Friday, January 27, 2006

Moore's Law Hits the Dust

Moore's Law is a rule of thumb that tells us we can expect to see computing power double every 24 months. That's a rule of thumb that looks like a hammer hit the thumb.

The BlueGene/L Supercomputer is breaking all the records:

On September 29, 2004 the BlueGene/L Supercomputer became the fastest computer in the world achieving 36.01 teraflops per second, beating out NEC’s Earth Simulator which previously held the record at 35.86 teraflops.

On November 4, 2004 the BlueGene/L broke its own world speed record by achieving 70 teraflops.

On March 24, 2005 the BlueGene/L again broke its own world speed record by achieving 135.5 teraflops

On October 27, 2005 the BlueGene/L “again” broke its own world speed record by achieving 280.6Teraflops

You know, what happened to Moore’s law?

(Image by GridCafe at CERN)

The "At Home" Contact Center

The number of "at home" customer service reps will increase from 112,000 to about 300,000 in the next four years. This is a huge leap in people seeking careers where they can work from home and it has been made possible mainly by new contact center technology and new corporate policy. In light of increased cost to fuel our cars, this trend of working from home will only increase in the years ahead for many service businesses.

After Amazon ... The Line is Drawn

For marketers, mark this as “Year 11 AA” (After Amazon) – the point in history when a line was drawn between traditional marketing and data-driven marketing. A point in time when a convergence of technology, the rise of consumer power and the potential for longitudinal customer relationships mandated we change how we converse with customers. It is change or perish. It’s that simple.

In Year 1 AA, Amazon’s personalized recommendation engine launched ecommerce and began a revolution in marketing that has reached far beyond the World Wide Web.

When was the last time you walked into a store where the clerk greeted you at the door with an item selected just for you? In the world of online commerce, Amazon can accomplish the seemingly impossible. They have built a store for every customer, picking perfect items from a universe of millions, all in the blink of an eye, thousands of times each second. Since 1995, Founder Jeff Bezos has built an online store that can sell just about anything, with high margins, rapid inventory turnover and high customer satisfaction.
Just three years later, two Stanford programmers developed an algorithm that echoed Amazon’s automated personalized recommendation engine. They founded Google with an engineering concept that treated website links as recommendations, and from that foundation came the world’s most effective search engine.

Much has been written about Googlezon, a fictional scenario developed by Robin Sloan and Matt Thompson. In a thought-provoking look back at the history of the Web from the Year 2014 -- 10 years in our future. Their story is fascinating, amusing and unnerving. But their vision of an Evolving Personalized Information Construct is where marketing will eventually move. It will take time because a generation of marketers who grew up practicing the 4P’s is still at the helm. They are only begrudgingly giving up on traditional mass marketing.

But the facts are clear to anyone who wants to read them. Traditional marketing is no longer working.

Pete Sealey, former CMO of The Coca-Cola Company, at a conference of the Association of National Advertisers, was downright emotional in his assessment of the stupidity with continuing to mass marketing. "We've got to stop, folks!" he cried plaintively as he described the runaway inflation of network media pricing combined with stomach-churning declines in reach and effectiveness.

Seth Godin confirms the failure of traditional marketing in today's business world. Successful marketing is no longer "advertising" -- it's simply too hard to get people to care, because people in the U.S. already have everything they need, most of the things they want, and don't expect significant differences between brands.

A Tillinghast actuary noted: “The market is currently smart and educated, and we cannot trick them into lower benefits. We cannot provide lower benefits for the same amount of money, especially in an era of full disclosure. Rates of return for shareholders of insurance companies are barely at acceptable rates of return. There is no room to take profit from a shareholder.
Customers have never liked to intrusive marketing. While there are exceptions, most mass marketing has hovered in the 2% response rate for years and years, across all media – free standing inserts, mass direct mail, trade shows, TV and radio, banner ads. By any standard, a 2% return on investment is not a good deal. Our CEO’s would be better advised to invest the money in a long-term bond than to spend it on such programs.

There is a better way.

The New Marketing Construct for Changing the Customer Conversation

The new construct makes four fundamental changes:

1. Marketing becomes data-driven, targeted, addressable.

2. Marketing becomes customer-centric and more relevant to customer needs.

3. Marketing becomes a longitudinal, evolving, interactive personalized relationship.

4. Marketing becomes more measurable and accountable.

More to come ...

Biased Marketing? Surely Not ... or Just Maybe?

The Business Pundit (Rob May, Louisville) latched onto an intriguing piece of research and, as usual, the Pundit is asking the right question that makes the research relevant to all of us marketers. The research produced by LiveScience studied the decision making practices of politicians -- it turns out that they are routinely making decisions that ignore facts that don't support their party point of view.

Okay, so politicians are just humans and subject to stupidity like the rest of us mortals.

But it begs the question ... how often do you recommend a campaign or a product decision that flies in the face of facts that seem to tell you to go the other way? True confessions -- I've done it. Hopefully at this point in my career I have stopped doing it.

But I continue to witness brand marketers who -- in the face of contrary evidence --want to make a mark by producing a product or an ad campaign or one of a thousand other kinds of things that get done in the world of marketing.

Egos get tied up into the idea of the moment.

The risk of not succeeding prevents us from dumping a sunk cost.

We rationalize the facts away.

We support decisions that come our of our department and counter the decisions that come from other departments.

Maybe the existence of this LiveScience research will cause us to challenge projects before they go too far -- especially when there is some evidence to the contrary.

