Looking for deals for this holiday season?  Well, Black Friday and Cyber Monday are the days to buy online.

Look for free shipping deals, special limited-time offers and exclusive product bundles.

My new company, kajeet, is joining in.  We've got free shipping running and if you buy a kids cell phone on Thanksgiving or Black Friday, be sure to use promo code "FRIDAY15" at checkout to get 15% off any cell phone.

Check out the selection of LG Rumor phones in Champagne, White, Blue and Green.  With no contracts and unlimited FREE parental controls and just $169.99, the Rumor at kajeet is a great deal.  With 15% off and free shipping, it's the can't miss wireless gift for the kid in your life this holiday season.

Happy Thanksgiving!

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When it comes to creating an emotional brand experience, forget copy, taglines, imagery and brand iconography.

There's nothing like touching and feeling a product first-hand. Tasting the product is even better.  Especially when that taste is vaporized rubber and burning brake pads.

Of course you have to be a gearhead, enjoy automobiles and love driving.  That's why Audi's Driving Experience is perfect in terms of targeting and likely a big success in generating sales.

On Saturday, I attended Audi's complimentary two hour session at Summit Point racetrack in West Virginia, as the the result of an invitation I received as a current Audi owner.  I thought it would be a great way to spend a few hours on the weekend and get a ride in the 2009 A4.

Instead, I experienced a great example of experiential marketing and even witnessed a prospective Audi customer turn into a likely purchaser.

During the session, we had the chance to run the new A4 on an autocross track against three competitive models: Lexus IS250, Mercedes C300 and the BMW 328xi.  All models were comparably equipped and all featured all wheel drive.  While I admit an Audi bias going in, I found the A4 to be the best drive on the autocross track, showing a great balance of power, handling and luxury.

I drove in the car with a couple who were in the market for an automobile in that class and I was able to watch their preference swing very strongly to the A4 after they'd driven the other three models around the course.  It was clear to me that after driving the cars head-to-head--and a lot harder than they would get the chance to in a standard dealership test drive--that this couple was off the fence and preferred Audi for their next car.

Of course, that's exactly what Audi was hoping for. What I experienced with my co-driver was probably exactly the way Audi and Emotive white-boarded it in the planning stages.

After the autocross, we had the chance to go out and drive the A4 at speed on the racetrack for several laps, following a professional driver.  Talk about a great way to end the day, and not even have to worry about tires, fuel and brakes!

Of course, Audi ensured that the experience was all true to the brand.  The signage was beautiful.  The complimentary continental breakfast in the lounge reminded me of a luxury European hotel.  And all the furniture, including stainless steel tables and chairs, and modern white sofas was brought in specifically for the day.  Nothing at all was left to chance, even the use of high-tech iPod Touches to capture the post drive survey and the very cool Audi caps handed out as thank you gifts.  Vorsprung durch technik indeed.

What should you consider when undertaking an experiential marketing campaign?  My takeaways:

1. Budget appropriately. In order to do this right, Audi spent a fortune.  From purchasing competitive vehicles, to detailing them (they were impeccably clean), to the furniture, food signage and impeccably-groomed young staff, everything was perfect.  When you're trying to sell $48,000 cars, nickels and dimes spent on the presentation do matter.
2. Don't be afraid of the competition. Don't hesitate to let your prospective customers compare your product head-to-head, especially when you believe your product can stand up.  Bring in a reasonable set of the products likely to be cross-shopped and let your customers touch and feel those products as well.
3. Don't be afraid to guide the conversation. While you can let people make up their own minds about your product in relation to the competition, Audi did a fine job in the pre-drive briefing letting us know how to test the cars and what to look for.  Of course, Audi was bound to do well in that comparison because we knew what to think about during the drives.
4. Sweat the details. Is the coffee good?  The pastries of best quality?  Is the upholstery clean?  All of this matters and all of this costs almost nothing to get right.
5. Have a plan. The logistics of having hundreds of people come through to drive the cars must have been mind-boggling (the presenter indicated they brought 70 cars with them).  Yet, everything ran very smoothly.  Clearly, Emotive (the group that put together the day for Audi) had a lot of experience and a very good plan in place.

How have your experiential marketing experiences gone?  Have you had similar good experiences?  Or ones that went awry?

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De-averaging your marketing investments and paying close attention to how your incremental marketing investments pay off is a post I've been intending to write for a while now.

The good folks at Rimm-Kaufman group, however, saved me the trouble with yesterday's excellent PPC Averages can Hide Incremental Nightmares.  Please take the time to read it.

