Databases / Analytics
Knowledge and insights relating to the development, implementation and management of customer information, databases, analytics and related technologies are explored here. There is a lot of expertise in his area, particularly, from CMA members.
Analytics in Good Times and Bad
“It was the best of times, it was the worst of times” – for data analytics that is. When times are good, some marketers seem less concerned about the efficiency of their marketing investments and will target just about anyone who qualifies for a promotion. But when times are bad, and budgets are being aggressively managed, there is usually renewed interest in making these budgets work as hard as they can. That’s when data analytics becomes a marketer’s new best friend. Data analytics can help marketers justify their investments to management and help them to make smart decisions about where to cost effectively cut back on programs to minimize the impact. An effective predictive modelling infrastructure aligned with business objectives can quickly and relatively painlessly identify where to trim budgets, if required.
Even better, effective post-campaign tracking linked to these suites of models can make ROMI-based decisions even easier to make. Accurate attribution of marketing investments combined with targeting tools like predictive models are some of the best strategic tools marketers can use to effectively manage their budgets. These can help marketers decide between potentially competing marketing investments by program or channel and defend the business case for their programs.
However, there is no reason that the value of this approach needs to be limited to bad economic periods. Just like any other business, marketers should be looking to optimize the return on their investments through both good and bad periods. Sometimes the business priorities may change (acquisition vs. retention, revenue vs. profit) but every marketer should be aiming to generate a positive return for their business, regardless. A well designed suite of analytical models and tracking tools gives marketers the flexibility to adjust to these changing priorities without needing to change the overall process.
So don’t be afraid to engage your pocket protector wearing data analytics team (I’m allowed to say that because I’m one of them) in good times and in bad. We can help you spend your budget more effectively whether it’s big or small.
Mar. 23 2009 09:00 AM
Posted by CMA
on behalf of
Paul Tyndall
Comments 1 posted
Tell me I’m wrong!
The deeper we get into this cyclical (yes, Dorothy, there still is an economic cycle) recession, the more bleating I hear about changed paradigms, new economies, death of TV, death of print, and so on.
On friday afternoon I packed my brief case to go home for the weekend. I had trouble stuffing it full of the “dead medium” reading material that I receive just about every week (Marketing, Strategy, Contact Management, Applied Arts magazine, VUE (MRIA Magazine), Argyle (A lifestyle quarterly), Backbone (Business, Technology, Lifestyle), Driven (Fashion, Automobiles, Electronics, Fiction, Travel, Men’s Lifestyle), Report on Business Magazine, Midtown Post, not to mention three daily newspapers for Friday(I try to avoid the Sun on Friday). On Saturday around two hundred pages of newspaper landed on my doorstep (and I only read the Post and the Star on Saturday), and the list seems never to end.
Every one of these gems is supported to varying degrees by advertisers.
I watched the news on TV on Friday evening (twice, actually), 60 Minutes on Sunday, several Sunday Morning news shows, and, I confess, a rerun of Boston Legal on CITY. All of these are supported by advertisers. When I look out of my urban window I see, if it’s not snowing, billboards, superboards, backlit boards. All supported by advertisers. I took the subway to the movies last night and between the two I was barraged by more ads than I could count…I could go on forever, but I think you get the point.
New paradigm?
Talking of which, the Facebook site for “Advertising Week” in November, had, at its peak, 274 members: 4 news posts all describing the event; three posts to the “discussion board” all of them appearing to be ads for unrelated products and 7 posts on the wall, all of which seem to be shills posted by the organizers. The group was started at least two months ahead of the event. All of this, and Facebook is a social site, not a business site.
Which reminds me. The linked in site for the same event achieved 41 members, many of whom were speakers or presenters at the event.
If somebody doesn’t call the “experts” on their expertise soon, there will be seriously disruptive results. The marketing communication and persuasion industry is in the middle of a Tornado of cloudlike idiocy, propagated by people who should know better! So far, this has led to an obsession about measurement that will destroy strategic and advertising creativity, but not lead to any increase in business. Brand loyalty (in which, as you know, I hardly believe), or brand loyal-like behavior (in which I totally believe) will be reduced to short term bribery, and profitability and margins will be shot to hell. But mostly, we will all live in a dull, HTML driven world of bland pantone numbers, formulated letters making up “tested” sentences to "drive" immediate, "trackable", on-line behavior that matches the results predicted by the "modeling" programs..
Call me a Luddite, or anything else you want. But before you do that, prove to me that I’m wrong.
Jan. 13 2009 09:00 AM
Posted by Laurence Bernstein
Comments 1 posted
From the What to the Why: Understanding Web Analytics on a More Cerebral Level
Most Web analytic tools available today -- both paid (Omniture, Core Metrics etc) and free (Google Analytics) -- provide functionality to let you see what customers are doing on your site. These tools allow you to understand how customers are getting to your site (referral reports), where customers are roaming on your site (next page or previous page flows), and even where you are losing customers (fallout reports).