Thursday, January 26, 2006

Compiling and Managing Three Types of Customer Data

Most marketing databases hold three types of customer data.

Demographic Data – Individual, household or company data describes the customer in a physical or descriptive manner. This is the most commonly available data, and it tends to be the least proprietary.

Relational Data –Transactional data describes the relationship you have with the customer. This data is accumulated in your company’s operational systems, but only a small amount of the data is typically needed in the marketing database.

Contextual Data – The most relevant data is about the customer’s interests, wants, needs and expectations. This is the real gem of the three kinds of data because it gets at the emotional triggers that impact the quality of the relationship.

Look for Insights when Planning Targeted Media

Interesting tidbit from a national survey by Paragon Media Strategies on radio loyalty of Christian listeners: 45% of those who listen to Christian stations do not listen to secular radio.

Such tidbits are important when doing target marketing because they give you insights on how to slice and dice the market. If you're after a slice of people who listen to Christian radio, your plan needs to account for the likelihood that they won't be listing to other radio formats.

Wednesday, January 25, 2006

Cleanliness is next to Godliness ... Especially for Your Marketing Database

The goal of your database is to provide the information to help you eliminate excess marketing costs and to enhance revenue generation from improved customer targeting and retention. But for many marketers, the goal is elusive because of questionable data quality.

Your data is only as good as your data, or put another way that we are all familiar with – garbage in, garbage out. Data cleansing is the seemingly straightforward process of getting the garbage out and quality in. With so much importance riding on data quality, it is remarkable that this aspect of building a marketing database has so often been trivialized.

The database marketer needs to transform data from legacy systems into unique identifiable elements that are needed for building an accurate, integrated view of customers and the products they purchase or the services they use. Data cleansing involves such factors as: name-and-address standardization, gender assignment, geo-coding, ZIP+4 processing, postal coding (for foreign addresses), data correction and validation. Geo-coding is used to enhance addressability by verifying address integrity and assigning postal codes, or by assigning geographic codes to support geo-demographic mapping and site planning activities.

Before skipping this process consider the budget implications that bad data will wreak upon you into the future. If just 10% of your database addresses are incorrect and you have 500,000 prospective and current customers in the database, clearly 10,000 mailers will fail to reach your target market … sending out a $10 mailing to 10,000 bad addresses gives you a fast idea of the financial drain.

A clean, well integrated marketing database is mandatory for success in today’s competitive environment. You need to master data extraction, data transformation, data cleansing and eventually, data integration.

Gartner lists six major steps to cleaning data:

Elementizing: parsing data into components called “elements”

Standardizing: applying a standard form to these elements

Verifying: examining the elements and checking for errors

Matching: detecting identical elements such as the same address or name

Householding: Searching for information that indicates the same household

Documenting: capturing the results of the earlier steps in metadata to facilitate future data cleansing

In the end the task requires a combination of technology, software, processes and services to build a single, accurate and useful view of your prospective and current customers.

Think Before Building Your Customer Database

As with any significant marketing project, before you construct a marketing database, you need to have a clear vision and objectives. The same old questions plus a few more specific questions must be resolved if the database is useful when it is all done:

What problem will the database solve?
How will you know if it is successful after it is all built?
What is the most critical business benefit?
What are the key deliverables?
Who benefits?
Who owns the database?
Who owns the data?
Who are the internal stakeholders and what are their requirements?
What existing databases now hold potentially useful information?
Who owns these databases and the data in them?
What applications must access the database?

Sun Sees Blogs as Strategic Asset

Sun Microsystems has gone from the 99th to the 6th most popular server company, largely because it has embraced authenticity and transparency in its communication initiatives. “Companies that fight transparency will confront a competitive deficit,” said Jonathan Schwartz, COO.

Blogging allows you to look into a company, meet its people and see how it functions. It puts a human face on the corporation and makes it real. Schwartz said that this window into the company and the direct interaction with its employees is what builds the trust factor. And he emphasized that authenticity and transparency are keys to blogging success.

Just 4% of Fortune 500 companies are running corporate or employee blogs ... 96% are missing an important tool to deliver their branding and public image. The early adopters will gain the advantage. Imagine going from 99th in your industry to No. 6 -- by any measure, that is confirmational of the revenue potential that blogging offers.

Harte-Hanks: Know Thy Customer

A well-designed, enterprise-wide customer database contains the information needed to deal with each customer through all the phases of the relationship--cradle to grave (literally and figuratively). That means including information contained in the individual legacy systems, as well as sales and marketing information, contact information, and where the customer falls in the lifecycle of the relationship. Any information that can be used at any of the customer touchpoints should be available in the complete structure.

A Harte-Hanks primary study of 642 cross-industry companies of all sizes — each implementing relationship management initiatives — more than seven in ten favor a commercially available solution over one implemented in-house. And three in four say that to succeed, the solution must be embraced corporate-wide. Constructing a single database to store and access customer information is now viewed as such a strategic assignment that future projects will be staffed and managed by cross-functional teams — 40% more often than current assignments.

Corporate Dieting Dangerous to Health

The Corporate Board has a new white paper that you just gotta download ... it's free but you do have to register. The paper written by Susan Webber is titled "The Incredible Shrinking Corporation."

In a nutshell, the paper explores the craziness that managers go through to hit quarterly numbers while they are cutting the muscle right out of their businesses. A big reason: lack of a corporate vision. Without a vision for where the business is headed, there is no compelling reason to hang on to valued assets ... it becomes easier to cut numbers to please Wall Street. Susan Webber will get you thinking, especially if you feel your company is not yet performing as well as you believe it could.

