Tuesday, March 29, 2011
Marketing: it's in the mind
Consider this: In taste tests, consumers can rarely tell the difference between different brands of chilled cola (some claim we can’t even tell the difference between a cola and Sprite). Below a certain temperature, all we taste is the cold, the sugar, and the sensation of the bubbles on our tongue. The rest of the experience is in the brand. And the brand resides in the mind, not on the tongue.
Monday, March 28, 2011
Welcome to Just Marketing
Have you ever heard anyone say "ah, but that’s just marketing."
Maybe you've even said it yourself.
“Just marketing”??? What does that phrase mean?
As I understand it, at best it is dismissive, a trivialization of marketing – as in, “it’s nothing important,” “nothing you should take seriously” – it’s just marketing.
At worst, it is synonymous for "it's a lie," or "they're just lying." As
Sunday, March 27, 2011
The Devil (and the Details) are in the Budget
All major decisions that an organization makes are made during the budgeting process. In many cases, the budgeting process is informed by a strategic plan or multi-year proformas. However, the practical and strategic decisions that are necessary to put a strategic plan into play are primarily discussed and decided upon during the budgeting process.
Ideally, an operating budget is created and adopted by an organization’s senior staff, thereby ensuring that each department is represented. For senior managers that represent marketing and are responsible for earned revenue streams, the following are some important questions to ask during the budgeting process:
1) How accessible does your organization desire to be?
• Average Ticket Price and Percent Paid Capacity. In major organizations, earned revenue can come from a myriad of different sources including ticket sales, fees, parking, restaurants, concessions, event rentals, merchandise, advertising, classes and summer camps. However, for most performing arts organizations, the majority of earned revenue comes from ticket sales. When adopting sales figures for tickets, a manager must consider two variables: average ticket price and percent paid capacity. When a budget is being developed, the higher these two variables climb, the less accessible an organization becomes. For example, if an organization adopts a budget with an overall average ticket price of $60 and an average percent paid capacity of 80%, it will be forced to enact pricing and marketing strategies to fulfill its budgetary requirements, meaning that only 20% of its inventory can be sold at less than $60 (and this includes all complimentary tickets).
• Complimentary Tickets. All earned revenue budgets should include a well thought out complimentary ticket budget. In many cases, organizations will find themselves with competing interests. Economic pressures can force an organization to increase its percent paid capacity and average ticket price, but doing so will also force a change to how an organization uses complimentary tickets. Many organizations use complimentary tickets for charitable donations, community outreach, publicity, donor cultivation, staff benefits and artist relations. However, only the budget will determine the amount of tickets available to use in any given year for these purposes. It is the responsibility of marketing representative to remind the budgeting team that no matter what current standard operating procedures are or what the desires are of staff members, the higher the average ticket prices and percent paid capacities go, the fewer tickets, especially for prime seat locations, will be available for complimentary tickets.
2) How much risk are you willing to take? The budgeting process can be pressure filled. After several rounds of budgeting, the pressure mounts on the marketing representative to increase his earned revenue forecasts. In doing so, there is only one question the budgeting team needs to ask—how much risk are we willing to take? A couple of bits of advice:
• Let the Data Do the Talking. A marketing representative should have years of data at his disposable, and he should use that data to produce the most accurate earned revenue projections he can. In projecting ticket sales for individual projections, one needs to do two things: 1) study the micro sales patterns of similar productions in recent history (3-5 years), and 2) study the macro sales patterns of all productions in recent history (5-7 years). The sales patterns of similar productions should give you a good indication of what is both possible and probable. I try to select at least three similar productions: one that under-performed, one that performed as expected and one that over-performed. Using the data from all three gives you a statistically probable figure, with room to do better than your projections. The macro sales patterns gives you an overall sense of standard operating revenues as well as outliers. If you notice during your budgeting process that you are forecasting that each of your productions will perform in the top 10% of all productions in your recent history, you might want to leave a little more room for failure. If the organization you are working for is taking the appropriate amount of artistic risk, you will need it. Final word of advice—no matter how much you are encouraged to do so, never go with your gut or “a feeling.” Decisions like these are should be left to the data.
• If You Are Uncomfortable, Say So. Marketing representatives have one primary responsibility in the budgeting process—they must be honest and transparent. If a budget makes you uncomfortable, voice your opinion. Ultimately, the budgeting team and the executive staff have final authority over the budget, but as part of the budgeting team, you must tell people when you are uncomfortable. That doesn’t mean you shouldn’t pass a budget that makes you a little nervous. All of us have passed budgets in the past that have kept us up at night, particularly in the past few years during the global economic crisis. However, you should never support, present and defend a budget that is irresponsible and dishonest. I am fortunate that I have never been placed in the position where I have been told I must present a budget that is irresponsible or face the consequences. However, if am ever faced with that position in the future, I would immediately start my search for new employment.
• Tell the Truth No Matter How Uncomfortable. I am fortunate to have a close working relationship with the senior staff at my current position, which allows for open and honest discussion. However, even in the best of environments, it can be uncomfortable to tell the truth. As the marketing representative on the budgeting team, you are in your position because the organization requires your truthful analysis and opinion. To not provide it for any reason is tantamount to dodging your responsibility. That being said, you also must be open to hearing sometimes painful and uncomfortable analysis as well.
3) Do you have the capacity to fulfill the budgeted expectations? My boss at Arena Stage has a great way of phrasing this question during the budgeting process. He diligently asks throughout the process if we have the capacity and resources to match our ambitions. It is a succinct and direct question that focuses the entire budgeting process. I am afraid that too many times arts organizations extend themselves by having unrealistic budgets because this question wasn’t asked. In terms of marketing, even if demand warrants a high budgeted goal, one needs to ask if you have the infrastructure to execute, which can include a multitude of actors such as staffing, technology, and operating procedures.
The final question I like to ask myself in terms of revenue projections is the ultimate litmus test—do we have an equal or better chance of over performing on budgeted revenue goals as we do under performing? If there is evidence that a greater likelihood exists that an organization will under perform rather than over perform, then I encourage you to adjust expectations to mitigate your risk.
Ideally, an operating budget is created and adopted by an organization’s senior staff, thereby ensuring that each department is represented. For senior managers that represent marketing and are responsible for earned revenue streams, the following are some important questions to ask during the budgeting process:
1) How accessible does your organization desire to be?
