According to IBM’s Global Chief Marketing Officers study, one of the TOP priority for CMOs “is to enhance customer loyalty and encourage satisfied customers to advocate for their brands.” Most marketers also agree that fostering loyalty among current customers and motivating advocacy behaviors is, more often than not, currently an untapped opportunity to improve profitability.

Certainly there’s plenty of evidence to suggest there’s something to that line of thinking.

The American Customer Satisfaction Index, for example, reported that the cross-industry satisfaction average hovers around 76%—a “C” grade—and hasn’t budged for two years. The lower the level of satisfaction, the higher the likelihood the customer won’t purchase the brand again. Not surprisingly, a Bain Consulting study found the average company loses 20%-40% of its customers every year.

Unfortunately, many marketers aren’t sure what to do about the problem. The same IBM CMO study reported that most CMOs feel under-prepared to deal with decreasing brand loyalty.

We asked Kevin Clancy, chairman of Copernicus, for a strategic perspective on what marketers can do to foster loyalty to their brands. Here’s what he had to say….

Mzine: Many companies seem to have ongoing struggles with maintaining and growing loyalty to their brands. Obviously there are many potential contributing factors, but to your way of thinking, what are some of the major ones?

Kevin: In our work with B2B and B2C brands in a variety of industries, we’ve discovered that poor targeting and lack of a consistent, compelling positioning are major reasons why many companies struggle to connect customers to their brand.

There are some people who–no matter what a marketer says or does–are just not interested in a particular brand. They wouldn’t take it for free. It’s going to be an expensive and maybe even impossible proposition to try to convert them from a completely disinterested buyer to a loyal customer.

Still, it’s not an infrequent occurrence to hear a company declare plans to target non-users of their brand without any indication that they know how many non-users are even open to switching or giving some share of their requirements to the company’s brand.

Just like if you’re on the wrong train, every stop is the wrong stop, if you start with the wrong target, it’s going to be a challenge to get where you want to go as far as growing loyalty.

Mzine: What’s the connection between a strong positioning and growing loyalty?

Kevin: Establishing an emotional connection between their brand and target consumers is something marketers talk about a lot.

Interestingly, when Copernicus asked consumers about the “personal or emotional connection with their preferred brand” across a variety of product and service categories, less than 10% on average claimed a “strong” connection. Just 20%-25% of consumers on average reported even a moderate emotional connection to a brand.

While it did appear an emotional connection was more readily formed in certain product categories–likely due in large part to the innate characteristics of the category–generally speaking, it’s up to marketers to encourage and help forge those higher-order bonds between their brands and the people who use them. One of the best ways marketers can do that is by solving customer problems with products or services.

A criteria we suggest marketers consider when assessing the potential profitability of different market segments is the size of the problems buyers in the group have that brands in the category or industry can solve with products and services. We have found time and time again that the bigger the problem a marketer can solve, the bigger the market response.

Carrying that thinking forward one more step, the bigger the problem on which marketers base the positioning strategy for their brands, the bigger the market and emotional response.

Mzine: Do you think companies are currently focused on the right things when it comes to growing loyalty to their brands?

Kevin: We have sometimes observed a tendency among senior management to get preoccupied with a metric—more often than not the Net Promoter Score—and improving it rather than focusing on what the barriers to loyalty are among current customers…and doing something about those barriers.

A brand’s Net Promoter Score, of course, is calculated by asking people on an 11-point “recommend” scale the “ultimate question:” how likely are they to recommend the brand to a friend or colleague? The scale runs from zero (“definitely would not recommend this brand”) to 10 (“definitely would recommend”).

People who score 9 or 10 are labeled “promoters”; people who score 0-6 are, in turn, labeled “detractors”; the 7’s and 8’s are ignored. Subtract the percent of detractors from the percent of promoters and you have the “net promoter score.”

While it’s not a bad metric, it’s only one behavioral measure of the far more complex concept of “brand loyalty.” Same can be said for fans on Facebook, followers on Twitter, and so on—they are but one measure and don’t offer much in the way of prescriptive guidance on the most profitable ways companies can improve that measure.

We’ve also sometimes found a tendency to hone in on a program that will encourage loyalty. I have no less than eight different “rewards” cards from different stores I go to on my key chain, for instance. How well those programs work in terms of achieving increasing levels of loyalty, however, is more a reflection of the strategy on which they are based.

And that’s the real ultimate question marketers should be asking: how do you integrate growing loyalty into your marketing strategy to take advantage of this untapped opportunity?

Marketers that have focused on taking a more comprehensive view of growing loyalty—that it’s about targeting the right people, with the right message, with the right kinds of campaigns, programs, and experiences with the brand—have seen the greatest success in this area.

Mzine: Can you give some examples of companies that have done that?

Kevin: Everyone seems to cite Apple and certainly it’s a ready-case to point to in order to demonstrate the effect of developing and maintaining a strong, loyalty-inducing positioning.

It did it by solving a pretty major problem consumers were having with PCs—they were frustrating and sometimes incomprehensible to use—by offering a product that was the exact opposite—user-friendly and easy to use. One of Steve Jobs’ many claims to fame was his religious focus on making Apple’s products “plug and play.”

The more the company stayed razor-focused on that positioning and consistently delivering on it, the better it did generating strong, positive feelings among customers. It was/is easy for customers to love Apple and have those feelings develop into heightened levels of loyalty that are the envy of the business community.

In recent years, McDonald’s by all appearances has very effectively targeted parents and families by positioning itself as the brand with something every member of the family can love. The chain has expanded and upgraded menu offerings to include something fun and tasty for the kids—with the promise of more reasonable, calorie-conscious portions—and more sophisticated fare for the folks.

In the opposite extreme—more of an anti-case—Avis Rental Car recently switched its long-standing positioning of “the brand that tries harder for its customers” to the brand that helps corporate travelers feel less stress and be more productive.

Sure, lots of stress and lack of productivity are two big problems business travelers have, yet it’s pretty unclear how the Avis brand does much to chip away at the problem with its services—it’s still just renting out the same kinds of cars offered by its competitors.

It’s not providing an actual solution to that big problem, and it’s the solution where the lovin’ feeling customers have for the brands they buy and use comes from.

Mzine: If you had the ear of every CEO and CMO for five minutes, what would you say to them about growing loyalty to their brands?

Kevin: When you chart out a model of how sales occur, it usually looks something like this: first a marketer approaches a target market, they build awareness, achieve distribution, stimulate trial, encourage repeat, foster loyalty, etc. Loyalty may come toward the end of the sales process, but marketers need to start taking the steps to build brand loyalty from the very beginning.

If marketers want to grow loyalty, there’s no better place to start than with the most important strategic decision there is: who to target. It makes little economic sense to invest marketing dollars in fostering loyalty among customers who are not profitable to a brand or all that likely to remain loyal in the first place.

Once you have a target group, you need to figure out how you’re going to motivate them to consider your brand and do it in a way that fosters the kind of strong, positive feelings that enhance loyalty. Remember that an emotional connection is something that you have to work hard at building over time. It’s not something that comes from having a hip new logo or clever, funny ads…. It comes from providing products and services that consistently deliver something of meaningful value to a customer.

Marketers who take the time to learn more about problems target customers have that products and services in the category can feasibly and profitably solve and build their brand’s positioning around delivering that solution will have an infinitely easier time earning the long-term devotion and allegiance of target customers.

Again, loyalty isn’t something marketers only need to start worrying about after a customer has made his or her first purchase. Growing loyalty isn’t just a matter of finding the right reward program or return-visit incentive. A large part of success in this area comes from making strategic decisions that prime the pump, so to speak, for loyalty.

To watch Kevin’s recent webcast on this topic for the American Marketing Association visit: goo.gl/AsyAx

Debate about the size, shape, direction, and even the very existence of a purchase funnel has raged on for a few years now as marketers work hard to figure out how best to get their target customers to think about, talk about, buy, and maybe even love, their brands.

One recent description we liked, for example, came from Jim Lecinski, managing director of U.S. sales and service at Google, who maintains, “the funnel is now more like a neuron, with branches that let shoppers move forward and backward through the process until they’re ready to make a decision.”

Regardless of where they net out on the funnel issue, however, most agree identifying which among the exploding number of opportunities for marketers to influence the purchase decision will produce the highest return on investment has become a both a critical and often frustratingly complex process.

“The reality is marketers have to pull more levers today than they ever had to before. All of us are consuming media in so many different ways—some people are only online, some only watch TV,” Dina Howell, CEO of Saatchi & Saatchi’s in-store marketing arm, told the Wall Street Journal this past April.

“The bulk [are] somewhere in the middle, and that’s what’s making it harder to determine what is the correct formula.”

We sat down with Copernicus’ CEO Peter Krieg to get his thoughts and big picture perspectives on how brands can best market themselves to shoppers as they move through the ever-expanding path to purchase.

Here’s what Peter, our resident retail industry expert and a pioneer of shopping occasion segmentation research, had to say:

Marketing Frayers: Can marketers count on customers following a general direction down the path to purchase anymore?

Peter: The general direction remains the same, yes. Something—an event, a situation, a mealtime, seeing friends with a product, reading an article, business expansion, you name it—inspires a decision-maker to explore the different products and services available. He or she considers the options, makes a purchase, feels satisfied, and–it’s hoped–shares experiences with and ultimately influences others.