All of these products are great at telling you "what" the customer is doing on your site. However, it’s up to the marketer to figure out "why" they are doing it. Sometimes it’s easy. Just by looking at fallout (where the customer abandoned their path), you can begin to hypothesize the usability improvements that might be required. Unfortunately, after a few iterations, you may still be left guessing..
To understand the "why", marketers in all areas of business have traditionally employed focus groups as a key way to learn more about consumer behaviour and test new ideas. In my opinion, this has limited value for Web marketers looking to optimize their sites. While it is always interesting to watch consumers perform tasks and answer questions, the results of a focus group can be skewed due to the small audience that is interviewed, and also by the quality and impartiality of the script for the test itself.
In the past year, it seems more and more sites are measuring the "satisfaction" of the Web experience. I’m talking about those invitations to “answer a few questions” that are showing up on top sites. While it might be seen as an intrusion, the acceptance rate is remarkably high. Fact is, these marketers are taking advantage of a tremendous opportunity: They have an engaged online audience that is willing to talk about their site experience, isolate hot spots in need of remedy, and as a result, put the business’s own assumptions to the test.
Online customer satisfaction mechanisms provides the ability to:
1: Measure if your Web experience meets consumer needs.
2: Provide insights into "why" customers might be dropping off.
3: Understand future behaviours. Will the customer come back or recommend the site to other prospective customers? It’s bedrock stuff; the whole raison d’etre for any Web site.
The top online customer satisfaction companies, and their tools, are quite sophisticated. They go well beyond capturing customer verbatim insights. They have the ability to generate satisfaction scores across numerous site characteristics, benchmark against other sites, and pinpoint exactly where the most meaningful ROI opportunities exist for improvements. How? You can do so by asking customers to score their experience, and then cross-tabulating those scores with verbatim comments. It’s a rich vein of voice-of-the-customer intelligence, and in combination with more quantitative data from an Omniture or a Google analytics, can take the guess work out of understanding if your navigation, or content, or site performance, or task-related steps, or (pick one!) are passing muster with your visitors. You would be surprised how many customers are prepared to take the time to respond and provide constructive insights. Needless to say, this information is gold!
Measuring the satisfaction of your website adds perspective, some of the intangible value that your Website offers. Let’s say you’re not an e-commerce site, but you are heavily used by prospects seeking product research information. Customer satisfaction tools can help you understand if you were successful, if you are making a positive impact on brand, and if you are bringing the visitor closer to a purchase decision. Of course, if you are e-commerce enabled, you may also learn whether customers are running into barriers when trying to complete a purchase.
A satisfaction score doesn’t have to be isolated to the Website itself. It is also impacted by the overall satisfaction the customer has with your brand, your call centre or bricks and mortar operations. Learning and differentiating the specific activities offline that are impacting satisfaction will bring valuable information back into the organization. In one case in my own company, we discovered that customers were unclear how to reach us. By doing some research and partnering across channels, we created an online solution with more detail about business hours, key phone numbers and email addresses, these complaints dropped significantly.
I encourage you to investigate the tools on the market, ranging from free (4Q), to commercial (Foresee Results) and find the right fit for you. In my own experience, the “why” has taken on extra importance this year as we strive to improve our site. The information we have gathered from our customers has influenced our agenda, and led to improvements. It can for you too.
Other Reference posts on Web Analytics:
Your Website’s Success—Beyond Online
3 simple steps to analyzing any online campaign
If you are already using satisfaction as a measurement, comment on this post--- how do you use it and what other ways it has helped you?
Oct. 20 2008 09:00 AM
Posted by CMA
on behalf of
Parth Shukla & Hugh Stuart
at Bell
Comments 0 posted
Measurement Help is on the Way
With increased discussion this year around traditional marketers shifting media budgets online, what remains to be seen is how these marketers will measure their digital spending vis a vis their traditional marketing allocations. In the past, hesitation to shift budgets online has been largely attributed to a lack of commonly accepted ways to measure the impact of online efforts. Tools available to marketers today range from Web analytics programs, to control vs. test measurement, to the more complex Econometric or marketing mix models. Unfortunately, within marketing mix models, companies have continued to struggle with how to incorporate the results of their search, banner advertising, sponsorship, social media, and other interactive programs to establish a reasonable comparison.
It now appears that some progress on this exercise is finally being made. The "Marketing When Customer Equity Matters" article in the Harvard Business Review in May focused on Wachovia Financial's efforts to find an effective, data based method to make the company's marketing spend, including online, more accountable.
Going beyond measuring the short term impact of marketing spend on revenue or unit sales, Wachovia is exciting in that it successfully found a means to value customer equity and to compare everything from traditional to direct and digital media spends.
