Chapter 5: Establishing customer segmentation and brand values

Welcome to the 5th Chapter of “The Ultimate Guide to Digital Marketing in a Data-driven World”. If you missed Chapter 4 you can read it here.

This is one of a series of 11 posts or if you want to get the entire book in one hit you can download the full book here.

As mentioned in the previous chapter, in order to create a truly customer-centric strategy, you will need to identify your best, most profitable customer profiles and understand what drives their behaviour.

In this Chapter we look at how to establish customer segmentation and explain the shift from simply identifying functional drivers to also understanding emotional drivers.

Customer segmentation

Once we have dealt with establishing your customer segments and brand values, we will outline the importance of maintaining a clear persona and tone of voice, in order to differentiate your brand from those of your competitors.

Establishing segmentation

Have you ever heard this?

We need more one-to-one marketing and an econometric model to truly deepen our customer segmentation.

At TrinityP3, we hear this regularly from clients evolving from brand-based advertising to a more direct customer model as they enter the world of e-commerce and data-driven digital marketing.

But while new technology allows massive amounts of data to be crunched relatively easily and quickly, this doesn’t necessarily mean that you need to apply a pure one-to-one model – notwithstanding the fact that many financial institutions espouse talking at a one-to-one level based on financial holdings and a customer’s predictive propensity to purchase.

We also regularly see segmentation models with 10–20 overarching customer segments. But while these look scientific and highly targeted, they often fail to effectively deliver on business objectives.

They simply aren’t practical, nor are they worthwhile considering the effort required to apply them. As budgets get squeezed, many segments are simply not showing the YOY (year-on-year) profit growth that was predicted.

The fact is that the companies that are achieving success with direct-to-customer digital marketing have simplified their segmentation to 3–7 core segments with overarching attributes.

Even more significantly, these segments are based on a buying life-cycle and life-stage segmentation rather than the old RFM (recency, frequency, monetary) model – organisations succeeding in this space are adding ‘length of relationship’ to create a more robust RFML model.

So before establishing your segmentation or evolving your current segmentation, it is important to heed these three observations:

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How to avoid the traditional to digital marketing transition trap

This post is by Darren Woolley, Founder of TrinityP3With his background as analytical scientist and creative problem solver, Darren brings unique insights and learnings to the marketing process. He is considered a global thought leader on agency remuneration, search and selection and relationship optimisation.

I wonder how many marketers feel like this. My old friend and terrific illustrator Roger Harvey, drew this cartoon for me and I think it captures how many marketers find themselves today. One foot in the traditional marketing camp they have lived in for most of their careers and one foot in the digital camp, which is not living up to the expectation or the promise.

Surrounding them are the vendors, agencies, suppliers and media encouraging them to “Go forward” or to “Pull back” depending on their vested interest. Meanwhile the marketers feel like they are trapped in a precarious position feeling that if they stand still too long they will be left behind and if they go forward or back they could be seen to fail.

What they do know is they need to make a decision one way or the other as in the meantime they will continue to haemorrhage budget on both their traditional and their digital strategy. So how did they get here and more importantly how can they get out and avoid being trapped?

The transition from traditional to digital marketing - Roger Harvey 2014

The transition from traditional to digital marketing – Roger Harvey 2014

How did we get here?

There are many reasons marketers end up in this situation. Understanding these is the first step to finding the best way out of the situation, or even better, making sure you avoid it completely.

1. Assuming traditional and digital work the same way

There is a very senior marketer who got stuck here because he simply transitioned their spend from their traditional media to their digital media. Working for a services company, they believed that the way digital advertising worked was exactly the same as traditional advertising. That is, instead of thinking about engaging the audience, he focused on audience delivery, measuring and paying for impressions with excellent CPMs (cost per thousand) in digital over the increasing price of media in his traditional channels.

His approach was driven by a belief that the role of the advertising was to drive awareness and perception of the brand. Over time the digital budget increased at the expense of the traditional budget, but the results were not being delivered in the form of new customer, increased sales or revenue. In fact financially he felt it was a huge failure. But he could not go back to his traditional media options as he had seen the performance here fall rapidly too.