CRM Not Quite Dead on Arrival

CRM might not be Dead on Arrival, but it sure has developed a serious limp.

Lots of companies have now invested a large portion of their recent lives in implementing, troubleshooting, ripping out and replacing customer relationship management (CRM) systems.

Part of the reason for discontent is that despite its name, the greatest failure of CRM is that it never really was about directly helping customers. Solutions were sold to executives running call centers or sales organizations as a way to wring out inefficiency, force standardized processes and gain better insight into the state of the business.

But CRM completely failed to address was the need to help marketing and sales to communicate to customers with more relevance, timeliness and to resolve customer problems

A major reason is that marketers at companies with CRM systems have generally failed to do the strategic planning and cultural evolution so that their companies were prepared to actually improve customer relationships. Until we do this hard work, until we get our databases right, until we develop the content development and delivery right ... well, we have no one to blame but ourselves.

This does not mean junk the CRM. It means if you got one, step back and evaluate your value stream (the processes by which you ultimately deliver value to your customers).

What mechanisms do you have in place to improve your ability to hear what the customer wants?

What content do you need to deliver in marketing campaigns, in customer service programs, in field sales?

How should the documents you send out be made more relevant to the people you send them to?

What is the real marketing, sales and customer service strategy that makes you more valuable to your customers?

What solutions do you pitch at each customer interaction? How can you improve responsiveness and relevance from your contact center agents?

Improve each critical step in the value stream so that the software finally delivers its big promise to you.

Sunday, January 22, 2006

Michael Crichton Offers 3-Part Roadmap to Conquer Complexity

Marketers take note: complexity is here.

Michael Crichton has raised a lot of questions about managing global complexity in his fictional “State of Fear.” His speech at the Washington Center for Complexity and Public Policy further explained the line of thinking that guided his research for the book. His conclusions on complex systems can help us all move to a model where we can more effectively manage the systems that operate in marketing departments and in our marketplaces.

He defines complexity:By a complex system I mean one in which the elements of the system interact among themselves, such that any modification we make to the system will produce results that we cannot predict in advance. We live in a world of complex systems. The environment is a complex system. The government is a complex system. Financial markets are complex systems. The human mind is a complex system---most minds, at least.”

There is danger in complexity.

“A complex system demonstrates sensitivity to initial conditions. You can get one result on one day, but the identical interaction the next day may yield a different result. We cannot know with certainty how the system will respond... when we interact with a complex system, we may provoke downstream consequences that emerge weeks or even years later. We must always be watchful for delayed and untoward consequences.”

“Organizations that care about the environment do not seem to notice that their ministrations are deleterious in many cases. Lawmakers do not seem to notice when their laws have unexpected consequences, or make things worse. Governors and mayors and managers may manage their complex systems well or badly, but if they manage well, it is usually because they have an instinctive understanding of how to deal with complex systems. Most managers fail."

Fortunately, Crichton points out, studies show that we can learn to manage complex systems. There are people who have investigated complex systems management, and know how to do it. But it demands humility and the ability to admit when we are wrong.

“The science that underlies our understanding of complex systems is now thirty years old. A third of a century should be plenty of time for this knowledge and to filter down to everyday consciousness, but except for slogans—like the butterfly flapping its wings and causing a hurricane halfway around the world—not much has penetrated ordinary human thinking.”

Crichton offers a roadmap to getting our arms around complexity and if we put these to work in our marketing information systems, our campaign systems, our CRM systems ... we can become better managers.

His first counsel is that we must avoid over-simplifying complexity. When we make this mistake, we come up with wrong answers.
Our human predisposition is to treat all systems as linear when they are not. A linear system is a rocket flying to Mars. Or a cannonball fired from a canon. Its behavior is quite easily described mathematically. A complex system is water gurgling over rocks, or air flowing over a bird’s wing … An important feature of complex systems is that we don’t know how they work. We don’t understand them except in a general way; we simply interact with them. Whenever we think we understand them, we learn we don’t. Sometimes spectacularly.

His second counsel is that we approach this task with humility and admit when we are wrong and to realize that we will be wrong more often than we are right.If you manage a complex system you will frequently, if not always, be wrong. You have to backtrack. You have to acknowledge error. You’ve probably learned that with your children. Or, if you don’t have children, with your bosses.”

His final admonition is to eliminate the tendency we all seem to have of using fear to galvanize those around us to follow our solution.Fear may draw a television audience. It may generate cash for an advocacy group. It may support the legal profession. But fear paralyzes us. It freezes us. And we need to be flexible in our responses, as we move into a new era of managing complexity. So we have to stop responding to fear.

Why is it important for us marketers to pay attention to Michael Crichton, or to any other experts who struggle with the implications of complexity? Because marketing is running far behind other aspects of business in understanding our own processes. Because we cannot manage something as complex as CRM without coming to grips with what we can do and what we cannot do before we become buried in complexity that smothers us. We must become expert at simplifying the complex processes we now have under our responsibility if we have any hope of improving results.

Thursday, January 19, 2006

Okay, I Agree with Seth ... But Not that All Marketers Are Liars

Seth Godin gets a lot of press, and I mean a lot of press!

He is the consumate self-promoter, but he carries along with it a ton of marketing wisdom.

I picked up my copy of "All Marketers Are Liars." I bought the book but never read it cause somehow the title just irritated me ... I don't want to be included in a profession of liars. But I randomly opened to page 101.