As I was reading it, I started to think about applying LTV to the methodology.  When you think about making decisions based on LTV, the story becomes even more clear.  All will be revealed (with a graph!) after the break.

First, I roughly recreated the RKG dataset from visual examination of the graphs.

Then, I developed some hypotheses about how the customers acquired in the original effort would perform.  They included:

1. Incremental Lifetime Sales. The top bucket of customers (acquired with the first $10,000 in ad spend) would generate an additional 80% more sales.  The bottom bucket would generate just 5% more sales.
2. Incremental Lifetime Marketing Investment. The incremental advertising cost to generate the incremental sales (you have to spend money to make money, regardless of what your CFO may want to believe!) ranged from a 7% A/S ratio for the top bucket to 1,000% for the last bucket.

I suspect I've been too conservative in my assumptions of incremental sales for the top bucket and the rest of the A/S assumptions are just estimates for discussion purposes.  I made no additional assumptions for improvements in gross margins and so on.

So what happens when I applied my assumptions? Here's the graph:

The light yellow and light blue lines are essentially the graphs on the original RKG blog.  The orange/dark blue lines show what happens when I try to add in LTV.  What happens?

1. Peak profit (marketing income) shifts leftward. That means that instead of hitting max profit at around $60K of original acquisition ad spend, this model shows it peaking at around $40K of original acquisition ad spend.
2. The profit slope changes. It becomes more steep in the first four buckets of marketing investment and then the rate of change also falls off more rapidly after the peak.

Of note is that I haven't considered overall revenue and other factors (economies of scale) that may impact marketing investment decisions.  You may, for example, want to be slightly less efficient on the margins for revenue volume purposes or to maintain volumes if you have costs that operate as step functions.

What does this mean as you look at incremental marketing investments?

1. It's even more important than Rimm-Kaufman indicates when you look at investment on an LTV basis.  The mistakes on the margin are not as gradually dilutive to your profit, when you consider LTV.
2. It's important to get up the experience curve. Given that the slope of profit rises pretty quickly, you're leaving money on the table if you don't (or can't) bucket the marketing investments and quickly march up that curve--by investing more in marketing, smartly.

How do you analyze the incremental performance of your PPC campaigns and other marketing investments?  What challenges do you face when trying to build models to maximize your marketing performance while delivering against volume or revenue constraints?

Update, August 6th--Graph above was updated due to some missing data.  All comments above still hold.  The original graph uploaded this morning is available here for review.

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Are the Beijing Olympics headed for an opening ceremony marketing problem? Today's Wall Street Journal raises the specter of athletes wearing masks to the opening ceremony and causing China to lose face. Other blogs and sources are starting to pick up on this.

What if 10 or 20% of the athletes in the opening ceremony parade walked in wearing face masks to protect themselves from the pollution and, ultimately, their chance at an Olympic medal? What does that say about the Chinese government? Do you want that imagery tied to your brand, after paying tens or hundreds of millions to be the official X of the Games?

Do you have a contingency plan in place? What will you say when images of mask-clad athletes in the murky Beijing air, in front of your expensive banner, are transmitted to the world?

Just a thought and one I haven't fully wrapped my head around yet. I'd love to hear your thoughts.
photo credit: upton

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OK, as a CMO you're going to be fired in ~23 months anyway.

But a recent study, carried out by Marketing Management Analytics, Financial Executive and Ed See, makes me think that more senior marketing executives should double-check the shine on their resume and perhaps consider a few more networking lunches in the near future.

A very brief summary of that report found in Ad Age frightens me and brings to mind a few courses of action that you can take today, if you find yourself in a similar situation.

A few quick points from the study follow. The CFOs interviewed said that:

• 9/10 of CFOs don't use marketing ROI metrics in development of marketing budgets.
• 7/10 don't use their company marketing forecasts for earnings guidance or public disclosures.
• 6/10 believe their marketing departments have inadequate understanding of financial controls.
• less than 4/10 said their company marketing forecasts were audit-ready.

From the CMOs and senior marketing leaders surveyed:

• Only 33% of CMOs reported "full cooperation and an open dialog" with finance in setting metrics and methodologies for marketing ROI calculations in 2008.
• Only 10% indicated that they could forecast the effect of a 10% cut in marketing spend.
• Only 14% said senior management had confidence in their firms' marketing forecasts.

To summarize:

1. CMOs ability to estimate their impact on the business isn't even of ballpark (+/- 10%) quality.
2. CMOs don't have a great grasp of providing accurate and reliable forecasts of investments that will pass reasonable audit scrutiny.
3. CMO's don't play well with others.
4. The CFO's have so little confidence in the marketers that they crunch the numbers with relatively little input from the marketing team.

