A Marketer’s Approach to Harnessing Big Data

Note: I wrote this as a contributed article a few years ago for a consulting client, but they decided not to use it. Instead of letting it collect dust, I published it here. Enjoy!


The term “Big Data” has been gaining momentum in all aspects of business, especially with web analytics, mobile, social media, and customer data. And, it’s usually used in the context of impending doom and mixed with cryptic terms like Hadoop, MapReduce, and “in-memory database.” It’s becoming so pervasive that Gartner’s 2012 Hype Cycle for Emerging Technologies has it entering the “peak of inflated expectations,” a sure sign of hysteria.

When it comes to marketing, however, massive amounts of data—whatever you want to call it—are becoming a fact of life with which marketers need to be concerned. But what is it and how do you leverage it to enhance your marketing efforts?

Big, different, and fast

Big data is generally defined in terms of volume, variety, and velocity. From a marketing perspective, you’re already collecting reams of data on every prospect or customer during even just one visit to your website. Couple that with the variety of customer touch points—purchase, email, advertising, support, social—and you quickly realize that even a small business is collecting data on a massive scale. The velocity, or speed, of data collection is also accelerating, especially as smartphones, tablets, and other technologies continue to weave their way into every aspect of everyday life and ease a potential customer’s ability to interact with your brand.

As the challenge of big data grows, marketers are told that they’ll need huge IT investments to collect the data, expensive and complex analytics tools to dig into it, and legions of data scientists to understand it. Furthermore, most of the big data focus from those developing the technology is given to the back-end, with “speeds and feeds” being touted and novel software architectures promoted as the great new hope for attacking big data.

Getting a handle on your big data

So where should marketers focus?

CIO magazine recently covered how marketing departments should roll big data analytics into their marketing strategies. While they go a bit deeper than a marketer might need, they do suggest that you focus on the most basic of marketing concepts:  What do my customers want?

It’s a common misconception that your big data is elusive and that you’ll need a huge project to even gain access to it. In reality, most marketers already have access to the data they need, usually within the tools that collect it. Finding the low hanging fruit in your data is as simple as segmenting your targets based on specific attributes, like preferred channels, content consumed, or recency of engagement (or purchase or click).

Since most marketers aren’t data scientists, it’s going to require a few trials to understand what your data can do for you. Don’t be afraid to dig in to it and ask questions of it. Think about the last time you said, “If only we could do X…” and use that as your first project.

Forbes magazine, in an overview of big data business challenges, stated that, “Successfully exploiting the value in big data requires experimentation and exploration.” Take that experimentation approach and start looking for ways to intelligently segment your customers into groups that you can then easily target. It’s not so much what you do, but that you do something, do it now, and learn from it.

Enhancing your capabilities

Why put in this early effort to see what’s possible? Because there’s a huge amount of value in your marketing data. So much so that it’s easy to justify an investment in analytics.

A mid-2012 report from Aberdeen Group, “Customer Analytics: Leveraging Big Data to Achieve Big Results,” shows that companies who optimize their customer analytics have revenues 90% higher and retention rates 3.5x higher than companies who don’t. Even more, they see customer lifetime value growth of 20% annually. That’s a great start to help you calculate an ROI to justify resources for your customer data.

As previously mentioned, each of your current marketing tools undoubtedly has some sort of reporting or filtering functionality, which is a great place to begin looking for ideas. However, few of those stand-alone tools go beyond simple reporting. And, fewer yet enable marketers to integrate data from multiple systems.

Instead, and as you grow your customer knowledge and see how it can impact your revenues and attrition, start to seek out tools that have the capabilities to dig into more data from multiple systems at a faster pace. Big data is volume, variety and velocity, so make sure that you’re thinking ahead and will be able to manage all three of those areas.

Also, beware of analytics that claim to integrate data but do so by aggregating (summarizing) it, thereby blocking you from the post-analysis targeting of individual customers. It’s great to discover that you have 50,000 customers ready to purchase, but unless you can target them individually, that information is virtually worthless.

Stop delaying

Regardless of your capabilities, your marketing data mountain is becoming bigger by the second. The way to get a handle on it is to start digging into it now. Understand what you have, what you can discover with your current tools, and what other capabilities are needed to wring out the value.

