Marketing Insights and Analysis
Good customer service operates on the premise that all customers deserve a base level of respect. Customer Relationship Management tools are useful in identifying which customers to treat with additional courtesies, but many organizations have an attitude of using these tools to lessen the base quality of service to other customers.
The unfortunate impact of this can be a lifetime of negative sentiment. Ford had the most highly rated vehicles for initial quality in 2009, but think about people that refuse to drive American vehicles because of their quality in the 1908’s. Attitudes persist, and an incorrect strategic approach to leveraging CRM tools can have decades long affects.
My personal experience with this began in graduate school. Like nearly everyone else, I had to carefully budget my funds in school. I lived in a clean, inexpensive apartment in a marginal neighborhood. Drove a reliable small car that had good mileage. I had AT&T Wireless service because they offered a reasonable number of minutes for the price. I had previously tried service with Sprint, Verizon and even worked for a brief spell with T-Mobile.
I lived in Omaha at the time. The Omaha MSA population is around 1 million, which is not an insignificant population. Omaha is a driving town, and while you can zoom around on the expressways there is still one intersection that has by far more traffic than any other. I believe over 100k cars pass through the point on any given day.
It was also a dead spot for AT&T. Calls consistently dropped there. The busiest intersection in town, and the response from AT&T was “we cannot guarantee service at all locations.”
To be fair, it wasn’t the only dead spot for AT&T. I’d lose calls throughout town and my apartment. I learned where to end calls before they were ended for me. I had one corner of the apartment that got service, so I’d leave the phone there and use bluetooth throughout the apartment to talk.
I had agreed to a contract with AT&T and so I continued my service with them. I continued to pay my monthly service bill, even though the service was non-functional. My service contract was due to be up on October 3, so in late September I signed a new service contract with Verizon. I ported my number over to the new account. I did not cancel my old account with AT&T. I had 10 days left on the account and I intended to complete my contract. Imagine my surprise when I received a bill for the last amount, plus a $200 early termination fee.
So I called AT&T.
Me: Yes, I’m calling about a bill. I think there is a mistake. I see an early termination fee on my bill.
AT&T: Yes sir, that’s because you closed your account prior to your 2 year commitment.
Me: There’s clearly a mistake. I didn’t close my account.
AT&T: Sir, you ported your number over to a new provider.
Me: Yes, because your service was horrid. I had to get service, but I didn’t close my account.
AT&T: Sir, it’s our policy to close an account when a number is ported.
Me: Oh, well I must have agreed to that in some contract then. Can you point that out to me in my contract or your policies?
AT&T: Well sir, it’s not a published policy. But why would you have an account if you couldn’t use the service?
Me: I couldn’t use the phone when I did have a number with you, I didn’t see much difference in paying for it when i didn’t.
We went around for 4 hours on this. They wanted to charge me a fee for an unpublished policy, to which I never agreed to. I eventually won. They removed the unpublished, unagreed to fee “as a courtesy”.
Note that I switched to Verizon. The same Verizon Wireless I had previously in the 90’s, but switched because I didn’t like their coverage at the time. Verizon handled my cancellation gracefully. They left the door open to my returning.
What are my impressions of AT&T to this day? I still remember their absolutely horrid coverage, but that’s only reinforced by the negative treatment I received at every encounter with their service people.
Why is this lesson important? I was in grad school at the time I had AT&T. I was spending $60/month on phone service and clearly wasn’t flagged in their system as an important account. AT&T is spending billions on upgrading the quality of their network, but I’ll never consider going back to them. They treated me as an unimportant account. There are no unimportant accounts.
I’ve had Verizon Wireless service for 5 years. I am one of their “important accounts,” now. I spend several times the average customer rate on their service. I have no issue with spending what I do with Verizon. They may provide additional benefits to me now because of my account status, but at no time in my experience with them have they treated me with any less respect.
Segmentation of customers should be used to enhance the interactions with your valued customers, and to identify customers that are costing your business funds. Using CRM and segmentation to decrease the experience of your base consumer only ensures that you limit your long-term high profit growth potential.
We’ve always known that users have limited patience when visiting sites. Akamai recently released a study showing users become impatient when pages take longer than 2 seconds to load. TubeMogul monitored performance for 192 million video streams over 14 days and found that when a video rebuffers, 81.19% of viewers navigate away from the page.