So what do you do, if you're a senior marketing leader and find yourself in a situation like the above?

First, accept you have a problem.  Get with your CFO and let them know one of your top priorities is to fix the problem.  Make sure you both understand what the CFO's specific problems are with your marketing planning, forecasting, ROI calculations and assumption development processes.

Second, triage. Figure out what you're doing wrong, but as importantly, figure out what you're doing right (and I know you're doing a number of things correctly) and learn from those processes that are working well.  Work out a punch list with your CFO, and understand the "A" priorities.

Third, partner with your CFO to improve your process. I insist in the concept of the financial guys driving the calculations and modeling side of the equation, the marketing team leading the assumptions and scenario planning, and then a "team of two" on running the iterations of your plan or forecast.  (The marketing team should pressure test the calculations and the financial team should pressure test the marketing assumptions.)

Fourth, own the issue. As CMO or senior marketing leader, if your financial leadership doesn't trust your ability help get to clear marketing metrics and ROI calculations, it's your problem, not theirs.  Make it really clear that you own the forecasts, plans and budgets and that you'll be the one to be held accountable for the hits and misses--not the financial guys who built the models, nor can you blame the last CMO for problems.  It's on you.

So do you have problems with your planning and forecasting? Are you a financial pro who needs some help in improving the planning and forecasting competency of your marketing team?  Let's talk, here or on the phone.

photo credit: Gary Denness

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A recent article in the New York Times got me thinking about the psychology of marketing again, and how some basic principles are used or under-used in social media marketing.

"Warning: Habits May Be Good for You" explores how an anthropologist turned to marketing experts from CPG companies like Procter & Gamble to help increase the incidence of hand-washing with soap after using the toilet in the nation of Ghana to improve the health of children.  Obviously, this was an important effort and I was encouraged to see marketing practitioners as instrumental in helping achieve success in this endeavor.

As I was reading the article, it struck me that many of the techniques used are found in Robert B. Cialdini's classic Influence: The Psychology of Persuasion. I'd lent out my copy a few years ago and, thankfully, had to buy a new version which includes an epilogue written by Dr. Cialdini in 2007.  My re-read then triggered a few thoughts on social media.

If the social media crowd can stop navel-gazing long enough to do some quick research and scientific work, boy will money be made. [More after the jump.]

Dr. Cialdini's research caused him to identify six key weapons of influence:

1. Reciprocation
2. Consistency
3. Social Proof
4. Liking
5. Authority
6. Scarcity

Many of his examples focused on face-to-face selling or just plain interactions with others.  When I first read the book (originally published in 1984) for the first time in 1995 or so, I was struck by the fact that my company at the time was using all six of those principles, but in various offline direct response channels.

We didn't intend to use Cialdini's principles; rather, we evolved into using them through years of scientific univariate tests.

Which of the six principles is most important to a social media startup? From what I can see, it's the concept of Social Proof.  Jason Calacanis becomes a Twitter advocate and, because several of his followers also pick up on Twitter, it soon provides proof to a certain circle that Twitter is a good thing.  Boom, the product takes off.

What's the problem with the concept of Social Proof in growing social media? Try this:  Ask anybody over 40 who's not a regular reader of Alley Insider, Valleywag or Paid Content what Twitter is.  My bet is you get a blank stare two out of three times.

Simply relying on Social Proof can get you pigeonholed within a very select segment of people.  Now, for companies that provide great services to that limited target audience, it can be very good business indeed. (See how Rafat Ali made out with Paid Content.)

The key is how to use the concept of Social Proof to expand beyond that initial, lucrative target audience and become more ubiquitous.

Summary and key takeaways

1. What's "old" is new again. Go back and do your research.  Classics of marketing and psychology are relevant today, just as the concepts they cover were 10,000 years ago.  Plus, with Amazon, it's now cheap to really build your library of information!
2. Consider how humans are hard-wired. When building products, services and delivery methods for those products, think about basic human infrastructure and how you can find the path of least resistance to your ideas.
3. Remember that great psychology can't overcome a bad product. You can certainly fool some of the people some of the time using some of Dr. Cialdini's "click, whirr" discoveries.  But that's still only going to take you so far.  Start with great products.

I'll look at more of Dr. Cialdini's concepts in the future.

In the meantime, how have you applied psychology in your marketing?  Or, when have you seen good (or clumsy) attempts been applied to you?

photo credit: HeffTech

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What's the value placed on a social media marketing campaign by the marketers that develop the campaign?  It's hard to tell, because one typically can't get access to the key metrics associated with the campaign, particularly sales attributed to the effort and ROI.