• Average Ticket Price and Percent Paid Capacity. In major organizations, earned revenue can come from a myriad of different sources including ticket sales, fees, parking, restaurants, concessions, event rentals, merchandise, advertising, classes and summer camps. However, for most performing arts organizations, the majority of earned revenue comes from ticket sales. When adopting sales figures for tickets, a manager must consider two variables: average ticket price and percent paid capacity. When a budget is being developed, the higher these two variables climb, the less accessible an organization becomes. For example, if an organization adopts a budget with an overall average ticket price of $60 and an average percent paid capacity of 80%, it will be forced to enact pricing and marketing strategies to fulfill its budgetary requirements, meaning that only 20% of its inventory can be sold at less than $60 (and this includes all complimentary tickets).
• Complimentary Tickets. All earned revenue budgets should include a well thought out complimentary ticket budget. In many cases, organizations will find themselves with competing interests. Economic pressures can force an organization to increase its percent paid capacity and average ticket price, but doing so will also force a change to how an organization uses complimentary tickets. Many organizations use complimentary tickets for charitable donations, community outreach, publicity, donor cultivation, staff benefits and artist relations. However, only the budget will determine the amount of tickets available to use in any given year for these purposes. It is the responsibility of marketing representative to remind the budgeting team that no matter what current standard operating procedures are or what the desires are of staff members, the higher the average ticket prices and percent paid capacities go, the fewer tickets, especially for prime seat locations, will be available for complimentary tickets.
2) How much risk are you willing to take? The budgeting process can be pressure filled. After several rounds of budgeting, the pressure mounts on the marketing representative to increase his earned revenue forecasts. In doing so, there is only one question the budgeting team needs to ask—how much risk are we willing to take? A couple of bits of advice:
• Let the Data Do the Talking. A marketing representative should have years of data at his disposable, and he should use that data to produce the most accurate earned revenue projections he can. In projecting ticket sales for individual projections, one needs to do two things: 1) study the micro sales patterns of similar productions in recent history (3-5 years), and 2) study the macro sales patterns of all productions in recent history (5-7 years). The sales patterns of similar productions should give you a good indication of what is both possible and probable. I try to select at least three similar productions: one that under-performed, one that performed as expected and one that over-performed. Using the data from all three gives you a statistically probable figure, with room to do better than your projections. The macro sales patterns gives you an overall sense of standard operating revenues as well as outliers. If you notice during your budgeting process that you are forecasting that each of your productions will perform in the top 10% of all productions in your recent history, you might want to leave a little more room for failure. If the organization you are working for is taking the appropriate amount of artistic risk, you will need it. Final word of advice—no matter how much you are encouraged to do so, never go with your gut or “a feeling.” Decisions like these are should be left to the data.
• If You Are Uncomfortable, Say So. Marketing representatives have one primary responsibility in the budgeting process—they must be honest and transparent. If a budget makes you uncomfortable, voice your opinion. Ultimately, the budgeting team and the executive staff have final authority over the budget, but as part of the budgeting team, you must tell people when you are uncomfortable. That doesn’t mean you shouldn’t pass a budget that makes you a little nervous. All of us have passed budgets in the past that have kept us up at night, particularly in the past few years during the global economic crisis. However, you should never support, present and defend a budget that is irresponsible and dishonest. I am fortunate that I have never been placed in the position where I have been told I must present a budget that is irresponsible or face the consequences. However, if am ever faced with that position in the future, I would immediately start my search for new employment.
• Tell the Truth No Matter How Uncomfortable. I am fortunate to have a close working relationship with the senior staff at my current position, which allows for open and honest discussion. However, even in the best of environments, it can be uncomfortable to tell the truth. As the marketing representative on the budgeting team, you are in your position because the organization requires your truthful analysis and opinion. To not provide it for any reason is tantamount to dodging your responsibility. That being said, you also must be open to hearing sometimes painful and uncomfortable analysis as well.
3) Do you have the capacity to fulfill the budgeted expectations? My boss at Arena Stage has a great way of phrasing this question during the budgeting process. He diligently asks throughout the process if we have the capacity and resources to match our ambitions. It is a succinct and direct question that focuses the entire budgeting process. I am afraid that too many times arts organizations extend themselves by having unrealistic budgets because this question wasn’t asked. In terms of marketing, even if demand warrants a high budgeted goal, one needs to ask if you have the infrastructure to execute, which can include a multitude of actors such as staffing, technology, and operating procedures.
The final question I like to ask myself in terms of revenue projections is the ultimate litmus test—do we have an equal or better chance of over performing on budgeted revenue goals as we do under performing? If there is evidence that a greater likelihood exists that an organization will under perform rather than over perform, then I encourage you to adjust expectations to mitigate your risk.
Saturday, March 19, 2011
Is It Time to Re-Think the Way We Discount?
It seems to me that there are two reasons to provide discounts:
- To encourage and reward particular behaviors
- To provide access to targeted demographics
Too many times arts organizations provide discounts that don’t encourage desired behavior, or that benefit patrons outside of targeted demographics. While exercised with good intentions, a quick examination of some common practices reveals that there can be some detrimental unintended consequences:
Rush Tickets. Many organizations have policies that place tickets on sale, sometimes to certain demographics like students, at the last minute at a steep discount. Unless your organization is selling at a high percent capacity, or has thousands of seats, by practice, you are guaranteeing a steep discount to relatively good seats in exchange for people exercising an unwanted behavior (late ticket buying). Many organizations bemoan the deterioration of their subscriber base, but continue to promote their rush ticket policies. Why would patrons buy several shows at once months in advance when they know they can get a better deal on decent seats at the last minute? Instead, I would encourage organizations to develop policies to reward desired behaviors. In order to convert a single ticket buyer to a subscriber, an organization usually must do two things: 1) convert them into multi-buyers so that they are purchasing multiple productions in the same season, 2) incentivize them to purchase their tickets earlier and earlier. By doing both, you establish behaviors that closely mimic a subscription, and therefore your conversion from single ticket buyer to subscriber should be much easier. Recommendation: If you would like to provide discount tickets to targeted populations such as students, then do so in a manner that instills early buying habits. Instead of incentivizing a last minute purchase, incentivize purchases that are done weeks, if not months, ahead of time.
