Monday, February 28, 2005

A Search Engine Primer

The Internet is a vast repository of information without a uniform system for filing, access or storage. The most effective search engine can locate 60 percent of the existing content. The smallest can only find a mere 2 percent.

Why do you care? Because search engines drive traffic to your site, quality traffic… people actively seeking something related or relevant to what you’ve published.

Being prominently listed in a search engine’s results presents your site to prospects and customers immediately after they express a direct interest in your topic. This is the moment direct marketers live for. You deliver the right message at the right time to the right audience. It is as close as we get to the chemical formula for conversion. There is no greater kismet moment in cyberspace.

Yet these magical moments don’t come early or often. In fact, achieving consistently favorable search engine results requires the instincts of a cryptographer, the focus and intensity of brain surgeon and the insights of a psychic. That's because search engines play a complex game of cat-and-mouse with those seeking “search optimization”. To properly make the continuous moves and countermoves necessary to be ranked among the top 10 results above the fold is a full time job.

To guide you through this changing array of algorithms designed to tag, sort, file and retrieve your site and its content, here’s a guide to the basics of search optimization. Search engines are digital reference librarians. There are three garden varieties.

I. Spiders

Spiders are computerized robots who automatically pull up pages and tag, sort and file by machine, based on pre-programmed assumptions. They are necessary because we are creating new web pages much faster than anybody can count or catalog them. Different spiders take different things into account. And just to make it interesting, they change their matrices all the time. That’s why a site can rank in the top 5 one day and in the top 50 the next day.

Search engines are moving targets. You have to monitor them constantly to be successful. Natural search engines automatically retrieve documents from the Web and follow all built-in links. The “bot” leaves a catalog trail of both.

They can start anywhere and, like natural predators, they move according to their own rhythms. Spiders feed pages to the search engines which, in turn, feed them to searching surfers. The best way to influence spidered results is to focus on 4 critical variables:

1. Domain. A strong component of the search engine algorithm is whetherthe keyword is in the domain name. For example, if you are searching for books, is a sure bet. The closer your domain name mirrors what you are or what you do – the better.

2. Title. Does the search term appear in the page title? Every page on the Web has a title slug. If the name is in the title, the bots pick itup easier. Placement of the title is also important. Large title words repeated often at the top score best.

3. Links. Search engines look for the number of links and the relevance of the sites linked together. Google counts and ranks the number of links to assign your position when the search results are presented more links imply more relevant and used content.

4. Meta Tags. Meta Tags are keywords and characters or phrases embedded in the HTML code that users do not see. They are critical tools in the battle for optimizing search results, even though not all engines use them and some are programmed specifically to ignore meta tags.

While not visible to the viewer, the spider searches the meta tags and often ranks a site based on the number of times the keyword appears in the meta tag. In the old days site designers loaded up the meta tags with theword “sex” ( the most searched term ever) till search engines got wise to the practice. Today you must be careful that the word is not repeated too many times, or the engine’s spam detectors might automatically exclude the page.

If a keyword is important, it should be repeated a minimum of seven times, preferably in large fonts at the top and in the title of each page. The two most important types of meta tags and phrases for search engine indexing are:

A. Descriptions. Each web page has a brief, unseen summary description.If you don’t create it, the bot will. If you write a description of thepage in place of the summary the search engine would ordinarily create,you describe and categorize yourself. This substantially increases the chance of being ranked high in searches for your topic.

Descriptions must be less than 25 words. Search engines use a set amount of characters in the descriptions they return. If yours is too long, it will be cut off and so will your chances to optimize results.

B. Keywords. Each page can be coded with keywords to direct how your site in indexed or sorted. If you provide key words for the search engine to associate with your page, you self-define when and who will find you. Search engines don’t make judgments they find the key words. Less than 50% of web pages use key word and description metatags, so using both works in your favor.

II. Directories or Indexes

Directories or Indexes depend on humans to do the tagging, sorting and filing. Yahoo! is the largest one. They have editors reviewing content and determining whether to add sites to their database. When indexes search for key words, they take four metrics into account:

1. URL: Is the keyword in the URL?

2. Title: Is the keyword in the title?

3. Description: Is the keyword in the actual description of the site that the viewer sees? The description is usually written by an editor, but the editor often uses part or all of a description provided by the site. Because the index is scouring the content of these descriptions for keywords, controlling the description is crucial to search success.

In the index game conforming to emerging norms is the best bet.Remember that human editors are looking for the easiest, fastest way to get the job done. Piggy-backing on trends simplifies their job. Look carefully at descriptions on other sites and conform as much as possible to the style and length that prevail within the index. Unfortunately each index has its own editorial norms so you have to do this for each major index.

4. Traffic: Some indexes and some pure engines take traffic into account when determining rank. They rank your site based on the number of times people click through to it on their engine. If your site is getting more clicks than the site above you, you move up in the order of presentation.

III. Paid Search

Most search allow you to jump the line for money. There’s not much more to it than deciding which words you want to buy and how much it’s worth to you. The results are usually displayed separately and are graphically separated from natural search results. Nonetheless people searching are clicking on paid listings.

The key aspect of the pay-per-search game is avoiding terms that get bid up in price quickly and identifying key words which you can own or which will deliver a high percentage of customers to you and not to your competitors.

If you are the kind of person who, in Walter Mitty moments, imagines yourself in a musty, airless room cracking the Japanese “Purple” code, then search optimization work is for you. Ensuring top rankings is a continuous process of monitoring and making refinements based on Web site modifications and changes to search engine criteria.

For most marketers, it is almost impossible to keep abreast of the mercurial changes engines and indexes make to determine rankings. You need expertise and time to even have a shot at doing this right. The smartest marketers are outsourcing this to specialist agencies. My favorite is Acronym in New York.

Loyalty Marketing: Sister Hummel's Epistle

Goebel, makers of “Hummel” porcelain figurines, those tschachkes that everyone’s Grandmother has and cherishes, is celebrating the 25th anniversary of it’s collectors club, the oldest in the USA or so they claim. Club marketing, the poor man’s CRM, has had both a remarkable impact on the brands using it and a remarkable history of experimentation.