Tools to help ensure optimal performance and availability have been available to large commercial sites for years, but the cost of these capabilities has left them out of reach of the average web site operator. The existing technologies have also dealt largely with the big opportunities, allowing developers to become lazy in their coding practices.
2010 sees the introduction of two key developments that will drive additional innovation and adoption of affordable performance technologies to the masses:
Google’s decision to include performance as part of the page rank algorithm is significant. Traffic to retail, travel, health, music and others derive at least 30% of their traffic from organic search. The composition of referral sources continues to shift, and with respect to earned media and other drivers organic search will continue to be a primary driver of traffic for the foreseeable future. Web sites must continue to make search engine optimization a focus.
Not only is the percentage of traffic driven to web sites from social sources increasing, it is increasing the volatility of traffic patterns. A look at the usage of any web site prior to 2007 would be fairly predictable. Web sites would experience occasional spikes, often in conjunction with e-mail blasts, but traffic followed predictable patterns. E-mail blasts are scheduled, allowing organizations to have warning of coming loads in traffic.
Most technology organizations size their environment to handle the normalized traffic patterns and provide enough capacity to handle heavy usage times. They factor expected usage, peak usage, growth, and design an environment that allows for a multiple of that.
The Digg effect (or Slashdot effect) changed the expectation for traffic and places a unique strain on environments. An article that was prominently featured on either Digg or Slashdot (and now Twitter and other sources), could unexpectedly drive enough traffic to overload the server capabilities, similar to a distributed denial-of-service attack. Organizations could not just allow for a few multiples, they needed to have capacity to scale to 20-30x multiples. And quickly, and inexpensively, and to decrease the capacity when the traffic had diminished.
The good news? Solving for availability will also improve overall performance. And vice versa.
Before jumping into the expected developments in 2010, there are numerous small steps that can be taken to improve performance of web sites.
The trends I expect to see reach mass audience in 2010 are in three trending categories:
What trends should we see for the small web site operators in 2010?
What optimization steps do you use on your web site? What innovations do you think we should see in 2010?
While large sites focus on content delivery networks and loading up on big iron to more quickly process requests, small web site operators that intelligently approach the problem can compete with large web site operators by making small optimizations.
What is the size of the opportunity with these changes? 20-25% reduction in response time. That reduction in effort also reduces the load on web and application servers, allowing them to focus on serving the dynamic elements of your site. Before pursuing advanced capabilities, consider whether reducing 25% of your load is worth the effort.
This is a simplified sample request:
The information is then returned back along the same path. Within each step may be multiple steps, such as multiple hops at an ISP.
For any simple web page that is requested, there may be dozens or hundreds of individual requests for images, style sheets, javascript files, HTML and media.
There are several basic steps that can be taken to improve performance of web sites. The main groupings of performance are:
For a deep dive on these steps, visit the Y!Slow User Guide or pick up O’Reilly’s book on High Performance Web Sites for Front End Engineers. Smashing Magazine has also provided a good writeup on optimizing performance.
The government released facts on it’s “Cash for Clunkers” program. This program was positioned as a way to assist an industry in trouble and reduce the carbon impact of cars by improving fuel economy.
While it’s too early to determine the true impact of the program, the initial facts do illustrate some interesting findings.
Here are the facts that were released by the government:
The automakers that most benefited from the program were Toyota, Honda and Nissan, with 41 percent of the new automobile sales. The “Big 3″, GM, Ford and Chrysler, accounted for 39 percent. Toyota alone had 19.4 percent of the overall sales.
Initial indicators suggest this will contribute 0.3 to 0.4 percent for Q3 economic growth.
If we assume the average person drives 15,000 miles per year, and an average cost of $2.628 per gallon of gasoline, we can derive the following facts:
| Clunkers | New | Savings | |
|---|---|---|---|
| Gallons of gas required | 655 million | 415 million | 239 million |
| Total $ spent on gasoline | $1.7 billion | $1.09 billion | $629 million |
If the average purchase of gas is 15 gallons, this means 15,933,333 fewer fill-ups per year, or 23 less fill-ups per person per year.
I question the immediate economic benefit of this program. As a general principle, I do not favor programs that explicitly favor one industry over another. It props up ineffective companies. GM and Chrysler both were failing based on years of mistakes, and an economic stimulus to them does nothing to correct the underlying problems.
I do not believe this was an outright effort to “pay back” unions for their support of the Obama administration. More purchases were made from non-unionized automakers than the Big 3. There are more direct ways to reward those organizations.
