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Industry Insights

Eliminating Advertising ROI Anxiety in 2012

As 2011 winds down, forecasters are out in force with prognostications for ad spending in 2012 and beyond. With U.S. presidential elections, the summer Olympics, and European soccer championships on the horizon for next year, not surprisingly, so is growth in ad expenditures.

“There has been some downgrade in spending in the fourth quarter, but we are quite reassured,” Steve King, CEO of media firm ZenithOptimedia, explained to The Hollywood Reporter about current ad market trends. “There has been no dramatic change like we saw in 2008.”

He described the 2012 ad market as one characterized not by “the exuberance of the 1980s and ’90s, but continued spending on proven, trusted ways of getting returns” like TV and the web.

Likewise, Brian Wieser, senior research analyst at Pivotal Research Group, predicts that in 2012, “ad media will feel a ‘haves versus have-nots crunch.’” As he clarified, “simply put, in scarce times, marketers are concentrating their budgets among their primary medium (often network TV for large brands seeking awareness) and a secondary medium (often digital platforms for traditional brand marketers, who typically pursue engagement-based outcomes among a subset of the population who are aware of their brand attributes).”

Our takeaway from these observations: yielding a highly-positive return on investment has not decreased at all in importance. Marketing accountability is as important as it has ever been.

Sticking with tried-and-true media vehicles that have performed reliably may be one way marketers can alleviate advertising ROI anxiety. We have five more solutions to knock it out all together in 2012:

1. Get a revolutionary selling message.

As much as many marketers rely on TV and the web to yield a solid ROI, much of traditional and online advertising remains a complete mystery to target customers. A shocking number of prime-time television spots, for example, consist of 27 seconds of an unrelated, irrelevant, perhaps humorous story and 3 seconds of brand mention. You can’t build sales or a brand by communicating either a non-message or a message that no one understands. You HAVE TO give people a reason to buy your brand.

2. To find a revolutionary selling message, start with an audit of brand perceptions and preferences.

Any firm or organization can ask target customers what they think of your brand and its competitors—does it have a clear or fuzzy brand image? How does your brand compare to competitors on characteristics that your target customers would like to see in a product or service in the category or industry? It’s also possible to ask which brands they prefer.

3. Communicate the SAME revolutionary selling message across all mediums.

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. The overwhelming majority of brands, in the overwhelming majority of product categories should communicate 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.

4. Test your way to a 3-sigma execution.

Research firm Dynamic Logic found creative quality is 50% to 75% responsible for a campaign’s success or failure. Yet more often than not, companies develop and test too few commercials. While many companies regularly test hundreds of product and service concepts, getting a read on only one or maybe two ad campaign concepts is pretty commonplace. Expanding the number of ad concepts tested BEFORE developing a campaign will dramatically increase the probability of finding truly breakthrough creative.

5. Get to know digital behaviors.

Taking the time to research the digital behaviors of your target customers–where they go, what they do, what they search for, how they search, and what they need in a website–is absolutely necessary to dominating the internet. With all the attention on social media, “websites haven’t been bright and shiny for years now; they’re more de rigueur,” wrote David Armano on the Harvard Business Review blog. “I have to conclude that getting your website to completely satisfy business, brand and user goals is still elusive for many companies.” As a result, many marketers are increasingly coming back to their websites and evaluating them in terms of untapped ROI opportunities.

As Scott Briskman, now of Signal to Voice, once famously wrote, “It doesn’t matter how good your delivery system is if the creative sucks.” Using consistently-performing media certainly makes sense as far as taking steps to ensure you achieve highly positive ROI. Going a few paces further to get other inputs to performance in exceptional working order will greatly enhance the power of your advertising in the year ahead.

Marketing Cartoon

Illustrated by C. Madden

Copernican Exploration

The “Disappearing” Middle Class: Is It Really Time to Shift Your Strategy?

“As income falls and diversity rises, a smaller, less homogeneous middle class is emerging—and you’d better shift your strategies,” urged an article in AdAge.

“A wide swath of American companies is convinced that the consumer market is bifurcating into high and low ends and eroding in the middle. They have to alter the way they research, develop and market their products,” reported the Wall Street Journal.

“Companies have thought that if you’re in the middle, you’re safe. But that’s not where the consumer is anymore,” warned Deborah Weinswig, an analyst with Citigroup.

Whether or not every product, service, and brand marketer in America needs to shift their strategy, of course, is not as straightforward a question to answer as these statements from authoritative sources may make it sound. There are at least a few reasons why a marketer may want to think twice.

For one thing, the notion of a “vanishing middle class” of Americans itself has long been a controversial topic, primarily because the very definition of “middle class” is so ambiguous. A quick internet scan of definitions of “American middle class”, for example, yielded wildly different sizes ranging from 25% to almost 70% of the population.

Some say “middle class” is more a state of mind than an economic distinction anyway.

“Historically, sociologists have defined ‘middle class’ as those with salaries,” explained one sociologist from the National Council of Applied Economic Research. “I think ‘middle class’ is very much a state of mind.”

“Everyone wants to believe they are middle class,” said Dante Chinni, journalist and founder of the Patchwork Nation. “For people on the bottom and the top of the wage scale the phrase connotes a certain Regular Joe cachet.”

If membership in the middle class is, in fact, self-determined, we haven’t seen any evidence that a decreasing number of consumers define themselves as Middle Americans.

Many self-described Middle Americans do indicate they have less discretionary income to spend. Just-published analysis done by the non-partisan Congressional Budget Office revealed that the middle three-fifths—60% of the U.S. population—has essentially the same share of after-tax income now as it did 20 years ago. Meanwhile, the cost of living has increased dramatically over the course of that time and everyone cut back during the recession. The middle class specifically decreased spending between an estimated 10% to 13%.

Yet even AdAge admits, “clearly, people [in the middle class] are still spending money and buying products.”

Maybe the middle three-fifths isn’t spending at the same level or rate as the top fifth of the population, but that doesn’t mean there isn’t a healthy-sized segment of middle income Americans ready to make a purchase and with money to spend. Considering that globally the middle class is surging–The Christian Science Monitor reported that by 2030, the global middle class will at least double in size to 5 billion—to the extent that products, services, and brands in a category can be cross-marketed among the middle classes in different countries, continuing to target middle class America could be quite cost-effective and lucrative. Especially if all these other companies have abandoned them.

The squeeze on the middle market of brands in some categories is much more likely the result of the increasingly indistinguishable differences between the quality of brands along the pricing spectrum than it is the contraction in the size of the American middle class.

Regardless of their income bracket, if consumers can get the same level of quality, don’t need the cache of a brand name, and can save a few bucks in the process, they just might “trade down” to a lower-priced dish soap, clothing brand, or car. In 2008—before the recession hit—estimates already put the “trading down market” at $1 trillion in the U.S. (out of consumer spending of $3.7 trillion), up from $700 billion in 2005.

At the same time, as the gulf between the prices of high-end and middle market brands have narrowed, there’s much less of an economic impediment to “trading up”—paying a 50%-200% premium to get what’s perceived as a better product or experience.

Middle class consumers may trade up or trade down in some categories, on some purchasing occasions, but it appears they’re doing it because marketers—either through pricing, product quality, packaging, customer experience, and more—are supplying them with compelling reasons to do that. A bifurcating market may just be marketer-made.

Bemoaning the death of a middle class of people and brands seems premature as does an across-the-board shift in strategy. Though many in the middle three-fifth are quite pressed financially, that doesn’t mean there are fewer consumers looking for a superior balance of price and value in most product and service categories. A two-pronged market where only high-end, prestige brands and low-end, lowest-possible-price products and services will survive is not a fait accompli.

Discovery of the Month

Steve Jobs: Facts and Fictions

Since his death a few months ago, Steve Jobs has been heralded as many things. A visionary, a true inventor, a business hero—the list is long and makes it clear that the man and the products Apple sold were/are greatly admired.

As with any legend that gets told and retold though, sometimes the facts get glossed over, toned down, or even left out all together. As a result, every behavior ascribed to the champion of the story contributes mightily to success and are, therefore, worth emulating. Before the tales of Jobs’ alleged propensity for going on gut feel alone and how much his intuition-driven decision-making style contributed to his success gets blown too far out of proportion, let’s take a closer look at history.

While we haven’t personally come across an interview or speech he gave where he actually utters the words himself yet, Jobs reportedly abhorred all forms of consumer research. He’s purported to have believed that research reflected the needs, wants, attitudes, habits and preferences of today, not tomorrow. Rumor has it that he trusted in his innate ability to make a marketing decision—whether about a new product, an ad campaign, packaging, or store layout.

Assuming for the sake of argument that the zeitgeist has it right, the real question to consider is how did this intuition-driven decision-making style fare?

“Everyone thinks of Jobs as the genius who gave us the iPod, MacBooks, the iTunes store, the iPhone, the iPad, and so on,” wrote Nick Schulz in a piece for the National Review Online this past summer.

“Yes, he transformed personal computing and multimedia. But let’s not forget what else Jobs did:

• Apple I – failure
• Apple II – failed to take off until the floppy disk was introduced
• Lisa - “an epic failure”
• NeXT computer – a “big nothing-burger of a company”

Even the iconic Macintosh was not successful initially and Jobs famously got the boot from the division for failing to spur sales.

True, no one could claim with any certainty that marketing research could have helped avoid those failures or with resuscitating the product when sales proved disappointing. At the same time, it’s at least safe to say pure gut instinct didn’t reliably contribute to Jobs’ market or early career success either.

For an alternative theory to Jobs’ more recent product and business triumphs, consider his ability to focus the company entirely on consistent delivery of the clear and compelling positioning, “easy to use.” In all the commentary about Jobs, the vignettes about the hard–sometimes viewed as questionable–trade-offs he made in order to ensure that Apple’s products worked seamlessly together and were something that anyone without a tech background or engineering degree could operate indicate that this guy understood the power of making a brand stand for something.

Instead of “plug and pray,” as one commentator describe other technology products, Apple offered products that were truly “plug and play.”

Was it a gut instinct that led Jobs to “easy to use?” It certainly could have been, though it’s hard to believe there wasn’t some awareness among decision-makers at Apple about how other companies were developing and marketing their products, not to mention what users of those products complained about.

The information doesn’t come direct from the horse’s mouth, but in an interview with The Hub a few years ago, Apple’s co-founder Steve Wozniak, for example, described the early computer market: “Here was the world in 1975, and a whole bunch of people were trying to make money on low-cost microprocessors and build computers with switches and lights—like every computer ever had been.” This knowledge inspired him to do something different and design a computer that a “normal, average” person could use.

Apple’s cult following also afforded it a variety of resources as far as finding out what users like and don’t like, would like but can’t find, etc. Not too many companies have a MacWorld magazine and annual trade show event, blogs, and websites independently operated and dedicated to all-things related to the brand and using its products. It’s hard to believe at some point Jobs and others at Apple didn’t tap these sources to at least do some informal customer research.

Now an argument could be made against the necessity of certain kinds of marketing research in some technology categories that are changing every six months. Jobs may have had a point that if you ask consumers how likely they are to buy a product or service that’s entirely new and never been seen before—as was the case at one point in time with home computers—they’ll most likely tell you that they won’t buy the product.

