Marketing By-The-Numbers
Posted by Cordi in Methodologies, Practical Advice on March 2nd, 2010
The Marketing Executives Network (MENG) released the results of its annual member survey today. As a participant in the survey, I selected Marketing ROI as the “concept of the year”. It appears that many of my colleagues felt similarly – making Marketing ROI number one this year over Customer Retention and Brand Loyalty.
This ranking does not diminish the importance of Customer Retention (based, of course, on segmentation and customer profitability studies) or the importance of “living” and enhancing the Brand. What it does reflect is a new appreciation for the “business of marketing” over the classic “art of marketing”.
The majority of respondents believed that 2010 will be a “better” year than 2009, even as the economic facts point more to “hope” than “expectation”. In such a fluid situation, the best marketers are going to spend marketing dollars carefully and where those dollars have the most impact. They can only spend as wisely as they measure well.
Determining the Return on Marketing Investment does not have to be complicated and difficult to implement. It can be as simple as measuring the cost of new revenue from existing customers compared to new customers. Detailed analysis should be done only as a pattern emerges – and the pattern will be different in different business segments and different companies within a segment.
Measuring the effectiveness of marketing, also, helps executives to understand the impact of larger economic forces on their business – so that they can make choices in their tactical approach to their Go-to-Market Strategy earlier and more surgically than in the past. This, in turn, leads to sustainable bottom-line profitability and long term business success.
True Operational Excellence is Always the Result of Good Go-to-Market Strategy
Posted by Cordi in Methodologies, Practical Advice on February 19th, 2010
I received an e-mail from Aberdeen Research today that claimed 73% of companies responding to an earlier survey expressed “a need to improve operating expenses as a top priority.” Operational efficiency is subject to many definitions and in the Aberdeen case it is an argument for tools over technique. My definition is a little different.
My definition of operational excellence is the technique of maximizing profit by optimizing the cost of doing business in any economic circumstance. Excellence does not just happen; it is the result of advanced planning and timely execution.
Companies that are going to be successful in this more precarious and opaque national and global economy will be those that have a good Go-to-Market Strategic Plan supported by a set of solid tactical plans geared to optimize efficiency in any economic circumstance. The tactical plans must be based on the probable and the possible and the unthinkable business scenarios – all in support of the Strategic Plan.
Operational excellence is a product of good scenario design, and tactical implementation. The final question management must ask before accepting a tactical plan is “does the company have the focused business processes and the enabling tools to quickly identify the changing economic conditions (early indicators) and respond urgently”? If the answer is “no”, the remediation begins with determining if the answer “no” is a fault of the tactical plan or the result of sub-optimal business operating practices or enabling tools ?
Bottom Line Excellence is the result of focusing on continuous re-examination of strategic assumptions and the nimbleness to adjust to changing assumptions.
Joyce Stoer Cordi
All Rights Reserved 2/18/2010
Steering Your Small or Medium Business through the Shoals of 2010 Recovery
Posted by Cordi in Methodologies, Practical Advice on February 11th, 2010
What is a small or medium business to do in the current, unstable global and (US) national economy? I was reminded yesterday, while reading the Businessweek small business e-letter, of just how unclear the path to economic recovery is — or whether we are on the road to recovery at all? No two “economic experts” agree —
- It’s a V shaped recover and we have passed the bottom
- It’s a W shaped recovery and the double – dip is coming in the second half of 2010 or in q1 2011
- The US economy needs another stimulus plan (I have lost count. Is this the 4th?)
- Government stimulus plans have had little or no impact on economic recovery
- When government stimulus is withdrawn later this year, the unemployment will rise
What is the owner of a, just for a practical example, $50M plant nursery that sells to big box retailers to do?
- Small and medium business should be acting aggressively to be prepared for a surge in demand in second half 2010
- n Small and medium business should delay hiring and building inventory until there is more evidence of consumer demand
How about neither?
The smart nursery owner needs to plan for either, both, or neither eventuality in the next 12 months by focusing on the only important measurement – bottom-line profitability. A consistent record of profitability in good and bad economic conditions is the key to great customer confidence, employee loyalty and flexible, affordable, available credit.
Bottom-line profitability doesn’t just happen. It is the result of careful analysis and planning. It does not take a lot of executive time, but it does take executive focus. To learn more just click here http://www.cordiconsulting.com/thought_leadership.html
The Importance of Customer Segmentation
Posted by Cordi in Practical Advice on February 3rd, 2010
Washington Post Technology Page (2/3/2010) ran the headline “AOL posts profit, but subscribers dwindle”.