For those of us concentrating on helping mainly traditional marketers find value in the digital space, one can only hope that the Wachovia example is a sign that times are changing. It would be great to see further successful examples from industries beyond financial services coming to light over the next year - even better if Canadian marketers were driving some of these best in class studies. As the Wachovia article concludes, with the right models in place, marketing dollars spent in digital media can make the shift from being logical based on consumer habits and analytics to being comparable and quantifiable.
Jul. 07 2008 09:00 AM
Posted by CMA
on behalf of
Chantal Rossi Badia
Comments 3 posted
Does LTV even exist any more?
As a traditional Direct Marketer, I was raised in this business to focus on response, results and the bottom line. If you didn’t have a sense of a customer’s lifetime value – you were doing something wrong. At the risk of sounding outdated, CLTV was the catch-phrase of ‘the day’. Obviously, this is no longer the case. I know this because I’m still a direct marketer – but rooted much more in the online space. I said to a co-worker the other day: “Do we have a sense of the CLTV? It will make the response projections much more meaningful.” Not only did I get a blank stare in return, not even the client in question had this figure readily available.
So if not CLTV, what’s the new accepted standard of measurement online? We talk about click-throughs, unique visitors, conversion…but even these terms are meaningless outside of specific industries and without knowledge of the online offering. Is it an e-commerce site? Well then traffic and conversion are King. Is it a brand site just looking for consumer attention? If so, length of time on site and volume of user generated content may be relevant. Regardless, the evolution of the World Wide Web (in the form of Web 2.0) has brought about significant change to not only what we measure, but how we benchmark and classify ROI across the board.
So here is my own 2 cents based on constant banter and discussion around the topic of measuring truly interactive, two way online properties.
Instead of talking about CLTV as the be all and end all, we start thinking about results in a different light. Perhaps it is at times less tangible then what we grew up with in this industry, but still valuable in a marketplace that is constantly changing.
I call it E3: Exposure, Experience & Engagement.
Exposure…obviously, how many people hear about your site, visit the site, passively browse around your pages, etc. The starting point for any analysis and a critical measure that is a carry over from the traditional advertising days.
Experience…where we start to divert from days past. How many of those exposed to your site actually experienced your brand? Did they go deep in the site? Did they read product reviews? Did they view consumer generated videos? Did they link through to related properties? It’s exposure on caffeine.
Engagement…think active experience. Not just sitting in the audience but volunteering to be part of the show. Posing a question to an Ask and Answer forum, uploading your favourite tv commercial, ordering product, posting an article to your Facebook page. Engagement is difficult to achieve and getting more and more challenging as brands realize the need to truly connect with consumers in an honest, relevant and open manner. Without mentioning names, we’ve all heard the horror stories of big brands seeding comments in blogs and so forth. Engagement can’t be forced – it must connect to real consumer insights and answer the timeless question of “what’s in it for me?”
When analyzing online activity, it’s critical to look beyond session-based data as it only reveals a partial picture. By reviewing a multitude of variables from the passive (exposure) to the interested (experience) to the involved (engagement) – the value of your brand online begins to clear up – and reveal the new value in your customer.
So what’s the new CLTV? Is it E3? Maybe. Is it some other formula? Possibly. At this point, the only sure thing is that measurement will continue to evolve and it’s up to us Marketers to look for ways of showing the different dimensions of ROI.
Jul. 03 2008 10:53 AM
Posted by Robin Whalen
Comments 2 posted
3 Simple Steps to Analyzing any Online Campaign
At the end of an online campaign one often hears from media agencies that they ‘over delivered’ on the online impressions. That’s easy for traditional media buyers to understand and easy for agencies to sell. But a web campaign does not end at impressions nor at click throughs (this is where a little knowledge is dangerous).
To analyze the effectiveness of a web campaign, I suggest the use of a very basic funnel mechanism:
Attract: Track and measure the traffic from all media/tactics used.
Engage: Once traffic has arrived does it engage? Read your product info/whitepaper? Engage in a conversation or forum? View demos/videos?
Convert: Once the visitor has gained the necessary info, does he convert to an action? The action will depend on your objective and can range from subscribing to a newsletter, to ordering a product, to placing a call to a rep or paying a bill online.
Now put on your web analytics shades and look at the ‘over delivered’ impressions – what does it really mean?
Attract: Are the people who saw the impressions interested in your message, did they interact with the ad and/or click through? If so, how many and from where?
Measurement: Visits or Unique visitors.
Engage: Once they did click through, what did they do? Did they engage or just exit from the landing page as they were not ‘qualified’ traffic. This is where a little knowledge hurts. If you measure your success by CTR, it could be unqualified traffic drawn to your website under the wrong pretext.
Measurement: Product Views, Demo’s downloaded or form posts.
Convert: Of the traffic you received how many took the action you wanted them to take, from subscribing to your newsletter to calling in/going in-store for more info or buying it online?
Measurement: Online sales, leads generated or email subscriptions.