He hit a chord with me in a section about anger. What angers him also angers me, and I am sure rankles you as well.

Something as powerful as marketing should not be abused for selfish ends. What we do as marketers should not be used (abused) on any kind of deceit -- whether we end up on Sixty Minutes, or just cheated one customer. We should all be smart enough to realize that today with millions of active bloggers we won't get away with deception ... and we surely all recognize that deceptive marketing will destroy our credibility with the marketplace. Trust is the one thing we work to build up with all our branding communications.

Where is the line between telling the positive story of a product without spinning it too far? To what extent can we ignore the weaknesses in our offerings. There is a line. And when we cross that line, it is not sufficient to rationalize by saying "everyone else is doing it." When we look in the mirror in the morning, we all know if we have done right by those who trust us.

The real skill we bring to the companies that hire us and the customers we serve is the ability to tell a story that is truthful, genuine, authentic. When we do this right, we will capture both the minds and hearts of our marketplaces by helping people to make purchases that are right for them and profitable for our companies.

Wednesday, January 18, 2006

Kodak Launches "Simply Pictures"

Kodak has launched a contextual marketing microsite called "Simply Pictures."

Content on the site is designed to help customers dream up new ideas for using digital photos -- for example, gift and party concepts rather than pitching Kodak products.

This is the kind of site more and more marketers need to create ... they grow the market by stimulating demand ... a trust factor will develop when consumers see Kodak helping them become more creative and this will move many customers to retail stores with the Kodak brand name firmly entrenched.

Kodak's interactive agency Avenue A / Razorfish developed the site.

Monday, January 16, 2006

Fastlane is GM's Voice to the Customer

One of the top-level benefits of a blog is that it brings you face-to-face with the unedited sentiments of your user community.

The General Motors blog, Fastlane, is great reading, especially for car enthusiasts (that's just about all of us, isn't it?). GM executives post to give readers an inside-look at the company Fastlane itself is full of user-centered content instead of the expected defend-or-criticize mode of engagement with the company. A bonus for enthusiasts is a concise listing of relevant websites in the Fastlane blogroll.

But it's the reader comments on Fastlane that make this so valuable to GM ... even when they hear stuff they don't want to hear ... it at least gives them a way of hearing the market and building trust. A lot more effective, in my opinion, than the company's rack of puffery advertising that communicates very little of use to car buyers and car owners.

Online comments and sentiments can make or break a business.Take how Sony's spyware debacle was triggered and accelerated by disparaging blog comments and forced the company to change direction in a matter of days. The good news is that Sony listened and responded.

Such listening to the marketplace can put any company into the fastlane.

Sunday, January 15, 2006

"Mobile Me" at Apple

On January 5, Apple filed a U.S. Trademark for the phrase "Mobile Me." In the list of goods and services, Apple included both mobile communication and cellular. Reuters says:

"We believe this is further indication of (Apple's) strategic direction to extend its iPod + iTunes and Mac franchises into new business areas including smart phones, value-added mobile content services, and the broader consumer electronics space," American Technology Research analyst Shaw Wu wrote in a note on Thursday.
Apple overturned the music industry and practically reinvented itself with the iPod. With a heritage for designing products that look spectacular and are more user-friendly than those sold by competitors, this could be an exciting new direction for cell phones. That's one industry that needs a good shaking, and Apple is just the company to do it. I need a new phone, but I am going to wait to see what they have up their sleeve first.

Lester Wunderman Coined "Direct Marketing"

Lester Wunderman is the person who first coined the phrase "direct mail," using it publicly for the first time in a speech given on October 1, 1961 (Wunderman, 1996). He defined direct mail as a "system of interactive transactions that would restore a measure of dialogue and human scale to the way we made, sold, and bought things."

From Wunderman's point of view, he saw advertising moving away from the traditional means of filtering communications from advertiser to consumer. Instead, he saw the advertising environment as one in which the consumers were actually talking back, becoming part of the conversation. By approaching the advertiser with questions, consumers were forming the expectation that not only should a consumer's needs be addressed, but that advertisers should know who they are, as well.

There is no better way to phrase his revolutionary ideas, than to use his own words.

"We are living in an age of repersonalization and individuation. People, products and services are all seeking an individual entity. Taste, desire, ambition and lifestyle have made shopping once again a form of personal expression."

The ultimate participation in an advertisement comes when you can buy directly from the advertising medium. This further enhances the definition of direct marketing: It not only gets the order, but takes it as well.

Advertising can be a personalized service - if we realize that the bulk of our media today are addressed to a specific person or family. Direct mail must increasingly use its power to address specific individuals of known demography and characteristics, if it is to come to fruition. A television transmitter is blind, but a computer has a memory and selective vision. Data, harnessed to the new digital printers, can write tens of millions of personalized letters at low cost.

A respondent to such a computerized conversation recently wrote, "In this age of computers, it is refreshing to be treated once more as an individual."

We are just a short step away from completely individualized, volume direct mail, which I believe will soon create personalized advertising opportunities of which we never dreamed.

Best of the Blogs for this Week

Newspapers are a Thing of History ... And so, at last, there are two piles of paper: a short one of stuff to read, and a tall one of stuff to throw away. Unfortunately, many people are taking the logic of this process one step further. Instead of buying a paper in order to throw most of it away, they are not buying it in the first place. The whole article at Corante.

Who's Listening to Podcasts? ... Podcasts changed the listening habits of millions of consumers and affected the way radio — and to an extent, television — broadcasters communicated to their audiences. New research on the viability of podcasting at eMarketer.

