Marketing Basics Still Apply on Social Media

Marketing Basics - Social Media

Many seasoned marketers are all too eager to leave the social media marketing to younger professionals. The ever-evolving social media space can feel daunting to traditional marketers accustomed to broadcast and print marketing. But while the technology is different, the basic building blocks of marketing still hold true.

When creating a marketing campaign delivered through any media, you must…

  1. Identify your target market. In traditional marketing, we get to know the target market through quantitative or qualitative market research. With social media marketing, we can get to know the target by “listening” on the social media platform. What are customers saying about the product? About what they want? About how they use the product? Same questions, new media.
  2. Create relevant messaging. In traditional marketing, the development of the message can be a very long, intensive process. With social media marketing, the creative development cycle is usually much faster. Some of the most effective social media campaigns will build on current trending topics or hashtags.
  3. Measure your campaign results. With traditional marketing, effectiveness can be measured by reach and frequency. With social media marketing, engagement is king because the platforms are inherently interactive.

Let’s take a few examples of how these marketing fundamentals apply in a social media context.

Oreo seizes social moment at 2013 Super Bowl

Oreo’s 2013 Super Bowl social media campaign spoke to a large audience at the right time. When the lights went out at the Superdome during the 2013 Super Bowl game, Oreo saw an opportunity and tweeted, “You can still dunk in the dark.”

By contributing to an ongoing trending topic, Oreo received nearly 16,000 retweets. The now-famous blackout tweet demonstrates how relevant messaging can reach a targeted audience and ignite viral engagement.

Yeti Coolers engages Facebook fans

Social media can also improve the playing field for lesser known brands. Igloo and Coleman are strong brand names in the cooler market, but the (once) lesser known Yeti now has cooler sales revenue that rivals its competitors. Yeti makes rugged coolers for those who have a passion for outdoor activities. The company’s social media strategy speaks to this audience in their language. On its Facebook page, Yeti regularly shares imagery of its product featured in the fun and adventure of the great outdoors.

The company’s more than 207,000 Facebook fans routinely engage with these posts. In fact, it’s quite common for the company to get 500 likes per Facebook post. That works out to an engagement rate of 0.24%. Compare that to Disney, one of the most recognized brands in the world, which gets about 35,000 likes per Facebook post. Disney has 48.4 million Facebook fans, an engagement rate of 0.07%. Yeti may have a smaller presence, but it is more effectively engaging its audience.

You’ve heard this marketing refrain before: Deliver the right message for the right audience at the right time. It is as relevant today as it has always been.

Social media hasn’t reinvented marketing: If anything, it underscores that the basics of marketing are as valuable as ever.

6 Tips to Launching a Successful Cause Marketing Program

cause marketing

Cause marketing is a term used to describe a company’s efforts to partner with a solution to a societal problem.  Nowadays there are a number of “social enterprises” that exist to sell something AND bring awareness to or solve a social problem.  But, even if your business is not a social enterprise, you may benefit from creating a cause marketing program that customers an rally behind.  Consider these tips before launch your program.

  1. Align program with your corporate marketing strategy.  You can drive awareness of and preference for your brand through cause marketing.  An effective program must aligned with your overall marketing strategy.  If consumers cannot make the connection between your support and the charitable cause, it’s less likely that your program will have a positive effect on your brand.
  2. Develop criteria for potential nonprofit partners.  It’s best to develop a list of criteria for your nonprofit charitable partner.  There are a number of charity evaluators (like Charity Navigator) that offer criteria for consideration.  You should also consider criteria that are specific to your needs.  For instance, if you are trying to grow in a specific region, you may want to identify a nonprofit who serves in that region.
  3. Interview other donors of your potential partner.  It’s always a good idea to talk to references.  Charitable partners who have good relationships with other donors will want you to talk with those donors.  Once you find a partner, ask for reporting that helps you evaluate your program. Other donors or partners have likely asked for something similar.  Find out if they delivered as expected.
  4. Define success.  As with any marketing program, you should have specific goals that delineate what a successful campaign will look like.  Are you looking to increase the number of clients served by the nonprofit organization?  Are you expecting to improve your own brand image?  Defining goals will help you measure progress after the program is implemented.
  5. Identify an executive champion.  Your internal champion should be from your leadership team and well-versed in your cause marketing strategy.  This leader should ensure that the program is integrated with your other marketing efforts.  They can also serve as your spokesperson regarding the cause and your commitment to it.
  6. Measure results.  And, refine as needed.

