Interview by Manoj Jasra, The web Analytics world

The voice of the web Analytics world, Manoj Jasra, was kind enough to pose a number of great questions to me this week. He published the interview on his blog (web Analytics world) this morning.

Among the questions my favored was: “Please elaborate on the paradigm changes for Multichannel Analytics between Brand Marketers vs. Direct Marketers vs. Web Analysts.” . The answer to that surprised me myself!

And Manoj’s last question made me kick myself. I thought of something I should have asked the book publisher to do for encouraging cross pollination between online, direct, and brand marketers.

Thank you Manoj!

A Quadrant Chart for Sophistication with Analytics vs. Multichannel Marketing

A recent post highlighted the central idea behind the book Competing on Analytics: Namely, many companies employ analytics (business intelligence) merely in a tactical role, i.e. for improving ROI, while a few others use analytics so cleverly that they become the basis of their differentiation.

Then, another post had a similar observation about the way that companies use multichannel marketing. Namely, for most companies the existence of multiple marketing/business channels is just the way things are done in their industry. Yet a few other companies are able to use channels so cleverly that they become the basis of their differentiation.

Well, given those two dimensions, analytics vs. multichannel marketing, let’s see what happens when we juxtapose both in a quadrant chart. Is there anything to be learned from companies employing both of these in either a tactical fashion or as a strategy that forms the basis of their competition?

Here we go.

In the chart below, the use of analytics, as a tactic vs. a strategy, forms the Y axis. The X axis stands for the use of multiple business channels as a mere tactic vs. as a strategic differentiator.

Quadrant chart for use of Analytics vs. Multichannel Marketing

Let’s place some companies that we all know on this chart.

The old Blockbuster was arguably in Quadrant I, i.e. there was no differentiating use of business intelligence nor multiple channels that an outsider could spot.

In came Netflix as a competitor in Quadrant II. Netflix used the online channel as a differentiator, namely a video store that offered infinitely more choice than any Blockbuster branch ever could. Plus better terms on top.

Blockbuster countered by matching Netflix’s terms and capability for rent online / deliver by mail. But in addition Blockbuster also added the weight of their 5000+ stores into the battle. Now customers could rent online as with Netflix but also return and rent in stores on the spot. That moved Blockbuster also into Quadrant II, competing on channels.

NetFlix has an Ace up their sleeve though. Namely, as discussed in the book Competing on Analytics, Netflix is honing their analytics behind movie recommendations. The analytics for providing more relevant movie recommendations are expected to become the basis on which NetFlix will now compete with BlockBuster going forward. At the same time its online channel advantage is being matched and therefore eliminated. That moves NetFlix from Quadrant II to III.

Can either company move into Quadrant IV where they differentiate on both the basis of analytics AND the basis of channels? How?

Note that if Netflix merged with, say, Safeway, to match Blockbuster’s store channel strategy, it would not move Netflix into Quadrant IV. Rather, the store channel would become a non-differentiator for either company. Blockbuster would move back into Quadrant I while Netflix would stay in III, at least until Blockbuster can match its movie recommendations. The take away from this observation is that the Quadrant is not just determined by a company’s own actions but also those of its competitors.

So, can you think of a way that one of these companies could cross into Quadrant IV before the other one does?

For Netflix it would require a way to make use of channel advantage in a way that Blockbuster can’t immediately match. For instance, this could be to pass on to its customers the cost savings from having no brick & mortar stores to maintain.

For Blockbuster it would require a way to use analytics in a way that Netflix can’t immediately match. Maybe some kind of analytics on what is going on in their stores? For example, market basket analysis to recommend the best candy that goes with each movie? (Just kidding).

Move beyond "Can't Manage What You Don't Measure" (part I)

To my embarrassment, the first time I heard the old management adage “You can’t manage what you don’t measure”, I heard it from a competitor of mine at Unica in the web analytics space. Namely, I heard it from Webtrends’ former CEO Greg Drew.

Brilliant, I thought back then. A very good fit not just for management in general, but especially for online marketers who have to manage the process of:

  • attracting visitors to their web sites,
  • engaging them with the right content,
  • and enticing them to convert to leads, customers, loyal customers, and high value customers, over time.

