What's New in Marketing - Issue 48, May 2006

http://www.wnim.com

Yahoo predicts rapid growth in search agencies

Speaking in New York earlier this month Tim Cadogan, the British Vice-President of Yahoo search, spoke many times on the importance of search marketing agencies in the future growth of the industry.

A significant comment? Very. To-date the relationship between search marketers and the search engines has not been an easy one.  Search marketers want to discover how the search engines are selecting sites – search engines have felt their carefully crafted search engine results pages have been manipulated, making their carefully crafted sorting mathematics virtually pointless.

Equally, there have been numerous fallings-out between search engines and search marketing agencies.  Direct sales people from the search engines have created friction with agencies, contracts between search engines and advertisers have been written to make life difficult for agencies.

But, as search moves towards handling larger sums of money and to being a more advertising driven industry, the agency channel has continued to develop and to offer relatively advanced support for clients even when the search engines have not been co-operating.

Take ranking report checks for instance.  All search engines have described these as ‘against their guidelines’ and as ‘automated queries’, something that could have your agency punished in some way.  Search engines were also concerned that advertisers might work harder to manipulate results if they were seeing rank positions more frequently.

So Cadogan’s remarks that, “It’s becoming a complex industry and clients are simply not going to have the resources to handle it”, is a startling statement – albeit true.

Equally stunning is the fact that Google has now launched a tool which can be used to check rankings!  In typical style, of course, you can’t check or compare your rank positions with other search engines – so it has a relatively limited use for most advertisers – but it is a change of heart and is to be welcomed.

Yahoo’s stance on the industry is refreshing.  MSN has long had a partnership approach with its software distributors.  Now all we need is for Google to adopt a proper channel strategy where they speak to the industry and tell their partners of forthcoming changes BEFORE they hit the deck.  

Clients need objective agency support, search engines are struggling to recruit enough people to go sell their systems, and agencies need a professional way of working with the search engines.  Then the whole system will have a better chance of taking its full place at the marketing budget table.

About the author

Andy Atkins-Krüger is President of the UK Search Marketing Association SMA-UK

http://www.sma-uk.org/

Search Engine Optimisation (SEO) Best Practice

Introduction

These factors are based on a recent report from E-consultancy (2006) for which I was lead author and involved extensive research and review with leading SEO practitioners (both client side and agency side). In total, the report identified hundreds of actions marketers and their agencies can take to improve results from SEO, but here I summarise the Top 10 factors which should be part of your SEO strategy.

In this first article, I start with an update on the importance of SEO to marketers today. I will also answer some of the most common questions about search marketing asked by attendees of my online marketing training courses including the 3 different types of search engine marketing. Then, I will run through the first 5 areas of search engine optimisation that need to be managed.

How important is search engine marketing?

As marketers we need to keep reminding ourselves just how important search engines are in reaching prospects and customers. If we don’t, then there will always be more web savvy competitors who are investing to ensure they deliver results from the search engines.

Billions of searches a year

A recent indication of the growing importance of search came from Netratings (2006) who showed that the number of searches increased from 4.1 billion to 5.7 billion from ’04 to ’05 in the US, a 39% Year on Year increase. Furthermore, the number of searches in the US is more than 183 million per day.

Hundreds of thousands of brand and product category searches

A more tangible indication of the importance of search is shown by the usage of specific keyphrases that searchers use to connect with brands and research products. The Table shows staggering numbers of people searching.

Tip

Use the search engine’s own keyphrase analysis tools to see how many people are searching for your brands, products and services. I have compiled the top free tools at http://www.davechaffey.com/SEO-Best-Practice.

Search volume of searches for keyphrases in a single month

Notes:

1. Google estimates from Google Traffic Estimator available through Google Adwords for UK, January 2006 (See Chaffey, 2006).  Total Google searches based on assuming that on average Position 1 ad slot receives 5% clickthrough rate, so total searches 20 times this (actual clickthrough will vary by keyphrase, e.g. highest for brands).

2. Overture UK search advertising network main search sources included Yahoo!, MSN and Wanadoo favoured by consumers rather than business people which results in different values for CRM and Oracle. Includes both singular and plural. * Includes singular version of word.

3. Both include non-human, software generated searches from link tracking, rank checking and click fraud.tools, so overestimate actual searches by people. Also an individual may repeat searches several times when researching.

How important is Google?

Within search, ‘The big G’, aka Google is also becoming more important. According to a recent Internet Retailer (2006) summary of WebSideStory research, Google now accounts for 75% of all UK searches, with Yahoo! in second place with a paltry 9% and MSN Search with 5%. In the US, the figure for Google is 55% with the other search engines giving more competition. But, the message is clear – if you’re serious about getting results from search engine marketing, you have to seriously understand how to perform better in Google.

Do I need to be top in the listings?

Everyone wants to be top, not everyone can be top for all keyphrases and fortunately it isn’t essential to be top. But and it’s a big but, it seems it’s becoming more important to be top, particularly for the strategic keyphrases which will give you success in your marketplace.

Recent iProspect (2006) research seems to suggest that searchers have become more impatient and the majority just look at the first page. The research shows that 62% of search engine users click on a search result within the first page of results, and a full 90% of users click on a result within the first three pages of search results. These figures were just 48% and 81%, respectively, in 2002. But remember that these are reported and not observed behaviours which will vary by sector.