With 250,000 members in the United States the collectors’ club accounts for a huge percentage of recurring sales, which Goebel counts on as baseline revenue each year. At retail prices ranging between $100-$350, club members generally buy 3-4 units per year and can be generally counted on to buy another “club exclusive” not available to the public and refer at least one new lead annually. All in all, the club is a dynamic element in the Goebel marketing mix, which provides sales volume, customer feedback, marketplace intelligence and brand direction at a minimal cost-per-sale.

Rooted in the twin premises that … an enhanced brand experience nets a higher lifetime customer value and … that it’s easier to sell existing customers more stuff than create new customers, club marketing seems like a no-brainer. All you have to do is sign up your best buyers, give them an occasional deal, send them a newsletter and … presto … you have guaranteed sales of hundreds of thousands of units each year. If only it was this easy.

And while everybody from professional sports teams to consumer products companies to car manufacturers have embraced affinity or loyalty marketing, very few have got it right and gotten it to pay off either in terms of units sold or brand loyalty.

Consider these variables, and lessons learned from the adherents of Sister Maria Innocentia Hummel’s cult.

1. Own The Customer Relationship.

You can’t relate to customers if you aren’t prepared to respond to their needs. In many business categories the manufacturers of the brand distribute products through retailers. Each claims ownership of the customer relationship. Sometimes their interests coincide. Sometimes they don’t. Too often, in spite of intramural wrangling, neither makes much of an effort to add value, communicate with or interact with end users. But if you expect to build a brand, the brand has to own a relationship with its heaviest users. To concede away this link is to place your fate in the hands of others. It’s a recipe for disappointment leading to disaster.

Yet, if you own the relationship, you must answer the phone, mail, fax and e-mail, provide credible customer service and be ready, willing and able to engage customers’ concerns, questions and needs. It requires a substantial investment of time, attention, people and capital. It can be very annoying. The investment requirement often gets retailers and manufacturers at each other’s throats since retailers prefer to control the interaction and have manufacturers cover their costs or pay them for services rendered.

Relative brand loyalty also plays a factor. Some of the Goebel club members exclusively collect Hummels. Others collect all manner of dust-collectors from any number of competitors. A decision to own the relationship often is the by-product of an estimate of the potential ROI. Yet in a world of weary middlemen fearful of disintermediation, whomever controls the brand needs to connect with primary customers.

Another important aspect in deciding to own the relationship is the nature of loyal customers. Often, they don’t match marketers’ conceptions about who their best customers are or ought to be. It can be sobering to realize that your best customers are lower middle class, Middle American, blue-haired women, most likely of German-American extraction concentrated in second tier cities and small towns wearing stretch pants and driving 5 year old mini-vans.

It can also be upsetting when their love of the brand does not coincide with the immediate marketing agenda, the new brand identity guidelines or the new product line. Nonetheless they drive your volume. Brand stewards need to overtly or covertly own the relationship and influence the direction of marketing-oriented clubs. To do otherwise is to lose control of powerful brand advocates.

2. Use The Club Aggressively

Club members are totally into your brand. So don’t be bashful about asking them questions, profiling them and seeking their advice. When it comes to interacting with your brand, club members have very few privacy concerns. On the contrary, they want you to know them and schmear them.

Too many marketers prefer either to dictate or guess at what their best customers want or will respond to. A club offers a test bed, a ready-made research panel and a practical compass for campaigns and product development. These are people eager to help, even if they ask too many questions, constantly demand freebies and have all kinds of wacky ideas. You can’t afford to ignore your best customers, but you may need to filter their enthusiastic input.

The same energy that attracts club members can also be harnessed to drive marketing initiatives. Ask club members for referrals. Allow them to earn discounts for referring new members or purchasing selected products. Give them a heads-up on new products and new campaigns to guarantee baseline street credibility or advance word-of-mouth. If their impact on your brand is significant, customize creative messaging for them.

3. Offer Real Value

The Hummel Club offers it’s members … a free gift on joining and with each annual renewal, an exclusive series of products, unique annual Christmas plates, bells and angels, a quarterly newsletter, an annual behind-the-scenes trip to the factory in Bavaria, an annual convention and opportunities to meet visiting artisans during their publicity sweeps through the US.

This array of offerings is not philanthropy. Every club activity yields a profit to Goebel. Each has been requested by and tested with club members, who since 1981 have formed themselves into 70 local chapters in the US alone. Each component was added incrementally and each required the brand to balance practical growth objectives with the idiosyncratic needs of club members.

The allure of club marketing, especially to members, is insider knowledge and access.
Serving this primary motivator is the key to effective club marketing strategies. Don’t ignore the greed factor either. Many Hummel collectors calculate and obsess about the value of their pieces on the secondary market. If you doubt me, check Hummels on eBay.

Here product knowledge and nuances can affect secondary prices and the value of larger collections. Club members want to know every detail about artists, production, painting, back stamps, issue dates, etc. since the details often determine the difference between very valuable figurines and also-rans. The same is true in many product categories.

Club marketing requires recognition and aggressive management of a community of people and interests coalesced around a brand. These interests are not necessarily aligned and are often in conflict. The marketing challenge lies in sorting them out and harnessing them to drive brand recognition, growth and direction. Meeting the challenge can sustain and enrich your brand.

Consider the Goebel example. Cutesy figurines of Bavarian children in everyday activities made by a tubercular nun in the 1920s and 1930s and realized in glazed porcelain … a momentary fad, which should have died out when the GIs returned from occupying Germany after the Second World War, is still wildly popular. Sixty years later almost a quarter of a million Americans spend $1000 religiously each year to collect new figurines, talk about them, swap them and interact with others who do. It’s not only the legacy and artistry of Sister Hummel. It’s smart loyalty marketing.

E-Mail Split Personality Syndrome

I’m having an e-mail identity crisis. It’s especially severe because it coincides with an out-of-body experience. I’m trying to sort out my e-mail accounts as an individual. But as a marketer I’m astounded at what my morphing personality means for those seeking to identify, reach or persuade me. And at the risk of becoming a focus group of one, I suspect that I’m not the only Sybil in Cyberspace.