What’s changed is the sheer number of potential sources of information that might sway the decision-maker toward one brand or another and one channel or distributor or another. Obviously it’s easier and faster than ever for the decision-maker to access the multitudes of information, compare prices, and purchase locations. It’s also easier and faster for decision-makers to share opinions, reviews, and news with other decision-makers.

What’s also amazing to many of us veteran marketers is whether someone is shopping for a car, computer, insurance policies, industrial products, diapers, or even a toothpaste, they’re investing some amount of time in exploring options…sometimes while they’re already in the process of shopping at a store.

There’s a growing sense that ALL marketers now have to consider, not just what our client P&G calls the first and second moments of truth—seeing the product on the shelf and using/experiencing the product or service after purchase—but all the “store back” and “store forward” moments where any other competitor in the category or industry has the potential to move shoppers toward one brand or another, and one purchase channel or another.

Marketing Frayers: How have you seen companies change the way they approach moving customers through the path to purchase towards their brands?

Peter: Pre- the digital and mobile media revolutions, we worked with clients to understand the effect different types of shopping occasions had on their brands. We’d help them assess the profitability of each shopping occasion and often connected people segments to shopper segments.

We could tell a client, for example, your most profitable segment of people spend 50% of their budget for the category on a “weekend ritual” shopping trip, 25% on a “seasonal” shop, 20% on a “spur of the moment” purchase, and 5% on an “emergency” to give, among other things, some macro-level guidance on positioning for their product or services and innovation efforts.

We could also help them profile each retail location by shopper type to direct in-store merchandising, promotions, displays, etc., toward the needs and preferences of the predominant shopper segments.

These days, however, clients have moved shopper marketing way beyond the four walls of a bricks-and-mortar store…and the digital equivalent of four walls of an e-commerce website. I completely agree with what Dina Howell [CEO of Saatchi &Saatchi X] said–that shopper marketing “isn’t just about cardboard displays anymore—you need to accommodate the way shoppers behave now, and that means online and in stores.”

As a result, we now chart a shopper’s complete path to purchase to identify where and why the client is (or isn’t) on this journey … and where and how an increase in a client’s presence will have the greatest effect on sales, loyalty, and advocacy.

For instance, where and how to they begin their search for a product or service in the category? What information are they looking for? If they’re going to the company’s website, where do they go? What are their digital, social, and mobile media habits? How likely are they to advocate for the brand?

Marketing Frayers: At the start of the year, Booz & Co said manufacturer spending on shopper marketing has just about doubled-over the past five years. It currently totals $35 billion with anticipated annual growth of 15%. What would you say are the key opportunities for marketers to make the most from their shopper marketing investments?

Peter: I’m by no means the first to observe that there’s a great deal of convergence going on as more and more shopper marketing campaigns cut across different media and go beyond the online or offline purchase channel. Integration of shopper marketing with overall branding efforts is something we’re reading, hearing about, promoting, and seeing in action on a much more regular basis than ever before.

With that in mind, the biggest opportunity marketers in general have is to get everyone working against the same target group—the customers they’ve identified as the ones with the highest economic and marketing value to the brand.

For shopper marketers specifically, understanding the “mix” of shopping occasions of the key target group, along with what motivates them to purchase the brand; preferences for online and offline channels or retailers; customer experience preferences and needs; interest in new products and services; and the function and possible influence of traditional, digital, and mobile media along the path to purchase, goes a long way towards improving overall effectiveness and efficiency.

Successful shopper marketing—whether through a bricks-and-mortar or e-commerce channel—still comes down to understanding which customers on which shopping occasions hold the most potential profit opportunity and the ability to translate this information into positive interactions and experiences with the brand at key moments in the purchase process.

There’s a huge opportunity for marketers to arm their sales force and/or key account managers with profiles of the shopper mix at the retailer, e-tailer, and even individual store-level. Connect shopper types with merchandising, promotion, in-store display, experiences, etc., and you’ll go a long way towards cinching the purchase of your brand at a particular location.

Likewise on the ecommerce side, there’s a huge opportunity to arm website developers and managers with guidance to enhance experiences and maximize sales through that channel. We worked with Under Armour, for instance, to profile the different types of shoppers on its website to improve sales via that channel.

Marketing Frayers: What do you think are the big trends in shopper marketing?

Peter: I mentioned integration, though I think that’s a longer-term aspiration.

On the tactical level, product marketers increasingly use both traditional in-store tactics, as well as digital tactics on retailer websites. And mobile just keeps getting bigger. I saw Juniper Research’s forecast that spending on mobile retail campaigns in 2012 will hit $15 billion globally—a 50%increase over 2011!

One of the biggest trends I see is getting some strategy behind shopper marketing efforts.

Everyone knows there’s still a chance to influence a sale at the point-of-purchase. It’s the who, when, and how companies have to solve for now in order to create some competitive advantage along the path to purchase, generate the most incremental sales and profits at the point-of-purchase, and foster loyalty and advocacy beyond it.

Another trend along the lines of strategy development I see more of is product marketers investing more time gathering insights about the shopper mix at different points of distribution. Marketers use this knowledge to improve line reviews with key retailers, to become more fact-based in joint ventures and partnerships, and to figure out which products could be sold in new channels of distribution.

Marketing Frayers: If you had the ear of every CMO in the world for five minutes right now, what would you tell them about best practices for marketing to shoppers along the path to purchase?

Peter: Some marketers call them “touch points”, Google calls them “zero moments of truth,” P&G has their terminology. Regardless of whether there’s ever agreement on what to call all the different opportunities marketers have to influence the ultimate purchase decision, it’s clear that in every category and industry marketers are trying to stay one step ahead of each other when it comes to sustainably persuading decision-makers to choose their brand.

There’s a reason why many marketers have a great sense of urgency for getting a sound strategy in place to guide shopper marketing decisions. As companies increase their budgets for shopper marketing, the pressure will build to demonstrate incremental profits on investment.

The marketers that will be in the best position to do that—and do it consistently—are the ones that pinpoint the customers and shopping occasions that have the highest potential profit value in offline and online distribution channels.

They’re the ones who also get a comprehensive understanding of the critical points along their their target customer’s and shopper’s path to purchase. If your brand isn’t tapping an opportunity to influence a decision-maker at a critical point, figure out why and what kind of fix will generate the biggest return.

To learn more about our shopper insights research and consulting services, visit copernicusmarketing.com/services/shopper-insights.

Here’s part 2 of our expert interview with Kevin Clancy where he answered questions posed by attendees of his recent Brand ManageCamp “Fresh Thinking Starts Here” webcast series, as well as a few of our own.

Need the background before you read part 2? Read part 1.

Otherwise, we’ll pick up where we left off yesterday….

Q: Does the idea of a revolutionary selling message still apply to smaller brands? How about non-profits?

Kevin: No matter the industry; product or service category; for-profit or not-for-profit; whether your customer is a consumer or a business, finding a revolutionary selling message most definitely applies when it comes to improving the ROI of advertising programs.

Regardless of the size of their budget or market share, I often tell companies to start the search for a revolutionary selling message with an audit of brand perceptions and preferences.

Now, the way a company might go about researching perceptions and preferences among current and potential customers might differ in scale and scope, but it’s still possible. Any firm or organization can ask target customers what they think of a company and its competitors—does it have a clear or fuzzy brand image? It’s also possible to ask which brands they prefer.

Q: Do you think the same message can be used in all forms of communications including advertising, PR, the website, social media, sales force, etc.?

Kevin: If you’re a McDonald’s and you’re spending, for the sake of argument, $300M in measured media, you can afford to communicate a somewhat different message through different media.

But there are very few McDonald’s.

For the overwhelming majority of brands, in the overwhelming majority of product categories, I firmly believe that it should be the same message. It should be the same message in every media and in every communications vehicle. Not just advertising, but packaging, PR, the website, everything.

Q: Do you recommend continued advertising in a market in which you already have a strong presence? We have advertised for 5 years in a medium, but have not had a direct increase in sales as a result (people don’t mention this medium when asked)?

Kevin: There’s a lot of research that suggests that if you cut out your advertising budget in a medium you’re hurt. I’d be wary about cutting it out.

On the other hand, I would work my tail off to make sure that the advertising that I’m using in that vehicle is as strong as it can possibly be. If it is as strong as it can be, you will see the results within three months.

Q: What do you mean by 3-sigma?

Kevin: A statistical term, sigma is a standard deviation from the mean. Putting it into the context of my presentation now, the average ROI of an ad campaign for a CPG brand is negative. For a non-CPG brand, it’s pretty close to 0. A 3-sigma advertising campaign would be three standard deviations away from average, meaning the campaign produces a dramatic, highly positive ROI.

Q: What if you don’t have the money to test alternative advertising ideas? What do you recommend a company do?

Kevin: If you don’t have a significant budget for copy testing, for example, you can bring out alternative ad executions, each expressed on a piece of paper (or screen) as an ad concept with a brief description of what the execution might be in small group discussions or individual interviews [with target customers].

What I sometimes do if a company has absolutely no money is to introduce them to professors at business schools around the country. Often the professors are willing to turn their students loose on the problem. If the company is willing to pay out-of-pocket costs, the professor will get a class of students involved in doing some ad testing or concept testing…or any other kind of testing for that matter.

So a lack of a big budget is not a reason why you can’t or shouldn’t do the kind of things I’m talking about.

Q: How do you find out about online behavior of targets? Do you need to do a large-scale research study?