How to get the best results from search engine marketing?

But how to get the best results from search? With its growing importance in generating sales, competition has become fierce. Paying several pounds per click for the top position is now commonplace in the sponsored links of the Google Adwords and Yahoo! Search Marketing networks. Some companies are finding they can’t profitability advertise at these rates, so are having to bid lower and consequently lose potential sales. Others are taking a more long term view and are investing in SEO, which with the right commitment can return results measured in pence per click rather than pounds per click.

One more time – what’s the difference between SEO and paid search?

Before we get onto the success factors for SEO, here’s a quick summary of the difference between different types of search engine marketing (SEM) if you are unfamiliar with them.

E-consultancy (2006) explains SEM as follows:

“Simply put, search engine marketing (SEM) is about connecting searchers looking for information related to your brand with what they are looking for. It is about making your brand visible within the search engines to attract new visitors to your site(s).”

Within SEM, there are three main opportunities for organizations to get their message across, to gain visibility and to direct visitors to their sites.

“The first two opportunities are via the results pages within the search engines and the third, less well known type is on third-party sites.”

1. The natural or organic listings. The part of the pages listing results from a search engine query which are displayed in a sequence according to relevance of match between the keyword phrase typed into a search engine and a web page according to a ranking algorithm used by the search engine. This is the main area of the search results pages on the left.

The method for achieving placement in this part of the page is called search engine optimization (SEO).

2. The paid or sponsored listings. A relevant ad (typically a text ad) with a link to a destination page is displayed when the user of a search engine types in a specific phrase. A fee is charged for every click of each link, with the amount bid for the click the main factor determining its position (and in Google, its quality score, which is mainly dependent on the ad clickthrough rate). These ads are usually displayed above, to the right and below the natural listings.

The method for achieving placement in this part of the page is called paid-search (aka ‘pay-per-click’ / PPC). Confusingly some paid search specialists and some new media magazines call paid search ‘Search Engine Marketing’. We don’t think this is the way forward since SEO is most certainly marketing also and it is natural for SEM to be broken down into SEO and PPC.

3. Content-network listings. These ads are displayed on third party sites by publishers who have setup an advertising deal with Google using the Adsense programme or who display Yahoo or MIVA listings on their website. These actually account for a sizeable proportion of Google revenue (around 40%), but tend to have much lower clickthrough rates and tend to be more prone to click fraud. Ads may be paid for on a Pay Per Click basis or a Cost-Per-Thousand ads displayed for – so these aren’t necessarily PPC.

So, finally, onto my first five SEO success factors.

1. Goal setting: Setting Best Practice

A structured, scientific, measured approach to SEO works best since there are some great tools available to help assess demand for your products and services through the number of searches and to track your results to date. Free tools are listed at Chaffey (2006) and many search marketers rate paid tools such as Hitwise which can be used to assess competitors’ performance on individual key phrases and for different demographics.

That said, setting goals for SEO isn’t straightforward since there are so many variables, many outside your direct control, which will affect your results. This is why many companies have instead, opted for a paid search-based strategy where goal setting is more straightforward and return on investment is easier to achieve.

You can’t outsource this completely

Some marketers I speak to say worrying things like, “yeah we did SEO last year” or “Our agency handles SEO”. But, in my view SEO is far too important to be just left to an agency. It also requires commitment from the client to help the agency or internal specialists understand the market and business objectives and continuously review the results and refine the approach.

One of the first questions I ask when discussing SEO is, “How many key phrases do you optimise on”? A deceptive question. For a company with a diverse set of products, if the answer is “I don’t know” or “less than 50”, this sets the alarm bells ringing. Attention to detail counts in search and I know financial services companies optimising on 5,000 key phrases, holiday cottage companies on 10,000 and a shopping comparison on a million! Of course, within this some phrases are much more important than others – deciding on the right strategic, brand and niche target key phrases is a big part of your search strategy.

Three key steps in goal setting for SEM

In the E-consultancy (2006) best practice guide, we recommend these stages for analysis and goal-setting:

A.Demand analysis. Identifying the popularity of each search term, its relevance to the products or services qualified by the ‘intent of the searcher’ indicated by the phrase and the competition on it.

B. Performance analysis. This assesses how the company is currently performing for these phrases. With the right tracking tools and tags, it should be possible to report average position in natural or paid listings; click volume referred from search; click quality (conversion rates and ideally bounce rates to compare landing page effectiveness); outcomes (sales, registrations or leads); costs (CPC and CPA); profitability (based on cost of sale or lifetime value models).

C. Gap analysis. Identifies for each phrase and product where the biggest potential for improvement is, so you can target your resources accordingly.

After these three stages, you can set goals for a realistic number of clicks and with a site conversion model, leads or sales. But we still need to decide which of the search techniques these clicks are going to originate from. This leads us on to the next stage.

2. SEM Strategy Best Practice

Defining and refining your SEM strategy runs in parallel with demand and gap analysis. For the key phrases you are underperforming on, you need to decide the best combination of tactics to drive visitors.

