Testing: Sometimes, the Little Things Count

We’re always seeking new approaches to achieve breakthrough results in direct response marketing, and sometimes we get a big win with a bold new concept. But while you’re on the quest for a big idea, don’t overlook the little things. Slight changes, particularly in your call to action or offer structure, can result in incremental improvements and even significant lifts in response. And in the online world, these tests are easy to execute and results can be read quickly.

testing in marketing
“A/B testing,” Creative Commons license. | Credit: Flickr by Howard Lake

We’re always seeking new approaches to achieve breakthrough results in direct response marketing, and sometimes we get a big win with a bold new concept. But while you’re on the quest for a big idea, don’t overlook the little things. Slight changes, particularly in your call to action or offer structure, can result in incremental improvements and even significant lifts in response. And in the online world, these tests are easy to execute and results can be read quickly.

Recently, I moderated a panel for the Philly DMA. Panelists Caleb Freeman of Calcium USA, Kate Gomulka of MayoSeitz Media, Julie Herbster of Quattro Direct, and Arly Iampietro of Nutrisystem all shared tips on optimizing online marketing.

Some of the insights Iampietro conveyed illustrate how little things can result in significant wins. She’s responsible for optimizing the website user experience at Nutrisystem. So Iampietro showed us how minor changes to the copy on the call-to-action button, like using a caret (>) next to the button text, made a big difference in guiding customers through the conversion process. Also, for a high-commitment product like a diet program, things that suggested a commitment by the visitor before the person was ready to commit depress response.

For example, early on in the user experience:

  • “Continue >” stimulates more clicks than “Order now >”
  • “View plan >” outperforms “Get started >”

Other easy tests include changing up the imagery on the site. For example, men converted better when shown pictures of men with women rather than with other men.

Offer structure is highly important and easy to test. In his book “Predictably Irrational,” psychologist Dan Ariely relates a classic example of how a simple change in the offer structure made a difference for The Economist magazine. He presented a group of 100 MBA students with the following offers:

  • Internet-Only Subscription                    $59
  • Print-Only Subscription                        $125
  • Print and Internet Subscription          $125

The results — 84 selected the combo offer vs. 16 selecting Internet only. With the “Print Only” decoy offer removed, only 32 selected the combo offer. I repeated this experiment with a group of 30 undergrad students, presenting the scenario without the decoy offer first. None of them chose the print and Internet option. With the decoy offer inserted, about half went for the combo offer — and these were budget-conscious undergrads who don’t consume print as a rule!

Easy-to-execute tests that bring big results are not limited to online marketing. In my agency days, we had a B2B client who was sending millions of mailers out each season. We tested multiple creative executions against a very recalcitrant control every year, without a significant win. Then we decided to buck traditional direct wisdom that mailing to an actual name would outperform a non-personal address. What we found was that addressing mail to the functional title of the decision-maker outperformed our mailings to specific names, some of which may no longer have been at the company. So don’t be afraid to test against your long-held assumptions, so long as you do it in a limited way.
The takeaway? A big win doesn’t always come from a big change.

What little things have you done that have generated big wins?

Full-Price Customers: How to Get, Keep Them

The refrain from retail CMOs has been consistent and almost deafening. They say: “We don’t just need more customers, but the right customers.”

Full-price customers, Mike FerrantiThe refrain from retail CMOs has been consistent and almost deafening. They say:

“We don’t just need more customers, but the right customers.”

“We need to grow margins.”

“We need to reduce our dependency on discounts.”

Even during this year of economic recovery, luxury brands in particular have been seeking to improve margins and sales by selling more full-price purchases — all while retail, at large, has been crushed.

But the high-end isn’t the only one that desires full-price sales. Remember not too long ago, JCPenney infamously tried to eliminate discounting and offer a fair, low price every day? We know how that worked out.

Starting shortly after the Great Recession in 2008, as both business and consumer spending dried up, marketers were forced to adopt traditional strategies for creating incremental revenue in a difficult environment. The range of tactics deployed was extensive; yet, pricing became more important and varied than ever before.

This phenomenon, you remember, was so widespread, that an entire category was born — “flash sale” websites like Totsy, Groupon, Gilt, Rue La La and Zulily. eCommerce juggernaut Amazon came out its their “Golden Box” and more recently, ushered in PrimeDay.

The Customer Is in Control

While price cadences, markdowns and closeouts are not new, something more fundamental began happening among consumers. It was the confluence of accelerating globalization, mass adoption of the Web and the deep scarring from the recession — that began driving up savings rates and reducing debt, which appears to have infused a new ethos among consumers and their perception of bargains.