I have 5 e-mail accounts from 4 separate providers organized on three computers. I’m trying to figure out who I am, where things should go and whom I should trust to receive, store and archive stuff that matters to me. Until now I’ve had everything go to my office mailbox. The result is 100+ messages a day -- ranging from marketing e-zines, travel alerts, stock quotes, horoscopes, opt-in retail offers, notes from cousin Agnes and lots of Spam – on top of the business notes, reports and decks flooding in. It’s time to separate the information streams and direct them to specific accounts for my own productivity and sanity.

Evidently, I’m not alone. International Data Corporation pegs the current number of e-mail addresses at 1.2 billion e-mail boxes receiving 36 billion e-mails. E-mail is already the number one activity on the web and widespread home and office use suggests that many of us have multiple accounts and multiple identities online. Moreover the ease of creating new Web-based e-mail accounts will continue to bedevil the FBI and direct marketers’ for quite some.

It’s a whole lot more complicated than my snail mail box, where personal stuff, office and business correspondence, bills, magazines, catalogs and Spam reliably show up under the watchful and skeptical eyes of our mailman, a USPS lifer with thinning hair, half glasses, a shuffle step and an arthritic stoop.

Ironically my identities can be deciphered by a skilled direct marketer with access to widely-available software that can match D, Daniel, Dan, or Danny Flamberg and all the mutations and variations using street address, zip codes and other data points. In Cyberspace my identities are much more varied owing in part to innumerable security scares and the anonymous ability to project my warped psyche as distinctive user names and passwords, which often satisfy me but are hard to remember.

I decided to steer professional, marketing and business-related stuff to one account. Travel, retail and association alerts, offers and routine stuff to a second. And friends or relatives are now vectored to a third account. My total daily time checking e-mail has increased by 90 minutes daily. My Spam count has tripled.

I still haven’t got it all right so I’m frantically forwarding items from one account to another and frequently subscribing or unsubscribing with different addresses, which is a colossal pain. Assuming I’m open to communication from players I don’t already know or deal with in these sectors, how do they find me?

As a marketer, I’m troubled that we have not really devised ways to efficiently and effectively merge and purge e-mail addresses or link offline profiles to e-mail addresses. I am profoundly aware that premature claims by consultants, technology and software suppliers during the dot-com boom brought about the anger and action of privacy advocates who have all but closed off our chances for cracking these codes in service to commercial ends.

Ironically, so far the only people who seem able to either track me down efficiently or cover me via e-mail carpet-bombing are the porn purveyors, who in many ways have pioneered the most viable technology and marketing techniques on the Web. I’m routinely flattered and surprised by the growing number of people who either think I’m such a major stud that I need to see lots of naked people in countless positions and combinations or that I'm impotent and need a chemical solution ASAP.

So I’m faced with existential questions … how do I sort my messages, how do I present myself to the world (and simultaneously remember all those passwords and user IDs) and whom do I trust to house and potentially share my personal information?

There have been several attempts to create products or services to concentrate my online identities into an easy-to-use, easy-to-transmit access authentication scheme that could be used online or via wireless devices. In theory, by concentrating all my identities in one place, I could by-pass my faltering memory and securely access sites, programs, stores, applications and organizations of my choosing with one-click.

The cost, of course, would be giving the provider of this service, access to all my secrets. No doubt the government will sooner or later want to get into the act to assure themselves who I am and what (if any) is my relationship with Osama bin Laden. I’m not a privacy nut but this stuff scares me. I’m willing to endure more than a few error messages as I transpose user names and passwords rather than lay bare who I am and what I’m doing to any kind of commercial or governmental scrutiny.

I’m usually schizophrenic when I consider the costs and benefits of identity authentication and profiling. As a data-driven marketer, I’m generally amazed at both the math and the machinations of profiling, collaborative filtering and forward-looking modeling. As a bald, aging, white, liberal, male New Yorker, it is depressing to be reminded that I track with my demographic, that birds of a feather truly flock together, that age, education and income are much more predictive of behavior than we like to admit or that my viewpoint and needs aren’t as unique or distinctive as I tell myself they are.

An although I suffer from E-mail Split Personality Syndrome, at this point in time the cure is much worse than the symptoms. And so like millions of others, who are predictably like me, I am willing to endure a bit of confusion and discomfort to retain a measure of anonymity and the ability to elude marketers like myself.

Thursday, February 24, 2005

Smart Surgical Search Engine Tactics

A new study indicates that multi-word searches are more valuable in terms of clicks and, by inference, conversions than single word searches. This makes a lot of sense.

Consider a search for "socks" on Google, far and away the leading search engine. Assume that the more generic the search equals the least valuable prospect. Why? Because the least sophisticated buyer will default to the broadest possible search term. Also assume that the broader the term searched draws the biggest number of potential competitive key word buyers because the monkey-see-monkey-do marketer bids on the plain vanilla terms in a mistaken attempt to outwit or outspend the competition.

The generic term "socks" yields 12.6 million hits and is a term heavily bid upon. Add the word "cashmere" and hits drops to 240,000. By adding a second word you reduce the prospect universe dramatically; most likely getting closer to real buyers. The more specific the search becomes, the more likely you will be in closer contact with people who have a need, the cash and a true interest in buying. (This assumes that a more determined buyer is a more sophisticated search engine user; an anssumption that may not yet be true.) Add "mens" to the search criteria and the number of hits drops to 139,000 which can be further winnowed by specifying a color like green to reduce hits to 43,200.

Then zero in on location. Here you begin to understand the appeal of local search. By adding "NYC" the total hits shrink to 6160. Specify "Manhattan" and the list is down to 3910 and if you punch in a zipcode, Google displays just 5 nearby sellers.

Assuming you are selling men's green cashmere socks in the 10017 area ( e.g. Bloomingdales), the more words bought yields the tighest results and presumably the most immediately interested buyers. The real question then becomes will the cost of buying a 7 word phrase yield enough searches and enough buyers to cover your costs?

If you want to end up in the top 5 natural search results above the fold or high up in the paid results running across the top blue bar or along the right hand margin, the best SEO tactics are to buy strings of words that correlate to the most popular items you are selling. Ideally each string of words might be phrases that your customers actually use or combinations of words that reflect the criteria your customers use to select merchandise.

The tactics work for B2B searches where generic terms like "ERP" or "blade servers" yield zillions of search results and are presented to everyone from kids doing school reports and aging investors to CIOs and operating IT managers with budgets and buying authority. Again the operating assumption is ... the more generic the search term; the less valuable the impression.