For each group of product category and individual product and associated phrases you need to select the most cost-effective tactic from:

• Search engine optimisation (SEO)
• Paid search
• Affiliate marketing (if appropriate to your market)

This is a key challenge in SEM since it requires a unified strategy at a key phrase level across all of these three tactics. This is such a challenge because to get the best results from each of these tactics you need to hire specialist agencies in each. This again requires commitment from the client to act as the bridge between the three, or at least keep them talking together.

Tip

For organisations targeting thousands of key phrases across products it also shows the need for a search key phrase dictionary which summarises goals and results for each key phrase.

3. Site inclusion Best Practice

Inclusion is where the technical skills of SEO consultants and agencies come to the fore.

Work on site inclusion is needed to improve your Index coverage which is the proportion of your pages which are included within the index of each search engine.

While Google and the other engines are now much improved in their capabilities to index sites, there are still many sites where the content management system used can cause problems. A recent example I saw was for a niche publisher who was invisible for a brand search on the company name because they hadn’t used a conventional name and location for the home page.

There are several reasons why getting complete index inclusion is difficult:

•           There may be technical reasons why the search robots do not crawl all your pages such as the use of SEO-unfriendly content management system – frustratingly common

•           When search engines update their ranking algorithms this may result in changes to the number of pages included

•           Search engines do have limited (although huge) storage capacities and recently no longer publicise the size of their indexes, apparently so as not to get involved in ‘size wars’

•           Given index size is finite, search engines do not currently aim for 100% inclusion – they just try to do their best to as much information as they can

•           As you add pages to your site, the search engine robots will always lag a little in keeping its index up-to-date

Assessing index coverage

Tip

You can assess your index coverage using the Google syntax < site:domain.com> for example “site:www.wnim.com” returns nearly 400 pages.

Try It: http://www.google.co.uk/search?q=site%3Awnim.com.

Tip

You can also the Google Sitemaps ‘Crawl Stats’ which reports on pages crawled, reachable and errors. Google Sitemaps is a very powerful tool which can be used by internal staff as well as agencies. It can be used to flag to Google pages that are not indexed and prioritise pages returned (for example, sometimes Google may return a terms and condition page rather than the required product summary page.

You may think that once your pages are indexed you can relax, but continuous changes to the search algorithms and competitors mean this is far from true. For instance in early 2006, Google trialled and introduced a major update to the way it included pages known as the Google Big Daddy update explained by Google insider Matt Cutts (http://www.mattcutts.com/blog/bigdaddy/).

4. Document meta data Best Practice

As I have said, SEO is often seen as an agency discipline, but for my next two success factors, content owners inside a company can really help get their organisation visible on the web by following some simple rules which are all about delivering relevant marketing messages.

Document meta data that document creators specify gives search engines a big clue as to what the page is about. The three most important types of meta data are the document < title> tag, the document ‘descriptions’ meta tag and the document ‘keywords’ meta tag.

i. The document title

The < title> tag is arguably the most important type of meta data since each search engine places significant weighting on the key phrases contained within it AND it is the call-to-action hyperlink on the search engine results page. If it contains powerful, relevant copy you will get more clicks and the search engine will increase position in the listing accordingly relative to other pages which are getting fewer clicks.

Tip

To see how relevant your < title> is, use the Google ‘site’: syntax with a key phrase – this will return all the pages on your site about a particular topic.

For example < seo site: wnim.com>

Try It: http://www.google.co.uk/search?q=seo+site%3Awnim.com.

Here you can see that more specific title tags could be used like those here: < seo site:davechaffey.com.

Try it: http://www.google.co.uk/search?q=seo+site%3Adavechaffey.com> .

ii. The ‘description’ meta tag

A meta tag is an attribute of the page within the HTML < head> section which can be set by the content owner.

The “description” meta tag denotes the information which will typically be displayed in the search engine results page when a web page is found if relevant ‘snippets’ cannot be used from within the body copy.

So, the page creator can modify this to make a stronger call-to-action in the search engine listings.

Tip

To view meta tags for a site, select View, Source or Page Source in your browser.

Example, for a credit card:

< meta name=" description" content=" Different credit cards for different people.  Looking for a great rate? Had trouble getting a credit card in the past? Either way we could have the card to suit you! Apply online, service your account online." >

iii. The ‘keywords’ meta tag

The Meta keywords meta tag is used to summarise the content of a document based on keywords. Some unscrupulous SEOs can still be heard to say to potential clients (“we will optimize your meta tags”). This is partly because that’s what the client wants to hear – a surprising number have heard of the concept way back and still think it is important.

But this is a waste of time today since the keywords meta tag is relatively unimportant as a ranking factor. If you test the importance of meta keywords by placing a unique keyword in the meta keywords tag you will find that Google does not identify the page based on these and has never used them since its launch in ‘97.

Example (with too many meta tags):

< meta name=" keywords" content=" Capital One, Capital One UK, Capital 1, credit cards, credit card, platinum, uk credit cards, MasterCard, Visa, low apr, 0% , purchase teaser, online banking, internet account servicing, online account servicing, e-banking, sixty second decision, apply online, apply for a card, safe shopping, internet shopping, secure shopping, fraud guarantee, rebuild credit, bad credit, debt consolidation." >

Tip

Don’t invest a large amount of time in optimising the keywords meta tag, just include a focused series of keyphrases which summarise the document content and are consistent with the phrases users are searching on. But, it is always interesting to see what your competitors are optmising on.

