (and let me restrict myself to tech companies only). Essentially, I’m trying to answer 2 questions:

  1. Of all the tech companies that are trying to move in horizontal/vertical spaces, is there an underlying force that’s common to all of them? and,
  2. Can I use/adapt any contemporary frameworks/theories to help me make such decisions?

Marketing Hypermetropia

Have you noticed lately that everyone’s trying to get into everyone else’s business? Google is trying to become social (old story..I know), Facebook is trying to do what Foursquare and Groupon do. Microsoft is putting its might behind Bing…Apple tried to get into social networking with Ping (and failed)... digital agencies are doing technology companies’ job and technology companies are moving into management consulting space…This is what happens when companies take “marketing myopia” too seriously. Is there an answer to this madness?

Alan Mitchell in his book Right-Side up says:
"If I can buy a product by pointing my mobile phone at a bar code, then why shouldn't my telecom provider become a bank? If so, he may want to use an existing bank’s infrastructure to provide this service. The bank, however, may have different ideas. It may want to evolve towards a personal financial agent role, with the mobile phone as a key part of this one-to-one interactive service. 


And why don’t credit card companies use their incredible ability to aggregate consumer information evolve to become buying clubs on a vast scale? Instead of simply paying for big ticket items with your credit cared, order the item you want and let the credit card company aggregate demand.”

So, you see there's more to come :-) I think an answer to this puzzle can be found in the categorizations of companies that Alan describes in his book. He says all types of businesses can be classified into one of the following four new categories:

1. Infrastructure provider
2. Connector
3. Intellectual property creator
4. Passion Partner

I must say it's a very creative way of categorizing companies to address the problem described above. As long as you understand which category you want to belong to, you don’t have to try to be all things to all people!!

Each of these categories deserves a detailed description to make any sense. I'll cover that in my next post!!

Social Commerce is like Drive-thru


Really, if you come to think of it…isn’t social commerce much like drive thrus….What are these eCommerce kiosks on Facebook after all?  Facebook (in fact all of social media and maybe the entire web) is like your car. While you are driving, you wanna stay inside your car as much as possible…that’s why they built those drive-thrus.


I think we could come up with some interesting ideas by using this analogy. For instance, if you are taking your car to an unknown place, you’d prefer to have a GPS. I don’t think we have a GPS equivalent for social media, yet! Wouldn’t it be great if we could use a socialGPS to decide before adding somebody (known/unknown) who sends us a request on FB or LI or even to monitor our connections and see if we are in the right company?


The invention of car made our physical journey non-linear, which led business to rethink their customer acquisition strategies – people could live in far away places…so retail shop owners had to move beyond their a-retail-shop-near-every-train-station strategy. On similar lines, social media has made our information/decision journey non-linear; which btw is going have far more powerful consequences on businesses than what non-linear-physical-journey did!!

CX + UX + WA = True Customer-Centricity

Customer centricity is the underlying theme that runs across Customer Experience, User Experience and Web Analytics + all other related fields. However, all of these approaches look at customer-centricity from very different perspectives.
For instance, CX and UX, two similar sounding fields actually lie at two ends of experience continuum, whereas Web Analytics, depending on what you measure, can be used to assess user engagement at tactical level (UX) or to assess customer engagement at strategic level (CX) if combined with database and multi-channel marketing principles.

Traditionally customer experience consultants and user experience consultants have worked in silos. If you don’t agree with me, take a look at Strativity group (CX) and Adaptive Path (UX). You’ll hardly find anything common between their approaches and strategies except that both strive to build engaging customer-centric experiences!!

I’m convinced that a multi-disciplinary team with CX, UX and WA experts can do wonders in creating truly customer centric business.

Imagine what would happen if the following silos were removed:

CX
UX
WA
Understand business needs of customer
Understand visitor motivations
(Attitudinal)
Understand visitor actions
(Behavioral)
Marketing Data
Qualitative data
Quantitative data
Business Focus
Visitor/user Focused
Data focused
Deal with small to medium scale data sets (market research)
Not trained to work with large datasets
Large data
Brand architectures, CX roadmap; business model redesign to keep customer at centre
Visitor/user personas, wireframes,
Scorecards, KPIs, web analysis
Business, marketing, finance
Sociology, psychology, design
Stats, data mining, CRM



Information Architecture for Gov2.0

Besides all the other UX related things, if there’s one thing that Gov2.0 related initiatives really-truly-madly-urgently need, it’s Information Architecture. Almost all Gov2.0 related digital initiatives I’ve ever seen can benefit from Information architecture. Take for instance data.gov or data.gov.au – you don’t have to be a UX expert to see that these sites were designed by IT folks to be consumed by IT folks (even though they did not intend it to be that way).

data.gov talks about “semantic web”, “linked open data” and “xml/rdf” etc. on it’s home page – can you beat that? I dunno but if this website was created to engage regular citizens then I doubt if it’s really serving its intended purpose. The labels, the vocabulary, taxonomy… whatever, nothing seems to have been designed by keeping ordinary citizens in mind – so much for user-centered-design!! huh.


On the similar note, during a recent Social Business Summit, Karen McGrane from Bond Art + Science discussed how “UX will make or break social business”.  I believe, this is an incredibly insightful observation and it’s high time we moved beyond the global gyan (5C’s and 4P’s of social business) and started doing something about creating relevant social experiences for users. This is more important for Gov2.0 initiatives because unlike other web 2.0 related things, there's no obvious incentive for people to engage with govt. agencies. Is it fun? Is it useful? Can I make a difference? Hell, I don’t event understand what they are talking on their websites…

Shouldn't we design our Gov2.0 initiatives in a way that regular citizens would actually want to use?

What’s wrong with social shopping?



Two things:
  • They either offer discounts to people who would have bought anyways.
  • Or, they sell to deal-seekers, who always wait for deals before buying stuff; basically customers with permanent negative lifetime values.

Hell, as Groupon becomes more popular, even regular people are becoming deal-seekers!!

In a recent study (How effective are Groupon promotions for businesses? Sept-2010, Prof. Utpal Dholakia, Rice University), 42% businesses who used Groupon said they would not want to use such services again. That’s a big red herring. Not sure why Groupon is still valued at $ 6 billion.

It seems Groupon and other social shopping sites are adding some value to new and small businesses that are yet to establish their brands and are seeking new customers.

The study suggests three interesting ideas to make services like Groupon more useful for businesses:
  • Reward relational behaviours of consumers over transactional behaviours. Instead of offering $60 food for $30, offer $10 off on each of customer’s next three visits.
  • Instead of offering a discount on a consumer’s total bill, offer specific discounts on various items and give businesses opportunity to cross-sell.
  • Help businesses use unutilized capacity through promotion offers or sell unpopular items. A yoga studio can offer classes on a weekday afternoon, for example.

I think social shopping needs to learn a lot from well established database marketing principles or we’d just be making mistakes and reinventing wheels. Kevin Hillstrom and Jim Novo have some very interesting things to say about how database and multichannel marketing principles can be used in social/digital world.


Part-II is here.