Category: measurement

Who are the advertising industry’s biggest wankers?

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Please forgive the crude title but if you read on you will understand why I don’t have a choice.

I remember a few years ago Fusionbrand interviewed a young guy who was about 24 years old. He had only been working for 3 years but had already won more than 25 awards. I can’t remember what they were for but none of them were significant. However he genuinely believed winning those awards meant he was good at what he did and could command a bigger salary.

Nowadays, there are so many award shows for the advertising industry that one of them, in an attempt to stay different, has dropped the word advertising from the title. We’re regularly asked to propose ourselves for awards with suggestions on how to ensure we win. We’ve never done so which is why we’ve never won an award but have always been asked by clients to do additional work.

I don’t know if these award shows are an attempt by a dying industry to stay relevant or perhaps it’s a genuine belief that handing out awards to just about anyone who pitches up for work really will help keep advertising relevant.

Proudly display this award in your reception area
Proudly display this award in your reception area

Anyway, there are some people in the advertising business who don’t take themselves too seriously and have noticed the handing out of awards has got out of well, hand. So they’ve created an amusing distraction for the digital era or for those who haven’t won enough awards. The Handy Awards website and app let’s you award yourself an award for anything you want.

All you need to do is download the handy awards app and shake your phone and you’ll win an award. The longer you shake the phone, the better the award. For those with real determination, there’s a Best in Hand award but that takes some real shaking but I know you can do it. And the good news is you can share the award with a friend.

You can even share your impressive award with a friend.
You can even share your impressive award with a friend.

As the site says, “The Handys are the world’s first advertising award show where you can give yourself an award in the comfort of your studio apartment or at your desk within your agency’s open office. All without entering any work or having to sit through someone else’s boring case study video.”

It would appear that, judging by the awards it is only open to male creative wankers but sticking with the crude nature of this post, perhaps there is a female award, err coming?

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How to develop a measurable content marketing plan

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As the corporate driven creative message is assigned to the advertising graveyard, and content becomes the key tool to engage consumers the ability to use content to build a story around your brand is more important than ever before.

If you know and understand your customers and are able to create content that resonates with each segment (and I’m not talking traditional age related segments) you are well on your way to building a profitable brand.

That’s because so much research is carried out online. Need to find something out, what do you do? You ask Google. It is estimated that Google answers more than a billion questions from people around the world every day.

So where do you start? Well this superb infographic from BrandPoint in the US provides a robust overview of what you must do to build awareness, generate interest and create customers. These are of course key steps to building a profitable brand.

How_to_Measure_Content_Marketing_Infographic

What is Social Business

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We’re involved in the development of the Asean Social Business Summit to be held in Kuala Lumpur in May 2013. You can read more about the event here and visit the official site here

But there is a lot of confusion over what is and what isn’t social business. Social Business refers to enterprise collaboration & innovation that uses social technologies to boost corporate, customer and social value. Social Business does NOT refer to social marketing (PR) or social entrepreneurship (helping rural businesses).

This video argues businesses are still stuck in the Industrial Revolution and need to change and change fast. Importantly, it goes some way to explaining what is social business

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IS YOUR INTERNET STRATEGY WORKING FOR OR AGAINST YOUR BRAND?

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I’ve heard a lot of good things about the Naumi hotel in Singapore and as I’m travelling down south, I thought it would be a good opportunity to try the place. Sadly when I attempted to book online, the hotel was full.

The next day I was reading an online newspaper and noticed an ad for the Naumi. I thought that maybe they’ve freed up some rooms and I can get to stay there after all.

Unfortunately, the hotel was still fully booked. In fact, after further research, the hotel is fully booked and in just about every room category, with one or two exceptions, for the next 12 months at least. I didn’t look past 12 months so it could even be longer.

Massive digital campaign despite being fully booked for a year

Since I saw the ad almost a week ago, I have continued to see Naumi ads across a wide variety of online sites, both local and international.

So why is the Naumi advertising? Isn’t this a total waste of an advertising budget? Is this an example of why CEOs are losing patience with CMOs? I can only assume it’s not a one off ad but in fact part of a campaign. If I am right, how much is this campaign costing and if the hotel is full for 12 months, what is the point?

Despite being fully booked, the hotel continues to advertise

When creating a digital campaign, reach and frequency are irrelevant. If those words were used in the pitch to you then you need to sack the agency. Because all they tell you is how many people saw your ad and how often they saw it.

You are probably wondering if they are perhaps using it as a lead generation exercise. Well I thought the same thing and that as I left the site they would try to grab some data from me.

It’s a logical thought because banner ads are not that effective. The general consensus of opinion is that the number of visitors who actually click on a banner ad is only 0.2%, which equates to one in 500 visitors that actually click on the ad.