The fact remains, however, that most categories aren’t even changing every five years, let alone six months. Practically-speaking, most new products and services aren’t as radical, game-changing, or so totally breakthrough that potential target customers couldn’t offer some insights into their viability or direction on how to market them most effectively and efficiently.

In our experience, the heroic tales of going on gut feel alone turn out to be much less the stuff of business legend than they first appear. Reports of terrific performance are more often than not greatly exaggerated just as the role of research, business experience, and the market knowledge of the individual are often minimized for effect. With that in mind, we suspect Steve Jobs made a whole lot more informed gut-decisions, at least in Apple’s more recent history, than ones based purely on hunch alone.

What We’re Reading

Leading-Edge Marketing Research: 21st Century Tools and Practices

Edited by Robert Kaden, Gerald Linda, Melvin Prince (Sage Publishing, November 2011)

A just-published anthology, Leading Edge Marketing Research: 21st-Century Tools and Practices showcases the excitement of a field where discoveries abound and researchers are valued for solving weighty problems and minimizing risks. Nearly 40 other authors–many considered visionaries in the field of research and marketing–provide rich new tools to measure and analyze consumer attitudes, combined with existing databases, online bulletin boards, social media, neuroscience, radio frequency identification (RFID) tags, behavioral economics, and more.

Truth be told, we’re partial to this book for a reason.

Copernicus’ Kevin Clancy and Ami Bowen contributed Chapter 6, “State-of-the-Science Market Segmentation: Making Results Actionable for Marketers,” to this exciting compilation of industry best-thinking.

The duo make the case that a truly state-of-the-science approach to market segmentation focuses as much on ensuring the relevance and applicability of the outcome to fundamental strategic decisions as it does on the technical complexity of the algorithm or analytical technique used to sort buyers into groups.

Download an excerpt of their chapter from Leading Edge Marketing Research.

“For approximately 50 years,” say Kevin and Ami, “knowledge of how a market segments and what constitutes a good market target has been the sine qua non of marketing strategy. No wonder most marketing textbooks include among their introductory chapters a discussion of market segmentation and targeting.”

“Yet some in the research industry say market segmentation is no longer relevant in today’s marketplace. We say unless it achieves state-of-the-science standards of actionability, it probably isn’t.”

With an eye towards who within an organization will use the results and how they will use them, along with clever measures of profitability and a range of descriptive variables to test, the two describe how marketers can tap into the full potential of this critical strategic research tool to improve performance and ROI.

To learn more about Leading Edge Marketing Research and order a copy, visit Amazon.com.

Buy now on…..

Coming Attractions

Kevin Clancy to Speak at Local AMA Chapter Events

AMA Boston

Topic: “Inspiration, Aspiration and Transformation: Overcoming Testosterone-Driven Decision Making and Problematic Research to Build Extraordinary Strategies”

Tuesday, February 28, 2012
6:00 PM
Hyatt Regency Boston

AMA Richmond

Topic: “Inspiration, Aspiration and Transformation: Building Extraordinary Marketing Programs”

Thursday, March 15, 2012
12:00 PM
University of Richmond Jepson Alumni Center

Happy holidays and best wishes for 2012 to all!

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Industry Insights

“Actionable Insights”: Watchword or Buzzword?

We’re only one year into the 2010s, but we’re already concerned that the term “actionable insights” is fast on its way to topping this decade’s list of meaningless marketing buzzwords. Don’t get us wrong, we love the sentiment behind the term—we’re as frustrated and depressed as the marketers who paid for the study when research results end up gathering dust on a shelf because no one could figure out what to do with all the “insights” into customers and prospects. When recent discussion on the topic turned to the measurement of the return on marketing research investments, however, we started to worry a bit.

“Return on Investment (ROI) on research projects,” predicts Bob Lederer, editor and publisher of Research Business Report, “is going to become a factor in the everyday functioning of client research/insight departments. It is already happening in a handful of companies. Many others see its inevitability [and] are beginning to think about it. Some expect it to materialize in the short term.”

It’s true, getting hard and fast ROI numbers for research certainly would help on many fronts. When Copernicus sat down with a group of marketing research directors at some of the leading companies in America a few weeks ago, most agreed that middle management submits “too many requests for small annoying projects” focused on nearer-term, tactical issues. Having some side-by-side comparisons of the ROI of frequently requested smaller tactical projects vs. more comprehensive, strategic assignments could help managers understand how to get more value out of the research they ask for and do.

Many of the back-of-the-envelope kind of ROI calculations we ourselves have used either reflect the risks inherent in not doing the research or the relatively minor cost associated with doing research that could produce a sizable improvement in marketing performance. Admittedly, this kind of ROI discussion does not necessarily make for the strongest business case for doing it in the first place. We agree that providing a number based on actual investment dollars and sales/profit results would be more in line with what a CEO or CFO would expect, and could certainly help when it comes to securing and protecting the annual budget.

Of course, we can forsee any number of difficulties in getting to that number. For instance, what happens when marketers implement a marketing plan different than the one the research supported? How can you reliably calculate ROI in that situation? Or in a larger organization, how do you isolate the actual financial contribution of a market segmentation exercise from that of, say, the advertising campaign to the performance of a new product?

Whatever the measurement system that does get into place, we can also forsee any number of difficulties resulting from that number. There’s already plenty of evidence to suggest that the perception among marketers is a good deal of research produces insights of marginal value. For example, only 14% of senior executives who’ve done a market segmentation exercise in the past two years say they derived any value from it. Put another way, nearly 90% think they got little out of one of the most frequently done major strategic research exercises.

According to a recent Boston Consulting Group (BCG) study, just 41% of executives said marketing research was a source of competitive advantage and only a third said their company was above average when it came to turning consumer insights into innovative products or services. Only 34% of line managers agreed that their insights team consistently answered the question “so what,” about the data they provide. Reported BCG, “money is spent on research reports that languish on dusty shelves because the data rarely yield actionable plans….The result is a low return on marketing research investment that can total hundreds of millions of dollars.”

We hope for all the energies spent getting the metrics and measurement capabilities into place to evaluate ROI, equal or greater attention gets paid to what’s driving the perception that many insights aren’t actionable in the first place. While measuring the ROI of marketing research is certainly an intriguing idea and could help direct marketers to the kinds of strategic research that can have the biggest impact on performance, why wait to get a measurement system in place to ensure that marketing research is demonstratively useable and relevant to marketers?

No matter what, the outputs from the measurement system will only be as good as the inputs. If the ultimate goal is to deliver “actionable insights” and highly positive perceptions of value, improving the ability to assess ROI won’t get us there on its own. Employing research tools and approaches that make it easier to connect insights to actions needs to play an equal part in the ROI effort.

Recommended Reading:

Get Marketers to Eat Their Spinach and Love It Too! 5 Tips for Marketing Researchers, Copernicus Marketing Consulting & Research

The Consumer’s Voice: Can Your Company Hear It?, Boston Consulting Group

Copernican Exploration

Lessons from Oscar: What NOT To Do With An Established Brand

How to differentiate an established brand, stay relevant as competitors encroach, broaden your audience without losing existing core customers, and continue to grow are all issues marketers deal with on a regular basis. No one is immune.

Up until recently, for example, retail heavy-weight Wal-Mart had a bumpy road as it tried to figure out how to update its brand strategy from “always low prices.” Starbucks has made many recent moves, including a new nameless logo, as it searches for ways to keep its aging brand relevant and competitive. More recently and in true Hollywood fashion, the Oscars, the venerable annual award show honoring “the best of the best” in motion pictures, has demonstrated some very important “don’t’s” when trying to reinvigorate interest in an aging brand.

All signs seemed to point to the potential for the show to expand its audience base. Though the TV audience for the show’s yearly broadcast had increased 30% over the past two years from an all time low of 32 million in 2008 to 41.7 million in 2010, there still seemed to be opportunities to grow in every age group. Yet when the median age of the broadcast topped out at over 50 last year, the Oscars’ brand managers must have become so preoccupied with attracting younger viewers that all their energies went into coming up with ways to appeal to the younger demographic.

The Oscars secured twenty-something actress Anne Hathaway and thirty-something actor James Franco as hosts and launched a full-throttle marketing campaign, “You’re Invited,” with a slew of digital and social media elements.

As Nicole LaPorte described on The Daily Beast: “The decision by this year’s Oscars producers…to hire Franco and Hathaway—the youngest hosts in the history of Oscar—was itself a drastic act in the progressive slouch towards a cooler, more populist Academy Awards.” She went on to describe Franco’s “offbeat reputation” as playing “perfectly into the Academy [of Motion Picture Arts and Sciences, the owners of the Oscars] to rebrand the Oscars as, well, playful,” and to detail other digital efforts to make the show more “au courant than ever before.”

Certainly hiring hosts who appeal to current and prospective viewers makes sense. Same for extending the event into social media during the broadcast. Hitting viewers on the multiple screens they supposedly look at simultaneously seems like the direction entertainment is going. Yet these are far from bold strategic moves to resuscitate a flailing brand. In fact, they strike us as superficial fixes backed by little more than an intuition that going after a younger demographic is the best way to increase overall audience size.

Not surprisingly, they didn’t work. The broadcast—younger hosts and all—received less-than-rave reviews across the board from critics and viewers alike. As reported in the Wall Street Journal, about 37.6 million people watched, down almost 10% from 2010, and “ranked as the fifth lowest since at least 1974.” True, the 2011 broadcast didn’t LOSE as many 18-to-34-year-olds as it did last year, but that’s not exactly a selling point that ABC—or whichever television network may broadcast the Oscars next year—can use to woo potential advertisers or justify higher ad prices.

Taking a closer look at who to target was by no means a bad place for the Oscars—or any other established brand that’s seen stalled or shrinking share, for that matter—to start when it comes to formulating a plan of attack. Sometimes even just asking the question “who is our target?” can instantly reveal a whole host of opportunities, particularly when the targeting decision wasn’t all that well-fleshed out to begin with.

What was the rationale for selecting this group? What do we know about them, not just demographically, but about their movie-going habits, attitudes towards award shows, favorite stars, etc.? What percentage of this group tunes into our program? Why don’t they tune in? Are they familiar with the Oscars? Are we not appealing to them in a way that’s all that compelling or motivating? Is there something about the broadcast that they don’t like?

Interestingly, we’ve found through our own experiences working with companies to set marketing objectives that sales problems are often NOT the fault of the product or service. Still, we wouldn’t be surprised to find out the Oscars bucked this trend. The inexplicably long broadcasts and many, many dry and self-congratulatory moments have made for some fairly unentertaining television over the years. Another good question for the Oscars to ask is what would reliably and feasibly increase the entertainment value of the broadcast to the target audience?

While it’s probably not the kind of news that brand managers like to hear, as the Oscars demonstrate, reinvigorating a brand more often than not requires much more than superficial fixes.

Discovery of the Month

Customer Satisfaction in a Slump: Even the Net Promoters Agree

A few weeks ago, we saw the latest statistics from the American Customer Satisfaction Index (ASCI), which put the average customer satisfaction rating for more than 225 companies in 45 different industries and government agencies at 75.3 out of a hundred. As it turns out, that number has not improved appreciably for more than a decade.