2. Treating this as a marketing only opportunity

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Chapter 4: Launch your digital marketing strategy with a rock-solid foundation

Welcome to the 4th Chapter of “The Ultimate Guide to Digital Marketing in a Data-driven World”. If you missed Chapter 3 you can read it here.

This is one of a series of 11 posts or if you want to get the entire book in one hit you can download the full book here.

In this Chapter we look at the development of your actual digital marketing strategy and how to best focus your energy on the right aspects of your strategy.

Digital strategy

Now that you have set your mission, vision, goals and objectives, along with the framework for collaboration, it’s time to flesh out the actual digital marketing strategy that will help you reach your objectives, allocate resources and budgets, and define the critical metrics for measuring success.

The development of your go-to-market strategy, which is the focus of this chapter, should be done in conjunction with listening to your customers, identifying their needs and creating a more relevant customer-segmentation strategy – these issues are dealt with in Chapter 5.

In the past, the conventional wisdom was to use the marketing funnel to create a plan. The funnel was a plan of campaigns that aimed to migrate prospects through a series of sequential steps to reach a purchase decision. It involved four key stages:

  1. Create awareness – getting your company, product or service name in front of a potential target market
  2. Generate leads – gathering prospects who have inquired or shown interest in your offering
  3. Nurture and educate prospects – deepening the relationship to educate prospects about your offering or keep it top-of-mind until the prospects have a need for it
  4. Convert prospects into customers – closing the sale and ideally managing the relationship through to ongoing repeat purchases (lifetime value)

However, life in the new digital world, as we’ve already mentioned, is highly interactive rather than one-way and sequential. Digital technology allows consumer actions and decision-making to be more iterative and integrated.

So many leading digital organisations now cite the McKinsey loyalty loop (shown below) as the preferred consumer decision journey (CDJ).

Engaging consumers throughout the customer decision journey

The CDJ takes a more complex, customer-centric approach than the marketing funnel. It focuses on five stages through which a consumer can move back and forth:

  1. Consider – brands that people consider when thinking about a purchase
  2. Evaluate – information-gathering about the above brands to narrow the choice
  3. Buy – buying the preferred option
  4. Post-purchase – post-purchase reflection on whether the brand purchase was suitable and whether expectations were met; this often informs the decision about whether or not to make another purchase
  5. Advocate – telling friends and colleagues about the purchase and the experience of the product or service

The CDJ approach opens up a much richer range of strategies and allows you to focus your energy on the right aspects. It changes your thinking from a conversion mentality to a belief in satisfying needs and behaviours.

Using the following hypothetical example, let’s now bring these stages to life.

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The Marketing Management Book of the Year – 2014 edition

This post is by Darren Woolley, Founder of TrinityP3With his background as analytical scientist and creative problem solver, Darren brings unique insights and learnings to the marketing process. He is considered a global thought leader on agency remuneration, search and selection and relationship optimisation.

On April 10, 2006 we published our first blog post titled “Where have all the directors gone?”. Over the next few years we posted new content infrequently and irregularly. (In September and October that year we posted more than we did for all the following year 2007).

These early posts were informative for when we focused on embracing the blog, in late 2010, as an opportunity to share the huge amount of information and insights we were gathering in our marketing management consulting work. Within 12 months the traffic to the website and the blog had increased 300% and the number of people visiting the site each month has now risen to more than 15,000 people globally.

2014_2013_Marketing_Management_Book_Of_The_YearTop 50 Marketing Management Posts of 2013

Towards the end of 2013 we realised that by publishing three posts a week we had produced more than 150 posts for the year. Obviously some of these had attracted more and gained greater engagement than others. We challenged Mike Morgan to analyse the data and compile a list of the top 50 most popular posts based on readership, sharing and comments.