Kevin: I’m working on the assumption that you have thought about who the best target is in your product category. If you haven’t thought about that before, I’d encourage you to send Copernicus a note and we’ll send you something to read on that topic.

Assuming you know who it is you’re going after, you can do a large-scale survey among 500-600 target group members in your category or a small-scale survey if you have a small budget among, say, 50 people and everyone can do that.

Q: From my experience in CPG, if your demographic is fairly straightforward in terms of age, gender and income-level and things of that sort, you can buy syndicated data [about online behavior of targets] and that’s not always that expensive to buy. There are folks out there that are following lots of different demographics and psychographics on how they are spending their time both online and offline. What do you think of syndicated data?

Kevin: That’s true, there are many sources of syndicated data. Personally, I’m a stronger proponent of spending the same amount of money [you’d spend on syndicated data] and doing a survey among your target customers. The advantage is you get data which is really customized for your brand, as opposed to data which is attempting to work across a broad range of brands.

So I agree with you that you can buy it, I tend to think it’s often better if you tried to customize it.

Q: You hear so much about social media in relation to the idea of “dominating the internet.” The idea is to “dominate” conversation on the web. But you don’t hear as much about updating, designing, fixing the website in order to “dominate.” Why do you think that is?

Kevin: I’m by no means an expert on this topic, though I suspect the newness and novelty of social media as a marketing tactic has a lot to do with it.

Websites had their day in the sun when the internet was as novel a thing as social networks are today. From what I’ve seen recently, however, marketers are increasingly coming back to their websites and evaluating them in terms of untapped opportunities to improve ROI.

Just another reminder, you can read part 1 of our interview with Kevin and/or watch his free webcast on-demand at brandmanagecamp.com/webcasts/.

Welcome to part 2 of our interview with Rolf Olsen, Marketing Sciences Director at Carat North America. If you haven’t read it yet, be sure to read part 1!

We had a few more questions for him about social media listening and here’s what he had to say:

Marketing Fray: Do you find its mostly bigger companies and brands doing social media listening?

Rolf: It probably is but I don’t believe it should be solely for the “big boys”. Smaller companies are often more agile and can react better to consumer feedback across all social tracking spectrums. Small companies who adopt a more socially focused development strategy are essentially tapping directly into the consumer. As Charlie Sheen would say = winning.

Marketing Fray: What would your definition of a “productive social listening” program be?

Rolf: Accept that it could influence all part of your business and embrace it. Seeing the results of an integrated social strategy will create advocates who sing your praises. Think of it as an unpaid work force, driven by passion for your product.

AND, one that does not just cost you money by just drinking the kool-aid sold by listening companies…

Marketing Fray: If you had the ear of every CMO in the world for five minutes, what would you say to them about developing a social listening program?

Rolf: Think about what your company stands for and then see what people actually say… it can be eye-opening.

Remember, the social “channel” is not an extension of your traditional marketing machine, this is your opportunity to make a personal connection and hear what your consumers actually want, beyond what your normal market research tells you.

In case you missed Jeff Maloy’s webcast yesterday, “Branding 2.0: Bring Strategy and Execution Together to Capture Hearts and Minds,” you can watch it now on-demand on our webcast channel.

The main thrust of Jeff’s talk was that if you align the essential elements of a brand strategy—starting with a target that’s high in economic value to a brand—and establish a clear process for evaluating executional elements, you help ensure that every new product, campaign, or program you launch continuously reinforces your brand’s positioning message.

Jeff’s talk generated a couple of questions from viewers, which we posed to him. Here’s what he had to say:

Marketing Fray: What would you say is the biggest predictor of whether a brand’s strategy will help it break through all the competitive clutter?

Jeff: There are many, many factors that impact the ultimate success of a brand’s strategy when it comes to generating awareness, sales, profits and growth. Not all of these factors are within a marketer’s control.

I can say that having a clear, high-value target and developing a positioning based on the needs, problems, and motivations that will most likely inspire this group to make a purchase can make the difference between a brand becoming a market leader vs. an also-ran. Without either of these things, a strategy is much more likely than not to fall flat.

The impact of thinking through the process of execution, particularly for how to go about selecting things like the logo, the packaging, the new product, the ads—all the pieces that you’re counting on to help you break your brand through—cannot be underestimated either.

Marketing Fray: Do you find many companies consider introducing new executional elements—particularly the logo—a “brand strategy?”

Jeff: Definitely true. Executional elements should reflect and embody the brand strategy. They should continuously reinforce the brand’s positioning among key targets. But a logo in and of itself is not a “brand strategy.” While the visual identity may elicit a response, it does not cause the response—the elements of brand strategy do.

We were able to grab a few minutes with Copernicus’ Peter Krieg, President and CEO at the firm, to talk about one of his favorite topics: building a great brand strategy.

For close to 30 years, Peter has worked with Fortune 500 and other leading brands to grow their brand equity and profit line. He has industry expertise in retail, travel & hospitality, adult beverages, and B2B, and his past and present client list includes prestigious names like Procter & Gamble, General Electric, and IBM.

In other words, this guy knows his brand strategy stuff. If you missed his webcast on this topic last week, “Build Your Brand Like the Big Boys,” you can get it on-demand on our webcast channel.

The thrust of his suggestions: identify a good (i.e., profitable) target and a motivating positioning and success will follow.

Here’s more of what he had to say:

Marketing Fray: How do you define “successful brand?” Can you give some examples of companies that you think do a great job of building and maintaining a corporate brand, brands within categories, or both?

Peter: First, let me say that there are a lot of reasons a business (or a brand) is “successful” in terms of making money. Things like wide distribution and/or big ad spend have a large effect on sales. And there’s the tangible product or service itself: does it taste good?

Those things aside, the “brand” is a success if it has an image that’s:

1. Distinct in the target consumer’s mind
2. Unique within the category or industry
3. Relevant to the target consumer

If a brand has an image that meets these criteria, the ultimate sign of success should occur: the consumer is positively predisposed to try any product/service with that brand[name] on it and to tell their friends to try it, even without knowing too much about the specific product.

Panera Bread is a good example of a successful brand. People perceive Panera as different than other restaurants and seem to truly understand Panera’s positioning. Panera also has customers who advocate for that brand. Under Armour also enjoys the same kind of “equity.” The managements of these two brands have worked hard to cultivate their brands.

Johnson & Johnson is a good corporate example. Almost like Sunkist oranges, put “J&J” on a product and everybody knows and trusts what they’re going to get.

Marketing Fray: In your experience, what are the critical elements a marketer needs to have in place to build a successful brand?

Peter: There are three mission-critical elements:

1. A financially-optimal target segment
2. An accurate understanding of the target’s needs
3. A way of communicating how your brand will address their needs that’s clear, creative and obsessively consistent.

A financially-optimal target is positively inclined to use your brand and their category consumption is above average. You’re looking for the segment that is, for example, 25% of the households or companies, but account for 50% - 70% of your future profits. You also want a segment that’s fairly homogeneous in terms of “needs,” demographics, and behaviors.

In terms of an “accurate” understanding of their needs, you want solid, quantitative data on this. Not focus group results. Further, you need to measure needs in a special way to make sure you’re capturing the influence of emotional desires, as well as the fundamental impact of more basic, rational “needs.”

There’s no doubt that poor creative execution can doom a brilliant strategy. So can executions that change from year to year. We always encourage marketers to the time to develop the strategy and execution before launching a campaign. It takes far less time to get the campaign right the first time than it does to do it over and over again.

Marketing Fray: We’ve heard you say before that there are no generally-accepted approaches for positioning development. Of the approaches you’ve seen, what works the best and can anyone and everyone use it?

Peter: This two phased-approach is the best one we’ve seen. First you need a quantitative survey to define the target and to get a solid grasp of where the brand is now, relative to competitors, as well as some of the basic options it has in terms of positioning. Next, you should generate and test–‘quanti-latively”–positioning ideas.

For example, you could do a series of focus groups with the target to share and discuss positioning ideas. But, each idea is also formally rated by respondents in terms of relevance, credibility, uniqueness and other measures. This way you get the input and inspiration of the group interaction, but also some “hard” data on how the different ideas perform.

Don’t forget: for more on Peter’s thoughts and perspectives on building a great brand strategy, listen to his recent webcast, “Build Your Brand Like the Big Boys,” on our webcast channel

We sat down with Copernicus’ Eric Paquette, a senior vice president at the firm who’s leading the digital charge, and posed three questions about how and what marketers can do to make good digital marketing decisions.

The main thrust of his recommendations: adapt your current marketing research tools to the digital age.

Smart companies, he says, have already begun to make changes to the kind of information they capture about buyers in their category or industry. And it’s not hard to do.

Here’s more of what he had to say:

Marketing Fray: It’s not exactly new news that marketers have shifted more and more of their attention and budgets to digital marketing efforts. What’s not talked about as much, it seems, is how they are going about figuring out digital investments. Do you have a sense of how they are developing digital marketing plans?

Eric: The entire process of planning marketing communications has gotten dramatically more complicated over the last several years, that’s for sure. The explosion in the use of digital technologies has really changed what marketers need to consider when deciding how, when, and what type of brand communication to share or deliver. It’s not just about digital GRPs anymore.

Yes, when developing digital marketing strategies, marketers and their media planners still have “traditional” concerns like reach, frequency and efficiency in addressing target customers. But they also have to grapple with what these folks will do when they come into contact with a brand, whether through advertising, content they sought out, or buzz they “hear” as others talk about a brand on blogs, Twitter, Facebook, etc.