By way of background, the ASCI is based on customer interviews and an econometric model developed at the University of Michigan’s Ross School of Business. The model maps the relationship between customer expectations, perceived quality, and perceived value (a.k.a., the drivers of satisfaction), satisfaction, and customer complaints and customer loyalty (a.k.a., the results of satisfaction).

Given all the recent emphasis on really “engaging” with customers by responding to their unique needs, wants, and interests throughout the pre- and post-purchase process, we found the news that it hadn’t improved at all for years pretty astonishing.

Keep in mind that for more than a decade, companies have obsessed over corporate and brand equity and management consulting firms have preached the joys of 100% customer satisfaction. For all that, according the ASCI many firms still earn “C” grades.

Coincidentally, about the same time we saw the ASCI report, we also read the 2011 Net Promoter Industry Benchmarks put out each year by the software firm Satmetrix. A completely different measure of customer satisfaction from the ASCI, the Net Promoter Score first saw the light of day in 2003 when The Harvard Business Review published “The One Number You Need To Grow,” by Fred Reichheld, a senior management consultant at Bain and Company.

Reichheld’s objective was (and is) to elevate customer satisfaction metrics to the same level of rigor and importance as financial metrics like revenue growth or return on equity. He proposed an 11-point “recommend” scale from zero—definitely would not—to 10—definitely would “recommend this company to a friend or colleague.” People who score 9 or 10 for a particular company or brand are labeled “Promoters”; people who score 0-6 are, in turn, labeled “detractors”; the 7’s and 8’s are ignored. Subtract the % of detractors from the % promoters and you have the “net promoter score” (NPS).

Generally speaking, a score over 50% is considered a good score. In some industries where the average NPS is negative, just hitting positive single digit numbers is a relative achievement. True, NPS is one of the most controversial and often criticized customer satisfaction metrics in marketing research, but true or not, correct or incorrect, it’s a score that many CEOs and CFOs look at to gauge how their company and its brands are performing at keeping customers happy.

According to Satmetrix, there were some standouts in their 2011 report. Financial services firm USAA earned the highest NPS across all brands and industries examined at 87%. Grocer Trader Joe’s was also up there at 82%, as was Costco at 77%, Apple at 72%, and Amazon at 70%. Still, we were startled by the negative NPS industry averages and scores for big brands. Insurance had an industry average of –5%, for instance. In credit cards, Citigroup earned a -20%. In insurance, Cigna had a -24%.

Other industry averages and scores for big brands were only just fair. Airlines had an industry average of 15%, for example. We know getting over 50 is considered in the range of good, but we would have expected a brand like search engine giant Google–the #2 most admired brand in the world no less—to do more than just barely make it over that threshold. It got a 53%.

Interestingly, Reichheld himself has said the NPS score of the average American company is 15%. You could get that by having 45% promoters and 30% detractors or 58% promoters and 43% detractors or—and this would be really crazy—you could have only 20% promoters and 5% detractors with 75% of customers and prospects giving you a pass. Any way you look at it, a 15% isn’t exactly a good sign about the ability of American business to make customers happy.

Our own research does not support the pursuit of 100% customer satisfaction. We have repeatedly found the relationship between satisfaction and profitability to be curvilinear—profitability does rise as satisfaction rises, but only up to a point. After that point, the costs of delighting the customer with ever-increasing levels of satisfaction exceeds the retention-linked profitability.

While the point of diminishing returns differs from company to company, it does exist. Finding out where it is as part of an effort to better understanding the financial relationship between satisfaction and profitability would certainly help companies set more realistic, achievable, and bottom-line-friendly goals than 100% customer satisfaction.

Still, anyway you look at it, put the ASCI and Net Promoter results together and it’s clear that companies have some work to do when it comes to figuring out what drives customer satisfaction with their brands.

What We’re Reading Now

At the Top of Our Reading List….

Everything is Obvious Once You Know the Answer: How to Minimize Risk, Avoid Surprises, and Grow Your Business in a Changing World

By Duncan Watts (Crown, March 2011)

We just got our copy of this new book which we’ve already read quite a bit about. Watts, a principal research scientist at Yahoo!, takes on conventional wisdom—which is, he writes, “not so much a worldview as a grab bag of logically inconsistent, often contradictory beliefs, each of which seems right at the time but carries no guarantee of being right any other time”—and challenges some strongly held marketing beliefs such as the marketing power of “influentials.”

We’re looking forward to reading it.

Looking for more good books to inspire your marketing strategies and programs? Consider the seven books written by the principals of Copernicus. The list includes the popular Your Gut Is STILL Not Smarter Than Your Head, chock full of ideas for balancing experience and judgment with rigorous, actionable research when making important marketing decisions.

Buy now on…..

Coming Attractions

Register for Our Upcoming Webcasts….or Check Out One On-Demand

Each month, we tackle core strategy development issues or offer points of view on hot marketing topics to marketers looking for fresh perspectives, ideas, and information to help them improve the performance of their marketing programs.

Visit our webcast channel for a complete listing.

Upcoming Speeches and Talks at Conferences Near You

Find out if we’re coming to your favorite industry event or a conference in your city.

OTC Perspectives National

Topic: Market Segmentation in the Digital Age
Speaker: Eric Paquette
Tuesday and Wednesday, May 10-11
Sheraton Atlantic City
Atlantic City, NJ

AMA Atlanta

Topic: Digital Strategies “Illustrated”: Translating Insights in Actions
Speaker: Kevin Clancy
Tuesday, June 21
Villa Christina Restaurant
Atlanta, GA

Industry Insights

Who Makes for a Good Customer Target These Days Anyways?

Naturally, smart marketers want to put their precious marketing resources and budget dollars into the efforts that will help them get to and inspire the purchase interest and loyalty of their “best” customers. It’s just not very effective or efficient in most situations to cast as wide a net as possible and see what you drag in anymore—those days have come and gone.

But that begs the question, who makes for a good target customer these days anyways?

In this day and age of exploding digital and social media where the mainstay of media—“buy advertising and customers will watch, listen, and go shopping for our brand”—no longer applies, the answer to this question is far more complex than it might appear. Marketers have to integrate traditional and digital paid advertising with “owned” properties such as the brand’s website, as well as traditional and social “earned” media such as news articles and tweets.

Phew!

Now, generally speaking, most marketers know the “best” customers—either current or prospective—are the ones who will generate the highest return in terms of profits for your brand. They are indeed “good targets” for digital and social marketing activities.

There are many pieces to the profitability equation, however. Yes, there are the financial measures of revenue such as lifetime value, current spending in the category in dollars, current share for your brand today, number and types of products or services purchased, and brand switching history/potential. Yet there are also several other characteristics that make one target more valuable than another because they’re easier to get and keep.

A good target is…

…less price sensitive. Unless you’re Wal-mart and want to grab share amongst the folks who put price above all other brand considerations, price insensitivity is another important indication of a buyer’s value to a brand and one particularly relevant these days.

*….struggling with big problems. The bigger the problem your brand can solve, the bigger the market response.

…interested in new products and services from the brand. Introducing new products and services—in good times and in bad—can generate the kind of organic growth companies crave. So why not ensure that new products and services WILL generate bottom line growth by narrowing in on the buyers most interested in considering the latest offerings from a brand or company?

….will advocate for your brand. The greater the level of influence a buyer has among their family, friends, and acquaintances, the more a brand’s marketing ROI will benefit. Customers who do some of the work for a brand because they’re more likely to spread the word off- and on-line about a product they found that really works or a service that solved a serious problem are like money in the bank.

….socially-connected on the web. Because of the speed and number of tools available to customers to spread information about product and services on-line, word-of-mouth activity is even more important to capture in a digital environment. The more active and engaged a customer is with different social media, the more valuable they can be to a brand.

Marketers can use the answers they collect from buyers in their category or industry as filters to separate the “good” from the “OK” and “not-so-good” potential targets for off- and on-line marketing activities. Just figure out which descriptive characteristics—demographics, psychographics, attitudes, lifestyles, needs, behaviors, and more—have the strongest relationship to these profit-related criteria and marketers will have one half of the guidance they need to build a high performance marketing plan.

Let’s talk about the other half—very often the forgotten half—because this information that helps smart marketers identify the high value targets will only get them so far. They also need to know how best to communicate with them.

From an operational standpoint then, a good target ALSO is…

…distinct in terms of needs and wants. The more homogeneous and preemptible a target’s needs and wants, the easier time marketers will have developing compelling positioning and messaging that breaks through in traditional and digital channels.

…relevant to traditional and digital communications decisions. Get a sense of how high-value customers use traditional, digital, and social media throughout the pre- and post-purchase process, and, in particular, how they like to interact with a brand within different communications channels.

…findable in syndicated media databases. The “best” communications channels—either current or prospective—are the ones with a disproportionate number of high-value customers. Ask and answer the same questions used in the database resources media planners regularly access to develop direct links.

As more and more marketers shift their mentality from experimentation with digital and social media to integration of all on-line efforts with the overall marketing plan, they will need to update their image of a “good target” in order to give themselves a leg-up in generating the most return from digital marketing investments.

Recommended Reading:

Yes You Can! Get More Out of Market Segmentation Research

Copernican Exploration

Bloggers and Influentials: Kevin Clancy Offers Insights Into these Key Targets for Word-of-Mouth Marketing

“Before Americans buy, they talk. And they listen,” explain Berry-AMA book prize winners Ed Keller and Jon Berry in The Influentials. These days, they say, “the buying process is to ask a friend, family member, or other expert close at hand what they think.” To back up their contention of the power of the word-of-mouth marketing channel, we offer up the following quick stats:

• According to a recent NOP World survey, 9 in 10 consumers say that of all the sources of ideas and information about products and services available, they trust recommendations from people they know the most.
• 67% of consumer purchase decisions are primarily influenced by word-of-mouth, found consulting firms McKinsey and Thompson Lightstone.
• As for B2B, 50% of U.S. and U.K. executives say they are likely to buy a product or service based on word of mouth, or so found a study by Keller Fay.

As far as leveraging WOM in their brand’s favor, most marketers know they’ve got to get to the “influentials” and “super-influentials” in their category or industry. These folks tell friends and neighbors what and where to buy. Their friends, family members, and colleagues turn to them for their perspectives and opinions on products and services. In other words, when they talk, people listen. The messenger carries as much—if not more weight than the message.

Now, as our readers know, Copernicus is always on the prowl for conventional marketing wisdoms begging for some grounding in empirical data. And in the area of WOM marketing, one of the biggest CWs going is that “influentials” and “bloggers” are one-and-the-same-person.

Though many studies have established the growing awareness of blogs and increasing blogging activity, none have included direct measures of personal influence. Still, this commonly-held belief has inspired many marketers to push their brands into the blogosphere to reach and impact influentials.

We sat down with Copernicus’ chairman Kevin Clancy to talk about the findings of an in-depth R&D investigation he led to determine whether or not “influentials” and “bloggers” are indeed synonymous terms.

Here’s what he had to say:

Mzine: Where did the idea that “bloggers” and “influentials” are one-and-the-same-person come from, do you think?