Millennials today refer to saving money as a sort of “hack.” The Internet is filled with “life hacks” and more relevantly: “savings hacks.” Even if they are spending that savings on going out at night — that, too, has spawned what may be a generational interest in getting more for their money. It’s a badge among them to find the cleverest ways to pay less and get more.

While walking to a meeting, I realized I had not put collar stays in my shirt collar. I was going to stop at a retail store on the way, and instead of Googling where to buy them as I did (I’m a Gen Xer, and that’s what I would do) a Millennial did a different search, and we stopped at Starbucks. He came out with a wooden stirrer, and snapped off a piece to fit each side. Then he started on where I could buy custom dress shirts for 30 percent less than what I was likely paying. (He was right.)

This anecdote isn’t intended to communicate how clever this was. It’s intended to illustrate a new consumer behavior, born of the intersection of rising influences of “digital natives,” mobile tech, cloud computing, and the impossible rate of change that comes with it.

If you don’t sell to Millennials today, odds are you will be targeting them soon. Today, the oldest Millennials are entering the accessible- and luxury-buying brackets, and they will take their toll on them. I’ve already worked with clients who are offering products designed to entice new buyers of their brands into trial, they are not discounted products, but new products designed to appeal to the more price-conscious Millennial. These new offerings are changing the way brands market and sell.

Existing Full-Price Buyers

Our recent internal study looked at the impact of eliminating sale items for a brand that typically sells to more affluent customers. A few things happened almost immediately:

  • With sale items gone, on-site searches skyrocketed, as the price-conscious consumer hunted for the sale
  • The conversion rate plummeted for consumers who looked for and could not find a sale
  • Full-price purchases went up as a percentage of sales — yet revenue declined

The short-term effect was that revenue dropped materially at the outset. It was essentially the same behavior of discount buyers at other organizations that abruptly “eliminated” sale pricing. The longer-term impact is still unfolding, but surely not every customer is a full-price buyer, and some will never return — unless the sale returns.

Further analysis illustrates there are at least three types of buyers when it comes to price:

  • Full-Price Buyers (price inelastic)
  • Discount Buyers (price elastic)
  • Both (buyers who consume incentives and buy at full price)

Strategies for these different types of customers range from simple to exhaustive. In short, our goal is to understand the elasticity of demand associated with each customer and the goods she purchases. The best place to start is with a simple segmentation of each of the types of buyers based on their consumption of discount promotions.

Does Flat Design Forsake Response?

When I first became aware of the Internet, I was running the Toronto office of direct marketing agency Cohn & Wells (later purchased by EURO RSCG). I had met a young guy (with purple hair) who worked down the hall and when I asked what he did, he introduced me to the World Wide Web. It was 1995.

Converting Website Visitors to Sales OpportunitiesWhen I first became aware of the Internet, I was running the Toronto office of direct marketing agency Cohn & Wells (later purchased by EURO RSCG). I had met a young guy (with purple hair) who worked down the hall and when I asked what he did, he introduced me to the World Wide Web. It was 1995.

Our largest client, Bell Canada, was launching a campaign to defend itself against telecommunications deregulation and I wanted to include a website as a response mechanism in order to support their position as an innovative industry leader.

The URL? http://www.belladvantage.com/save/2c.html — not exactly easy, intuitive or consumer friendly but the page itself took advantage of known visual cues that would stimulate response: Skeuomorphism.

Skeuomorphism is the idea that early computer interfaces would be more intuitive to users if an object in software mimicked its real world counterpart. For example, a “trash can” and “file folder” are two of the most recognizable skeuomorphic objects.

As the web matured, designers spent hours on designing and testing skeuomorphic buttons, adding curves and drop shadows as non-verbal cues to indicate that, yes, this is where you should click to take the next action. In fact, if you Google “best color of button for conversions” you’ll get over 1.3 million results. Article after article about not only colors, but shapes, sizes and shadows, and how they’ve been tested and refined for maximum response. For our Bell Canada landing page, the buttons were indeed large, colorful and action-oriented.

But now, the world has gone to flat design. For the most part, buttons are now no more than a simple rectangle. Some research suggests that rounded corners enhance information processing and draw our eyes to the center of the element, but that insight seems to have been tossed out the window.

Color seems to be optional as well — or color appears after you hover over the button. That seems counterintuitive to me, as the sole purpose of the button is to draw your eye to the action area and to click — if the button is lacking any color, it’s not grabbing my attention in the first place!

Other advice from experts is to clearly label the button with a message of what happens after the click/tap or indicate what it does using action verbs. As a dyed-in-the-wool direct marketer, I know buttons should be labeled with “Learn more” or “Add to cart” or “Download now,” but apparently others don’t find this the least bit important as I’ve spent many a confused minute or two unsure how to proceed on a website when the button was labeled “Awesome!” or “Got it.”

