Archive for February, 2012
While quantum physics deals with discrete, indivisible units of energy called quanta, marketing programs deal with concrete, divisible units of measurements called metrics. It’s a rabbit hole all folks in marketing need to know how to go down to pull out what they need.
No organization can continue to spend on a marketing effort without knowing what’s working and what’s not. Measuring marketing program successes or product launch failures give organizations the metrics to control marketing spend so they can continue to invest in what’s working and adjust what’s not.
Data-driven marketing improves efficiency and effectiveness of marketing expenditures across the spectrum of marketing activities from branding and awareness, lead generation to loyalty, and new product launch to Internet marketing. In 1990 Gary Lilien and Philip Kotler came up with the ROMI marketing model (return on marketing investment). The term became main stream in 2002 when Gary Powell wrote the book, The Return on Marketing Investment.
The formula for ROMI is:
[Incremental Revenue Attributable to Marketing ($) * Contribution Margin (%) - Marketing Spending ($)] /Marketing Spending ($)
Still confused about how to calculate ROMI? Microsoft Office now has a ROMI template to assist you in this calculation.
New Marketing Metrics
As marketing campaigns have become more technologically sophisticated and digitally measurable so have the metrics to prove or disprove them. Four new marketing metrics are being touted in the book, Data-Driven Marketing, which was voted the best marketing book in 2011 by the American Marketing Association.
To shine in the eyes of your CEO and CFO, integrate these metrics and formulas into your day-to-day marketing practices.
1. Profit – calculated by taking gross sales minus expenses (standard on a P&L statement)
2. Net Profit Value (NPV) — NPV is a way to decide whether or not to invest in a project by looking at the projected cash inflow and outflow. See the example below.
Suppose we’d like to make 10% profit on a three-year project that will initially cost $10,000.
a) In the first year, we expect to make $3,000
b) In the second year, we expect to make $4,300
c) In the third year, we expect to make $5,800
So the NPV is $3,100 because your company would make $13,100 off a $10,000 investment.
3. Internal Rate of Return (IRR) — Determines the value of cash returns with cash invested. Considers the application of compound interest factors. Here’s the formula:
The formula is n periodic cash flow Σ _______________ = investment amount t = 1 (1 + i) t where i = internal rate of return t = each time interval n = total time intervals Σ = summation
An example would be if you received $3,000 per year for 5 years on a $10,000 investment. The internal rate of return was about 15%.
4. Payback – Helps you determine the costs of the project, above what you would otherwise be expending if you hadn’t done the project at all. For a detailed guide of how determine the payback follow Money’s guide to determining project payback.
Tracking results is really nothing new, but the formulas have changed and perhaps gotten a bit more sophisticated. Instead of looking at tracking as a chore; change your thought process that these elements are key indicators of your success. Remember the quote from Bill Hewlett cofounder of Hewlett-Packard, “You cannot manage what you cannot measure, and what gets measured gets done.”
Now we can hedge our bets by nurturing our customers in thorough steps and tracking how far down the rabbit’s hole they go via QR Codes®, landing pages, PURLs, coupons cashed, tickets purchased, donations given, and on, and on, and on.
Don’t let the power of numbers and formulas scare you. It’s not quantum physics, it’s just good business.
Want to start the New Year with a spike in business, web traffic, or sales? You can unequivocally without fail by mailing postcards. Do it now by following some simple guidelines and you can generate all the sales leads you want.
In today’s high tech world where social media campaigns and multi-channel campaigns that sometimes can take months to develop are the rage, we forget low-tech postcards still work every time when executed correctly.
The father of advertising, David Ogilvy, calls postcards his secret weapon in his book, Ogilvy on Advertising. After just a few months in advertising, a client on a limited budget tested Ogilvy’s wherewithal at the ripe age of 37. This client walked into Ogilvy’s London agency wanting to advertise the opening of his hotel with just $500 to spend. Ogilvy bought $500 worth of postcards and sent invitations to everybody he found in the local telephone directory. The hotel opened with a full house. “I had tasted blood”, says Ogilvy in his Confessions.