And just because they click on the ad, doesn’t mean they automatically become customers. The seller, in this case the Naumi hotel still has to convert those visitors into prospects.

There are various ways of doing this, depending on your business. For the Naumi hotel, this is obviously to get the visitor to book a room. However if the hotel doesn’t have any rooms and simply tells the visitor this, the whole exercise has been a complete waste of time and money.

Of course the visitor may return, but then again they may not after all, how many visitors that have been disappointed, return to the scene of their disappointment? Or they may go on to build a relationship with another hotel.

Surely it would have made sense for the hotel to offer an apology (I don’t know about you, but when a firm apologises for being successful, I am hooked) and ask me for an email address so they can start to build a relationship with me?

And to use the campaign more effectively, I would create an offer whereby any visitors that register, will be offered a free upgrade when they book at a later date.

But no, they spent that money creating a campaign to get me to their website and then when I get there its like the place has closed down.

I bet the marketing department is reporting an increasing rate of visitors to the website but so what.

Digital advertising is not just about the campaign – the creativity, the reach, the frequency, the impressions, the clicks etc.

It is about the data, the source of the lead, the influencers and ultimately conversions that generate ROI.

If you don’t do it properly, don’t do it at all.

Isn’t it time you valued – not measured — customer satisfaction?

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Recently I’ve met a couple of companies who couldn’t explain why they implemented a customer satisfaction survey and how they used the results! I hope this is the exception, not the rule.

If you’ve carried out a customer satisfaction survey, you probably did it because you want to deliver great customer service and believe the satisfaction survey will give you something to benchmark future results against. If this is the case, you are not alone.

Many companies regularly measure customer satisfaction. They send out surveys or call asking questions about satisfaction with service, product usage and more. Most people will have encountered the satisfaction survey at the bank counter that encourages immediate responses, the results of which can impact the manager’s bonus.

Others may have received a call from a car workshop after a service or an email from an online service provider.

But, unfortunately, the results of such measurement are unactionable. That means customer satisfaction surveys do a poor job of linking cause and effect.

As an example, a traditional survey might ask, “How satisfied were you with the product/service?” And then give 5 options from “Very satisfied” to “Very dissatisfied” but where’s the cause and effect?

If customers are dissatisfied with the product, what caused it? Was it a poor sales or other service experience? Or was it because the teller gave the wrong information? An unfair ‘returns policy’? Complexity? A lack of add-ons?

Part of a typical satisfaction survey, how measureable are the results?

Many customer satisfaction surveys measure the wrong activity at the wrong time, often with the wrong customers. If a walk in customer to a branch of a bank is a frequent visitor who takes up a lot of time making withdrawals or engaging expensive, trained personnel with minor transactions, should the bank care if they are satisfied or not?

Another failing of customer satisfaction surveys is that they are divorced from the costs of satisfaction. Yes, customers can be satisfied, but do you really want to satisfy every customer no matter what it costs?

Many organizations apparently do and some think good satisfaction scores are considered more important than profits. At least one Malaysian firm boasts of “exceeding expectations.” Not unexpectedly, setting the satisfaction bar so high inevitably leads to excessive expenses, hurting profitability.

And it is also misleading. According to Frederick Reichheld, writing in the influential Harvard Business School publication, 90% of industry customers report that they are satisfied or very satisfied. Impressive figures but why is it then that repeat purchases remain in the 30% – 40% range? Surely if so many customers are satisfied, shouldn’t they be making repeat purchases?

But most telling of all, in numerous surveys, 60% – 80% of customers have reported they are happy with service, before moving to a competitor!

Harvard Business Review - even completely satisfied customers can leave

Another issue with satisfaction is that as consumers become more empowered, the less likely they are to be satisfied. According to a survey by Accenture and the Marketing Society, the percentage of people whose ‘expectations of service quality are frequently or always met’ declined from 53% in 2007 to 40% in 2009. If this trend continues, it is unlikely that expectations will ever be met and therefore, what is the relevance of a satisfaction survey?

Companies can also influence or manipulate satisfaction scores with the timing of the questions. For instance, if an airline upgrades a traveler from economy to business class on a long haul flight and then calls the next day to ask if the passenger was satisfied will produce a predictable answer.

What you really want to do is to value satisfaction, not measure it. Valuing satisfaction means putting an actual cost figure on the satisfaction that is required to keep a customer as a customer.

After all, you spend large amounts of money on advertising, sales and other branding tactics to acquire a customer and then when you do acquire him, you ask if he is satisfied with the service. Wouldn’t it make sense to know why he became a customer and what it will take to keep him as a customer?