Sales Meetings for Customers ... Instead of a kick-off sales meeting at a hotel or arena for employees only, which many companies do this time of year, Apple has Steve Jobs do a 90-minute presentation in front of customers at Macworld that's live, then archived, on the Web. Church of the Customer presents 5 steps for running a successful sales meeting.

Learn How Customers Learn ... When you get the lessons Kathy Sierra has passed along from her extensive experience (all at no tuition fee to you), you will understand more clearly how to get inside customers and teach them how you address their most important needs. It's at Kathy's very pictorial blog: Creating Passionate Users.

Clear the Dragons from the Room ... Dave Pollard has a great review of Adam Kahane's book Solving Tough Problems. The post by Pollard condenses and frames Kahane's insights to help us all work more collaboratively. He identifies the dragons that live in our companies, killing progress everyday with internal conflict and he lists 10 ways to clear the dragons out of the business. It's all at Save the World.

The Pro Golf Tour ... TaylorMade Golf Company has launched a contextually relevant blog. The posts are about life on The Tour by and about the players they sponsor. Avid golfers will find the insights offer a unique look into the circuit and the blog is aggressive in branding the company's products. This is a model worth emulating. Take the Tour.

Marcom Blog ... The new semester has started and this popular blog is picking up steam again. The blog is part of the curriculum for Auburn University marcom and PR students. Instructor Robert French has recruited a panel of PR and Marketing professionals who post regularly on communications ... the students then comment on the postings ... the refreshing part of the blog is the ability to see inside the students' minds and watch their development as future pros. Ah, yes, I am one of the pros who blog here, most frequently I write about direct marketing, PR and technology. See you at Marcom Blog.

The Auto Industry Beat ... Business Week has a new auto blog ... the writing is excellent, giving readers keen insights into the inner workings of the auto industry. Check out The Auto Beat if you want to see how this industry churns.

Thursday, January 12, 2006

Blog Harrasment: Ticket to Jail

This year, a new, quietly passed federal law apparently makes it a crime to anonymously post messages online that "annoy, abuse, threaten, or harass." In other words--as first pointed out by CNET's Declan McCullagh earlier this week--anyone from bloggers to consumers venting their dissatisfaction on a message board is potentially subject to liability. Attempts to enforce this law would almost certainly violate the First Amendment. But such attempts could also lead to protracted and expensive battles, until the courts finally declare the law unconstitutional.

The New Direct Marketing Construct

Gone are the days when direct marketers simply put out a new promotion each quarter, seeking to generate new revenue based on a one or two percent response rate. Now, direct marketing is a long term relationship strategy where we communicate and motivate with people in a database and every communication builds on the last contact.

Direct Marketing today is so strategic that it must be developed within an enterprise-wide Customer Management framework. It's been nearly 10 years since CRM first came on the scene. You'd think we had it all worked out by now. Instead, Customer Management is practically non-existent at most companies. Direct Marketing is the powerful ally to CRM, but it calls for high-level corporate and brand strategies to consider customer acquition and retention objectives within a customer lifecycle management point of view.

The new Direct Marketing Construct first must be developed in concert with corporate and brand strategies to define a customer management (or database management) strategy that governs who, when and how communications will take place over the lifetime of the relationship with each prospect or customer.

Too often, these high-level strategies are not worked out clearly, or are not understood the same by key people ... confusion reigns, and if it does, the direct marketing communications to customers will be out of alignment with what the company and brand are trying to accomplish.

The Customer Management Strategy is executed through a continuous, value-enhancing set of processes for content development, analytics, data management, campaign management, event trigger management, and campaign performance tracking. Each of these processes should be flow-charted and documented so that everyone on the team is fully aware of how they work and interrelate.

As you then move down into execution, there is an additional layer in the Direct Marketing Construct, namely, a series of Customer Performance Accelerators ... the factors that you use to build out each customer initiative. These CPAs need to be utilized every time, whether the initiative is aimed at one customer, a group of similar customers or a yet wider cast into the marketplace. The specific accelerators include:

Audience Persona Profiles for segmentation and aggregation of targets for each campaign
Product or Service Offerings that deliver desired value to these targets
Messaging that communicates the positioning and value proposition with clarithy
Contact Triggers that determine the frequency and timing of communications to targets
Communications Media to deliver messaging most efficiently and effectively; typically this calls for cross-channel touchpoint management
Incentives or Catalysts to motivate targets to take desired action
Creative Concepting to deliver messaging in a compelling, attention-getting and memorable manner
These seven accelerators when developed in cohesion are the factors that will change customer behavior. They must be driven by quantitative metrics wherever possible. Incidentally, while variations may exist for specific campaigns, these seven accelerators are arranged in priority sequence. That is, pay most attention to the top of the list because that's what drives performance the most.

Monday, January 09, 2006

eMail Now an Essential Part of
Any Direct Marketing Strategy

A new report released today by Jupiter Communications, a worldwide authority on Internet commerce, reveals that the commercial e-mail market will soar to an estimated $7.3 billion in 2005, cannibalizing direct mail revenues by 13 percent.

Jupiter’s prediction does NOT run counter to my earlier comments on the strength of direct marketing. In fact, eMail is simply another direct marketing medium that together with mail will further cannibalize mass marketing.
With research indicating that US consumers will see an estimated forty-fold increase in e-mail volume, Jupiter advises that businesses improve their outreach immmediately - integrating messages across media channels, growing house lists, and incorporating feedback for improved targeting - or risk increasing opt-out rates.