Disciplined customer segmentation and analysis will help a struggling company to reduce their operating expense by prioritizing their marketing and selling activities on the limited number of customers who produce the most revenue. The analysis may not provide an exact statistical 80%/20% breakdown but it won’t be far different.
When a company focuses on its most valuable customers it accomplishes two things:
Improves customer loyalty and, potentially, wallet share
Creates a model for increasing the total number of high value customers
$50M companies that aspire to be $1B companies need to build processes to continually monitor who their key customers are and why they are key customers
In Business, Timely Renovation Avoids Restructuring
Posted by Cordi in Practical Advice on April 29th, 2009
During this serious recession the business news is driven by stories of job losses, forced mergers and bankruptcies. The question that must be asked is whether these events were inevitable or are the result of management failures?
I would argue that these events were not inevitable. They happened because executives focused on doing whatever was necessary to “make the quarter (revenue)” without considering that these decisions could have mid-term and long-term consequences. High tech companies, auto manufacturers and major banks and insurance companies currently under duress based their most important decisions on a common, but flawed, assumption: they could grow their way out of the consequences of bad short-term business decisions. When a business assumes inevitable growth, it forgets that both history and gravity tell us a different truth.
In the technology industry, Sun realized too late that hardware was no longer a differentiator – especially when associated with proprietary operating systems. Sun never made the total commitment to JAVA and its other software products – turning itself a cheap acquisition target for Oracle.
GM did not misinterpret consumer sentiment toward larger vehicles over the last decade. For proof, one needs to look no further than the SUVs offered by every major import vehicle manufacturer after the success of the Chevy Tahoe. The GM mistake was to build that consumer sentiment into their revenue strategy and fixed operating costs. Their competitors were more realistic in their model mix and their (business) operating model. Toyota has both its hybrid Prius and its SUV Pilot – but neither model is encumbered by high labor costs, expensive retiree benefits or out-dated factories.
Neither Sun nor GM’s failure was inevitable. If the assumptions underlying short-term strategic and operational decisions had been tested against potential consequences developed in mid / long-term scenarios – the outcome for either (or both) would have been different. The short-term plan would have been modified to incorporate mitigation strategies for mid / long-term impacts resulting in a corporate renovation over time rather than an urgent restructuring.
Businesses that take the extra 10% time to plan their present and their future in tandem will continuously renew themselves – and, by so doing, insure their survival in lean times and their prosperity in good times.
@Cordi and Associates Inc. All Rights Reserved
www.cordiconsulting.com
4/28/2009
In the 21st Social Media is a Catalyst to the Science and Business of Marketing Research
Posted by Cordi in Practical Advice on April 24th, 2009
I just listened to a Pod-Cast this morning on a product called Clarabridge extolling the virtues of getting to know your customer through elegant data mining algorithms. The mining is done against a variety of online commentary sources where anonymity is considered equivalent to reason or objectivity.
This Pod-Cast was less than an hour after I finished the morning paper – which included a well-written column – “Is Twitter still cool?”. – If everyone is out there doing it, is it still cool? (Chris O’Brien, www.mercurynews.com) –.
I know that I have many more people following me on Twitter than I am following and that makes me feel guilty about not posting some narcissistic nonsense every day –. Not guilty enough, however, to motivate me to post something –
Maybe I am more cynical about all of this – After spending many years engaged in performing market research and applying the results, I believe the fundamentals are still true
There are more sad love songs than happy love songs, because people who are happy DO IT rather than singing about it
A fool with a tool is still a FOOL
Marketers are deluding themselves, if they think that mining the random ravings of random folks on public social media sites is going to give them a more realistic idea of the success of their product versus classic market research validated by sales data (leads, conversions, costs, maturity curves etc).
We know something about customer behavior
80% of consumers buy a product or service because they need or want it. They take it home and use it, like it or don’t and just move along (to which Goodwill, Salvation Army, and local food pantries say “amen” ) –
Self-nominated customer feedback comes from the 20% that really love or hate the product
A profitable and growing business needs to understand the 80%.
Random feedback, even if well analyzed, is a risky basis for making future commitments of time, money, or other resources –. Data mining and analysis of social media comments does offer some insight into avenues that should be pro-actively explored to determine if they are or are not real predictors of future behavior. By offering some specific avenues of exploration, data mining reduces the time and cost of market research while, at the same time, making classic market research techniques more important than ever!!
This is a topic that is going to continue to challenge both the marketer and the market researcher as social media spread across more and more of the developed/developing world.
@Cordi and Associates Inc. All Rights Reserved
4/23/2009