Kevin: One measure of personal influence is certainly a willingness and interest in sharing opinions with others. People who are actively commenting or writing their own blogs are giving their perspectives and recommendations on different topics, so it’s not all that far-reaching an assumption to think there could be a relationship between these two groups.

But there’s more to personal influence that just the propensity to share opinions.

We get asked on a fairly frequent basis, hey are the folks who post reviews on products and services influentials? We say we don’t know. Yes, they’re sharing opinions and the content of their reviews may impact the purchase decisions of others. But are the individuals who post reviews on Amazon or Angie’s List or Facebook influentials? Are folks regularly seeking out the opinion of these specific individuals to see what they say? Are folks looking for reviews in general or for the reviewer?

When it comes to reviews posted on Amazon, for example, our experience is generally folks look at them in the aggregate. If most reviews are negative, people may decide not to buy. But that’s different than people seeking out the opinions of a specific reviewer–say a blogger–when considering a purchase in a particular product or service category.

The Word of Mouth Marketing Association defines an influencer as a person who has “a greater than average reach or impact through word of mouth in a relevant marketplace.” That means to be considered “influential” you, for instance, have to have a level of authority and knowledge on a particular topic.

What struck us about previous research on the topic was the lack of direct and comprehensive measures of personal influence. Some measures came at it by asking about likelihood to share opinions. Others talked about the number of connections or friends study participants have. But there was no definitive answer to the question, certainly not one grounded in empirical data.

Mzine: So are influentials and bloggers one-and-the-same?

Kevin: While they aren’t redundant concepts, there’s a strong relationship between the level of blogging engagement and cross-category personal influence.

Copernicus surveyed a national cross-section of 808 men and women, ages 18 and older, about their blogging behaviors and their personal influence patterns across 21 categories, ranging from products and services such as soft drinks and fast food restaurants to social/cultural topics such as sports and politics. We identified five groups that varied in terms of blog usage and three groups that differed in personal influence across the categories.

In our study, we found 53% of those who scored high in cross-category personal influence post comments or write their own blogs in contrast to only 21% of those who scored low in cross-category personal influence. In the simplest terms, these influentials are highly engaged with blogs.

Mzine: What do you think of blogs as a marketing communications tool? What about as a research tool?

Kevin: Whether it’s an effective means to achieve an end in large part depends on who you are trying to reach. In our study, about half of respondents did not read blogs on a regular basis. In other words, if you’re planning on using blogs to reach a market on a mass-scale, there’s a good chance you’re going to miss a lot of potential buyers of your product or service if you just focus on blogs.

Same holds true as far as research goes. You may miss hearing about issues, needs, trends, etc., of the pretty sizable portion of the population that’s not actively engaged on the blogosphere.

As far as reaching and engaging with influentials—a target group whose word of mouth power far exceeds their numbers in the population—however, blogs can be a powerful tool. Interacting with those most likely to influence the personal decisions of others in a medium in which they more actively engage can boost the effectiveness of word-of-mouth marketing efforts.

One big takeaway from our study is that while there’s a tendency for influentials in one product category to be influential in others this correlation is far from perfect. This flies in the face of marketers and researchers who employ a single, general measure to tap into personal influence and expect it to work across different product categories.

Marketers are wise to study and target influentials in their particular product/service category and understand their digital and social behaviors to enhance the performance of efforts aimed at this important group.

Mzine: If you had the ear of every CMO in America for five minutes, what would you say to them about reaching and impacting super-influentials in their category or industry?

Kevin: For a variety of reasons, the first step in the purchase process in a growing number of product and service categories is to ask a friend, colleague, or family member what they think about different brands. This holds true as much for business-to-business and industrial products and services, as for consumer products and services.

The big challenge for marketers is to identify, reach, and impact the one in ten folks who tell the other nine what, when, and where to buy. One estimate we’ve seen is that every influential impacts the purchase consideration of 7 friends and family members. The key here is to not only figure out who these people are in terms of demo- and psychographics, but what their on- and off-line media habits are to most effectively pre-dispose them to share information about your product or service.

I’d also add that every company that has made innovation a priority—and really, who hasn’t—identifying and getting a better understanding of influentials should be a critical component of any marketing strategy for a new product or service. There’s just so much evidence out there that demonstrates influentials spread the word at a much higher rate. Tapping into this group can definitely help improve the overall return on your innovation investment.

To learn more about this topic, listen to Kevin’s recent webcast, “Super Influentials: New Insights For Reaching Them on the Web,” available on-demand. To download, visit our webcast channel.

Discovery of the Month

Tips for Improving Innovation ROI: 4 Tools to Give You a Read on New Product or Marketing Program Performance in 30 Days

With management chomping at the bit to demonstrate that the company is getting a good return on their marketing investments, CMOs need to know whether new products/services and marketing programs are successful in as little as 30 days.

No one can afford to wait the customary six to 18 months to get performance data anymore. With the uncertain economy, tight marketing budgets, bottom-line pressures, and so on, there’s a heightened urgency for marketers to demonstrate results to CEOs and CFOs as early as possible. The sooner there’s some directional data on how the marketplace has received a new product or marketing program the better. Wait six months and marketers may not have enough time to make adjustments to get maximum performance and meet management expectations.

What can marketers do to measure the performance of new products/services and marketing programs quickly and accurately?

We’ll start to tackle an answer to this question with four more questions:

Is the product/service or campaign new and different?

Is it a front-loaded effort?

Is the media weight behind the launch substantial enough to read the results?

Do people care about the product category?

A “yes” answer to all of the above opens up the possibility of putting one or more of the following four tools to work on early performance tracking:

1. Blog hyper-analysis
Use widely-available analysis tools to see if your new product, campaign, or program has inspired online conversation, positive or negative.

What it gives you: Although blog posts are not necessarily linked to sales, they do provide an early indication of whether people are talking about a new product or campaign, which give marketers some indication of whether it has broken through. They’d have an early warning if nothing’s happening, if conversation takes a negative turn, or there’s little mention of a new product or something related to the key brand message contained in a new campaign.

Set-up time: One week

Predictive validity: Fair

Ball-park costs: $30K

2. Souped-up campaign penetration tracking
Instead of looking at 25 different “awareness” metrics, we recommend developing a single measure that we call campaign penetration which incorporates most of the traditional measures into a single metric.

What it gives you: The advantage to using campaign penetration is that instead of having a bunch of numbers that fluctuate seemingly at random from one quarterly tracking study to the next, marketers get one reliable and valid metric that tells them how a campaign is doing at generating “real” awareness for a brand and its key brand message. It also gives them a much better handle on a campaign’s impact on sales.

Set-up time: Two weeks

Predictive validity: Good

Ball-park costs: $50K

3. Novel applications of simulated test marketing
Simulated test marketing (STM), the single best validated tool in all of marketing research, can help gauge the ROI of actual campaigns after they’ve been launched.

What it gives you: Though marketers often use an STM to forecast sales and profits of a new product/service or a new advertising campaign pre-launch, they can also use one cleverly done to improve a forecast 30-days post-launch. A marketer can see the current trajectory of a new product/service or program based on 30-days of actual, real-world results and use this information to recalibrate the model. If a marketer sees a big difference between where the pre-launch and post-launch forecasts have sales and profits headed, they will have an early warning to take action.

Set-up time: Four weeks

Predictive validity: Very good

Ball-park costs: $100K

4. After vs. Before Econometric Modeling
Some marketers undertake econometric analyses of historical investment and sales data to gain insights into which components of marketing plans work best.

What it gives you: Often marketers use this kind of information to guide future marketing planning decisions and to understand the incremental impact each marketing investment had on sales, account activations, usage, etc. There’s an opportunity here, however, to use the same kind of sophisticated statistical analysis to gauge the performance of a new campaign pre- and post-launch.

For example, a consumer packaged goods firm might have been collecting years worth of investment and sales data for the markets in which it’s rolling out the new product. Econometric modeling could then be used to make a forecast of new product performance following the launch. After the campaign begins, it could continue to track the same data. At about the four week mark, the model could be recalibrated based on the actual market performance. Very quickly, the firm could compare forecasted sales performance with actual performance.

Set-up time: Six months

Predictive validity: Excellent

Ball-park costs: $300K

Though these four tools use very different types of data and inputs, they all provide insights that weren’t widely available even a few years ago. Depending on your budget and the amount of historical data you have available to you, using one or a combination of two or more can give you, at the very least, a general sense of whether a new product/service and/or campaign has broken through the clutter.

Remember the primary purpose of employing one or more of these tools in the first few weeks a new product or campaign is in the market is to give a marketer a fighting chance to make improvements, figure out necessary adjustments, or give peace-of-mind that an innovation effort is on its way to delivering the kind of return that makes senior management smile.

For more ideas for improving ROI, check out our new white paper:

Beyond Luck: Three Steps to Better Innovation ROI

What We’re Reading Now

At the Top of Our Reading List….

Competitive Intelligence Advantage: How to Minimize Risk, Avoid Surprises, and Grow Your Business in a Changing World

By Seena Sharp (Wiley, October 2009)

Competitive intelligence is a hot topic of discussion among marketers these days. More and more, we’ve been asked for examples of when companies can use competitive intelligence and how to find useful information that can help guide resource allocation and strategic planning in the short- and long-term.

Good thing there’s a terrific book available for marketers looking for a thorough introduction to the topic: Competitive Intelligence Advantage, written by noted competitive intelligence expert and a good friend to Copernicus, Seena Sharp.

“Competitive intelligence gets at the truth,” she writes in the opening pages of the book as she begins to make her case. “It objectively details what is happening, much of which may be unknown to most executives. Unless you conduct an analysis of current conditions, the information that you know is only partially current and may be only partially accurate.”

Read this book and you’ll come away with the understanding and tools you need to get a strong CI program going for your brand or business. Also read Seena’s interview on The Marketing Fray for more thoughts and perspectives on getting value from competitive intelligence research.

Looking for more good books to inspire your thinking as you look ahead to 2011? Check out the seven books written by the principals of Copernicus! The list includes the popular Your Gut Is STILL Not Smarter Than Your Head, chock full of ideas for infusing research into marketing decision making to improve ROI.

Buy now on…..

Coming Attractions

Register for Our Upcoming Webcasts….or Check One Out On-Demand

Each month, we tackle a new and, we hope, relevant topic to marketers looking for information and tools to help them do their jobs better. To date, we’ve covered everything from market segmentation to “white space,” improving innovation ROI to performance tracking.

For a full listing of past and future webcasts, visit our webcast channel.

Upcoming Speeches and Talks at Conferences Near You

We’re on the docket to speaking at several upcoming conferences. Check out the schedule below:

AMA 31st Annual Marketing Research Conference

Topic: Market Segmentation for the Digital Age
Speaker: Eric Paquette
Sunday-Wednesday, September 26-29
Hilton Atlanta
Atlanta, GA

Pharmaceutical Marketing Research Group Fall Institute

Topic: Implications of the Digital Revolution in Marketing
Speaker: Eric Paquette

Sunday-Tuesday, October 24-26
Westin Waterfront
Boston, MA

Industry Insights

Who Makes for a Good Customer Target These Days Anyways?