The importance of keeping a customer as a customer is ignored in almost all satisfaction surveys. Yet why would you want to satisfy a customer if 60% – 80% are likely to defect to a competitor with the next purchase?

Companies committed to growing profitability instead of expenses are already making the move to valuing satisfaction.

One of the first companies was Starbucks. Starbucks prides itself in providing a unique customer experience. In many ways, its brand is based on this customer experience. But Starbucks success meant longer queues that created unhappy customers. So, to ensure continued growth, Starbucks sought to measure satisfaction with the customer experience.

Starbucks strives to deliver value

Starbucks decided to talk to customers. Its customer research discovered that the average “unsatisfied” customer stuck with the company for a little more than one year, made 47 visits to its stores during that period and spent a total of approximately US$200. Not bad, really, for an “unsatisfied” customer.

But look at the value of a “satisfied” customer. The average “highly satisfied” Starbucks customer patronized the chain for more than eight years, made almost double the amount of visits (86) per year and spent over US$3,000 over that average eight-year time frame.

What was the primary difference between “unsatisfied” and “highly satisfied” customers? The amount of time the customer had to wait in line. Now that Starbucks knew the value of satisfaction, it could make the appropriate financial decisions.

Indeed, once the connection was made between marketing metric and financial outcome, calculating the investment and its potential payoff became easier. Based on Starbucks’ estimate, marketing would have to invest US$40 million annually worldwide to sufficiently reduce wait times and help convert those unsatisfied customers into highly satisfied ones. That’s no small amount, even for Starbucks.

If you were the CEO of Starbucks, what would you have done?

Actually, the data made the decision quite easy. Since the research had shown that each highly satisfied customer was worth US$3,000 over eight years and each unsatisfied customer was worth US$200 for one year, all Starbucks had to do was calculate the discounted cash flow and determine how many customers must be converted from unsatisfied to satisfied customers to generate the US$40 million in incremental revenue needed to cover the investment. The calculation revealed that Starbucks would rapidly recover its investment in satisfaction.

So take a close look at your own customer satisfaction surveys. Are they just telling you how “happy” customers are at a particular time and place and based on a specific transaction? Or do they provide actionable data about customer value?

Do they let you know their standards for product and service performance? Do they let you know how customers hold you accountable? Do they provide data that lets you make financial investments in customers that will bring the greatest financial return?

What’s needed today – and unfortunately is missing among companies that depend on creativity to build their brand – is a correlation between marketing metrics and financial outcomes.

Don’t limit your bottom line with feel-good customer satisfaction surveys that just look at customer good will. Instead, measure the value of their satisfaction. The result will not only tell you the causes of their satisfaction or dissatisfaction, but, much more importantly, provide the hard financial data to determine what to do about it.

BRAND AUDITS: Key for consistency and integration

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How effective are your branding activities? Are they aligned for the future?

Unfortunately, most branding initiatives revolve around a creative campaign developed by an advertising agency. Depending on budget, the creative campaign will be implemented with a one-size-fits-all message communicated to all and sundry and across multiple mass media platforms for as long as budget allows.

The model essentially revolves around hope – hope that lots of people will see the campaign, hope that amongst those people will be the target markets, hope that the message will resonate with those target markets, hope that those target markets will remember and hope that if they remember they will act. So basically, the ‘strategy’ is one of hope. Chances are if it isn’t, the agency will, if you haven’t already fired them, propose more of the same.

For most brands this approach is an exercise in futility. Wouldn’t it be better to first get an understanding of where your brand is, what your stakeholders want from your brand, what you are doing right (and wrong), the channels they are most likely to interface with, their influencers and more?

Internal and external brand and communications audits can both help determine how effective your branding activities have been and, more importantly, what they need to accomplish in the future.

Brand audits have multiple advantages. They provide a benchmark to evaluate the current brand position. Carried out every 2 years they can evaluate progress toward branding goals. They also unify an organization. Too often, everyone has a different definition of branding.

A brand audit can provide a consistent, universally accepted definition that ensures that everyone is marching to the beat of the same branding drum. Finally, a brand audit can help eliminate the all-too-common disconnect between what companies believe their brand to be and what customers perceive it to be.

An internal brand audit takes the brand temperature from corporate executives and other personnel. One-on-one confidential interviews probe to determine each individual’s perceptions of the brand, branding goals, evaluation of past branding activities, knowledge of key corporate or brand messages and other key points.

What are the current branding and customer processes, and how can they be improved? One great question to ask is: “Imagine it is five years from now, and the company is celebrating historic financial and market success. How did the company arrive at this point? What are some of the activities that brought us to such success?”

A brand audit can cover a wide cross section of departments but must have the customer and the customer’s needs at its core. Is relevant customer data being added to corporate databases? Is customer information shared with other areas of the company? What initiatives are on the horizon that will affect certain customers and how will this be addressed?