Pay-What-You Can (PWYC) Performances. The intent of a Pay-What-You-Can performance is honorable. Most organizations desire the ability to make their products available to populations that simply cannot afford standard ticket prices. However, in practice, another reality presents itself. I am always amazed by organizations that continue this practice citing accessibility concerns, when all one has to do is stand outside and count the number of patrons who arrive for PWYC performances in expensive luxury sedans and fur coats. If you can afford a Mercedes, I am pretty sure you can cover the price of a regular ticket. What those patrons are doing is taking away inventory from the people you want to serve. They are taking advantage, but only because you are allowing it. Recommendation: Several organizations are now requiring proof of limited income in order to access PWYC performances or substantially reduced price tickets. Much like how students must show IDs, proof such as an EBT card or a tax return can ensure that you are serving the exact populations you have created these programs for.
Complimentary Tickets. A complimentary ticket represents the ultimate discount, yet too many times they are used for the wrong reasons. Consider the following circumstances:
- Potential Donors. Many development officers use complimentary tickets to get donor prospects in the door and into a performance. We all know that first impressions are critically important, so I would ask what message are we sending to someone with obvious means when we have to give them a free ticket to get them in the door? If they are seriously interested in your work, or in becoming a major donor, shouldn’t they want to pay the same ticket price that standard patrons pay in the first place?
- Board Members and Current Major Donors. Giving at certain levels should come with exclusive benefits, such as access to purchase house seats or the ability to purchase tickets before they go on sale to the general public. However, many organizations simply give away tickets to Board Members and Major Donors. In the case of Board Members, they should always be looking for ways to help an organization increase revenue, and by taking complimentary tickets, in many cases they are using inventory that can be sold. Major Donors on the other hand are often gifted tickets at certain levels of giving, however the ideal situation would have them purchasing tickets and giving philanthropically. By providing large amounts of complimentary tickets to Major Donors, all an organization is doing is moving revenue from the earned line to the contributed line. When trying to build revenue, both earned and contributed, an organization cannot rob Peter to pay Paul.
- Media. Many organizations don’t take the time to properly credential media, and by not doing so, they are tempted to provide complimentary tickets to every request that comes into their press department. Professional journalists deserve a complimentary ticket if they can commit to coverage via a properly credentialed media outlet. If journalists request a complimentary ticket, but cannot commit to coverage or they represent an outlet that is less than professional, it is the responsibility of your publicist to decline the request. In many cases as a courtesy, organizations will also provide a second complimentary ticket so a journalist can bring a guest, however this isn’t obligatory. Many Broadway producers and major organizations will only provide a single complimentary ticket for a journalist in circumstances where there is incredibly high demand on inventory.
- Complimentary Standing Room (CSR) or Standby Tickets (CST). Many organizations have very liberal policies for CSRs and CSTs. However, similar to rush tickets, unless you are selling out regularly, you are training those that use CSRs that they are available for virtually any performance, thereby guaranteeing that those who use CSRs will never purchase a ticket in the future. In many cases, CSRs are a self-fulfilling prophesy. The argument being that if an organization has unused inventory immediately before a performance, why not use unfilled seats for CSRs or Rush tickets? Well in many cases, CSRs and Rush Tickets are the reason why organizations have unsold inventory at the last minute. In my opinion, CSRs should only be used for customer service issues for longtime subscribers/donors or for internal artistic staff that need to maintain a production in a long run. Other than that, CSRs should be subject to your standard complimentary ticket policies and tracked as a complimentary tickets.
A final thought on complimentary tickets:
It isn’t uncommon for an arts organization to use 5-10% of its entire inventory for complimentary tickets. Usually these tickets are provided to people that could easily afford the cost of a ticket. At the same time, many organizations are desperately looking for ways to make their work more accessible to populations of people who simply do not have the means to purchase a ticket, even at a discount in some cases. I wonder what would happen if an organization adopted a policy that complimentary tickets would be reserved exclusively for patrons who had no other means to access their work? Hundreds, if not thousands, of complimentary tickets would become available to the people who needed them the most.
Thursday, March 17, 2011
Spring is in the air...and motivation is all around us!
I look around and see people going for walks, kids outside playing, plants and flowers starting to grow, birds chirping, the grass is starting to get green - It's that time of year to get active and motivated! It's time for rebirth, renewal and regrowth.
There is no better time of year to get a fresh start, spawn fresh creative and ideas, refresh your mind and energy. Its amazing what some fresh spring air will do to clear the mind and dust off the cobwebs of winter. We all get the winter blues - get burnt out on the cold air, gray skies and the mucky mess outside. The change of seasons is a great motivator. Take the opportunity and extra spark that Spring brings to finish the lingering projects you have been putting off, tie up those loose ends, back-up files, update your systems and get things tidy and in order for a new quarter.
A quick list of simple things you can do to really get motivated and get an exciting fresh start for the season:
Until next time,
Jeremy
There is no better time of year to get a fresh start, spawn fresh creative and ideas, refresh your mind and energy. Its amazing what some fresh spring air will do to clear the mind and dust off the cobwebs of winter. We all get the winter blues - get burnt out on the cold air, gray skies and the mucky mess outside. The change of seasons is a great motivator. Take the opportunity and extra spark that Spring brings to finish the lingering projects you have been putting off, tie up those loose ends, back-up files, update your systems and get things tidy and in order for a new quarter.
A quick list of simple things you can do to really get motivated and get an exciting fresh start for the season:
- Back up all of your files
- Clear your desk
- Open your windows and let some fresh air in
- Do any cleaning or equipment maintenance
- Get out, enjoy something active, feel the warmth of the sun
- Pack up your snow boots and winter coat
- Go out on the town, be social
Until next time,
Jeremy
Wednesday, March 16, 2011
What an 6 year old can teach us about customer motivation.
My 6 year old daughter took up Irish Dancing about 6 months ago (she's the redhead in the photo). For 6 months she's been practicing every day and learning new steps. Finally, last week, she had her fist recital and did great!
She loves her Irish Dancing, but since her recital, she can't stop talking about it.
Stay with me, there's a banking point here ... recognition!
Just a little recognition or reward can help to motivate a consumer.