The Cost of Losing an Loyal Customer

loyal customer

Recently, I broke up with my cable company.  It was actually a very painful thing for me to do.  You see, I don’t like change; I’m a loyal customer.  I’ve thought about this breakup for years.  I moved into my current home seven years ago and I’ve had the same cable provider since the move.  Every year, my cable bill would creep higher and higher each year.  Each time it happened, I would contemplate a change.  My cable company provided both my television service and my internet service.  I still had a landline for home phone service.  There were so many reasons not to leave.  With another provider, I wasn’t sure if I would have to pay more for cable channels I’m used to getting.  I didn’t know if the service would be as stable as my cable service.  Would my internet service be fast enough?

To make a long story short, I left because of a terrible customer experience.  It was solely based on one bad interaction with one customer service rep.  Within a week of the cancelling my service, my cable company’s telemarketers were reaching out to me with new offers.  It was rather ridiculous because the new offers cost the cable company much more than keeping me in the first place.

As a result, I’ve been contemplating the cost of losing a loyal customer.  It usually results in higher expenses, lower revenue and damage to brand value.

Marketing expenses increase as customers leave

Generally, the marginal cost of keeping an existing customer is lower than the cost of acquiring a new customer.  It’s also lower than the cost of re-soliciting a former customer.  As a result, churn and marketing costs are positively correlated.  As existing customers leave, companies must put more marketing dollars into new customer acquisition to keep revenue flat and even more to grow.

Average revenue declines when customers exit

In nearly every business model, the average revenue from an existing customer is higher than the average revenue from a new customer.  Said differently, once a customer has made one purchase, that customer has given permission for a conversation for a second purchase…and a third and a fourth…  In subscription-based models, the longer a customer stays, the more likely that customer will stay longer.  This loyal customer requires an adequate investment in customer service.

Brand value is damaged when customers leave

Former customers cost companies an unknown, but likely large, amount of brand damage.  Most people are more willing to share a negative brand experience than a positive brand experience (which explains why we often find mighty fine restaurants with mediocre online ratings).  Again, this is why the customer experience—even for loyal customers—is so critical.

This is not to say that all customers are valuable.  It’s important to understand the value of each customer segment.  Ah, but that’s another discussion for another day.

As for me, I still don’t like change.  And, the breakup with my cable provider was hard.  Maybe I’ll go back one day…but it’ll cost them!

Can Radio Shack Shrink Its Way to Profit?

Radio Shack - groovy

Radio Shack’s sales dropped 10% between 2013 and 2012, a steeper drop than the 5% decline seen with 2012 calendar year results.  And, operating results were the worse the company has seen in the last five years.  What’s a CEO to do?  On his investor call today, Radio Shack CEO Joe Magnacca announced that the company would close about 25% of its company-owned stores.  How will Radio Shack profitably increase same store sales in 2014?

Can the company shrink its way to profitable growth?

Much of Magnacca’s turnaround strategy focuses on being relevant.  The strategy is on point but can the executive team execute?  As pointed out in its Super Bowl ads, Radio Shack lost its way many years ago.  Consumers and their tastes evolved while Radio Shack stayed the same.  With its new branding campaign (one of Magnacca’s 5-point strategic turnaround initiatives), the company is searching for messaging that is relevant to its target customer.  Another of Magnacca’s strategic initiatives is revamping product assortment.  This effort to reach customers with relevant products is a fine strategy once customers start visiting stores again.  The product initiative can only drive profitable growth if the rebranding strategy is successful at helping store traffic rebound.  And, there is a risk with this new merchandising strategy:  The company intends to promote high margin private label brands.  Clearly, these products must be relevant to new and returning customers.