To get faster access to more likely buyers, sophisticated marketers are talking to their customers and buying descriptions or phrases that reflect how prospects and customers talk about or describe problems, pain points and needs. They are also researching how generic terms are embedded in prospect thinking and buying phrases that reflect how truly qualified leads might think about the product.

For example rather than buy "ERP" or "SAP ERP software" a more sophisticated marketer might buy "ERP in the software stack" or "ERP integrated with customer relationship management."

These are phrases less likely to be bid up and more likely to be used by qualified prospects. In this way the smart guys reduce the number of bidding wars over the generic terms, carve out potentially ownable terms and get top rankings on searches conducted by those most likely to be researching their product or service.

Tuesday, February 22, 2005

The Real Objectives of Integrated Marketing

Appear smart, with-it, organized and relevant by presenting one face and one voice to customers and prospects wherever and whenever they intersect or interact with the brand.

Engage customers and prospects comfortably and persuasively in ways, consistent with the brand identity and brand promise, which respects customer choices, preferences and privacy.

Sell more stuff faster to customers and prospects with the highest potential lifetime value and the greatest likelihood to be loyal, referring customers over time.

Make every penny of marketing spend work as hard as possible in every possible way by rigorously benchmarking and monitoring productivity, yield, duplication and ROI.

Reduce and rationalize internal silos by engineering a marketing system where internal resources compliment rather than compete with each other to present the brand as customer-centric, competitive and responsive to the marketplace.

Compass Points for Online Conversion

As the web becomes a global emporium, it’s becoming obvious that we need to watch, understand and manipulate the commerce process closer to sell more stuff. At this point what we measure (clicks, page-views, impressions) doesn’t help figure out how to optimize conversion. It is time to focus on how to sell more, faster. The old saying “where you look is what you see” dictates the relevant metrics. It’s the sales…stupid!

One way to crack this code is to begin with baseline direct marketing principles.

1. Behavior is the best predictor.
2. Repeat behavior is a better predictor.
3. Prospects that look like current customers are likely to be better prospects.
4. Prospects that do what customers do are the best prospects
5. It’s easier and cheaper to sell more to current customers than to convert prospects into new customers.
6. None of this is as easy to do as it is to say.

Ten Secrets to Success in Advertising or Marketing

1. Read everything. Don’t just scan it. Read it. Be sure you understand it. Ask questions. Keep asking. Question it. Good ideas come from everyone. Your perspective will help keep us from being too insular.

2. Demand context. You’ll be asked to do a million things. Many are routine or intuitive. Some not. If in doubt, ask what we are doing, why, to whom, and how your task fits into the whole scheme of things. Also insist on knowing about priorities – which matters/comes first, second, third.

3. Be a Hub. We will all be spinning in several directions. You are the hub of the wheel – steady, stable, constant, always in the same place. You’ll have to figure out how to do it.

4. Get involved. Surf the sites. Know our competitors. Read the paper with us and our clients in mind. Become an online shopper. Notice cool functionality, interesting details, marketing stuff and share it with the team.

5. Lay out your thinking. As you do more complex projects, don’t assume that everyone knows (or remembers) what you are doing. Lay out the assumptions and hypotheses. Document your approach so we know where you are coming from.

6. Treat everyone like a client. Assume that everyone deserves maximum attentiveness and respect. You’ll never go wrong.

7. Assume urgency. We move at Internet speed. And deliver service and answers in a New York minute (50 seconds). Assume that every request made is to be done ASAP unless otherwise stated. If too many ASAPs pile up, ask for help in setting priorities.

8. God is in the details. Every great thing is nothing more than a web of details. Write everything down. Check and double check. Spell check. We are all juggling stuff. We expect you to be on top of things – entirely buttoned up. If we don’t share the details – demand them from us.

9. Know where we are. Figure out our personalities. Get all our phone, pager, PDA and home numbers in an easily accessible form. Know how and when to reach us throughout the working day. Figure out what you need from us to be productive. and happy. Then tell us explicitly. Few of us read minds. All of us want to work in a fun, happy and productive place. Getting there is an individual and collective responsibility and goal.

10. Build a network. Every organization has a formal structure and table of organization that explains who’s who and what’s what. Every organization also has informal links of friendship and mutual cooperation between people. That really decides who’s who and what’s what. Getting into the informal loop and being a source of help and information to others will expedite your ability to get stuff done and accelerate your productivity and job satisfaction.

The Last Hope for Ad Agencies

Ad agencies have always been at the mercy of client anxieties. And agencies have always been the whipping boys for all manner of brand or product performance issues. Everyone understands that agencies exist so they can be fired. Everyone also realizes that the core agency value proposition is either “we know or can do something you cannot” or “ we have arms and legs to get things done faster, better and/or cheaper than you can do it yourself.”

But in the last few years agencies have had even more tenuous relationships with their clients. The list of clients that broom agencies quickly seems to be growing. Skip Pile’s latest research indicates that clients change agencies, on average, every 2.5 years, twice as frequently as before. There are all kinds of reasons but the bottom line is that few clients believe that agencies are long-term partners.

You can’t be a partner if they don’t know you well. Rarely are agency chieftains, part of a client’s inner circle. It is unusual for agency heads to be considered the CEO’s or even the VP Marketing’s consigliore or to even have a voice in crafting client strategy. Instead agencies and their leaders have become receivers of strategic output and implementers of tactical plans.

Very few clients believe that their agencies actually know the fundamentals of their business, their category or the critical processes within their enterprise. Agency expertise is understood as generic, plain vanilla project management.

And even that role, too, has a built-in trap. Aggressive cost controls and benchmarking have given savvy clients unusual leverage. Many specify upfront the time, cost and staff to produce a postcard, a website, an e-mail campaign or a #10 mail package. Few are willing to pay for anything but minimal staffing. Even fewer are willing to pay for senior people who allegedly bring added value, insight or experience to their accounts.

Yet agencies, from the 2-person shops to the global conglomerates, seem to be impotent to affect the size, timing or sequence of client spending. Agencies are output. It is a sobering thought, which fundamentally changes the game.

Yet changing these circumstances requires changing the way agencies do business. Consider a few key areas.

