Posts Tagged "ROI"

For companies that offer SMS alerting capabilities (including Interactive Mediums) and their customers, results like those cited in this January 29, 2010 MobileMarketingWatch.com post are proof positive of the value of text messaging:

“…a pilot SMS reminder solution…ended with unprecedented results – saving Kaiser nearly $150 per appointment and over $275,000 at a single clinic.”

Efficiencies and costs savings were at the heart of the value in this example, which is apparently driving consumer acceptance of text message alerts – the post’s title is after all, “Survey: Consumers Want SMS Alerts.”  The study was conducted in the U.K., but you can expect similar attitudes prevail in the U.S.

While these numbers are impressive, I would argue that marketers need to keep their eyes on the top line/revenue growth “yin” to the cost savings/efficiencies “yang” offered by text messaging.  That’s the theme behind the diagram included in line with this post.

As marketers in any segment – healthcare or otherwise – approach the mobile channel, they have a variety of options for getting started, as we have previously discussed around mapping strategy to the mobile channel.

Many organizations will approach text messaging from a non-marketing perspective, which can yield impressive cost savings and efficiencies among an entire customer base – which tends to be dominated by customers served at a loss or break-even.  Thus the utility of text messaging as a cost saver.

Those companies that leverage mobile marketing techniques in a parallel fashion to target the revenue side of business should experience even greater results by increasing the pool of highest value customers – the 20 or so percent which generate the greatest value, be it profits or revenue.  The key to unlocking that added value is employing mobile engagement techniques such as promotions and others that call consumers to action.

Today I came across a November 25, 2009 MarketingSherpa.com article titled, “One-Two Campaign Punch Grows Email & Mobile Lists: Segmentation Delivers 40% Lift in CTR” that is a great example of Active Customer Engagement in action.  As we have said before, Active Customer Engagement is not so much about mobile as it is targeting consumers “on the go.”  In this case, the targeted customers are truly active, as the example cited in the article is for a retailer of sporting goods, bicycles in particular.

Similar to what we described in our Point of View on Active Customer Engagement and this actual customer example, email, web and mobile communications work together as part of a larger effort consisting of media buys supporting a promotion.  It isn’t apparent that the retailer had access to a system encapsulating all the components required to configure, execute and measure the program, but you can be certain if it did, ROI would have been greater.

A tidal wave of buzz is building around Active Customer Engagement, as illustrated by another recent article outlining the solution here on the Illinois Technology Association website.  Today as well, we were featured in a brief article titled, “Time to market with mobile” at brand-e.biz in which we say the following that gets to the heart of what Active Customer Engagement’s value is all about:

“What should drive mobile marketing investments is a strategy which focuses on the customer experience, what you want to achieve with your customers.  Developing ideal mobile paths for your customers to follow to achieve your goals should yield the best results…And in practice this will almost always mean some combination of text message interactions, mobile applications, mobile optimized web and even e-mail.”

Today on MobileMarketingWatch.com a post appeared titled, “Applying Email Strategies To Mobile Marketing,” which suggests email marketing best practices have applications within mobile.  While I agree that strategies like targeting and relevance apply to either discipline, as noted here marketers should remember that email and mobile often have different or interdependent applications.

More interesting than the recommendations were references to an earlier November 24, 2009 article on MarketingVox.com citing Direct Marketing Association (DMA) ROI research for email and search marketing:

“…commercial email now returns $43.62 for every dollar spent on it in 2009…”

“…search advertising..is the next most effective channel with an ROI of $21.85 for every dollar spent.”

A simple conclusion would be that email’s return is about 100 percent that of search.  Consider as well that, with respect to email, “41% of consumers find that promotional offers are irrelevant, according to a study by the Chief Marketing Officer (CMO).”  That means despite nearly half of those subject to email marketing rejecting those offers, ROI is greater than 4,000 percent!  It isn’t clear if ROI was calculated based on direct sales driven by email promotions.