Naturally, smart marketers want to put their precious marketing resources and budget dollars into the efforts that will help them get to and inspire the purchase interest and loyalty of their “best” customers. It’s just not very effective or efficient in most situations to cast as wide a net as possible and see what you drag in anymore—those days have come and gone.

But that begs the question, who makes for a good target customer these days anyways?

In this day and age of exploding digital and social media where the mainstay of media—“buy advertising and customers will watch, listen, and go shopping for our brand”—no longer applies, the answer to this question is far more complex than it might appear. Marketers have to integrate traditional and digital paid advertising with “owned” properties such as the brand’s website, as well as traditional and social “earned” media such as news articles and tweets.

Phew!

Now, generally speaking, most marketers know the “best” customers—either current or prospective—are the ones who will generate the highest return in terms of profits for your brand. They are indeed “good targets” for digital and social marketing activities.

There are many pieces to the profitability equation, however. Yes, there are the financial measures of revenue such as lifetime value, current spending in the category in dollars, current share for your brand today, number and types of products or services purchased, and brand switching history/potential. Yet there are also several other characteristics that make one target more valuable than another because they’re easier to get and keep.

A good target is…

…less price sensitive. Unless you’re Wal-mart and want to grab share amongst the folks who put price above all other brand considerations, price insensitivity is another important indication of a buyer’s value to a brand and one particularly relevant these days.

*….struggling with big problems. The bigger the problem your brand can solve, the bigger the market response.

…interested in new products and services from the brand. Introducing new products and services—in good times and in bad—can generate the kind of organic growth companies crave. So why not ensure that new products and services WILL generate bottom line growth by narrowing in on the buyers most interested in considering the latest offerings from a brand or company?

….will advocate for your brand. The greater the level of influence a buyer has among their family, friends, and acquaintances, the more a brand’s marketing ROI will benefit. Customers who do some of the work for a brand because they’re more likely to spread the word off- and on-line about a product they found that really works or a service that solved a serious problem are like money in the bank.

….socially-connected on the web. Because of the speed and number of tools available to customers to spread information about product and services on-line, word-of-mouth activity is even more important to capture in a digital environment. The more active and engaged a customer is with different social media, the more valuable they can be to a brand.

Marketers can use the answers they collect from buyers in their category or industry as filters to separate the “good” from the “OK” and “not-so-good” potential targets for off- and on-line marketing activities. Just figure out which descriptive characteristics—demographics, psychographics, attitudes, lifestyles, needs, behaviors, and more—have the strongest relationship to these profit-related criteria and marketers will have one half of the guidance they need to build a high performance marketing plan.

Let’s talk about the other half—very often the forgotten half—because this information that helps smart marketers identify the high value targets will only get them so far. They also need to know how best to communicate with them.

From an operational standpoint then, a good target ALSO is…

…distinct in terms of needs and wants. The more homogeneous and preemptible a target’s needs and wants, the easier time marketers will have developing compelling positioning and messaging that breaks through in traditional and digital channels.

…relevant to traditional and digital communications decisions. Get a sense of how high-value customers use traditional, digital, and social media throughout the pre- and post-purchase process, and, in particular, how they like to interact with a brand within different communications channels.

…findable in syndicated media databases. The “best” communications channels—either current or prospective—are the ones with a disproportionate number of high-value customers. Ask and answer the same questions used in the database resources media planners regularly access to develop direct links.

As more and more marketers shift their mentality from experimentation with digital and social media to integration of all on-line efforts with the overall marketing plan, they will need to update their image of a “good target” in order to give themselves a leg-up in generating the most return from digital marketing investments.

Recommended Reading:

Yes You Can! Get More Out of Market Segmentation Research

Copernican Exploration

Bloggers and Influentials: Kevin Clancy Offers Insights Into these Key Targets for Word-of-Mouth Marketing

“Before Americans buy, they talk. And they listen,” explain Berry-AMA book prize winners Ed Keller and Jon Berry in The Influentials. These days, they say, “the buying process is to ask a friend, family member, or other expert close at hand what they think.” To back up their contention of the power of the word-of-mouth marketing channel, we offer up the following quick stats:

• According to a recent NOP World survey, 9 in 10 consumers say that of all the sources of ideas and information about products and services available, they trust recommendations from people they know the most.
• 67% of consumer purchase decisions are primarily influenced by word-of-mouth, found consulting firms McKinsey and Thompson Lightstone.
• As for B2B, 50% of U.S. and U.K. executives say they are likely to buy a product or service based on word of mouth, or so found a study by Keller Fay.

As far as leveraging WOM in their brand’s favor, most marketers know they’ve got to get to the “influentials” and “super-influentials” in their category or industry. These folks tell friends and neighbors what and where to buy. Their friends, family members, and colleagues turn to them for their perspectives and opinions on products and services. In other words, when they talk, people listen. The messenger carries as much—if not more weight than the message.

Now, as our readers know, Copernicus is always on the prowl for conventional marketing wisdoms begging for some grounding in empirical data. And in the area of WOM marketing, one of the biggest CWs going is that “influentials” and “bloggers” are one-and-the-same-person.

Though many studies have established the growing awareness of blogs and increasing blogging activity, none have included direct measures of personal influence. Still, this commonly-held belief has inspired many marketers to push their brands into the blogosphere to reach and impact influentials.

We sat down with Copernicus’ chairman Kevin Clancy to talk about the findings of an in-depth R&D investigation he led to determine whether or not “influentials” and “bloggers” are indeed synonymous terms.

Here’s what he had to say:

Mzine: Where did the idea that “bloggers” and “influentials” are one-and-the-same-person come from, do you think?

Kevin: One measure of personal influence is certainly a willingness and interest in sharing opinions with others. People who are actively commenting or writing their own blogs are giving their perspectives and recommendations on different topics, so it’s not all that far-reaching an assumption to think there could be a relationship between these two groups.

But there’s more to personal influence that just the propensity to share opinions.

We get asked on a fairly frequent basis, hey are the folks who post reviews on products and services influentials? We say we don’t know. Yes, they’re sharing opinions and the content of their reviews may impact the purchase decisions of others. But are the individuals who post reviews on Amazon or Angie’s List or Facebook influentials? Are folks regularly seeking out the opinion of these specific individuals to see what they say? Are folks looking for reviews in general or for the reviewer?

When it comes to reviews posted on Amazon, for example, our experience is generally folks look at them in the aggregate. If most reviews are negative, people may decide not to buy. But that’s different than people seeking out the opinions of a specific reviewer–say a blogger–when considering a purchase in a particular product or service category.

The Word of Mouth Marketing Association defines an influencer as a person who has “a greater than average reach or impact through word of mouth in a relevant marketplace.” That means to be considered “influential” you, for instance, have to have a level of authority and knowledge on a particular topic.

What struck us about previous research on the topic was the lack of direct and comprehensive measures of personal influence. Some measures came at it by asking about likelihood to share opinions. Others talked about the number of connections or friends study participants have. But there was no definitive answer to the question, certainly not one grounded in empirical data.

Mzine: So are influentials and bloggers one-and-the-same?

Kevin: While they aren’t redundant concepts, there’s a strong relationship between the level of blogging engagement and cross-category personal influence.

Copernicus surveyed a national cross-section of 808 men and women, ages 18 and older, about their blogging behaviors and their personal influence patterns across 21 categories, ranging from products and services such as soft drinks and fast food restaurants to social/cultural topics such as sports and politics. We identified five groups that varied in terms of blog usage and three groups that differed in personal influence across the categories.

In our study, we found 53% of those who scored high in cross-category personal influence post comments or write their own blogs in contrast to only 21% of those who scored low in cross-category personal influence. In the simplest terms, these influentials are highly engaged with blogs.

Mzine: What do you think of blogs as a marketing communications tool? What about as a research tool?

Kevin: Whether it’s an effective means to achieve an end in large part depends on who you are trying to reach. In our study, about half of respondents did not read blogs on a regular basis. In other words, if you’re planning on using blogs to reach a market on a mass-scale, there’s a good chance you’re going to miss a lot of potential buyers of your product or service if you just focus on blogs.

Same holds true as far as research goes. You may miss hearing about issues, needs, trends, etc., of the pretty sizable portion of the population that’s not actively engaged on the blogosphere.

As far as reaching and engaging with influentials—a target group whose word of mouth power far exceeds their numbers in the population—however, blogs can be a powerful tool. Interacting with those most likely to influence the personal decisions of others in a medium in which they more actively engage can boost the effectiveness of word-of-mouth marketing efforts.

One big takeaway from our study is that while there’s a tendency for influentials in one product category to be influential in others this correlation is far from perfect. This flies in the face of marketers and researchers who employ a single, general measure to tap into personal influence and expect it to work across different product categories.

Marketers are wise to study and target influentials in their particular product/service category and understand their digital and social behaviors to enhance the performance of efforts aimed at this important group.

Mzine: If you had the ear of every CMO in America for five minutes, what would you say to them about reaching and impacting super-influentials in their category or industry?

Kevin: For a variety of reasons, the first step in the purchase process in a growing number of product and service categories is to ask a friend, colleague, or family member what they think about different brands. This holds true as much for business-to-business and industrial products and services, as for consumer products and services.

The big challenge for marketers is to identify, reach, and impact the one in ten folks who tell the other nine what, when, and where to buy. One estimate we’ve seen is that every influential impacts the purchase consideration of 7 friends and family members. The key here is to not only figure out who these people are in terms of demo- and psychographics, but what their on- and off-line media habits are to most effectively pre-dispose them to share information about your product or service.

I’d also add that every company that has made innovation a priority—and really, who hasn’t—identifying and getting a better understanding of influentials should be a critical component of any marketing strategy for a new product or service. There’s just so much evidence out there that demonstrates influentials spread the word at a much higher rate. Tapping into this group can definitely help improve the overall return on your innovation investment.

To learn more about this topic, listen to Kevin’s recent webcast, “Super Influentials: New Insights For Reaching Them on the Web,” available on-demand. To download, visit our webcast channel.

Discovery of the Month

Tips for Improving Innovation ROI: 4 Tools to Give You a Read on New Product or Marketing Program Performance in 30 Days

With management chomping at the bit to demonstrate that the company is getting a good return on their marketing investments, CMOs need to know whether new products/services and marketing programs are successful in as little as 30 days.

No one can afford to wait the customary six to 18 months to get performance data anymore. With the uncertain economy, tight marketing budgets, bottom-line pressures, and so on, there’s a heightened urgency for marketers to demonstrate results to CEOs and CFOs as early as possible. The sooner there’s some directional data on how the marketplace has received a new product or marketing program the better. Wait six months and marketers may not have enough time to make adjustments to get maximum performance and meet management expectations.

What can marketers do to measure the performance of new products/services and marketing programs quickly and accurately?

We’ll start to tackle an answer to this question with four more questions:

Is the product/service or campaign new and different?

Is it a front-loaded effort?

Is the media weight behind the launch substantial enough to read the results?

Do people care about the product category?