E-mail is a cost-effective and high-response rate vehicle by which to acquire and retain consumers, sell and promote products, drive loyalty, and reinforce branding efforts. In fact, many Internet commerce and content ventures have made e-mail the must-have communications vehicle. Because of the swift time-to-market and the strong return on investment (ROI) of e-mail, Jupiter estimates that commercial e-mail spending will grow from $164 million in 1999 to $7.3 billion in 2005.

However, the expected increase in the volume of e-mail will strain consumers' attention span. The average number of commercial e-mail messages that US online consumers receive per year will increase from 40 in 1999 to over 1,600 in 2005; non-marketing and personal correspondence will more than double from approximately 1,750 in 1999 to almost 4,000 in 2005. As competition for consumers' attention rises, companies face two challenges: maintaining a high response rate and maintaining a high quality dialogue with consumers.

As a result, the volume of opt-in commercial e-mails continues to rise at a furious pace. However, consumers will not have the resources or tolerance to maintain the high response rates that are driving businesses to e-mail in the first place. Businesses must focus on delivering value from the first e-mail contact, because opt-out is just a click away. This is precisely where contextual marketing communications principles will become mandatory … value of the email is determined on an individual basis … is it relevant to my interests and pains? If not, it will be ignored.
Jupiter's research shows that businesses can increase the value of their e-mail marketing to consumers by integration: across media, channels and data.

Marketers must maintain message consistency across all media.

The tone and message of E-mail should reflect the look and feel of print, banner, and broadcast campaigns. One of the biggest challenges that businesses face in e-mail marketing is growing their internal e-mail contact database effectively. Companies must realize that they have to leverage all available channels - Web, phone, and retail - to capture e-mail addresses from consumers. Marketers must integrate e-mail collection efforts into all points of contact with consumers aggressively - online and off-line.

To provide valuable communications to consumers and maintain a high response rates, businesses must capitalize on the closed-loop environment that e-mail provides by integrating all available data. And to maximize marketing intelligence and improve content messaging to targeted audiences, businesses must leverage and feedback into e-mail efforts as much consumer data as possible, including response rates, purchasing behavior, and demographic data.

Context is a Direct Marketing Strategy

I talk a lot about context and a lot about direct marketing. Context is simply a qualifier for direct marketing. Skip the context and direct does not work as effectively.

More clearly context is not a mass marketing technique. You cannot develop a context beyond a fairly tightly defined customer persona. To reach to the masses is a mistake because the message must be watered down so much that it is no longer contextually relevant to but a few within the mass audience. Direct lets you get more relevant.

Contextual direct marketing is a simple concept. It takes information and analysis to make it work.

Most marketers are unable to capitalize on the concept because of several barriers; customer ADS being only one of them. The barriers are all executional.

Cultural Difficulty in Dropping Advertising

Changing what you have been doing and doing something new always meets resistance. I watch one marketer after another find excuses to keep using mass marketing ... they are really clever at holding on to a strategy that cannot any longer deliver as effectively as direct. The world has fragmented, but they want to run ads. Ads make them feel good. But the returns will not be there. Every dollar spent on mass marketing at the expense of direct marketing is setting you back.

Lack of Understanding

Some managers who use direct marketing as an important tool think they are already doing it. They have not yet grasped the subtle shifts from optimizing response rate to optimizing relevance which in turn optimizes response rate.

Lack of Information

Chances are you do have enough information to get started but you don't have the technology or analysis capabilities to get at the right information already existing in your company. Gartner supports this conclusion, saying typically there is more data available than anyone is actually able to use.

Higher Cost of Execution

Yes, contextual direct is more expensive than mass communication. But the return over time will more than offset the initial and ongoing expenses. The higher cost makes the decision to go contextual more difficult. Ads are so cost efficient. With direct, you need new technology, new staff resources, a new messaging approach, even new creative people who can deliver compelling creativity in a different medium. But the bottom line is that customer conversion will improve.

Success is At Hand

Management culture can be overcome only by clear and powerfully leadership. You need to integrate and balance all the marketing functions: Organizational Commitment, Strategy, Data, Analytics, Messaging, Touchpoint Delivery, Creativity to impact customer needs and interests and to market directly at these consumer-centric qualities.

The Cure for Customer ADS

Why, oh why, do I keep harping on data-driven contextual marketing?

Because I know it works and because everything I read points to its importance.

Another book gives credence: The Attention Economy: Understanding the New Currency of Business.

Davenport and Beck, the authors describe a sort of Attention Deficit Syndrome that falls over buyers. "What are the symptoms of this kind of corporate ADS?

1. An increasing likelihood of missing key information when making decisions.
2. Diminished time for reflection on anything but simple information transactions such as email and voice mail.
3. Difficulty holding others' attention.
4. Decreased ability to focus when necessary.

People don't have enough attention because they're overworked, stressed and trying to do too much in too little time."

This is simply one of many barriers we all face when communicating to customers. How do you get their attention?

Simple. Be relevant. Talk about things they are interested in. Solve their pains.

Do not for one second think that telling them how wonderful your product is will be interesting to them until they see you are trying to help them and that they can trust you.

Sunday, January 08, 2006

Celebrating My Blogger Birthday!
Squidoo is Next!

It almost slipped past me.

Context Rules Marketing has now been in the blogosphere for a full year.

It started as an experiment. I wanted to learn more about blogging and figured the best way to do it would be to, well, go blog.