A good online campaign delivers on all 3 aspects and ultimately connects the right consumers to the right products and services. Your cost per conversion to action is the bottom-line financial measure which should become your benchmark.
A situation where the agency ‘under-delivers’ the impression would not be too bad IF--- it was more qualified traffic who engaged and at a higher percentage and/or bringing your overall cost per conversion lower.
Go ahead, change the conversations with your media agency and ask them to start measuring the whole funnel and your cost per conversion.
Jun. 02 2008 09:00 AM
Posted by CMA
on behalf of
Parth Shukla
Comments 1 posted
Managing the Explosion in Data
Every year or in some cases every day a new source of data is discovered or created that could be used for marketing and analytics. But how much is too much? Data Mining and/or Business Intelligence has been around for a long time but, now it seems to move into a whole dimension in the past few years. So what really is the difference between Business Intelligence and Data Mining?
There are also ongoing discussions around the new buzz word of "Real Time Analytics." What does it mean and how much data should be utilized in real time? What additional benefit does it provide and is it better then the traditional approaches? And with this explosion of data what is the better business model for Data Management....a centralized or distributed one?
If you have been wondering about the same thing, the Marketing Technology & Database Intelligence Council recently held am internal roundtable with a group of other experts to discuss these types of topics and it will be posted on the CMA website soon... so stay tuned.
May. 21 2008 09:00 AM
Posted by CMQ
on behalf of
Gayle Ramsay
Comments 0 posted
Leverage Your Data With 1-to-1
Let’s take a magic carpet ride through the space-time continuum.
Fast-forward ten years from now. Will anyone be doing mass advertising? Will there be any value in Television advertising, unless it’s targeted to each household or individual. The future of marketing can only be as good as the technology available, and considering where it’s at now; we’re in for some hardcore one-to-one marketing.
Right now, personalization is where TV was 40 years ago. Everybody knows it’s there, but no one quite knows what to do with it yet.
Early response rates on personalization have been very promising – three times the industry average, with many running higher – but there’s not enough of a track record to make accurate predictions. Marketers like to go with what works, and having an X factor can be intimidating. That enchanting unknown territory of “potential ROI” is like the land of OZ.
It seems like a lot of people are getting into personalization, including companies as diverse as Xerox and Canada Post. These companies offer complete conception through production one-to-one services. There are other companies such as Lift Agency that specialize in personalization and have been pulling in impressive results for clients such as Telus and Mercedes.
Personalized mailings aren’t in any way new. Variable print technology has been around for many years. But advancements in client databases and increasing awareness with one-to-one marketing is starting to perk up some ears to the idea of leveraging available data to really speak to customers in a way that resonates and promotes stronger relationships.
So if you have the data, why not use it?!
Apr. 25 2008 09:00 AM
Posted by Selina Jane Eckersall
Comments 1 posted
The Lump Left Over
A little while back Paul Tyndall (See: Why don't the same rules apply) asked the question about ROI calculations/justifications for new media, and by extension, marketing investments in general.
I think another question needing to be asked is how do we go about measuring the ROI of goodwill. Accounts don't do a good job of measuring goodwill . Its usually the balancing figure reflecting the difference between assets and liabilities on a balance sheet - not something with actual metrics behind it.
Walter Schuetze (former SEC Chief Accountant and FASB member) derisively characterizes reported goodwill as "the lump left over", at least according to this accounting blogger.
FASB:Summary of Statement No. 142
Goodwill and Other Intangible Assets (Issued 6/01)
"Analysts and other users of financial statements, as well as company managements, noted that intangible assets are an increasingly important economic resource for many entities and are an increasing proportion of the assets acquired in many transactions. As a result, better information about intangible assets was needed. Financial statement users also indicated that they did not regard goodwill amortization expense as being useful information in analyzing investments."
Leaving the accountants alone for a minute, it seems to me that whenever there is a customer acquisition program - the enterprise is more willing/prepared to invest in what it hopes will be the start of a long-ish profit stream than it is in re-investing in its brand. I say hopes - because there are no guarantees the brand overtures will yield any results and I also exclude the activities the brand engages in to solicit a sale..
Most brands face their problems later in life - when retention efforts require investment to bolster the brand for self supportive brand evolution reasons, for customer win-backs, to offset the competition's acquisition drives etc...
There are many different ways to come to terms with this issue - as it mostly resides in the realm of executive definition making. Having a precise enterprise-wide definition of what constitutes a goodwill investment is not in the final analysis important. What is important is taking the time to understand the desired impact the goodwill will have on your brand - but measuring the status quo is like counting angels on the head of a pin..
To determine the value of your goodwill investment - look to the forgone profit stream, and any traditional win-back costs as an upper end of the investment it is willing to make, or look at your average customer tenure and then value those who exceed that threshold. The point is you need to make the effort - if you believe there is value in retaining "that lump left over".