I’m also a strong advocate of the action arrow. That little “>” icon that is one more visual action cue. In my mind “Learn more >” is far stronger than just “Learn more” — especially when the button is flat.

For those of us who have grown up in the direct response world, we have studied, tweaked and tested our way to maximum direct mail response rates. Neuromarketers helped us study how the brain responded to various stimuli and we began to apply it to every aspect of marketing design from pricing to color choice. So why throw all that insight away and use a flat button?

I’m sure readers will tell me that it’s because everybody already knows it’s a button. But I beg to differ. “Everybody” doesn’t always include that older adult who may not be as web savvy as you are. And I, for one, don’t want to lose a single response. So with all of our energy spent on studying and testing conversion techniques, I would encourage someone to test a skeuomorphic button against a flat button and share the results with me. I truly believe there may be an “a-ha!” moment on the horizon.

Poll: Do We Vote to Stay or Leave as ‘Direct Marketers’?

Since the advent of email, digital marketing and all the disruption that’s come our way since, how one regards the term “direct marketing” is clearly in question.

Email, Mobile and Social Media Marketing: Lessons from top-performing B-to-B and B-to-C brandsSince the advent of email, digital marketing and all the disruption that’s come our way since, how one regards the term “direct marketing” is clearly in question.

Two weeks ago, Marketing EDGE bestowed a Lifetime Achievement Award at its inaugural EDGE Awards event in New York to Lester Wunderman, the data-driven advertising strategist and practitioner who founded the Wunderman agency and first coined the term “direct marketing” in the mid-1960s.

Recently, Mr. Wunderman told 1:1 Magazine:

“I predicted what’s been happening. We’re beginning to see mass production get more personalized. Also digital, where you have interactions between sellers and buyers, has really helped to change marketing. It used to be that advertising was about a brand. Now it’s about individuals and what they want and need and most likely want to buy, so we’re being much more efficient than we used to be. We used to invest in broadcast media. Now we’ve become much more personalized.

Easy access to information and personalization is happening because the whole world is digital and the ability to locate prospects and customers and readdress them over time makes advertising more specific. From a database, we can know what each customer is likely to buy. It’s what I call direct marketing and it’s really the manufacturer and the consumer now having a relationship on the Internet.”

So with referenda all the rage these days, I ask, “Do we, as data-driven marketers, remain in the ‘direct marketing’ camp or do we leave to something new?”

We’re seeing evidence of change everywhere:

Some here may argue no one is “leaving” direct marketing. We’re only recognizing that we’ve morphed into data-driven marketing, personalized marketing, accountable communications, digital, mobile, search and social — and the integration of these channels around the prospect or customer.   While the “direct” nomenclature may encompass all this realm, many in the workforce — particularly digital natives — for whatever reason equate “direct marketing” with “direct mail” as if analytics never existed until Google came along.

The “stay” camp may actually be in some agreement with the other side: Yes, we’ve morphed, but all marketing is becoming direct (read, accountable and measurable) and if it isn’t, it ought to be or else we’re wasting client money.

Data from DMA shows that data-driven marketing is claiming an ever-larger slice of the ad spending pie, but it’s still not the whole pie: so we still have ways to go before “direct marketing” is indiscernible from the more general “marketing.” Until the day every creative is as comfortable with data as he or she is with pretty pictures and the big idea, we’re still a chasm away from uniting branding and data into one common cause. Until the day our data masters understand the art and skill of storytellers, we still need bridges and ambassadors between the two.

So do you vote to STAY or LEAVE — or should we just stop worrying about it, and be a bridge instead?

Death of the Salesman

There’s no question that the Willy Lomans of this world have been dying a slow, agonizing death—only instead of losing the fight to travel exhaustion, the opponent is the Internet … And marketing

There’s no question that the Willy Lomans of this world have been dying a slow, agonizing death—only instead of losing the fight to travel exhaustion, the opponent is the Internet.

According to a recent CEB article in the Harvard Business Review, 57 percent of purchase decisions are made before a customer ever talks to a supplier, and Gartner Research predicts that by 2020, customers will manage 85 percent of their relationship with an enterprise without interacting with a human. That shouldn’t surprise anyone since we spend much of our days tapping on keyboards or flicking our fingers across tiny screens.

In Willy’s day, the lead generation process would have consisted of making a phone call, setting up an appointment, hopping a plane to the prospect’s office, and dragging a sample case through the airport. In the 1980’s, that sample case turned into an overhead projector, then a slide projector and a laptop, and finally a mini projector linked to a mobile device or thumb drive. In 2014, salespeople are lucky if they can connect to a prospect on a video conferencing call.