A “yes” answer to all of the above opens up the possibility of putting one or more of the following four tools to work on early performance tracking:

1. Blog hyper-analysis
Use widely-available analysis tools to see if your new product, campaign, or program has inspired online conversation, positive or negative.

What it gives you: Although blog posts are not necessarily linked to sales, they do provide an early indication of whether people are talking about a new product or campaign, which give marketers some indication of whether it has broken through. They’d have an early warning if nothing’s happening, if conversation takes a negative turn, or there’s little mention of a new product or something related to the key brand message contained in a new campaign.

Set-up time: One week

Predictive validity: Fair

Ball-park costs: $30K

2. Souped-up campaign penetration tracking
Instead of looking at 25 different “awareness” metrics, we recommend developing a single measure that we call campaign penetration which incorporates most of the traditional measures into a single metric.

What it gives you: The advantage to using campaign penetration is that instead of having a bunch of numbers that fluctuate seemingly at random from one quarterly tracking study to the next, marketers get one reliable and valid metric that tells them how a campaign is doing at generating “real” awareness for a brand and its key brand message. It also gives them a much better handle on a campaign’s impact on sales.

Set-up time: Two weeks

Predictive validity: Good

Ball-park costs: $50K

3. Novel applications of simulated test marketing
Simulated test marketing (STM), the single best validated tool in all of marketing research, can help gauge the ROI of actual campaigns after they’ve been launched.

What it gives you: Though marketers often use an STM to forecast sales and profits of a new product/service or a new advertising campaign pre-launch, they can also use one cleverly done to improve a forecast 30-days post-launch. A marketer can see the current trajectory of a new product/service or program based on 30-days of actual, real-world results and use this information to recalibrate the model. If a marketer sees a big difference between where the pre-launch and post-launch forecasts have sales and profits headed, they will have an early warning to take action.

Set-up time: Four weeks

Predictive validity: Very good

Ball-park costs: $100K

4. After vs. Before Econometric Modeling
Some marketers undertake econometric analyses of historical investment and sales data to gain insights into which components of marketing plans work best.

What it gives you: Often marketers use this kind of information to guide future marketing planning decisions and to understand the incremental impact each marketing investment had on sales, account activations, usage, etc. There’s an opportunity here, however, to use the same kind of sophisticated statistical analysis to gauge the performance of a new campaign pre- and post-launch.

For example, a consumer packaged goods firm might have been collecting years worth of investment and sales data for the markets in which it’s rolling out the new product. Econometric modeling could then be used to make a forecast of new product performance following the launch. After the campaign begins, it could continue to track the same data. At about the four week mark, the model could be recalibrated based on the actual market performance. Very quickly, the firm could compare forecasted sales performance with actual performance.

Set-up time: Six months

Predictive validity: Excellent

Ball-park costs: $300K

Though these four tools use very different types of data and inputs, they all provide insights that weren’t widely available even a few years ago. Depending on your budget and the amount of historical data you have available to you, using one or a combination of two or more can give you, at the very least, a general sense of whether a new product/service and/or campaign has broken through the clutter.

Remember the primary purpose of employing one or more of these tools in the first few weeks a new product or campaign is in the market is to give a marketer a fighting chance to make improvements, figure out necessary adjustments, or give peace-of-mind that an innovation effort is on its way to delivering the kind of return that makes senior management smile.

For more ideas for improving ROI, check out our new white paper:

Beyond Luck: Three Steps to Better Innovation ROI

What We’re Reading Now

At the Top of Our Reading List….

Competitive Intelligence Advantage: How to Minimize Risk, Avoid Surprises, and Grow Your Business in a Changing World

By Seena Sharp (Wiley, October 2009)

Competitive intelligence is a hot topic of discussion among marketers these days. More and more, we’ve been asked for examples of when companies can use competitive intelligence and how to find useful information that can help guide resource allocation and strategic planning in the short- and long-term.

Good thing there’s a terrific book available for marketers looking for a thorough introduction to the topic: Competitive Intelligence Advantage, written by noted competitive intelligence expert and a good friend to Copernicus, Seena Sharp.

“Competitive intelligence gets at the truth,” she writes in the opening pages of the book as she begins to make her case. “It objectively details what is happening, much of which may be unknown to most executives. Unless you conduct an analysis of current conditions, the information that you know is only partially current and may be only partially accurate.”

Read this book and you’ll come away with the understanding and tools you need to get a strong CI program going for your brand or business. Also read Seena’s interview on The Marketing Fray for more thoughts and perspectives on getting value from competitive intelligence research.

Looking for more good books to inspire your thinking as you look ahead to 2011? Check out the seven books written by the principals of Copernicus! The list includes the popular Your Gut Is STILL Not Smarter Than Your Head, chock full of ideas for infusing research into marketing decision making to improve ROI.

Buy now on…..

Coming Attractions

Register for Our Upcoming Webcasts….or Check One Out On-Demand

Each month, we tackle a new and, we hope, relevant topic to marketers looking for information and tools to help them do their jobs better. To date, we’ve covered everything from market segmentation to “white space,” improving innovation ROI to performance tracking.

For a full listing of past and future webcasts, visit our webcast channel.

Upcoming Speeches and Talks at Conferences Near You

We’re on the docket to speaking at several upcoming conferences. Check out the schedule below:

AMA 31st Annual Marketing Research Conference

Topic: Market Segmentation for the Digital Age
Speaker: Eric Paquette
Sunday-Wednesday, September 26-29
Hilton Atlanta
Atlanta, GA

Pharmaceutical Marketing Research Group Fall Institute

Topic: Implications of the Digital Revolution in Marketing
Speaker: Eric Paquette

Sunday-Tuesday, October 24-26
Westin Waterfront
Boston, MA

Industry Insights

“Actionable Insights”: Watchword or Buzzword?

We’re only one year into the 2010s, but we’re already concerned that the term “actionable insights” is fast on its way to topping this decade’s list of meaningless marketing buzzwords. Don’t get us wrong, we love the sentiment behind the term—we’re as frustrated and depressed as the marketers who paid for the study when research results end up gathering dust on a shelf because no one could figure out what to do with all the “insights” into customers and prospects. When recent discussion on the topic turned to the measurement of the return on marketing research investments, however, we started to worry a bit.

“Return on Investment (ROI) on research projects,” predicts Bob Lederer, editor and publisher of Research Business Report, “is going to become a factor in the everyday functioning of client research/insight departments. It is already happening in a handful of companies. Many others see its inevitability [and] are beginning to think about it. Some expect it to materialize in the short term.”

It’s true, getting hard and fast ROI numbers for research certainly would help on many fronts. When Copernicus sat down with a group of marketing research directors at some of the leading companies in America a few weeks ago, most agreed that middle management submits “too many requests for small annoying projects” focused on nearer-term, tactical issues. Having some side-by-side comparisons of the ROI of frequently requested smaller tactical projects vs. more comprehensive, strategic assignments could help managers understand how to get more value out of the research they ask for and do.

Many of the back-of-the-envelope kind of ROI calculations we ourselves have used either reflect the risks inherent in not doing the research or the relatively minor cost associated with doing research that could produce a sizable improvement in marketing performance. Admittedly, this kind of ROI discussion does not necessarily make for the strongest business case for doing it in the first place. We agree that providing a number based on actual investment dollars and sales/profit results would be more in line with what a CEO or CFO would expect, and could certainly help when it comes to securing and protecting the annual budget.

Of course, we can forsee any number of difficulties in getting to that number. For instance, what happens when marketers implement a marketing plan different than the one the research supported? How can you reliably calculate ROI in that situation? Or in a larger organization, how do you isolate the actual financial contribution of a market segmentation exercise from that of, say, the advertising campaign to the performance of a new product?

Whatever the measurement system that does get into place, we can also forsee any number of difficulties resulting from that number. There’s already plenty of evidence to suggest that the perception among marketers is a good deal of research produces insights of marginal value. For example, only 14% of senior executives who’ve done a market segmentation exercise in the past two years say they derived any value from it. Put another way, nearly 90% think they got little out of one of the most frequently done major strategic research exercises.

According to a recent Boston Consulting Group (BCG) study, just 41% of executives said marketing research was a source of competitive advantage and only a third said their company was above average when it came to turning consumer insights into innovative products or services. Only 34% of line managers agreed that their insights team consistently answered the question “so what,” about the data they provide. Reported BCG, “money is spent on research reports that languish on dusty shelves because the data rarely yield actionable plans….The result is a low return on marketing research investment that can total hundreds of millions of dollars.”

We hope for all the energies spent getting the metrics and measurement capabilities into place to evaluate ROI, equal or greater attention gets paid to what’s driving the perception that many insights aren’t actionable in the first place. While measuring the ROI of marketing research is certainly an intriguing idea and could help direct marketers to the kinds of strategic research that can have the biggest impact on performance, why wait to get a measurement system in place to ensure that marketing research is demonstratively useable and relevant to marketers?

No matter what, the outputs from the measurement system will only be as good as the inputs. If the ultimate goal is to deliver “actionable insights” and highly positive perceptions of value, improving the ability to assess ROI won’t get us there on its own. Employing research tools and approaches that make it easier to connect insights to actions needs to play an equal part in the ROI effort.

Recommended Reading:

Get Marketers to Eat Their Spinach and Love It Too! 5 Tips for Marketing Researchers, Copernicus Marketing Consulting & Research

The Consumer’s Voice: Can Your Company Hear It?, Boston Consulting Group

Copernican Exploration

Lessons from Oscar: What NOT To Do With An Established Brand

How to differentiate an established brand, stay relevant as competitors encroach, broaden your audience without losing existing core customers, and continue to grow are all issues marketers deal with on a regular basis. No one is immune.

Up until recently, for example, retail heavy-weight Wal-Mart had a bumpy road as it tried to figure out how to update its brand strategy from “always low prices.” Starbucks has made many recent moves, including a new nameless logo, as it searches for ways to keep its aging brand relevant and competitive. More recently and in true Hollywood fashion, the Oscars, the venerable annual award show honoring “the best of the best” in motion pictures, has demonstrated some very important “don’t’s” when trying to reinvigorate interest in an aging brand.

All signs seemed to point to the potential for the show to expand its audience base. Though the TV audience for the show’s yearly broadcast had increased 30% over the past two years from an all time low of 32 million in 2008 to 41.7 million in 2010, there still seemed to be opportunities to grow in every age group. Yet when the median age of the broadcast topped out at over 50 last year, the Oscars’ brand managers must have become so preoccupied with attracting younger viewers that all their energies went into coming up with ways to appeal to the younger demographic.

The Oscars secured twenty-something actress Anne Hathaway and thirty-something actor James Franco as hosts and launched a full-throttle marketing campaign, “You’re Invited,” with a slew of digital and social media elements.

As Nicole LaPorte described on The Daily Beast: “The decision by this year’s Oscars producers…to hire Franco and Hathaway—the youngest hosts in the history of Oscar—was itself a drastic act in the progressive slouch towards a cooler, more populist Academy Awards.” She went on to describe Franco’s “offbeat reputation” as playing “perfectly into the Academy [of Motion Picture Arts and Sciences, the owners of the Oscars] to rebrand the Oscars as, well, playful,” and to detail other digital efforts to make the show more “au courant than ever before.”

