Bloghound

Today my firm, Beeline Labs, Deloitte, and the Society for New Communications Research released highlights of an online communities study among 140 organizations which create and maintain communities. Some of the highlights, more of which can be found here:

Greatest value of communities:

• increasing word of mouth (35%)
• increasing brand awareness (28%)
• bringing new ideas into the organization faster (24%)
• increasing customer loyalty (24%)

Greatest obstacles

• getting people involved in the community (51%)
• finding enough time to manage the community (45%)
• attracting people to the community (34%)

What contributes most to effectiveness:

• ability for community members to connect with other like-minded people: 54%
• ability for members to help others: 43%
• focusing community  around a hot topic or issue: 41%
• quality of the community manager/community management team: 33%

Advice for others

When asked what their most important piece of advice is for others creating communities, survey participants’ advice focused around these eight areas:

1.    Start with the end in mind: “Start with a business strategy, defining carefully what you want to accomplish through the community.”

2.    Focus on the value to the members:  “Make sure you deliver real, special, unique, obvious value to the core group you’re hoping to attract.”

3.    Don’t start with the technology: “Too often people get drunk with Web 2.0 tool excitement and then try to push their business and customer goals into the wrong tool.”

4.    Keep it simple and intuitive:  “Focus on the least common denominator first. Keep it easy to navigate with simple tools to use.”

5.    Keep it fresh and active:  “Keep activity levels up, constantly add new content.”

6.    Have dynamic community leaders: “Make sure you devote enough time to managing the community; letting it fester is worse than not having it in the first place.”

7.    Think through who to involve – or not. “Get Legal and PR to buy-in and help on design, but keep them out of active management.”

8.    Get a passionate core of participants active before launching:  “Make sure you have a committed core of passionate users before you launch.”
Many thanks to everyone who took the time to take the survey and talk to us as part of the qualitative surveys. The complete results are on their way to you this morning.

Getting management to buy into innovative marketing approaches can be tough.

Here are six facts to support change, based on performance data that Copernicus Marketing Consulting has collected from more than 500 marketing programs (consumer and B2B products and services.)

1. 84% of programs are resulting in declining brand equity and market share.
2. Customer satisfaction averages just 74%.
3. Most acquisition efforts fail to reach break even.
4. No more than 10% of new products succeed.
5. Most sales promotions are unprofitable.
6. Advertising ROI is below 4%.

For more, see the Harvard Business Review article, “Don’t Blame the Metrics” by Kevin Clancy and Randy Stone.

I feel both exhausted and encouraged from this week’s Conference Board conference on Measuring Marketing Effectiveness. Exhausted because the data shows that despite so much talk for so many years about the need for measures and ROI , we marketers have made very little progress over the past 10 years.

A 2007 ANA study found that just 11 percent surveyed said they are very satisfied or satisfied with their ability to determine marketing ROI. A soon-to-be released Conference Board study found that none of the companies surveyed feel as though they’ve “arrived” at figuring out a good way to measure marketing.

Exhausting, too, because creating approaches that provide insights and guide planning - vs. simply measuring tactics — is hard, scientific work. Companies with successful measurement systems, like Eli Lilly, Unilever, MetLife, said it takes at least three to four years to begin making real progress.

The only measure that may matter?

What was encouraging, however, is that marketing measurement innovators believe one approach is particularly valuable: measuring customer preference or perceived value, which are leading indicators of revenue, profits, and cash flow. (In other words, a measure that helps you manage and satisfy the CEO and CFO AND see glean insights to help manage vs. simply measure marketing.)

Don Sexton, professor of marketing at Columbia University believes that this is the most effective measure, yet is missing from nearly every list of marketing measures. (FYI: Don is releasing a book on the topic this fall.)

Other takeaways:

Relationship preference matters as much as product preference

Mark Kershisnik of Eli Lilly believes (and has the data to back it up) that equity can provide a measurement of both investment and performance, and the way to measure equity is by assessing product brand preference AND relationship preference.

I found this especially interesting as so many marketers focus exclusively on product preference, yet customers make decisions, particularly in the B2B landscape, on relationship factors like trust, likability, innovation.

Most common measures are meaningless: lagging indicators vs. leading indicators

Most of the common marketing metrics are, well, useless. Awareness, mind share, perception, recognition, recall, share of market, loyalty, purchase intention, cost per click, etc. may be easy to measure, but they don’t connect to business value nor do they provide indicators of what to do differently to improve performance. They are lagging indicators measuring past performance rather than leading indicators that can help diagnose where to improve brand and relationship preferences and how to monitor progress of achieving marketing objectives.

