Update Your Segmentation Model With Social Data Before It’s Too Late

LateAttention digital marketers: It’s time.

If you weren’t convinced before, I’m going to attempt to convince you again. If you aren’t infusing “why” people are using social media into your marketing segmentation model, you may be missing key ways to make digital marketing successful.

Traditional customer segmentation models typically look at some combination of behavioral, attitudinal and demographic data. If leveraged properly that information fuels marketing tactics from personalization to email marketing to direct mail. These models are built through survey data and can be the backbone of a sophisticated, integrated marketing program to identify, engage and activate those segments.

Faced with new data about social media behaviors, marketers need to figure out how to integrate social media behaviors into those models. Each day or week that goes by without including that data is contributing to the lack of effectiveness of the model itself.

This past week Pew Research released their 2014 Social Media Update. Among key insights among the 81% of American adults who are using the internet, are several statistics (paraphrased) showing usage continuing to rise:

  • 52% of online adults now use two or more social media sites, a significant increase from 2013, when it stood at 42% of internet users.
  • For the first time, more than half of all online adults 65 and older (56%) use Facebook. This represents 31% of all seniors.
  • Facebook is still the most popular social network, and engagement there has increased. 71% of internet users are on Facebook.
  • Instagram, LinkedIn, Twitter and Pinterest all expanded their footprint across several demographic groups.

We’ve passed the point where social media is a revolution, and chances are most companies have some sort of social effort underway. To achieve the same lift that a traditional segmentation model can provide to more established tactics, marketers need to apply the same rigor to segmentation related to social data to get the most out of social media efforts. That rigor translates into insights, and insights will fuel tactics and approaches.

I continue to see companies that aren’t looking at social data this way – often leaving a separate team off to attempt to deliver results without the insights they need, disconnected from the market research teams that look at segmentation models. Maybe I’m just stating the obvious, and maybe companies have already started efforts to figure this out.  Are you seeing the same thing?

photo credit: Evan via flickr

Making the Leap: Why Companies Struggle with Social Media

How many people at your company are trained, equipped and empowered to talk to customers?  If your organization is large, chances are the percentage of customer-facing people is smaller.  How many customers does your company have?  How about potential customers?  No doubt the numbers stack up in a heavy ratio against people inside the company that are trained to engage them.  Traditional advertising and marketing provides a cushion, putting out messaging to the large customer population to influence their purchase behavior.  It didn’t require making a leap to engage customers in conversation or to deeply understand how they make a purchase decision.  The approach was always one-sided, and the feedback loop could be carefully and slowly measured with focus groups and research.  Social media provides opportunities for two-way and multi-way conversation, which requires discipline, research, scale and transparency.  Simply put, one way is easier, two-way (and multi-way) is hard.

An Analogy

When I was a freshman in college, a couple friends and I drove to a local quarry that had been shut down.  The quarry was flooded and it provided a great location for cliff-diving.  Was it safe? Probably not, but it was fun.  Deciding to take that last step to a more than fifty foot drop was a daunting task, but the sense of personal accomplishment and fun was rewarding afterwards.  The general sense was, “that wasn’t so bad” and “exhilarating” at the same time.

Three Industry Examples

Making the leap to engage customers through leveraging social media tools can be a similar experience to leaping off that cliff.  (Well, the decision to leap anyway – the benefits can be much more reqarding.)  I’ve worked with clients in different industries, and they all viewed that leap in different ways.  The retailer already tried the leap – they started with the prototypical Facebook page, a couple of Twitter accounts, some user generated content contests.  But they didn’t start with understanding customer preferences, needs, attitudes and behaviors, and they also didn’t use any social media monitoring.  To me that’s like making the leap without knowing how high the cliff is or how deep the water is.  The good news: no one got hurt so far and now they can be more strategic in their approach.

The financial services and banking client is conservative and hugely risk averse.  Regulatory concerns abound.  A strategy was developed and plans were made, but the company wasn’t aligned as an organization on when and how to jump in.  They’ve spent several months examining, evaluating, listening, watching competitors but not yet making that leap to converse and engage.  They have a great brand promise around community and customer service, and when they do make the leap they will be unbelievably prepared.  What’s holding them back? Scale, empowerment, fear of the unknown and fear of failure.  When they do start it will be methodical, and they will see the benefits, but their journey to the leap needs to be vetted as a company first.

