The Battle Between Macro and Micro Marketers

Reading first-quarter reports from a variety of companies, not surprisingly, everything was focused on the “macro” numbers. The totals. Total sales and revenue, total costs, total number of employees, total ROI. That’s what the analysts and shareholders say they want to see. Don’t bother them with “micro” details: These just get in the way of the “big picture” and anyway, it is about time for lunch.

marketers battleReading first-quarter reports from a variety of companies, not surprisingly, everything was focused on the “macro” numbers. The totals. Total sales and revenue, total costs, total number of employees, total ROI. That’s what the analysts and shareholders say they want to see. Don’t bother them with “micro” details: These just get in the way of the “big picture” and anyway, it is about time for lunch.

There is no question that the big picture is important. But all macros are the sum of lots of little micros; and especially, the health of data-driven marketing businesses is determined by the optimization of each of these micro details. When they are summed together, they produce averages. And it is no secret that average is the most dangerous word in all of marketing — especially our data-driven kind.

Imagine 10 men sitting at a bar having a beer. The net worth of five of them is $250,000 and the net worth of the other five is $350,000. It is easy to calculate that $300,000 is the average net worth of the men in the bar. But now another thirsty fellow comes into the bar and orders a beer. His name is Bill Gates and his net worth is measured in billions. Now what’s the average net worth of the men in the bar?

It is perhaps a silly example, but if you are a marketing professional, you know that in working to define the income range of your target audience, the distorted figure you get when Mr. Gates’s net worth is averaged with those of the other men in the bar, it makes the “average” totally useless from a marketing point of view.

Like so many other things in today’s increasingly digital world, fortunately fewer and fewer marketing professionals are talking about average when they have a cornucopia of metrics that invite us to look at each specific person. The end of average is upon us, and we shall not be sorry to see it go.

And yet, even when we operate at a micro level, valuing each action or combination of actions, we can sometimes overlook the proverbial forest for the trees.

Especially if we have a big success, one of the easiest things in the world is to become complacent about it. That’s the direct opposite of “optimization.” Let’s call it lazy minimization.

Recently, a client, working to develop just how much marketing money he could afford to spend in each available medium and the optimum mix, challenged one of the golden rules I had laid down for the use of the Allowable Cost per Order (ACPO) model — never spend more than the ACPO.

The ACPO Methodology is explained in detail in the e-book “Profiting from the Magic of MarketingMetrics,” available from Target Marketing. For a free, short “How to Calculate the ACPO” presentation, just email “ACPO, Please” to pjrosenwald@gmail.com.

Turning away from his computer screen, he posed a very simple question, one that I should have asked myself years ago: “If you never spend more than the ACPO, are you optimizing your profit, or are you just playing it safe?”

While there is certainly nothing wrong with being “safe,” it is hardly the way to drive maximum growth.

When we ranged the different media cells from the lowest cost per order (CPO) to the highest and concentrated on the effect on the cumulative profit, we received a compelling message that our historic focus on not allowing the ACPO to be exceeded was detrimental to profit. I’m still kicking myself for not having asked and answered that question years ago.

Peter's ACPO chart

It’s all in the numbers. Had we eliminated all CPO cells higher than the ACPO of $265, we would have had 707 fewer sales and, therefore, less market share — a shortfall of 35 percent. But we would have spent $248,313 — a savings of $323,337, or 43 percent. That had always struck me as the best strategy.

But in asking the “optimum profit” question, my colleague had opened the door to a whole new way of seeing. Because, as you can easily see in the illustration, the optimum cumulative profit of $429,508 comes with the 13th cell at a CPO of $441, compared to the ACPO of $265. If optimum profit is really the name of the game, which it usually should be, then cutting off at the ACPO would be the wrong strategy.

We see this kind of aggressive thinking more and more and it is exciting. What we see less of, especially in SMBs, is a willingness to grasp the fact that however well things are going today, they could be improved if only management would abandon complacency with the “good” and focus on making it “better.” If only they would insist on getting inside the big macro numbers and look at the micros.

In today’s world, if the aggressive collection and use of the right micro data isn’t part of the core business case of an entrepreneurial company, something vital is missing.

Endit …

When Marketing and Politics Collide

America is politically obsessed right now. Each day there is at least one and often several news items that lead to a cycle of finger-pointing, name-calling and outrage. It doesn’t matter which party or candidate you endorsed, where you live or where you get your news — emotions are running high all across the land. What does this politically and emotionally charged climate mean for marketers?

Politics and marketingAmerica is politically obsessed right now. Each day there is at least one and often several news items that lead to a cycle of finger-pointing, name-calling and outrage.