So on top of “traditional” concerns, marketers and their media planners have to determine how digital fits into the consumer “journey” of learning about, talking about, and hopefully buying the product or service. Does digital play a lead role in the plan, or is it there to support other vehicles? How does mobile fit? What’s more, they also need to worry about the receptivity of the audience to different vehicles, including digital vehicles.

As you can see, there are many factors that go into building digital marketing plans.

In our experience, these days good media planners focus much more closely on integrated communications planning—stitching together “bought” advertising with search strategies; owned content (e.g., the website, proprietary videos or other content, etc.) strategies; and “earned” media (think PR on steroids in our digital, connected world) strategies.

Marketing Fray: What marketing research tools might help them?

Eric: Really, marketers can adapt existing marketing strategy research tools to make them more applicable and actionable in a digital world.

A market segmentation remains a core marketing research building block that they should use. They still need to define customer targets for marketing activities; they just need to adapt market segmentation into make sure the definition offers guidance on these new digital marketing concerns.

There are three ways to do that.

One, because digital technologies make it much easier for us to connect and disseminate information, a market segmentation that will guide digital marketing strategies should include what I’ll call a customer’s “advocacy value.”

Ideally, marketers would like to target folk who love the brand, love to talk about the brand, and have a significant digital “reach” with blogs, social media and the like. They can capture these key pieces of information through a segmentation questionnaire. “Advocacy value” should get factored into the current and potential value of each segment and, therefore, the target selection process.

Secondly, a market segmentation that will help marketers make smart digital decisions describes how a target segment likes to behave on line. Several companies, including our sister company Carat, have defined digital behavior typologies that can be used to guide communications planning.

Are our targets “Authors” who like to create their own content on-line? Are they “Connectors” who like to share content with social media? Or are they simply “Spectators” who like to read, watch or observe the content developed by others? A good market segmentation that will guide digital marketing communications strategies captures this information to help.

Finally, while it seems boring by today’s standards, a digital-age market segmentation research exercise should also capture where our target goes on-line to help guide some of the “bought” digital media strategies. Where do we want to place our banner ads, or do home page take-overs?

Aside from market segmentation, I’d also recommend a second key piece of research, what I’ll call “buying process” research. Basically this is an examination of the “journey”—or how consumers learn and buy in a particular category. It addresses where targets go for information in a category, where they buy, how long they take to make purchase decisions, etc. Is it a research-heavy process, or an impulse-driven purchase? What are the key pieces of information that drive someone to purchase?

This type of marketing research can be a revelation for marketers and their media planners as they map out the communications strategy. The insights in provides helps to clearly define the role that different types of media and communications will play.

Marketing Fray: Any real-world examples of companies using marketing research tools like market segmentation to make better digital strategy decisions?

Eric: We’re starting to see some of the smarter and more ROI-focused companies adopting/adapting these marketing research tools.

They tend to be companies that historically have been good about integrating their market segmentation research and target selection with media planning decisions. They have always known that they can drive significant efficiencies in media planning by understanding the detailed media use of their targets. When marketers find media vehicles used disproportionately by their target, it allows media buyers to essentially buy GRPs at a discount.

Today, these companies have begun to realize that the “old” way of doing things now only solves for a small fraction of their communications plan. The old links between targets and traditional media use still hold value, yet too many critical unanswered questions linger. The smart companies out there will start to fill in these information gaps with research well-designed for the digital marketing world.

For more information on digitally-enhancing your market segmentation, check out Eric’s recent webcast, “Market Segmentation for the Digital Age” on our webcast channel or contact Ami Bowen for a PDF of the presentation.

Market segmentation has become the marketing topic du jour.

Where companies once remained mum on the subject, now they are actively touting their new market segmentations. Even Wal-Mart, the very embodiment of a mass marketer, has announced its intentions to segment the market and focus on specific groups.

To date, Wal-Mart has tried to be “all things to all people,” explained Eduardo Castro-Wright, the retailer’s CEO. Problem is, “you end up under-serving everyone because you don’t have an offering that is specific to that customer segment.”

According to a recent Economist Business Intelligence Unit and Marakon Associates study of senior executives of large companies, 59% had conducted a major market segmentation exercise within the past 2 years.

Peel away the onion a bit and you find that beneath the greater attention and excitement, there’s quite a bit of frustration. The Economist/Marakon study also found that just 14% of senior executives who’d done a segmentation study said they derived any real value from it.

Why are so many so unhappy?

We turned to Copernicus’ resident market segmentation and targeting strategy expert Henry Gamse, Senior Vice President of Statistical and Modeling Services, for answers.

Henry designs and supervises the data analysis for virtually all large-scale quantitative studies done as part of Copernicus consulting engagements. He also leads the segmentation audits the firm does to assess the approach a client currently uses as a first-step to improving the performance of marketing programs.

Here’s what he had to say:

The Marketing Fray: Why do you think segmentation and targeting has recently become such a hot topic?

Henry: A good segmentation provides a company with clear direction on which group represents the best target—one which has a high economic value to a company and can be easily identified in the population or in customer databases. If a segmentation meets these requirements, it will pay for itself many times over, and this is what is causing the big buzz about segmentation.

The Marketing Fray: There’s a great deal of dissatisfaction with outcomes of segmentation exercises. Why do you think this is? Is there a common complaint you hear from marketers about their market segmentation efforts?

Henry: Most segmentations done today leave out the “targeting” part. One company called us recently to complain about the outcome of a segmentation project it had just done with another firm.

“It yielded some interesting groups that were different attitudinally,” he explained, “but we didn’t find a segment we could target efficiently; one which is especially open to our brand, and spends a lot in the category, and has needs which we can understand and address.”

It’s this lack of actionability which drives marketers crazy and renders many segmentation reports—which are usually gargantuan print-outs housed in colorful three-ring binders—little more than expensive doorstops.

The Marketing Fray: Any particular approaches that seem to be the current crowd favorite? What are their pros and cons?

Henry: Occasion segmentations are in demand. Here, the consumption situation, not the consumer, is the unit of analysis, and great attention is focused on the time, place, and reason for the purchase decision. This provides invaluable guidance for tailoring the client’s products and messaging strategies to fit common usage situations.

A product typology segmentation is another newer approach and is particularly useful for retail outlets, restaurants, and hotel chains. Segments are formed based on characteristics of the establishment, such as square footage, layout, product mix, age of the property, surrounding neighborhood, etc. The resulting segments help guide marketing strategy for specific outlet types within a larger chain.

The segmentation types we come across most frequently, however, are “attitudinal”—where groups are defined by opinions, values, or lifestyles—and “needs/benefits”—where groups are defined by category/product needs or desired benefits.

These popular approaches are superficially appealing, but when you get down to it, they are not particularly revealing. While the resulting groups may be quite different in terms of attitudes or product needs, they are practically identical on buying behavior, brand preference, and most importantly, receptivity to a company’s brand, and profitability to that brand.

What’s more, it’s impossible to differentiate between the media exposure patterns of one group versus another or find the segments in databases. When all is said and done, the segmentation is not actionable because there is no clear target.

The Marketing Fray: What are the key attributes of successful segmentations—those that have led to a marketing strategy that significantly grows sales and profits?

Henry: It’s important to think about a successful segmentation as the result of a “process,” rather than merely the outcome of some approach to dividing up the market. A process that leads to a successful segmentation starts by gathering representatives from all the branches of the organization who will be using the segmentation, and talk about how everyone plans to use it.

This upfront work will make it far more likely that the segmentation will address as many collective needs as possible and make it infinitely easier for the organization as a whole to implement it.

The kind of segmentation that forms the foundation of a great marketing strategy is one that provides a detailed, well-balanced picture of the buyers in different groups. In other words, it tells you more about them than just their gender or age, their attitudes, or their needs—it tells you all these things and more.

The groups should also be very different in terms of their economic value to a firm and in their media habits. The process that leads to this kind of segmentation involves testing hundreds of diverse variables including needs, psychographics, demographics, behaviors, media preferences, and more to sort out which are most predictive of heavy spending in the client’s category, openness to the firm’s brand, and other profit-related criteria. It should use the most predictive variables as the basis of segmentation.

The Marketing Fray: If you had the ear of every CEO and CMO around the world for five minutes, what would you say to them about segmentation and targeting?

Henry: Everyone is familiar with the term “segmentation,” but the difference between a good segmentation and a run-of-the-mill segmentation is night and day!

A successful segmentation is more than merely interesting; it is actionable. At the very least, it must clearly identify a target segment which is high in economic value, or better yet, profitability to your brand, and has a distinct set of needs which can be addressed and marketed to.

The vast majority of segmentations on which we are brought in for a “post mortem” do not have a good measure of profitability built into the methodology. I find it incredible (and scary) how many consulting and research firms claim to produce the “financially optimal segmentation”, yet they’re using only a set of attitudes, or demographics, as inputs with no prior thought, testing, or screening to see if they actually predict profitability.

Their claim that these simple, untested inputs produce the financially optimal solution is either incredibly naïve or outright quackery. A few of the attitudes or demographics may be predictive of economic value, but most are not.

As the ultimate decision maker for your company, you must evaluate the competitive proposals carefully and choose a consulting or research partner wisely; it could be one of the most important decisions in your career.

The right choice will positively impact your company’s future for years to come, while the wrong choice will result in a quickly-discarded waste of resources, gathering dust on a shelf.