Certainly hiring hosts who appeal to current and prospective viewers makes sense. Same for extending the event into social media during the broadcast. Hitting viewers on the multiple screens they supposedly look at simultaneously seems like the direction entertainment is going. Yet these are far from bold strategic moves to resuscitate a flailing brand. In fact, they strike us as superficial fixes backed by little more than an intuition that going after a younger demographic is the best way to increase overall audience size.

Not surprisingly, they didn’t work. The broadcast—younger hosts and all—received less-than-rave reviews across the board from critics and viewers alike. As reported in the Wall Street Journal, about 37.6 million people watched, down almost 10% from 2010, and “ranked as the fifth lowest since at least 1974.” True, the 2011 broadcast didn’t LOSE as many 18-to-34-year-olds as it did last year, but that’s not exactly a selling point that ABC—or whichever television network may broadcast the Oscars next year—can use to woo potential advertisers or justify higher ad prices.

Taking a closer look at who to target was by no means a bad place for the Oscars—or any other established brand that’s seen stalled or shrinking share, for that matter—to start when it comes to formulating a plan of attack. Sometimes even just asking the question “who is our target?” can instantly reveal a whole host of opportunities, particularly when the targeting decision wasn’t all that well-fleshed out to begin with.

What was the rationale for selecting this group? What do we know about them, not just demographically, but about their movie-going habits, attitudes towards award shows, favorite stars, etc.? What percentage of this group tunes into our program? Why don’t they tune in? Are they familiar with the Oscars? Are we not appealing to them in a way that’s all that compelling or motivating? Is there something about the broadcast that they don’t like?

Interestingly, we’ve found through our own experiences working with companies to set marketing objectives that sales problems are often NOT the fault of the product or service. Still, we wouldn’t be surprised to find out the Oscars bucked this trend. The inexplicably long broadcasts and many, many dry and self-congratulatory moments have made for some fairly unentertaining television over the years. Another good question for the Oscars to ask is what would reliably and feasibly increase the entertainment value of the broadcast to the target audience?

While it’s probably not the kind of news that brand managers like to hear, as the Oscars demonstrate, reinvigorating a brand more often than not requires much more than superficial fixes.

Discovery of the Month

Customer Satisfaction in a Slump: Even the Net Promoters Agree

A few weeks ago, we saw the latest statistics from the American Customer Satisfaction Index (ASCI), which put the average customer satisfaction rating for more than 225 companies in 45 different industries and government agencies at 75.3 out of a hundred. As it turns out, that number has not improved appreciably for more than a decade.

By way of background, the ASCI is based on customer interviews and an econometric model developed at the University of Michigan’s Ross School of Business. The model maps the relationship between customer expectations, perceived quality, and perceived value (a.k.a., the drivers of satisfaction), satisfaction, and customer complaints and customer loyalty (a.k.a., the results of satisfaction).

Given all the recent emphasis on really “engaging” with customers by responding to their unique needs, wants, and interests throughout the pre- and post-purchase process, we found the news that it hadn’t improved at all for years pretty astonishing.

Keep in mind that for more than a decade, companies have obsessed over corporate and brand equity and management consulting firms have preached the joys of 100% customer satisfaction. For all that, according the ASCI many firms still earn “C” grades.

Coincidentally, about the same time we saw the ASCI report, we also read the 2011 Net Promoter Industry Benchmarks put out each year by the software firm Satmetrix. A completely different measure of customer satisfaction from the ASCI, the Net Promoter Score first saw the light of day in 2003 when The Harvard Business Review published “The One Number You Need To Grow,” by Fred Reichheld, a senior management consultant at Bain and Company.

Reichheld’s objective was (and is) to elevate customer satisfaction metrics to the same level of rigor and importance as financial metrics like revenue growth or return on equity. He proposed an 11-point “recommend” scale from zero—definitely would not—to 10—definitely would “recommend this company to a friend or colleague.” People who score 9 or 10 for a particular company or brand are labeled “Promoters”; people who score 0-6 are, in turn, labeled “detractors”; the 7’s and 8’s are ignored. Subtract the % of detractors from the % promoters and you have the “net promoter score” (NPS).

Generally speaking, a score over 50% is considered a good score. In some industries where the average NPS is negative, just hitting positive single digit numbers is a relative achievement. True, NPS is one of the most controversial and often criticized customer satisfaction metrics in marketing research, but true or not, correct or incorrect, it’s a score that many CEOs and CFOs look at to gauge how their company and its brands are performing at keeping customers happy.

According to Satmetrix, there were some standouts in their 2011 report. Financial services firm USAA earned the highest NPS across all brands and industries examined at 87%. Grocer Trader Joe’s was also up there at 82%, as was Costco at 77%, Apple at 72%, and Amazon at 70%. Still, we were startled by the negative NPS industry averages and scores for big brands. Insurance had an industry average of –5%, for instance. In credit cards, Citigroup earned a -20%. In insurance, Cigna had a -24%.

Other industry averages and scores for big brands were only just fair. Airlines had an industry average of 15%, for example. We know getting over 50 is considered in the range of good, but we would have expected a brand like search engine giant Google–the #2 most admired brand in the world no less—to do more than just barely make it over that threshold. It got a 53%.

Interestingly, Reichheld himself has said the NPS score of the average American company is 15%. You could get that by having 45% promoters and 30% detractors or 58% promoters and 43% detractors or—and this would be really crazy—you could have only 20% promoters and 5% detractors with 75% of customers and prospects giving you a pass. Any way you look at it, a 15% isn’t exactly a good sign about the ability of American business to make customers happy.

Our own research does not support the pursuit of 100% customer satisfaction. We have repeatedly found the relationship between satisfaction and profitability to be curvilinear—profitability does rise as satisfaction rises, but only up to a point. After that point, the costs of delighting the customer with ever-increasing levels of satisfaction exceeds the retention-linked profitability.

While the point of diminishing returns differs from company to company, it does exist. Finding out where it is as part of an effort to better understanding the financial relationship between satisfaction and profitability would certainly help companies set more realistic, achievable, and bottom-line-friendly goals than 100% customer satisfaction.

Still, anyway you look at it, put the ASCI and Net Promoter results together and it’s clear that companies have some work to do when it comes to figuring out what drives customer satisfaction with their brands.

What We’re Reading Now

At the Top of Our Reading List….

Everything is Obvious Once You Know the Answer: How to Minimize Risk, Avoid Surprises, and Grow Your Business in a Changing World

By Duncan Watts (Crown, March 2011)

We just got our copy of this new book which we’ve already read quite a bit about. Watts, a principal research scientist at Yahoo!, takes on conventional wisdom—which is, he writes, “not so much a worldview as a grab bag of logically inconsistent, often contradictory beliefs, each of which seems right at the time but carries no guarantee of being right any other time”—and challenges some strongly held marketing beliefs such as the marketing power of “influentials.”

We’re looking forward to reading it.

Looking for more good books to inspire your marketing strategies and programs? Consider the seven books written by the principals of Copernicus. The list includes the popular Your Gut Is STILL Not Smarter Than Your Head, chock full of ideas for balancing experience and judgment with rigorous, actionable research when making important marketing decisions.

Buy now on…..

Coming Attractions

Register for Our Upcoming Webcasts….or Check Out One On-Demand

Each month, we tackle core strategy development issues or offer points of view on hot marketing topics to marketers looking for fresh perspectives, ideas, and information to help them improve the performance of their marketing programs.

Visit our webcast channel for a complete listing.

Upcoming Speeches and Talks at Conferences Near You

Find out if we’re coming to your favorite industry event or a conference in your city.

OTC Perspectives National

Topic: Market Segmentation in the Digital Age
Speaker: Eric Paquette
Tuesday and Wednesday, May 10-11
Sheraton Atlantic City
Atlantic City, NJ

AMA Atlanta

Topic: Digital Strategies “Illustrated”: Translating Insights in Actions
Speaker: Kevin Clancy
Tuesday, June 21
Villa Christina Restaurant
Atlanta, GA

Download printer-friendly version.

Industry Insights

Eliminating Advertising ROI Anxiety in 2012

As 2011 winds down, forecasters are out in force with prognostications for ad spending in 2012 and beyond. With U.S. presidential elections, the summer Olympics, and European soccer championships on the horizon for next year, not surprisingly, so is growth in ad expenditures.

“There has been some downgrade in spending in the fourth quarter, but we are quite reassured,” Steve King, CEO of media firm ZenithOptimedia, explained to The Hollywood Reporter about current ad market trends. “There has been no dramatic change like we saw in 2008.”

He described the 2012 ad market as one characterized not by “the exuberance of the 1980s and ’90s, but continued spending on proven, trusted ways of getting returns” like TV and the web.

Likewise, Brian Wieser, senior research analyst at Pivotal Research Group, predicts that in 2012, “ad media will feel a ‘haves versus have-nots crunch.’” As he clarified, “simply put, in scarce times, marketers are concentrating their budgets among their primary medium (often network TV for large brands seeking awareness) and a secondary medium (often digital platforms for traditional brand marketers, who typically pursue engagement-based outcomes among a subset of the population who are aware of their brand attributes).”

Our takeaway from these observations: yielding a highly-positive return on investment has not decreased at all in importance. Marketing accountability is as important as it has ever been.

Sticking with tried-and-true media vehicles that have performed reliably may be one way marketers can alleviate advertising ROI anxiety. We have five more solutions to knock it out all together in 2012:

1. Get a revolutionary selling message.

As much as many marketers rely on TV and the web to yield a solid ROI, much of traditional and online advertising remains a complete mystery to target customers. A shocking number of prime-time television spots, for example, consist of 27 seconds of an unrelated, irrelevant, perhaps humorous story and 3 seconds of brand mention. You can’t build sales or a brand by communicating either a non-message or a message that no one understands. You HAVE TO give people a reason to buy your brand.

2. To find a revolutionary selling message, start with an audit of brand perceptions and preferences.

Any firm or organization can ask target customers what they think of your brand and its competitors—does it have a clear or fuzzy brand image? How does your brand compare to competitors on characteristics that your target customers would like to see in a product or service in the category or industry? It’s also possible to ask which brands they prefer.

3. Communicate the SAME revolutionary selling message across all mediums.

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. The overwhelming majority of brands, in the overwhelming majority of product categories should communicate 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.

4. Test your way to a 3-sigma execution.

Research firm Dynamic Logic found creative quality is 50% to 75% responsible for a campaign’s success or failure. Yet more often than not, companies develop and test too few commercials. While many companies regularly test hundreds of product and service concepts, getting a read on only one or maybe two ad campaign concepts is pretty commonplace. Expanding the number of ad concepts tested BEFORE developing a campaign will dramatically increase the probability of finding truly breakthrough creative.

5. Get to know digital behaviors.

Taking the time to research the digital behaviors of your target customers–where they go, what they do, what they search for, how they search, and what they need in a website–is absolutely necessary to dominating the internet. With all the attention on social media, “websites haven’t been bright and shiny for years now; they’re more de rigueur,” wrote David Armano on the Harvard Business Review blog. “I have to conclude that getting your website to completely satisfy business, brand and user goals is still elusive for many companies.” As a result, many marketers are increasingly coming back to their websites and evaluating them in terms of untapped ROI opportunities.