5. On Page optimisation Best Practice

E-consultancy (2006) recommend that “On-page optimisation is vital to achieving good results through SEO”.

The most basic test of relevance is the number of times the search phrase appears on the page (headlines and sub-heading that include a search term are particularly powerful).

However, there are many other factors that can also be applied. In its guidance for Webmasters, Google states:

“Google goes far beyond the number of times a term appears on a page and examines all aspects of the page's content (and the content of the pages linking to it) to determine if it's a good match for your query”.

These other factors include the position of the words on the page, the document structure and the use of hyperlinks containing the keywords linking to the page, indeed in many competitive sectors it is the quality of the links from pages linking to it that are most important in achieving good results, and that is one of the main factors we will look at next month.

Next month

We will continue our coverage of the latest success factors in SEO next month where I will run through the second most important 10 factors. Then, in a later article, I will give you another top 10, for paid search marketing, since today paid search is an essential part of every search strategy. But before then, we will move from tactical to strategic, where I will give my view on another top 10, this time, the Top Ten strategy issues for e-channels.

References

Chaffey, D. (2006) Keyphrase analysis tool compilation (http://www.davechaffey.com/SEO-Best-Practice)

E-consultancy (2006) Search Engine Optimization (SEO) Best Practice Guide 2006, Published April, 2006. (http://www.e-consultancy.com/publications/seo-guide/)

Internet Retailer (2006) Google captures 75% share of UK search engine market in February. http://www.internetretailer.com/dailyNews.asp?id=18087

iProspect (2006) iProspect Search Engine User Behavior Study. Press release: Search Engine Marketing Firm iProspect Study Reveals Increase in the Importance of Attaining Top Natural Search Results. 11 April 2006. http://www.iprospect.com/media/press2006_04_11.htm.

Nielsen Netratings (2006). Press release, 3 March 2006, http://www.nielsen-netratings.com/pr/pr_060302.pdf

About the author

Dr Dave Chaffey is workshop leader for a range of one-day e-marketing training workshops from the CIM:

• Email Marketing (www.cim.co.uk/0766)
• Running Effective E-marketing Campaigns (www.cim.co.uk/0767)
• Improving Your Results from Digital Marketing (www.cim.co.uk/1138)
• Marketing Research Using the Internet (www.cim.co.uk/1135)

Go to http://www.cimtraining.com/ for course details and online booking.

Dave Chaffey is trainer and consultant for Marketing Insights Limited (http://www.marketing-online.co.uk/). He is a prolific e-business author whose books include ‘Total E-mail Marketing’, ‘Internet marketing: Strategy, Implementation and Practice’ and E-business and E-commerce Management.

Read Dave Chaffey’s blog (http://www.davechaffey.com/) for Emarketing Essentials – the five “must-read” articles about online marketing from the hundreds Dave reads each month.

How To Get People Addicted To Your Site

You might first consider asking every employee to describe a bad customer experience. Next, ask them to describe a truly great experience. Do that, and you might end up with what National Semiconductor offers: website addiction. Now we’re getting into serious territory, something I’ll be addressing at this year’s London Emetrics Summit 3-5 May

Phil Gibson at National Semiconductor likes to get people's attention by describing his website goals this way:

• Hook prospects through curiosity
• Interest and intrigue them through a journey of discovery
• Infatuate them with delight and amazement
• Build an emotional bond through ecstasy and exhilaration
• Get them physically addicted out of desperation and

             dependency, given that there were no alternatives

How did they do this?

National Semi created a free online environment for design engineers that gives them access to software tools and catalogues they couldn't afford to assemble for themselves. An engineer can design a power supply, a wireless device or a micro controller in hours instead of weeks. One click and the thermal imaging simulator tells them if they need to install a fan. Another click and a full set of schematics and diagrams are there for the downloading. One last click and all the components they need to build an actual prototype are delivered the next day.

Now that such devices can be designed in hours instead of weeks, engineers are incorporating that time span into their project plans and they become physically dependant on www.national.com. And they're delighted.

National Semi saw that the power of the Internet as a customer retention tool was not in offering more white papers, but in offering services that are interesting, intriguing, delightful, exhilarating, and addictive.

How do you put these examples to work for you?

1.      Recognise how painful it might be to buy from you. View the process from your customers' side of the counter/phone/website.

2.      Build your Web site around your customers' buying cycles rather than your own sales cycles.

3. Understand what your customers are trying to accomplish, and help them reach their goals rather than focusing on what they are trying to buy.

Customer relationship management? Anybody will tell you that the first rule of relationships is caring about the needs of the other party.

  About the author
Jim Sterne is the founder and producer of the Emetrics Summit, http://www.emetrics.org/

Organising for customer management – from insight to delivery

At our consultancy we’ve been taught an interesting lesson by some of our clients. We’ve spent two years of helping our clients build their customer management capabilities through search and selection. Now, some of them have asked if we can take a step into territory conventionally served by HR consultants, the territory of organisational strategy and design, training, and other aspects of managing customer management teams.

Our customers are companies that have built up their customer management capabilities. They now want to deploy these capabilities more effectively, in three main ways. One is through accelerated delivery of customer management strategy and programmes. Another is through delivery of enhanced service and value to their internal customers, by improving the quality of customer information gathered, used and shared within the business, and through using this information to develop stronger customer insights and ensure their use in the business. The final way is through creating a structure that will focus on unleashing their competitive strengths.