Market segmentation has become the marketing topic du jour.

Where companies once remained mum on the subject, now they are actively touting their new market segmentations. Even Wal-Mart, the very embodiment of a mass marketer, has announced its intentions to segment the market and focus on specific groups.

To date, Wal-Mart has tried to be “all things to all people,” explained Eduardo Castro-Wright, the retailer’s CEO. Problem is, “you end up under-serving everyone because you don’t have an offering that is specific to that customer segment.”

According to a recent Economist Business Intelligence Unit and Marakon Associates study of senior executives of large companies, 59% had conducted a major market segmentation exercise within the past 2 years.

Peel away the onion a bit and you find that beneath the greater attention and excitement, there’s quite a bit of frustration. The Economist/Marakon study also found that just 14% of senior executives who’d done a segmentation study said they derived any real value from it.

Why are so many so unhappy?

We turned to Copernicus’ resident market segmentation and targeting strategy expert Henry Gamse, Senior Vice President of Statistical and Modeling Services, for answers.

Henry designs and supervises the data analysis for virtually all large-scale quantitative studies done as part of Copernicus consulting engagements. He also leads the segmentation audits the firm does to assess the approach a client currently uses as a first-step to improving the performance of marketing programs.

Here’s what he had to say:

The Marketing Fray: Why do you think segmentation and targeting has recently become such a hot topic?

Henry: A good segmentation provides a company with clear direction on which group represents the best target—one which has a high economic value to a company and can be easily identified in the population or in customer databases. If a segmentation meets these requirements, it will pay for itself many times over, and this is what is causing the big buzz about segmentation.

The Marketing Fray: There’s a great deal of dissatisfaction with outcomes of segmentation exercises. Why do you think this is? Is there a common complaint you hear from marketers about their market segmentation efforts?

Henry: Most segmentations done today leave out the “targeting” part. One company called us recently to complain about the outcome of a segmentation project it had just done with another firm.

“It yielded some interesting groups that were different attitudinally,” he explained, “but we didn’t find a segment we could target efficiently; one which is especially open to our brand, and spends a lot in the category, and has needs which we can understand and address.”

It’s this lack of actionability which drives marketers crazy and renders many segmentation reports—which are usually gargantuan print-outs housed in colorful three-ring binders—little more than expensive doorstops.

The Marketing Fray: Any particular approaches that seem to be the current crowd favorite? What are their pros and cons?

Henry: Occasion segmentations are in demand. Here, the consumption situation, not the consumer, is the unit of analysis, and great attention is focused on the time, place, and reason for the purchase decision. This provides invaluable guidance for tailoring the client’s products and messaging strategies to fit common usage situations.

A product typology segmentation is another newer approach and is particularly useful for retail outlets, restaurants, and hotel chains. Segments are formed based on characteristics of the establishment, such as square footage, layout, product mix, age of the property, surrounding neighborhood, etc. The resulting segments help guide marketing strategy for specific outlet types within a larger chain.

The segmentation types we come across most frequently, however, are “attitudinal”—where groups are defined by opinions, values, or lifestyles—and “needs/benefits”—where groups are defined by category/product needs or desired benefits.

These popular approaches are superficially appealing, but when you get down to it, they are not particularly revealing. While the resulting groups may be quite different in terms of attitudes or product needs, they are practically identical on buying behavior, brand preference, and most importantly, receptivity to a company’s brand, and profitability to that brand.

What’s more, it’s impossible to differentiate between the media exposure patterns of one group versus another or find the segments in databases. When all is said and done, the segmentation is not actionable because there is no clear target.

The Marketing Fray: What are the key attributes of successful segmentations—those that have led to a marketing strategy that significantly grows sales and profits?

Henry: It’s important to think about a successful segmentation as the result of a “process,” rather than merely the outcome of some approach to dividing up the market. A process that leads to a successful segmentation starts by gathering representatives from all the branches of the organization who will be using the segmentation, and talk about how everyone plans to use it.

This upfront work will make it far more likely that the segmentation will address as many collective needs as possible and make it infinitely easier for the organization as a whole to implement it.

The kind of segmentation that forms the foundation of a great marketing strategy is one that provides a detailed, well-balanced picture of the buyers in different groups. In other words, it tells you more about them than just their gender or age, their attitudes, or their needs—it tells you all these things and more.

The groups should also be very different in terms of their economic value to a firm and in their media habits. The process that leads to this kind of segmentation involves testing hundreds of diverse variables including needs, psychographics, demographics, behaviors, media preferences, and more to sort out which are most predictive of heavy spending in the client’s category, openness to the firm’s brand, and other profit-related criteria. It should use the most predictive variables as the basis of segmentation.

The Marketing Fray: If you had the ear of every CEO and CMO around the world for five minutes, what would you say to them about segmentation and targeting?

Henry: Everyone is familiar with the term “segmentation,” but the difference between a good segmentation and a run-of-the-mill segmentation is night and day!

A successful segmentation is more than merely interesting; it is actionable. At the very least, it must clearly identify a target segment which is high in economic value, or better yet, profitability to your brand, and has a distinct set of needs which can be addressed and marketed to.

The vast majority of segmentations on which we are brought in for a “post mortem” do not have a good measure of profitability built into the methodology. I find it incredible (and scary) how many consulting and research firms claim to produce the “financially optimal segmentation”, yet they’re using only a set of attitudes, or demographics, as inputs with no prior thought, testing, or screening to see if they actually predict profitability.

Their claim that these simple, untested inputs produce the financially optimal solution is either incredibly naïve or outright quackery. A few of the attitudes or demographics may be predictive of economic value, but most are not.

As the ultimate decision maker for your company, you must evaluate the competitive proposals carefully and choose a consulting or research partner wisely; it could be one of the most important decisions in your career.

The right choice will positively impact your company’s future for years to come, while the wrong choice will result in a quickly-discarded waste of resources, gathering dust on a shelf.

We sat down with Copernicus’ Eric Paquette, a senior vice president at the firm who’s leading the digital charge, and posed three questions about how and what marketers can do to make good digital marketing decisions.

The main thrust of his recommendations: adapt your current marketing research tools to the digital age.

Smart companies, he says, have already begun to make changes to the kind of information they capture about buyers in their category or industry. And it’s not hard to do.

Here’s more of what he had to say:

Marketing Fray: It’s not exactly new news that marketers have shifted more and more of their attention and budgets to digital marketing efforts. What’s not talked about as much, it seems, is how they are going about figuring out digital investments. Do you have a sense of how they are developing digital marketing plans?

Eric: The entire process of planning marketing communications has gotten dramatically more complicated over the last several years, that’s for sure. The explosion in the use of digital technologies has really changed what marketers need to consider when deciding how, when, and what type of brand communication to share or deliver. It’s not just about digital GRPs anymore.

Yes, when developing digital marketing strategies, marketers and their media planners still have “traditional” concerns like reach, frequency and efficiency in addressing target customers. But they also have to grapple with what these folks will do when they come into contact with a brand, whether through advertising, content they sought out, or buzz they “hear” as others talk about a brand on blogs, Twitter, Facebook, etc.

So on top of “traditional” concerns, marketers and their media planners have to determine how digital fits into the consumer “journey” of learning about, talking about, and hopefully buying the product or service. Does digital play a lead role in the plan, or is it there to support other vehicles? How does mobile fit? What’s more, they also need to worry about the receptivity of the audience to different vehicles, including digital vehicles.

As you can see, there are many factors that go into building digital marketing plans.

In our experience, these days good media planners focus much more closely on integrated communications planning—stitching together “bought” advertising with search strategies; owned content (e.g., the website, proprietary videos or other content, etc.) strategies; and “earned” media (think PR on steroids in our digital, connected world) strategies.

Marketing Fray: What marketing research tools might help them?

Eric: Really, marketers can adapt existing marketing strategy research tools to make them more applicable and actionable in a digital world.

A market segmentation remains a core marketing research building block that they should use. They still need to define customer targets for marketing activities; they just need to adapt market segmentation into make sure the definition offers guidance on these new digital marketing concerns.

There are three ways to do that.

One, because digital technologies make it much easier for us to connect and disseminate information, a market segmentation that will guide digital marketing strategies should include what I’ll call a customer’s “advocacy value.”

Ideally, marketers would like to target folk who love the brand, love to talk about the brand, and have a significant digital “reach” with blogs, social media and the like. They can capture these key pieces of information through a segmentation questionnaire. “Advocacy value” should get factored into the current and potential value of each segment and, therefore, the target selection process.

Secondly, a market segmentation that will help marketers make smart digital decisions describes how a target segment likes to behave on line. Several companies, including our sister company Carat, have defined digital behavior typologies that can be used to guide communications planning.

Are our targets “Authors” who like to create their own content on-line? Are they “Connectors” who like to share content with social media? Or are they simply “Spectators” who like to read, watch or observe the content developed by others? A good market segmentation that will guide digital marketing communications strategies captures this information to help.

Finally, while it seems boring by today’s standards, a digital-age market segmentation research exercise should also capture where our target goes on-line to help guide some of the “bought” digital media strategies. Where do we want to place our banner ads, or do home page take-overs?

Aside from market segmentation, I’d also recommend a second key piece of research, what I’ll call “buying process” research. Basically this is an examination of the “journey”—or how consumers learn and buy in a particular category. It addresses where targets go for information in a category, where they buy, how long they take to make purchase decisions, etc. Is it a research-heavy process, or an impulse-driven purchase? What are the key pieces of information that drive someone to purchase?