Clearly the days of gathering in a conference room for the sales pitch are long gone. We’ve always known that sales people talk too much and buyers, who’ve never had the patience to listen, now have the tools to avoid them altogether: websites, whitepapers, case studies, videos, LinkedIn groups, webcasts—virtually anything and everything to avoid talking to sales.

As a result, the sales function has now been placed squarely in the hands of the content strategists and creators. And yes, that means that the sales function is now in the hands of marketing.

Now a different problem exists. Most marketing folks don’t know how to help the buyer along their journey because that’s not how they’ve been trained. They have no idea how different types of buyers think, or how they search for information, or make decisions, so they don’t know how to create nor position content in a meaningful and relevant way—and that’s long been the complaint of sales. In their opinion, all marketing does is churn out “fluff” that is irrelevant to a serious buyer.

Now marketers must step up and really understand how to optimize marketing tools in order to help that buyer reach the right brand decision at the end of their journey. That’s really why content has become the marketing buzz word.

And just like we despised the salesman who talked too much, potential buyers despise content that is full of sales-speak. While a product brochure has a purpose, it is not strategic content. Similarly, a webinar in which most of the supporting slides are simply advertising for the product, turns off participants who quickly express their displeasure via online chat tools to the host and by logging out of the event.

Great content should seek to:

  • Be authentic: What you say needs to sound genuine and ring true—no one believes you are the only solution to a problem. On the contrary, the discovery process is all about evaluating your options (the pros and the cons). Avoiding a question because your answer may reveal the flaws of your product or service only shines a spotlight on the issue. Honesty is always the best policy.
  • Be relevant: Share insightful information that leverages your expertise and experience; help the buyer connect the dots. “How to” articles are popular, as are comparison charts—if you’re not going to do it, the prospect will be doing it for themselves anyway, so why not help by pointing out comparison points (that benefit your product) they might not have previously considered?
  • Be timely: To get a leg up in the marketplace, you need to be prepared to add value when the timing is ripe. It’s highly unlikely that your marketplace hasn’t changed in the last 50 years. Help show buyers how your product/service is relevant in today’s marketplace—how it deals with challenges you know they’re facing or are going to face tomorrow.

Smart marketers have a lead nurturing strategy in place—an organized and logical method of sharing relevant content along the buy cycle. And that content is well written and segmented by type of decision maker. The CFO has a different set of evaluation criteria from the CEO and the CTO. Business owners look at purchase decisions through a completely different lens than a corporate manager.

Depending on the industry, business buyers have different problems they’re trying to solve, so generic content has less relevance than content that addresses specific issues in an industry segment. Those in healthcare, for example, perceive a problem from a different perspective than those in transportation.

The new name of the selling game is “Educate the Buyer—but in a helpful and relevant way.” And while Willy Loman may continue to sit at his desk making cold calls or sending out prospecting emails, the reality is nobody has the patience or interest to listen to his sales pitch any more. So marketers need to step up and accept responsibility for lead generation, lead nurturing and, in many instances, closing the sale.

Death of the Agency? Not So Fast …

The last season of “Mad Men” is approaching, but let’s not be so fast to bury the ad agency with it. Media outlets are reading trends and are raising questions. The Economist has a special report on digital disruption in the advertising supply chain, and is quite taken by how “Big Digital’s”

The last season of “Mad Men” is approaching, but let’s not be so fast to bury the ad agency with it.

Media outlets are reading trends and are raising questions.

The Economist has a special report on digital disruption in the advertising supply chain, and is quite taken by how “Big Digital’s” profit margins and programmatic media buying have come to dominate advertising and audience selection. In one article, “Leaner and Meaner,” they’re saying:

The ad-tech firms are gleefully forecasting the imminent demise of Madison Avenue’s middlemen, but they may be wrong, for two reasons. First, ad tech has introduced so much complexity into the business that clients may want to hold on to agencies for advice, and agencies’ creative services are likely to remain in demand when brands are having to churn out so many different pieces of content.

Second, the prediction that technology companies like Google will start to compete head-on with the agencies is likely to prove wrong. To provide full client services they would need to hire thousands of new employees, for limited gains. Google’s margins this year are expected to be around 50%, whereas WPP’s are forecast at just 17%-and that is for the largest and one of the most successful advertising agencies. Perversely, the agencies’ mediocre returns may protect them from being wiped out by nimbler competitors. Their tents in Cannes may no longer have the best views, but the admen will still be there.