A sound customer management strategy can be compromised by poor relationships among the groups involved – managers, users, specialists. This leads to conflict, misuse of resources, over-stretched specialised units, under-utilisation of specialist skills - all because companies are so busy moving ahead with customer management that they do not consider how their customer management people should be organised and managed.

Organisations should be developed in line with customer management strategies. Through our search and selection work, we have a good picture of how leading businesses work in these areas, and what makes them successful in attracting and keeping good staff, and ensuring that they deliver, whether in classic areas of customer management, eg data management, customer insight or campaign management, or wider areas such as customer-focused product innovation.

Our clients asked us to extend our proposition because the response of the conventional HR consulting industry did not satisfy them. HR consultants have a good toolkit, from interviewing techniques and personality profiling approaches, through advanced ideas about organisational strategy and design, to methods to help clients get to where they want to be. But with few exceptions these consultants do not have the in-depth knowledge of customer management that they need to recommend the right paths to their clients, without asking the client to pay for an extensive fact-find to discover what clients believe that consultancies pitching for business to them should already know.

Our response has been careful, but based on the fact that I started work in customer management and direct marketing over twenty years ago through projects which were focused on people and not data, technology or even campaigns. We have therefore agreed to work in this area, but to ask for close involvement of the HR function, so that they can use their preferred organisational strategy and design approach and toolkits.

Developing a comprehensive, balanced approach demands recognition of the technical requirements, human dynamics, and strategic demands for successful customer management. This starts with identifying the main tasks to be carried out by the customer management team – now and in the future, and the typical workload requirements they produce. It extends to reviewing customer management strategy for its people implications –this requires a good knowledge of the demands placed by the main kinds of strategies on those who create and implement them. It also involves more classic HR work.

Some of this is cultural, eg reviewing values, beliefs, behaviour patterns, and leadership styles associated with the culture or the informal organisation, identifying whether they are likely to aid or hinder delivery of customer management strategy, and suggesting ways of making appropriate changes. This also involves ensuring that team culture and direction matches team members’ professional objectives and values. Some of the work is structural, such as recommending alternative structures and accountabilities that will help the organisation achieve its targets.

Some of the work is are operational, eg ensuring that staff capability is fully utilised, through training, communication and motivation, and that staff understand any changes needed and are committed to making them work. And some is more managerial eg ensuring that senior management is involved in determining direction and supporting change.

We’ve learnt that on projects like this, telling clients what to do and going through formal, rigid processes rarely brings the best results – coaching and mentoring are king. Working with clients to agree how to approach the problem is always better than laying down the law. We’ve also learnt that this area of marketing is often a backwater when it comes to using the best change management and HR management ideas. That is why we’re finding the whole experience so enjoyable – it’s almost as if our whole careers have been leading up to this – very satisfying.

About the author

Professor Merlin Stone is director of WCL Consultancy. WCL helps large companies and public sector organisations plan and implement change. To learn more about WCL please email info@w-c-l.com or call +44 (0)207 7593 5760

Measuring Marketing Performance – What are we talking about?

As with most current writing on marketing, the assumption seems to be that everyone knows and understands the term, but when asked to explain marketing performance measurement, the majority of marketers will give a variety of answers, some of which will be quite different.

The more that is spoken and written in marketing and business circles about making marketing accountable, the only thing that becomes clear is that marketing and business people rarely speak to same language. Why is this? Perhaps emanating from, or seeking to emulate the voice of academia, business and marketing have a habit of developing business and marketing terms often shortened to acronyms eg, TQM, CRM, ROMI. However, if asked to define and explain these terms, there seems to be no standard answers. The problem is not just limited to measuring marketing performance, but seems to pervade almost every aspect of marketing. Even the term ‘marketing,’ is now imprecise. The Chartered Institute of Marketing (CIM) produced the official definition of marketing as being, “All those management functions which anticipate and satisfy customer demand profitably.” Yet even the CIM confuses the subject by referring to “marketing products”, when what is clearly meant is the promotion, advertising and selling of a product. From a business point of view, marketing would perhaps be better defined as “the function for getting and retaining profitable business”.

When measuring marketing performance, the clear definition of the terms and measurements used is fundamental to the intelligent understanding of the marketing processes and actions. Without agreement on basic definitions, the interpretation of marketing information leads to misunderstanding and confusion. Furthermore, because marketing is only one function in a business, it is important that the terms used in its analysis and measurement, are also understood by the other business functions, such as in Operations and Finance. As all the functions in a business are interdependent, it is essential that the marketing and business terms used are consistent throughout the organization.

Peter Drucker said, “If you can’t measure it, you can’t manage it”. This is as true for the marketing function as any other area of a business, yet marketing is the last corporate function to develop and adopt processes and standards that can be measured quantitatively. Measuring marketing performance assists in the efficient managing of the marketing assets, by providing quantitative evidence for decision making. Thus whatever metrics, information or measurements are collected, the first consideration should be how such data will clarify understanding of the current marketing situation, and facilitate decision making? Different levels of management will require different information so it is important to decide what data is to be collected, how it is to be presented and what purpose it is to be used.