Even so, you could argue that relevance is a key determinant of return for email and search marketing investments.  Paid search may help connect consumers with relevant results, yet search by its nature is rather broad, pointing consumers to some destination rather than calling them to action.  An email communication pushed to a consumer by a business should be more targeted, relevant and contain a compelling call to action.

Considering mobile — especially SMS text message interactions – by its nature must be relevant, ROI should exceed both email and search.  Extrapolating figures cited in the article, ROI for mobile marketing could be another 100 percent greater than email, offering upwards of $80 for every dollar spent.  Even if it’s no better than email, mobile’s ROI is highly relevant to marketer’s interested in making the most of their budgets.

Buyers of products or services have a threshold below which they have little to no expectation for a positive, measurable return on their investment.  Items along these lines are instead bought based on an expected, subjective value — e.g. soap to clean your hands, tissue to blow your nose.  Brand preference for either of these examples influence purchase, but relative to business to business services they are commodities for all practical purposes.  Commodities tend to succeed based on price.

Many marketers are entering the mobile arena with a similar view on text messaging.  As has been widely reported, investments in SMS marketing campaigns are often driven by curiosity with a focus on trial.  The same could be argued around the market for mobile applications.  A hard monetary return is often thus not considered as important in a buy decision as the price of the product or service — just like commodities, yet unlike household products, you could say mobile is a “hot commodity” right now with plenty of demand to go around the ecosystem of suppliers.

Once the unbridled enthusiasm around mobile begins to ebb and is replaced by more rational, measured decision making, how will this affect the market for mobile marketing technology products and services?
 
There are two probable outcomes in my view: buyers will gravitate toward the big “brands” from which they source marketing products and services — the well known, long established multi-disciplinary providers who have tacked on a mobile capability to their offerings. Why?  Simply because it will represent a low cost, safe choice from a trusted company.

AdMob is not an example of what I’m talking about.  Advertising, especially online advertising, has established metrics for valuing such services (CTR, CPM).  Once significant scale is achieved, as happened with AdMob, the blend of metrics with scale makes for a highly valued prize.

The other outcome should offer buyers a better, higher value choice, independent of price.  Providers which combine scale, metrics and more, will enable marketers to leverage the mobile channel in ways that a commodity choice never can match — via Active Customer Engagement.  I’m of course talking about the Mobile Customer Experience, inclusive of all means of targeting customers at the point of device and calling them to action based on marketing objectives which are measurable.

Marketers able to see the distinction, and not fixate on mobile as an adjunct to email or a novel handset application, will be more successful than their peers.

Yesterday BusinessWeek.com posted an article titled “M-Commerce’s Big Moment,” and it includes statistics and examples highlighting the growth of mobile as a viable commerce platform much more evolved than its ringtone marketplace roots.

• “…by the end of the second quarter only about 7% of U.S. consumers bought goods or conducted financial transactions via cell phone, according to a Nielsen Mobile survey of more than 90,000 people,” but this is growing rapidly.  “In January, consultant ABI Research projected North American sales of physical goods ordered via cell phone would reach $544 million this year, up from $346 million in 2008.  Now, Mark Beccue, senior analyst at ABI, is considering updating his 2009 forecast to $800 million.”  What is interesting about this figure is that investments in mobile marketing in 2009 were forecasted at about $400M by Forrester in a July 2009 report titled “U.S. Interactive Marketing Forecast, 2009 to 2014.”  Do the math and that reflects a super high return on investment, given that the $400M figure is inclusive of all mobile marketing investment, not just that associated with commerce applications.
• Ebay and Amazon.com accounted for 70 percent of physical goods sales conducted via mobile in 2008.  If nothing else, this illustrates consumer adoption of m-commerce as a viable transaction platform, and concerns over data/credit card privacy should wane as Visa and other companies provide secure solutions optimized for mobile, as pointed out in the article.
• “By the end of 2009, about half of established retailers may have mobile Web sites, up from less than 20%.”  Given escalating adoption of Smartphones capable of providing a rich mobile web experience, retailers should reap considerable benefits.  “In the second quarter, 28% of all handsets sold in the U.S. were smartphones, up from 19% a year earlier, according to consultant NPD Group.  And more Americans will be able to gain access to the mobile Web soon.  One-third of consumers without a Web-enabled phone plan to purchase such a device within the next year, according to a survey of 3,305 U.S. consumers conducted in March…”
• Mobile is becoming the only channel that matters, in some cases replacing the traditional desktop PC.  “A large portion of the customer base is totally replacing their online experience with mobile, says Ensign of Papa John’s.  We think a lot of the times they were customers of Papa John’s [before] but ordered from other restaurants, too.  But now there’s a new convenience with Papa John’s, and we are getting a greater percentage of their purchases.”