This type of marketing research can be a revelation for marketers and their media planners as they map out the communications strategy. The insights in provides helps to clearly define the role that different types of media and communications will play.

Marketing Fray: Any real-world examples of companies using marketing research tools like market segmentation to make better digital strategy decisions?

Eric: We’re starting to see some of the smarter and more ROI-focused companies adopting/adapting these marketing research tools.

They tend to be companies that historically have been good about integrating their market segmentation research and target selection with media planning decisions. They have always known that they can drive significant efficiencies in media planning by understanding the detailed media use of their targets. When marketers find media vehicles used disproportionately by their target, it allows media buyers to essentially buy GRPs at a discount.

Today, these companies have begun to realize that the “old” way of doing things now only solves for a small fraction of their communications plan. The old links between targets and traditional media use still hold value, yet too many critical unanswered questions linger. The smart companies out there will start to fill in these information gaps with research well-designed for the digital marketing world.

For more information on digitally-enhancing your market segmentation, check out Eric’s recent webcast, “Market Segmentation for the Digital Age” on our webcast channel or contact Ami Bowen for a PDF of the presentation.

We were able to grab a few minutes with Copernicus’ Peter Krieg, President and CEO at the firm, to talk about one of his favorite topics: building a great brand strategy.

For close to 30 years, Peter has worked with Fortune 500 and other leading brands to grow their brand equity and profit line. He has industry expertise in retail, travel & hospitality, adult beverages, and B2B, and his past and present client list includes prestigious names like Procter & Gamble, General Electric, and IBM.

In other words, this guy knows his brand strategy stuff. If you missed his webcast on this topic last week, “Build Your Brand Like the Big Boys,” you can get it on-demand on our webcast channel.

The thrust of his suggestions: identify a good (i.e., profitable) target and a motivating positioning and success will follow.

Here’s more of what he had to say:

Marketing Fray: How do you define “successful brand?” Can you give some examples of companies that you think do a great job of building and maintaining a corporate brand, brands within categories, or both?

Peter: First, let me say that there are a lot of reasons a business (or a brand) is “successful” in terms of making money. Things like wide distribution and/or big ad spend have a large effect on sales. And there’s the tangible product or service itself: does it taste good?

Those things aside, the “brand” is a success if it has an image that’s:

1. Distinct in the target consumer’s mind
2. Unique within the category or industry
3. Relevant to the target consumer

If a brand has an image that meets these criteria, the ultimate sign of success should occur: the consumer is positively predisposed to try any product/service with that brand[name] on it and to tell their friends to try it, even without knowing too much about the specific product.

Panera Bread is a good example of a successful brand. People perceive Panera as different than other restaurants and seem to truly understand Panera’s positioning. Panera also has customers who advocate for that brand. Under Armour also enjoys the same kind of “equity.” The managements of these two brands have worked hard to cultivate their brands.

Johnson & Johnson is a good corporate example. Almost like Sunkist oranges, put “J&J” on a product and everybody knows and trusts what they’re going to get.

Marketing Fray: In your experience, what are the critical elements a marketer needs to have in place to build a successful brand?

Peter: There are three mission-critical elements:

1. A financially-optimal target segment
2. An accurate understanding of the target’s needs
3. A way of communicating how your brand will address their needs that’s clear, creative and obsessively consistent.

A financially-optimal target is positively inclined to use your brand and their category consumption is above average. You’re looking for the segment that is, for example, 25% of the households or companies, but account for 50% - 70% of your future profits. You also want a segment that’s fairly homogeneous in terms of “needs,” demographics, and behaviors.

In terms of an “accurate” understanding of their needs, you want solid, quantitative data on this. Not focus group results. Further, you need to measure needs in a special way to make sure you’re capturing the influence of emotional desires, as well as the fundamental impact of more basic, rational “needs.”

There’s no doubt that poor creative execution can doom a brilliant strategy. So can executions that change from year to year. We always encourage marketers to the time to develop the strategy and execution before launching a campaign. It takes far less time to get the campaign right the first time than it does to do it over and over again.

Marketing Fray: We’ve heard you say before that there are no generally-accepted approaches for positioning development. Of the approaches you’ve seen, what works the best and can anyone and everyone use it?

Peter: This two phased-approach is the best one we’ve seen. First you need a quantitative survey to define the target and to get a solid grasp of where the brand is now, relative to competitors, as well as some of the basic options it has in terms of positioning. Next, you should generate and test–‘quanti-latively”–positioning ideas.

For example, you could do a series of focus groups with the target to share and discuss positioning ideas. But, each idea is also formally rated by respondents in terms of relevance, credibility, uniqueness and other measures. This way you get the input and inspiration of the group interaction, but also some “hard” data on how the different ideas perform.

Don’t forget: for more on Peter’s thoughts and perspectives on building a great brand strategy, listen to his recent webcast, “Build Your Brand Like the Big Boys,” on our webcast channel

In case you missed Jeff Maloy’s webcast yesterday, “Branding 2.0: Bring Strategy and Execution Together to Capture Hearts and Minds,” you can watch it now on-demand on our webcast channel.

The main thrust of Jeff’s talk was that if you align the essential elements of a brand strategy—starting with a target that’s high in economic value to a brand—and establish a clear process for evaluating executional elements, you help ensure that every new product, campaign, or program you launch continuously reinforces your brand’s positioning message.

Jeff’s talk generated a couple of questions from viewers, which we posed to him. Here’s what he had to say:

Marketing Fray: What would you say is the biggest predictor of whether a brand’s strategy will help it break through all the competitive clutter?

Jeff: There are many, many factors that impact the ultimate success of a brand’s strategy when it comes to generating awareness, sales, profits and growth. Not all of these factors are within a marketer’s control.

I can say that having a clear, high-value target and developing a positioning based on the needs, problems, and motivations that will most likely inspire this group to make a purchase can make the difference between a brand becoming a market leader vs. an also-ran. Without either of these things, a strategy is much more likely than not to fall flat.

The impact of thinking through the process of execution, particularly for how to go about selecting things like the logo, the packaging, the new product, the ads—all the pieces that you’re counting on to help you break your brand through—cannot be underestimated either.

Marketing Fray: Do you find many companies consider introducing new executional elements—particularly the logo—a “brand strategy?”

Jeff: Definitely true. Executional elements should reflect and embody the brand strategy. They should continuously reinforce the brand’s positioning among key targets. But a logo in and of itself is not a “brand strategy.” While the visual identity may elicit a response, it does not cause the response—the elements of brand strategy do.

Welcome to part 2 of our interview with Rolf Olsen, Marketing Sciences Director at Carat North America. If you haven’t read it yet, be sure to read part 1!

We had a few more questions for him about social media listening and here’s what he had to say:

Marketing Fray: Do you find its mostly bigger companies and brands doing social media listening?

Rolf: It probably is but I don’t believe it should be solely for the “big boys”. Smaller companies are often more agile and can react better to consumer feedback across all social tracking spectrums. Small companies who adopt a more socially focused development strategy are essentially tapping directly into the consumer. As Charlie Sheen would say = winning.

Marketing Fray: What would your definition of a “productive social listening” program be?

Rolf: Accept that it could influence all part of your business and embrace it. Seeing the results of an integrated social strategy will create advocates who sing your praises. Think of it as an unpaid work force, driven by passion for your product.

AND, one that does not just cost you money by just drinking the kool-aid sold by listening companies…

Marketing Fray: If you had the ear of every CMO in the world for five minutes, what would you say to them about developing a social listening program?

Rolf: Think about what your company stands for and then see what people actually say… it can be eye-opening.

Remember, the social “channel” is not an extension of your traditional marketing machine, this is your opportunity to make a personal connection and hear what your consumers actually want, beyond what your normal market research tells you.

Here’s part 2 of our expert interview with Kevin Clancy where he answered questions posed by attendees of his recent Brand ManageCamp “Fresh Thinking Starts Here” webcast series, as well as a few of our own.

Need the background before you read part 2? Read part 1.

Otherwise, we’ll pick up where we left off yesterday….

Q: Does the idea of a revolutionary selling message still apply to smaller brands? How about non-profits?

Kevin: No matter the industry; product or service category; for-profit or not-for-profit; whether your customer is a consumer or a business, finding a revolutionary selling message most definitely applies when it comes to improving the ROI of advertising programs.

Regardless of the size of their budget or market share, I often tell companies to start the search for a revolutionary selling message with an audit of brand perceptions and preferences.

Now, the way a company might go about researching perceptions and preferences among current and potential customers might differ in scale and scope, but it’s still possible. Any firm or organization can ask target customers what they think of a company and its competitors—does it have a clear or fuzzy brand image? It’s also possible to ask which brands they prefer.

Q: Do you think the same message can be used in all forms of communications including advertising, PR, the website, social media, sales force, etc.?

Kevin: If you’re a McDonald’s and you’re spending, for the sake of argument, $300M in measured media, you can afford to communicate a somewhat different message through different media.

But there are very few McDonald’s.

For the overwhelming majority of brands, in the overwhelming majority of product categories, I firmly believe that it should be the same message. It should be the same message in every media and in every communications vehicle. Not just advertising, but packaging, PR, the website, everything.

Q: Do you recommend continued advertising in a market in which you already have a strong presence? We have advertised for 5 years in a medium, but have not had a direct increase in sales as a result (people don’t mention this medium when asked)?