As with most professions today, marketing is becoming increasingly digital. More data is collected, more interactions are measurable, and more options for engaging with targets are available. Each day that you delay, your big data mountain buries you a little bit more.

Need help?  Here’s an assignment: How many customers made a purchase in the past month? Or, how many of your active prospects visited your website last week? If you can’t answer those questions in a few minutes, you should have an urgent talk with your manager tomorrow.

Worst Event Marketing Ever?

I signed up to attend CES this year, which unleashed a torrent of emails encouraging me to visit booths, attend events, and check out new products. While most of these emails were fine, a few stood out in their awfulness.

I could go off on a tangent on how, even with an amazing product, marketing is a critical function. Good marketing should be seen as a requirement, especially when you’re marketing to the press and media covering the largest consumer electronics show on the globe. Furthermore, sales reps (and even sales VPs) shouldn’t be blasting marketing or event emails, and definitely shouldn’t be sending emails to press and media.

So, just for reference, if you’re blasting out a pre-event email and trying to drum up traffic at your booth or interest in your product, here’s what NOT to do.

(Note:  Below is the entire email, and I’ve obfuscated the name and booth number to prevent embarrassment.)


XXXX will be in booth #XXXX. We look forward to meeting you!

Admin & Sales

XXXX, Inc.

A/B Testing on Wine Labels

As a huge wine non-snob, my first stop in the grocery store is always the wine discount shelf. The way I look at it, it’s like the store paid me to age their wine. Win-win!

Wine and marketing collideDuring a recent trip, however, my interests in wine and marketing collided as I spotted two wines from the same brand, Mia’s Playground, sporting wildly different labels. As you can see in the photo, their Cabernet, on the left, has a fun, playful, non-intimidating label, while the chardonnay on the right has a more serious, formal design.

I’d never heard of Mia’s Playground wine, but at $4.99, pretty much any wine is worth a shot. A quick web search shows that Mia’s chardonnay usually retails for $16, while their Cabernet goes for about $15. That’s a pretty steep discount, and makes the differences in the labels even more interesting. Why are two wines priced similarly yet sporting different label designs, and why are they both heavily discounted? Is this Mia’s A/B test gone horribly wrong? Are they trying to position the different varietals for different market segments?

As I thought about it more, I wondered if the label even makes a difference. I was confident that it did, but as a quant, I needed to see the numbers…

What Do the Academics Say?

Since wine is a $32.5 billion industry in the US alone, it’s no surprise that plenty of research has been put into wine marketing. Think about the logistics of the typical wine purchase: it’s highly-subjective, there are tons of choices, even at small stores, and each wine has a new vintage every year. As a wine consumer, you’d probably lean towards known wines that you’re familiar with (which just increases the marketing efforts required by competing wines) or, without additional information (like reviews or Wine Spectator scores), you’d just choose the one with the best marketing+price combo.

Here are a few tidbits from some semi-recent studies that show how much impact labels have on wine sales:

  • From a 2007 UC Berkeley study: “…the illustration used on the label had the greatest impact on both purchase intent and perceptions of brand personality.”
  • A 2007 study from University of Reims, France, found “that when the label is authentic, young consumers don’t see any risk buying the wine because the presence of the label is a definitive indication of the product’s authenticity.”
  • A paper presented at the 2010 International Academy of Wine Business Research Conference stated that “packaging can be related to between 26% and 42% of predicted price differences.”

To add some confusion to the mix, or just to show that even the consumers themselves don’t know what they want, I found these two conclusions from separate Cal Poly studies:

  • One study found that “Americans did not rank ‘has an animal on it’ as a desirable feature but two of the top three brands, Yellow Tail and Toasted Head, had an animal on them.”
  • Another study found that “there is little to no correlation between wine label design aesthetics and price.” However, this study focused more on font, colors, and layout over label content, and was written by an undergrad (gasp!). One interesting finding of their research was that tasting scores by Robert Parker were higher for wines with labels that were designed in a top-to-bottom format over a left-to-right format. What’s up with that?

Where Was I?

OK, I’m off the rails here. Back to Mia.

As I started writing this post and googling “Mia’s Playground,” I learned a few things:

Having worked a stint in the wine industry consulting for Robert Mondavi Wines, I immediately recognized Sebastiani as one of the biggest wine producers in the US. With 1.3 million cases sold in 2011, that puts them at #14 on the Wine Business Monthly list of the largest North American wine producers. Sebastiani’s website has them at 2 million cases in 2007, so the Great Recession has, apparently, not been kind.