A minimum of 25 minutes is required for each interview, but they can take up to an hour. Questions can be prepared beforehand, but the most valuable insights often result from free-ranging discussions on relevant topics.

A key component of a brand audit is a communications audit, which is especially useful for larger firms with multiple divisions or departments that get involved in branding activities.

A communications audit looks at all the visual material that represents a brand – the brand identity, press releases, ads, brochures, Web site, logos, etc. Analysis then determines the amount of consistency and integration in appearance/design, messages and their relevance to target markets and adherence to corporate standards. Ideally, a brand manual is in place to provide a benchmark.

The role of social media in corporate communications is increasingly important and a social media audit must be included in the communications audit. Communications across social media require different skill sets to traditional marketing and this is scaring some companies away but it must be addressed.

Internal brand and communications audits often reveal a stunning amount of discrepancies that result in mixed messages, incompatible branding efforts or even disagreement about branding goals.

An external brand audit looks at how various stakeholders (or, more accurately, constituencies) view the brand. Such constituencies include customers, prospects, media, distributors/retailers, regulatory bodies and suppliers.

Sometimes, an external brand audit is combined with a loss analysis to determine why a contract or other business went to a competitor. These constituencies are asked their perceptions and experiences with the brand.

Sample questions can include: “Why did you buy the first time?” “Why will you buy again?” “How useful and relevant are corporate communications?” “How responsive is our support?” “How do our competitors compare to us?” One revealing question we’ve used in the past is: “If you were running our company, what would you do to better meet your requirements?”

The number involved in brand audits can vary greatly according to time, cost or other constraints. Even as few as 5 – 10 interviews may produce actionable insights.

The success of a brand audit will be determined by the people involved. They must understand branding imperatives, be familiar with the relevant products and company and have superb questioning, listening and analytical skills.

Results of brand audits must not only be shared as widely as possible but also incorporated into internal and external branding efforts, including employee communications, advertising and PR.

It is especially important to use the results to drive changes in sales, service, support and other customer-facing activities.

Finally, remember to use brand audits as guidelines for improvement, not as sticks for punishment.

How Tourism Malaysia should have approached its social media strategy

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Twitter, facebook and other social media communities have been buzzing with comments related to the RM1,800,000 (US$600,000) Tourism Malaysia (TM) is spending on Social Media (SM). Here’s a little background on the story.

Initially, the deputy minister of tourism was quoted as saying that the RM1,800,000 “covers the cost of hosting various activities on the facebook page, including six interactive Flash applications, development and maintenance work and advertising.” He went on to say that, “the ministry spent nearly RM300,000 to develop each of the six applications on their facebook page.” I could only find one (see screenshot below).

This statement was rejected by citizens and government ministers alike with one minister suggesting it was a waste of funds as the facebook site is free and using the ‘Visit Penang’ facebook page as an example (see screenshot below), explained that it was set up for free and had attracted over 100,000 fans.

Citizens were even more incensed, with one enterprising and concerned tax payer setting up a facebook page that parodied one of the official government pages (see screen grab below). Within hours, this page had attracted 5 times as many ‘likes’ as the official page.

A couple of days later, the tourism minister announced that, “the RM1.8 million (is) for a full social media branding campaign, and not just to set up a facebook page.” She went on to say, “”(The money) is for responding, informing, interaction and monitoring (work on the facebook page), evaluation, data collecting, content development and advertising on Google, Facebook, etc…”

With her comments came an official release that stated the costs were for the following:

1. Technical

* Dedicated hardware deployment
* Software licencing
* Front end applications
* Application server engine

2. Development of six campaigns that require the following:

* Flash games engine
* Flash programming and coding
* Creative development and design
* Campaigns ideas and concept
* Front-end Flash design
* Testing and debugging

3. Campaign promotions

* Digital advertising campaigns on Google and facebook
* Contest, page wall and tourism fanpage content management
* Collection and management of database

The tourism minister then went on the offensive, asking reporters, “Do you think it’s cheap to set this up?” And as if to justify the expense, explained, “Tourism Australia is spending RM150 million (US$50 million) for the next three years on social media.”

Most recently, the minister stated that the allocation was to ‘run, manage and monitor a tourism campaign in the social media, including RM360,000 for advertising and over RM500,000 for prizes for the contests organized.’

‘Disappointed and hurt’ she is reported to have invited the Malaysian Anti-Corruption Commission (MACC) to investigate the campaign finances.

It is too early to determine the results of Tourism Malaysia’s first foray into social media but whatever the results, the Malaysian government, the tourism minister and the tourism ministry could have handled the matter more effectively and efficiently.