- A congratulations notice when a customer hits savings milestones
- An "your almost there" notice when a loan is paid down to a limit
- Hand written thank you notes when someone opens a new account or makes a large deposit
Think about how you can do the little things to recognize your customers and reignite the spark of interest, excitement or fun that they felt when they first walked into your branch.
Have a blessed and safe St. Patty's day - a day when we're all Irish Dancers.
Take care,
Eric
Tuesday, March 15, 2011
How To Segment Your List For Better Performance
One of the best ways to build your online business is to build your list - that is, your subscribers or database of potential customers (prospects). But you can also do it by changing the way you market to your existing customers.
Today, I'll show you how you can segment your database of names to boost sales, increase bonding and shorten conversion time. Data mining, list segmentation, or strategic database marketing, is basically the art of slicing and dicing your own in-house list of names for optimal performance. You do this to help increase the response to your promotional and conversion efforts. You see, once you divide your list of names into smaller groups ("segmentation"), you can specialize your product offers. Then, by targeting your offer based on customer needs, you'll be promoting products to people who are more likely to buy them. You increase your customers' satisfaction as well as your potential conversion rates. (The conversion rate is the number of people who not only read your offer but actually purchase the product.) And higher conversion rates means more money for your company.
One proven model is the RFM method. It's practiced by direct-response marketers all over the world, and is a marketing method used at many large publishers and direct response marketing companies. "R" stands for Recency, how recently a customer has made a purchase. "F" stands for Frequency, how often the customer makes a purchase. And "M" stands for Monetary, how much the customer spends. Here's how you can use the RFM method to help lift your sales.
Recency
Whether your house list is made up of people who signed up to receive your free e-zine or people who paid for a subscription, you can segment your database according to how long your customers have been with you. Let's say, 0-3 months, 3-6 months, 6-12 months, and 12+ months. You would look at these groups as your hot subs (newest subscribers), warm subs (mid-point subscribers), and cool subs (those who have been subscribing to your e-zine the longest). Let's say your list is made up of subscribers to your free e-zine. Here's how you use that information...Because your "cool subs" may have lost their initial enthusiasm for your e-zine, you should cross-reference them with your open rates. If most of them haven't been opening your e-zine in six, nine, or 12 months, you should consider sending them a special message asking if they still want to receive your e-zine. But that doesn't mean you ignore them. These inactive subscribers are a great group on which to test new marketing approaches, new prices, new subject lines, and so on. After all, you have nothing to lose. Your goal for this group is to re-engage them. And since they aren't responding to your current e-mails, why not use this platform to test? Your "hot subs" are your newest, most enthusiastic subscribers. They are ripe to learn more about you, your products, and your services. If you handle this group properly, you can cultivate them into paying customers. So you may want to send them targeted offers and messages.
For example, you could send them a special introductory series of e-mails (also known and auto responder series). This special series would introduce them to your e-zine's contributors and philosophy. It could also tempt them with specially priced offers. Sending an introductory series like this can not only increase the number of subscribers who convert to paying customers, it also increases their lifetime value (LTV) - the amount they spend with you over their lifetime as your customer. Hot Tip! Make sure to suppress the recipients of your auto responders from any promotional efforts until the series is complete to ensure more effective bonding.
If, instead of subscribers to a free e-zine, your house list is made up of people who paid for their subscription, the same segmentation process applies. You break your active subscribers into hot subs, warm subs, and cool subs. You also break out expirers (those who allowed their subscription to run out) and cancels (those who cancelled their subscription). Cross-marketing to these lists is usually effective. The expirers often just forgot to renew and simply need a reminder. And just because someone cancelled one subscription doesn't mean they may not be ideal for another service or product that you provide. If they're still willing to receive e-mail messages from you, add these folks to your promotional lists. Once you've gotten these otherwise inactive subscribers to open your messages, turning them into paying customers is just a matter of time. Most Internet marketers would have written these people off. So any revenues you get from them are "extra."
Frequency
This segmentation tactic is another way to break down your house list: by how frequently customers have bought from you. So once you've divided your list based on recency, you look at it in terms of your customers' purchase behavior. First, you identify your multi-buyers - customers who've purchased more than one product from you. You then split this list further, segmenting out two-time, three-time, four-time (and more) buyers.Those who have bought from you most often have proven their loyalty and obviously like the products and service they've been getting from you.
So if, for example, you're considering launching a new product with a high price point, these would be your best prospects.
Monetary
Finally, you look at your list in terms of money. One way to do this is to divide your list by the amount of money each customer has spent with you. You might, for example, assign a benchmark dollar amount, such as $5,000, $10,000, or more. Customers at that level make up your "premium buyers." This is the group that has the most favorable LTV for your company. These are your "VIPs." Once you discover who your VIPs are, you can design products or offers specifically for them. Let's say you have some kind of exclusive - and expensive - lifetime membership club. You would market this to multi-buyers who also fall into your "premium buyer" category.
If you offer payment options to your customers, another monetary way to divide your list is according to the payment options they have chosen: monthly, quarterly, yearly, etc. This will help you determine the initial purchase tolerance of each group of customers and which ones may respond best to future price points. As you can see, by looking at your customers' purchasing habits - recency, frequency, and monetary - you can identify the best customers for certain products. And by offering a product to customers who are likely to want it, you can improve your conversion rates.
By using the proven RFM model and other data-mining techniques, I've seen conversion rates double and triple. I've also seen inactive subscribers' open rates surge from 0 percent to more than 30 percent. That's quite an accomplishment, considering that the average open rate for the industry is about 20 percent.
However, many companies that send emails don't have the capacity for datamining.
Unfortunately, many smaller business or start-up companies typically cut email features for cost. Oftentimes, these companies save money using cost-effective and efficient online email service providers that can certainly get the job done, but don't offer robust segmentation tools that allow the client list analysis and dissection features. So try to think of the bigger picture when shopping for email service providers. Hot Tip! When looking at email marketing companies, make sure you ask if there's a list segmentation or datamining feature that can easily be done through their email platform. Find out if it's standard or an upgrade, and what those costs may be monthly. Sometimes it may be an additional fee, but will certainly pay for itself over time.