Their most-recognizable brand is probably Smoking Loon, but their website shows nine brands, of which Mia’s Playground is not seen. Digging deeper, I found that Mia is actually Don Sebastiani’s daughter, and that her name also adorns a wine-based cooking sauce.

Wine.com shows Mia’s Playground as “no longer available,” and they and Snooth.com list vintages from 2002 through 2008.

$15 is “Luxury” Wine?

Marketing plays a huge role in the wine industry, obviously. This wine industry publicist says that 2% of a wine’s retail price is dedicated to marketing, which translates into $650 million spent on wine marketing in the US. With that amount of spend, there’s definitely room for consultants, focus groups, and, yes, even A/B testing.

Quality Segments of the Global Wine Market
Quality Segments of the Global Wine Market, Wine Communications Group

More googling seems to indicate that Mia’s Playground switched label designs with the 2005 or 2006 vintage from the fun version to the serious version, maybe in an attempt to spur sales or justify the price.

Sadly for Mia, a wine priced at $15-16 is considered an “ultra-premium” wine by the Wine Communications Group. (Other sources peg $15 as either “luxury” or “super-premium,” so this segmentation system is clearly unclear.)

It’s very telling about the US wine consumers’ palate (or wallet) that 94% of wine sold is under $14 per bottle. Or, maybe it’s indicating that, for those who are willing to spend more than $15 for a bottle of wine, price ceases to be a key decision-making factor? Either that, or I’ve been over-paying for wine for the past 10 years.

Bottom Line

Mia may have simply been another victim of the Great Recession, since the timing fits perfectly. As the economy started to slow, and instead of lowering the price, Mia tried to up-level her brand with a serious label befitting a $15 wine. With a 2008 vintage hitting the shelves in 2009, and with Sebastiani’s sales dropping 35% between 2007 and 2011, Mia’s bosses may have had to cut under-performing brands.

In any event, wasn’t this a fun exercise!? Let me know what you think with a comment below.

I’d really love to see the sales numbers before and after the label change. But, as a marketer myself, if the change of label had minimal or even negative impact, it was obviously a sales execution problem! 😉

I’ve sent an email to Sebastiani to get the real story on Mia’s Playground and will update this post if/when they respond…


Google Finally Markets to the Masses

A few months ago I wrote a post about Google’s lack of mass-marketing prowess.  Just the look and feel of most of their products has that “built by engineers, for engineers” vibe.  Android is a great example, even with the advances in Honeycomb.  Same with Gmail, Google Analytics, Google Docs, and on and on.  Now don’t get me wrong: I love Google products.  I’m an Android nut and I’ve totally given my digital life over to Google’s cloud services. I live in Chrome across multiple devices and I love it (for the most part).  But even the new Chromebooks, which I think are killer products (I love my Cr-48), are getting trashed by both mainstream and techie reviewers (I’ll skip the rant on their obvious Apple bias…).  I do have an engineering background, which maybe aligns my thought process and helps me “get it” with respect to their usability.  Sadly, however, nearly all of their products don’t pass the parent test:  Would my mother be able to use this?

And that’s all just related to using their products.  The marketing for their products and brand has been virtually non-existent.  While commercials and advertisements may be what you think of when I say “marketing,” I’m also talking about their product marketing:  colors, logos, designs, instructions, user guides, help pages, usability, screen flow and layout, etc.

But things seem to be taking a turn for the better.  The Cr-48 came in a neat package, with a clever design, but it still wasn’t mainstream.  Now, a few months later, Google seems to be jumping on the consumer marketing bandwagon. Maybe it’s the frequent slamming of the usability of their products, or maybe it’s their attempt at competing directly against Apple.  Whatever the reasons, I’m glad that they’ve finally hired some humans, at least in their marketing department.

Google Music android app image
The "old" Google Music app icon

Google’s new Music Beta product is a great example. (Although they need to stop beating the “beta” label, which I’d bet that 80% or more of consumers outside of the Bay Area have no clue as to what that means.)  Here’s the icon for Google’s old Android music app:  a simple, bland speaker. I know that it’s a speaker.  Most people would get that it’s a speaker.  Some may think that it’s a wheel, but it’s probably obvious that it’s a speaker, right?

