Looking for deals for this holiday season?  Well, Black Friday and Cyber Monday are the days to buy online.

Look for free shipping deals, special limited-time offers and exclusive product bundles.

My new company, kajeet, is joining in.  We've got free shipping running and if you buy a kids cell phone on Thanksgiving or Black Friday, be sure to use promo code "FRIDAY15" at checkout to get 15% off any cell phone.

Check out the selection of LG Rumor phones in Champagne, White, Blue and Green.  With no contracts and unlimited FREE parental controls and just $169.99, the Rumor at kajeet is a great deal.  With 15% off and free shipping, it's the can't miss wireless gift for the kid in your life this holiday season.

Happy Thanksgiving!

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Here's a trivially-observed example of what lousy customer service will cost you.  In this example, from Verizon, it's a minimum of $100.

The saga unfolds after the break.

We made the switch to Verizon FiOS in December, after waiting for years.  It's a terrific product, with great HD picture quality, and speedy and stable high-speed Internet access.  The installer was excellent and courteous and made sure everything was working perfectly before he left.

The ability of Verizon to handle an easy premium offer (the infamous HD Free TV offer)?  Not so much.

I've been working email and phone conversations with Verizon since January trying to get my $200 Best Buy gift card, which I selected in lieu of the 19" HDTV.  Since then, I've amassed a string of emails with the Verizon executive escalation team which have gone unanswered since January.

Finally, in frustration, I resorted to The Consumerist's list of Verizon executive contacts and sent an email to Ivan Seidenberg on Friday at 5:30.

Talk about quick reaction!

At Monday at 9:30, I received a call from a very nice young man who was very apologetic and who was clearly empowered to do whatever it took to make me happy.  He indicated that the $100 gift card I received in January was the first part of a win-back offer and that I'd get the other $100 in month 13.

The problem was that I never responded to a win-back offer.  I went for the FiOS triple play/free TV offer.  However, I didn't want to get something I didn't deserve, so I let the young man know that if they just sent me a $100 gift card, I'd consider us even and not to worry about anything else.

Of course, he had no way to give me just what was owed to me ($100 of gift cards) and had to resort to shipping out a $200 card.  I practically had to beg him not to FedEx it to me.

So Verizon will get stuck paying a $100 penalty for bad customer service, and that's not counting the time and effort expended via the forwarding of the complaint email from Mr. Seidenberg down the food chain and the inevitable executive escalation report that will be fed back up the chain at some point.

Now, want to take a guess what I expect in January or February of 2009?  Yep, I suspect the CRM systems of Verizon have been so fouled up by the free TV offer debacle that they'll spit out another $100 card for me.

The worst part of the whole experience actually took place yesterday afternoon.

I received a very uncomfortable call from one of my prior executive escalation contact's supervisor.  The supervisor apologized to me for her employee's lack of follow-up to me, and let me know it would be "handled appropriately" and that the person would be "reprimanded."  Yecch.  It felt like one of those unconfortable visits when your neighbor's kid hits a ball through your window and they come over with the kid's ear in a vise grip and make them apologize.  I couldn't get off the phone quickly enough and couldn't believe that Verizon was treating its employees like this--both the supervisor, who clearly wasn't comfortable making the call, and the employee.

Can you imagine how this employee--who's a grown adult, with a mortgage, family, etc.--must feel? I wonder how far he/she will deviate from the Verizon manual going forward and actually even try to use their brain?

I also wonder what brand of bureaucratic punishment will be exacted.  Banishment from the department bowling team?  Six months of replenishing the floor candy bowl?

All it would have taken was for Verizon to have a system in place that let their employees solve customer problems the first time, even to the extent of spending a little bit of money to address the root cause.  This one resolution must have cost them in total the price of 2 or 3 TVs; multiplied by thousands, it's got to be one of the all-time promotional disasters.

What are you doing that's L.L. Bean-like?  What are you doing that's Verizon-like?  More importantly, what are you doing that's more of the former and less of the latter?

photo credit: Daquella manera

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When it comes to creating an emotional brand experience, forget copy, taglines, imagery and brand iconography.

There's nothing like touching and feeling a product first-hand. Tasting the product is even better.  Especially when that taste is vaporized rubber and burning brake pads.