Leadership. Clients hire agencies that have a point of view. If you don’t have a POV you are just another vendor cranking out pretty pictures or punchy copy. Unfortunately too many agencies either haven’t developed or articulated a distinguishing POV or are unwilling to expose their POVs for fear of rejection. In a corporate environment that is naturally risk averse, having a POV is a point of distinction, which must be leveraged to an agency’s benefit.

DM agencies especially have practical knowledge not only about a client’s strategy but generally understand the distribution channels, the media, contact centers, customer service, fulfillment, retail traffic patterns and nuts and bolts operational reality. Agencies are often in a position to traffic information, data and ideas among and between different business units and to infuse grand schemes with a healthy dose of reality.

Leadership requires agencies to get out ahead of their clients by thinking through and anticipating events, sketching out likely competitive scenarios and contingency plans, understanding the personalities and power dynamics within client organizations and presenting “crazy” ideas or trial balloons for client consideration.

Doing this requires proactive thinking and investment spending. It also requires that we train junior people how to do these things and use senior, seasoned people to get top-level access and to put this stuff across persuasively. Account people who take reasonable risks, get beyond the day-to-day and become trusted, memorable or effective on the basis of their personalities play a critical role in offering clients the leadership they crave.

Efficiency. Developing tools to train, manage, deploy and effectively use agency resources is critical to maintain margins and grow profitable businesses. In the wake of the Seifert conviction, it will be critical to answer skeptical clients questions about rates, billing and productivity. Though most agencies have adopted the professional services fee model, they haven’t used professional services norms to maximize the value, productivity and utilization of their people.

This is not a software problem. It is a matter of understanding who is working and what they can do and mapping these resources transparently against client needs in real time. Improved real-time resource planning in-tandem with clients is a necessity.

Agencies have not parsed work among or between teams to capitalize on expertise or economies of scale. Nor have they used time zone differences, cost differentials or global resources to move projects ahead faster or to squeeze out better margins. Force utilization tactics and productivity measures, beyond counting billable time, are virtually unknown in the ad business, even though other industries have used these techniques to great effect in reducing costs and cycle times while motivating their best people.

Alliances. Every agency has loads of alliances. They are usually touted in press releases. Yet few can actually capitalize on these relationships to the benefit of clients. And while they sound good in credentials presentations, far too many agencies can’t, don’t or won’t leverage these alliances because they cannot control the ally’s end product or they fear disintermediation.

These twin demons --- paranoia and the need for control – have undercut most agencies claims and seriously burned credibility in offering clients the ever elusive “integrated solution”. The ability to leverage resources within networks is still the exception rather than the rule and has led all but a few clients to reject the idea that they can get full service from any one holding company.

Clients believe that each agency has one or two core strengths. Nobody really believes that any given agency is tops in everything. Having, using and delivering credible, expert allies is critical to consolidating, maintaining or expanding any standing with the leading marketers and brands, especially at a time when they are working with skeletal staffs.

Being able to field a coordinated team of agencies who will uniformly understand client objectives and culture, work in a coordinated manner, deliver against integrated timetables and husband precious marketing dollars is the Holy Grail. Orchestrating alliances is the best chance for finding and delivering the Grail to our clients.

Leadership, efficiency and alliances are three areas directly controlled by agencies. They have traditionally influenced relationships with clients. Attacking consulting firms and whining about the economy isn’t the answer. Leveraging agency assets is the only hope.

Monday, February 21, 2005

Women Buy Everything: Work With Them

For Confucius, “Women hold up half the sky.” For futurist Watts Wacker, women are the only factor in modern life as men become simply exotic house pets. For e-tailers, women are becoming dominant shoppers demanding different shopping environments and functionality.

Since the early part of the 20th century women have owned shopping as a practical activity, as a personal gratification and as a sport. Simultaneously a symbol of social liberation, an outlet for intellectual and financial expression and a convenient ghetto, shopping, according to Paco Underhill, is female. A study commissioned by, P&G and Harris Interactive confirmed this social reality when they found that women control 75 percent of family finances, and 80 percent of family purchase decisions.

Underhill, a retail consultant and self-proclaimed shopping anthropologist, believes that “Women can go into a kind of revelry when they shop. They become absorbed in the ritual of seeking and comparing, of imagining and envisioning merchandise in use.” And yet its not frivolous. “ Women generally care that they do well in even the smallest act of purchasing and take pride in their ability to select the perfect thing.” In my family and among my female friends, you can add the pride of getting the perfect thing at the perfect price, usually a discount measured in double digits.

So it shouldn’t be too much of a shock that as women close the online gender gap, they will become the preeminent online shoppers. This necessarily changes the game. Women shop differently than men. They are more discerning about merchandise. They do more advance research. They care about product care, laundering instructions, components and ingredients. They expect more convenience and service and care not a whit about the latest bells and whistles or the glory of evolving technology. Meeting this new, tougher set of expectations will be the deciding challenge of this holiday season for e-merchants, many of whom are still struggling to get basic functionalities working right.

Until recently women have been a steadily growing minority on the Net. Online savvy women have tended to be in their 30s or 40s and married. They’ve tracked with the upscale demographics of their male counterparts. The Boston Consulting Group reported that 42% of online women have been in cyberspace for three or more years and that slightly more than half have a year or less under their belts.

The early evidence of quick shopping adoption is scattered but compelling. In aggregate, twenty-one million women have bought something online. Those accessing the net from home have bought twice as much as those logging on at work.

If the newbies follow the patterns set by their cybersisters, site rankings and site functionality are in for big changes. One obvious reason is that women shop both for themselves and for others. Single women drive gift businesses. And married women serve as the health-care decision maker in virtually every household, buy food, HBA and cleaning products, acquire goods and services to furnish, decorate or maintain the house and household routines and buy for kids or aging parents. (When you consider this list, you realize that men basically buy their own toys and occasionally cover their pets.)

Goodbye Surfer Girl

What is surprising is that women’s’ shopping style changes online. According to Underhill, “ men and women switch sides when shopping on the Web: Men spend lots of time surfing from site to site while women go directly to their destination, click only enough to buy what they want then log off.” Its pretty much the same act as the remote control. He flips. She sticks. The reason, he opines, is that “women turn technology into appliances. Women see its purpose—its reason, what it can do” as the primary value. They care much less about the intrinsic qualities of the technology.