I was intrigued by a new social push by Sony Ericsson for the Z750a flip phone, created by their agency, Iris.  The campaign is titled "Bringing Purple Back."

Well, neither Sony Ericsson nor Iris would give me any objectives for the campaign.  Neither was any information or speculation found on unofficial Sony Ericsson blog sites about the campaign.

Being an inquisitive guy, I decided to use the crude but effective research technique of following the money to learn more.

Smart marketers tend to invest more dollars where volumes are high and margins are high, and less when the expected outcome is otherwise. 

I tend to think of Sony Ericsson as a fairly smart marketer, based on my hypothesis that they're focused on the consumer--they've got a great assortment of cell phones and get generally very good reviews for the products, which are eye-catching and (to my mind, anyway) competitive with anything out there.

So how much is Sony spending on the Bringing Purple Back campaign?  Not much.

Let's take a look at what I've found this morning:

1. Prizes of just $2,393.  Six lousy free cell phones and one grand prize of a $599 gift card, positioned as a free pair of designer shoes. (Why not a phone and a free year of AT&T service?  But I digress.)  No million dollar sweeps.  Not even a free phone a day.  Six over the course of a six week promotion.
2. Short promotion length.  Six weeks.  Unless something is absolutely crazily viral, it takes a couple of weeks at minimum to get a campaign off the ground.  By the time things are up and running, it's game over.  The excessively short time frame smells of a budget compromise.
3. PPC buys of $0.  Go to Google and Yahoo and try to search for "Sony Ericsson 750a".  While I don't expect the Bringing Purple Back website to pop, why no PPC spend?  (I tried a number of different KW searches including the obvious "Purple Cell Phone" and came up snake eyes.)

Say the agency fees for the planning and site were $300K.  Sony Ericsson spent over $88 million just a couple of years ago to sponsor the WTA women's tennis tour.  What do you think gets daily attention back at HQ?

In conclusion, I have to believe that either this social effort is either:

1. Not worth much to Sony Ericsson and given an appropriate amount of investment and care.
2. A botched effort, due to poor planning and low budget (see the PPC buy screw-up above).
3. A test.

If it's got the right amount of effort associated with it, given the expected ROI, then OK.  (I still have to believe that some PPC, particularly at the kickoff when you might get some search attempts, makes sense.)

If it's a botch, then I hope there's a good campaign debrief on the calendar for Sony Ericsson and Iris to review execution against objectives and so forth.

What do you think of the effort? Might it work?  Could purple be the new black?  Do you like the Z750a phone?

photo credit: Marco Gomes

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You plan for offensive operations, while you prepare to play defense.  You'll find this concept in both warfare and sports, and it's applicable in business as well.

I much prefer playing offense, because that's where you score and generate revenues. A strong business offensive plan also limits the amount of places you'll need to prepare to play defense, freeing up more resources for--you guessed it--playing more offense.

What's an example of planning as opposed to preparations in a marketing context?

A great example can be found in the United States Postal Service and the annual postage increases.  If you're using direct mail as a marketing channel, you can be sure of two things:

1. Postage will go up, driven by higher USPS costs and the rapid decline in the volume of first class mail.
2. Automation requirements will become more rigid, which limit your ability to be creative in your mail formats.

One of the key cost components of your direct mail marketing efforts is always going to go up (which it has done for years) and is going to go up more rapidly than in the past because of the USPS's need to cover labor costs and, now, energy price increases.

The USPS is trying to counteract the labor cost increases on their side by providing a bigger carrot for mailers who automate their mail more effectively and using a bigger stick (higher prices) on those who don't.

In the past, we used to counteract higher postage rates by getting more creative in the the formats we'd mail. Moving to heavier packages, with larger non-standard sizes paradoxically would counter the postage rate increases.  Not anymore.

So, what's the difference in "planning" for the USPS's annual price action vs. "preparing" for the same?

In "plan" mode, you understand what you're likely to face in the future and are testing for it proactively today. For example, at a past employer,  we knew the USPS was changing the automation requirements to require a certain amount of flexibility in the mailings or face significantly higher postage.  We were using a very rigid piece that was going to lose its automation discount and the price increase would have tanked our ROI.  So, we immediately began testing a number of different formats that met the flexibility requirements for next year, so we'd know the impact on our marketing ROI and could further develop plans to overcome any degradation.