It doesn’t matter which party or candidate you endorsed, where you live or where you get your news — emotions are running high all across the land. What does this politically and emotionally charged climate mean for marketers?

There have long been companies and business models defined by a cause or a philanthropic purpose. For instance, Tom’s Shoes is one of a host of buy one/give one modeled retailers that have a clear purpose built into their brand. But that’s different than consumer brands taking a stance on a timely and divisive political issue.

Well known corporate entities and brands like Starbucks, Nordstrom’s, Lyft and Amazon have all taken recent public, political positions — up to and including boycotts and legal action. Research from Morning Consult reveals the support behind that kind of activity — at least among young adults. Another study from J. Walter Thompson Intelligence further validated and quantified that finding, citing “Americans are […] overwhelmingly supportive of brands that take stances on issues: 78 percent agree that companies should take action to address the important issues facing society, while 88 percent agree that corporations have the power to influence social change.”

Does political activism help a brand with conventional brand metrics? Maybe. The Super Bowl LI ads that had a political message appeared to create more buzz, engender more sharing and had higher recall than non-political ads aired during the same game but reviews are mixed on whether these ads were effective at creating emotional connections, building brand favorability or purchase intent. Longer or deeper commitments to that strategy would presumably produce different results but that is not clear as yet and different, additional metrics must be considered when examining the effect of a political stance.

The decision to embrace a cause or take a political stance has potentially significant impact on market perception and brand performance. That impact could be positive or negative and requires a thoughtful approach to what must be a long term commitment.

Know Your Audience

We’re a nation split right down the middle on many critical issues so taking an action or position is a chancy endeavor unless your audience is well understood and unified on that particular issue. Even so, the threat remains that some will see a vocal and public position as unwarranted, in poor taste, or simply outside of the realm of a brand’s responsibility or authority.

For some niche or lifestyle brands it’s natural to take a stance on social or political fronts that relate to the brand’s value proposition. Their audiences accept and even expect it. That assumption should be validated with prior research of course, and be sure to factor in any potential backlash from broader populations exposed to ads. In general, the universe of active, political brands is expanding as consumers increasingly look for more than a transactional relationship with their favorite brands. If a consumer is going to emotionally connect to a brand, they want to know they are in sync on important matters. Social media has given both brands and consumers the tools to connect on multiple levels.

That deepened brand relationship tends to happen after brands have done the hard and time-consuming work of establishing a clear brand voice and messaging platform based on consumer information, insights and feedback. In the future, more of that work and messaging will likely be around issues, causes, and policies to help develop recommendations around social and political activism. This is not familiar territory to most marketers and they may need to reach out to consultants to help them understand and frame their options.

Corporate Responsibility

What is a brand’s obligation to enter the dialogue? There are a dizzying number of issues to consider as the link between politics and business issues is becoming more direct and more visible to consumers. The decision is unique to each company but colored by an inherent lack of control over the final message.

Brand messaging is picked up and replayed in both traditional and internet media outlets and then by consumers themselves. Consumer statements are often laced with approval or condemnation and then further exaggerated by the bubbles of self-validation that social media networks and news/opinion curation encourages. This generates an exaggerated reaction to any action or statement as the sling-shot effect of the Internet magnifies both the reach and impact within certain, connected populations. So a little potentially goes a long, long way but not always in a predictable direction. Corporate responsibility and communication officers have never been more challenged.

Don’t Make Me Think — Or Choose: Marketing From a Position of Strength

You think you’re being helpful by offering your site visitors and email subscribers a lot of choices. You’re not. You’re being counter-productive. And you may even come across as a little desperate. The counter-productivity is a result of our natural inclination to shut down when confronted with too many options to process.

Position of StrengthYou think you’re being helpful by offering your site visitors and email subscribers a lot of choices. You’re not. You’re being counter-productive. And you may even come across as a little desperate.

The counter-productivity is a result of our natural inclination to shut down when confronted with too many options to process. You’ve probably heard of this referred to as analysis paralysis or the paradox of choice.

These phenomena are very real, and offering too many choices, even if they are presented in a visually compelling fashion, leads a higher percentage of your audience to opt for “Door No. 3” — doing nothing.

Offering fewer choice requires that you do the research and planning work before crafting your offer so that you know what will resonate with each of your audience segments. Once you’ve done the work to establish your audience’s needs, there’s no risk in offering a manageable number of options. You already know what they want.

Reducing that risk has the added benefit of eliminating even a whiff of the desperation that comes with trying to please everyone all the time.