Focus on just a few things

Many marketers try to measure too many things - 30 or 40 factors. It’s impossible to properly assess that many factors - or have the resources to work on improving that many factors. Many of the speakers recommended focusing on just 3 - 4 product preference factors and 1 -2 relationship preference factors.

Getting on the same page crucial to success

All of those firms with successful measurement strategies have educated their entire leadership team so that everyone has a shared definition of marketing, marketing value, measures and metrics.

The CFO’s mantra

Kamal Sen, director of business analytics and strategic planning for Unilever in Asia, Africa, Middle East and Turkey, offered what the CFO really cares about:

• Sales is vanity.
• Profits are sanity.
• Cash is reality.

I just finished a research project about marketing analytics with Dave Bond of Sapient that you can download here. Highlights of our findings:

Overall takeaway

Analytics isn’t about measuring and reporting. It’s about aligning marketing with corporate goals and generating meaning from the data to guide decisions.

Former Nissan CMO and Hyundai Motor America chief operating officer Steve Wilhite summed up the issue well when he explained to us:

“People are spending a tremendous amount of money to generate data, much of which is useless. At the end of the day the metrics you choose to measure should be part and parcel of strategy development. Being able to measure what you’re trying to accomplish is what becomes important in business planning and obviously it becomes important in justifying the particular execution that you choose.”

Six major obstacles

1. Lack of agreement and support from senior executives
2. Gap between corporate goals and tactical analytics
3. The tyranny of metrics, aka the ROI black hole
4. Misleading insights from measuring silos
5. Alignment requires change management heavy lifting and patience
6. Confusion about fundamental types of analytics and measures

Five guiding principles for creating a marketing analytics strategy

1. Get on the same page about the measures that matter the most
2. Adopt just a few measures
3. Use a portfolio approach
4. Build analytics into marketing strategy
5. Know the devil is in the data: collaborate with IT

People are sick of being polled and surveyed, as Ad Age’s Jack Neff has been reporting , with articles like “Consumers Rebel Against Marketers Endless Surveys. “ (Survey response rates average 10 percent and are falling.)

But seems like people do want to have a say and help companies. New research to be released tomorrow by Communispace finds that people participate more when companies give them more interesting ways to participate — chats, video sharing, brainstorming, going mystery shopping, posting day in the life diary posts, etc. People also like to be able to weigh in on more topics.

This study of 26,500 people in 57 communities follows up Communispace research earlier this year that found that monthly participation in by-invitation communities ranged from 33 to 84 percent, with an average of 56 percent of community members contributing. In other words, half of the people asked to help, helped. What a difference compared to conventional research’s 10 percent participation, if that.

This is another good example of business disruption — and of people opting out of a blah experiences (surveys) and opting in to experiences that they find interesting, fun or valuable.

One of the most interesting ways to measure media relations is to correlate media coverage with customer satisfaction. That’s just what Xcel Energy does, and the insights from the analysis have been especially helpful in guiding strategy, according to Steve Roalstad, director of media relations and one of the fellow speakers at last week’s Minnesota International Association of Business Communicators conference.

Steve measures media favorability against the company’s Voice of The Customer key drivers, assessing media relations results and ongoing monthly customer satisfaction surveys. He doesn’t rely on expensive, special media analysis software, but instead uses off-the-shelf Microsoft Excel and Access software.

One interesting finding, which has helped focus business and media relations strategy: customer satisfaction increases with positive media coverage about issues associated with environmental concerns or alternative energy resources, whereas a few years ago stories about service reliability had the most influence on customer satisfaction.

So media relations measurement approaches produce stats that have no relation to business measures. Steve seems to have figured out a straightforward way to measure his organization’s work in a way that gleans insights for future strategy and makes good business sense.

At yesterday’s annual ITSMA Conference in Cambridge, Mass., Barbara LaGuarida, marketing communications director of Lucent Technologies, explained why and how Lucent has turned to a conversational marketing approach to increase sales effectiveness.

Lucent Worldwide Services, a $2 billion business with 10,000 employees, realized that to sell services it needed more of a consultative than transactional sales approach. The new senior sales executive told Barbara that he saw one major obstacle to being able to move to consultative selling: lack of tools.

“I was shocked,” said Barbara. ” I thought he’d say the issue was talent or training. But tools? After all, we had 1,00o different pieces of collateral available to the sales reps.”