In "prepare" mode, you've got to be ready for anything and then respond in a reactive way. You could prepare by figuring out what the price increase might be.  Or what the automation requirements might be.  Or any other number of things.  Being ready for too many options would suck away marketing resources into planning and analysis and away from the key task of acquiring more customers.  Plus, once you reacted, you still wouldn't know the impact on your ROI.  Rolling out untested responses to competitive or environmental changes is the number one way to destroy your marketing ROI.

Plan = Proactive = Offense

Prepare = Reactive = Defense

Summary and key takeway
When you have the choice, play proactively and play offense.

I'm not saying you shouldn't prepare for the unexpected, whether it be competitive efforts, consumer preference or even the weather.  Instead, you should be aggressively planning to launch new channels, acquire more and better customers and developing new and better products.  Then, on the planning side, be prepared for the 20% of things that could cause major disruptions to your business.

What do you think about the proper Plan to Prepare ratio?  Have you ever had an example where you suddenly realized you were preparing too much and, hence playing defense when you should have been playing offense?

photo credit: selena marie

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Today is the 64th anniversary of D-Day. I am appalled that none of my daily mainstream media reads (New York Times, Washington Post, USA Today) this morning had anything commemorating the event.

On June 6th, 1944, the brave men of the Western democracies began the liberation of occupied Europe in one of the most audacious and complex military operations the world will ever know. They beat back the forces of evil and tyranny and, through their sacrifices, helped give us the lives of peace and prosperity we enjoy today.

I was born over twenty-three years later, yet I will never forget.

There are countless stories of bravery and leadership, such as that of Brigadier General Theodore Roosevelt Jr., who insisted on arriving in the first wave on the beach to provide morale to the troops. He led men up the beach wearing a knit hat, supported by a cane and brandishing a .45.

Or Brigadier Lord Lovat, who together with his piper Bill Millen led his men into battle armed with bagpipes and a knife. You'd follow men like those into Hell itself.

What does all this have to do with Marketing? Only as a reminder that:

• Things never go as planned. (So be well-prepared and know your mission cold.)
• You can't be too prepared, because of the things that will go wrong.
• Personal leadership, at all levels, is the key to overcoming chaos.

Today, I'll remind my children of the importance of this day and begin re-reading Stephen E. Ambrose's terrific history of D-Day. I'll also read Ronald Reagan's famous speech at the 40th anniversary a couple of times.

What will you do?

photo credit: Zigar

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Today's article is a reminder that customer service, when done correctly, isn't an expense.  It can be your #1 marketing tool and put a wide moat between your business and your competitors.

L.L. Bean is the standard against which your phone support should be measured.

From their website:

Guaranteed.  You Have Our Word^TM.

Our products are guaranteed to give 100% satisfaction in every way.  Return anything purchased from us at any time if it proves otherwise.  We do not want you to have anything from L.L. Bean that is not completely satisfactory.

Unlike a lot of companies, L.L. Bean really lives by their guarantee.

I was preparing for our annual Outer Banks vacation this year and checking out our Bean Sunbuster shelter.  We've had it for four years--it's a fantastic product for use when spending long days in the North Carolina sun.

However, the last time we used it, one of the large fiberglass poles broke.  When I pulled it out today, I remembered that and decided to call for a replacement in enough time to receive it before we left for Nag's Head.

I called and immediately got a very courteous phone representative who found the part number in under one minute.  Secondly, he asked for my name.  The instant I gave him my last name, he confirmed my address--he'd apparently pulled my record up via the ANI when I called--and thanked me for giving him the correct pronunciation of my last name.

Before I could even ask the price, he let me know it would arrive at my home via FedEx on Saturday and was there anything else he could do?

The price? Gratis.

I asked about the price, and was more than willing to pay for a new pole.  No dice. L.L. Bean wanted me to be happy and refused to take my money.

In my entire interaction with the company, I didn't hear a representative worried about talk time, first call resolution rates or any of the nonsense you normally encounter in call center management.  He clearly owned the problem, cared about the problem and was empowered to make me happy.

Will I buy from L.L. Bean again?  Absolutely. (In fact this experience makes me think about why I'm not doing so much more frequently)  Will I tell others?  I just did.

Summary and takeaways

1. Treat customer service as a marketing investment.  Not an expense.  Give those front-line employees all the tools they need to keep your customers happy and let them have at it.  Treat product replacements as marketing, not a cost to be squeezed out ruthlessly.
2. Ignore the traditional call center metrics. Stop beating on your employees for talk time "infractions" and other petty nonsense.  Your customer service team is your key to success.  Treat them and pay them well and let them win for you.
3. Fire a few MBA's. Get rid of the people who come to you with "metrics" about why you can't do #1 and #2 here.  Take the money you save and use it to pay more to your customer service team.

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