Even the terms used in measuring marketing performance tend to cause confusion. While the word ‘metrics’ often appears as a generic term when speaking of measurement, ‘Metrics’ refers to the standards for measurement, providing target values that a company must achieve to reach a certain level of success. By contrast, ‘measurements’ refers to the raw outcome of a quantification process, such as a company’s numbers, ratios and percentages. ‘Benchmarks’ on the other hand, are the standards against which all others values are judged. Therefore, in most cases, ‘benchmarks’ are used to establish the value of the metrics to be used for measuring satisfactory performance at any particular time.

To add to misunderstanding, the term ‘Return on Investment’ (ROI), is often confused with the term ‘Return on Marketing Investment’ (ROMI), but these terms should not be interchangeable. Return on Investment (ROI), refers to the net income divided by the capital employed. But in 2005, the American Marketing Association and Aprimo Inc, identified six other interpretations of ROI  currently in use : incremental sales revenue, the ratio of cost to revenue, the cost per sale generated, changes of financial value of sales generated, cost of new customer and cost of old customer retention. However, the ‘return on Marketing Investment,’ (ROMI) is generally used to measure the financial performance of specific marketing activities such as an exhibition or advertisement. Because it is difficult to identify which sales are attributable to which activity, ROMI is generally limited to measuring specific marketing investments, and is not readily applied to the marketing function as a whole.

Before measuring the marketing performance of any business, all the marketing terms, measurements and acronyms that are used should be clearly defined and understood. Clear definitions focus the mind on what is to be measured as well as the value and purpose to which such measurements may be put. If measurements and their meaning are not clearly understood, the resulting management decisions will be questionable.

About the Author

Nicholas Watkins of Contract Marketing Service, (Specialists in Measuring Marketing Performance and Return on Marketing Investment.) For more information please visit:

http://www.contractmarketingservice.com/

http://www.businessperformancemaximized.com/

Understanding Customer Buying Behaviour: The Customer's Voice

This understanding of what customers’ really want requires qualitative research of the buyer behaviour and the purchasing process: the critical stages, issues and the personnel involved during each customer’s ‘journey’ – from having no need or knowledge of your solution, to selecting you as the potential vendor and then ultimately contracting with you.

From this acquired data on buyer behaviour, you can then develop a corresponding sales and marketing process and CRM programme, to meet customer needs consistently and profitably, with minimal waste in your marketing budget.

Business Challenge

Without an understanding of buyer behaviour and the purchasing process, any marketing strategy that is developed for the sector will be based on incomplete and often misleading data.  The challenge is therefore to generate the critical information on buying behaviour direct from customers as the essential foundation for building a more successful sales and marketing programme.

Lord William Hesketh Lever, the founder of Lever Bros once said: “Half my advertising is wasted, the problem is which half”. 

Nearly half a century later, the conundrum remains: how to invest – and justify the investment – in business development without really knowing which sales and marketing activities are the most effective in influencing customers.  In the absence of a real understanding of buyer behaviour, the tendency is for marketing to be reactive and driven by budget availability – rather than by that which will produce the best ROI – as there is no validated basis for the company to evaluate satisfactorily how customers are influenced by a sales and marketing programme.

The nagging questions remain: " We suspect we could get better results from sales and marketing, but how? What should we be doing differently? How would we know that it was the right course of action?"

The core problem is this: the buying process is opaque and knowledge of what customers really want is incomplete.  What is required is an understanding of the dynamics by which purchasing decisions are made in the target market. 

This then raises some important questions about the buying process:

·                Are there any key stages that can usefully be identified and aggregated in the buying process? (So that you can understand how sales enquiries develop and progress in the sector)

·                What are these stages and their duration? (To align sales & marketing activities accordingly)

·                What are the major issues for the customer at each stage of the buying process? (To then address the issues in your service proposition and communications)

·                Who are the decision-makers and influencers, and what are their interests? (So you know who to target and how)

·                How do buyers arrive at decisions? (To understand how you can influence them)

But can’t this information be acquired from the sales team and revenue data?  After all, the ultimate goal is increased sales: so aren’t sales statistics the best measure of what the market wants?  Surely sales people are best qualified to provide an understanding of customer behaviour – as they are in regular, often daily contact with the market?

The answer is probably “no”.  Firstly because historic sales information alone is unsatisfactory, and often misleading for this purpose.

Sales statistics report only on the results of sales and marketing activities which the company actually employs, of course – but competitors might be using other methods to better effect.  So what opportunities are lost because of a lack of awareness of what really works most effectively with a customer in sales and marketing?

Secondly, feedback from the sales team is usually partial and incomplete, as contact is often with a limited range of individuals in the customer organisation, and at only specific stages in the sales process, such as once a sales lead is secured.  But how did the sales lead develop?  What was it that influenced a customer’s ‘behaviour’ and resulted in him/ her recognising that there was a potential requirement. And finally, what convinced him/her to select a particular vendor’s solution? 

The attention of salespeople is mostly driven by the short term necessity of securing a sale – because that’s the primary business task for them – rather than understanding what strategically initiates and directs the buying process, as well as the implications for your sales and marketing strategy.

As an example, the requirement for enterprise software by a customer’s IT project team may derive from a high-level business decision in the organisation, perhaps at board level and initiated by the CFO or COO – and driven by a range of strategic and operational issues and priorities initiated from beyond the IT department.