If we look at the savings in gas as the main return on investment, the pay back period for this will be 4.58 years. The U.S. taxpayer is ultimately the one funding this incentive and from an individual investment standpoint, this doesn’t immediately appear to be a good decision. The general rule of thumb for automobiles – take out loans for no more than 36 months because you don’t want to have a loan longer than the expected life of your car – fails here. While newer cars are more reliable, and could be kept for longer periods, the average consumer buys a new car every 3-4 years.
Sales tax revenue will benefit local government, but will be less than $300 million. The net property tax benefit from this program may slightly increase, but these were trade-ins, not new purchases. The benefit from property tax rates will be the incremental difference in value between a clunker and a new car.
Sales Bubble
An original intent was to assist Detroit, but that benefit may be limited. Automakers with excess inventory were able to push vehicles through the supply chain. This clearly benefited distributors, but I question whether it will benefit automakers. There is a distinct possibility that this promotion captured all of the demand for new cars, and that sales will crater now that the incentive is gone. If that is the case, automakers will be reluctant to resume building vehicles that will sit on the lot.
On the other hand, this is an effective hedge against fuel inflation and places control directly in the hands of consumers. The savings from fuel are retained by the consumer, so household purchasing power would be increased by $909 per year. If fuel prices increase – which is a highly likely event – this program shields participants from those inflationary forces. If we return to $4.00 gas, the pay-back-period for the program comes down to 3 years, and the consumer would save $1387 in fuel costs per year.
The most immediate beneficiaries of the program were dealers. The incentive not only stimulated overall demand for vehicles, it also led to higher average sales prices for vehicles. Dealers saw both higher volume and profitability rates.
I suspect there was latent demand for new automobiles (people holding off due to recession), but many people would have purchased in the next 12 months regardless of an incentive. I’m not certain they would have gone for vehicles that averaged the 9+ MPG gain realized in this program. While this incentive encouraged people to purchase cars now, I think it may have encouraged them to buy slightly more efficient vehicles than they would have otherwise purchased.
The biggest question, whether this will help the U.S. automobile industry, won’t be known for years. The stimulus was indirect and the benefit will depend on several other factors, including whether the economy picks up allowing for sustained consumption of automobiles.
What is the economic impact of the savings of $629 million per year? Not only is this money retained by the consumer, it is money that is not sent overseas in exchange of oil. Will that have a higher economic benefit than other types of stimulus?
Will the improved fuel economy have negative secondary effects, such as decreased sales in convenience stores? A 58% improvement in fuel economy also means a decreased need to visit the local gas station.
The debate around the long-term benefits of stimulus will likely influence future stimulus programs for years. Let me know your thoughts. I’ll continue to watch this space.
I will be participating on a panel on Tuesday, July 21, 2009 at the New York Festivals International Advertising Awards discussing “Social Media: How to Profit from It & Get Clients to Buy Into It.” You can find more information on the panel at the NYF International Ad Awards web site.
The questions we’ll be addressing:
It’s a challenging space, and I’m not convinced agencies are the right group to lead this effort. I’ll be posting my thoughts and feedback later in the week after the event.
I had the opportunity to meet and share a few drinks with Alan Wolk last night. Alan is a bright guy who works with great brands on identifying how they explore and engage in the social media space. We got to talking about how to explain Twitter.
We’re frequently asked by non-Twitter users what Twitter is and what it’s all about. My friends understand it’s social, and typically lump it in together with Facebook, MySpace and even LinkedIn, and IM (depending on level of knowledge).
Note: To further frustrate my non-digital friends, I intend on responding to their inquiries about “What is Twitter” with a link to this post. Maybe via Twitter.
I started by explaining my somewhat sardonic classification of the systems:
I’m extremely passionate about marketing technology and analytics. Like many marketers, I have a drive to understand why things are and leverage that knowledge. There aren’t a lot of people working in my field, and less that share the same level of passion. I know several of my peers at other companies, but being a small group we’re geographically distributed. If I try to talk about my interest areas with my friends, their eyes quickly glaze over and they drift away.
So what is Twitter to me?
Twitter is a social application that allows me to find people that share my passions regardless of location, that I would have never met previously, and engage in interesting conversation with. The supposed “what I ate for breakfast” of marketing technology and analytics may seem mundane to 99.9% of the world, but to the people that share my passion it could be of relevance.