Of course you have to be a gearhead, enjoy automobiles and love driving.  That's why Audi's Driving Experience is perfect in terms of targeting and likely a big success in generating sales.

On Saturday, I attended Audi's complimentary two hour session at Summit Point racetrack in West Virginia, as the the result of an invitation I received as a current Audi owner.  I thought it would be a great way to spend a few hours on the weekend and get a ride in the 2009 A4.

Instead, I experienced a great example of experiential marketing and even witnessed a prospective Audi customer turn into a likely purchaser.

During the session, we had the chance to run the new A4 on an autocross track against three competitive models: Lexus IS250, Mercedes C300 and the BMW 328xi.  All models were comparably equipped and all featured all wheel drive.  While I admit an Audi bias going in, I found the A4 to be the best drive on the autocross track, showing a great balance of power, handling and luxury.

I drove in the car with a couple who were in the market for an automobile in that class and I was able to watch their preference swing very strongly to the A4 after they'd driven the other three models around the course.  It was clear to me that after driving the cars head-to-head--and a lot harder than they would get the chance to in a standard dealership test drive--that this couple was off the fence and preferred Audi for their next car.

Of course, that's exactly what Audi was hoping for. What I experienced with my co-driver was probably exactly the way Audi and Emotive white-boarded it in the planning stages.

After the autocross, we had the chance to go out and drive the A4 at speed on the racetrack for several laps, following a professional driver.  Talk about a great way to end the day, and not even have to worry about tires, fuel and brakes!

Of course, Audi ensured that the experience was all true to the brand.  The signage was beautiful.  The complimentary continental breakfast in the lounge reminded me of a luxury European hotel.  And all the furniture, including stainless steel tables and chairs, and modern white sofas was brought in specifically for the day.  Nothing at all was left to chance, even the use of high-tech iPod Touches to capture the post drive survey and the very cool Audi caps handed out as thank you gifts.  Vorsprung durch technik indeed.

What should you consider when undertaking an experiential marketing campaign?  My takeaways:

1. Budget appropriately. In order to do this right, Audi spent a fortune.  From purchasing competitive vehicles, to detailing them (they were impeccably clean), to the furniture, food signage and impeccably-groomed young staff, everything was perfect.  When you're trying to sell $48,000 cars, nickels and dimes spent on the presentation do matter.
2. Don't be afraid of the competition. Don't hesitate to let your prospective customers compare your product head-to-head, especially when you believe your product can stand up.  Bring in a reasonable set of the products likely to be cross-shopped and let your customers touch and feel those products as well.
3. Don't be afraid to guide the conversation. While you can let people make up their own minds about your product in relation to the competition, Audi did a fine job in the pre-drive briefing letting us know how to test the cars and what to look for.  Of course, Audi was bound to do well in that comparison because we knew what to think about during the drives.
4. Sweat the details. Is the coffee good?  The pastries of best quality?  Is the upholstery clean?  All of this matters and all of this costs almost nothing to get right.
5. Have a plan. The logistics of having hundreds of people come through to drive the cars must have been mind-boggling (the presenter indicated they brought 70 cars with them).  Yet, everything ran very smoothly.  Clearly, Emotive (the group that put together the day for Audi) had a lot of experience and a very good plan in place.

How have your experiential marketing experiences gone?  Have you had similar good experiences?  Or ones that went awry?

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The good folks at Rimm-Kaufman group, however, saved me the trouble with yesterday's excellent PPC Averages can Hide Incremental Nightmares.  Please take the time to read it.

As I was reading it, I started to think about applying LTV to the methodology.  When you think about making decisions based on LTV, the story becomes even more clear.  All will be revealed (with a graph!) after the break.

First, I roughly recreated the RKG dataset from visual examination of the graphs.

Then, I developed some hypotheses about how the customers acquired in the original effort would perform.  They included:

1. Incremental Lifetime Sales. The top bucket of customers (acquired with the first $10,000 in ad spend) would generate an additional 80% more sales.  The bottom bucket would generate just 5% more sales.
2. Incremental Lifetime Marketing Investment. The incremental advertising cost to generate the incremental sales (you have to spend money to make money, regardless of what your CFO may want to believe!) ranged from a 7% A/S ratio for the top bucket to 1,000% for the last bucket.