The third is a consumer goods company.  They have an “old school” brand that has been around for ages, and have deep roots in the traditional marketing days where the advertising industry boomed.  Their leap decision is more about changing their ways, bringing the consumer to be the focus rather than just the product, and moving away from “broadcasting” on more channels to “engaging.”  Making the leap was inevitable, but they needed to change their mindset in order to understand customers better, why they make a brand purchase decision and how they can participate in conversation without outright selling.

Let’s Hear From You

Every company is different – the culture, the brand promise, the beliefs, the success, the level of focus on consumer insights, and the ability to apply tools and technologies that are new to mutually benefit company and client.  Why do you think companies struggle with social media?  For companies that are succeeding, what do you think got them there – what it brand affinity they could tap into or did they have to work harder to create engagement?

Photo credit: clickflashphotos via Flickr

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The Marketing Hot Seat: Rachel Happe

hotseatIf you don’t know Rachel Happe yet, you are missing out.  I’ve had the sincere pleasure of getting to know Rachel in the local Boston social media scene, and it was clear from my first conversation with her that she knows social media and the power of community unlike most.  With a background that includes working as a research manager at IDC and a senior director of social media products at Mzinga, Rachel brings a refreshing, thought-provoking view to what challenges large enterprises are facing with Web 2.0.  Before reading her point of view on the Marketing Hot Seat, I’d recommend subscribing to her blog, the Social Organization and taking time to learn more about the business she is building with friend Jim Storer.  The Community Roundtable is a tremendous wealth of value-add resources for social media practioners. (My agency, Rosetta, is a big proponent and partner, and I’ve been referred to as a CR Cheesehead – read on and you’ll see Rachel lives what she preaches).  I’m grateful that Rachel has offered to weigh in this week on the challenge – please let her know what you think in the comments.

  • You’re the CMO.  You have a marketing budget of $1M.  Your company is a consumer product company, relatively unknown / early stage.  Customers who know the product like it. CEO wants ROI within 12 months.  What do you do?

Rachel Happe and Gradon TrippAdam has graciously pulled out his marketing wizard wand and given me the role of CMO at an upstart consumer products company – not a likely scenario but fun to play with none-the-less!  I’m lucky because I don’t have to deal with a lot of organizational complexity, legacy systems, or legacy structures set up for a vastly different information environment than the one that exists today. And luckily, I understand a bit about what’s changed.  The cost of content creation has dropped, the cost of distribution has dropped, and the cost of customer discovery has dropped – all dramatically. That means that my investment will pay off relatively quickly.

My marketing focus is split between two key constituent groups.  My first important constituent group is the channel partners who actually sell my product to the end customer. The second key constituent group is the consumers themselves – driving demand from consumers will help me negotiate more and better contracts with my retail partners.   My goals for the year are to execute 1 exclusive large partner deal (think Target), 5 mid-size partner deals (regional chains, Zappos.com, etc), and 50 niche retailer contracts. Our channel manager will use our website including a blog, an email newsletter, and trade shows as the primary means of outreach to this audience.  All of those touch points will be richly supported with online media from our customers and secondarily supported through our Twitter, Facebook, Flickr and YouTube outreach done with our end customers.

On the consumer end, we’ll start with research and capturing user interaction with our product.  We’ll give our small team of young enthusiastic media makers the gear to video tape, podcast, and take pictures as they talk to users about their reaction to the product and how they use it.  We’ll use that content for regular posting to YouTube, Flickr, Facebook, and Twitter but we’ll also solicit content generated by the users themselves and post that. We’ll also use the research to design two online games – one individual and one team-based – that integrate with Twitter and Facebook. We will use a vendor like Bunchball that makes these games personalized, competitive, and branded. We’ll build a cheap-to-execute but unique version of our product to reward contributors for completing different tasks.  Our team of media makers will also be charged with engagement – proactively and reactively interacting with people who are in our target audience and packaging the best of the resulting interactions and media for re-use. We will identify our cheeseheads and promote them.

Roughly, our marketing spend will look like this:
HappeChart

I’m expecting the following unit flow from each type of retailer:
Large = 60,000 units
Medium = 12,000 units
Small = 600 units
The profit from each unit is $9 and if I hit my planned goals, we’ll have $1,350,000 in profit by the end of the year. Covering my marketing costs by a bit but building a great foundation going into the following year.

What an awesome year!

…And what an awesome post, thanks again Rachel.  What do you think of her approach?

