Is it all in the analytics?

Posted on March 14, 2011 by jonfricker

In the mid-90s we pitched (and won) some direct marketing work for a company offering personal loans. We were told that as long as 0.5% of the people we mailed applied for a loan and that a third of applicants were offered and accepted a loan, then the campaign would generate a positive return on investment.

We did the basic sums, and indeed, assuming we could create, produce and distribute mailing packs for a specific price – it did pay back – marvellous!

The company had a large data management team analysing individuals’ credit worthiness & propensity to need a personal loan and we created occasion-based campaigns to suggest reasons to borrow – a new car, a special holiday, over due home improvements, the family wedding…and of course the default: ‘consolidate your debt and pay less per month’…but for many more months…in the hope that the marriage of consumer needs, credit worthiness and propensity would lead to a converted sale.

I couldn’t help think about the 99.5% of people we mailed who didn’t respond. We could argue that the mailings created awareness and therefore delivered some benefits if you looked at it from the brand owner’s perspective. But what about the people mailed – did they really welcome unsolicited treaties to take on debt for only 28% APR – or did it just hack them off?

So what’s the relevance to all this today?

I read from The Marketing Society that a ‘key business growth driver’ is:

“Smarter use of customer analytics to translate customer and market data into value added strategic insights”. In plain English, I think this means: ‘use information to come up with ideas, products & services which meet consumer needs better than those being offered by your competitors’ – simples.

At the same time, data management companies tell us that thanks to advanced analytical techniques (I think this means an ability to do maths – or at least, programme a computer to do the maths for you) – marketers can now target more accurately and timely than ever before. Marketing agencies also give life to these claims promising their approach is better, smarter, more focussed, less wastage.

It should be great news for the 99.5% of our personal loan victims.

This being the case, am I the only person in the country who receives 3, 4, 5 pieces of direct mail every day – the vast majority of which are unsolicited and irrelevant? Let alone the queue of emails offering me everything from a new job to another expensive event to listen to someone ‘sell’ their wares & the promise of lasting improvements in the bedroom performance department.

And if it’s not the case that companies feel an urge to include me on their mailings simply because I’m ‘me’ – then I have to assume I’m one of ‘many’ – which suggests that most of us receive a ton of irrelevant stuff, despite the assertions of the data and agency experts – resulting in many hacked off people and wasted marketing investment…hardly clever.

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Loyalty and sweets

Posted on February 28, 2011 by jonfricker

There seem to be a lot of conflicting views on loyalty at the moment. The Marketing Society identifies improving customer loyalty as a key driver for growth. Last week alone the Daily Telegraph and Hilton Hotels announced new / upgraded loyalty schemes; the direct marketing / relationship marketing gurus have told us for many years that the cost to retain and build customer value is relatively low compared to the high cost of new customer acquisition. It all sounds very plausible, so I was surprised to read that an analysis of the IPA Effectiveness Awards entries and IPA databank concludes that ‘the loyalty approach only rarely leads to successful marketing outcomes. Loyalty campaigns underperform on almost every business metric’.

It got me thinking about loyalty marketing and what it really means.

Just because a person habitually choses to buy a particular brand or visit a particular retailer doesn’t necessarily mean they are loyal – it may be a case of a lack of choice. Of course most of are overloaded with choice with very little to differentiate one product or service for another. We’re also used to getting ‘deals’ – and it is in this context that loyalty programmes have to compete.

Most loyalty programmes remind me of the child with sweets in the playground ‘be my friend and you can have a sweet’ he proclaims; but what happens when the sweets run out?

The best examples of loyalty seem to be based around the local community. The expectation of my fellow season ticket holders at Charlton Athletic (insert your local team!), still coughing up their hard-earned cash through relegation & regular disappointment on the pitch, still singing their hearts out in support – that’s loyalty. The local café / sandwich shop which despite the growing attention of the multiples chains retains its customers because they help, they smile, they ‘connect’ with their customers – (their fresh bread baguettes also help!) – that’s loyalty.  But it’s not just local businesses, national chains can do it too – look at Majestic Wine – a brilliant retailer in part because it has great things to buy – in part because it is staffed by helpful & motivated people.

Interesting none of these currently has a loyalty scheme.

So what do loyalty schemes actually achieve? Most brand owners, whilst they may desire the exclusive custom of their customers, recognise that most people will have a cluster of brands that are acceptable to them – indeed for the few people, who do buy the brand exclusively – you could argue the relevance of a loyalty programme. But, for the most part, people exercise a degree of choice between their preferred brands and at any one point in time purchase is likely to depend on availability, promotional offers, exposure to advertising, impulse, recommendation and in some cases, simply, chance. In this context, loyalty schemes are really just longer lasting sales promotions designed to sway ‘floating shoppers’ to their brand slightly more frequently. In return the brand owner sacrifices some profit – and if you look at it like this, perhaps it’s not surprising that the IPA Effectiveness Awards conclude that loyalty programmes underperform.