I suspect I've been too conservative in my assumptions of incremental sales for the top bucket and the rest of the A/S assumptions are just estimates for discussion purposes.  I made no additional assumptions for improvements in gross margins and so on.

So what happens when I applied my assumptions? Here's the graph:

The light yellow and light blue lines are essentially the graphs on the original RKG blog.  The orange/dark blue lines show what happens when I try to add in LTV.  What happens?

1. Peak profit (marketing income) shifts leftward. That means that instead of hitting max profit at around $60K of original acquisition ad spend, this model shows it peaking at around $40K of original acquisition ad spend.
2. The profit slope changes. It becomes more steep in the first four buckets of marketing investment and then the rate of change also falls off more rapidly after the peak.

Of note is that I haven't considered overall revenue and other factors (economies of scale) that may impact marketing investment decisions.  You may, for example, want to be slightly less efficient on the margins for revenue volume purposes or to maintain volumes if you have costs that operate as step functions.

What does this mean as you look at incremental marketing investments?

1. It's even more important than Rimm-Kaufman indicates when you look at investment on an LTV basis.  The mistakes on the margin are not as gradually dilutive to your profit, when you consider LTV.
2. It's important to get up the experience curve. Given that the slope of profit rises pretty quickly, you're leaving money on the table if you don't (or can't) bucket the marketing investments and quickly march up that curve--by investing more in marketing, smartly.

How do you analyze the incremental performance of your PPC campaigns and other marketing investments?  What challenges do you face when trying to build models to maximize your marketing performance while delivering against volume or revenue constraints?

Update, August 6th--Graph above was updated due to some missing data.  All comments above still hold.  The original graph uploaded this morning is available here for review.

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What if 10 or 20% of the athletes in the opening ceremony parade walked in wearing face masks to protect themselves from the pollution and, ultimately, their chance at an Olympic medal? What does that say about the Chinese government? Do you want that imagery tied to your brand, after paying tens or hundreds of millions to be the official X of the Games?

Do you have a contingency plan in place? What will you say when images of mask-clad athletes in the murky Beijing air, in front of your expensive banner, are transmitted to the world?

Just a thought and one I haven't fully wrapped my head around yet. I'd love to hear your thoughts.
photo credit: upton

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I've got a .mac account for backup and file exchange purposes, so the downtime was more of an annoyance to me than anything.  I didn't expect anything from Apple, except an update telling me that everything was stable and an apology.

To my surprise, I got an email apologizing as well as a free month of service.  Smart customer service move by Apple which, like L.L. Bean, knows service.  The cost of providing that extra month of service is ~$0 and should easily pay for itself in forgone churn.

Nice job, Apple.  Email from Apple is after the jump.

We have recently completed the transition from .Mac to MobileMe. Unfortunately, it was a lot rockier than we had hoped.
Although core services such as Mail, iDisk, Sync, Back to My Mac, and Gallery went relatively smoothly, the new MobileMe web applications had lots of problems initially. Fortunately we have worked through those problems and the web apps are now up and running.
Another snag we have run into is our use of the word "push" in describing everything under the MobileMe umbrella. While all email, contact or calendar changes on the iPhone and the web apps are immediately synced to and from the MobileMe "cloud," changes made on a PC or Mac take up to 15 minutes to sync with the cloud and your other devices. So even though things are indeed instantly pushed to and from your iPhone and the web apps today, we are going to stop using the word "push" until it is near-instant on PCs and Macs, too.
We want to apologize to our loyal customers and express our appreciation for their patience by giving all current subscribers an automatic 30-day extension to their MobileMe subscription free of charge. Your extension will be reflected in your account settings within the next few weeks.
We hope you enjoy your new suite of web applications at me.com, in addition to keeping your iPhone and iPod touch wirelessly in sync with these new web applications and your Mac or PC.
Thank you,
The MobileMe Team
Please review the MobileMe Terms of Service.*

*Please note these MobileMe Terms of Service replace and supersede the prior .Mac Terms and Conditions.
MobileMe is available to persons age 13 and older.
Copyright © 2008 Apple Inc. 1 Infinite Loop, MS 303-3DM, Cupertino, CA 95014.
All Rights Reserved / Keep Informed / Privacy Policy / My Info
You are receiving this email from Apple to notify you of service information regarding your MobileMe account.

photo credit: snappybex

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But a recent study, carried out by Marketing Management Analytics, Financial Executive and Ed See, makes me think that more senior marketing executives should double-check the shine on their resume and perhaps consider a few more networking lunches in the near future.