The real challenge comes with acting on those convictions - of using that investment as part of your brand retention program. I'm not talking about upsell/cross sell - but rather at those programs that help your customers FEEL your thanks for their patronage.See Rule # 13
By way of example I point out how one of the Telco's launched a holiday season email program inviting customers to play a game - where everyone had a chance to win some sort of prize.
(I ran a similar type of program back in my Lysol days - as part of a clean and win sweepstakes
Customers had to clean a dirt spot on the instore ad pad - which in most cases revealed a coupon value (remember everyone likes to win)
While I naturally don't have the Telco's results - I know from my experience - these types of thank you events are exceptionally powerful business and goodwill generators.
But they went a step further and sought to measure their impact - as I was recently asked to participate in an online survey - probing me with all sorts of questions regarding my brand affinities, likes/dislikes etc... .
Seems to me that goodwill is much more than just "the lump left over". Come to think of it - doesn't that description also apply to profit?
"Profit is the applause of your customers." Ken Blanchard
Mar. 12 2008 09:00 AM
Posted by Miro Slodki
Comments 2 posted
Why Don’t the Same Rules Apply?
Whenever new marketing technologies arrive, marketers often seem willing to dispense with the traditional metrics and ROI calculations. As email marketing arrived on the scene, marketers were so enamoured with the speed and low cost (more on that later!) that they forgot to see if it actually had a positive impact on the customer behaviour. Throwing the direct marketing rule book out the window, most proponents seemed happy enough to look at “open rates” and “click throughs” regardless of how this translated into something more tangible like sales, value or even, perish the thought, ROI.
But isn’t that what makes direct marketing so interesting in the first place, the ability to accurately quantify the actual impact on client value? The last few years have seen a move to make email marketing campaigns as measurable and accountable as more traditional direct marketing. However, in my experience, many still forego the basics like “control cells” and assign all purchases to the success of the campaign, as though no one would have bought the latest Britney single without receiving the e-newsletter promoting it.
New and potentially interesting technologies arrive on a daily basis providing an ever increasing set of channels in which to communicate and interact with clients and potential clients. Podcasting, Facebook, Blogging, Neural Implants (oh wait, that one hasn’t happened yet). However, as each one enters the marketers’ toolbox, there seems to be little effort put into how exactly are we going to measure it. Again people fall back on somewhat less interesting metrics such as the number of “members”, “posts” or “tags” something achieves. While those are indeed measurable, without better linkage to behaviour, there is no way to determine whether these investments in time, money and brand are generating a positive return for the company.
Back to the low cost issue. Yes, many of these technologies are relatively inexpensive and the time to delivery can be fast, however, they are definitely not free. There are still some hard costs in terms of dollars. But there are also soft opportunity costs related to the time spent by marketers regularly managing and updating a Facebook page versus working on other marketing opportunities. And perhaps the larger cost is the potential opportunity cost of flooding clients / prospects with a non-stop barrage of contacts from you. This may ultimately translate into decreased receptivity of other marketing messages, which would then have a much higher cost to the company.
I’m no Luddite, but I think that we need to continue to strive to find ways to apply the same rules of measurability that made direct marketing so successful in the first place to these new technologies as they arrive. This will help marketers prioritise their efforts and investments and identify which new tools actually can provide marketing value.
Mar. 04 2008 09:00 AM
Posted by CMA
on behalf of
Paul Tyndall
Comments 0 posted
Empowering Marketing Intelligence: It's Not Just About the Data
"If you're not going to make decisions, stop asking questions. If you're not going to take action, stop making decisions. If you're not measuring results, stop taking action.” (Rob Armstrong, Teradata)
On November 27th, the CMA's Marketing Technology and Database Intelligence Council held a highly informative session surrounding the challenges marketers are facing with the explosion of data analytics. If you couldn’t make it - here’s what you missed…
The key take-away from the morning was - Focus on the business, the process, the customer - technology is an enabler but the human element is critical to deriving intelligence and insights.
Each of the four speakers had their individual take on how to manage the ever-increasing explosion in data:
Greg Doufas of Rogers Cable is continuously testing the applicability of new analytical methods. As the analysis matures, it "grows up" and integrates into their business intelligence toolset. Each tool has its proper use and it's important to know where to draw the line. Knowing where to draw the line comes with experience. However, they don't focus on the data. They provide a continuous narrative about customers, working continuously to surface insights, not data.
Alioscha Leon of Microsoft Canada is part of a global analytics network striving to implement re-usable modules of analytics know-how, processes and technologies. They don't have one end-to-end solution that satisfies all countries. Instead, they have designed a business logic layer that facilitates the sharing of best practices and a data consumption portal with analytics and visualization tools.
Daymond Ling of CIBC stressed the importance of helping those who seek answers from analytics to ask really good questions, questions that the data can help answer. Business questions are often vague. Help the business re-phrase the question so that you can peel the answer back layer by layer. Don't fuss over tools or let tools be the focus - create something that may not be interesting but that is always useful.