The article concludes astutely that the development of this picture is entirely dependent on the network which connects consumers with businesses.  The “iPhone is morphing into a kind of predator parasite on the wireless network, sucking out the value and leaving networks gasping for air,” which means more than the risk of slow networks stalling m-commerce.

In the event networks play catch up mode with Smartphone adoption and usage, mobile marketers with strong ties to their on the go customers will more likely benefit from a greater share of consumer spending simply for the sake of convenience and prior experience.  For that reason, retailers and businesses of all kinds need to begin engaging their customers now in mobile dialogues based on business objectives mapped to the Mobile Customer Experience.

In the past I have labeled mobile marketing an enabler of “active direct response” due to the immediacy of interaction, but another new term, “Direct Branding” I think equally applies.  In this context, Direct Branding is the application of direct marketing techniques by brand marketers to reach their customers in nontraditional ways.  It was the subject of this article on ChiefMarketer.com and while not specific to mobile, Direct Branding is certainly a mobile application increasingly used by marketers.  The reasons for brand marketers to embrace direct customer marketing concepts are underscored by this quote:

“The shift from traditional advertising or marketing to direct branding will help you confidently point to measurable marketing milestones and outcomes. Whereas branding and the classic direct marketing used to be separate disciplines, the two have discovered that they need to merge. Marketing accountability becomes the norm and is absolutely necessary to compete and survive in this day.”

The article contains interesting examples by Consumer Packaged Goods makers using digital media to launch new products and capture interaction data to evaluate the effectiveness and return on their investments.   It’s a brilliant idea, but the article makes no mention of mobile as an interaction channel actually preferred by many consumers, especially in and around the point of sale.

Brand marketers would be wise to embrace Direct Branding as a strategy but should build mobile channel considerations into their plans to reach consumers on the go – especially given the generally higher response rates for mobile programs and the need to continually justify marketing investments to top executives.

“Today, branding and measurement are not mutually exclusive. Great branders understand that they need to add the measurement metric of direct marketing to their work in order to prove ROI. The C-suite expects marketing to show a positive impact to the bottom line, and those marketers that can will not only survive, but thrive.”

As a leading mobile marketing solutions provider, we offer clients flexible ways of engaging with their customers.  One of the ways we do this is by offering a fast path to doing so via the use of a shared short code – a shorthand of sorts for letting on-the-go consumers quickly participate in a text dialogue without entering a full length phone number.

Some clients prefer to have a dedicated code potentially reflecting their name or a brand attribute when translated from numbers to a word, but obtaining one requires additional time be built into a mobile program.  Power users of these codes have embedded mobile into the very foundation of their brands.

We recently came across a simple and effective example of how one of our clients uses a short code to engage their target customers and learn more about them.  The Lake Forest Graduate School of Management is a Chicago area MBA program designed for working and/or experienced professionals.  They use text message marketing as a call to action in their recruitment efforts, as seen in this photograph of signage located in a commuter elevated train station waiting area.  Some of the lessons to be learned by this program include:

• Targeting: Mobile is a key ingredient in this program but it is not the focal point; rather, the emphasis is on communicating with a target audience by reaching them most effectively.  In this case, locatoins where busy commuters congregate is a great spot to promote an education program intended to help elevate careers.
• Multi-Channel: Signs like this are not high tech but the call to action is, and everyone with a mobile phone is a potential responder.  Texting MBA to this shortcode begins a Mobile Dialogue designed to inform and persuade; responders are greeted with a brief message requesting an email address for learning more about their program.  A mobile device is not often the right medium for reviewing information and this approach recognizes that.  Those opting in again receive a real time email response with more information, including pointers to areas of the school’s website with even greater details.
• Knowledge: Mobile is the perfect medium for reaching the type of customer the school seeks given its emphasis on busy professionals who are always near a potential call to action (billboard, signs on objects like buses or commuter stations, taxi cabs and others).  Mobile also provides the means by which the school can learn more about its target customer to sharpen its recruiting efforts.  Data captured during the course of Mobile Dialogues combined with information about which mediums drive the most qualified interest informs the creation of more relevant messages and a higher return on marketing investments.

Current economic conditions and a low barrier to entry are making mobile a central and growing tactic used by marketers to engage their customers.  This, in spite of the relatively less established ways of measuring the effectiveness of mobile marketing campaigns.  So, it was with keen interest that I came across a September 18, 2009 eMarketer article titled “Cost and ROI for Mobile Campaigns.”

The most striking aspect of the article, which is a snippet of an interview with an agency executive, is the following quote:

“An eight-week campaign for mobile media…we’re probably talking about $250,000 to $300,000.”

There are no details provided about the scope of such a project, and in fairness I could not access the entire contents of the interview, but such a statistic runs counter to what I’ve seen on a daily basis in terms of marketer adoption of mobile marketing methods relatively easily and without committing a significant amount of dollars.

For this amount of increasingly precious marketing budget, the article cites fairly high level and common metrics for measuring mobile campaigns, and only refers to one piece of information that could initiate the process of building a high value Mobile Customer Data Asset.

“Marketers want to know, how many acquisitions of consumer phone numbers or e-mails did a mobile campaign drive? How many messages did we deliver? How many page views did we get at the WAP page? What were the most popular products viewed at the WAP level? How many clicks did the mobile banners get?”

Regardless of how much a mobile marketing campaign costs, I think it’s important for marketers to remember that building mobile into the fabric of marketing plans at the onset of the year is most critical to leveraging mobile strategically and to achieve the greatest value.  The article characterizes mobile in a similar manner, as “connective tissue,” which stitches together multi-channel advertising and marketing.  This is absolutely true, but marketers might want to think about mobile as more an organ they cannot live without, to use another medical analogy.

In terms of actual return, the article describes “Return on Innovation” as more important than assigning a dollar value.  “Innovation” in this context is some measure, subjective or otherwise, that describes how well an organization embraces the mobile channel.

I think this is a good idea, but as I implied, the mobile channel is ultimately about engaging customers and learning more about them over time, to serve them better and ultimately sell more products or services to them.  For that reason, I’d like to suggest that Return on Knowledge be a focal point for marketers as they go about justifying investments in mobile marketing.

I could not agree more with an article I saw on MobileMarketer.com today titled “When it comes to mobile marketing think loyalty, not coupons.”  The author succinctly states three challenges associated with executing effective, measurable couponing programs as follows:

“Not only is the scanning equipment and point of sale integration a black hole of challenges and issues, the consumer usability issues are numerous.”

He is referring to a number of variables in this statement, including low adoption of mobile devices capable of displaying digital bar codes, limited scanning capabilities at the point of sale (POS), to say nothing of the integration between the couponing campaign and sales transactions necessary to determine ROI.  Perhaps most importantly for any such program to succeed is the customer experience, which is not enhanced by customers fumbling with their devices at the POS, a point also raised.

In this recent blog post , I raise the concept of the “integrated customer” to facilitate effective and measurable customer engagement programs such as coupons or loyalty.  The approach I describe gets to the very heart of the author’s prescription:

• Focus on SMS text because it’s most widely used, as opposed to iPhone which has a loyal but currently smaller following.
• Make the goal engagement, so that customers remain “opted in” to your program over time.
• Focus on closing the loop to understand effectiveness and ROI:   “A well developed mobile solution should provide information on member growth, redemption rates, purchasing behaviors, predictive purchasing patterns and ROI – down to the store location and individual member level.“

The author notes as well that “the devil is in the details.”  To that end, it isn’t readily apparent how a marketer could implement a measurable program in the absence of POS/transaction integration.  That is why I proposed creating an “integrated customer” to serve as that glue, by incenting them to play this role and by doing so remaining engaged in an ongoing dialogue with the marketer’s firm. In this way, marketers can accelerate the deployment of effective loyalty and couponing programs which are measurable and long lived.