A very brief summary of that report found in Ad Age frightens me and brings to mind a few courses of action that you can take today, if you find yourself in a similar situation.

A few quick points from the study follow. The CFOs interviewed said that:

• 9/10 of CFOs don't use marketing ROI metrics in development of marketing budgets.
• 7/10 don't use their company marketing forecasts for earnings guidance or public disclosures.
• 6/10 believe their marketing departments have inadequate understanding of financial controls.
• less than 4/10 said their company marketing forecasts were audit-ready.

From the CMOs and senior marketing leaders surveyed:

• Only 33% of CMOs reported "full cooperation and an open dialog" with finance in setting metrics and methodologies for marketing ROI calculations in 2008.
• Only 10% indicated that they could forecast the effect of a 10% cut in marketing spend.
• Only 14% said senior management had confidence in their firms' marketing forecasts.

To summarize:

1. CMOs ability to estimate their impact on the business isn't even of ballpark (+/- 10%) quality.
2. CMOs don't have a great grasp of providing accurate and reliable forecasts of investments that will pass reasonable audit scrutiny.
3. CMO's don't play well with others.
4. The CFO's have so little confidence in the marketers that they crunch the numbers with relatively little input from the marketing team.

So what do you do, if you're a senior marketing leader and find yourself in a situation like the above?

First, accept you have a problem.  Get with your CFO and let them know one of your top priorities is to fix the problem.  Make sure you both understand what the CFO's specific problems are with your marketing planning, forecasting, ROI calculations and assumption development processes.

Second, triage. Figure out what you're doing wrong, but as importantly, figure out what you're doing right (and I know you're doing a number of things correctly) and learn from those processes that are working well.  Work out a punch list with your CFO, and understand the "A" priorities.

Third, partner with your CFO to improve your process. I insist in the concept of the financial guys driving the calculations and modeling side of the equation, the marketing team leading the assumptions and scenario planning, and then a "team of two" on running the iterations of your plan or forecast.  (The marketing team should pressure test the calculations and the financial team should pressure test the marketing assumptions.)

Fourth, own the issue. As CMO or senior marketing leader, if your financial leadership doesn't trust your ability help get to clear marketing metrics and ROI calculations, it's your problem, not theirs.  Make it really clear that you own the forecasts, plans and budgets and that you'll be the one to be held accountable for the hits and misses--not the financial guys who built the models, nor can you blame the last CMO for problems.  It's on you.

So do you have problems with your planning and forecasting? Are you a financial pro who needs some help in improving the planning and forecasting competency of your marketing team?  Let's talk, here or on the phone.

photo credit: Gary Denness

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"Warning: Habits May Be Good for You" explores how an anthropologist turned to marketing experts from CPG companies like Procter & Gamble to help increase the incidence of hand-washing with soap after using the toilet in the nation of Ghana to improve the health of children.  Obviously, this was an important effort and I was encouraged to see marketing practitioners as instrumental in helping achieve success in this endeavor.

As I was reading the article, it struck me that many of the techniques used are found in Robert B. Cialdini's classic Influence: The Psychology of Persuasion. I'd lent out my copy a few years ago and, thankfully, had to buy a new version which includes an epilogue written by Dr. Cialdini in 2007.  My re-read then triggered a few thoughts on social media.

If the social media crowd can stop navel-gazing long enough to do some quick research and scientific work, boy will money be made. [More after the jump.]

Dr. Cialdini's research caused him to identify six key weapons of influence:

1. Reciprocation
2. Consistency
3. Social Proof
4. Liking
5. Authority
6. Scarcity

Many of his examples focused on face-to-face selling or just plain interactions with others.  When I first read the book (originally published in 1984) for the first time in 1995 or so, I was struck by the fact that my company at the time was using all six of those principles, but in various offline direct response channels.

We didn't intend to use Cialdini's principles; rather, we evolved into using them through years of scientific univariate tests.

Which of the six principles is most important to a social media startup? From what I can see, it's the concept of Social Proof.  Jason Calacanis becomes a Twitter advocate and, because several of his followers also pick up on Twitter, it soon provides proof to a certain circle that Twitter is a good thing.  Boom, the product takes off.