How could you make that process more successful over time if you didn’t measure where you stand now? How could you know whether a change you make to your site or marketing campaigns improved things or worsened them?

But then I came across another eye opener. 

[Read more →]

An Online and an Offline Marketer Walk Into a Bar …

So, an online and an offline marketer walk into a bar. But tired of always drinking the same old beer, today, they really want to figure out which of the drinks on the bar’s shelf are going to be their new favorite.  The objective is to maximize their enjoyment rate.

How do you think the online marketer will go about that vs. the offline marketer?

Drink

Click to find out!

[Read more →]

A Small Step for Marketers – A Big Step for Marketing

“So … how many banks are actually doing that?” I was questioned by an Internet marketer in Sydney last week.

We were discussing the idea of measuring customers’ behavior on the website in order to refine the targeting of marketing communications to these individuals.

Using web analytics to improve the web site and improve online advertising is a mainstream activity with Internet marketers. Equally mainstream among direct marketers is to measure offline behavior to refine the targeting of future marketing communications.

But, what about the crossover? What about refining communications using online behavior? That notion sounded far out to my discussion partner from the online marketing side.

The truth of the matter is the following. Leading direct marketers are proudly proclaiming today that they are already integrating some 15 marketing channels, including offline and online outlets. These include not just store purchases, direct mail, call center, website, email, and so fourth, but even SMS and MMS, if you are talking to a Telco!

So online – offline integrated marketing is a done deal for direct marketers? Standard and boring like eggs for breakfast? It’s just that the online guys need to catch up?

Not so fast!

More often than not today, what these direct marketers are talking about is the fact that they have been including transactions closed over any channel into their customer data warehouse. Whether their customers purchase online or offline, the transactions are funneled into the CRM or marketing database. The data are very much used for measuring ROI of direct marketing activities. The information is also used for updating customer lifetime value calculations and targeting future direct marketing activities.

So pretty darn good already, I must say. Anything still missing here?

Yes, indeed. Namely, what if the deal is not inked? What if the customer browses but does not buy? Wouldn’t it be awesome to know if prospects have been considering a direct marketing offer even if they didn’t pull the trigger yet? What better time to re-market when they are just mulling over their purchase decision?

Direct marketers have grown up in the offline world where they are not spoiled with behavioral data about their customers. It may be for that matter that most of them have ignored the fact to date that such – awesome – behavioral data is readily available to them, namely online. All it takes is to make one more connection, namely to connect the web analytics solution into the data warehouse. Direct marketers already have some 15 connections, and all it takes is just one more. Not a big deal.

But … how many are doing that?

Mind you, there are a good number doing it already even if they are far from being a majority:

  • For example, at least one bank has implemented an automated re-marketing program to prospects who begin an account application but either don’t complete it or never put any money in their accounts. The program achieved great response rates and increased account openings + funding.
  • Basic re-marketing programs for abandoned shopping carts are fairly well understood by online retailers today.
  • It is common in email marketing to target future email content based on click throughs from previous emails. (The targeting often does not yet include web analytics data though to figure out what happened after the click-through. What if it was a bounce and the reader hated it, but now you are just going to send more of the same because you think she liked it?)
  • Catalog retailers will target future direct mailings based on data that includes online purchases. But one cataloger for example is also sending along with the catalog a cover letter that highlights areas of interest to the recipient based on their online behavior! I love it!

“But what about accuracy”, I hear online marketers say? What about cookie deletion and kiosks and anonymous visitors and yada yada?

Oh, accuracy,. schmaccuracy!

Do you really think offline data is anywhere near being accurate? If offline marketers were as obsessed with accuracy as their online colleagues not a single marketing offer would ever arrive in our mail boxes.

It is understood that you can’t match up 100% of your transactions and data. So what! If you can target the top 20% of your customers and increase your business with them — wouldn’t that be worthwhile enough? You betcha!


Connecting the 16th channel (i.e. web analytics) to direct marketing is technically a rather small step for marketers today. But it will be a big step for marketing. And the momentum for it is building because – marketing without targeting – how much longer is that going to be affordable?

Erwin Ephron on Media

The first master of multichannel marketing in this mini series was Hurol Inan. He is from the online marketing world. Next came Kevin Hillstrom whose background is from direct marketing. So, in the name of multichannel consciousness, it is high time now to pick a guru from the brand marketing world. Where is the Rosetta Stone for online, direct, and brand marketers?