Some 300 postings since January 7, 2005.

It took a good while to get my voice right. Do I comment on what's being said around the marketing blogosphere? Do I talk about the things I do in my day-job at Cincom Systems? Do I rant? Do I? Do I?

I decided eventually that a little of all the above was okay, but my central voice would go to my passion -- creating contextually relevant marketing that I belive deeply can optimize marketing and lead us to increased effectiveness and efficiency.

For most of the past several months, I have been bouncing around the Top 50 Marketing Blogs. But there are many days when I wonder if anyone is paying attention. Free advice often goes unattended to.

What's Next in My List of Experiments?

I have been working on a number of related projects as part of this blogging experiment. Some you will see in the weeks to come. A big one is now visible.

I am creating a series of online marketing reference libraries that will serve as comprehensive resources for marketers. I'm using Seth Godin's Squidoo technology to build these libraries ... he calls them "lenses" -- a good name because they let you peer into the depths of a subject and link to related expertise.

So far, I've built six that are in various stages of development ... the only one that is approaching what I have in mind is The Complete Direct Marketing Lens. If you have any feedback, either drop me a comment here or use the "contact me" link on my Squidoo page.

Others in development (and not yet ready for prime time) include lenses on marketing management, sales promotion, package design, interactive marketing and customer relationship marketing.

Where's the Data?

That's actually the wrong question. Gartner tells us that there is substantially more data at our hands that we know how to use. We need the ability to use the data ... it's that simple. And once you get moving in the contextual direction, you will begin accumulating more and more data about individual customers. But again, it is the ability to use the data that becomes the cutting edge.

Of course, you don't need all the data you have likely captured. Marketers need to pull the wheat from the chaff -- no need to capture and store useless information that will mask the lessons to be learned. So the first rule is to determine what data is of most importance to your successful marketing program. Then develop the insights that lead to effective action.

Putting Context to Work

The role of contextual marketing is obvious when it comes to messaging strategies. But in a data-driven marketing department, context plays in other critical ways, as well.

Messaging -- Your messages become data transformed into meaning. The meaning gains relevance and importance to customers because it speaks to their interests and their needs, wants and expectations. It tells them how you will help solve a problem instead of how wonderful your product features and benefits are.

Targeting -- Using data also helps you target the right offering to those prospects who are most likely to have an interest in it. You look for people with specific pains or needs instead of traditional demographic cuts across a population. Mass marketing media cannot give you nearly the precision you need, so direct and online media are finding great favor. You use contextual data to sharpen the focus.

Touchpoint Optimization -- When the world is awash in media options and channel touchpoints, it becomes quickly overwhelming to optimize your media strategy. When you have the data on customer context, it becomes clearer what message distribution resources will best serve you.

Fact-Based Performance Management -- In the old days, it was permissable to say that you did not know which half of your marketing budget was getting the best results. Today, every dollar must be effective. All solid contextual programs have the right tracking mechanisms for online, point-of-sale, field sales, direct marketing programs ... you can see what is working and optimize rapidly.

Four Accelerators Behind Growth
of Contextual Marketing

Contextual marketing has its basis in the facts and its heart beats to create relevance between what you sell and what the customer wants. It was harder in the past to do this because creating context is a complex, scientific business that looked just plain too-hard to do.

But things are different today. I cite four of the factors now accelerating its adoption:

Technology -- We can now accumulate and massage massive amounts of information and put this information where it can be used to make better, more precise decisions. These databases are now growing into terabyte size but are easier than ever to use. If the marketing department falls behind its competition in the tech areana, the barn will burn down fast.

Proliferating Touchpoints -- On the one hand the proliferation of touchpoints is a demon. It is incredibly difficult to keep message continuity consistent across all the points your customers will use to touch your business. The media are fragmented and typically disjointed. But the good news is that these touchpoints are increasingly addressable and measurable giving rise to increased potential to target customers whereever they are in their buying cycles.

Analytical Skillsets -- The data is useless if your managers cannot get at it and use it to make the right decisions, to infer the right courses of action. Just five years ago it was rare to find marketing analyists on staff except at the big consumer packaged goods firms. Now this expertise is available to the rest of the world.

A New Mindset
-- Most marketers, as I said earlier, come from a background where qualitative skills reigned supreme. That included me until about 15 years ago when I added a "marketing analyst phenom" to my agency's staff and we immediately began cutting new strategies for our clients that earned them hundreds upon hundreds of millions of dollars in revenue. The mindset has shifted. The B-schools are pumping out people with the expertise and marketers are beginning to hire them. This will be a huge accelerator pushing contextual marketing forward at an awesome rate.

Marketers! Put on Your Thinking Caps!

The majority of marketers are still more right brainers than left. It has been the ticket to success in the past, but the past has passed. Creativity will always be important, but it is not the throne any longer. Marketing has become a very complex business and this complexity can be simplified only with a data-driven marketing construct.

Our CEOs are measured by revenue generation, not awareness. We have to think like the CEO and deliver greater accountability. Information is now on the throne and we have to learn how to use it in creating the business models that will create CEO success into the future. It is all about data and how we analyze the data to produce competitive advantage by adding value in every step of our processes.

This is about changing the rules and definitions to lead to a new unique positioning. Progress becomes the value stream.

For many marketing managers, this means adding a resouce not now on the team: information specialists to get, analyze and use customer data to produce results not possible before.

Some information is easy to get at; it is observable. The tough one is to get at the less visible facts that can unleash desired outcomes. For example, it is relatively easy to get customers to tell you what they want but not at all easy to get them to tell us what will cause them to buy. We need to watch the customer more carefully and look for insights into their interests, passions, desires.