Mobile Marketing Watch had its own agency pity-party headline last week, “Are Yesterday’s Advertising Agencies Finally Dying?” reporting on a UK opinion piece:

As the challenges marketers face increase, the solutions from agencies shrink. It’s time for them to step up.

That’s the opinion of Tom Goodwin, founder and CEO of the Tomorrow Group, in a recent post at The Guardian.

“There is a curious tension in the current agency landscape—a vast mismatch between what clients’ needs are and what agencies are working on, and this gap seems to be widening,” Goodwin explains.

True, Goodwin admits, the Internet has been both a blessing (new opportunities) and a curse (change is always hard).

“The internet has been a mixed blessing, a volatile combination of incredible, new possibilities, rampant change and some of the most destructive forces the marketplace has ever seen,” Goodwin contends. “On a communications level, we have a plethora of new media channels, memes circling the world in seconds, the app of the moment bursting onto the scene, and trends like content marketing, native advertising and influencer marketing to navigate and leverage. The options seem more bewildering than ever and more abruptly changing, all in a context where attention is moving onto platforms which become even harder to connect with people.”

What’s to be done? Goodwin believes agencies need to up their games.

What does raising their game look like? Yes multiple screens and a crush of data are inflicting huge demands for content—some of it targeted to a few eyeballs. The scramble for creative, analytics and insight talent must be accomplished as agencies seek to keep their historic role as strategic counsel, with built-in expertise to deliver that counsel all under the same shingle.

That won’t be easy—The Economist says advertising is not the first choice for math students, for one—but skills matching must be a priority of agencies, because brands need guidance through the technology maze, and they need break-through content that engages wherever the consumer may be—something ad tech cannot or will not generate on its own.

By the way, Big Digital has its own death predictors, too.

Blogs: The Long and Short of It

Many marketers struggle over blog content—and that’s never more apparent than when you stare blankly at your screen, hoping for inspiration. According to WP Virtuoso, there are over 152 MILLION blogs on the Internet and a new blog is created somewhere in the world every half second. Of course that translates into a mishmash of quality content, so I’d like to suggest a blog amnesty program

Many marketers struggle over blog content—and that’s never more apparent than when you stare blankly at your screen, hoping for inspiration.

According to WP Virtuoso, there are over 152 MILLION blogs on the Internet and a new blog is created somewhere in the world every half second. Of course that translates into a mishmash of quality content, so I’d like to suggest a blog amnesty program. Let yourself (or your brand) off the hook; step back and evaluate what role your blog is playing in your marketing mix. Honestly scrutinize the content, carefully evaluate the time you invest to create that content and the value it’s adding to your brand—and then determine if it makes sense to continue.

A recent study from Curata on Content Marketing Tactics found that 71 percent of marketers plan to boost content marketing spend in 2014. That translates into even more articles, posts and blogs, but it doesn’t necessarily translate into quality posts.

How are posts evaluated? It depends on the topic and the writer.

If you are extremely knowledgeable about your area of business, and you know how to write and share helpful insights, then by all means, go for it.

For example, to stay abreast of industry best practices and the latest trends, I read a lot of marketing blogs. One of my favorites is from Seth Godin. The author of 17 books (many of them bestsellers), Seth was one of the founders of Yoyodyne, where he promoted the concept of permission marketing. He contends that the only way to spread the word about an idea is for that idea to earn buzz by being remarkable.

Sometimes his posts are long—600-plus words—and sometimes they’re extremely short—24 words!—but they’re always Seth’s point of view on a topic that represents his personal brand. And they get tweeted, shared and Facebook liked a LOT: 2,100 Facebook likes and 2,029 tweets alone for this pithy 62 word post on September 1:

Forgive yourself for not being the richest, the thinnest, the tallest, the one with the best hair. Forgive yourself for not being the most successful, the cutest or the one with the fastest time. Forgive yourself for not winning every round.

Forgive yourself for being afraid.

But don’t let yourself off the hook, never forgive yourself, for not caring or not trying.

Seth posts to his blog daily—whether it’s a long discussion on “Understanding substitutes” or a short one on “Who named the colors?”

So take a good long look at your own blog. What’s your point of view/brand voice? Why are you blogging? Does anyone care? Will anyone share?

Marketing ROI in B-to-B: Why Is It So Hard, and What Can We Do About It?

The other day, I had the pleasure of discussing the challenges of marketing ROI with Jim Obermayer, CEO and executive director of the Sales Lead Management Association, on his Internet radio show. Our conversation got me thinking: Why is the Holy Grail of marketing ROI so tough to achieve in business markets? And what can we do about it?