Below is Google’s new music app icon and the imagery from the product’s landing page.

Look at the colors!  Look at the clear meaning of the icon – headphones!  Look at the background!  Wow, now there’s some consumer marketing by someone who knows consumer marketing.  Finally!

Google Music android app image

Another great example is Google’s ad for the “It Gets Better” Project.  Just their simple participation in such a wonderful and progressive movement is fantastic.  Honestly, I challenge anyone to watch the Google Chrome ad for this project and not come away moved by it’s message and the deeply personal stories and emotions conveyed by the people in the video.

Google Music Beta landing page imageBottom Line

As a geek and gadget nut, I’m looking forward to my next Android phone and maybe even a Honeycomb tablet.  But, as a marketer, I’m glad that Google is finally getting their act together and focusing on the average consumer, not just the tech, geek, engineer.  To compete against Apple’s amazing products and incredible marketing machine will take more than Google Labs and highly-innovative but complex features.  I just hope that these few examples are the beginning of a new page for Google, not just random one-offs.

In the meantime, Google, how about creating a “movie beta” and allowing me to purchase and download movies to my phone?  Apple’s been doing that for years…

Marketing with Sound

I just love the way that Skype has used original and distinctive audio sounds as such a major part of their branding.  The startup “aaaaaahhh – POP” is happy, fun, and unique.  Even their shutdown sound is nice.  (Although, not everything thinks so. A Google search on “skype startup sound” shows that there are plenty of haters out there, including this doozy:  How to Kill Off and Murder Skype Startup Sounds.)

By B.Romain. Used under Creative Commons.

The Skype sounds remind me of the “Nokia tune” from a few years back, which they used in commercials and was the default ringtone on Nokia devices.  It was actually funny to see multiple people reaching for their phones when that sound was heard!  On the other hand, maybe it was sad to see how many people couldn’t figure out how to change their ringtone…

Skype’s audio branding also reminds me of the Yahoo! yodel, Metro PCS’ “Hello, hello, hello,” and even AOL’s “You’ve Got Mail.”

In today’s electronics-driven world, it is just now striking me as odd not to hear a sound when I start up my phone or open an app.  I hear a recognizable tune when I boot Windows, or OS X, or even Ubuntu (best OS boot sound of the three, IMHO!), but not when I start my iPod Touch or my Android phone.  Sure, my Nexus One phone rocks a cool video during boot-up, but no sound (OK, it vibrates for a split second, but that’s not good enough). And it’s whole purpose is based on sound – it’s a phone!  Apple has even less of an excuse, given their focus on music.

So what is the marketing takeaway here?

Almost every computer, laptop, and mobile device has the ability to play sound, and most devices are good at it because they have a speaker phone built right in (or better yet, surround sound!).  Websites, apps, and logos take advantage of colors and animations, so why not sound?  It can be used as a trigger, like your sense of smell makes you think of Granny when you smell baking bread.

When I build my own app, you can be sure that it’ll have a start-up sound.  Of course, it’ll probably be a Pearl Jam song…

For those considering it, just a note of caution: not everyone wants to hear a yodel when they open your app in the middle of a meeting, so make it optional or make “off” the default sound…

Why Consumers Should Embrace Location-based Services

Privacy.  It seems as if it’s the media’s only focus every time a location-based or social app or service is mentioned.  With RFID tags, GPS apps, Foursquare, Facebook’s Places, and now iTunes’ Ping, everyone thinks that sharing a bit of info about your likes, dislikes or whereabouts is going to lead to the downfall of civilization.  While everyone must be careful with their personal info, how much detail they share (such as city vs. eight-decimal GPS precision), and how often they share it, there are so many more benefits than drawbacks to these services.  Plus, the risk that the company owning or using the data will do anything that’s harmful and directed at an individual really isn’t even an option.

In 2000, while at business school (and long before Facebook and Twitter and Foursquare), I took a ‘marketing data analytics’ course that focused on clickstream analysis.  Even then, privacy was beginning to become an issue and our instructor summed it up in such a way that I’ve always referred back to his quote:

In the good old days, you went in to your neighborhood market, the owner knew you and what you purchased.  If a product that you liked was back in stock, and the owner mentioned it, you’d be grateful.  If the owner said that, since you liked plums and apricots, you’d also probably like pluots, you’d respond with a big ‘thank you.’