Data from confirms that women are “seekers” rather than surfers exhibiting the traditional male surgical shopping approach. Women make half as many purchases as men and spend only one-third as much time doing it. Women tend to visit fewer sites for shorter periods of time. However they tend to have longer online sessions than men and seem to be more loyal to the sites they elect to visit or buy from.

Addressing the needs of female online shoppers requires close attention to the following tactics:

KISS. Keep it simple. Manage the K size of images. Avoid downloads or plug-ins if you can. Don’t get carried way with Frames, Flash or other tools. Focus on getting her there quickly and establishing your positioning. She wants to get in and get out efficiently. Facilitate that for her.

Show Her the Beef. Your female visitor is there to shop. For her, this is serious business. She wants to see what you have and what it costs. Streamline editorial. Make photos and images big. Use zoom technology to show off details. Make type big enough to be seen without her glasses and in colors or fonts that will get instant recognition and understanding. Arrange merchandise sequences logically and use adjacencies for cross-selling or up-selling.

Aim For One-Click Navigation. Try to put your goods or services within one click of purchase. Work towards an intuitive site navigation. Make it easy for her to ask questions and contact customer service. Put your returns policy in a prominent place. Use “breadcrumbs” so she can retrace her steps easily.

Recognize Her. The more personal you can be, using opt-in techniques, the better her experience. Don’t bury your privacy policy. If you can dynamically serve her pages based on her shopping patterns, so much the better. Remember that the volume of merchandise sold is directly correlated to the time spent on your site. Using personalization techniques or offering live-chat assistance will increase the length of her session and the value of her shopping cart.

Plan for Group Activity. If you’ve ever been in a store, you know that two women shopping together can become a buying machine in record time. Offer your female shoppers opportunities to share the shopping experience. Chat rooms, the ability to e-mail products to friends, a wish list or gift registry, a personal shopper, group shopping or group discounts, the use of Instant Messenger to facilitate virtual shopping trips among girlfriends will pay off in increased sales and loyalty.

The Real Point of CRM

I have more relationships that I can handle. I do a so-so job, managing up, down and sideways at the office. I do a little better with my gorgeous wife, great kid and lovelorn dog. I am on solid ground with my assistant who typed this column. I do a little worse with my aging mother and
doting in-laws and much worse with my annoying landlord and contentious ex-wife.

Then I struggle to manage relationships with dog-walkers, babysitters, doormen, dry cleaners, piano teachers, soccer coaches, tech guys, chorus masters, postmen, next door neighbors, visiting cousins, finance guys, college pals and professional peers. I am maxxed out.

I really don’t have room for relationships with my fabric softener, my shoes, my dishwasher, my news agent, HBO, The Mets, each of the 65 magazines I regularly read, my Palm Pilot, my cell phone provider, AOL, my toothpaste or my TV set. And even if I did, I am not sure I’d do any better relating to them.

I guess I should be thrilled that hundreds of corporations have decided to take this burden off my shoulders by investing in CRM programs. I am flattered. From multimillion-dollar software installations to guys with 3 x 5 cards, somebody out there is trying to keep up, keep track and keep selling me.

The problem is I’m an odd duck. So are most people. We don’t really do what we say. We can be distracted and rerouted by deals and offers. We change our minds easily and frequently. We take advice from unqualified strangers at cocktail parties. We can be sidetracked by slick design.
And for large categories of goods and services we either don’t care or we do care very much but we don’t show it. Marketers spend too much time buying increasingly complex “M” solutions and not enough time understanding “Cs”. The greatest enemy of CRM is unmet expectations. Gartner projects that 55% of CRM efforts in telecom will fail to demonstrate a positive ROI. All
that time, energy and money without any movement along the relationship continuum and no positive cash flow to show for it.

When all the bells and whistles are stripped away, CRM rests on three fundamental direct marketing principles. All that time, money and energy is spent trying to capitalize on these truths which drive every direct marketer.

1. Birds of a Feather Flock Together. If you can find the demographic/psychographic patterns that define your most valuable or most frequent customers – you can better serve them and find more of them easily.

2. RFM Matters. If somebody takes an action, it’s easier to get them to do it again. The sooner the better. And if you watch how much they spend you’ll get a feel for how much they could be worth to you as a customer. That’s why cataloguers put offers in your shipping bag and send you a new catalogue as soon as you buy. Its all about recency, frequency and monetary

3. 80/20 Rules. 20% of your customers yield 80% of your volume. Ideally if you can identify the 20%, you can communicate with them much more cheaply and thereby maintain volume while increasing margin. This fantasy of finding the 20% explains why packaged goods marketers keep trying to do CRM in spite of successive failures, total lack of understanding and
products that usually sell for less than five bucks.

Getting all the data entered correctly, kept current and aggregating personal info, buying stats, appended data, model scores and the results of email campaigns, coupon redemption or store visits could keep teams of programmers, analysts, coders and marketing research types busy for years. Imagine the costs and the time required, especially if you have legacy ERP systems, scanner data and warring business units with private stashes of numbers.

After all this, when a marketer gets it right it’s a beautiful thing. When they blow it, it’s a colossal waste of money. To help raise your consciousness about the room for relationships in consumer’s lives and the need to watch and respond, allow me to site a few examples from my relationship-rich life. They are not statistically significant or projectible. But I have a hunch they reflect the state of the CRM art. . . the good, the bad, the over-engineered and the unfocussed.

Norm Thompson
Fifteen years ago I saw an ad in The Wall Street Journal that read “I make the world’s most comfortable socks. If you doubt me, send me your card and I’ll send you a free pair”. Being younger, poorer and much more gullible (I thought there was a real guy named Norm in Oregon). I did it. So did ‘Norm’. His wick-dry socks are ‘the best’. ‘Norm’ sends me his catalogue, which I generally ignore. But he also sends me a flyer about my socks twice a year. And like a lab rat, my reflex instinct is to buy 3 pairs for $19 twice each year. Do the math. For the wholesale cost of a pair of socks and thirty 50 cent mailers ($15 over 15 years), Norm has built me into an annuity with a present lifetime value of $570 and a future value worth at least $38/year. It’s an ROI you or I would kill for.

