Is Popularity Worth the Price?
Most every executive wants to move the needle: more awareness, more customers, more interaction. But pushing metrics up doesn't always mean success, if the cost is too high, said Robert Shaw, Ph.D., professor of marketing metrics, Cass Business School, and founding director of Value Based Marketing Forum, during his keynote at 2010 Gartner CRM Summit UK. Sometimes, what drives the most value is to narrow your focus and use analytics to target the right customers at the right time.
According to Shaw, there are three iconic aspirations: fame, popularity, and loyalty. In business terms these might be brand awareness, customer satisfaction, and brand loyalty, he said. The question is, are they good? That is, can you monetize them?
You can, if you use metrics intelligently, he said. "Always predict financial results," Shaw said, adding that the CRM outcomes that add value are acquiring more customers, retaining customers, cost reduction, and fulfilling service obligations.
Shaw advised attendees to weigh the benefits of building awareness, improving customer satisfaction, and increasing loyalty versus the cost of doing so. If you invest a great deal to have a presence on Faceboook with the goal of increasing awareness, for example, but increase awareness only 1 percent, the cost may outweigh benefit. A better choice may be to spend on targeting a highly profitable customer segment to increase their wallet share. Shaw cited Earthlink as an example. In the past its scattershot mailings returned a 5 percent response. The company began using predictive analytics to target its communications, which increased the response rate to 20 percent--and delivered $50 million in additional value per year.
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