If you’d like to connect with me via Twitter, I’m available @robsaker
Oprah Winfrey was introduced to Twitter on April 17, 2009 by Evan Williams and Ashton Kutcher. Within moments of her first tweet, thousands of people responded to her.
This could have been a transformative moment in traditional and social media. For a brief moment, television’s arguably most successful personality was engaging directly with her audience in a dynamic conversation on social media’s hottest platform. Instead of engaging in dialogue, Oprah stuck to the traditional broadcast metaphor that built her empire and with which she was comfortable. @Oprah’s limited replies to people, other than celebrities for dinner invitations, demonstrate that she’s using Twitter more as a distribution tool than for conversation.
Twitter is a conversation engine that functions when people post and respond. Twitter can be used for mass distribution of information, but it thrives when the conversation and interaction is diverse.
Oprah hasn’t engaged with Twitter much since her first tweet. In the period since, she’s tweeted 24 times. The most recent tweet at the time of this writing was on May 2, two days ago.
Oprah’s usage isn’t different from many Twitter trial users. Much has been made of Twitter’s low retention rate. The retention rate of users that return the following month has been estimated at 40%. For every 10 people that try the service, 6 people disengage almost immediately (that 40% is listed as a low retention rate from a trial is something we’ll challenge in a different post).
What is different with Oprah’s trial is the audience she could bring. When the press caught wind of Oprah’s disinterest in Twitter, they used the information as an indicator of Twitter’s imminent demise. Twitter had peaked and was unable to reach beyond it’s roots with the digerati. The technology press then rebutted that assumption, stating that Oprah’s non-use of Twitter had limited relevance to the growth of Twitter.
So what does Oprah’s Twitter experience tell us? Let’s first take a look at the data.
Oprah has been a light user of Twitter, at 2.6 tweets per day. A brief scan of her Tweets shows she has responded to 5 different people, but primarily uses the medium to broadcast select messages. @Oprah’s follower count grew to 784k within a month, but has since stagnated to nearly no growth. A Tweep who has an 810,000-to-11 follower/following ratio is using it as a broadcast medium, not surprising given Oprah is one of the most famous television celebrities.
So how does this compare with the other leading daytime television hosts?
Of these daytime hosts, @MarthaStewart has adopted Twitter in a way truest to it’s intent as a conversation engine. Most telling of Martha’s adoption and understanding of Twitter and social media was this post.
While it may not be representative of the overall TV audience, I do believe Oprah.com’s online audience is a fair representation of the potential audience that would use Twitter.
| Oprah.com | Twitter.com | Metric | |
|---|---|---|---|
| Gender | 137 | 103 | female |
| 60 | 96 | male | |
| Age | 9 | 18 | 0-17 |
| 89 | 153 | 18-34 | |
| 143 | 124 | 35-49 | |
| 151 | 88 | 50+ | |
| Ethnicity | 98 | 103 | Caucasian |
| 173 | 101 | African American | |
| 61 | 66 | Hispanic | |
| 60 | 92 | Asian | |
| Household | 115 | 112 | No kids |
| 78 | 82 | Kids | |
| Affluence | 96 | 120 | $0-$30k |
| 101 | 106 | $30-60k | |
| 99 | 83 | $60-$100k | |
| 102 | 97 | $100k+ | |
| Education | 89 | 83 | No college |
| 108 | 114 | College | |
| 106 | 110 | Grad school |
From http://www.quantcast.com/oprah.com and http://www.quantcast.com/twitter.com
An index of 100 would mean a composition that was representative of the US population.
Oprah.com’s visitors skew higher in female, African American, and are slightly more affluent than Twitter. Twitter has a higher Asian composition and a significantly larger number of younger visitors.
To complete the picture, I next conducted a limited, non-scientific poll of 100 random respondents to see what intersection occurred between Oprah viewers and Twitter users.
At first glance, 14% seemed like a high number of intermittent Oprah viewers, but Oprah averages 23 million viewers in the United States each week. That’s approximately 13% of the total US population. Her daily audience is estimated at 7 million viewers. Comparatively, Twitter.com reaches an estimated 15 million people per month (note: this is the web only audience, and is likely well below actual usage numbers).
On the surface, Twitter had a momentous opportunity with the Oprah exposure. Like products that have “made it” by appearing on QVC, an adoption of Twitter by Oprah could lead to the bring millions of new Tweeps.