Kevin: There’s a lot of research that suggests that if you cut out your advertising budget in a medium you’re hurt. I’d be wary about cutting it out.

On the other hand, I would work my tail off to make sure that the advertising that I’m using in that vehicle is as strong as it can possibly be. If it is as strong as it can be, you will see the results within three months.

Q: What do you mean by 3-sigma?

Kevin: A statistical term, sigma is a standard deviation from the mean. Putting it into the context of my presentation now, the average ROI of an ad campaign for a CPG brand is negative. For a non-CPG brand, it’s pretty close to 0. A 3-sigma advertising campaign would be three standard deviations away from average, meaning the campaign produces a dramatic, highly positive ROI.

Q: What if you don’t have the money to test alternative advertising ideas? What do you recommend a company do?

Kevin: If you don’t have a significant budget for copy testing, for example, you can bring out alternative ad executions, each expressed on a piece of paper (or screen) as an ad concept with a brief description of what the execution might be in small group discussions or individual interviews [with target customers].

What I sometimes do if a company has absolutely no money is to introduce them to professors at business schools around the country. Often the professors are willing to turn their students loose on the problem. If the company is willing to pay out-of-pocket costs, the professor will get a class of students involved in doing some ad testing or concept testing…or any other kind of testing for that matter.

So a lack of a big budget is not a reason why you can’t or shouldn’t do the kind of things I’m talking about.

Q: How do you find out about online behavior of targets? Do you need to do a large-scale research study?

Kevin: I’m working on the assumption that you have thought about who the best target is in your product category. If you haven’t thought about that before, I’d encourage you to send Copernicus a note and we’ll send you something to read on that topic.

Assuming you know who it is you’re going after, you can do a large-scale survey among 500-600 target group members in your category or a small-scale survey if you have a small budget among, say, 50 people and everyone can do that.

Q: From my experience in CPG, if your demographic is fairly straightforward in terms of age, gender and income-level and things of that sort, you can buy syndicated data [about online behavior of targets] and that’s not always that expensive to buy. There are folks out there that are following lots of different demographics and psychographics on how they are spending their time both online and offline. What do you think of syndicated data?

Kevin: That’s true, there are many sources of syndicated data. Personally, I’m a stronger proponent of spending the same amount of money [you’d spend on syndicated data] and doing a survey among your target customers. The advantage is you get data which is really customized for your brand, as opposed to data which is attempting to work across a broad range of brands.

So I agree with you that you can buy it, I tend to think it’s often better if you tried to customize it.

Q: You hear so much about social media in relation to the idea of “dominating the internet.” The idea is to “dominate” conversation on the web. But you don’t hear as much about updating, designing, fixing the website in order to “dominate.” Why do you think that is?

Kevin: I’m by no means an expert on this topic, though I suspect the newness and novelty of social media as a marketing tactic has a lot to do with it.

Websites had their day in the sun when the internet was as novel a thing as social networks are today. From what I’ve seen recently, however, marketers are increasingly coming back to their websites and evaluating them in terms of untapped opportunities to improve ROI.

Just another reminder, you can read part 1 of our interview with Kevin and/or watch his free webcast on-demand at brandmanagecamp.com/webcasts/.

Debate about the size, shape, direction, and even the very existence of a purchase funnel has raged on for a few years now as marketers work hard to figure out how best to get their target customers to think about, talk about, buy, and maybe even love, their brands.

One recent description we liked, for example, came from Jim Lecinski, managing director of U.S. sales and service at Google, who maintains, “the funnel is now more like a neuron, with branches that let shoppers move forward and backward through the process until they’re ready to make a decision.”

Regardless of where they net out on the funnel issue, however, most agree identifying which among the exploding number of opportunities for marketers to influence the purchase decision will produce the highest return on investment has become a both a critical and often frustratingly complex process.

“The reality is marketers have to pull more levers today than they ever had to before. All of us are consuming media in so many different ways—some people are only online, some only watch TV,” Dina Howell, CEO of Saatchi & Saatchi’s in-store marketing arm, told the Wall Street Journal this past April.

“The bulk [are] somewhere in the middle, and that’s what’s making it harder to determine what is the correct formula.”

We sat down with Copernicus’ CEO Peter Krieg to get his thoughts and big picture perspectives on how brands can best market themselves to shoppers as they move through the ever-expanding path to purchase.

Here’s what Peter, our resident retail industry expert and a pioneer of shopping occasion segmentation research, had to say:

Marketing Frayers: Can marketers count on customers following a general direction down the path to purchase anymore?

Peter: The general direction remains the same, yes. Something—an event, a situation, a mealtime, seeing friends with a product, reading an article, business expansion, you name it—inspires a decision-maker to explore the different products and services available. He or she considers the options, makes a purchase, feels satisfied, and–it’s hoped–shares experiences with and ultimately influences others.

What’s changed is the sheer number of potential sources of information that might sway the decision-maker toward one brand or another and one channel or distributor or another. Obviously it’s easier and faster than ever for the decision-maker to access the multitudes of information, compare prices, and purchase locations. It’s also easier and faster for decision-makers to share opinions, reviews, and news with other decision-makers.

What’s also amazing to many of us veteran marketers is whether someone is shopping for a car, computer, insurance policies, industrial products, diapers, or even a toothpaste, they’re investing some amount of time in exploring options…sometimes while they’re already in the process of shopping at a store.

There’s a growing sense that ALL marketers now have to consider, not just what our client P&G calls the first and second moments of truth—seeing the product on the shelf and using/experiencing the product or service after purchase—but all the “store back” and “store forward” moments where any other competitor in the category or industry has the potential to move shoppers toward one brand or another, and one purchase channel or another.

Marketing Frayers: How have you seen companies change the way they approach moving customers through the path to purchase towards their brands?

Peter: Pre- the digital and mobile media revolutions, we worked with clients to understand the effect different types of shopping occasions had on their brands. We’d help them assess the profitability of each shopping occasion and often connected people segments to shopper segments.

We could tell a client, for example, your most profitable segment of people spend 50% of their budget for the category on a “weekend ritual” shopping trip, 25% on a “seasonal” shop, 20% on a “spur of the moment” purchase, and 5% on an “emergency” to give, among other things, some macro-level guidance on positioning for their product or services and innovation efforts.

We could also help them profile each retail location by shopper type to direct in-store merchandising, promotions, displays, etc., toward the needs and preferences of the predominant shopper segments.

These days, however, clients have moved shopper marketing way beyond the four walls of a bricks-and-mortar store…and the digital equivalent of four walls of an e-commerce website. I completely agree with what Dina Howell [CEO of Saatchi &Saatchi X] said–that shopper marketing “isn’t just about cardboard displays anymore—you need to accommodate the way shoppers behave now, and that means online and in stores.”

As a result, we now chart a shopper’s complete path to purchase to identify where and why the client is (or isn’t) on this journey … and where and how an increase in a client’s presence will have the greatest effect on sales, loyalty, and advocacy.

For instance, where and how to they begin their search for a product or service in the category? What information are they looking for? If they’re going to the company’s website, where do they go? What are their digital, social, and mobile media habits? How likely are they to advocate for the brand?

Marketing Frayers: At the start of the year, Booz & Co said manufacturer spending on shopper marketing has just about doubled-over the past five years. It currently totals $35 billion with anticipated annual growth of 15%. What would you say are the key opportunities for marketers to make the most from their shopper marketing investments?

Peter: I’m by no means the first to observe that there’s a great deal of convergence going on as more and more shopper marketing campaigns cut across different media and go beyond the online or offline purchase channel. Integration of shopper marketing with overall branding efforts is something we’re reading, hearing about, promoting, and seeing in action on a much more regular basis than ever before.

With that in mind, the biggest opportunity marketers in general have is to get everyone working against the same target group—the customers they’ve identified as the ones with the highest economic and marketing value to the brand.

For shopper marketers specifically, understanding the “mix” of shopping occasions of the key target group, along with what motivates them to purchase the brand; preferences for online and offline channels or retailers; customer experience preferences and needs; interest in new products and services; and the function and possible influence of traditional, digital, and mobile media along the path to purchase, goes a long way towards improving overall effectiveness and efficiency.

Successful shopper marketing—whether through a bricks-and-mortar or e-commerce channel—still comes down to understanding which customers on which shopping occasions hold the most potential profit opportunity and the ability to translate this information into positive interactions and experiences with the brand at key moments in the purchase process.

There’s a huge opportunity for marketers to arm their sales force and/or key account managers with profiles of the shopper mix at the retailer, e-tailer, and even individual store-level. Connect shopper types with merchandising, promotion, in-store display, experiences, etc., and you’ll go a long way towards cinching the purchase of your brand at a particular location.

Likewise on the ecommerce side, there’s a huge opportunity to arm website developers and managers with guidance to enhance experiences and maximize sales through that channel. We worked with Under Armour, for instance, to profile the different types of shoppers on its website to improve sales via that channel.

Marketing Frayers: What do you think are the big trends in shopper marketing?

Peter: I mentioned integration, though I think that’s a longer-term aspiration.

On the tactical level, product marketers increasingly use both traditional in-store tactics, as well as digital tactics on retailer websites. And mobile just keeps getting bigger. I saw Juniper Research’s forecast that spending on mobile retail campaigns in 2012 will hit $15 billion globally—a 50%increase over 2011!

One of the biggest trends I see is getting some strategy behind shopper marketing efforts.