Today, I'll show you how you can segment your database of names to boost sales, increase bonding and shorten conversion time. Data mining, list segmentation, or strategic database marketing, is basically the art of slicing and dicing your own in-house list of names for optimal performance. You do this to help increase the response to your promotional and conversion efforts. You see, once you divide your list of names into smaller groups ("segmentation"), you can specialize your product offers. Then, by targeting your offer based on customer needs, you'll be promoting products to people who are more likely to buy them. You increase your customers' satisfaction as well as your potential conversion rates. (The conversion rate is the number of people who not only read your offer but actually purchase the product.) And higher conversion rates means more money for your company.
One proven model is the RFM method. It's practiced by direct-response marketers all over the world, and is a marketing method used at many large publishers and direct response marketing companies. "R" stands for Recency, how recently a customer has made a purchase. "F" stands for Frequency, how often the customer makes a purchase. And "M" stands for Monetary, how much the customer spends. Here's how you can use the RFM method to help lift your sales.
Recency
Whether your house list is made up of people who signed up to receive your free e-zine or people who paid for a subscription, you can segment your database according to how long your customers have been with you. Let's say, 0-3 months, 3-6 months, 6-12 months, and 12+ months. You would look at these groups as your hot subs (newest subscribers), warm subs (mid-point subscribers), and cool subs (those who have been subscribing to your e-zine the longest). Let's say your list is made up of subscribers to your free e-zine. Here's how you use that information...Because your "cool subs" may have lost their initial enthusiasm for your e-zine, you should cross-reference them with your open rates. If most of them haven't been opening your e-zine in six, nine, or 12 months, you should consider sending them a special message asking if they still want to receive your e-zine. But that doesn't mean you ignore them. These inactive subscribers are a great group on which to test new marketing approaches, new prices, new subject lines, and so on. After all, you have nothing to lose. Your goal for this group is to re-engage them. And since they aren't responding to your current e-mails, why not use this platform to test? Your "hot subs" are your newest, most enthusiastic subscribers. They are ripe to learn more about you, your products, and your services. If you handle this group properly, you can cultivate them into paying customers. So you may want to send them targeted offers and messages.
For example, you could send them a special introductory series of e-mails (also known and auto responder series). This special series would introduce them to your e-zine's contributors and philosophy. It could also tempt them with specially priced offers. Sending an introductory series like this can not only increase the number of subscribers who convert to paying customers, it also increases their lifetime value (LTV) - the amount they spend with you over their lifetime as your customer. Hot Tip! Make sure to suppress the recipients of your auto responders from any promotional efforts until the series is complete to ensure more effective bonding.
If, instead of subscribers to a free e-zine, your house list is made up of people who paid for their subscription, the same segmentation process applies. You break your active subscribers into hot subs, warm subs, and cool subs. You also break out expirers (those who allowed their subscription to run out) and cancels (those who cancelled their subscription). Cross-marketing to these lists is usually effective. The expirers often just forgot to renew and simply need a reminder. And just because someone cancelled one subscription doesn't mean they may not be ideal for another service or product that you provide. If they're still willing to receive e-mail messages from you, add these folks to your promotional lists. Once you've gotten these otherwise inactive subscribers to open your messages, turning them into paying customers is just a matter of time. Most Internet marketers would have written these people off. So any revenues you get from them are "extra."
Frequency
This segmentation tactic is another way to break down your house list: by how frequently customers have bought from you. So once you've divided your list based on recency, you look at it in terms of your customers' purchase behavior. First, you identify your multi-buyers - customers who've purchased more than one product from you. You then split this list further, segmenting out two-time, three-time, four-time (and more) buyers.Those who have bought from you most often have proven their loyalty and obviously like the products and service they've been getting from you.
So if, for example, you're considering launching a new product with a high price point, these would be your best prospects.
Monetary
Finally, you look at your list in terms of money. One way to do this is to divide your list by the amount of money each customer has spent with you. You might, for example, assign a benchmark dollar amount, such as $5,000, $10,000, or more. Customers at that level make up your "premium buyers." This is the group that has the most favorable LTV for your company. These are your "VIPs." Once you discover who your VIPs are, you can design products or offers specifically for them. Let's say you have some kind of exclusive - and expensive - lifetime membership club. You would market this to multi-buyers who also fall into your "premium buyer" category.
If you offer payment options to your customers, another monetary way to divide your list is according to the payment options they have chosen: monthly, quarterly, yearly, etc. This will help you determine the initial purchase tolerance of each group of customers and which ones may respond best to future price points. As you can see, by looking at your customers' purchasing habits - recency, frequency, and monetary - you can identify the best customers for certain products. And by offering a product to customers who are likely to want it, you can improve your conversion rates.
By using the proven RFM model and other data-mining techniques, I've seen conversion rates double and triple. I've also seen inactive subscribers' open rates surge from 0 percent to more than 30 percent. That's quite an accomplishment, considering that the average open rate for the industry is about 20 percent.
However, many companies that send emails don't have the capacity for datamining.
Unfortunately, many smaller business or start-up companies typically cut email features for cost. Oftentimes, these companies save money using cost-effective and efficient online email service providers that can certainly get the job done, but don't offer robust segmentation tools that allow the client list analysis and dissection features. So try to think of the bigger picture when shopping for email service providers. Hot Tip! When looking at email marketing companies, make sure you ask if there's a list segmentation or datamining feature that can easily be done through their email platform. Find out if it's standard or an upgrade, and what those costs may be monthly. Sometimes it may be an additional fee, but will certainly pay for itself over time.
Monday, March 14, 2011
8 Tips for Marketing SaaS and Software in the Cloud
Why SaaS Marketing Rocks
After having taken to market both SaaS (starting in 2002) as well as traditional on-premise software solutions, I observed first hand some of the significant differences between the two models as it relates to marketing. And I also learned a few lessons along the way (some were learned the hard way, but I guess that’s how you learn best). You will see quickly in the following sections that I have a bias towards cloud software solutions, mostly because, if done right, the on-demand cloud model provides much faster, more direct and immediate feedback cycles on how your market is responding to your solution and marketing stimuli - a marketer's dream! In many cases, it also allows for much more compelling value propositions compared to traditional on-premise solutions. But let's take a closer look.
(1) Focus on the business buyer
One of the biggest changes in marketing SaaS vs on-premise software is the makeup of your target audience. While IT departments traditionally had a lot of influence over the software buying decision and acted as gate keepers, cloud solutions today often allow you to deal directly with the business problem owner and end user to make the decision and subscribe to your service (this obviously depends a great deal on the complexity, integration and scope of the solution). One of the biggest factors in the adoption of cloud solutions is that business users can activate the solution quickly, often without having to rely on slow IT resources.
