Try a soft-sell approach to your commitment-shy past customers

What is the value of a web visit that ends without an action? Sure, if that visit ends in a sale, or some other action, the answer is easy. But what about the person who “snacks” on your content but leaves without a conversion? Today data mining expert Kevin Hillstrom makes a case for testing a less strident reaction to an abandoned shopping cart visit. At the very least, he advises testing against a control group when you send discount offer emails to these not-ready-to-purchase past customers.

In the post he suggests the following:

Click for a larger versionConstruct a value model in your transactional records using the following “dummy variables”:

  • Shopping Cart Abandoned 1 Month Ago
  • Shopping Cart Abandoned 2 Months Ago
  • Shopping Cart Abandoned 3 Months Ago
  • Website Visit, No Shopping Cart, No Purchase, 1 Month Ago
  • Website Visit, No Shopping Cart, No Purchase, 2 Months Ago
  • Website Visit, No Shopping Cart, No Purchase, 3 Months Ago

When you do this, Hillstrom contends that what many find is this:

Unconverted website visits and abandoned shopping carts are not the end of the world! In fact, these activities tend to increase future customer value, as illustrated in the graph above (months four and twelve in the graph).

Hillstrom likens future value, as measured by non-sale visits, as “sort of like a heartbeat … each additional purchase (months six and eighteen in the graph) results in a shot of adrenaline, causing the heart to beat.

“Each unconverted website visit or abandoned shopping cart results in a mini-jolt, as evidenced in many statistical models.” Indeed, he writes, “We view the activity as part of a relationship.”

The take-away from those trying to derive value from any type of site is obvious: Build into your value model a way to watch unique visitors over time, and match “non-committal” behaviors that accompany purchases (or subscriptions, or whatever your call-to-action is) to a dollar amount.

And also: When you see folks abandon a conversion funnel, stay calm!

Another tip is consider measuring two specific signs of interest using my Content Interest Index. You can see a seven-minute YouTube video describing what it is, and its value, by visiting this post about the Index.

Note: The link above was to a blog post called Jeff’s First Pecha Kucha. This is a way of presenting slide show content in a prescribed format that is brief and often quite fun. If you are in the Milwaukee area, don’t miss this evening’s Pecha Kucha Milwaukee at the Sugar Maple. It should be a lot of fun!

Winning by the numbers: In praise of Moneyball and data analytics

moneyball-book-coverFive years ago the book Moneyball was going around the office of respond360, which is the CRM arm of BVK. The book fueled my love affair with data-driven marketing. In reviewing the book this morning, I realize how relevant its lessons have become in our economic downturn.

Wikipedia describes the account of the Oakland A’s unprecedented success on a shoestring budget this way:

Statistics such as stolen bases, runs batted in, and batting average, typically used to gauge players, are relics of a 19th-century view of the game and the statistics that were available at the time.

The book argues that the Oakland A’s front office took advantage of more empirical gauges of player performance to field a team that could compete successfully against richer competitors in Major League Baseball.

Rigorous statistical analysis had demonstrated that on base percentage and slugging percentage are better indicators of offensive success, and the A’s became convinced that these qualities were cheaper to obtain on the open market than more historically valued qualities such as speed and contact. These observations often flew in the face of conventional baseball wisdom and the beliefs of many baseball scouts and executives.

By re-evaluating the strategies that produce wins on the field, the 2002 Athletics, with approximately $41 million in salary, are competitive with larger market teams … who spend over $100 million in payroll. Because of the team’s smaller revenues, Oakland is forced to find players undervalued by the market, and their system for finding value in undervalued players has proven itself thus far.

I found the book inspiring then, and I find it even more exciting today. In spite of my general lack of enthusiasm for the sport of baseball, I found it the best business book of 2003.

Reading Digital Tea Leaves

The author argues that most teams still rely on the black art of talent scouting. Wizened, tobacco-spewing scouts  watch a young athletes play and proclaim him either unfit or “slugger material.” Does this sound like the seat-of-the-pants metrics that marketing has traditionally used to evaluate markets, products and campaigns?

Back when I read it, I was thrilled to imagine new ways to read a different sort of tea leaves — namely, the ones found in market and customer databases. What I’ve learned since is that once you start looking at data in a new way, you can find breakthrough insights.

