Archive for July, 2011

Using Metastrategy to Amplify Your Media Performance

July 20th, 2011

By Alan See, Chief Marketing Officer at Berry Network

The prefix “meta” is used to mean about its own category. For example, under the umbrella of business intelligence, you often hear the term “metadata,” which means data concerning data. For purposes of this short post, “metastrategy” could be described as an overarching marketing strategy determining which media strategies to use during various phases of the consumer purchasing process (strategy concerning strategy).

As your customers move through the purchasing process, multiple media channels have the potential to impact their buying decisions and shopping experiences. This makes an integrated marketing strategy more important than ever. There is strategic marketing importance in each phase of the consumer buying process in today’s competitive economy.

In the Berry Network Social-Ready Assessment, we asked respondents: “What level of priority does your company currently assign to social media marketing?” Less than 40 percent of our respondents rated the priority of their social media marketing initiatives as neutral or low. Interestingly, nearly 100 percent of those respondents are SMBs with revenues less than $100 million. Does that mean small businesses are anti-social? I don’t think so, but many are putting off their strategic marketing planning process since nearly all of the neutral and low responders also stated they “haven’t addressed social media related to corporate strategy on either a formal or informal basis.”

Not having a strategy is a dangerous place to be. In fact, in the Forrester report “Benchmarking Social Marketing Plans for 2011,” analyst Sean Corcoran states, “Any company not creating a long-term strategy, setting budgets, allocating resources, or setting policy is already falling behind. Interactive marketers should follow the companies that were brave in social media marketing and implement now rather than wait and learn the hard way.”

The current combination of declining customer satisfaction levels and economic concerns is creating the perfect customer experience storm. In this type of business climate, those companies that focus on an integrated consumer purchasing process will be the ones that come out on top. That means a relentless and coordinated approach to strategic marketing across all media channels has never been more important.

Posted in Alan See, Customer Experience, Customer Retention, Customers, Forrester, Integrated Marketing, Marketing, Metastrategy, Strategy | No Comments »

Connecting Customer Lifetime Value with Social Media

July 6th, 2011

By Bruce Weinberg and Paul Berger, Professors at Bentley University

Let us express upfront our sincerest apologies for using a somewhat academic voice in this blog post!

“Customer lifetime value” (CLV) is a very important relationship marketing concept. It is the present value of the net cash flows (from all purchases) that an organization expects to receive from a customer over his/her “lifetime.” While the definition is straightforward, the mathematics used in computing it can sometimes get messy and involved (don’t worry, we have PhDs from MIT). Marketers use it to think about customer acquisition and retention (i.e., long lasting relationships), rather than focusing solely on the initial transaction. Indeed, when used effectively, CLV can lead to improved marketing decision making and increased profitability.

We believe that CLV is a mathematical kindred spirit with social media, in that they both can be important mechanisms in relationship marketing. Further, we believe that CLV can work hand-in-hand with social media to satisfy senior management’s thirst for quantitative accountability from social media. With all due respect to Cuba Gooding, Jr., “show me the ROI” has always been the mantra for proof of performance. CLV can absolutely play an important role in not only identifying the value of social media but also in effectively leveraging the value of social media (i.e., helping organizations use it more effectively).

In order to do this, we extend the notion of CLV to incorporate/consider social media and propose the concept of “connected customer lifetime value” (CCLV). CCLV includes not only the present value of the net cash flows from a customer’s purchases over time, but also the present value of the net cash flows from others’ purchases who were influenced (to purchase) by that customer through social media. Just to be clear, we are saying that there are two important components: CCLV = purchases by a customer + purchases by others who were influenced (to purchase) by that customer through social media.

Using CCLV can change dramatically whom marketers value as customers! When using CLV, marketers would target customers based on their expected purchases. Customers who are expected to purchase relatively little over time have relatively little value. However, when using CCLV, these very same customers could have relatively high value to a marketer if—this is the cool part—their influence on others’ purchasing decisions was great (and positive), resulting in substantial volume of purchases (by others). It is conceivable that a customer who makes relatively few purchases could be the most valuable customer to an organization, courtesy of social media and the influence it enables!

We are not saying that this is necessarily typical; although, we know that consumers typically search online for consumer opinions/conversations before making a purchase. The important messages here are that a customer’s economic worth can be based on his/her purchases and on influence through social media, that CCLV can quantitatively show the value of social media, and that CCLV can be used by marketers to leverage social media in making decisions.

Posted in Bruce Weinberg, Customer Lifetime Value, Customers, Marketing, Profitability, Relationship Commerce, Relationship Marketing, ROI | 8 Comments »