American Airlines
I am a mile whore. But American seems to know when and where I fly even though they’ve never asked me a ton of nosey questions. They post my new points quickly and offer me deals on the routes I fly. They upgrade me much faster than their competitors and generally make me feel like a big shot. On most flights I get automatic upgrades often presented with handshakes from smiling gate agents. I’ve repaid their largess with frequent use, several incremental vacation package purchases, light mileage redemption and positive word-of-mouth. When I compare AA with Continental, Northwest, US Airways and United, who also are relating to me, AA seems more nimble, able to act faster and working much harder at our relationship.
The home of the original collaborative filter bedevils me. I purchase a ton of booksusing that magical, demonic ‘1 click buy’ feature. Yet they aren’t very grateful. They never write or call. When I actually took a cross-sell offer on a CD player and CDs, I wasn’t acknowledged or thanked. Even the stodgy old BOMC celebrates a change in my behavior! I ignored their mail and FSI catalogues. I tossed the postcards pushing DVDs and white goods. I think I mean more to them than I really do. I haven’t felt this way in a relationship since seventh grade.

Brooks Brothers
I have worn Brooks Brothers Oxford cloth buttoned-down shirts since I was eleven. I used to buy them with money from my paper route since they were too pricey for my Mom. Since they’ve gone cyber, I have benefited from some great discounts. But, I can’t tell if they’ve
sorted me into a “value buyer” category or if its just a coincidence that I seem to only get discount catalogues and discount HTML emails often in quick succession. I know they’ve tuned up the fashion collection. But I can’t decide if they’ve become a discounter or if it’s just a characteristic of our unique relationship? I’m trying to decide if our relationship is governed by a sophisticated profiling effort linked to an ingenious contact strategy or whether Brooks is desperate to move the goods at lower margins. The fact that they’ve never zero-ed in on what I buy, referred to my purchase history or offered me a logical cross-sell suggests that latter.

I’ve been a Gold Card holder for ten years. I still get a kick seeing my name on those digital boards and by passing the counter filled with tourists and losers. Immediately getting in the car and driving away makes me feel important and very savvy. But what’s up with their points
deal? They offer me all kinds of irrelevant coupons. If they’d look at my transaction history and my address, they’d know how lame the offers are! Is it still a relationship, when one side no longer pays attention?

David Bouley has been the “chef of the moment” in New York for 20 years, Danube is a shrine for foodies and gourmands. David keeps the checks of his 400 most frequent diners in a shoe box under the bar. His captains note wine choices and tips given. Each time you come in, they check the box so that the free ‘chef’s taste’ you get isn’t the same as last time. In my case, they remember how much I’ve come to love beef cheeks. So they bring me a free portion without asking. The box also cues the Headwaiter which drinks, wines and desserts you’ve tried, so the waiters know what to suggest and how to up-sell you. The technology is vintage 18th Century. The feeling of being pampered by one of the world’s great chefs is sublime.

Ultimately CRM is about paying attention. Technology facilitates collecting and analyzing data about your customers. But the game is won or lost in using the data at the right time with the right customers. Ideally CRM is like a friendship. With each exchange and each interaction the
parties learn more about each other. Each gently adjusts for the next encounter and generally feels good about the whole thing.

The Coming Global Vendor Battle

The evolutionary battle for direct and interactive marketing is shaping up quietly as marketing services companies flesh out their portfolios in anticipation of eating DM agencies’ lunch. Not everyone sees the coming clash. But leading clients are open to alternatives, because they experience the agency model as severely broken.

The antagonists address the problem of creating integrated marketing programs from two different and distinct perspectives. Agencies have been selling insight-driven creative, media planning and buying and project management at high margin retainers exclusively to one firm in each category since the late 60s. An agency’s assets are its talent and its bench strength. They sell big ideas.

Marketing services firms own hard assets; principally compiled lists, software or printing facilities. They aggressively sell to many or most players in each category and have acquired allied and ancillary services, usually at the behest of clients, which are competitively priced, often on a commodity basis. They sell infrastructure and discrete products.

If you are handicapping the title bout it will be Wunderman, OgilvyOne, Draft, MRM Worldwide, Digitas, Euro RSCG 4 and what’s left of Rapp Collins versus Harte-Hanks, Acxiom, Experian, Donnelly and D&B competing on a global stage. The focus will be on the high tech, financial services, travel and hospitality, automotive and retail industries.

Clients, starved by years of flat budgets and hiring freezes, need external marketing resources that understand their business, move quickly and can deploy nuts-and-bolts services on an as-needed basis at competitive costs. Clients want results measured in terms of demand generation, cross-sell, upsell and in increments of awareness or loyalty. They want to count on having a single butt to kick; a partner with skin in the game who is always on-call, doesn’t make excuses and offers predictable pricing.

The marketing services crowd has no creative pretensions and few claims about strategic insight into industries. They are agile and can execute quickly. They produce effective lists, do merge/purge, design and execute online and offline campaigns (including landing pages, sophisticated lettershop work and print on-demand), build, host and operate websites, handle sophisticated teleservices and teleweb interfaces, collect, track, monitor and analyze customer and prospect data, do search engine marketing, produce and distribute collateral and handle POS messaging and promotions.

Most claim they can present a single point of access, control, billing and operational responsibility to clients. The marketing services value proposition is “we will do it for you faster, cheaper and with less ado than agencies but with the same or better quality, coordination, command and control.” The next logical step, they argue, will be to outsource all marketing processes and retain only a few marketing strategists and leaders within a client organization.

Agencies, boasting brand names and faded glory, claim to offer superior service, industry specific expertise and insight and value-added project management spanning the globe. In fact, many of the components of agency service (e.g. lists, teleservices, CRM, lettershop, print or video production) are bought from marketing services firms. The value add from agency management of ed these services varies widely in quantity and quality.

To better track the coming battle, assess agencies and marketing services firms from the perspective of client “must-haves”.

Integration and Coordination. During the last fifteen years, agencies have created separate profit centers to offer media, production, interactive and consulting services. These units are charged with making profits independently. As a result they buy and sell services within the agency rubric which complicates relationships with clients, reduces easy integration and coordination and often adds to the bill. The quality of service and the tenor of the relationship rest on the skills of account management.