Erwin Ephron is my favored guru and writer from that brand marketing world. I know Ephron only from his website EphronOnMedia.com. Watch out web analysts and direct marketers! This site is a dream come true with easy to read and understand articles that provide a glimpse into a media planners world.

Erwin Ephron is the father of modern media planning, as far as I understand. What does that mean? It means for example scheduling the frequency and intensity of advertising methodically so to drive up results. Given a budget constraint, should ads be scheduled frequently to hit viewers multiple times per week or should the budget be spread across the year so to reach as many first time viewers as possible?

Much research has been done on the topic. Ephron’s contribution seems to be especially in the area of analyzing the benefit of recency of ad exposures for driving results. He is sometimes referred to as the father of “recency planning”. Read how Ephron teaches tap to this elephant.

The TV channel still gets the most advertising dollars 

Media planning of course also means choosing the channels that will improve outcomes.  How is it done? With analytics of course! Multichannel analytics.

Clearly Ephron’s focus across his long carreer have been the traditional offline channels, TV, radio, print, etc. These are the ones he has written about. Not a bad idea, since TV is still  – today – the channel where marketers are spending the largest chunk of their budget, namely thirty to fourty percent.

Priceless Ephron moments include:

  • The Brittle Bones of Media where Ephron concludes that TV advertising can be made more effective by flighting radio ads in parallel. Especially today when viewers can dodge TV ads easily.
  • Quote from Ephron on Accountability: “Buying advertising is like buying a melon; you have to spend the money before you find out if it’s any good.” Hence the requirement for measurement!
  • Finding the Other Half: Were you always wondering whether those big commercials turn into sales? What was the product again they were selling? (It was a good chuckle and commercial though!) Well, Ephron has been wondering too, and looking into the databases.

Maybe as a sign of the traditional media from which Ephron comes, his site is not a blog. But you can subscribe to his articles by email, and I highly recommend doing so.

For these and many other excellent lessons that I learned on Ephron On Media let me humbly nominate Erwin Ephron for the Master of Multichannel Marketing award. Thank you for writing things down!

Master of Multichannel Marketing

Kevin Hillstrom and Multichannel Forensics

Everybody knows Kevin. His name is becoming synonymous with multichannel marketing. Almost anybody who fancies themselves a connoisseur of integrated marketing is reading Kevin’s blog at MineThatData.com.

Kevin is the author of Hillstrom’s Multichannel Forensics and Hillstrom’s Database Marketing. He is a veteran in the database marketing industry having worked at such companies as Nordstrom, Eddie Bauer, and Land’s End.

Everybody loves Kevin’s work. I certainly do.

His Multichannel Forensics method plows through data on customer transactions, channel by channel to shed clarity on trends of cross-channel behavior. Instead of stopping at short term sales analysis of campaigns (e.g. catalogs or website), Multichannel Forensics projects the multi-year impact of one channel on others.

Why?

Because, Multichannel Forensics provides clarity without getting sucked into what is probably the most dangerous quicksand in multichannel analytics. Namely, the impact of multiple touch points from various channels over time. Customers zig zag across channels, read a marketing message here, ignore it there, research on one channel, and buy on another. Hillstrom explicitly calls out his conviction that assessing the incremental impact of any one touch point is really difficult in today’s world.

So Multichannel Forensics produces a top-down view from bottom-up data on customer behavior. It creates a map that shows where customers are headed to answer questions such as:

  • Should you reallocate $x from one channel to another?
  • What is the contribution of marketing through one channel on purchases from another?
  • What would happen if you closed down the catalog division?

But there are many more reasons why we love Kevin’s blog:

  • He is a blogger with attitude. You can’t help but notice. His writing commands attention. (Everybody who has actually met him in person though says the nicest things about his character.)
  • Kevin is controversial. The only thing he seems to like better than to shoot down commonly held (but shaky) perceptions is to call out when technology vendors or consultants (“the pundits”) have no clothes on.
  • Kevin is blunt. He calls foul when shortsighted practitioners are kidding themselves, for example by neglecting to use controlled testing when measuring marketing results.