Where loyalty schemes start to make sense is when they collect data on people’s behaviours, their likes and preferences – and use this to increase consumer spend – and, of course, sell it to suppliers for additional revenue…every little helps. But most loyalty schemes don’t reach that level of sophistication.

I’m not saying that most loyalty programmes are flawed, just that many are not really about loyalty – they’re about bribing a purchase – and at worst they wallpaper over the cracks in brand.

I think it was the great Lester Wunderman who once said ‘loyalty is when people buy you when the incentives have stopped’ – I’m not sure we’ve learned his valuable lesson yet.

I read in a recent Trendwatching review that the concept of random acts of kindness is becoming more established; a spontaneous ‘thank you’ – something to appreciate and make you smile – for the few 100% loyalists and floating shoppers alike. I remember our local butcher doing this – the gift of a sausage, individually wrapped for each child, to break up the monotony of the Saturday shopping trip – 25 years later we still prefer to buy meat from the same butcher and there are still queues on a Saturday morning.

Perhaps a key driver for loyalty is customer service and spontaneity – meeting people’s needs better than your competitors, exceeding expectations – rather than resorting to sweets (though the occasional sweet is always welcome).

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Magic and Logic –are we still getting it wrong?

Posted on February 23, 2011 by jonfricker

It’s now almost 5 years since the IPA, ISBA and the Chartered Institute of Purchasing and Supply published Magic and Logic: ‘re-defining sustainable business practices for agencies, marketing and procurement’.

It’s a great publication recognising that some of the things agencies do really add value to a client’s business: ‘Magic’ – creating brilliant ideas from clever thinking as a starter – and that these should carry a premium price; and that some of the things agencies do are more administrative functions: ‘Logic’, which need to be paid for – but shouldn’t carry a premium price.

It’s also full of laudable proclamations: ‘Make procurement your ally not your enemy’; ‘a weak agency trades on price. A strong agency has confidence in its ability to deliver and stands firm’; ’unite for win/win’.

But admit it – the relationship with procurement departments is rarely good – perhaps because we don’t really understand each other’s goals – perhaps because we haven’t changed the way we do things.

At an IPA event to launch Magic & Logic a guest speaker – the procurement manager for a brand leading High Street chemists, attempted to justify why it was acceptable for clients to ask agencies for creative proposals without payment when pitching for business. – I admit my first thought was next time I have a headache I’ll pop into the local branch – take an assortment of remedies – and then go back and pay for the one that cures me at a later date.

On reflection, I started to get annoyed that at the precise moment we were talking about the added value of thinking and creativity – the procurement professional was advocating that agencies give away Magic – it didn’t make sense then, and it doesn’t make sense now.

Sadly I don’t see much change these days – agencies still give away the ‘Magic’ and try to make up their fees on ‘Logic’ – we’ve got it the wrong way around.

Perhaps a way forward is to learn better how to work with procurement – here are six thoughts:

  1. Don’t underestimate the experience of procurement in buying marketing services – they don’t just buy paper clips and staplers, many are former marketing professionals – both client and agency-side.
  2. Understand their objectives – inevitably procurement will specify the KPIs for a campaign – they also have their procurement  KPIs – ask what they are and negotiate in such a way that it helps them achieve their goals.
  3. Use a procurement expert to advise you – to help you negotiate –procurement professional to procurement professional. Some clients use procurement to distance themselves from the ‘difficult money’ questions – use experts to give you an objective perspective.
  4. Make sure you know what a successful campaign will look like and how will you will measure success – think about sharing the risk and getting rewarded for exceeding your goals.
  5. Think about  your agency remuneration model – ask yourself about the relevance of set hourly / daily rates given that sometimes you might be spreading ‘Magic’, sometimes administering  ‘Logic’.   Make sure you get handsomely paid for Magic – for ideas and thinking which builds your client’s business
  6. Measure your agency revenues by Magic and Logic and a place a focus on increasing the proportion of your revenue generated from Magic.

Procurement teams are likely to increase in importance as businesses feel the squeeze and need to justify marketing expenditure and demonstrate value to their finance directors – not the cheapest but the added-value for money – and we’d better learn to embrace them effectively.

 

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KFC – no longer Finger Lickin’ Good

Posted on February 21, 2011 by jonfricker

My heart sank when I read that KFC had decided to ditch (for the second time) ‘Finger Lickin’ Good’ and replaced it with ‘So Good’ – a new slogan promising a healthier focus.