Photo credit: Jim Storer via Flickr

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The Marketing Hot Seat: Aaron Strout

hotseatOf the folks who agreed to participate in The Marketing Hot Seat (all of them marketing practitioners in some form), Aaron Strout is the only one who is currently a CMO.  At Powered, Aaron is in a position to talk with peers on a regular basis about justifying the ROI on community. I’ve gotten to know Aaron over the last few years, before he became a Boston-to-Austin transplant, and he was one of the first ten people I started following on Twitter in mid-2007.  Several months ago Aaron asked me to participate in the Experts in the Industry Series (many of the Hot Seat contributors are fellow alums), and it was around that time I began to refer to Aaron as “the Kevin Bacon of Social Media.”  Aaron is the consummate connector and has a relevant, practical and thoughtful approach to the Marketing Hot Seat challenge.  It’s not what I expected, I’m guessing if you know Aaron and his background you might be surprised too.  (If you like what Aaron has to say I’d also recommend checking out his weekly Quick n’ Dirty Podcast with Jennifer Leggio where the talk of social media case studies is an informal breath of fresh air).

  • You’re the CMO.  You have a marketing budget of $1M.  Your company is a consumer product company, relatively unknown / early stage.  Customers who know the product like it. CEO wants ROI within 12 months.  What do you do?

aaronstroutLet me start by saying this is a brilliant exercise Adam for two reasons:
1) you’re getting some great advice from some of the smartest minds in the industry (well, from the other participants at least).
2) the rules of this “exercise” not only require us to be pithy but we also have to prove out an ROI, with all due respect, a topic that many bloggers can usually skate around.

What’s a little tricky about this exercise is that although you’ve specified that we are the CMOs of a “consumer product whose customers like our product,” the fact that we don’t know whether we’re selling soft drinks, software, or soft pillows — products that all require different channels of distribution — makes developing a marketing strategy tricky. Because I’ve only ever worked for companies that sell services and/or software, I’m going to pretend that the product is consumer software (delivered SaaS style).

Now that we know what we sell, I’m also going to assume that we make a profit of $20/month or $240/year/new customer. With these assumptions, we can start to create a budget and an ROI construct. For starters, I’m going to go out and hire three people to manage our marketing activities. You may or may not have intended us to include this in our plan but I’m going to exclude salaries because most companies bucket this as an operational cost:

  • manager of lead gen/SEO
  • manager of social media/PR
  • manager of event marketing

And here are the areas we’re going to spend our money:

  • $400,000 – paid search
  • $100,000 – event marketing/sponsorships
  • $125,000 – PR (think someone like SHIFT)
  • $300,000 – e-mail list rentals
  • $75,000 – research subscriptions/CRM/listening tools

Without going through all the math, lets say these paid activities drive 4,000,000 prospect touches with an average response rate of 2% resulting in 80,000 interested prospects. Assuming a 5% convert, that gives us 4,000 new customers at $240 per customer for a total profit of $960,000. [Note: these numbers may or may not be on target but for the sake of this exercise, it shows you that this is one way to think about the math behind marketing ROI].

Uh oh. That leaves us $40,001 short of our goal. But wait, that’s where social media comes in. Because we’re a smart company and we signed up for a listening service right out of the gate so we know where our potential customers are hanging out. We also have a manager of social media (along with our savvy CMO) that is blogging participating on Twitter, Facebook, Youtube and LinkedIn. All of these activities help increase reach and thus new prospects.

Let’s assume that if we’re doing our job right, we hit an additional 5,000 interested prospects with the same math as above. That gives us 250 incremental customers, so at $240/customer, we bring in an additional $60,000 and voila, we’re now at $1,020,000 in annual revenue. Yes, we’re squeaking by but we’ve built a great base for future marketing efforts. And while I didn’t include it here because our new company wasn’t quite ready for community, you can bet your bottom dollar that I would budget in a branded online community to the tune of $200-300K for year two. But that’s a blog post for another day…

What do you think?  Did Aaron nail it?  What would you do differently?

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The Marketing Hot Seat: Kyle Flaherty

hotseatI met Kyle Flaherty prior to his Boston to Austin journey and knew early on that he was a thought leader in marketing.  As Director of Marketing and Communications for Breakingpoint, Kyle is passionate about applying new marketing techniques in the B2B arena.  Besides his passion for the Red Sox, he and I continue to share the belief that social media provides new tools and approaches to complement the marketer’s toolbox.  I had high expectations on Kyle’s entry for the Marketing Hot Seat – especially with his help to craft the idea – and he doesn’t disappoint. Read on.