In marketing services firms, each component sells separately. Relationships are based on successful past sales and the perception of the value and quality of component products.
They are just beginning to create client-centric menus of services with pricing incentives to buy combinations or packages of services. They are new at responding to the need for integrated services and in some cases don’t yet see themselves in this arena. They do not have a cadre of seasoned account managers that see the forest for the trees.

Industry Expertise. With few chiefs and many, often under-trained Indians plus significant turnover, claims of deep industry expertise are hard to sustain. Agencies know how to create stuff and manage their own internal production processes, but hardcore understanding of markets and product niches is often hard to come by. Knowledge management in agencies is in its infancy. Given client exclusivity, agencies often cannot or will not share what they really know among or between clients. This is ironic since clients often choose an agency on the basis of its track record for a particular allied or competitive client.

Marketing services people tend to know their product. They are list mavens, printing whizzes and call center jockeys. Sometimes they also know allied products in their company portfolio. Most aren’t yet thinking in terms of broadband client service or client throughput. But recent acquisitions and management moves make clear that these firms are headed in that direction. Some have put coordinating structures in place to better package and price their offerings. There is little or no effort made at knowledge management.

Global Reach. Agency global networks, especially in the DM space, are a mixed bag. Central control and coordination is difficult. Time zones, wide variations in talent, different business practices and expectations and a variety of ownership models complicate the process. Many clients end up funding what should be an agency’s internal wiring.

Marketing services firms have regional hot spots and regional expertise but cannot yet present a consistent package of global services to clients. At this point in their development they probably don’t see enough potential demand to justify the internal plumbing or new acquisitions necessary.

The forces affecting the next generation of direct and interactive marketing are working their way into place. Today, neither DM agencies nor marketing services firms can provide clients with the full menu of services they currently demand. But sometime soon a leading major client will defect and the battle will be joined. Stay Tuned.

Taming Marketing Processes

Business Process Management (BPM), the effort to identify, document, quantify and replicate best practices is coming to marketing. CEOs and CFOs want to know what’s behind the curtain, how much it costs, how much it yields and how much faster and cheaper it can be done. .

Dubbed Marketing Process Management (MPM) or Enterprise Marketing Management (EMM) the movement is much more than buzzwords. It is rooted in material changes and significant savings in time, efficiency and cash gained from process re-engineering in finance, accounting, manufacturing, logistics and supply chain. It’s marketing’s turn.

This business movement, championed by a bevy of opinion leaders, CEO authors and the usual B-school pundits, is based on the premise that every successful business is an aggregation of discrete processes. If you get the processes right and can find efficiencies in aligning simultaneous or sequential processes, you win the game.

The assumption is that marketing, long considered a black hole for budget dollars, can be similarly tightened up. Below is a guide to the topics likely to come under scrutiny as the first wave of BPM sweeps across the land and sets expectations for senior leaders.

Targeting. On a basic level there is a finite, definable universe of buyers, influencers, advisers and spoilers for every b2b product and service. On a sophisticated level, systems should track individuals by industry, segment, product use, title and role in a selling process mapped over time or deal cycles. Yet very few organizations have reliable processes in place to manage target lists and databases. Instead the squeaky wheel gets the grease when there is an obvious or embarrassing mistake or when the pipeline dries up.

And even though names and titles turnover as much as 40% each year, marketers ought to be able to continuously run data collection and cleaning programs to insure they know who to sell to. Ideally these systems incorporate information from sales reps, partners, customer service and online channels and are scrubbed regularly by telemarketers and online updates.

There is a constant anxiety about the quality of target lists and the relevance of the names on these lists when mapped against product or deal cycles. And yet very few companies have put standardized processes in place to manage this on-going need. Data cleansing and updating can be a program that runs quietly in the background of every marketing organization consuming a steady, constant percent of the budget it.

Organizational Alignment. It’s still not uncommon for sales and marketing to have different agendas, timelines, targets, program preferences and budget priorities. Part of this ambivalence is institutional, cultural and personality driven. But there is no real excuse for a corporation’s horses to be pulling in different directions.

Even the most Machiavellian CEO has figured out that competition and conflict between sales and marketing yields nothing more than wasted time and resources. Yet few have used their authority to compel a single view of the marketplace or to impose an integrated approach to applying the right amount of resource in the right sequence to yield the most profitable revenue in the shortest time.

The lessons of process engineering will soon be applied to this perennial problem in ways that will force chief marketers to become much more involved in sales processes, pricing and productivity issues. Similarly the process perspective will benchmark the ROI of favorite sales tactics like golf outings, trade shows, giveaways and travel boondoggles to force sales teams to demonstrate their throughput power.

Demand Generation. The desperate search for qualified leads that turn into bona fide sales opportunities is and always has been a game of numbers. There are a finite number of ways in which individuals are contacted, messaged, incented and engaged. A universal standard for defining lead qualification exists, though it is expressed in a million ways.

“Best practices” can be identified, quantified, replicated and probably automated. The emphasis shifts from creative, where the next campaign or package is expected to crack open the sky, to a mining and refining model where getting to the right person with the right frequency at the right time rings the bell.

eNurturing. In every industry and for every product there are prospects who are interested but not yet ready to buy. Hardly anyone has found a formula to keep these leads ”warm” efficiently and for nurturing their interest into deals that can be harvested when ripe.

Managing C or D leads should be an automated process driven by assumptions about when to mail, when to ping with an e-mail newsletter, when to invite to events and when to contact live by phone or in-person. A series of well-timed contacts, using pre-defined messages can be orchestrated at discrete stages of a purchase cycle by using technology to nurture future deals for maximum return on minimal investment.

CRM. Tracking customer information and behavior ought to yield competitive advantage, facilitate up-sell and cross-sell and build stronger customer loyalty. Ideally these systems ought to give senior management visibility into what is happening day-by-day in ways that will improve the speed and quality of decision-making.

Huge sums have been spent. Nailing down the real use and value of CRM investments, especially sunk investments in evolving technology, is high on most leadership agendas. An obvious payoff should be better reporting and insightful analysis from the data collected. As a result management “dashboards” featuring daily or weekly graphic displays of critical marketing variables will become as popular as Blueberries.
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