I suspect that someone has written a report for the KFC Colonels about how unsanitary it is to encourage people to lick their fingers after a hearty bucket of chicken & that it would have to go.

OK, I accept that finger lickin’ might not be good especially if you’re sharing coleslaw or beans – but the notion that KFC food, often eaten with your fingers, is so tasty that you have to lick your fingers clean is true, witty & whilst you could claim other brands might claim it too – they haven’t – and, therefore, the thought has become owned by KFC.

It’s also built on an observation of human behaviour. The marketing cognoscenti will probably call it an insight – a quality that many seem to think has only recently been discovered …oblivious to the fact that people have been identifying insights for years.

The MD of KFC UK – (heavens I hadn’t noticed before how close the company initials come to an irreverent fashion brand) – rightly exclaims his excitement for the new ‘So Good’ slogan: “it’s much more than just a new slogan – it’s about becoming everything we do, including our great tasting food, the work we do with our people, and the way we operate in the local community”…. Note: nothing about ‘healthier focus here’

Bravo Mr. MD for getting behind your new slogan – but let’s be honest – ‘So Good’ is ‘So Bland’ – it just reeks of marketing people aimlessly plotting through the dictionary, a Thesaurus and ‘create a slogan’ websites in the vain hope of coming up with something interesting.

‘Finger Lickin’ Good’ has been used for 50 years – testament to the brilliance of the team who created it. It was reintroduced after a nine year gap by BBH in 2008 because: “We wanted to reintroduce a world famous line”.

I wonder if anyone really believes that ‘So Good’ will last for the next 50 years and become a world famous line – or will it end up in the great bucket of mediocre slogans?

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Why all the buzz around Shopper Marketing?

Posted on February 18, 2011 by jonfricker

I’ve got another bee in my bonnet and like an incessant buzz on a summer’s day – it’s starting to annoy me.

I’m amazed at how a whole ‘new’ marketing category is being built around something most of us do everyday of our lives – shopping.

Specialist agencies are springing up, large agency groups are investing in shopper marketing expertise and you can spend a small fortune on conferences and seminars which promise to share learning and experience, but are more often simply sales platforms for learned speakers.

I read about the importance of ’understanding how one’s target consumers behave as shoppers, in different channels and formats, and leveraging this intelligence to the benefit of all stakeholders, defined as brands, consumers, retailers and shoppers’.

I’m encouraged to think shopper not consumer with an example of someone buying babies’ nappies to underscore this brilliant insight into discovering the silver bullet to success.

But is it really new?

If you take the time to speak to the Marketing Directors  of the major High Street and shopping centre brands do they believe that ‘shopper marketing’ is the answer to their prayers…or is it just effective retailing marketing?

Let’s think for a minute – retailers want to grow profitable sales – and they do this in many instances with a focus on growing category sales. They run marketing programmes designed to increase traffic by increasing consumer penetration and increasing frequency of visit. Of course encouraging traffic has little value if people don’t spend money so they also employ tactics to encourage people to convert traffic to sales and to increase spend levels too….nothing new here!

Brand owners want to encourage profitable sales & they need distribution and presence in retail to achieve this – (OK let’s put aside on-line sales for now – though growing quickly, on-line still represents a relatively small percentage of total sales in most categories). So to be successful brand owners need to demonstrate how sales of their brand will help build the retailer’s sales and profit by better meeting consumer needs – with a focus on incremental, not just cannibalising competitive sales.

Consumers have grown to expect choice (largely thanks to oversupply and a lack of real differentiation) – and of course retailers meet this need for choice generously.

The challenge is how to make sure everyone wins…the retailer, brand owner and consumer.

When faced with a marketing challenge I always start with thinking about people – and what they need to make decisions – preferably to the benefit of the brands we’re representing at that particular moment.

Some consumers have pre-determined purchase intentions and just want to get into a shop, buy and escape. Others browse, sometimes with intent to purchase, sometimes because it’s something to do – part of the social calendar.

Some are susceptible to interruption, to new ideas – some simply there to enjoy the entertainment of shopping.

Some want advice and guidance – some are confident to find out for themselves.

And, of course, the same person may have different needs for different categories and in different contexts.

Shopper marketers will have us all believe that by using a magical combination of science and art, they can build sales – and indeed they may be able to do so.

But retailers have long recognised these different shopper needs and developed sophisticated merchandising and communications programmes to optimise traffic flows, to manage customer journeys, to prompt, to tempt – all in the interests of maximising spend.