One would be forgiven for thinking that Tourism Malaysia has some internal communications issues. Because when the deputy minister first explained what the funds were spent on, his statement didn’t make sense. The deputy minister’s statement suggests he was provided with notes written by someone more familiar with the workings of an IT department than the requirements of a social media campaign. This has caused the deputy minister to be embarrassed in parliament and I hope someone has been reprimanded.

In terms of the social media exercise, Dave Duarte MD of South Africa based Huddlemind and a social media expert who was in Malaysia as the story broke stated in his blog that the exercise has already justified its expense.

His rationale is based on his guesstimate that the average conversion rate of a facebook fan to a customer is approximately 3% and because the average domestic tourist spends RM2,500 with 40,000 fans, the facebook page has already recouped its expenses.

This statement may be a little optimistic but it is certainly worth tracking the number of ‘likes’.

In terms of the game itself, it seems OK, leaning heavily on guitar hero. Personally I found the racial profiling of the characters unnecessary. Playing the game requires one to be more dexterous than I and as a result, the score required to qualify for the iPad 2 draw will always be beyond my means! I suspect I’m not the only decision maker in the family who will feel the same and this resulted in me leaving the page rather disappointed. But I digress.

So Tourism Malaysia’s (TM) long overdue foray into social media has not had an auspicious start. In the future, what can this key organization that contributes over RM50 billion (US$16.6 billion) to the national purse do to ensure tax payers get value money for all social media branding initiatives?

Here are 10 key recommendations for future initiatives

1) A social media strategy or any of the tactics within that strategy, is not the responsibility of the IT department. In future, the head of the department responsible for social media initiatives should represent the ministry when talking to the press and his press release should be prepared by him and his department and not by anyone else. Although the minister or his/her deputy must respond to questions in parliament, it is wrong to expect them to be knowledgeable about branding tools such as social media. Ministers do not need to talk to the media about such relatively small activities.

2) Social media requires an ongoing strategy and interactive initiatives such as the facebook pages are merely tactics within the strategy. Successful social media initiatives must be integrated with other branding initiatives.

3) I strongly suspect TM didn’t think through what they were doing when they launched the facebook pages. First of all it is important to develop a plan. Within that plan and before embarking on a social media strategy, it is important to identify what are the goals and how can facebook add value to branding efforts. Facebook is obviously an additional channel to interact with prospects and customers but why do it? To get more fans? Why? To get more participants? Why? How does TM convert those participants in the competition into leads? How does TM put a monetary value on social media activities? What metrics should be used? All of these should be outlined in the social media plan before implementation.

At the moment, registration is only required if participants want to be included in the draw for the iPad or meals. So how will TM optimize interactions with those participants and get them to become customers?

4) It’s also important to get fans to interact with other participants and to interact with participants. Critical to the success of any social media campaign are the conversations. Channels such as facebook are not platforms to broadcast messages about the company or in this case, Malaysia. The cuti cuti 1Malaysia facebook page has generated over 40,000 likes in a very short time and this is impressive. Furthermore, many of the postings on the wall have generated plenty of comments but TM is failing to enter into discussions with those who comment, preferring instead to pass that responsibility to others (See screen shot below). Interacting and engaging with people who comment is what social media is all about and will give TM more visibility, improve reputation and increase trust.

5) This first foray into social media is pretty basic and there is nothing wrong with that. But in future, Tourism Malaysia must look to be more innovative with what it does on social media. Fans will soon get bored of commenting and uploading images, especially if issues raised are ignored. Tourism Malaysia must encourage fans to be more creative. Perhaps by designing trips, submitting and voting for slideshows or setting up sub groups of specific niche related fans.

6) What makes being a fan special? At the moment nothing really which is a good and bad thing. Good because it means more people will become fans but bad because TM doesn’t know how many fans are really interested in the product or just want to win an iPad. In future, TM must look for ways to offer special content to fans or competition participants. Don’t be afraid to ask people to register.

7) This maybe a bit difficult for TM because technically, it isn’t allowed to sell Malaysia, only promote it but that doesn’t mean it can’t turn facebook into a potential profit centre. TM should make it easy for fans to book trips to destinations featured on the TM facebook the way it does on its website.

8) TM is still using mass media tactics on social media channels. This is ineffective and pointless. TM needs to stop thinking demographics and start thinking communities.

9) This applies to everyone and not just TM. Pause before creating a facebook group. Managing a group is difficult, time consuming and requires talent and patience to be able to respond to issues raised and continue a conversation till it’s natural end. TM launched four or five facebook pages at the same time! That requires a lot of talented manpower and judging by the lack of responses to issues raised, TM was ill prepared. Also important is what to do with the facebook group once the contest or event is over. It you want to delete a group, you have to manually delete every member of the group. With 40,000 members and growing, and with at least two clicks required to delete a member, the cuti cuti site will take a lot of manpower to shut down! If TM decides not to close down pages, in five years time, there will be a lot of dead pages that will confuse people.