For many applications, this will allow you to bypass IT in the early stages of adoption or altogether, depending on your solution. This is especially true for stand-alone, point solutions that don't require integration into on-premise or other cloud solutions. Also, be aware of IT pushback. I have seen many IT departments that have a strong on-premise bias to justify keeping their budgets and headcounts required for running the entire IT stack in-house.
(2) Re-focus messaging from product to buyer
While more direct access to the decision maker and buying authority may simplify the decision process to some extent, it requires marketing to better understand the underlying business problem the cloud solution is solving. Technical specs, speeds and feeds are now much less important, even irrelevant, to the buyer as they are often entirely encapsulated and "hidden" in the cloud.
What matters to the business user is the business value the solution delivers, the process it helps automate or enable, the cost it reduces or the opportunity it unlocks. In addition to your unique business and functional message, make sure to also embed a unique version of the “generic” cloud value proposition (lower cost and complexity, higher flexibility, faster on-boarding, seamless scalability, etc) into your marketing message and make them relevant and specific to your offering.
(3) Create buyer personas
For many software vendors who have been selling traditional on-premise solutions to customers, this focus on the business buyer and their unique requirements should not be new. The move to the cloud, in combination with dramatically changing buyer behaviors, however, requires a more sophisticated approach to marketing. It requires a crystal clear definition of your target segments, target buyer personas, and the typical journey your buyers take from problem to buying decision to actual purchase. This path needs to be made painfully easy for prospects to travel along. With powerful content assets that lead, just like breadcrumbs, from problem to solution.
(4) Simplify content marketing
Content marketing (combined with robust marketing automation) allows you to scale and put much of your inbound marketing efforts on "auto pilot", and "cherry pick" the leads you want to engage with directly, when they are ready to talk to you. While there are many steps in the decision process and many buyer personas that influence it, I have found that simplification is key to success. Especially if your marketing and sales organization is new to content and buyer centric marketing, don't be tempted to build the perfect system that, for example, captures 8 granular buying stages, 5 buyer personas, across, 5 market segments. Creating compelling content for the intersections of all these dimensions, you might be looking at hundreds of assets to be produced and deployed. This will easily overwhelm even the most sophisticated marketing teams.
Instead of attempting perfection, take a simplified crawl-walk-run approach, starting with as few as three buying stages (for example: “Awareness”, “Discovery”, “Decision”), one or two key buyer personas, and one target segment. Once this pilot model is designed and implemented with all content assets and associated programs, then you can move on to more sophisticated models applying the lessons learned earlier on.
(5) Highlight pricing model advantages
Pay as you go or subscription models enabled by cloud services allow buyers to adopt your solution much more quickly as they don't have huge upfront license fees to worry about that are often Capex, require justification, and many levels of sign-off. Instead, the monthly subscription payments can often fly under the radar and get paid without the intense scrutiny of big, lump sum payments, making it easier for buyers to pull the trigger.
(6) Mind the adoption gap
In market categories where cloud solutions are disrupting the way an existing problem is solved, make sure to revisit Geoffrey Moore's Chasm framework. If your SaaS category is in its early stages of adoption (for example marketing automation) market dynamics and buyer preferences will be dramatically different from segments that are in later stages in the technology adoption cycle (for example CRM). Innovators and early adopters are willing to take a lot of risk for a potentially big payoff. Early majority buyers will want to see references from companies just like them to reduce risk and ensure economic and technical success. Late majority and laggard buyers are the most risk averse bunch and will require strong cost and risk reduction benefits to be persuaded to move away from their existing solution. Pick the predominant segment in your market and focus on growing it instead of trying to be all things to all people – that hardly ever works.
(7) Highlight SaaS trial advantages
Cloud solutions make it easy for you to showcase your solution and make Trial or Freemium versions available as an offer and call to action that can be immediately provisioned. You can, for example, make a time limited (e.g. 1 month), concurrency limited, (e.g. number of parallel projects) or feature limited (e.g. disable premium features) version of the solution available in a self-service provisioning model and upsell later.
With software as a service, you can even see what features your trial users are actually using and are most interested in, and incorporate this information into your marketing and sales response (at the individual user level, leveraging marketing automation - you can even build feature usage into your lead scoring model to indicate sales readiness).
This insight into actual usage patterns allows you to fine-tune and reality-test your marketing message in a way that was previously impossible or cost prohibitive with packaged software. These insights, by the way, also enable you to create different, more granular subsets of your offering that you can provide to different segments in a way that was economically not feasible in the traditional on-prem model. There are great solutions available that let you do that granular packaging with minimum effort (contact me at hhschulze@gmail.com if you are interested in learning more).
(8) Address SaaS related concerns proactively
Cloud applications often face objections regarding data privacy (for example with companies in Europe), regulatory compliance, legal concerns, service availability, and other issues (especially with prospects in the late majority segment). Don't gloss over these concerns in your marketing and sales engagements. Instead, address issues upfront and outline your solution for each concern, before your on-premise competitors exploit them for you.
Embrace Cloud Marketing
In summary, SaaS and cloud software solutions are a very different animal compared to on-premise software. They offer new and exciting ways to deliver value to your customers. But don't treat the cloud the same way as your traditional software offering as the dynamics are profoundly different. And you may have to unlearn some things you thought to be tried and true. Also, make sure to embrace experimentation until you find the right mix of message, offers, and tactics. This market is still very new and constantly changing. Nobody has the right answers and best practices, so try new things and see what works. The cloud environment makes it easier for you than ever to test your approach in real time and make tweaks - take advantage of it!
What is your experience with marketing and selling SaaS?
Don’t forget to join the B2B Technology Marketing Community on LinkedIn to network with 20,000 of your B2B marketing peers and learn about the latest trends in tech marketing.
Winners...and 2nd Place
March...
The beginning of spring, warmer weather, flowers and BASKETBALL!
As we noted with our March Madness blog, the college basketball phenomenon that is about to grip the country starts in t-minus 2 days...with the First Four being played in our hometown of Dayton!
This time of year reminds me of the Winners and 2nd place. What is the difference? Many times it is timing of good play, a lucky run, a hot shooter, or a coach that simply can elevate his team.