(And if we’re lucky they have renewed focus on good, helpful, positive and enthusiastic customer service – thank you Mary Portas for reminding us all of the importance of good human behaviour and interaction.)

So is shopper marketing anything really new? I don’t really think it is – and in this context I don’t understand the buzz.

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Nokia – misguided youth?

Posted on February 11, 2011 by jonfricker

I like the honesty of Stephen Elop, Nokia’s new chief executive, in a memo leaked to technology website Engadget, he writes:

“We are standing on a burning platform. We have more than one explosion – we have multiple points of scorching heat that are fuelling a blazing fire around us.

There is intense heat coming from our competitors, more rapidly than we ever expected. While competitors poured flames on our market share, what happened at Nokia? We fell behind, we missed big trends, and we lost time.”

The first iPhone shipping was in 2007, and we still don’t have a product that is close to that experience. Android came on the scene just over two years ago, and this week they took our leadership in smartphone volumes. Unbelievable.”

And of course he’s right, whilst competitive manufacturers have developed ever appealing smartphones, Nokia has lagged behind.

OK – so it’s easy to blame a lack of NPD (or at least a lack in what is perceived as really innovative NPD) for their plight – but I think there’s been another issue at play, at least in the UK anyway.

Nokia in the UK is still a great brand, it generates high sales volumes & people, business customers and private individuals, love Nokia’s intuitive user interface.

For many of us, we couldn’t do without it. It’s a classic mainstream brand in the innovative technology sector.

And here’s the challenge – how to market to the people you serve best? Some of whom will want the latest technical wizardry, but many of whom just want a mobile phone that works brilliantly.

I think Nokia lost their way a couple of years ago – up to that time the advertising was mainstream, the sponsorship was mainstream (remember the X Factor), retail promotions were mainstream – it was a good fit.

Then a change in UK personnel brought a change in marketing focus – an almost manic focus on ‘youth’ and ‘new media’.

Of course it’s easy to understand why such a fundamental mistake was made – the youth market is seductive for marketers:

‘it’s fun & sexy’; ‘catch consumers young and benefit from higher lifetime value’; ‘technology brands need to appeal to the youth market to maintain credibility’

…all this is fine, if you have the products to back it up – but as acknowledged by Mr Elop, Nokia didn’t have the products. And by pursuing the dream of appealing to a youth market, Nokia also neglected its core consumers – and so many of them left the brand.

Hopefully today’s announcement of the establishment of a new relationship between Nokia and Microsoft will herald the development of new phones which will knock the iPhone (and HTC, Samsung, Blackberry, LG) off their perch – and when that happens, it’ll give Nokia the opportunity to make inroads into the youth market – in the interim, I hope it focuses on meeting the needs of its existing consumers.

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Being Savvy

Posted on February 8, 2011 by jonfricker

A high proportion of marketing briefs these days seem to contain the statement that the target audience is ‘savvy’ – and indeed, in the spirit of effective mirroring, a high proportion of agency responses also acknowledge that the target audience is ‘savvy’.

But what does it actually mean? And is it anything new for marketing people to get to grips with?

 Savvy is defined in the Oxford English Reference Dictionary as ‘Knowingness, shrewdness, understanding’ – OK, so people aren’t daft.

As far as marketing communications is concerned, people understand it’s about trying to build preference for a particular brand, encouraging them to like one brand more than competitive alternatives, and therefore buy more of it.

Many years ago that great sage Jim Williams at Young & Rubicam talked about communications literate consumers – referring precisely to this point. After all we’ve all been exposed to advertising spiel for years – it’ll be 56 years in September 2011 since Gibbs SR proclaimed itself as ‘the tingling fresh toothpaste for teeth and gums’ on the first UK TV advertisement – and, of course, print media pre-dates TV by many years.

No doubt the internet encourages many people to research their purchases in advance (even if that in reality means ‘comparing prices’ rather than learning to appreciate the comparative benefits promised) – so perhaps savvy means ‘price conscious’?

Or does it really just mean it’s increasingly difficult to convince people about the merits of a particular brand – that people are simply not as gullible as they once were – that we all have to work a lot harder to create campaigns that have any chance of being effective?

My suspicion is that ‘savvy’ has become just another word that marketing people love to adopt when they don’t really understand what makes people tick – we play lip service to it, but not much else – whereas what it really means is that we all have to work harder to seduce /persuade /encourage/ entice people to buy ‘our’ brands.

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“We’ve got 800 ‘likes’ on Facebook – brilliant!” … is it?

Posted on February 6, 2011 by jonfricker

The number of Facebook ‘likes’ a brand attracts has started to be used as a measure of success. Is this a temporary trend or is it a rather superficial measure at a time when there is a continued and increasing demand to demonstrate ROI?