The other day, I had the pleasure of discussing the challenges of marketing ROI with Jim Obermayer, CEO and executive director of the Sales Lead Management Association, on his Internet radio show. Our conversation got me thinking: Why is the Holy Grail of marketing ROI so tough to achieve in business markets? And what can we do about it?

The “why” part is pretty clear: Business buying cycles tend to be long, and involve multiple parties at either end. Marketers produce campaigns to generate an inquiry, and then qualify that interest with a series of outbound communications, and finally pass the qualified lead to a sales rep for follow up. From that point, it can take more than a year to close, and involve a slew of people on the customer side, from purchasing agents, to technical specifiers, to decision-makers.

The sales process is also complex, involving not only the face-to-face account rep, but sales engineers, inside sales people, and others who help get all the buyers’ questions answered, negotiate the terms, deliver, install and trouble-shoot the product, and whatever else needs to be done to satisfy the customer’s needs.

So, consider the difficulty of establishing the numbers that go into an ROI calculation in this kind of situation. Just to put a definition behind the concept: ROI, meaning return on investment, subtracts the marketing expense from the revenue generated, and then divides by the expense, resulting in a percentage that shows how much net return was produced by the investment.

But in this lengthy, multi-party, multi-touch selling situation, the “investment” part can be pretty tough to get at. Frankly, it’s a bit of a cost accounting nightmare, assigning an expense number to each sales and marketing touch that resulted in a particular closed deal. This brings up issues of variable versus fixed costs, marketing touch attribution—the list goes on and on.

Worse, the “return” part presents its own challenges. First problem is connecting a particular lead to a particular piece of revenue, which means carefully tracking a lead over its multi-month process toward closure.

Further, if a third-party distributor or agent is working the lead, it’s very likely that revenue results reporting is not part of the deal. With good reason: The distributor considers the relationship with the end-customer as his, and none of the manufacturer’s business. So the marketer who generated the lead often has no visibility into the associated revenue. Even if the deal was closed by a house rep, you’re looking at the endless squabble between sales and marketing about who gets the credit.

You can’t blame B-to-B marketers for throwing up their hands and relying on interim metrics like response rate and cost per lead. Especially when marketing staffers come and go, and may not even be in the job when the lead generated a while ago finally converts to a sale.

This is why I was so pleased at the arrival of the new book by Debbie Qaqish, The Rise of the Revenue Marketer, where she urges marketers to raise consciousness of their role in driving revenue results. “The revenue marketer uses the language of business,” she says. Examples of the metrics she recommends for revenue marketers include funnel velocity, sales conversion rates, pipeline revenue and campaign ROI.

My conclusions from this investigation:

  • Begin with a deep conversation with your finance counterparts to get at the best way for marketing to serve your company’s financial interests, like:
    • The right approach to assigning sales and marketing expense.
    • Whether to calculate returns based on net sales or on gross margin.
    • Decide which expenses are fixed and which are variable.
    • How to attribute the contribution of sales and marketing touches across the sales cycle.
    • Setting the ROI “hurdle rate” needed to support your company’s profitability goals.
  • Figure out where to get the revenue and expense data—not everything will be in your CRM system. Your finance counterparts should be help you source the data you need.
    • If a distribution channel party is a roadblock to revenue visibility, conduct a “did you buy” survey into accounts to which qualified leads were passed.
    • If the account-based revenue is captured internally, try supplementing your CRM system with data match-back to connect campaigns to sales, circumventing the arduous process of following a lead along its complex conversion process.
  • Set clear objectives for each marketing expenditure, so you know how to declare ROI success when you see it.
  • Get inspiration from The Rise of the Revenue Marketer, Debbie Qaqish’s innovative thinking on the role of marketing in B-to-B.
  • Get an education from Jim Lenskold’s 2003 classic, Marketing ROI: The Path to Campaign, Customer and Corporate Profitability.
  • If to many obstacles are in the way, fall back and rely on “activity-based” metrics like cost per inquiry and cost per qualified lead, which tend to be pretty easy to calculate, being mostly within the purview of marketing.

A version of this article appeared in Biznology, the digital marketing blog.

When Companies Lose Customers …

United Parcel Service suffered staggering customer defection as a consequence of its 15-day Teamsters work stoppage in 1997. The result was that, even after their 80,000 drivers were back behind the wheels of their delivery trucks or tractor-trailers, many thousands of UPS workers were laid off. A UPS manager in Arkansas was quoted as saying: “To the degree that our customers come back will dictate whether those jobs come back.”

United Parcel Service suffered staggering customer defection as a consequence of its 15-day Teamsters work stoppage in 1997. The result was that, even after their 80,000 drivers were back behind the wheels of their delivery trucks or tractor-trailers, many thousands of UPS workers were laid off. A UPS manager in Arkansas was quoted as saying: “To the degree that our customers come back will dictate whether those jobs come back.”

