Archive for Measurement

Posted in B2B, Consumer Behavior, CRM, eMarketing, Marketing Mix (New Concepts), Search Engine Optimization with tags , , , , on November 29, 2011 by Consultant

Social CRM: Measuring Relationships (the Wrong Way, and the Right Way)

I can’t tell you how many things—magazine articles, email newsletters, Facebook updates, tweets, blog posts—come across my desk every week that purport to be about “social CRM” (customer relationship management) measurement tools.

Actually, I could.

I could make a pretty little chart and break it down by type of article, and even by source.

And it might look something like this:

I think we could all agree that the value of this chart is questionable, at best. It’s pretty, and if we tracked it over time, we might even be able to find some insights. We could use it as an indicator of how much interest there is in this topic. Some might even use it to predict growth in this area of marketing.

But no one would propose we use this method to determine the value of the relationships I have with the topics I’m measuring.

So why are so many brands using tools just like this to measure social media engagement?

The problem, in a nutshell, is this: garbage in, garbage out. But before we can discuss how to get the proper data inputs, we need to explore what social CRM could and should be to an organization.

I was quite surprised and saddened to see a quote from someone at Eloqua implying that social CRM is about support requests (at least that’s what the quote seems to imply). “Although social CRM and support are, justifiably, hot topics in the media, calls for support account for only 1% of all tweets,” Joe Chernov wrote in a post titled “Your Social Media Followers Are Your Best Customers.”

Social CRM is about building and managing relationships of value in a world where brands require a digital and social presence:

  • For someone with a promotions background, that means identifying likely candidates for offers and tracking them through to conversion.
  • For someone with a lead-generation or B2B background, that means getting candidates to self-identify and passing them into a lead-management system.
  • For someone with an advertising or media background, that means paying lots of money for TV ads with some mysterious end result of increasing sales. (OK, that is a bad example.)
  • For a digital marketer, it means everything. We can no longer afford to not attach profit and revenue valuations to our efforts.

I will talk more about building social CRM programs in a later article. Here, I want to focus on a key aspect of social CRM: our ability to measure our success at building relationships of value.

Let’s go back to that first chart. It’s an indicator that could show us increased interest, over time, in the topic we’re monitoring. I could run a search in January. Then in February, I could run the search again and compare how many people are promoting these tools vs. January. Rinse and repeat.

We end up with a chart that appears in just about every social media monitoring report:

Here, we see the number of people talking about terms that are of interest to us, month over month. It could be about product mentions. It could be about key issues. That doesn’t matter. What really matters is how this data helps us understand the value of the relationships we are building (or not building).

But wait. That’s not what this chart shows us. It just shows us how many people are talking about something we are searching for. They could be the same people every period, or there could be 100% churn with no consistency across periods. For all we know, our efforts could simply be driving volume at the cost of relationships.

Someone usually pipes up at this point and shows me how they are tracking sentiment. Great. So we’re carefully tracking whether overall group mentality and conversation is trending positive or negative, but we still have no way to measure the relationships. Awesome.

I should point out that the fault for all of this confusion lies partly with the tool providers. We are all starting with measurements that social media monitoring tools just happen to provide. But what if we weren’t? What questions would we ask if we were designing this measurement program from the ground up? What knowledge would we want? How would we design the reporting tools to help us build long-term relationships of value to our brand?

Here are just some of the types of key questions we should be asking:

  • How many of the people from January are also active in February? What about in March?
  • Is there a core group of people driving different conversations?
  • What percentage of these people want to engage with our brand?
  • Is the group that talks about us more often over time more or less likely to purchase or participate in an activity?

In the charts presented earlier, we’re actually throwing away the data we gathered the previous month. So the first question we need to answer is this: What percentage of people from one period is still taking about us in a later period?

We need to start creating and seeing charts like this one:

If you’ve invested a lot in social or digital media, I hope you have a growing percentage of people talking about you or engaging with you month over month and quarter over quarter. And, if you do, who are these people? Which ones are driving the conversation? How do their sentiments compare with those of the rest? Or, my favorite question: what else are they talking about?