The strategies appear sound but can the company execute?  Magnacca joined Radio Shack in February 2013.  Calendar year results for 2013 were pitiful.  Critical 4th quarter results missed the mark.  Same store sales experienced an even larger drop in 2013 than 2012.  The strategy isn’t a concern but the track record of operational excellence has yet to materialize.  Magnacca has hired a few new execs to drive change.  We shall soon see if he has the right team to restore life to this once iconic brand.

2014 Super Bowl Ads: the Winners and the Losers

2014 Super Bowl

Ahhhh…the allure of over 100 million viewers.  It would make any deep-pocket, consumer-facing company want to throw their brand in the mix.  At $4 million for a 30-second spot, I expected more from the advertisers.  My quick takes on the 2014 Super Bowl commercials:

What did they do for their brand?

Budweiser is still King.  Puppies, Clydesdales, iconic brand that still has its polish.

Cheerios kept its brand fresh with a memorable commercial, which included an interracial couple—still a rarity in ads despite the blending American population.

Bank of America and U2 kept their respective brands positive with a (RED) donation tie-in.  Free download for a good cause.  Smart.

Radio Shack reminded us that they’re still around, which is good because most of us have forgotten.

The Heinz commercial was memorable.  The Carmax commercial was forgettable.

H&M told us about their David Beckham line.  How can we forget Beckham—with or without his tidy whities.

Auto manufacturers spent the most but were a mixed bag.

Super Bowl ad time is about building brand.  Brand recall is essential and I don’t think most Americans remember which manufacturer had Muppets and which had the Matrix.  Volkswagen did a great job of reminding us that German engineering is keeping their brand at the head of the lifetime-value pack.  Chevrolet entertained with the romancing cows…and subtly reminded us that their trucks have great towing capacity.  Ford’s creative was underwhelming.  I guess Jaguar has more mass appeal now, given the volume cars like the X type and Maserati is pushing down to a more affordable ride with the Ghibli.  The latter two brands are not quite for the average household but they aim to push their brand into more households.

I dare you to recall which brand advertised the Doberman+Chihuahua ad.  (Don’t Google it until you have a guess.)  Funny commercial but for the multi-million dollar price tag, I want you to remember my ad.

New brands need to tie content to their brand.

Squarespace is relatively unknown—before and after the Super Bowl.  Their content should have told us more about what they stand for.  Chobani yogurt did a better job, with the bear looking for “natural ingredients.”  Dannon Oikos introduced humor and was a bit risqué with its ad.  The company got our attention with John Stamos but I think most Americans would be hard-pressed to recall which brand aired this commercial.  SodaStream got a big Hollywood start (Scarlett Johanssen) but their commercial fell flat (pun intended).  Beats is not a new brand but new-ish and they won.  Ellen Degeneres dancing to music.  Stellar!  Stephen Colbert sold some pistachios but for who?

Find Your Target Audience, Map Your Social Strategy

Social media life

No doubt about it.  I’m feeling my age.  I’m now on Facebook, Twitter, Google+, Pinterest, Instagram, Snapchat and, of course, LinkedIn.  Social media is where it’s at…right?  Well, I guess it depends on what “it” is.

Facebook is THE place to catch up on the fabulous lives of all of your friends and acquaintances.  If you don’t have a fabulous life, you don’t post on Facebook.  Or, is it, if you are living your fabulous life, you don’t have time to post on Facebook?  Either way, chances are, someone has invited you in and you’ve at least signed up.  And so…clearly, if you own a consumer-facing business, you need to have a presence on Facebook and you need to get as many likes as you can because Facebook likes beget Facebook likes.  That is, you grow exponentially as you gather your new friend’s friends likes and friends of your new friend’s friends and so on.

Now, Google+ is a powerful social tool.  Great product but because Google showed up later to the social table than Facebook, they have fewer active users.  But, if you have any Google+ products (gmail, an Android, etc.), you WILL be invited to Google+.  Ultimately, the power of Google+ lies in the pace of adoption and user interaction.  Stay tuned…

If you are in to online scrapbooking, Pinterest is for you.  There are lots of users (and the majority are women) sharing lots of images.  Sometimes we’re discussing the fabric of our lives, sometimes it’s what we wish was the fabric of our lives.  It’s really a great forum for sharing with the girls.  “Look, what I found!”  If you’re a business, you really need to have something worth being found (visually) and shared.  Ben Silvermann (CEO of Pinterest) says that the company is piloting advertising on the site.  As an advertiser, expect to create new shareable content to optimize the bang for your buck.