Appealing a little to everyone isn’t the goal. The goal is to appeal strongly to those best suited to benefit from your product or service. This allows you to market from a position of strength. You’ve built a great offer around a product you know to be of value to your target audience. Now you know your marketing is much more helpful than intrusive. (Assuming you’re backing it up with great content.)

Don’t dilute your message with extraneous choices or choices designed to appeal to other segments. Those belong elsewhere, on separate landing pages or in emails targeted specifically to those segments. (You are segmenting your email list, right?)

The action you want your audience to take should be immediately clear, apparent, and transparent. This isn’t the Penn & Teller show. You’re not going to trick anyone into taking meaningful action.  You can only convince them that what you’re offering is worth their time.

That isn’t to say that you want to offer your audience no choice. Frequently, a choice of options is appropriate for even a tightly segmented audience. But that choice should be limited to just a few options. As in two or three — tops.

And your CTAs should not be equally weighted. As I mentioned above, there should be a clear objective, with everything in the email or landing page pointing toward that desired action. The secondary action(s) should be just that — secondary. They should be an acknowledgement that our research and data and segmentation might not be perfect and that some members of our audience might be just slightly off the target you’ve created. That’s OK. Those secondary choices also serve to re-affirm the choice the bigger part of your bell curve is making.

Gmail’s Tabbed Inbox: What Is Your Risk?

Marketers are vacillating between “no big deal” and “panic mode” when they think of Gmail’s interface that automatically sorts incoming emails. There are two questions that every emailer needs to ask: “What’s our risk?” and “How do we prepare?”

Marketers are vacillating between “no big deal” and “panic mode” when they think of Gmail’s interface that automatically sorts incoming emails. It continues to be a hot topic for users and marketers. Early feedback from Google suggests that users like it because there has been a strong retention rate of the tab experience. This isn’t surprising because the automated sort process simplifies life in the email world. Marketers can expect the tabs to stay.

The effect on email marketing results will fail somewhere between a complete derailing of campaigns and very little change. There are two questions that every email marketer needs to ask: “What’s our risk?” and “How do we prepare?” Answering those questions now makes it easier to respond if the changes have a direct effect on your business.

What Is Your Risk?
Assessing your risk begins with a review of your subscriber list. Estimating how many subscribers use Gmail isn’t as simple as one might think because there are two types of Gmail users. The easiest type to identify includes addresses that end with @gmail.com. They are confirmed users. The second is impossible to identify because Gmail provides email services to corporations, schools and government offices. You would have to have Google’s proprietary list of Gmail clients to know who to tag.

Judging by the databases we’ve analyzed, B-to-C companies have a better ability to measure the risk than B-to-B because people tend to use personal email addresses for consumer shopping. B-to-C companies can look at known Gmail users to access the risk. B-to-B companies will have a harder time because their subscribers tend to use company or organization email addresses. There are always exceptions. One exception for B-to-B is companies that market to soloprenuers.

A large base of Gmail users doesn’t automatically translate into high risk. The tabs have no effect on emails opened in applications like Outlook. There are studies that suggest that direct Gmail opens are less than 4% of total opens. Globally, there may be very little risk. What happens globally doesn’t matter if your database houses a high percentage of direct Gmail users.

How Do You Prepare?

  • Segment known Gmail users. This makes it easier to monitor open rates and times. The timing is especially important if your company sends limited time offers. Placing promotional emails in a separate tab may delay opens instead of reducing them. If the delay extends beyond the offer expiration, it will have a direct effect on revenue.
  • Watch for consistent trends. Gmail users tend to be a bit erratic with their open rates. It’s not unusual to see fluctuations. A small drop may be a hiccup instead of the beginning of the fall.
  • Monitor individual behavior. If you can identify individuals who use Gmail and consistently open your emails, create a segment for them. These are highly engaged people that want to read your messages. A drop in their open rate indicates a problem.
  • Ask for help. If there is a negative Gmail tab effect, ask Gmail users to flag your emails so they will go to the Primary tab. Some marketers started doing this shortly after the tabs became available. I don’t recommend this preemptive move because the new inbox is being tested by users now. If there isn’t a problem, why bother subscribers with information that may be confusing for them? It may not work anyway. While people are in test mode, they may switch between the classic and new versions. When they do, the flagged addresses revert to their original status.
  • Make your content more valuable. When people want to read your emails, they will find them. It doesn’t matter where they are hidden. Avid subscribers look for the messages and will email you if they don’t find them.
  • Watch for trends. If one or more segments start showing declines in response rates and revenue, look for similarities in email addresses. It could be a Gmail issue where the service is being provided to a third party.