The UPS loss was a gain for Federal Express, Airborne, RPS and even the United States Postal Service. They provided services during the strike that made UPS’ customers see the dangers of using a single delivery company to handle their packages and parcels. FedEx, for example, reported expecting to keep as much as 25 percent of the 850,000 additional packages it delivered each day of the strike.

UPS’ customer loss woes and the impact on its employees was a very public display of the consequences of customer turnover. Most customer loss is relatively unseen, but it has been determined that many companies lose between 10 percent and 40 percent of their customers each year. Still more customers fall into a level of dormancy, or reduced “share of customer” with their current supplier, moving their business to other companies, thus decreasing the amount they spend with the original supplier. The economic impact on companies, not to mention the crushing moral effect on employees—downsizing, rightsizing, plant closings, layoffs, etc.—are the real effects of customer loss.

Lost jobs and lost profits propelled UPS into an aggressive win-back mode as soon as the strike was settled. Customers began receiving phone calls from UPS officials assuring them that UPS was back in business, apologizing for the inconvenience and pledging that their former reliability had been restored. Drivers dropping by for pick-ups were cheerful and confident, and they reinforced that things were back to normal. UPS issued letters of apology and discount certificates to customers to further help heal the wounds and rebuild trust. And face-to-face meetings with customers large and small were initiated by UPS—all with the goal of getting the business back.

These win-back initiatives formed an important bridge of recovery back to the customer. And it worked. The actions, coupled with the company’s cost-effective services, continuing advances in shipping technology, and the dramatic growth of online shopping, enabled UPS to reinstate many laid off workers while increasing its profits a remarkable 87 percent in the year following the devastating strike.

UPS is hardly an isolated case. Protecting customer relationships in these uncertain times is a fact of life for every business. We’ve entered a new era of customer defection, where customer churn is reaching epidemic proportions and is wrecking businesses and lives along the way. It’s time to truly understand the consequences of customer loss and, in turn, apply proven win-back strategies to regain these valuable customers.

Nowhere are the effects of customer defection more visible than in the world of Internet and mobile commerce, where the opportunities for customer loss occur at warp speed. E-tailers and Web service companies are spending incredible sums of money to draw customers to their sites, and to modify their messages and images so that they are compatible and user-friendly on all devices. Because of this, relatively few of these companies, including many well-established sites, have turned a profit. Customer loss (and lack of recovery) is a key contributor. E-customers have proven to be a high-maintenance lot. They want value, and they want it fast. These customers show little tolerance for poor Web architecture and navigation, difficult to read pages, and outdated information or insufficient customer service. Expectations for user experience are very high, and rising rapidly.

Internet and mobile customers, to be sure, have some of the same value delivery needs as brick-and-mortar customers; but, they are also different from brick-and-mortar customers in many important and loyalty-leveraging respects. They are more demanding and require much more contact. They require multi-layer benefits, in the form of personalization, choice, customized experience, privacy, current information, competitive pricing and feedback. They want partnering and networking opportunities. When site download times are too long, order placement mechanisms too cumbersome, order acknowledgment too slow, or customer service too overwhelmed to respond in a timely fashion, online shoppers will quickly abandon their purchase transactions or not repeat them. Further, they are highly unlikely to return to a site which has caused negative experiences.

What’s more, the new communication channels also serve as a high-speed information pathway for negative customer opinion. If unhappy customers in the brick-and-mortar world usually express their displeasure to between two and 20 people, on the Internet, angry former customers have the opportunity to impact thousands more. There are now scores of sites offering similar negative messages about companies in many industries, and giving customers, and even former employees, a place to express grievances. It’s a new form of angry former customer sabotage, which adds to the economic and cultural effect of customer turnover.

For many of these sites, part of their charter is to help consumers find value; and, like us, they understand that customers will provide loyalty in exchange for value. They also recognize that the absence of value drives customer loss, and that insufficient or ineffective feedback handling processes can create high turnover. As one states: “The Internet is the most consumer-centric medium in history—and we will help consumers use it to their greatest personal advantage. We will increase the influence of individuals through networks of millions. We will raise the stakes for companies to respond. We will require companies to respect consumers’ choice, privacy and time, and will expose those that do not.” This may sound a bit like Orwell’s “Animal Farm,” but it does acknowledge the power of negative, as well as positive, customer feedback.

Some businesses seem minimally concerned about losing a customer; but the only thing worse than the loss of high value customers is neglecting the opportunity to win them back. When customer lifetime value is interrupted, it often makes both economic and cultural sense for the company to make an active, serious effort to recover them. This is true for both business-to-business and consumer products or services.