Rob Armstrong of Teradata emphasized the need for integrated operational and strategic data management processes. Business users have to own data cleanliness, not IT. IT manages the process of moving the data around (they're plumbers, managing the pipes, the infrastructure) but business has to be the one who cares about data quality and cleanliness. The problems you are resolving should drive prioritization of analytics work, as well as what you're going to do with it.
A marketers charge is to draw from these insights quickly and with increased frequency. All the speakers highlighted the need to ask the right questions and prioritize the use of both human and technological resources. Technology is rapidly evolving but we need to be constantly vigilant about how a new piece of technology will address a given business need.
Dec. 13 2007 09:00 AM
Posted by CMA
on behalf of
June Li
Comments 0 posted
The Ultimate Decision
The Promise:
It came upon us as a promise, wrapped in the innocence of simplicity. The inner core of a brand captured miraculously in a simple question.
“How likely is it that you would recommend us to a friend or colleague.”
The Net Promoter Score was born. The brainchild of Fred Reichheld, a Bain & Co. Fellow and Dr. Laura Brooks of Satmetrix Systems. The sort of material that Harvard Business Review writes their cases about. In fact HBR did publish an article in Dec 2003 with the eye catching title “The one number you need to grow”. The equivalent of a viral campaign unfolded, supplemented with a book… global speaking engagements.
Just as a black hole, the simplicity drew everyone to it. The promise, incubated by field studies at 400 businesses (turns out to have been 50+ in the end) which held that if we managed our customers properly – our business would grow. To do so only required our focus on customers who are either our promoters (scoring you a 9 or 10), passives (scoring you a 7 or 8) or detractors (scoring you 6 or less). Wait a minute – that’s all our customers. Exactly, but we’ll get to that again at the conclusion.
The Formula: % of Promoters - % of Detractors = Net Promoter Score (NPS)
Therefore if 50% of your respondents were promoters and 20% were detractors – you netted out at a score of 30. The higher the score the better.
NPS we were told would accurately predict a company’s ability to impress customers, turn customers into advocates, and -- in turn -- become an indicator of potential business growth. Scientific proof that this simple metric was ultimately more powerful and meaningful than any other management theory about customer satisfaction, customer retention, passion, loyalty or …well anything. So simple even a CEO could follow it ;-^)
And so the market embraced the theory. From all corners of the world. Heavyweights like GE (Real Estate division) Philips, HSBC, IBM (Enterprise Content Management), LEGO, Enterprise Car Rental, Intuit, Schwabb, American Express, Microsoft and others.
A simple approach, developed by respected accreditted professionals, endorsed by a world class university adopted by companies. What’s so bad about any of this?
The Questions:
Cracks in the foundation started to develop because of the lack of support to the contentions. Namely that the NPS was not a strong predictor, that there was evidense of research bias in the support used to substantiate the NPS and that the ACSI was not uncorrelated with firm growth..
“We find no support for the claim that Net Promoter is the ‘single most reliable indicator of a company’s ability to grow.’ The clear implication is that managers have adopted the Net Promoter metric for tracking growth on the basis of the belief that solid science underpins the findings and that it is superior to other metrics. However, our research suggests that such presumptions are erroneous. The consequences are the potential misallocation of resources as a function of erroneous strategies guided by Net Promoter on firm performance, company value, and shareholder wealth.”
Source: Timothy Keiningham et al. July 2007 A Longitudinal Examination of Net Promoter and Firm Revenue Growth
Other studies, other experts, opinion leaders, bloggers (see below) added their voices to the boisterous cacophony – worthy of the NYSE trading floor on a black bear day.
Undaunted, NPS supporters countered (see below) with their own assertions the NPS being as good as more complex measures and for the most part avoiding any direct discussions surrounding the statistical annomalies brought forward by Keiningham.
In this quote, Dr. Masden acknowledges being part of the team at the London School of Economics that vetted the NPS Score and asserts its ongoing validity as a reliable method of linking customer loyalty to growth.
"As far as the current debate goes, anyone who has read the information being disseminated from the “anti-Net Promoter” camp quickly comes to the realisation that the one Net Promoter question is, at the very least, just as good as more complex proprietary measures, that are tough to translate to the average executive and employee. But that leaves me questioning: why are we hung up on the measurement? The real conversation needs to be about how to get an organisation to be customer-centric and what that can mean for a company’s future”
Source: Clickadvisor.com on Sept 17 Net Promoter: the ultimate debate on customer loyalty
The Stalemate:
There is too much of an industry and ‘cult’ established around the NPS for it to dissapear on the basis of the allegations laid against them. In defence and defiance they point out that we are all ultimately pursuing the same path. True.
One can argue that the NPS may have accelerated the customer centricity movement, the other important benefit is that in its simplicity it has refocussed the dialogue on using metrics which can be widely disseminated and easily understood. Well in the words of Tim Keiningham
“ I too believe that loyalty consultants and researchers have over-complicated the message (and the analyses) with more advanced statistics than it took to get the Apollo space missions to the moon. It makes it impossible for management to understand, communicate, and rally support. This is ridiculous!”