So what was the size of the opportunity? If we assume the survey results were valid, the size of the total opportunity for Twitter in pure numbers was the 6% of Oprah viewers that weren’t Twitter users. 6% of the her weekly audience is 1.3 million viewers. Twitter’s March 2009 growth rate was 131%. If that growth rate was maintained, Twitter grew by nearly 1.1 million viewers each week following Oprah’s trial (excluding her viewers). Oprah’s non-use of Twitter would not have a material impact on the growth and adoption of Twitter or other social mediums.
What was missed in the press coverage was the opportunity of Twitter to expand into new growth markets. Oprah’s audience skews very high in the African American and over 50 age segments, areas where Twitter is weak. Twitter trails Oprah by nearly 90 points in the African American segment alone. While Twitter did not need the sheer number of visitors offered through Oprah, the influx of these unique segments would potentially help diversify the conversations taking place on Twitter and help entrench it as the place for conversations.
Oprah doesn’t need Twitter to continue to be successful. Syndicated shows like Regis & Kelly haven’t changed their format in years and retain a strong, if aging, population. Oprah could profitably ride the format of her show for years and retain a healthy audience.
A closer look at Oprah’s demographics show two troubling trends. First, her audience is aging. The majority of viewers are over 35 with a large number over 50. Secondly, her audience skews low with Asian and Hispanic demographics, and high in African American viewers. Hispanic and Asian populations are increasing (as a percentage of the population), while African American’s are decreasing. While Twitter is weak in its’ Hispanic audience, it has strong numbers in each of the other segments.
If we assume equal effectiveness at conversion, Oprah would derive as much or more value from engaging in Twitter and capturing these new segments, than Twitter would from converted Oprah viewers.
Oprah does not seem content to rest on her laurels, and her career points to a continual evolution in how she engages the community. As her competitors in daytime talk continue to effectively leverage Twitter as a way to interact with their audience, it will be interesting to watch if she re-engages with Twitter in the future.
If you’re reading this during the Razorfish Client Summit, I’m hoping it’s because I had the #1 organic spot for razorfunfish on Google. I had to leave early this AM on the redeye to Atlanta for another work engagement, but I’ve asked our Razorfish team be my representative. They asked that I blog about how I seized 31 on Google for the ‘razorfunfish’ term.
For reference, I was trying to gain top rankings for this search:
http://www.google.com/search?rlz=1C1CHMA_enUS313US314&sourceid=chrome&ie=UTF-8&q=razorfunfish
The easy solution is to come work for MillerCoors. Great brands, great people, we get free beer, and I’d be able to partner with you.
Short of joining America’s Best Beer Company, you can leverage these tips:
This all sounds like a lot, but I’ve setup my blog to ensure this all happens automatically as part of my posting. The added overhead in writing a blog is 15 seconds.
I looked at registering razorfunfish.com as a domain. That would have enhanced my rankings, but the domain was unavailable.
Once the post is created, you need to generate awareness about it. I did a few things here.
Optimizing for a short-term and virgin term is much easier than running a long-term program, but the principles are the same.
How does social media change the mix?
Excluding the sitemaps.xml, my awareness came primarily through social networks. The power of crowds, their interest and actions is what tells Google that my post is credible. Control the messaging on the social network locations, and you control what appears on Google.
Really hope I won, but hope more that people find this helpful. Please shoot me a comment if you want more details on specifics. I’ll be willing to share more details after the contest is over.
Cheers.
Razorfish is running a meme experiment to see how we can drive traffic around an idea. They’ve coined the term razorfunfish to see who can generate traffic.
We’re at Razorfish Client Summit in Las Vegas, and they mentioned that there were no term matches for razorfunfish on Google. They then cryptically explained to watch tomorrow (Thursday).
I expect we’ll see “razorfunfish” listed in several Twitter accounts and other social media platforms such as Facebook, MySpace, etc. Google indexes frequently so that a day isn’t unattainable.
The idea is that crowds in social circles can take hold of terms like razorfunfish and immediately propel it. The crowd co-owns razorfunfish with the company.
I doubt many people are blogging about razorfunfish. I’m participating in this social experiment to see if I can grab a top 10 spot on Google for the razorfunfish term.
Unfortunately, I am leaving the conference early Thursday so I won’t have the opportunity to see the results. If I do show up for razorfunfish, leave me a comment.
Information is essential in generating good insights, but it cannot be a crutch in making decisions. The posts here are intended to explore and are not perfect, but that's part of the point.