So how does a company defend itself against the perils of customer loss? The best plan, of course, is a proactive one that anticipates customer defection and works hard to lessen the risk. Companies need defection-proofing strategies, including intelligent gathering and application of customer data, the use of customer teams, creating employee loyalty, engagement and ambassadorship, and the basic strategy of targeting the right kind of customers in the first place. But in today’s hyper-competitive marketplace, no retention or relationship program is complete without a save and win-back component. There is mounting evidence that the probability of win-back success and the benefits surrounding it far outweigh the investment costs. Yet, most companies are largely unprepared to address this opportunity. It’s costing them dearly, and even driving them out of business.

Building and sustaining customer loyalty behavior is harder than ever before. Now is the time to put in place specific strategies and tools for winning back lost customers, saving customers on the brink of defection and making your company defection-proof.

Why and How to Let Prospects ‘Pick Your Brain’ Online

“Can I pick your brain on social selling, Jeff?” As a B-to-B marketer myself, I cannot afford to say no. Neither can you. Because customers may not want to do it themselves, as we suspect they do. In fact, prospects seeking free advice are often latent buyers or great referral sources. Here are two reasons to let prospects “pick your brain” and a way to give away knowledge that grows your business.

“Can I pick your brain on social selling, Jeff?” As a B-to-B marketer myself, I cannot afford to say no. Neither can you. Because customers may not want to do it themselves, as we suspect they do. In fact, prospects seeking free advice are often latent buyers or great referral sources.

Here are two reasons to let prospects “pick your brain” and a way to give away knowledge that grows your business.

Is It Stupid to Give Away Your Best Secrets?
“What kind of a business owner would be so stupid as to give away a company secret?” asks business owner Jerry X. Shea. He says prospective buyers constantly ask him how he does what he does.

“My answer … ‘that is why you are paying us to do it, because others can’t,'” says Shea.

“In 1992, I purchased a six-year-old screen printing/embroidery company,” says Shea. “We developed a way to print a four-color process on a T-shirt, and as a result I knew we would get the 10,000-shirt job as other shops in the area could not do it. Now why would I want to post on the Internet what it was we did get that end result?”

Because the Internet is an insurance policy on prospects finding what they need—with or without your help. If they want to do it themselves, they’ll find out how.

Businesses have always created and defended competitive advantages. Today, the Internet speeds-up the spread of information and exposes advantages faster. Bottom line: It’s smart to rely less on proprietary knowledge (to drive success).

The DIY Myth and the Damage It Inflicts
“Giving prospects my best advice for free will help them to do it without me.”

Not always. Here’s why believing this can hurt you.

Don’t confuse customers qualifying you with what you perceive as their purchase intent.

The act of seeking out knowledge does not always translate to customers’ wanting to do it on their own. Even in cases where it does “signal” a customer’s desire to do-it-themselves, what they want may change.

You want to be there when it changes.

Who will be there when customers change their minds? Who will they turn to when switching from, “Oh, heck, I can do that” to “Oh my, that didn’t work quite like I expected” or “Oh my. I had no idea it was that complicated.”

You should be there. You can also structure the (free) knowledge to foster prospects’ change in mindset.

Beware. Avoid the following:

  1. Misinterpreting customers intent to buy. Don’t presume customers want to do (themselves) what you want to be paid for. They may be qualifying you or the challenge they face.
  2. Over-valuing your knowledge. Avoid believing what you know is more valuable than what your knowledge DOES for clients.

Effective Content Helps You Filter Leads
Should every interaction have a financial return? Of course not. However, your time is valuable and in limited supply. Let content do the heavy lifting for you. Let blogs, white papers, video tutorials nurture prospects toward or away from buying.

Effective content marketing on YouTube, blogs or LinkedIn is all about using words to let customers:

  • get confident in their buying decision and/or ability to buy (at all)
  • self-select themselves as leads to be nurtured
  • change their mind and not do-it-themselves—returning to a trusted adviser (you)

Success is not determined by how much knowledge a business gives away. Your success is based on the material effect your advice and knowledge have on prospects.

We cannot afford to say no when customers ask for free advice. Because the act of asking does not always signal a desire to do-it-themselves. Plus, even if they are in “DIY mode” they may try, fail and come back to you—the clear, proven authority.

In my business I try to remind myself daily: Few people are willing to pay for my knowledge … but many are willing to pay for what my knowledge will DO for them. My knowledge isn’t my competitive weapon; my higher level of service is.

“The world does not pay men for that which they know. It pays them for what they do, or induce others to do.” —Napoleon Hill