The Ultimate Decision:
Believe it or not up to this point was the easy part. The hard part is deciding for yourself what happens next.
Will there ever be one metric to fit all needs? Highly improbable – and any contenders will not be allowed to make unsubstantiated claims. Instead of waiting for the new simple metric, we must continue to move forward with as simplified a system we can devise, implement and gain compliance with.
There are many competing schools of thought (Customer Experience Management, CRM, Loyalty/Continuity, Value Drivers, Image, WoM) reflecting the different successful business models/brands in the market.
To understand which approach will work best for your brand you must identify three things:
1. who your profitable customers are
2. what kind of relationship your profitable customers wish to have with your brand
a.Share of Wallet: the traditional CRM-centric make me a compelling (price/promotional) offer and I’ll buy it from you (or perhaps your competitors) – a brand relationship centered on the transaction.
b.Share of Mind: the traditional marketing promotions/communications approach – focussing on the key value proposition – a rational based brand relationship.
c.Share of Heart: Customer Experience Management – How people feel about the brand experience. Experience seen as a price mitigator and continuity reinforcer – an emotion based brand relationship.
d.Share of Life: How customers see the brand as a longer term partner for their category requirements, solutions and corporate/sustainability responsibility – an ‘adult/mature’ brand relationship.
3. within the relationship type identify the activities the enterprise must do to instill the longer-term repeat purchase pattern it seeks.
The key in my opinion is instead of defining your brand as an advocate of a particular ‘school of thought’ and then trying to mold your customers to fit within that model, we must instead look and manage this from the customer’s perspective. Therefore come to recognize the ALL of these relationship types exist simultaneously among different groups of your customers. What and how you communicate will be best served by understanding the type of customer they are first and from there make the ultimate decision as to how to relate and evolve with your customers.
Cheers
Miro
Suggested Reading:
NPS Adovcates:
The Ultimate Question. Driving Good Profits and True Growth. Fred Reicheld
www.satmetrix.com
www.netpromoter.com
Dr. Laura Brooks’s – VP Satmetrix latest blog posting
The Satmetrix white paper describing the research
Research conducted by the London School of Economics
Dr. Marsden from Clickadvisor.com on Sept 17 Net Promoter: the ultimate debate on customer loyalty
NPS Contrarians
Loyalty Myths: Hyped Strategies That Will Put You Out of Business and Proven Tactics That Really Work, Tim Keiningham, Terry Varga, Lerzan Aksoy, Henri Wallard
A Longitudinal Examination of Net Promoter and Firm Revenue Growth
The Value of Different Customer Satisfaction and Loyalty Metrics in Predicting Customer Retention, Recommendation, and Share-of-Wallet
January 2007 Maritz Research White Paper
COLLOQUY magazine article
Nov. 01 2007 09:00 AM
Posted by Miro Slodki
Comments 1 posted
Technology as the Great Enabler of CRM Analytics
With CRM becoming the paramount philosophy of marketing in the 21st century, organizations are striving to develop processes which are compliant with this philosophy. Specifically within the area of CRM analytics, one of the constants is the need for information. In looking at information within CRM analytics, one could use the analogy of the human body . The human body requires food for the effective functioning of all its processes which is similar to the need for information amongst CRM analytics practitioners. Yet, food by itself is not sufficient as exercise and eating the right foods are the real keys to successful health. It is no different with CRM analytics as the successful practices require not just information(food) but the ability to use this information in a meaningful manner(exercise).
The use of technology is the great enabler for CRM analytics by allowing organizations to more effectively derive meaningful information and knowledge from raw data. What does this mean? For the more advanced user, we now have more robust tools. Advanced statistical techniques can be more easily applied alongside tools that more effectively process the data.. A more advanced user can examine more complex techniques while examining them with much larger volumes of data. For these type of users, they can continue to look at their traditional ways of analyzing data which required a high level of technical expertise usually involving some type of programming as well as exploring other tools which may offer additional statistical techniques or increased data processing capabilities.
Yet, the real win for technology within the CRM analytics arena is the ability to empower more people beyond just the advanced users as discussed above. An empowered environment permits a much broader perspective of a given problem since more people are able to analyze the data. Certainly, this broader and indeed more collective perspective may produce better solutions. But what is the caveat? Yes, indeed more people can analyze data but how deep is the understanding of the information. At the heart of any analysis resides the source data. Most of these new empowering technologies deal with the source data in canned programming modules where the analyst does not need to have a solid understanding of the data environment and all its nuances. More importantly, the analyst does not need to have an understanding of how to manipulate the data into a form where it can be analyzed. This limitation represents a loss of potential knowledge and information because in many cases it is this detailed knowledge of the data environment that can truly lead to a superior data solution. As in many business scenarios, the devil is in the details.