Everyone knows there’s still a chance to influence a sale at the point-of-purchase. It’s the who, when, and how companies have to solve for now in order to create some competitive advantage along the path to purchase, generate the most incremental sales and profits at the point-of-purchase, and foster loyalty and advocacy beyond it.

Another trend along the lines of strategy development I see more of is product marketers investing more time gathering insights about the shopper mix at different points of distribution. Marketers use this knowledge to improve line reviews with key retailers, to become more fact-based in joint ventures and partnerships, and to figure out which products could be sold in new channels of distribution.

Marketing Frayers: If you had the ear of every CMO in the world for five minutes right now, what would you tell them about best practices for marketing to shoppers along the path to purchase?

Peter: Some marketers call them “touch points”, Google calls them “zero moments of truth,” P&G has their terminology. Regardless of whether there’s ever agreement on what to call all the different opportunities marketers have to influence the ultimate purchase decision, it’s clear that in every category and industry marketers are trying to stay one step ahead of each other when it comes to sustainably persuading decision-makers to choose their brand.

There’s a reason why many marketers have a great sense of urgency for getting a sound strategy in place to guide shopper marketing decisions. As companies increase their budgets for shopper marketing, the pressure will build to demonstrate incremental profits on investment.

The marketers that will be in the best position to do that—and do it consistently—are the ones that pinpoint the customers and shopping occasions that have the highest potential profit value in offline and online distribution channels.

They’re the ones who also get a comprehensive understanding of the critical points along their their target customer’s and shopper’s path to purchase. If your brand isn’t tapping an opportunity to influence a decision-maker at a critical point, figure out why and what kind of fix will generate the biggest return.

To learn more about our shopper insights research and consulting services, visit copernicusmarketing.com/services/shopper-insights.

According to IBM’s Global Chief Marketing Officers study, one of the TOP priority for CMOs “is to enhance customer loyalty and encourage satisfied customers to advocate for their brands.” Most marketers also agree that fostering loyalty among current customers and motivating advocacy behaviors is, more often than not, currently an untapped opportunity to improve profitability.

Certainly there’s plenty of evidence to suggest there’s something to that line of thinking.

The American Customer Satisfaction Index, for example, reported that the cross-industry satisfaction average hovers around 76%—a “C” grade—and hasn’t budged for two years. The lower the level of satisfaction, the higher the likelihood the customer won’t purchase the brand again. Not surprisingly, a Bain Consulting study found the average company loses 20%-40% of its customers every year.

Unfortunately, many marketers aren’t sure what to do about the problem. The same IBM CMO study reported that most CMOs feel under-prepared to deal with decreasing brand loyalty.

We asked Kevin Clancy, chairman of Copernicus, for a strategic perspective on what marketers can do to foster loyalty to their brands. Here’s what he had to say….

Mzine: Many companies seem to have ongoing struggles with maintaining and growing loyalty to their brands. Obviously there are many potential contributing factors, but to your way of thinking, what are some of the major ones?

Kevin: In our work with B2B and B2C brands in a variety of industries, we’ve discovered that poor targeting and lack of a consistent, compelling positioning are major reasons why many companies struggle to connect customers to their brand.

There are some people who–no matter what a marketer says or does–are just not interested in a particular brand. They wouldn’t take it for free. It’s going to be an expensive and maybe even impossible proposition to try to convert them from a completely disinterested buyer to a loyal customer.

Still, it’s not an infrequent occurrence to hear a company declare plans to target non-users of their brand without any indication that they know how many non-users are even open to switching or giving some share of their requirements to the company’s brand.

Just like if you’re on the wrong train, every stop is the wrong stop, if you start with the wrong target, it’s going to be a challenge to get where you want to go as far as growing loyalty.

Mzine: What’s the connection between a strong positioning and growing loyalty?

Kevin: Establishing an emotional connection between their brand and target consumers is something marketers talk about a lot.

Interestingly, when Copernicus asked consumers about the “personal or emotional connection with their preferred brand” across a variety of product and service categories, less than 10% on average claimed a “strong” connection. Just 20%-25% of consumers on average reported even a moderate emotional connection to a brand.

While it did appear an emotional connection was more readily formed in certain product categories–likely due in large part to the innate characteristics of the category–generally speaking, it’s up to marketers to encourage and help forge those higher-order bonds between their brands and the people who use them. One of the best ways marketers can do that is by solving customer problems with products or services.

A criteria we suggest marketers consider when assessing the potential profitability of different market segments is the size of the problems buyers in the group have that brands in the category or industry can solve with products and services. We have found time and time again that the bigger the problem a marketer can solve, the bigger the market response.

Carrying that thinking forward one more step, the bigger the problem on which marketers base the positioning strategy for their brands, the bigger the market and emotional response.

Mzine: Do you think companies are currently focused on the right things when it comes to growing loyalty to their brands?

Kevin: We have sometimes observed a tendency among senior management to get preoccupied with a metric—more often than not the Net Promoter Score—and improving it rather than focusing on what the barriers to loyalty are among current customers…and doing something about those barriers.

A brand’s Net Promoter Score, of course, is calculated by asking people on an 11-point “recommend” scale the “ultimate question:” how likely are they to recommend the brand to a friend or colleague? The scale runs from zero (“definitely would not recommend this brand”) to 10 (“definitely would recommend”).

People who score 9 or 10 are labeled “promoters”; people who score 0-6 are, in turn, labeled “detractors”; the 7’s and 8’s are ignored. Subtract the percent of detractors from the percent of promoters and you have the “net promoter score.”

While it’s not a bad metric, it’s only one behavioral measure of the far more complex concept of “brand loyalty.” Same can be said for fans on Facebook, followers on Twitter, and so on—they are but one measure and don’t offer much in the way of prescriptive guidance on the most profitable ways companies can improve that measure.

We’ve also sometimes found a tendency to hone in on a program that will encourage loyalty. I have no less than eight different “rewards” cards from different stores I go to on my key chain, for instance. How well those programs work in terms of achieving increasing levels of loyalty, however, is more a reflection of the strategy on which they are based.

And that’s the real ultimate question marketers should be asking: how do you integrate growing loyalty into your marketing strategy to take advantage of this untapped opportunity?

Marketers that have focused on taking a more comprehensive view of growing loyalty—that it’s about targeting the right people, with the right message, with the right kinds of campaigns, programs, and experiences with the brand—have seen the greatest success in this area.

Mzine: Can you give some examples of companies that have done that?

Kevin: Everyone seems to cite Apple and certainly it’s a ready-case to point to in order to demonstrate the effect of developing and maintaining a strong, loyalty-inducing positioning.

It did it by solving a pretty major problem consumers were having with PCs—they were frustrating and sometimes incomprehensible to use—by offering a product that was the exact opposite—user-friendly and easy to use. One of Steve Jobs’ many claims to fame was his religious focus on making Apple’s products “plug and play.”

The more the company stayed razor-focused on that positioning and consistently delivering on it, the better it did generating strong, positive feelings among customers. It was/is easy for customers to love Apple and have those feelings develop into heightened levels of loyalty that are the envy of the business community.

In recent years, McDonald’s by all appearances has very effectively targeted parents and families by positioning itself as the brand with something every member of the family can love. The chain has expanded and upgraded menu offerings to include something fun and tasty for the kids—with the promise of more reasonable, calorie-conscious portions—and more sophisticated fare for the folks.

In the opposite extreme—more of an anti-case—Avis Rental Car recently switched its long-standing positioning of “the brand that tries harder for its customers” to the brand that helps corporate travelers feel less stress and be more productive.

Sure, lots of stress and lack of productivity are two big problems business travelers have, yet it’s pretty unclear how the Avis brand does much to chip away at the problem with its services—it’s still just renting out the same kinds of cars offered by its competitors.

It’s not providing an actual solution to that big problem, and it’s the solution where the lovin’ feeling customers have for the brands they buy and use comes from.

Mzine: If you had the ear of every CEO and CMO for five minutes, what would you say to them about growing loyalty to their brands?

Kevin: When you chart out a model of how sales occur, it usually looks something like this: first a marketer approaches a target market, they build awareness, achieve distribution, stimulate trial, encourage repeat, foster loyalty, etc. Loyalty may come toward the end of the sales process, but marketers need to start taking the steps to build brand loyalty from the very beginning.

If marketers want to grow loyalty, there’s no better place to start than with the most important strategic decision there is: who to target. It makes little economic sense to invest marketing dollars in fostering loyalty among customers who are not profitable to a brand or all that likely to remain loyal in the first place.

Once you have a target group, you need to figure out how you’re going to motivate them to consider your brand and do it in a way that fosters the kind of strong, positive feelings that enhance loyalty. Remember that an emotional connection is something that you have to work hard at building over time. It’s not something that comes from having a hip new logo or clever, funny ads…. It comes from providing products and services that consistently deliver something of meaningful value to a customer.

Marketers who take the time to learn more about problems target customers have that products and services in the category can feasibly and profitably solve and build their brand’s positioning around delivering that solution will have an infinitely easier time earning the long-term devotion and allegiance of target customers.

Again, loyalty isn’t something marketers only need to start worrying about after a customer has made his or her first purchase. Growing loyalty isn’t just a matter of finding the right reward program or return-visit incentive. A large part of success in this area comes from making strategic decisions that prime the pump, so to speak, for loyalty.

To watch Kevin’s recent webcast on this topic for the American Marketing Association visit: goo.gl/AsyAx