Clearly, there is a major challenge in addressing this often incomplete understanding of the buying process.  It also raises another question: if you gather and collate this customer data on buyer behaviour successfully, how can it be used by your company?  What changes would you need to make to your sales and marketing organisation to really benefit from this insight into customers and the buying process?

Solution Description

The solution is to find out what customers really want through qualitative research of the market, by telephone interview.  The strategy is to ask a representative sample of customers questions that will elicit their ‘buying strategy’ – to find out the process by which they make a decision to buy. 

This enables you then to meet customers’ identified ‘wants and needs’ for information, service and solution delivery, through a sales and marketing process that matches these customer requirements precisely.

Most buyers will have a systematic ‘buying process’ to purchase offerings like yours – as they move from having no knowledge that they have a problem; through to recognising a need; identifying and assessing a range of solutions and options; and then choosing a vendor.

The process they follow might be unconscious and habitual, or it might comprise specific, formal procedures that the organisation follows.  Usually it is a combination of both and can be identified broadly as follows:-

Unaware ®   Acknowledgement ® Recognition ® Positioning

     Customer         of problem                     of need            of suppliers

® Evaluation ® ‘Beauty Parade’  ®  Selection of  ® Negotiation

     of options                                           Supplier            and purchase

Qualitative research will identify the specific buying process for each type of offering and customer organisation.  The objective then is to determine the key stages and the core issues at each stage, such as:-

·                The decision-makers and influencers

·                The formal and informal procedures for assessing and dealing with vendors

·                The decision criteria for moving on to the next stage in the process

Qualitative research is specified, rather than quantitative because the task is to uncover often unconscious buyer motivation and behaviour.  This requires ‘open-ended’ questioning so that, rather than providing a “yes” or “no” answer, the customer is required to think about and talk through his/ her decision-making rationale and processes.

Quantitative research, alternatively, imposes the researcher’s own ‘agenda’, usually through the provision of ‘yes/no’ response or multiple-choice answers.  This methodology may be beneficial for later second-stage research – perhaps to validate and quantify some key buying parameters – but inappropriate for uncovering the often complex information on buying behaviour in which you’re primarily interested.

Each qualitative research project is undertaken by telephone interview of an agreed sample customer population, based upon a questionnaire that is designed to meet precise information needs, employing specialised questioning techniques to reveal buyer motivation and behaviour.

Equipped with this information, a sequential buying process can be specified and validated.  This can then be mapped to your sales and marketing process: so that at each stage in the process your sales and marketing organisation and activity is aligned to provide exactly what the customer requires in order to buy from you, and as soon as possible.

The stages in the sales process will then range progressively from making the buyer aware that you exist, to generating sales leads, securing sales meetings, beating the competition, selling the specific solution and winning repeat orders.  Profitably.

A generalised model of the sales process, that is engineered to match the buying process, might look like this:-

Position in ®     Identify the  ®     Qualify and      ®   Establish

     the Category          problem              Prioritise                 Credentials

® Define Need ®  Propose & prove ®   Defeat the    ®  Win approval

                                 the Solution              Competition           & the Contract

Sales Process Engineering will provide a more transparent sales process, one which can be optimised by internal agreement, so that sales and marketing teams are aligned within a common, validated process for targeting the market and developing new business.  It will also enable you to identify and develop key metrics at each stage of the process, and then to address any specific problems or resource issues at each stage: further information on this is available on request.

Solution Benefits

The proposed solution is a qualitative research survey project to interview customers and identify and understand buying behaviour.  The key benefits are listed as follows:-

·                A precise method to understand and measure what customers require from companies like yours and what you need to do to sell successfully

·                Opportunity to model the buying process and to align your sales and marketing teams within an agreed, transparent sales process that matches how customers make purchasing decisions

·                Qualitative, open-ended questioning strategy – employing techniques to uncover key issues for the buyer and often hidden or unconscious decision processes

·                A customer-focused research project, with documented targets, methodology, milestones and budget

Implementation: 7-Stage Project Milestones

About the Author

Patrick Rea MCIM is a Chartered Marketer and developer of the ‘Sales Process Engineering’ system.  For further information: http://www.salesprocess.co.uk/

Murky waters: the new world of marketing agencies

Perhaps I do not need to say it but I will: “Marketing managers want the world.”

Ever-greater pressure on marketing budgets, time and the comfort of finding a trusted marketing supplier means that they want an easy solution.

Why go to a specialist supplier when everything is there for you in the marketing supermarket you call your agency?

But this is leading to some worrying trends.

Marketing is often seen by other professionals as a wishy washy discipline. CIM and the promotion of its diploma are squarely aimed at fighting what we all know to be an ill informed perception.  After all, Marks and Spencers has been saved by an ingenious advertising campaign and where would Richard Branson or Alan Sugar be without marketing?

We all still fight a battle with the accountancy department and others to justify our worth.  But the fight is taking a backward step.

The competition for marketing agencies to keep clients means that many are offering services that they cannot perform adequately.  Just the thing we do not want to see for in-house marketing departments or decision makers from other functions.

I do not blame integrated agencies for trying to be all things to all marketing men.  If they cannot offer PR or advertising, then someone else will.  The loss of potentially lucrative work is too much to take.  But I think in-house marketers need to consider their outlook more carefully.