However, I recently read a Sports Illustrated article on predictions based on statistics. In the Tourney run, the better the season strength of schedule, the more rebounds, the higher the turnover-generated margin, and the better the 3-point conversion rate...the better the proven chances of winning. Each of these play an important role in the regular season, but collectively greatly impact the post season.
The lesson?
The regular routines are what will get you to the dance, but the focus on the little things are what will get you the "WIN!"
Routine service and strong operations get you to the dance....but the life stage focused solutions, extra service efforts, and value-added products are what get you the win.
Review your process today...score yourself:
Have fun with March...and let's look forward to a productive 2nd quarter!
Cheers!
Bruce
The beginning of spring, warmer weather, flowers and BASKETBALL!
As we noted with our March Madness blog, the college basketball phenomenon that is about to grip the country starts in t-minus 2 days...with the First Four being played in our hometown of Dayton!
This time of year reminds me of the Winners and 2nd place. What is the difference? Many times it is timing of good play, a lucky run, a hot shooter, or a coach that simply can elevate his team.
However, I recently read a Sports Illustrated article on predictions based on statistics. In the Tourney run, the better the season strength of schedule, the more rebounds, the higher the turnover-generated margin, and the better the 3-point conversion rate...the better the proven chances of winning. Each of these play an important role in the regular season, but collectively greatly impact the post season.
The lesson?
The regular routines are what will get you to the dance, but the focus on the little things are what will get you the "WIN!"
Routine service and strong operations get you to the dance....but the life stage focused solutions, extra service efforts, and value-added products are what get you the win.
Review your process today...score yourself:
- 1-point for having a service measurement program
- 1-point for measuring % of channel usage (branch, ATM, debit card, etc.)
- 2-points for having a marketing dashboard
- 2 points for having monthly "share and compare" meetings
- 3-points for having a Service Champion award
- 3-points for creating an internal "great idea" submission process
- 4-points for having a semi-annual product review process
- 10-points for monitoring 5 mission critical ratios that move your business
Have fun with March...and let's look forward to a productive 2nd quarter!
Cheers!
Bruce
Friday, March 11, 2011
March Madness Baby!
Okay, it's that time of year again. You can watch basketball from about the time you roll out of bed until you turn out the lights...I LOVE IT!
Stay tuned, once the 2011 bracket comes out, fill yours in from 1st round to the finals, send it to me and whoever has the most wins (teams advancing on) will win with MarketMatch, if there is a tie the winning name will be drawn randomly. Up for grabs is a Dayton, Ohio goodies pack, this will include a bag of Mike Sell's potato chips, a box of Esther Price candy and jar of Fricker's hot wings sauce.
Enjoy your Friday. Make it a great weekend and until we talk again.
Debbi
Void where prohibited. This is not a lottery. Must be submitted by midnight, EST, Wednesday, March 16.
Wednesday, March 9, 2011
Increase Revenue with Increased Experience
A recent Forrester Research report looked at 13 different industries and came to the conclusion that as a customer's experience (CxPi) with your company increases, so does revenue, specifically in the areas of:
- Incremental purchases from existing customers
- Retention
- New sales from word-of-mouth
OK, not really rocket science, but it shows that there is ROI in employee engagement.
According to Forrester, the banking industry was more effected by positive customer experience than all others in the area of retention. In banking, an increase in positive customer experience yields a higher rate of change in attrition than all other industries. In a time when customers are changing institutions at a significantly higher level - this becomes an important finding.
Want to put some hard numbers to customer experience? According to Forrester's report, the banking industry can expect a total annual impact averaging $21.20 per customer by improving your customer experience - with more than half of the impact coming from reduced attrition.
So, increased customer experience equals increased revenue - you can't argue with the logic. But we have some work to do. Credit unions ranked in the Top 10 of Forrester's 2010 Customers Experience Rankings with only 3 banks in the top 50. How do we improve?
- Create written Customer Service Standards for the entire company to follow.
- Relook at your sales process - do you speak "to" the customer or "at" them. Create a process that facilitates a CONVERSATION with the customer - then addresses their needs.
- Relook at your sales materials. Are they benefit oriented.
- Follow-up is key. Call it on-boarding, re-boarding or just doing your job. But the best experience a customer has with you can be out of your branch and in their home. Set standards and create a process to add value-based communication with your customers.
- Consistent training. Customer engagement is a culture, not a program. It starts with a new hire and continues every-day. Your staff must be engaged and understand that we are dealing with people's money. And when it comes to money, a little empathy, understanding and advise can go a long way!
- Talk to them. Before you make changes to your organization, talk to your customers and determine their needs.
- Let them have it their way. Whenever possible, let the customer create their own product. More and more institutions are turning to a build-your-own checking product. If not that, then package your products in a way that looks tailored to them.
- Measure your success. Start with baselines in: Attrition, services per household and average balances. Then track your progress regularly.
A positive customer experience can differentiate you in a competitive market place and generate incremental revenue. It can grow your institution organically and reduce attrition.
Want to chat about your customer experience culture? Call us.
Take care,
Eric
egagliano@MarketMatch.com
866-501-2233, ext. 106
Thursday, March 3, 2011
MarketMatch wins at Award Show
MarketMatch wins a Gold ADDY at the 2011 Hermes Awards Show. Every year AAF (American Advertising Federation) holds a competition for advertising/creative firms to submit work completed in the prior year and they are judged in various categories.
In the Southwest Ohio region, Dayton and surrounding, there were nearly 500 entries submitted by advertising firms and agencies covering a wide variety of products and industries.
On Saturday, February 26, 2011 MarketMatch was presented with a Gold ADDY and was named one of only four special Judge's Awards! The judge who awarded his selection was quoted as saying...
"clever and simple, but monstrously ambitious"
"your effort, as big as it was, was expended for all the right reasons"
The next step is our Gold winning entry will now compete at the District level through AAF.
How cool is that? I told you I had a good feeling about the entries a month or so ago...our hard work and efforts definitely paid off!
Enjoy your Friday! Make it a great weekend and until we talk again.
Debbi
What they want you to find...
Logos can tell us lots of things about a business - you just have to see the signs.