  • You’re the CMO.  You have a marketing budget of $1M.  Your company is a consumer product company, relatively unknown / early stage.  Customers who know the product like it. CEO wants ROI within 12 months.  What do you do?

One million dollars goes a long way these days when it comes to marketing and I would make the most out of it by brining on resources and tools to then implement the necessary tactics. There will be four steps to take:

  1. Listen

    Kyle Flaherty

    Kyle (2nd from Left) along with the infamous Tim Walker, Bill Johnston and yours truly.

  2. Firstly we will want to understand how people perceive our product, the competition and how they find and digest information. To begin we will need to understand the community vernacular starting with how they search. Instituting a sophisticated SEO campaign and a detailed keyword landscape we will begin to understand what people are saying and more importantly what words they are using. Employing Hubspot we will create a detailed keyword landscape and with Google Analytics we will be able to correctly identify how our community finds our own company.

    Using this keyword landscape we now plug terms into a combination of Meltwater Buzz and simple RSS aggregation to find the people who are using these terms, where they are having these conversations and how they like to engage with other people and potentially brands. Doing this over a healthy period of time, I recommend 60 days, we can build a tighter messaging platform, proper web copy and launch our brand new website! The latter portion will be the most costly, but it would be a shame to not have your website reflect what you have learned during the listen phase.

    COST:$200,000 ($80,000 going to website design and development, $20,000 to tools and $100,000 to salary of staff and outside consultants)

    TOTAL TIME ELAPSED: 60 days

  3. Participate
  4. Our brand new website has launched, properly communicating with our audience our product’s merits. Also, based on the above research in we determined the majority of our potential customers are using Twitter and that 78% of them have their own blog (come along with me, this is all fantasy). Understanding this information we have created a plan to integrate social media into our marketing campaigns. The campaigns will be centered on creative uses of our products and we will use social media, email, PPC and event marketing. An important note here: our company views social media as part of our communications DNA and not a separate entity.

    The marketing staff will combine to manage the campaigns, including social media, and be the defacto community managers since there is no need to have someone dedicated solely to that job if it is part of everyone’s job. Kicking it all off will be an exclusive invite to our kick-off party, hosted in New York City but broadcast live into rented out pubs throughout the world (open bar anyone?). After the kick-off we will be launching several PPC campaigns, an email push and dedicated conversations on Twitter and Facebook. The one central tenant to all of this will be the use of video and images taken by our users and aggregated throughout our platforms.

    COST: $300,000 (The event is going to take the majority, but we will also need to purchase video equipment for users, PPC, email tools and of course salary).

    TOTAL TIME ELAPSED: 180 days

  5. Nurture
  6. Customers are flowing into the website and purchases are through the roof, nice work! Now we have to nurture our base. Each day we are interacting with our community online, offering tips on how to better use our product, highlighting their photos/videos and creating our own online content for people to share. This is the pure work portion of our twelve months and will take a lot of time from the marketing staff. During this time we will also want to create our customer advisory council in order to gather more information about the use of the product (version 2 is slated for a Christmas launch), these people will also start to become our online ambassadors for the planned launch of our dedicated online forums.

    COST: $100,000 (Salary will be the majority, but some funds will be used to get the advisory council together)

  7. Measure
  8. This portion was started actually during the listening phase, but I didn’t want you to be confused. Our measurements will be directly related to our business goals and as a start-up these are on a quarterly basis. Using SalesForce.com we have built a sophisticated sales and marketing dashboards and integrating that directly into our website we are measuring lead source details each day. This will include the use of SalesForce’s Twitter application, some personalized javascript development and integration of Act On for web analytics. Our web analytics will not be just numbers, but the actions folks take, based on personas built during phase 1.Everything we do will be measured down to the dollar and the impact of that dollar to our bottom line.

    COST: $100,000 (SalesForce.com, Act On and customized development)

    TOTAL TIME: Although measurement will happen daily, we will really have a great feel for success at the one year mark.

    Now it’s time to plan for next year, and look at me, I have some money left over, I’m thinking bonuses for my staff.

Well done Kyle, thanks again for participating and inspiring this series.  What do you think of Kyle’s approach?  What would you do differently?