He instills trust by speaking as a practitioner rather than coming from a technology vendor’s background.

Timeless Hillstrom moments are some of the following blog posts:

I was trying to relocate many more older blog posts that were highly memorable. Yet neither the search box on the blog nor Google volunteered them back to me no matter what keywords I tried. Take bookmarks next time! Oh yeah, did I mention how prolific Kevin is?

For these and many other excellent lessons I would like to nominate Kevin Hillstrom as a Master of Multichannel Marketing.

Master of Multichannel Marketing

Hurol Inan of Bienalto

You gotta love the work of Hurol Inan, the first Master of Multichannel Marketing that I would like to pay homage to.

Hurol is Australia’s guru for web analytics and online marketing.

He is the author of Measuring the Success of Your Website and Search Analytics – A Guide to Analyzing and Optimizing Website Search Engines. He is also the managing director of the online marketing consultancy, Bienalto with HQ in Sydney.

And what a master Hurol Inan is in his field.

A little known fact in the US is that Hurol’s book on web analytics was the first ever to be published on the subject, namely in Dec 2001. That is to say it came out even before the famous Jim Sterne’s Web Metrics which appeared mid 2002. (As web analysts know, of course, Jim Sterne went on to become the US guru for eMetrics marketing optimization.)

What blows me away however is how Hurol wrote about web analytics already in 2001.

Back then, my own understanding of great web analytics peaked at the discovery of the conversion rate metric. (How lame, looking back today.) Yet Hurol’s perspective was:

  1. Top-down starting from a business frame work and working down to detail from there
  2. Customer-centric rather than click centric already in 2001 !!!
  3. Unified, including online-offline integration

Even though the book is seven years old by now, much of its advice is still visionary. Here are two of my favored quotes from Part I – A Customer-centric Framework:

You can […] use this real-time information – about how products and services are selling – to test the market with new products. You can prelaunch a new line of products on your website and then use web analysis to see how customers respond.

Customer and sales data collected from the web can be integrated with information from the organization’s other customer-interaction points. This unified, cross-channel view of customers can be used to deliver more personalized services to the customer, whether it be at the call centre, through direct mail, or via the website itself.

I swear – I am still presenting these two great points at conferences today.

Seven years after Hurol wrote these paragraphs most companies are still not anywhere near that point of sophistication. For this and other excellent advice I would like to crown Hurol Inan as the first Master of Multichannel Marketing in the mini series on this blog.

Master of Multichannel Marketing

RFM is dead, long live RFEM

You are right. I made the title of this post more dramatic than it needed to be, just to engage you. And engagement is exactly what this thought is going to be about. Not engagement in the strategic sense that Graham Hill brilliantly discussed in a post on Bob Thompson’s  www.customerthink.com. Rather, just engagement in the sense that marketers have used RFM, namely for prioritizing customers for targeting with marketing communications.

Ok, Ok, so I am not talking about providing customers with a better experience. This one is purely for the marketer’s benefit. Namely to spend effort and money by directing marketing investments such as direct mail or e-mail to those most likely to respond. RFM metrics have been used for a long time for that purpose. RFM really isn’t dead at all. Recency is still a highly successful indicator as far as I know.

Web analytics however can contribute more than just R, F, and M on each customer. Especially, with the advent of web 2.0 and more interactivity on web sites web analysts are trying to define E, i.e. engagement as a metric for scoring visitors. So a visitor may be fairly R, moderately F, may be a small m rather than a M. But if the visitors has been a big E, then they should be more likely to be a good target.

Granted, this may fail in certain situations. If you want a silly example: The Victoria’s Secret web site has lots of visitors with a capital E, R, and F, but no M.

Admittedly:
A.) I work for software firm that provides web analytics solutions combined with modeling software that do this, namely at Unica. But one of my direct competitors, Webtrends, has just released a product by the name of Score for this very purpose too. And one of the best known names in web analytics, Eric Peterson, is all about engagement metrics. Our industry is trying to make sense of the practical and tactical use of this metric

B.) I have not researched this in any way to confirm it. But if you think of an abandoned shopping cart follow up e-mail program, you essentially have an RfEm program right there. So the only thing that is new in this thought is to use a new acronym and retire the old one.

Akin