On the one hand, I can see the benefit of a brand being able to demonstrate its popularity, that people are willing to declare their support publicly – assuming that they are genuine advocates, not just the result of an appeal to friends and work colleagues – as a means to encourage others to think positively about a particular brand, especially in markets which are in over supply and suffer from a lack of differentiation.

But does the fact that a couple of hundred people claim to ‘like’ your brand really make a difference, or is this another example of marketing people being seduced by this season’s ‘King’s new clothes’?

As I see it, there are three broad types of measurement – influencing, behavioural and the ultimate measure, financial.

Of course, all are interlinked.

Influencing measures: brand health, awareness and esteem measures sit at one end of the ‘influencing’ scale with more tactical things like coupons redeemed, samples distributed, web site hits and, I’d suggest, Facebook  ‘likes’ at the other end. All can be are interesting in that they can effect behaviour.

Behavioural measures: penetration, frequency & spend/weight of purchase – are helpful because they tell us how much sales revenue is generated – they also help us judge whether objectives are best addressed through exploiting headroom amongst existing buyers or by building penetration.

Financial measures: specifically market share (simply because share is a measure of relative performance against the market and competition) and profit are essential to understand. I’m not a great fan of just looking at sales revenue – a deep discount strategy might shift lots of volume and generate sales, which may be good to sustain distribution, protect factory output, or keep a competitor in its place – but it’s likely to be to the detriment of profitability.

The reticence of many companies to share profit margins with their marketing agencies – “it’s too commercially sensitive” – is perhaps a primary reason why agencies default to thinking about behavioural and influencing measures – they simply don’t have access to the financial information often enough.

I also wonder if marketing people use ‘confidentiality’ as a screen because they don’t evaluate the value of the campaigns they are proposing rigorously enough – but as long as they continue not to set commercial measures, they can expect finance directors to remain somewhat questioning over the return from marketing investment.

Whether you’re planning a campaign to increase sales of a leading FMCG brand on a national scale – or if you are a local café promoting ham and cheese baguettes, establish the right measures – those that influence behaviour, behaviour itself and, above all, the profit on incremental sales – but please don’t just leave it as ‘likes’.

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Language of Marketing

Posted on January 31, 2011 by jonfricker

Perhaps a love for language and the ability to do sums are the main reasons for my career in marketing. But the language of marketing continues to fascinate – and frustrate me.

Marketing people seem to be particularly receptive to using language and ideas – many introduced by the latest airport business lounge best seller – as a type of faux science which they use to conceal shallow thinking, claiming their approach delivers better campaigns & therefore justifies higher fees – (no problem with higher fees if grounded on genuinely intelligent work).

‘Engage’ has suddenly, apparently, become the key to successful marketing campaigns – interesting word ‘engage’ – a sign of personal commitment, a busy telephone line, an encounter in battle, a conversation. But surely marketing campaigns have always been designed to ‘engage’ – I can’t quite remember the last time we were asked to produce a campaign which would alienate the people we wanted to feel or do something as a result of that campaign.

‘Nudge’ is another recent favourite – at the beginning of 2011, the COI wrote to agency associations asking them to canvass their members for thoughts on how communications might be effected in a time where our Government has decided to ‘Nudge’ people…hot on the tails of Obama.

Of course, engage and nudge are not alone – who can forget presentations littered with paradigms; synergy; tipping points; herds; word of mouth; one-to-one / relationship / contextual / buzz/ smart /action marketing…and only last week ‘social media currency’ – used to describe the number of ‘likes’ on Facebook…good grief!

In the not too distant future I’m expecting to read that ‘in a changing world, successful campaigns will be designed to nudge consumers over tipping-points with engaging messages’ – hopefully that’s when someone will declare ‘that’s enough – please get back to marketing basics.’

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Cadbury’s return on digital marketing investment

Posted on January 29, 2011 by jonfricker

I read an article the other day claiming that Cadbury’s digital agency are reporting £3.00 sales generated for every £1.00 invested in digital advertising.

On the one hand, I thought, brilliant, well done for measuring the return, but on the other hand I couldn’t help feeling that someone was being a little bit smug in declaring a 3:1 return.

£3.00 ‘sales’ I noticed, not £3.00 ‘profit’ – so unless Cadbury generates an impressive 33% net profit on sales (which of course they may do) – then the claims of significant success are a tad less impressive.

The other thing the article didn’t tell us was whether the £3.00 sales were incremental.

So fair do’s in trying to measure success, but let’s make sure we apply a degree of robustness before declaring our brilliant effectiveness.

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