Photo credit: Aaron Strout via Flickr

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The Marketing Hot Seat

hotseatOver the course of the last several years I’ve gotten to know and interact with a bunch of talented marketers.  One of my favorite benefits of the community on Twitter is access to these folks for great discussions.  In the interest of showcasing that talent pool, over the next few weeks I’m going to share with you several posts here in response to a challenge, inspired by this line in the movie Speed:

“Pop quiz, hotshot. There’s a bomb on a bus. Once the bus goes 50 miles an hour, the bomb is armed. If it drops below 50, it blows up. What do you do? What do you do?”

After some Mr. Burns-like scheming with my friend Kyle Flaherty, I’m pleased to kick off the first Marketing Hot Seat challenge.  I have posed the following situation to 13 marketing-minded folks who span a breadth of knowledge and experience in the industry:speed

  • You’re the CMO.  You have a marketing budget of $1M.  Your company is a consumer product company, relatively unknown / early stage.  Customers who know the product like it. CEO wants ROI within 12 months.  What do you do?

Each participant will get a maximum of 500 words for a blog post to be shared back here in the next several weeks. The hope is a Harvard Business Case-like discussion on factors that go into a decision process, strategy development and prioritization of budget.  We have a diverse set of minds from the worlds of eBusiness, digital strategy, marketing consultants, content marketing, search engine marketing, community management and PR.  I am really grateful to these talented individuals for being willing to jump on the hot seat:

Upcoming posts:

  • Todd Defren, principal at SHIFT Communications – TBD
  • Jennifer Leggio, ZDNet social business blogger + Fortinet strategic communications director + Security Twits herder emeritus – TBD
  • Alan Wolk – Blogger, Creative Strategist, Consultant – TBD
  • Jim Storer – Experienced community manager and social media strategist. Working on my next venture… The Community Roundtable – TBD
  • Ken Burbary – Digital Strategy and Social Media for Ernst & Young – TBD
  • Kipp Bodnar – Social Media Marketer who blogs at SocialMediaB2B.com – TBD
  • Li Evans (Liana ‘Li’ Evans) –  Director of Social Media for Serengeti Communications – TBD
  • Beth HarteMarketingProfs Community Manager and #pr20chat Moderator. – TBD

You can bulk follow them here:

…and you can find them in a list on Twitter at http://twitter.com/adamcohen/marketinghotseat.

This is a great chance for all of us to engage in a healthy debate – extra points for creativity.  Where do you think they should get started?  Interested in being the company in the example?  It’s not too late, please let me know.

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The Zen of Advocacy

zenZen is not some kind of excitement, but merely concentration on our usual everyday routine.” – Shunkyu Suzuki

Twitter. Facebook. LinkedIn. Myspace. Blogs. YouTube. Community platforms. These are all tools to enable conversation. But that’s it – they are just tools. Having a presence on all of them doesn’t mean they will impact a business.  Stop thinking a Twitter strategy or a Facebook page is going to solve all your marketing challenges.  They won’t.  Instead, think of all of these channels as tools to leverage in order build advocacy.

Advocates, as customers,  are pivotal to growing a brand.  Here are some things that advocates can do for you:

  • Recruit new customers, or ultimately new advocates.
  • Share information with their networks.
  • Come to the defense of a brand in a crisis.
  • Develop new product or marketing ideas.
  • Provide purchase behavior insight and a shortcut to expensive market research initiatives.
  • Influence detractors.

As I talk to clients about social media, the concept of building advocacy gives social media marketing initiatives a purpose.  An advocacy program can arm the best customers with “to-dos,” and all of the available tools in social media give an easy way for them to collaborate and share.  When used effectively, community solutions and other social media outlets – paired with the right strategy – can give advocates meaningful and direct ways to execute all of the above.

I was intrigued by a story on the Wikipedia entry for Zen.  The story was about a martial arts master addressing a student having challenges with other students impacting his technique.  The master took the student to a stream.

“Look at the water,” he instructed. “It does not slam into the rocks and stop out of frustration, but instead flows around them and continues down the stream. Become like the water and you will understand harmony.”
Soon, the student learned to move and flow like the stream, and none of the other students could keep him from executing his techniques.

Imagine if companies treated cultivating advocates the same way the student and master viewed achieving harmony. By sorting through all of noise and focusing on connecting with and empowering advocates, marketers can create programs that have clear business impact – surrounded by the noise and echo chambers of social media.

What are some other benefits of advocates and what companies do you see that are embracing this concept well?  I’d love your input.

photo credit: h-k-d via flickr

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