As Scott Briskman, now of Signal to Voice, once famously wrote, “It doesn’t matter how good your delivery system is if the creative sucks.” Using consistently-performing media certainly makes sense as far as taking steps to ensure you achieve highly positive ROI. Going a few paces further to get other inputs to performance in exceptional working order will greatly enhance the power of your advertising in the year ahead.

Marketing Cartoon

Illustrated by C. Madden

Copernican Exploration

The “Disappearing” Middle Class: Is It Really Time to Shift Your Strategy?

“As income falls and diversity rises, a smaller, less homogeneous middle class is emerging—and you’d better shift your strategies,” urged an article in AdAge.

“A wide swath of American companies is convinced that the consumer market is bifurcating into high and low ends and eroding in the middle. They have to alter the way they research, develop and market their products,” reported the Wall Street Journal.

“Companies have thought that if you’re in the middle, you’re safe. But that’s not where the consumer is anymore,” warned Deborah Weinswig, an analyst with Citigroup.

Whether or not every product, service, and brand marketer in America needs to shift their strategy, of course, is not as straightforward a question to answer as these statements from authoritative sources may make it sound. There are at least a few reasons why a marketer may want to think twice.

For one thing, the notion of a “vanishing middle class” of Americans itself has long been a controversial topic, primarily because the very definition of “middle class” is so ambiguous. A quick internet scan of definitions of “American middle class”, for example, yielded wildly different sizes ranging from 25% to almost 70% of the population.

Some say “middle class” is more a state of mind than an economic distinction anyway.

“Historically, sociologists have defined ‘middle class’ as those with salaries,” explained one sociologist from the National Council of Applied Economic Research. “I think ‘middle class’ is very much a state of mind.”

“Everyone wants to believe they are middle class,” said Dante Chinni, journalist and founder of the Patchwork Nation. “For people on the bottom and the top of the wage scale the phrase connotes a certain Regular Joe cachet.”

If membership in the middle class is, in fact, self-determined, we haven’t seen any evidence that a decreasing number of consumers define themselves as Middle Americans.

Many self-described Middle Americans do indicate they have less discretionary income to spend. Just-published analysis done by the non-partisan Congressional Budget Office revealed that the middle three-fifths—60% of the U.S. population—has essentially the same share of after-tax income now as it did 20 years ago. Meanwhile, the cost of living has increased dramatically over the course of that time and everyone cut back during the recession. The middle class specifically decreased spending between an estimated 10% to 13%.

Yet even AdAge admits, “clearly, people [in the middle class] are still spending money and buying products.”

Maybe the middle three-fifths isn’t spending at the same level or rate as the top fifth of the population, but that doesn’t mean there isn’t a healthy-sized segment of middle income Americans ready to make a purchase and with money to spend. Considering that globally the middle class is surging–The Christian Science Monitor reported that by 2030, the global middle class will at least double in size to 5 billion—to the extent that products, services, and brands in a category can be cross-marketed among the middle classes in different countries, continuing to target middle class America could be quite cost-effective and lucrative. Especially if all these other companies have abandoned them.

The squeeze on the middle market of brands in some categories is much more likely the result of the increasingly indistinguishable differences between the quality of brands along the pricing spectrum than it is the contraction in the size of the American middle class.

Regardless of their income bracket, if consumers can get the same level of quality, don’t need the cache of a brand name, and can save a few bucks in the process, they just might “trade down” to a lower-priced dish soap, clothing brand, or car. In 2008—before the recession hit—estimates already put the “trading down market” at $1 trillion in the U.S. (out of consumer spending of $3.7 trillion), up from $700 billion in 2005.

At the same time, as the gulf between the prices of high-end and middle market brands have narrowed, there’s much less of an economic impediment to “trading up”—paying a 50%-200% premium to get what’s perceived as a better product or experience.

Middle class consumers may trade up or trade down in some categories, on some purchasing occasions, but it appears they’re doing it because marketers—either through pricing, product quality, packaging, customer experience, and more—are supplying them with compelling reasons to do that. A bifurcating market may just be marketer-made.

Bemoaning the death of a middle class of people and brands seems premature as does an across-the-board shift in strategy. Though many in the middle three-fifth are quite pressed financially, that doesn’t mean there are fewer consumers looking for a superior balance of price and value in most product and service categories. A two-pronged market where only high-end, prestige brands and low-end, lowest-possible-price products and services will survive is not a fait accompli.

Discovery of the Month

Steve Jobs: Facts and Fictions

Since his death a few months ago, Steve Jobs has been heralded as many things. A visionary, a true inventor, a business hero—the list is long and makes it clear that the man and the products Apple sold were/are greatly admired.

As with any legend that gets told and retold though, sometimes the facts get glossed over, toned down, or even left out all together. As a result, every behavior ascribed to the champion of the story contributes mightily to success and are, therefore, worth emulating. Before the tales of Jobs’ alleged propensity for going on gut feel alone and how much his intuition-driven decision-making style contributed to his success gets blown too far out of proportion, let’s take a closer look at history.

While we haven’t personally come across an interview or speech he gave where he actually utters the words himself yet, Jobs reportedly abhorred all forms of consumer research. He’s purported to have believed that research reflected the needs, wants, attitudes, habits and preferences of today, not tomorrow. Rumor has it that he trusted in his innate ability to make a marketing decision—whether about a new product, an ad campaign, packaging, or store layout.

Assuming for the sake of argument that the zeitgeist has it right, the real question to consider is how did this intuition-driven decision-making style fare?

“Everyone thinks of Jobs as the genius who gave us the iPod, MacBooks, the iTunes store, the iPhone, the iPad, and so on,” wrote Nick Schulz in a piece for the National Review Online this past summer.

“Yes, he transformed personal computing and multimedia. But let’s not forget what else Jobs did:

• Apple I – failure
• Apple II – failed to take off until the floppy disk was introduced
• Lisa - “an epic failure”
• NeXT computer – a “big nothing-burger of a company”

Even the iconic Macintosh was not successful initially and Jobs famously got the boot from the division for failing to spur sales.

True, no one could claim with any certainty that marketing research could have helped avoid those failures or with resuscitating the product when sales proved disappointing. At the same time, it’s at least safe to say pure gut instinct didn’t reliably contribute to Jobs’ market or early career success either.

For an alternative theory to Jobs’ more recent product and business triumphs, consider his ability to focus the company entirely on consistent delivery of the clear and compelling positioning, “easy to use.” In all the commentary about Jobs, the vignettes about the hard–sometimes viewed as questionable–trade-offs he made in order to ensure that Apple’s products worked seamlessly together and were something that anyone without a tech background or engineering degree could operate indicate that this guy understood the power of making a brand stand for something.

Instead of “plug and pray,” as one commentator describe other technology products, Apple offered products that were truly “plug and play.”

Was it a gut instinct that led Jobs to “easy to use?” It certainly could have been, though it’s hard to believe there wasn’t some awareness among decision-makers at Apple about how other companies were developing and marketing their products, not to mention what users of those products complained about.

The information doesn’t come direct from the horse’s mouth, but in an interview with The Hub a few years ago, Apple’s co-founder Steve Wozniak, for example, described the early computer market: “Here was the world in 1975, and a whole bunch of people were trying to make money on low-cost microprocessors and build computers with switches and lights—like every computer ever had been.” This knowledge inspired him to do something different and design a computer that a “normal, average” person could use.

Apple’s cult following also afforded it a variety of resources as far as finding out what users like and don’t like, would like but can’t find, etc. Not too many companies have a MacWorld magazine and annual trade show event, blogs, and websites independently operated and dedicated to all-things related to the brand and using its products. It’s hard to believe at some point Jobs and others at Apple didn’t tap these sources to at least do some informal customer research.

Now an argument could be made against the necessity of certain kinds of marketing research in some technology categories that are changing every six months. Jobs may have had a point that if you ask consumers how likely they are to buy a product or service that’s entirely new and never been seen before—as was the case at one point in time with home computers—they’ll most likely tell you that they won’t buy the product.

The fact remains, however, that most categories aren’t even changing every five years, let alone six months. Practically-speaking, most new products and services aren’t as radical, game-changing, or so totally breakthrough that potential target customers couldn’t offer some insights into their viability or direction on how to market them most effectively and efficiently.

In our experience, the heroic tales of going on gut feel alone turn out to be much less the stuff of business legend than they first appear. Reports of terrific performance are more often than not greatly exaggerated just as the role of research, business experience, and the market knowledge of the individual are often minimized for effect. With that in mind, we suspect Steve Jobs made a whole lot more informed gut-decisions, at least in Apple’s more recent history, than ones based purely on hunch alone.

What We’re Reading

Leading-Edge Marketing Research: 21st Century Tools and Practices

Edited by Robert Kaden, Gerald Linda, Melvin Prince (Sage Publishing, November 2011)

A just-published anthology, Leading Edge Marketing Research: 21st-Century Tools and Practices showcases the excitement of a field where discoveries abound and researchers are valued for solving weighty problems and minimizing risks. Nearly 40 other authors–many considered visionaries in the field of research and marketing–provide rich new tools to measure and analyze consumer attitudes, combined with existing databases, online bulletin boards, social media, neuroscience, radio frequency identification (RFID) tags, behavioral economics, and more.

Truth be told, we’re partial to this book for a reason.

Copernicus’ Kevin Clancy and Ami Bowen contributed Chapter 6, “State-of-the-Science Market Segmentation: Making Results Actionable for Marketers,” to this exciting compilation of industry best-thinking.

The duo make the case that a truly state-of-the-science approach to market segmentation focuses as much on ensuring the relevance and applicability of the outcome to fundamental strategic decisions as it does on the technical complexity of the algorithm or analytical technique used to sort buyers into groups.

Download an excerpt of their chapter from Leading Edge Marketing Research.

“For approximately 50 years,” say Kevin and Ami, “knowledge of how a market segments and what constitutes a good market target has been the sine qua non of marketing strategy. No wonder most marketing textbooks include among their introductory chapters a discussion of market segmentation and targeting.”

“Yet some in the research industry say market segmentation is no longer relevant in today’s marketplace. We say unless it achieves state-of-the-science standards of actionability, it probably isn’t.”

With an eye towards who within an organization will use the results and how they will use them, along with clever measures of profitability and a range of descriptive variables to test, the two describe how marketers can tap into the full potential of this critical strategic research tool to improve performance and ROI.

To learn more about Leading Edge Marketing Research and order a copy, visit Amazon.com.

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Coming Attractions

Kevin Clancy to Speak at Local AMA Chapter Events

AMA Boston

Topic: “Inspiration, Aspiration and Transformation: Overcoming Testosterone-Driven Decision Making and Problematic Research to Build Extraordinary Strategies”

Tuesday, February 28, 2012
6:00 PM
Hyatt Regency Boston

AMA Richmond

Topic: “Inspiration, Aspiration and Transformation: Building Extraordinary Marketing Programs”

Thursday, March 15, 2012
12:00 PM
University of Richmond Jepson Alumni Center

Happy holidays and best wishes for 2012 to all!

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