The task of every designer, then, is to create a design that will effectively convey this message. Some designers convey a company’s message in very obvious ways, typefaces, imagery, etc. Other designers prefer to be slightly more subtle. This is often achieved by embedding hidden elements or messages within a logo. These hidden elements and messages can be in the form of words, numbers, icons, depictions, or some other markings.
We’ve all seen the designs below millions of times. But how many of us notice the subtle messages they deliver as well? Take a look now. You may be surprised you didn’t notice these before:
The Big Ten collegiate conference has eleven schools but they didn’t want to change their name. However, they used their logo to hide the numerical “11” in the name.
The task of every designer, then, is to create a design that will effectively convey this message. Some designers convey a company’s message in very obvious ways, typefaces, imagery, etc. Other designers prefer to be slightly more subtle. This is often achieved by embedding hidden elements or messages within a logo. These hidden elements and messages can be in the form of words, numbers, icons, depictions, or some other markings.
We’ve all seen the designs below millions of times. But how many of us notice the subtle messages they deliver as well? Take a look now. You may be surprised you didn’t notice these before:
The Big Ten collegiate conference has eleven schools but they didn’t want to change their name. However, they used their logo to hide the numerical “11” in the name.
___________________________________________________________
This famous logo is extremely clean and simple but this arrow might not look like more than a smile to you. Before, coming to any conclusions I would like you to know the concept behind this…it says that amazon.com has everything from a to z and it also represents the smile brought to the customer’s face.
___________________________________________________________
You would say you have seen it thousand times but just to make you notice an arrow formed between the letters “E” and “X” conveying speed, direction and reliability of this amazing courier service.
Until next time,
Jeremy
This famous logo is extremely clean and simple but this arrow might not look like more than a smile to you. Before, coming to any conclusions I would like you to know the concept behind this…it says that amazon.com has everything from a to z and it also represents the smile brought to the customer’s face.___________________________________________________________
You would say you have seen it thousand times but just to make you notice an arrow formed between the letters “E” and “X” conveying speed, direction and reliability of this amazing courier service.
___________________________________________________________
At first glance, it looks like your basic lettered mark, but if you observe this hidden logo, the letters ‘My’ shows a human hand.
___________________________________________________________
___________________________________________________________
If you look at the two ‘Ts’ and the ‘i’ in between, you can clearly see two people enjoying a Tostitos chip and bowl of salsa.
Most people don’t realize that the smiley face at the top of the logo is also a lowercase ‘g.’ Known as the “Smiling G”, it is used to represent both the company name and the smiles that come from helping people help themselves.
___________________________________________________________
If you look at the two ‘Ts’ and the ‘i’ in between, you can clearly see two people enjoying a Tostitos chip and bowl of salsa.
Until next time,
Jeremy
Wednesday, March 2, 2011
QR codes add flexibility and access to your direct mail and traditional advertising message delivery.
Want to justify your Marketing budget?
A new J.D. Powers & Associates report on shopping and switching rates can not only justify your Marketing budget, but it should also put you on the offense ... and defense.
Here are the highlights:
- 8.7% of customers said that they switched their primary financial institution in the last year (up from 7.7% the previous year)
- Shoppers consider 1.9 banks while shopping (up from 1.6)
- The most common reason to switch is life circumstances
- Advertising/awareness & convenience drives their decision
- Less than half (43%) of customers who purchased an additional banking product did so with their PFI
So what does all this mean?
Go on the Offense
We've been saying it for about 2 years ... their is money in motion! People are switching financial institutions. You need to be in the 1.9 institutions that they consider.
Life Stages: You can differentiate your institution and speak directly to your customers needs through life stage messaging. Click here for more life stage information.
Get them to know you: Awareness drives consumer's decision ... and you're in the awareness business. Use your budget wisely and be on the radar of those folks most likely to be your best customers. Use segmentation and mirror modeling to locate your best opportunities - then focus your budget on them. You likely can't battle Chase, PNC, Wells Fargo and Bank of America dollar-for-dollar. It's not about getting EVERYONE to know you, it's about getting the right people to know you.
Go on the Defense
We can no longer assume that our PFI customers are safe or loyal. Assume that less than half of them will come to you for their next product and more than 8% of all your customers are looking to leave. Pretty scary stuff huh?
Focus on cross sells, strategically bundle your products and focus on your team's training - are they prepared to facilitate the customer conversation?
Not to be a fear-monger, but this report should both scare you, energize you and justify the importance of marketing now, more than ever. Share this with your management team and show up prepared with a plan based on ROI.
Good luck and take care,
Eric
Tuesday, March 1, 2011
Oh, How We Like our Awards
'Tis the season for award shows. Oscars, Emmys, Grammys, Golden Globes and the Tonys. We sure do enjoy our annual award shows. In Washington, DC, we have our own awards for theatrical excellence--the Helen Hayes Awards--which just announced their nominations last night. It reminded me that as marketers, awards present us with a significant question--how aggressively should we use these awards in our marketing campaigns?You might be thinking that the answer to that question is relatively easy. Why shouldn't you celebrate your nominations and trumpet your awards? A few things to consider:
When you market an award...
- you are willing building the brand of the award. It is said that smart lawyers only ask witnesses the questions they know the answers to. That way, the lawyer is in control of the situation, and there are no surprises. In my relatively short time in the DC market, I have seen numerous companies trumpet their large number of nominations and awards year after year until the inevitable year comes when they are left out in the cold. By building the brand of an award, performing arts organization's leave their perceived success in someone else's hands. They are no longer in control of their own destiny. When you say to a consumer over and over again that an award proves your artistic excellence, what does it prove when you are left out? were you artistically insolvent that year?
- you are publicly endorsing the validity of the award. You should ask yourself if you have any serious misgivings about the awards process. If you do, then you should not prominently market them, as doing so implicitly gives your endorsement of the process. One cannot market the awards, and then second guess the process.
- you are sending a signal to the artists who work at your organization. And what might that signal be? Is an artist's work not as important to the institution if it isn't recognized with a fancy award? Should an artist take less risk knowing that the results of the risk might lessen his chances for public acknowledgement? Is one artist more important to a production than another simply because of a nomination?
Awards are fickle. They will come, and they will go. And most of the time, you'll have no clue as to why. The one thing they are good for is bringing together the artistic community one time a year for a great big party. So if you are a winner this year, enjoy your glass of champagne, because if there is one thing I can guarantee, it will be that you will get screwed in the future.
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