I have been thinking about the holy grail of any marketing technology – generating measurable improvements in sales – but within the context of the mobile channel.  Technologies and services have long since been established of varying complexities which enable such tracking in channels like the web and call center, but mobile seems like virgin territory in this respect.

With many marketers just beginning to dip their toes into the mobile arena, and many sitting on the fence waiting to see how things shake out, anything which helps draw the critical connection between mobile marketing activity and business results should accelerate adoption of the underlying technologies.

Short of developing their own solution tightly integrated with internal systems, or purchasing potentially costly third party software and similarly stitching it into transactional systems, marketers would seem to have little choice but to rely on channel centric metrics, such as reach, open rates, and click throughs to measure and justify mobile marketing efforts.

Leveraging the Integrated Customer

This led me to imagine using customers as the glue between mobile marketing activities and logging business results.  What I call the “Integrated Customer.”

For example, many businesses rely on frequent and repeat purchases by their customers.  Be it a product with a limited lifespan that requires replenishment or a routine service, many businesses continuously market to their customers to maintain demand and stay top of mind.

I don’t think it’s any coincidence that these businesses may find mobile more appealing than email given the Epsilon survey’s email response data I referred to yesterday on the blog.  Mobile has the capacity to connect in a more relevant and timely fashion than email to influence consumers to purchase.

I see two keys to creating an Integrated Customer to enable the tracking of mobile marketing activity from message delivery through purchase:

• Provide incentive to customers to notify you upon redeeming an offer at the point of sale, ideally within a short time window, via text messaging.
• Assigning some dollar value to that transaction, like an expected average price or average market basket value, that can later be matched to inbound purchase notifications, to derive value and return on investment calculations.

First I will tackle the incentive part.  For example, a multi-site retailer could promote a loyalty program in its catalogs, on billboards and on its website, whereby customers opt in to receive limited life offers for redemption in their stores (such as a discount on certain items or a coupon).  These offers are periodically broadcast to opted-in customer mobile devices, containing unique codes which each store knows are associated with the discount program.

This retailer is really smart, and so has identified segments of its customers by lifetime value, allowing it to tier its loyalty program so that highly valued customer receive greater incentives than those of lesser value.  The discount codes are similarly aligned.

The retailer is also smart when it comes to having a strategy behind its loyalty program.  It knows the average value of a typical market basket, the purchase migration behaviors of customers among different lines of products, and has designed its incentive offers to grow basket size and encourage logical product bundle purchases.  There is a planned sequence of offers to be delivered to each segment, essentially a “best next action” the retailer is proposing to its customers.

Customers are told upon signing up for the program that this is not a one-time affair; it is part of the retailer’s ongoing efforts to serve its customers better.  To that end, customers are incented to text in their discount codes to a short code, along with the keyword RewardMe when making an eligible purchase.  Why would customers do this?  Not out of the kindness of their hearts.  Because it pays.

The loyalty program’s offers have a limited shelf life, say two weeks, and expire only to be replenished when a discount code is submitted as part of the above process.  A customer always wants to be sure to have an eligible reward handy to make a purchase and therefore will have just one reason to redeem their discount codes for “fresh” ones – when transacting at the point of sale.  There may be outliers, but the majority are likely to behave in this fashion.

The transaction is registered by the mobile marketing services provider when redeemed, then aligned with the expected value of the interaction, which was configured by the marketer at the onset of the program.  The marketer knows what offers were redeemed successfully, by product and customer segment, and can draw instant value and return on investment calculations.  The utility of the proposed “best next action” can also be assessed and refined based on the results.

Sounds like an application will killer potential value, and it didn’t require integration between mobile channel marketing execution and internal transactional systems.