One word about Snapchat.  It makes me feel… well, 40-something.  There are far fewer 40-somethings using Snapchat, which means I have fewer contacts to interact with.  Heck, I felt clumsy just getting the app to work.  Not to mention I was fretting over privacy concerns when the app asked for my mobile phone number.  Somehow I feel better when apps just ask for permission to access all the contacts in my phone.

Well, more to come on the other social media in a future blog.  I’m off to update my social media accounts.

JCPenney Needs a New Loyalty Program

loyalty program

JCPenney hired an Apple store executive as CEO with hopes of reviving the brand.  The new CEO has a vision for JCPenney but not a good enough view of the company’s customer base.  The company now needs a loyalty program to keep its current customers from deflecting.

Sales were in decline before Mr. Johnson’s arrival

You can’t really begin the JCPenney story with Ron Johnson, CEO since late 2011.  JCPenney’s sales were in decline before Mr. Johnson joined the company.  Unfortunately, they’ve taken a nosedive since he joined.  If we examine what happened, it’s rather easy to see that Mr. Johnson moved full speed ahead with a new strategy without understanding all of the issues and without really understanding the JCPenney shopper.

I’m sure Mr. Johnson understood that you can’t get Apple margins from a retailer like JCPenney.  And, I’m sure he understood that competition is more fierce in the apparel retail space than the technology retail space.  This isn’t a buy-the-iPod-because-there’s-no-equivalent-available game.

Keep your current customers happy

First thing, when you have $18 billion in sales, you want to keep your current customer happy.  A loyalty program will do that.  Changes likely will not. Seems that the first thing that happened was that the new regime said to the customer, you need a different in-store buying experience, you need to be weaned from discounting and you need to see JCPenney differently (change the advertising!).  Too much, too soon.  I personally like the new in-store boutiques at JCPenney.  They are fresh and modern and, I believe, still relevant to middle America.  BUT, taken with the other changes, customers thought they were footing the bill for the new showcases.  Not something they were willing to do.

Don’t ruin the sport

Shopping is a sport, of sorts.  Finding a bargain is the goal!  JCPenney took away all the goals.  No fair…and no fun!  But all is not lost for the company.  They can still bring back former shoppers; they are going to have to reward them for their loyalty.  Perhaps take a cue from the Starbucks loyalty card.  Discounts with frequent shopping, but, in the end, a greater share of wallet. If the company can develop a winning loyalty program, they may not go the way of Kmart.

Is Apple’s gadget dominance ending?

Apple - Dominant player

It seems that there have been so many ups and downs at Apple since the departure of Steve Jobs.  The latest of which hit hard today—a 12% drop in the stock price to a 4-month low.  Some proclaim that Apple has lost its edge since Jobs departure.  I, however, appreciate Tim Cook’s management style—at least as an outsider looking in.  And, I think it will be quite some time before Apple loses it’s dominates in the MP3 player, tablet or smartphone market.

Nearly 70% market share in the declining MP3 player market

Now, most would agree that the MP3 player is now a rather mature market.  At this point, the late majority have made at least their first MP3 player purchase.  With nearly 70% market share, Apple dominates this market and will continue to do so (albeit, a shrinking market).

More than 50% market share in the tablet market

By comparison, early adopters are taking the tablet market by storm.  And, many are going for the cheaper, smaller version of the tablet.  This explains why Apple allowed the iPad mini to cannibalize iPad sales.  iPad unit sales were up 48% in Q1 2013 but revenue was only up 22%.  A good guesstimate is that iPads are outselling iPad mini’s by 2:1.  (You can play with the math a bit to see if you come up with something similar.  I assumed the average iPad sale was $450, average iPad mini at $329.)  But even with this cannibalization, Apple continues to dominate the tablet market with over 50% market share.