You really can.

Although I don’t think he’s a marketer, here’s what “Ryan,” in his GoodReads review of the book, wrote:

Awesome – story of how the Oakland A’s built a great baseball team on one of the league’s smallest budgets by using innovative statistical analysis to identify undervalued players. I think that’s pretty neat.

I couldn’t have put it better. Pretty neat indeed.

If your site does any of these things, make a mobile version

Web usability expert Jakob Nielsen is admittedly “bullish” on the mobile web. But his recent post bemoans how lacking most web sites are when viewed on mobile devices. For most sites, his prescription isn’t a web design overhaul. Instead, he recommends creating a separate version specifically for the lowest common denominator mobile browser.

To be more precise, he recommends that only if your site is frequented by cell phones and smart phones should you make this investment. “Not all sites need mobile versions,” says Nielsen. “According to a diary study we conducted with users in 6 countries, people use their phones for a fairly narrow range of activities.

“So, because many mainstream websites won’t see a lot of mobile users, they should just adapt their basic design to avoid the worst pitfalls for those few mobile users they’ll get.”

Narrow Range of Activities

So, you may wonder: What is this “narrow range” of activities? The following list is a good summary. These happen to be the “behaviors users engage in when using mobile devices,” as described in the upcoming Usability Week 2009 Conference(s), presented by the Nielsen Norman Group and presented by Raluca Budiu in full-day tutorials.

The course description lists these activities. If your site has users doing any of these 11 activities, seriously consider designing or upgrading a mobile version for your site:

  1. Navigation to websites on mobile devices
    • Search
    • Portals
    • Bookmarks
    • Direct access
  2. Browsing for news, entertainment, sports
  3. Finding specific information (weather, movie times, etc.)
  4. Transactions (such as online banking and other financial operations)
  5. Using maps and location information
  6. Integrating e-mail and contact information with browsing and fact-finding
  7. Content management (ringtones, photos, etc.)
  8. Monitoring and communication
    • E-mail
    • Instant messaging
    • Online communities
    • Social networks
    • Discussion groups
    • And more
  9. Shopping
    • Finding information about a product
    • Comparing online and in-store costs
    • Purchasing
    • M-commerce
  10. Killing time
    • Video, music, and games
    • Accessing, choosing, and downloading content
  11. Accessing nutrition and health information

Far from a narrow range, that seems like a lot of functionality! In Nielen’s Utopia, we’d all be doing most of our work and online recreation from our phones. It seems more like science fiction than a glimpse of things to come.

So why exactly is Nielen so bullish on mobile? Here’s an excerpt of his reasoning in today’s post:

Mobile is the trend of the year in application design. While trends can be wrong, lots of interesting things are happening.

We’re turning a corner in mobile Web usability. Just as Apple’s Macintosh heralded a breakthrough in personal computer usability 25 years ago, its iPhone is pioneering a similar breakthrough in mobile usability today.

The iPhone is certainly not perfect, and competitors could easily make better mobile devices. By “easily” I don’t mean over a weekend. I simply mean that it’s possible to do it given a strong focus on user experience and user-centered design [UCD]; iPhone leaves a lot of ground for improvement. So far, however, iPhone competitors have been disappointing because they haven’t been created with UCD.

He goes on to write that, whereas mobile browsers may improve over time, it is the user experience designed into mobile web sites that will lead the way in the short-term. He explains, “There is immense potential for advances in mobile usability as more website, intranet, and enterprise software designers build mobile versions and revamp their current designs for usability.

“The mainstream Web’s state in 1998 actually provides a hopeful precedent: just a year later, in 1999, interest in Web usability began to explode as Internet managers realized how chasing ‘cool’ rather than usable design yielded poor business results.”

Nielsen concludes by stating that he hope history repeats itself. As we marketing technologists struggle to deliver more value with every customer contact (in today’s economy more than ever!), I see this being likely to happen.

Focus on customers to survive in this economic downturn

Gartner Research recently posted six strategic customer-focused areas for survival in this economic downturn. In a nutshell they focus on automating your way through these hard times. Each of the six acknowledge there will be many growth opportunities arising from the dramatic changes taking place right now.

The challenge their report emphasizes: To find customer- and sales-focuses areas to cut costs and reinvest wisely.