10) The big question with facebook is what to measure and how to calculate ROI. In 2010 a study stated that fans of the top twenty brands on facebook were worth an average of US$136 each. With 40,000 fans, that would make the cuti cuti page worth over RM16 million! However the study was panned as it was actually a measure of the value of customer loyalty and not a measure of how much facebook had contributed to that loyalty. Moreover, the average of 20 brands like Nokia and Apple bears no relevance to tourism anyway!

As TM doesn’t technically have a product to sell, it is hard to know what to measure. For instance, TM can’t measure the ROI of acquiring a prospect and turning that prospect into a customer via facebook and comparing it with other customer acquisition programmes.

In reality, Measuring the ROI of facebook fans is probably impossible, especially for a national tourism agency such as TM and especially when the facebook page features a competition that allows multiple attempts from the same user and the end product is a future staycation.

As the dust settles on this rather unfortunate event, TM and its agency has a lot of work to do to sort out its social media strategy. It’s not a great start, and a lot of mistakes have been made. The key is not to make the same ones again.

Direct Mail, Email and your brand

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Direct Mail and Email marketing are critical components of any branding strategy for either a business to business or business to consumer brand. And it is a growing business. But the quality of Direct Mail and Email marketing in Malaysia and the mining and management of the databases used is horrendous.

If you own a company and you want to destroy any equity there may be in your brand, prepare a badly written product sheet on your desktop and when you are finished, don’t bother to spell check the document.

Print 50,000 copies and shove them in all the letterboxes of as many office or apartment complexes in the Klang Valley as you can. While you are sitting at home waiting for the phone to ring (assuming you included it on the flyer – and believe me, some don’t), your ‘DM campaign’ is being thrown in the rubbish bin by the lift, used as a place mat for lunch or simply thrown on the floor by the mail boxes. Hardly an inspiring ‘moment of truth’ first time experience for your brand and potential customer.

Another way to damage your brand is to send the wrong material to the wrong people. I have three kids, two under the age of 13. Yet this year they have both received two offers from credit card companies. These offers state that applicants must be at least 18 years of age.

A lot of firms are moving away from DM to save money on the printing of their flyers or brochures and looking at Email marketing. Although figures are unavailable for Malaysia, the Direct Marketing Association in the UK informs us that 90% of companies are now using email marketing.

There is no doubt that a well thought out and planned email campaign can be effective and profitable. But too many firms don’t do this and instead are simply adding to the seven trillion spam messages expected to be delivered to inboxes around the world in 2011.

I signed up with a local event organiser for information on forthcoming branding and marketing seminars that they organise in the region. Within a week my inbox was inundated with emails related to human resources, accounting, insurance, motivation and other topics I have nothing to do with and no interest in. These emails are trashed with the same irritation as the ones for Viagra, lottery wins and Nigerian banks.

Despite my repeated requests to be unsubscribed from their list, I continue to receive multiple emails. I cannot simply mark the email as ‘junk’ because they are using a Gmail account and this will send all mail from Gmail addresses to my trash. The name of the company is ingrained in my subconscious, but for all the wrong reasons and it is now a matter of principle that we will not sign up for any event organized by this firm.

I have received about 10 emails in the past month from an insurance company that recently spent RM13 million (US$4 million) on a rebranding exercise. The emails are not personalized, the attachment is of a flyer that is dull and states in two places that the offer is exclusively for Mastercard holders yet I don’t have a Mastercard.

I really lose faith in financial institutions and other companies when they make such mistakes. Think of the money wasted on the cost of the name, flyers, administration and so on.

The rewards for good campaigns are significant. The Direct Marketing Association reports that more than RM550 billion was spent on direct marketing advertising (including email marketing) in 2008 and sales generated from that were an astonishing RM6,450 billion! There is no question then that DM can be effective because it allows consumers to read about the products and services before deciding to explore further, or even buy.

But it has to be done properly. It is not enough simply to create a campaign and send it out. It is also important that the content resonates with the target market. And you still need to ‘sell’ the product. Just because you have got into the prospect’s inbox, doesn’t mean the prospect will buy.

The key for all direct marketing or email marketing is get the customer information right in the first place and keep it updated accurately thereafter. If you are collecting a lot of leads but don’t have the resources to input and clean the data, then outsource. There are many firms offering such services and it will be money well spent.

There is an edict within Direct Marketing industry that says, “Right offer, right person, right time.”