More than 50% market share in the smartphone market

What about the smartphone market?  iPhones make up 56% of Apple’s revenue and they maintain more than 50% of the smartphone market.  Android devices (and, specifically, Samsung devices) are making a dent.  However, according to the IDC’s forecast of smartphones through 2016, Apple is expected to grow at 18.8%, while the overall smartphone market grows at 18.3%.  This suggests that Apple will maintain its dominance in this category.

Challenges ahead in the sale of songs and videos

Where Apple is probably most threatened is with iTunes.  Amazon recently opened an MP3 store for iPhones and iPods.  Amazon is a data beast.  They will continue to learn quickly from the transactions of the iOS users and there are many, many more songs on Amazon at 99 cents v. 1.29 on iTunes.  Amazon means to squeeze margins and this will put significant pressure on iTunes margins and/or sales.

That said, iTunes is 7% of Apple’s Q4 2013 revenue.  iPhones, iPads and iPods make up 80%.  Apple isn’t likely to lose their lead as #1 in any of these categories in the near future.

Online Wars: Best Buy v. Amazon

Best Buy - electronics in the home office

Hubert Joly, the new CEO at Best Buy, recently said that the retailer’s new strategy is to focus on online buying and loyalty incentives.  In other words, the company intends to take on Amazon and other online retailers head-on.

Let’’s see, with my Amazon Prime membership I get free shipping (on a boatload of items), instant streaming of TV shows and movies, and library book “rentals” on my Kindle.  The latter two benefits were added recently with no increase in the annual membership fee of $79.  Oh, and with my Chase/Amazon credit card, I earn 3% on my Amazon purchases.  The seamless integration of purchases (books and media) to my tablet is, …well, seamless.  No matter if I purchase items on my phone or my laptop, I turn on my Kindle and there they are:  my latest digital purchases.

Both companies are about $50 billion in annual revenue, but less than 5% of Best Buy’s revenue comes from online sales.  So, yes, they have room to grow the online sector.  They also have much ground to cover to compete with Amazon online.

The company must zig where Amazon (and other online retailers) zag.  Five things the management should consider:

  • Consumers still like to make big ticket electronic and appliance purchases in-person.
  • Price matching will further deteriorate margins.
  • Differentiation makes head-to-head “showrooming”” more difficult.
  • Employees who are trained can compare merchandise to competitor’s online merchandise and “defend” differentiated products.
  • Selling the heck out of warranty and on-site replacement services adds value

Maybe the new strategy ought not be to focus on loyalty.  Not because it’s not important but because it’s a given.  Best Buy has a head start on Amazon on physical locations.  Taking advantage of that and focusing on services (repairs and such) might be a better way to zig when Amazon zags.

Google’s Growth Disappoints

Google's growth

I saw a headline recently that said that Google’s earnings disappointed shareholders.  Now, I get that the company gives some guidance that creates some expectation but here’s the problem:  this $38 billion company only grew 25% in Q4 2011.  Let me say that again,this $38 billion company ONLY grew 25%.  This compares to 33% growth in Q3.  I get that in a relatively short period of time that is a substantial drop, but I also get that our expectations are really getting out-of-line with reality.

In a different heading, I recently saw that the S&P 500 is down 13% since 2006.  We know that the markets have struggled mightily in the last decade yet we continue to have visions of the glory days of old.  We put our hopes (and money) in the high-tech growth companies.  Certainly, it makes sense that those with nascent and expanding technologies will drive market growth.  But, we have to expect that the law of diminishing returns will kick in for, yes, even the high-tech companies.

Now is a good time for a good dose of reality.  We expect the engineering wizards at Google to continue to produce search algorithms that will keep advertisers and consumers coming back for more.  But, with 2 in every 3 web searches worldwide going to Google, we have to ask, how much more can they get?  In fact, how much more do they want?  I suspect not much given the investment in Chrome, Android, YouTube, Gmail and Google+.  But these are much smaller businesses than Search and Google’s best monetization to-date of most of these has been, well, …with search.  So, we’ll have to get used to diminishing returns on the growth of search (and Google) unless or until one of the new investment areas really catches fire.