This led to the publication of the “Top 50 Marketing Management Posts of 2013″ as a paperback and an e-book. More than 200 pages covering storytelling, strategy and collaboration from Shawn Callahan (Anecdote), content strategy by Craig Hodges (King Content) and pricing strategies from Jon Manning (Sans Prix, Pricing Prophets), plus marketing perceptions from Jon Bradshaw (Brand Traction), great insights on innovation, creativity and collaboration from Andrew Armour (Benchstone Limited) and Stephan Argent (Argedia Group) a founding member of the Marketing FIRST Forum.

Plus there were contributions from the TrinityP3 past and present including Nathan Hodges on Pitching, Mike Morgan on SEO, social media planning and content strategy and Nick Hand and Esther Selvanayagam on agency remuneration and finance.

The book is still available here in limited numbers in paperback or e-book.

Top 50 Marketing Management Posts of 2014

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Chapter 3: How the best of the best approach digital marketing

Welcome to the 3rd Chapter of “The Ultimate Guide to Digital Marketing in a Data-driven World”. If you missed Chapter 2 you can read it here.

This is one of a series of 11 posts or if you want to get the entire book in one hit you can download the full book here.

In this Chapter we delve into how best to approach digital marketing from a business and strategic perspective.

Business alignment

 

The Marketing Budgets 2013 Report released by Econsultancy and Responsys highlighted the fact that just over half of the companies surveyed globally were planning to recruit more people into their digital marketing teams in 2013 – this figure increased to 66% for businesses in the Asia-Pacific region and to almost 75% for Australian companies.

However, it also identified company culture and staff as the top two challenges in making the most of digital investment. Simon O’Day, vice-president at Responsys Asia-Pacific, was reported as saying, ‘While it’s good news that digital investment is rising, it’s still concerning that a third of marketers consider company culture a challenge preventing further growth’.

Plan for digital marketing success

Let’s now explore how to break down the silos and how best to plan for digital marketing success.

It’s no surprise that the leading digital companies have leadership teams that live and breathe the digital ecosystem. The online shoe and clothing retailer Zappos, for example, is widely regarded as the leader in creating online product description videos.

The company started in 2009 with seven people and, in line with its customer service mantra, it had the lofty ambition of creating up to 5000 videos to help consumers better understand its products. Now, Zappos employs 12 people and has produced over 200,000 product videos.

The common link between Zappos and other leading digital organisations is a collaborative construct and a seamlessly integrated culture.

Bricks-and-mortar organisations were naturally built into silos as they expanded. Physical presence and a production-line focus demanded that certain people be in charge of a particular area or discipline. Likewise, the marketing discipline was also siloed. It often has the structure shown below (source: Forbes’ Here’s what the marketing organisation of the future should look like).

Organizational structure

However, as we have migrated from a product society to a service society, this model has become outdated. The successful organisations of today have realised that they require an ‘always on’ approach, with a more flexible and collaborative culture. Disciplines now interrelate and leverage information and insights from each other in order to build more successful business outcomes.

The new marketing construct looks more like that shown below, with a CMO focused on the brand and customer experience at all touchpoints of marketing.
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The ‘dog’s dinner’ approach to managing agency rosters

This post is by David Little, who has been working in Procurement Category Management for 12 years within FMCG, Telecoms and Consulting. He has a special interest in Marketing categories, Procurement Leadership and helping others develop their Procurement skills.

Is this a familiar picture? Would your CMO or Marketing Director recognise this situation?

Agency roster table

How do rosters get like this?

It’s common for a marketing agency roster to expand according to the ad hoc requirements of the marketing team. Marketing personnel come and go, budgets expand and shrink, and the unique challenges your brands face change too. But the task of tidying up regularly is seldom a scheduled activity.

In addition to this, short-term, tactical opportunities crop up like new promotional campaigns, events or sponsorships, or even colleagues who have a ‘great contact’, leading to (whoops!) another agency creeping onto your payroll.