The danger goes much further.  If the clients happen to go to another integrated agency that does offer the discipline they are looking for, then, the whole account might eventually be moved over.  Once a client is exposed to credible alternatives, the job of keeping them is much harder.

It’s a competitive agency world.  It seems quite reasonable that an integrated agency covers all bases.  But for me this is where the problems start.

If an integrated agency can offer all the disciplines, to a very high level, which is so often proudly displayed on so many agency websites, then I say: “Fair play.”  However, I have come across agencies in the recent past that claim not only to be the jack-of-all-trades but the sublime masters of all of them.

I look at their websites and read the blurb on PR, design, branding or some other discipline.  They write confidently about the great service they offer.  There might be some clues about their real skills in the woolly references to the descriptions of the particular field they claim to have expertise in or whom they have worked with on such projects.  It is sometimes possible for an experienced and insightful in-house marketer to find out the real level of skills before they part with hundreds or thousands of pounds, but not always.

I strongly believe that it is imperative to the general well being of all agencies in the marketing family, as well as marketing at large, that integrated agencies only offer services they have real expertise in.

If these trends towards a one stop shop continues it will have detrimental consequences for us all.  Specialist agencies that genuinely offer something unique and different will be under greater pressure and could start to disappear.  It is an option I am sure many in-house marketers would miss. 

But after I have put my specialist agency cards on the table – I am the managing director of a brand and design specialist agency - I can point to the effect it will have on the integrated agencies themselves.  If integrated agencies do not live up to their promise to deliver all marketing services to a high standard as they so often do, it will lead to poorer views of the industry.  Marketing is often scurrilously, and wrongly, regarded as the weakest business function, the “colouring in book practitioners.”  We all have to work harder than other fields to prove our worth.  We do not want to be the last to be hired and the first to be fired when hard times come by.  We need to be improving standards and service, not watering them down, whatever the pressures.

One of the key tenants of marketing and indeed business is to stick to what you are good at.  I think this applies as strongly to agencies as to everything else.

In-house marketers need to seriously consider how they buy in marketing services.  Yes, budgets are stretched.  Yes, time is at a premium.  And yes, it is easier to give new work, even if it is not their area of expertise, to people you know.  But the next time you shop for marketing services shop around for your own interests and those of the profession you represent.

About the author

Nick Birch is the managing director of branding and design specialists The Agency. For more information please visit www.theagencyuk.net

Music on your Mobile?

Given the success of built-in radios, it is ironic that people base their mobile music forecasts on the success of ringtones. Although many ringtones are based on music, and have generated huge licensing revenues for record companies, they are considered part of the “phone personalisation” phenomenon rather than the “digital music” one.

A large part of the success of mobile phones is down to personalisation. Since people have been able to programme numbers into their phones they’ve been more likely to makes calls from their mobiles than a land line.

From personal address books, the trend quickly grew, with many small businesses creating “operator logos”, “faceplates” and “ringtones” based on well known celebrities, sports and music. Most started out below the radar of the big record companies and many illegally sold music. With polyphonic ringtones popularity boomed and the record companies got involved. Nowadays, MP3 ringtones or “truetones” include clips from actual recordings and record companies can take a leading role in this business.

However, the market for the music on mobile phones is very different to ringtones. People buy ringtones to say something about themselves. They want other people to form an impression of them on that basis. They are primarily a fashion accessory and customers will pay significantly more for ringtones than conventional music.

The ringtone market is also much less competitive than the conventional music business: you can buy CDs online and in the high street; you can only buy ringtones from your mobile operator or from the few ringtone businesses that advertise in magazines.  When selling full track music on the mobile phone, let’s look at the competitive nature of the market: iTunes sell single tracks for 79p, CDs frequently sell for less than £10, and Russian download sites offer albums for £2, charged directly to your mobile phone bill.

These prices include a license for music to listen at home on your stereo, your PC, in the car, or a portable device (including many mobile phones). It is cheap and flexible. Music bought on your mobile phone tends to be more expensive and less flexible: you can’t burn to a CD or listen to it in the car and often you can’t copy to your PC. The only advantage of buying music directly on your mobile is that you don’t have to download it from a PC. However, the additional costs and inconvenience raise further obstacles: Firstly, even with a 3G network, downloading music to your phone takes longer than over broadband. Secondly, you pay your network operator additional data charges for the download. Thirdly, if paying  on your phone bill, the Mobile Operator’s commission will be 5-10 times higher than processing the transaction through VISA or Mastercard.

These factors may be alleviated over time, but in the short term the cost and inconvenience of buying music on a mobile will limit the market to gadget freaks, more likely to buy music on their PC and download it to their mobile phone, than pay a premium for something they can get elsewhere.

Most people will continue to listen to music on their PCs, Hi-Fis, car stereos etc, with many upgrading from Walkman to iPod, but  basic listening habits are not going to change. The mobile phone is not going the kill the iPod. And the people who are listening to music today on their mobiles will carry on using their built-in FM radios.

About the author

Tom Weiss is a  recognised  authority on mobile business strategies  - specialising in mobile

Technologies. Tom is the author of the acclaimed book  Mobile Strategies  

tom@weiss.me.uk