Of the six, three are revenue-generating. Here they are, with a brief explanation of why they were included and what sort of immediate ROI might be expected:

1. Customer Retention Management

Gartner contends that holding onto customers who have a high value — or the promise of high value — is “Essential in difficult economic times.” The firm recommends calculating customer profitability / value and creating retention programs customized to each segment’s needs.

Common sense, right? But the vast majority of businesses are still light years away from calculating customer value — let alone devising ways to retain them!

It was Peppers and Rodgers, of The One-To-One Future fame, who most famously wrote about a business’s #1 asset as being its customers. That book was written in the early 1990s, yet the  systematic protection and “mining” of valued customers is still rare — so rare, in fact, that it still inspires whole books about those who dare to do it  well. (I’m thinking here of the book describing the astounding success of Harrah’s).

Gartner projects that in 2009, “Companies that develop effective retention management processes will reduce churn of profitable customers by at least 10 percent within six months.”

That’s a substantial bump. If your best customers follow the 80 / 20 Rule (that 20% of customers account for 80% of your profits), then this 10% reduction in churn of those best customers will mean — assuming every other rate is unchanged — an 8% increase in gross profits. That’s not chump change.

One proviso: By gross profits, I mean the money you get to keep after you’ve set up your retention methodology. These efforts aren’t free. But if you approach the process prudently, you’ll be gleaning far more profits from your existing customers, and feeling less strain to replace “churned” customers via ever-more-expensive acquisition tactics.

2. Lead Management

Speaking of customer acquisition, Gartner next recommends that marketing departments become more involved in the lead management process. By doing so, “Companies can improve lead quality and ensure higher conversion rates.” How do they define this expanded role? Here are two examples:

  1. Leveraging marketing insights — They advise using marketing data that the sales function may not be privy to augment leads before their sent through the sales pipeline
  2. Leveraging content — Helping the sales force use product information that’s already available to identify prospect needs early, and improve the impact of each sales contact

Companies that automate lead management processes this year will increase revenue by another 10% — all, “Within six to nine months, despite the uncertain economy,” reports Gartner.

3. Online Marketing

Interactive marketing isn’t a panacea. But it is a more cost-effective — and measurable — way to reach customers than traditional techniques. Here, Gartner claims that companies who, “Identify and prioritize three to four online marketing initiatives and measure marketing ROI,” will drive another 10% increase in revenue within six months.

I would be more skeptical of this projection if I haven’t seen it at work personally. Online business-building efforts have a surprisingly fast break-even when they’re done carefully. I see this payback being even greater today than a year ago, in a more hyper-competitive marketplace.

By that I mean we’ll soon be seeing an environment where only the fittest survive. The battle for limited business will shake things out quickly. That means very shortly, those who aggressively reach out for new business will find fewer hands fighting to grab it.

But that comes at some risk. More customer-focused investments need to be made starting today.

Life and Death in the Tar Pit

It’s appropriate that on this, the 200th birthday of Charles Darwin, we take a moment to ask ourselves how we are going to ensure that our businesses are not one of the losers in this heated battle for survival. Gartner’s report highlights constructive areas for the investment of scarce marketing dollars to ensure we come out winners in our category.

5 blogging tips for small business

Many moons ago the authors of the book Citizen Marketers posted a list of reasons why small businesses of all stripes — either b-to-c or b-to-b — should consider blogging.


Equally valuable in their post were these tips for the business blogger once the thing is up and running. Here they are:

  1. Do not have someone else write your blog. Write it yourself.
  2. Blogs should not be managed by the PR department or ad agency. Blogs are best when they’re authentic, which may include run-on sentences, detailed analysis or critical opinions. Typically, those qualities run counter to the sensibilities of traditional public relations.
  3. Do not have a thin skin. Comments to your posts may bite or sting, especially while other people watch. But a strong benefit of blogs: unwarranted criticism often causes other customers often to spring to your defense. Trust-based relationships emanate from taking the bad with the good.
  4. Do not let your blog go unattended for weeks at a time. Focus on several posts per week, even if they’re just a few paragraphs.
  5. Do not make your blog a branding exercise of self-centeredness. If you endlessly promote yourself and your services, no one will care.

Much of what followed in their post is dated. But re-reading it just now, I see these five tips as withstanding the test of time. Violate them at your own risk.