In short, it’s also important to look at how influence is being defined. Tools like Klout provide great shortcuts for understanding the activity and reach of individuals online. But what if your influencers don’t rate highly in Klout? What if they are everyday people who are so passionate about your brand that they are talking about you every month… and you just don’t know who they are?

Posted in B2B, Consumer Behavior, CRM, eMarketing, Marketing Mix (New Concepts) with tags , , , , , , on November 29, 2011 by Consultant

How Vulnerable Are You to Customer Defection?

In the early ’90s, the term “customer relationship management” (CRM) joined the marketing lexicon. Though the idea is often thought to refer to the implementation of some kind of technology, the real idea behind CRM is that the management of customer relationships is a business imperative.

CRM is about deciding which customers or segments to target, and then developing customer acquisition, retention, and growth plans that will attract and keep your best customers. CRM is really about making your customers the heart of your business.

Our job as marketers is to acquire, grow, and retain profitable customer relationships to create a sustainable competitive advantage.

How do you measure customer relationships?

We’ve all come to accept that creating customer loyalty is an integral part of any organization’s strategy and focus. Various factors influence the success of any customer relationship initiative. Here are five critical success factors:

  1. Clearly defined business outcomes related to customer acquisition, retention, and growth
  2. Agreement about who the customer is and what they want and need from your category (and you)
  3. Well-defined customer segments (and their desired behaviors) and customer-experience objectives
  4. A documented, integrated customer strategy
  5. Explicit measures of success, and the data and processes needed to support the metrics

 

Customer satisfaction and loyalty are two of the most common measures of success. A variety of models are used to measure and quantify customer loyalty, ranging from simple recency and referral models to RFM and customer lifetime value models. Recent research is examining those models to ascertain which, if any, truly measure customer loyalty.

Many organizations would agree that a loyal customer…

  • Stays with the brand despite competitive offers, changes in price, negative word-of-mouth, and product failures
  • Increases business/engagement in some way
  • Actively promotes the brand to others

Though there are many approaches to measuring customer loyalty, one metric that many organizations should consider is the Vulnerability Index.

Add the vulnerability index to your marketing KPIs

A vulnerability index serves as a way to measure loyalty in the face of competitive pull. Its purpose is to help you identify your most loyal customers—those who are going to stick with you through thick and thin.

To calculate your vulnerability index, you will need excellent market intelligence about your competitors’ campaign’s channel, offers, and markets. Once you have this information, follow these seven steps to construct your vulnerability index:

  1. Map the competitive activity. Include the competitor’s name, offer, duration of offer, and the offer’s focus area and market.
  2. Generate a list of loyal customers in the market where the campaign ran.
  3. Map their repurchase and engagement cycle based on frequency and last purchase date.
  4. Isolate all the customers whose repurchase or renewal dates fall within the competitor’s campaign period. This is your observation set (OS) and the set of customers who will experience the greatest competitive pull and are, therefore, the most vulnerable.
  5. Define your observation period, which is generally the campaign launch date and one purchase cycle after the last date of the competitor’s campaign.
  6. Monitor the purchases by vulnerable customers. Track all the customers whose purchases drop during the observation period. These customers constitute your vulnerable set (VS).
  7. Calculate the vulnerability index. Divide your VS by your OS and multiply that number by 100:

    Vulnerability Index = (VS/OS) x 100.

The index will give you a good idea of the proportion of customers who are succumbing to competitive pressure and some idea about the level of loyalty in those customers. If the index is high, you know that there is something to worry about. If the index is low, you can assume, with some degree of certainty, that your customers are exhibiting robust loyalty to the brand.

Because Marketing is charged with finding, keeping, and growing the value of customers, customer retention falls within the domain of marketing. Therefore, marketing organizations should have at least one objective aimed at retaining customers.

In addition to monitoring customer loyalty and advocacy and customer churn, Marketing should also keep tabs on customer vulnerability. If your vulnerability index begins to climb and exceed that of your competitors, you can anticipate that your defection rate is going to increase.

By monitoring your vulnerability index, you will know who your most loyal customers are, and you will be able to develop and implement strategies to withstand competitive pressure.

Read more: http://www.marketingprofs.com/articles/2011/4629/how-vulnerable-are-you-to-customer-defection#ixzz1f5bJmseK