Factor in these 10 must dos into your postcard mailing and your phone will ring as well as your company’s cash register:
- A clear, bold headline
- A graphic that supports the message
- Color that pops
- Subheads that lead into text
- Benefits vs. features
- A compelling, irresistible offer
- Your company logo (not too big now)
- A call to action
- Contact information (yes it can include a QR code)
- Return address
As for industry averages, the DMA analyzed 1,122 industry-specific campaigns and determined that the average response rate for direct mail was 2.61%. Postcard production coordinators see rates higher than 5% with a well directed postcard to send people to the web. Retail stores and catalogs can pull ROI as high as 7% with postcards.
Want to get really jazzed about the power per penny of a postcard? Yale Appliance mailed postcards at a cost of $8,000 and pocketed $2.3 million in sales in one-day. Pull out your Mac book and get your postcard campaign cooking.
Know your target audience, pull your list, design a simple postcard with a powerful graphic and call to action and start the New Year off by generating goodwill and good cash flow. Postcards are direct mail marketers best kept secret.
Trigger marketing is more about being a good dance partner rather than the dance invitation graphic designer. You have to get on the floor with the prospect and be a good follower so you can react when they decide to twirl or dip (i.e. pick up the phone, swipe their credit card, or drive off the lot with the new sports car).
As marketers, we’ve always been good at figuring out what to sell and how to sell it. Advertising guru Les Wunderman says, “What we often can’t figure out is when to sell.”
Precision timing is critical in an artillery strike, the New Year’s Eve ball drop, aerial acrobatics, and a lead-nurturing campaign. A trigger is a flag that cues you to send a customer an email, coupon, whitepaper, or presentation invitation at just the optimal point in time – precisely when the customer needs it to make a decision.
Yes, it takes work, trial and error, and recalibrations, but the value of trigger marketing is it delivers three to 10 times more returns to your marketing bottom line. “Triggers always work better than random outreach,” says Mail Print CEO Gina Danner. “Because you’re working in sync with their decision making process.”
Know Your Customers’ Triggers
CRM News cites six types of marketing triggers that you can use to automate your marketing campaign. By knowing, documenting and putting these triggers into a system to enable your to do market automation, you’ll be ahead of the game.
- Customer life events- Birthdays, weddings, new baby and a new car purchase are all customer events that could merit an action or message on your company’s part based on your product or service. Automating the timing of these life events is critical.
- Transaction behaviors- Does a customers credit card purchase show that they’re in the middle of a home remodel? Does their declining credit score cue you to sell them on credit counseling or credit repair services?
- Online behaviors- Is your customer hot on the trail for information that signals a future purchase? Have they hit your insurance website, downloaded a life insurance eBook, or interacted on a social network?
- Expiration Triggers- Does your product or service have a maturity date that can be used to signal a context –sensitive offer or message from a lending institution?
- Credit Bureau Triggers- If a customer has a mortgage with a bank and the bank sees them looking for other credit lending solutions it could trigger a loyalty program or retention call.
- External Triggers- Changes in market or environmental conditions may indicate it’s time to kick in a campaign to protect your company’s reputation and environmental stewardship.
Don’t Be That Salesperson
You know you hate the pushy store clerk who runs up to you as soon as you walk in the door. He/she further creates a relationship gap by blurting out all the items on sale without even asking what you came in for. She makes you want to run for the exit door by telling you even more irrelevant store information you didn’t request.
Don’t be that person when you are nurturing relationships through your sales funnel. Push marketing is out, trigger marketing is in.
Hang back in the corner instead and be an expert observer ready to answer questions or provide more information when your customer asks for it. Listen and watch for virtual body language that signals interest and the need for assistance. Let the customer raise their hand before addressing their needs.
It’s respectful, fruitful, and the new way of doing business in this customer-driven world.