Other mitigating factors affecting your choice of agency could be:

  • As illustrated above, your company acquires new brands from mergers or acquisitions, inheriting new agencies.
  • A mix of local and global brands; I’ve worked in FMCG where a local brand is the biggest seller, but barely exists elsewhere in the world.
  • Global brand affiliations, where head office directs you to a global agency or subsidiary.
  • Unique local brand positioning: I’ve also experienced a global big-hitting brand which was niche on the local scene. It didn’t have the same funds to execute on a grand scale and had a very different demographic to HQ’s ideal.
  • No-competition guidelines, where you may not be able to use the same agencies as your direct competitors.

The end result is often a roster that isn’t aligned to your needs and is hard to manage.

If we use the Situation, Target, Proposal model, we can break this complex transformation into more manageable chunks, as follows…
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Chapter 2: How digital marketing fits into the marketing mix

Welcome to Chapter 2 of The Ultimate Guide to Digital Marketing in a Data-driven World. If you missed Chapter 1 you can read it here.

In this chapter we put digital marketing into perspective, as a silo mentality no longer applies. We look at all the key channels and activity and define how they interrelate and fit into the marketing mix.

We will be releasing this book as series of 11 posts over the coming weeks or if you don’t want to wait that long you can go to this page to download the full book right now.

Digital Marketing Mix

Now that you are armed with the history and background of search, and a deeper understanding of it, let’s be clear on what digital marketing actually is. For it seems that everyone we speak to has a different interpretation of it.

We don’t propose our view to be all-encompassing. However, for the purposes of this guide, and to really simplify it for you, we have defined digital marketing as follows:

Digital marketing is the practice of connecting companies, products and services (or brands) to consumers through digital means. This can involve a direct hard sell (e.g. e-commerce) or a softer sell (influential) through digital content.

Digital marketing can be seen as having four characteristics:

  1. By connecting companies, products and services to consumers, digital is a channel accessible through a hardware device, such as a computer. There are a myriad channel forms, but the top six are:
  • Email
  • SMS
  • Social networks: Facebook, Google+, Twitter, Pinterest, LinkedIn, to name a few
  • Search engines: Google, Yahoo, Bing, Baidu (China’s number-one search engine) – these involve the organic ranking of websites, where your website is naturally scored, ranked and listed, hence the need for SEO as discussed in the previous chapter; they can also involve paid search, whereby you can pay for your website to appear on the first-page advertising area of a search engine, hence the need for SEA (search engine advertising)
  • NFC based on radio frequency identification standards
  • Mobile devices, including smartphones, tablets, PDAs, kiosks and surface technology
  1. It is also the digital format of advertising, which interrupts consumers in their online journeys – hence display advertising, paid SEA, social media advertising, quick response codes, video etc.
  2. Digital marketing can entail platforms containing content that informs, entices and engages consumers in order to build a closer relationship with a brand; for example, websites, apps, games, blogs and e-learning environments, as well as ‘curated content’ sources such as YouTube, SlideShare, Instagram and Pinterest. (Curated content is a collection of posts from other sites presented together in a news format or as a blog post with a unique introduction.)
  3. And lastly, digital marketing is measurable. The word digital comes from the same source as the words digit and digitus (the Latin word for finger), as fingers are often used for discrete counting. In fact, every digital action leaves a discrete digital fingerprint in the form of data. The recent explosion in digital activity, devices and technology has been accompanied by an equivalent explosion of data – as we mentioned in Chapter 1, the amount of global business data is doubling every 1.2 years. So it’s no wonder that you find yourself drowning in data, analytics and measurement reports. In Chapter 8, we will explore the various forms of digital marketing measurement to help you make more sense of your activity, and to demonstrate how to map it back to your business goals.

To recap, using the KISS principle (keep it simple stupid), digital marketing is four things:

  1. A channel
  2. An advertising opportunity
  3. Content
  4. Immediately measureable

So how does digital marketing fit into the mix? Neatly, or is it a grey area?

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Why do marketers really fire their agencies?