After analyzing what existed, Lucent found that its sales tools were not helpful in facilitating conversations with customers, were weak on differentiation, and were too product oriented. The company overhauled its sales tools, going from 1,000 different documents to just three Engagement Marketing tools:

1. A customer discussion document for engaging prospects in meaningful conversations. This document focuses on the problems that Lucent is seeing in the prospect’s industry, which gets the prospect talking about his or her view of the issues and problems. Information about Lucent is at the back end of this selling tool. At least a third of the presentation is about talking about issues. Not selling service solutions.

2. An executive proposal that highlights the customer’s key business challenges and Lucent’s proposed solution The purpose of this brief document is to make it easy for the prospect to shop it around internally to get feedback and build support.

3. A statement of work — a short, clear document linking Lucent’s proposed solution to the prospect’s objectives and problems.

While Lucent has only been using this conversational marketing approach for a year, the results are impressive.

• 56% of the sales reps say that the find the customer discussion document a valuable and effective tool.
• 51% of the sales reps say they can customize the customer discussion document without a sales engineer, which is a big deal in technical sales situations.

Other results:

• Lucent has reduced sales cycles by 20%
• Sales and marketing productivity is up 20 - 30%
• The expense to revenue ratio for services marketing communications has improved 20%

Prospects don’t want to have to sit through a PowerPoint all about a company and its solutions. They do want to talk about their issues and needs, and see if you’re the type of company that they would feel confident in working with to address those needs. Follow Lucent’s lead and create conversational marketing sales tools that make it easy to get people talking. You, like Lucent, will shorten your sales cycles and reduce the cost of sales support.

Lucent marketing measurement

The tenure for Chief Marketing Officers is shorter than ever, a brief 23.2 months according to Spencer’s Stuart’s new study.

Marketing is one of the most important corporate functions as it’s responsible for attracting and satisfying the customer. So what’s the fix to the revolving door? Some thoughts…

Give marketing authority over all those activities that affect a customer’s experience with the company/brand — including sales, product development, customer service, front line employee hiring and training, channel partners. If marketing is primarily foucsed on marketing communications — advertising, promotions, pr, etc. — it’s bound to fail. Branding is about what we do, not what we say. At last week’s Innovative Marketing Conference, Gwen Ishmael of Decision Analyst said she’s seen this model work at two successful companies and wonders why more companies don’t use this model.

Restructure the marketing organization: for those who aren’t ready to make the dramatic organizational changes in #1, think about this: eliminate all the different siloed departments and focus on three essential functions — customer and market insights, strategy, and communications.

Think of the CMO as more of a COO of the marketing organization, and less of a manager of the advertising agency or the “brand steward.” Leadership and innovation skills are more critical than traditional marketing experience. In fact, someone who has 20 years of marketing experience may be a liability because they may be too wed to old marketing pricnicples, like TV advertisiing and oversimplified brand promises.

Create new metrics for measurement. Reducing costs to get a better ROI may be the absolute wrong thing to do because it may affect the value you provide to customers. Similarly, increased sales or market share may be the goal, but what are the components needed to achieve those goals? What is the purpose of those components in helping to achieve sales or market share? Are those purposes realistic? How do we assess the performance of those components in ways that not only measures but provides insights for what to do differently?

Rotate the other C level positions into running marketing for 23.2 months so they understand the challenges and can help create innovative ways to run marketing — or set more realistic expectations for success.

CMO turnover

During a recent strategic planning meeting, directors of a publicly
traded company got into a heated discussion about goal setting for the
organization. I suggested that we step back and clarify the company’s
purpose and mission.

“Well that’s easy,” said one director, who then highlighted revenue and profitability targets.

But there’s a difference between purpose and profits.

Joan Magretta’s great book, “What Management Is: How It Works and Why I’ts Everone’s Business,”
explains why understanding the difference is important if we want
everyone in the organization to “pull in the right direction.”

“Now that we’ve become a nation of shareholders and investors, we are more
likely than ever to think that the purpose of a business is to generate
profits,” she writes. “But the real purpose of any business is to
create value for its customers and to generate profits as a result.

“While the distinction between purpose and results may sound like hair
splitting, it’s not. It goes to the heart of how managers get
organizations to perform.”

In the book Magretta uses FidelityInvestment’s retirement business as an example. Fidelity doesn’t define mission and purpose in terms of profitability or number of retirement accounts. Its purpose? “Make sure people who invest with Fidelity have
enough money to retire.”

Such a clear purpose then helps us create the goals and strategies to achieve the greater purpose. And to measure the right performance benchmarks.