These new user empowerment technologies are certainly here to stay. But organizations also need to understand that the role of advanced analytics and the need for more technical human resources is equally important. In fact, in being able to juggle these two priorities of user empowerment and advanced analytics, one must be able to evaluate projects by the degree of data intensity that is required. For example, certain exercises and projects such as simple cross-tab reports require a less data intensive discipline while projects such as predictive models require a much more rigorous discipline with the data. Both cases involve analytics and both are equally important to the organization , yet it is the successful organization that can both increase user empowerment while providing a more focused approach towards its advanced analytics. The key to this success, though, is effective use of technology.
Oct. 10 2007 10:50 AM
Posted by Richard Boire
at CMA
Comments 2 posted
CMA eMarketing Professional Certificate Course Starts In One Month.
Quick reminder that the fall semester of the Canadian Marketing Association's eMarketing Professional Certificate Course is just one month away.
I have taken on the responsibility of instructing the course from Ken Schafer of Tucows and have also revamped the course materials, updating the outstanding sessions originally crafted by Ken.
The course covers web site best practices, usability, social media, email, search, eCommerce, privacy, analytics and online advertising with practical examples, case studies and stimulating discussions over a 15 week period. Students will leave with a solid foundation of today's digital landscape and a superior marketing skill set in order to go forth and make their own mark in the growing medium.
It starts up September 26, 2007 and there are only a few spaces left. For those interested in taking a deep dive into the ever evolving world of digital marketing, don't delay.
Kick start your future with the CMA's eMarketing course. For more information, or to register for the course, please visit the CMA website. I hope to see you there.
UPDATE: I forgot to mention the course is available in Toronto and Montreal. Mitch Joel, and Dave Haber of Twist Image will be the course instructors in Montreal.
Aug. 25 2007 11:17 AM
Posted by Michael Seaton
Comments 1 posted
Champagne Wishes & Binary Dreams
It’s an exciting time in marketing right now! Things are changing rapidly, and marketers of all stripes are trying to carve their niche into the new technology-enabled landscape. Increasingly, interactive and database marketers are being asked to provide strategic leadership for other marketing sectors.
On the other side of the brain, creative marketers are being forced to think in ways that they’ve never had to think before, and are facing the increasing challenge of having to position their campaigns around technology and prove ROI to clients. This has created a technology war zone.
The battlefields are filled with old and new pieces of technology strewn throughout the DM landscape. Some of them lay abandoned, some of them have moved up in rank and forced to do things that they weren’t designed to do. Patches, band-aids and temporary solutions are rampant in this technology war zone. IT teams are stressed by demanding marketers, and marketers are stressed by busy IT teams.
Let’s look at a typical scenario…
You have to call Bob over in Company B to get the reports for the telemarketing push, you have to get your loyalty point statistics from IT, then you have to login to X Site to select and download your analytics for your latest web promotion, and then get in touch with Company C who does your surveying to gather more stats. And let’s not forget your email campaign, you’ll need those stats too, better login and download those! Got them all?
Good. Now someone will spend the next 3 hours compiling the data into a separate client report. Total amount of time spent on this, 6-8 hours - if you’re fast and efficient.
Wait a minute… Isn’t technology supposed to make our lives easier? faster? better? more productive?
Let’s face it, we got caught with our pants down didn’t we? We thought, “We have a web team, we can do Flash, we can do email marketing, we can host contest sites…” Today, these things aren’t enough. These things are expected; basic marketing 101. Now it’s all about the data, the marketing intelligence, the campaign stats, determining LTV, proving ROI, knowing exactly WHEN a campaign isn’t working and being able to do something about it in real time. The things that make creative marketers wake up in the middle of the night in a cold sweat… Data & Statistics!
THIS is what’s going to drive the future of marketing. Not how pretty your design is, how cool and inviting your copy is, or how many impressive clients you’ve worked for. The marketing landscape continues to change and evolve at a rapid rate, and we as marketers, need to embrace this change, form new alliances, and be able to predict and forecast future changes.
You know those super-smart people… the ones that work among beige walls and grey cubicles, where the low hum of computers and the odd cough can be heard, the ones that you thought were catatonic?! You know the ones you thought you had nothing in common with because they told jokes in binary and went to Sci-Fi conventions.
Yeah, well, you need them. And you need them now!
Jul. 31 2007 09:06 AM
Posted by CMA
on behalf of
Selina J. Eckersall
Comments 4 posted
More Databases / Analytics posts
Feb. 23 2007
Merging the Cultural Divide between Marketing and Analytics
Jan. 17 2007
Product Innovation, Database Marketing Services
Oct. 20 2006
Bryan Eisenberg - Why are we so bad at the Online conversion game? Session 5
Jul. 21 2006
Marketers meet the 'grups'
Jul. 18 2006
Is There a Doctor in the House? CRM Analysts to the Rescue!
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