Tuesday, February 8, 2011

Late to the Party

Blink:
When marketers tend to be laggards as it relates to the new world of social media, it isn’t that they can’t see the solution; it is they are unable to recognize the opportunity.

Read On:
Alterian, a company that specializes in integrated marketing platforms on behalf of its clients (e.g., T-Mobile, Pizza Hut, Harley Davidson, etc.), just published their 8th Annual Survey about brand engagement. At the end of the year they collected feedback from 1,500 Marketers, Agencies and Marketing Services Providers (MSP). Key findings that stood out for me:

Seven in ten respondents have little understanding of their brand’s social media conversations.


One third of the respondents indicated that their company’s website’s main focus serves as a brochure; only 11% of the companies surveyed had an element of engagement built in.

Nearly two thirds indicated they were not comfortable in the area of analytics.

When taking all factors into consideration (budgets, resources, time management, etc.), three fourths indicated that their brand was at risk for not being engaged with their customers as they should be – 57% of the respondents plan to take action to rectify what they believe is a problem.

Candidly I am not surprised by the above findings. Over the past two years, every time I engage with my peers about social media, I usually field the standard query: “Great Jim, but what is the ROI?” Valid question! I admit it is difficult to tie social media initiatives back to increased sales. However, marketers need to recognize that metrics are morphing thanks to social media and when the dust settles the one measurement that will remain constant is increased customer retention/profitability. Consequently, the new class of companies that are being labeled networked enterprises are utilizing social web technologies to enhance their current CRM initiatives. Remember, the end result is still all about achieving a transaction. Social CRM now facilitates customer interaction/engagement that leads to long-term customer retention.

Conversations about your brand are happening whether you’re participating in them or not. Are you going to begin formulating your plans to engage and seize the opportunity in 2011 or are you going to be late to the party?

11 comments:

  1. All excellent points, Jimmy. You're absolutely right...but then again, was ROI actually trackable with traditional advertising? Not really. Except for very few circumstances, there was no way to really know if the buyer came from that Vogue ad or admired a friend's outfit and was driven to the store based on a recommendation. So it's kind of ridiculous...but, then again, I have trouble understanding why people generally find it difficult to engage online to begin with.

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  2. I like your twist on failure to see the opportunity. In reality, it probably goes back to priorities and resources and biggest bang for the buck. I wonder how this breaks out by size of company or size of marketing budget because the big guys have the money to test the medium. Small companies don't quite have the luxury.

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  3. It may be that when the dust settles that there'll be one measurement. Doubtful that it will be increased customer retention/profitability because those are two different fruit salad ingredients as customers who are retained are not necessarily profitable, e.g., long-time bank customers who only have a savings deposit product and who are high-touch, i.e., require a relatively high level of personal contact/interaction.

    Plus, I get a sense that a number of organizations are now placing greater importance on customer advocacy -- having their customers bring in customers and spread the good word -- as well as life-time value/cross-sell potential (can we sell them something else?)-- than on retention.

    True that there are conversations about one's brand that are happening in which companies/brands are not participating. But, wasn't that always the case. Only now, companies have a greater opportunity than ever to monitor them, participate in them, and influence/manipulate them. Whether companies engage remains to be seen.

    The ROI question is a mask...a screen. Yes, it's critical to understand the value of different media in order to allocate spend dollars. Still, "what's the ROI?" as it relates to social media is often code for "I don't know how to do it effectively".

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  4. Great article Jimmy.I never cease to be surprised at the head in the sand approach of far too many business owners to the major shift that is happening in the world of communication between business and its revenue source. In my opinion this shift will soon create a massive gulf between those that getit and those that don't to the ultimate demise of those that don't. This article deserves very wide distribution and I will do my bit to help in this arena.

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  5. Thank you all for your comments. Interesting point re: retention/profitability; my apologies, but I have been in numreous business situations over the years where I have advised to get rid of unprofitable customers or product lines to turn businesses around. Too many companies do not take the time to analyze customer profitability. Social media analytics will be affording us the opportunity to improve our measurement in this area thanks to Social CRM.

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  6. JiM:
    I think another part of the problem is not wanting to change. Businesses are comfortable with what works or seems to be working. The most salesperson of yesterday are using the same old methods
    Regards
    Dick

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  7. Dick:

    Great point, but also old methods are producing results they are comfortable with while switching over to some of the new tools do not yield immediate results, thus they revert back to the old way.

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  8. In the pre-digital era, John Wanamaker famously said, "I know half of my advertising spending is wasted. I just don't know which half!"

    Just as Quants have taken over the investment world, they are seizing control of marketing. The blessing of digital marketing is that so many avenues have opened for tracking results--all this ROI and Cost Per Conversion data floods us. BUT--the data also converts EVERYTHING marketed digitally into the world of 'direct marketing.' Classically, direct marketing is ALL about sales, not branding, and not relationships. The soft side of marketing is being pushed aside, with demands for immediate measurement of results. And with so many measurements available, emotion is losing way to logic.

    You wonder if there is room for both? My own bet is that the emotional always finds a way to mess up logic. With Valentines Day approaching, I ask, what is the ROI on Romance? Pretty low usually, but that does not stop the Candy Heart business from booming every February.

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  9. I thinks is a fantastic post. Not to be late to the party of commenting... but I did just read the post and thing you make an excellent point about "marketers need to recognize that metrics are morphing thanks to social media and when the dust settles the one measurement that will remain constant is increased customer retention/profitability." My question is this: how do you measure that customer retention? I'm constantly being asked for more metrics, more ROI, and have found some valid ways to show a positive increase in sales, etc. The point I'm stuck on is the whole customer retention conundrum. I realize that is the main benefit but have yet to determine to 'show' it. Any thoughts?

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  10. "marketers need to recognize that metrics are morphing thanks to social media and when the dust settles the one measurement that will remain constant is increased customer retention/profitability"

    Love it. I've heard the ROI questions answered a ton of times... but I don't think I've heard it put this way before. I like it. I just finished the book Unmarketing and it touched upon the idea of ROI. It's a great read if you have a minute (although, a lot of it will be familiar - it's a good affirmation and maybe you'll pick up a thing or two)

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