This post is by Darren Woolley, Founder of TrinityP3With his background as analytical scientist and creative problem solver, Darren brings unique insights and learnings to the marketing process. He is considered a global thought leader on agency remuneration, search and selection and relationship optimisation.

Human beings are notoriously emotional and often irrational. But we would like to think we are totally rational.

Marketers are no different. In fact, rational feedback and reasons are often provided to justify what is largely an emotional response to a relationship. Being able to read between the lines on what is being said is insightful into understanding what is really happening underneath. This takes either incredible emotional intelligence, or being a pitch doctor on the inside, or both.

It is all about the relationship

Anyone that tells you otherwise is lying. It is a people business and what happens between the marketer and their agencies is relationship driven.

Customer service evaluation form with tick on poor

You see marketing, and especially marketing communications as a profession, is inclined to attract people who are very people oriented. This means that relationships are important to them. So when a marketer tells their agency “We have outgrown you”, is it usually code for “We have fallen out of love”?

Proof of this is seen in the reverse situation when a new CMO is appointed. If they do not instantly fall in love with the incumbent agency, often one of the first things they will do is fire the incumbent and appoint a new agency. Of course this will be perfectly rationalised by stating that they need a fresh team aligned to their fresh idea for the brand, but this happens before the incumbents have had a chance to prove themselves.

And in discussing the need for a pitch, we will hear a litany of perfectly valid reasons for undertaking a pitch, and one of the key areas we explore is the relationship with the incumbents. Here is where with probing you find that the sum of the parts equals an underlying whole, which is they no longer feel the love and commitment.

The challenge for marketers

The issue for marketers is how to articulate this in a professional business environment. Saying, “I feel like you don’t love us anymore” or “I don’t love you” or even “I love someone else” feels more appropriate in a daytime drama than in a corporate office. Therefore feeling constrained in having these conversations, marketers will resort to more rational (and acceptable feedback) for the agency.

The problem is that the agency will often respond to the specific feedback and not the underlying cause. This will exacerbate the marketer’s feeling because they are now left feeling misunderstood and that if the agency was truly aligned to the needs of the brand / business (read their needs) the agency would know what to do.

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Chapter 1: The rise and rise of digital marketing in a data-driven world

The first post in this series introduced the new TrinityP3 book “The Ultimate Guide to Digital Marketing in a Data-driven World” – you can read the introduction post here.

This is Chapter 1 of the book and in it we look at the history of digital marketing and the importance of data. We also discuss some of the incredible statistics and some of the big players – Google, Facebook, LinkedIn, Twitter and we also look at the rise of Content Marketing (and much more).

We will be releasing this book as series of 11 posts over the coming weeks or if you don’t want to wait that long you can go to this page to download the full book right now.

Digital and data

 It all begins with data

Big data, little data – it all begins with data. While the old direct mailers from way back have been immersing themselves in data warehouses and databases for decades, it’s now the top brand marketers who are embracing these practices and espousing the power of data to drive their businesses.

Major TV advertisers are now talking at conferences about the power of digital marketing and data, and the challenges of harnessing it for their businesses. But this isn’t just talk. There has been a dramatic shift from TV, print and radio budgets to budgets for an array of digital media. In fact, on average, 35% of a marketing budget is now spent on digital marketing.

Let’s not get ahead of ourselves, however.

Let’s go back to the beginning

The information and digital marketing revolution fired up in 1989 and sped forwards at warp speed. That was when the so-called ‘information superhighway’ was created by a British computer scientist called Tim Berners-Lee.

He invented the World Wide Web (www) with the aim of connecting people, places and information using servers, computers and something that has since become as common as cars, houses and televisions – the internet.

It wasn’t long before e-commerce was born, which soon began to transform our economic and social landscape. It was a completely new way of life. Having said that, many lessons can be learned by taking a quick look back at a past life – that which followed the industrial revolution.

The industrial revolution

In the late 1700s, low-yield production by hand started to give way to mass production by machines with the use of chemicals and coal. New types of jobs were created, productivity grew, cities expanded and living standards dramatically improved. Factories, canals and railroads forged a new era of urbanisation and connectivity. But these changes were not instant ones.