What's the problem with the concept of Social Proof in growing social media? Try this:  Ask anybody over 40 who's not a regular reader of Alley Insider, Valleywag or Paid Content what Twitter is.  My bet is you get a blank stare two out of three times.

Simply relying on Social Proof can get you pigeonholed within a very select segment of people.  Now, for companies that provide great services to that limited target audience, it can be very good business indeed. (See how Rafat Ali made out with Paid Content.)

The key is how to use the concept of Social Proof to expand beyond that initial, lucrative target audience and become more ubiquitous.

Summary and key takeaways

1. What's "old" is new again. Go back and do your research.  Classics of marketing and psychology are relevant today, just as the concepts they cover were 10,000 years ago.  Plus, with Amazon, it's now cheap to really build your library of information!
2. Consider how humans are hard-wired. When building products, services and delivery methods for those products, think about basic human infrastructure and how you can find the path of least resistance to your ideas.
3. Remember that great psychology can't overcome a bad product. You can certainly fool some of the people some of the time using some of Dr. Cialdini's "click, whirr" discoveries.  But that's still only going to take you so far.  Start with great products.

I'll look at more of Dr. Cialdini's concepts in the future.

In the meantime, how have you applied psychology in your marketing?  Or, when have you seen good (or clumsy) attempts been applied to you?

photo credit: HeffTech

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Well, the classic Claude Hopkins book Scientific Advertising is still a must-read.  It's a slim 56 pages, but blows just about every advertising book ever written out of the water.

No less than David Ogilvy said that everybody should read it seven times, and that it changed his life.

Good enough for you? Download an open-source PDF file here.  Read it at lunch.

Then go forth and do likewise.

photo credit: gds

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I was intrigued by a new social push by Sony Ericsson for the Z750a flip phone, created by their agency, Iris.  The campaign is titled "Bringing Purple Back."

Well, neither Sony Ericsson nor Iris would give me any objectives for the campaign.  Neither was any information or speculation found on unofficial Sony Ericsson blog sites about the campaign.

Being an inquisitive guy, I decided to use the crude but effective research technique of following the money to learn more.

Smart marketers tend to invest more dollars where volumes are high and margins are high, and less when the expected outcome is otherwise. 

I tend to think of Sony Ericsson as a fairly smart marketer, based on my hypothesis that they're focused on the consumer--they've got a great assortment of cell phones and get generally very good reviews for the products, which are eye-catching and (to my mind, anyway) competitive with anything out there.

So how much is Sony spending on the Bringing Purple Back campaign?  Not much.

Let's take a look at what I've found this morning:

1. Prizes of just $2,393.  Six lousy free cell phones and one grand prize of a $599 gift card, positioned as a free pair of designer shoes. (Why not a phone and a free year of AT&T service?  But I digress.)  No million dollar sweeps.  Not even a free phone a day.  Six over the course of a six week promotion.
2. Short promotion length.  Six weeks.  Unless something is absolutely crazily viral, it takes a couple of weeks at minimum to get a campaign off the ground.  By the time things are up and running, it's game over.  The excessively short time frame smells of a budget compromise.
3. PPC buys of $0.  Go to Google and Yahoo and try to search for "Sony Ericsson 750a".  While I don't expect the Bringing Purple Back website to pop, why no PPC spend?  (I tried a number of different KW searches including the obvious "Purple Cell Phone" and came up snake eyes.)

Say the agency fees for the planning and site were $300K.  Sony Ericsson spent over $88 million just a couple of years ago to sponsor the WTA women's tennis tour.  What do you think gets daily attention back at HQ?

In conclusion, I have to believe that either this social effort is either:

1. Not worth much to Sony Ericsson and given an appropriate amount of investment and care.
2. A botched effort, due to poor planning and low budget (see the PPC buy screw-up above).
3. A test.

If it's got the right amount of effort associated with it, given the expected ROI, then OK.  (I still have to believe that some PPC, particularly at the kickoff when you might get some search attempts, makes sense.)

If it's a botch, then I hope there's a good campaign debrief on the calendar for Sony Ericsson and Iris to review execution against objectives and so forth.

What do you think of the effort? Might it work?  Could purple be the new black?  Do you like the Z750a phone?

photo credit: Marco Gomes

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