When we do this we can then back up one step at at time into our value stream and make sure everything we do is aimed at delivering value that customers perceive as important to them. To do this reliably and predictably, we need many data points over an extended period of time.

We cannot get this kind of data with an over-reliance on qualitative focus groups. To transform marketing in this complex world, we need the numbers and the knowhow to get insights out of the numbers.

Do you have these kinds of resources on your team? Is your customer and prospect database accessible on the desktop of marketing managers? Do you have the right analytics packages to ream the data? Do you have the people who are deeply experienced in quantitative marketing ... scientific marketing. Do you have the processes in place to maintain an ongoing, learning relationship with the people in your database? Take inventory now or you stand a good chance of being marginalized in the future.

Friday, January 06, 2006

"CMO Magazine" Gone but Not Forgotte

With sad regrets, we all lost "CMO Magazine" -- it was well done editorially, and on more than one occasion was the source for some of the ideas presented here.

The editors write on their website: "We have decided to hit the pause button, take a step back, and consider alternative business plans."

Is this just part of the agony that even good publications face in light of competition from the Internet and blogosphere? It costs a bundle to print and distribute magazines, but I for one find them less and less essential to my life -- except when I am sitting in the doctor's office and need something to pass the hour of waiting.

Promotional Message Development

The old school of "knock 'em over" promotional content still works. You know it as 48-point type screaming "Free Offer" or "Two for Price of One." Fast, hard-hitting superlatives.

But with the customer more in control of the buying cycle than you are in control of the selling cycle, new approaches to copy development need to be utilized and tested. One that I like because it is involving is what I call "The Knights of the Round Table."

We all like stories. Story telling is an emerging art in the world of marketing. With the Knights Approach, you communicate your promotion through a concise story. Think of your promotional campaign plot in story terms:

A Happy Kingdom -- the desired state for your product, company, industry ... what things will look like when you win.

A Fair Maiden -- the customers who will gain incredible benefit from your product.

A Villain -- the foil, the picture of unhappy life without your product.

A Knight in Shining Armor -- your product comes riding in from the west (whoops, that's a mixed metaphor).

A Battle between the Villain and the Knight -- the product solves the problem.

A Happy Ending for Evermore -- the victory by your knight in shining armor, saving the maiden by defeating the villain.
This does not mean you wax along eloquently with a lot of words. Instead it means getting to the context of your offer with more customer involvement and interactivity.

The Knights Approach gives your story structure, interest and power. It lets you appeal to more emotions than "save money now."

Thursday, January 05, 2006

Al Ries Sees Google's Real Strength

Al Ries has posted a new column with Ad Age where he discusses Google's success and brings it back to what the company does best: search.

"Search," says Al, "is its "mousetrap," which essentially refers to a product or service's ability to keep people coming back for more."
Is marketing success simply about being better, or is it about representing an excellent product? Or both?

Actually, Ries says, "It's more about being first to market. The first to bring a product to market is then faced with the task of fending off other competitors by protecting its product through fierce marketing."

Of course, the brand must also focus on improving its product, but rather than trying to enter a market by doing things better, the key to marketing a product well is solidifying its first-to-market qualities in the minds of consumers.

However, it should I think not go unmentioned that there were plenty of companies around before Google who were offering search. But after Google hit the scene with its dramatically better search capability and better business model execution, everyone else is playing catchup. I think Google has done an incredibly good job of marketing, but not with traditional media. They are masters of everything viral.

Are You On Top of Web 2.0?

The Dot Com bust is over (except for a lot of people wondering where their money went). But Internet business model innovation did not die with it, and there are a couple of companies who already are reinventing the potential of the Internet. They're all part of a movement called Web 2.0. Unwittingly, you have been a participant, but maybe you should be taking a more aggressive and capitalistic look at what's happening.

Wikipedia has a good section on Web 2.0 as your Starter Kit.

But no sooner than you get through reading this summary than out comes today's blog from ZD Net's Phil Wainewright who challenges "Who Will Rule Web 3.0?"

Tuesday, January 03, 2006

Top Ten Viral Ads for 2005

BoreMe has assembled their list of the Top Ten Viral TV commercials from around the globe, along with downloadable views.

These sure are ads that will get people talking. No. 4 on the list is worth its weight in gold ... a commercial that sneaks up on you for Nokia.

Then there's the pandering use of nudity that always gets people talking ... especially the Queen of England ... unfortunately this time for a hard core video magazine.

While skipping the porno, there are good techniques here to emulate when you want to get customers talking about your brand.

Blog Campaign Creates the Buzz
Follow Up Creates the Sales

Adrants blogs about a blog campaign that had some legs for a South American wine company, run out of jolly old England. Sales doubled! Dang, man, we all want to double sales ...

The important lesson is to understand what the blog program did and didn't do.

Sending out free bottles of wine to known bloggers did get a lot of them writing about the wine. That's good. The right bloggers probably have a substantial reach as a total medium. They were not paid to blog about the wine, they just wrote about the experience.

What the wine company did that was really smart was in how they merchandised the blog buzz to the retailers. They got their buyers convinced that there were a lot of people talking about this wine so they better stock up.

That's a good technique for any outbound campaign -- be it traditional advertising, publicity placements or blogging. Always merchandise back to your sales force and then, in turn, to the trade to get the real value for the program. Sales only happen when sales and marketing are marching together!

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