So it’s time for Malaysian firms, from SME up to main board, to end all this untargetted, uninspiring, untrackable, unproofed direct mail and start building brands with quality marketing collateral.

Advertising campaigns need to be integrated across the organisation

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Recently I wrote a post about my experiences when I called the number on a billboard selling a luxury automotive brand. You can read the full article here

Basically I talked about how I rang this brand after seeing a billboard outside my office. I got through to the receptionist who asked for my number and said she would get someone from sales to call me back. Nobody called me back, even though the car costs about RM500,000 (US$166,000)! I thought this was an excellent example of why so many brands fail. But I didn’t think much more about it.

Then today I was sitting at a traffic light outside Bangsar Shopping Complex and I saw the same company had another billboard, this time it was advertising their jaw dropping top of the range V10 sports car that costs over RM1,250,000 (US$420,000) in Malaysia. Now this really is an exclusive motor and in the middle of last year there were orders for about 240 of them in the UK and a waiting list of 12 months. If they are only selling 250 odd in the UK I would expect them to sell no more than 50 in Malaysia. So you have to question why they market such an exclusive product on a billboard.

But this is not a rant about using old mass market mass economy models to sell luxury brands, this is about the fact that it is imperative that marketing campaigns are integrated and organisational excellence is at the heart of any tactical campaign.

And I know it isn’t at the heart of this campaign because whilst waiting for the lights to change I decided to call the number on the billboard and see what sort of a response I would get.

I called the number. No answer. Now it was 5.17pm and perhaps the receptionist has gone home. But I doubt the sales team had gone home. I bet they were sitting around wondering how to drive traffic to the showroom so they can make target this month and get a nice juicy bonus for Chinese New Year. Perhaps at least one of them might have been wondering why the expensive outdoor campaign they’ve been running for some time hasn’t generated any results!

I’ve tried to go and see these guys but the marketing manager tells me they are doing well. Here are some basic principles to abide by when you run an advertising campaign so that when you are doing well, you can do better.

1) You advertise on billboards to stimulate, inform, persuade etc. If you want to inform perhaps a 100 people in the country about a luxury product, spending large amounts of money on billboards or for that matter print ads in daily newspapers, is a complete waste of marketing dollars.
2) Consumers who can afford to spend over 1 million Ringgit on a car are unlikely to keep to your office hours. Make it easy for them to spend money with you.
3) Your advertising copy should appeal to a specific audience – in this case, those who can afford over RM1,250,000 on a car – everyone else is just getting in the way. So create copy that will resonates with that target market. This ad just mentioned the engine capacity and that was it! Ever wondered why mini does so well?
4) Develop metrics for measuring channel effectiveness. A simple metric for outdoor ads is a specially assigned number for that campaign.
5) Outdoor advertising is 24 hours. That’s probably one reason why you bought it in the first place! If you can’t have someone on standby 24 hours a day, install an answering machine or after office hours have calls diverted to a sales manager or sales director.

These are elementary and should be included in any strategy document created by a brand consultant.

Should you measure Brand Equity or Customer Equity?

Published on by brandconsultantasia3 Comments

Malaysian and Asian firms can save themselves a lot of effort and resources by focussing on customer equity as they attempt to build brands.

It’s almost 20 years since the launch of the landmark book “Managing Brand Equity: Capitalizing on the Value of a Brand Name” by David Aaker. David Aaker name may not be as familiar as others in his industry, but he is credited with developing the concept of “brand equity”.

The release of “Managing Brand Equity: Capitalizing on the Value of a Brand Name” came at a time when companies were desperately seeking new ways to increase the value of their brands by assigning a value to them or, measuring the intangible assets of the company such as reputation or channel relationships, that were previously ignored by traditional accounting systems. This became known as Brand equity.

On the face of it, “Brand equity” appeared to quantify intuitive recognition about the value of brands that in turn helped to rationalize marketing expenditures. It was also shorthand for a brand’s two key strengths – its relationship with purchasers and mental image among both prospects and customers. And it provided a means to rank winners and losers in branding wars – MAS vs Singapore Airlines, Maxis vs Celcom, Coca-Cola vs. Sarsi and so on.

Brand equity is now considered one of a number of factors that increase the financial value of a brand and the term is used freely to say the least. Nevertheless, despite its popularity, the concept of “brand equity” has numerous shortcomings, especially in an age when customers not organizations, are determining the success or failure of brands. Indeed, the pursuit of brand equity can even warp executive decision making and lead to lost profits and opportunities.

One shortcoming is that although the term is widely used, no common definition of brand equity exists.