The industrial revolution is widely recognised to have taken place from the mid-1700s through to about 1830 (over roughly 70 years). And a second industrial revolution is said to have begun in the 1850s, when steel made it easier to produce railway tracks, and electrification started to make its mark.

These were times of major innovation and knowledge transfer. And inevitably, along with major improvements in productivity, wealth and knowledge came greed and an imbalance in society. The new middle-class business owners lived in splendour; the workers lived in squalor.

The advent of the information age

Fast-forward to 1989 and we see the start of the next major shift in development – from analogue to digital technology. It was the advent of the information age, the point at which the product economy evolved into the service-based economy.

Computers, digital cellular phones and fax machines were created and adopted at a much faster rate than the bulkier machinery of the earlier transitions. The internet was shared with the public from 1991, giving people faster access to global information and previously untapped international markets.
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The Ultimate Guide to Digital Marketing in a Data-Driven World

TrinityP3 is proud to announce the launch of The Ultimate Guide to Digital Marketing in a Data-Driven World. This definitive guide has over 27,000 words featuring insights, tips, observations, tools, platforms, strategies and much more.

TrinityP3 Senior Consultant Anton Buchner is the author of the vast majority of this work with additional input from Founder & Global CEO Darren Woolley and Content Director Mike Morgan.

We will be releasing this book as series of 11 posts over the coming weeks or you can go to this page to download the full book right now.

Introduction: from confusion to clarity in 100 days

Have you been asking yourself over the past couple of years how you can harness the power of digital, including social media, apps, Facebook, smartphones, tablets, Twitter, games, responsive design, conversational search marketing, ratings, reviews, e-commerce, advocacy, Pinterest, blogs, Tumblr, NFC (near field communication), and wearable tech to name a few?

Global digital revolution

And with data being captured for every digital action – in fact, 90% of the world’s data has been generated in the past two years – are you getting a major headache from trying to find insights in your ‘life changing’ dashboards and executive data reports?

Well, the good news is that you’re not alone – 91% of marketers don’t know if their digital marketing is working (source: Digital Distress: What Keeps Marketers up at Night?).

We work in a digital, data-driven economy. We said goodbye to the industrial revolution long ago, and now we’re well and truly in the age of technology. Today’s marketing economy is not run by creative and media giants but by data scientists, content officers, chief technologists and the new CEOs (chief experience officers).

Gut feel has given way to behavioural analysis and a whole new world in which proving (or disproving) a marketing return on investment is the priority. And with all this activity has come great confusion and chaos.

However, as chaos theory has proved, within disorder can be found order – order in the sense of successful marketing strategies, improved customer satisfaction and, ultimately, profitable business growth.

This new world brings great opportunities, and like all new opportunities, these require new learnings. These learnings in turn demand new skills, reassessments and actionable steps that will revamp your approach to marketing.

Now as management consultants, we at TrinityP3 are constantly talking with clients who feel lost in today’s digital marketing world, unsure of how to proceed. Many senior marketers who were classically trained in the 4Ps are feeling increasingly out of touch in an age when social networks, advocacy and engagement rule discussion.

Campaigns have given way to brands that need to be ‘always on’. One-off strategies have given way to the monitoring of consumer sentiment, the sparking of conversations and the delivery of relevance throughout a customer’s life cycle.

So we have created the ultimate guide to digital in a data-driven world, to help you navigate the hype.

This guide will not only demystify the world of digital and data by explaining how it works, it will also help you put some logic back into your marketing approach. There are no bells, no whistles, no hype. This guide simply aims to help marketers get back to basics and follow the path from confusion to clarity.

Chapter 1: The rise and rise of digital marketing in a data-driven world

In this chapter we highlight the array of statistics (which unfortunately will be out-of-date the minute you read them) and trends that have accompanied the rise of digital and data-driven marketing.

Continue reading “The Ultimate Guide to Digital Marketing in a Data-Driven World”

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