In fact, in his book Building, Measuring and Managing Brand Equity, published about seven years after David Aaker’s work, K.L. Keller lists NINE definitions of Brand equity, some of which actually contradict one another. This lack of a definition means that no universally agreed upon measure exists.

Delve deeper into any methodology concerning a “brand equity” calculation, and it quickly becomes apparent that the effort has all the intellectual rigour of a fence post – a dash of corporate history, a gaggle of retail outlet numbers, a touch of stature here and some strength there, a little bit of ‘brand esteem’ topped off with an extra helping of distribution sales, a sampling of questionnaires and so on.

This lack of a common methodology means that two experts examining the same brand come up with widely divergent calculations. Furthermore, it is impossible to compare brands across different countries, industries or perspectives.

This imprecision – at a time of global economic uncertainty when shareholders are demanding more accountability and C level executives insist on both sophisticated measurement and accountability – means “brand equity” lacks validity as a benchmark for executive decision-making. After all, how can executives make effective decisions when it’s impossible to understand – and agree upon – consistent numbers?

As if C level executives didn’t have enough to think about, this imprecision causes other problems as well. If “brand equity” increases by 10%, what caused it? Was it the latest advertising campaign? Or was it a new product launch? Perhaps it was more aggressive sales? Or maybe it was the discounts at critical times to reduce inventory? Better service? “Brand equity” does not provide any insights about cause-and-effect.

Second, “brand equity” does not indicate market or financial success. Look at some companies with great “brand equity” – Pelangi Air, Perwaja steel, Port Klang Free Zone (PKFZ), Kodak, K-Mart, MV Augusta, MAS, – that have either disappeared, faced or are facing financial difficulties. Indeed, “brand equity” as a guiding star leads companies to focus on product maximization at a time when leading companies recognize that a focus on customers is critical to success.

Finally, and most important of all, “brand equity” is irrelevant to customers. Customers buy on value, service, price, convenience or other reasons, but never make a purchase decision based on the relative “brand equity” of two offerings.

Ask yourself, did you ever walk into Cold Storage, Armani or Isetan and buy something based on its brand equity? No, of course you didn’t. Hold that thought, why should you pay attention to an issue that customers ignore? Because everyone else is? Because you were told to in marketing classes that were probably developed in an era before Facebook, twitter, ecommerce and more?

So what should you focus on? The answer is “Customer equity”.

Customer equity has one universally recognized definition – the lifetime value of customers. This value results from the current and future customer profitability as well as such intangible benefits as testimonials and word-of-mouth sales.

Customer equity incorporates customer loyalty to buy again and again, the faith to recommend a brand and the willingness to forgive the inevitable mistakes that every firm makes.

While “brand equity” is impossible to calculate consistently, customer equity can be easily calculated on the back of an envelope. All that’s required are numbers that every company already is – or should be – calculating. These include revenue, customer acquisition (or marketing) costs, costs of goods/services and retention rates.

Ideally, depending on the industry, companies should also track leads and referrals, and be able to determine the profitability of specific products or services. By adding up revenue (or profits), subtracting relevant costs and incorporating retention rates, companies can determine the current – and future – profitability of every customer.

And because customer equity is easy to calculate, it will be understood by everyone from the boardroom to the warehouse, making it much easier to unify personnel behind the brand.

“Brand equity” is all about a product or an organization. But in the customer economy, brands that attempt to push products onto customers that don’t want them will fail. Even if you spend millions creating awareness of your products. Today, building a successful brand requires customers that are profitable.

Customer equity supports and measures the activities that encourage customers to buy more, more often. Increasing “brand equity” does little for a firm and decades of good will can be wiped out overnight (think BP), but increased customer equity reflects increased retention and word-of-mouth sales, key elements of a profitable brand.

Customer equity has other advantages as well. Because retention and customer profitability are tracked, it’s easy to make a direct link between marketing, service and other programs to increases (or declines) in customer equity.

Customer equity also enables the segmentation of very profitable, not so profitable and unprofitable customers. Knowing the relative profitability of customers not only helps promote retention of the best customers but also substantially improves the investment required and effectiveness of marketing as well as reducing marketing costs.

In today’s customer economy, “Brand equity” provides few if any tools for those responsible for attracting and keeping satisfied customers. In The Loyalty Effect, the author Frederick Reichheld wrote, “Customer equity effectively explains success and failure in business…. The companies with the highest retention rates also earn the best profits. Relative retention explains profits better than market share, scale, cost position or any other variables associated with competitive advantage.”

Do brands have value? Absolutely, and David Aaker has left an impressive legacy. But attempting to measure this value provides little benefit and distracts a company away from the critical task of retaining profitable customers.

Because ultimately, it’s these customers – not a fallible calculation of a dated concept – who are responsible for brand value and long-term corporate success.