But, if a computer or corporation does the same things, people think it’s creepy.

I may be naïve, but consumers shouldn’t worry about ‘big brother’ drilling down to find out that John Doe purchases too much beer or eats too many donuts. Being a B2B marketer with 50,000+ contacts in my company’s marketing database, I can assure you that the last thing I do is focus on marketing to individuals – it’s all about the numbers and aiming at segments.

For B2C, my 50,000 contact names are nothing.  Facebook has 500 million names – and growing. Marketing a marketing analytics solution for the past two-plus years, we’ve analyzed the behavior, purchasing, and response patterns of millions or individuals – and we’ve never seen a single name.  At best, we have a many-digit number, spread across multiple fields, that has no personally-identifiable information (PII).  Even our customers themselves have a daunting task of tying a name to an activity.  Having worked in tech for over a decade, the privacy fear-mongers obviously have no clue as to the cleanliness, integration, and access challenges companies have with their own data.  In the vast majority of corporate analyses, the data is aggregated or sampled such that connecting information back to a single person is impossible.

Again, consumers must be diligent to protect their privacy through each app’s settings (something that should be much easier than it is today).  But, I can think of dozens of reasons why consumers should embrace these services – from a discount as you walk by a store to interactive dressing rooms at retailers that use RFID tags to suggest complimentary products (and help reduce theft).

Bottom Line:  I look forward to the day that I opt-in to offers from the local coffee shop and am hit with a “free apple fritter with purchase of your double non-fat latte” offer on a Saturday morning.  That’s a privacy risk I’m willing to take! 😉

Marketing and Physics (Or, Why Google needs to hire more humans)

In the early part of my career, I always thought that the combination of “soft” skills, like marketing, and quantitative skills, like engineering, was rare. Looking back, I assume that was due to my work in manufacturing as a mechanical engineer. Being surrounded by such analytical, black/white, data-driven individuals rarely gave me the opportunity to see beyond that viewpoint. And, it taught me to to be completely data-obsessive since I tracked and measured and plotted every aspect of every project on which I worked.

Add 15 years and a business degree (where I naively assumed that touting my engineering background in my application essay would make me stand out – a definite mistake at Carnegie Mellon, where slightly above 50% of students have technical undergrads), and I’m now finding that the qualitative/quantitative combination is slightly more common than I previously thought, but still a rare and valuable combination, particularly in the tech space.

Take Google.  Most of their employees are incredibly intelligent but very technical, and it shows in their marketing and their product design.  I use many of their tools, probably because I’m an engineer at heart, but constantly snicker to myself when I think about a non-technical person trying to perform simple tasks.  It’s almost as if they don’t even consider the “average” user, let alone those who are technically inept.  Contrast that with Apple who, while creating incredibly technical products, ships the iPhone without a manual.  I won’t even mention the laughable Marissa Mayer profile in the New York Times where she – the VP of User Experience – talked about using her marketing “gut” to force her team to “test the 41 gradations (of color) between the competing blues to see which ones consumers might prefer.”  (Forty-one?!)

For example, Gmail is a great email tool and I use it as my primary personal email, but it’s design could be best described as technically proficient, not utterly usable.  The fact that they just recently added the ability to sort contacts by last name is a case in point.

I also have Google’s Nexus One Android phone and absolutely love it (probably because the techie side of me “gets” the idiosyncrasies).  But comparing the experience to that of the iPhone, you can tell that Android was developed by engineers with little input from people with “softer” skills in design, marketing, and usability.  It’s the small things, like the way app names that are too long are abruptly cut off, with no wrap, no ellipsis, nothing.  Or the way music totally cuts out for a second or so before a new-email ding or an appointment reminder tone, and then takes a second or so to restart after the reminder (as opposed to the iPhone’s seamless, simultaneous sounds).  Or take the way you access the memory card when connected to your laptop via USB:   you find the settings to “mount” or “unmount” the card.  Not the most intuitive procedure, and I’m still not sure which is which.

But, Dan Cobley, a marketing director at Google, gave a short talk at TEDGlobal 2010: “What physics taught me about marketing.” It was highly entertaining to me because he connected physics and marketing principles, two things I get.  While the viewer comments are on the negative side, he’s obviously a techie at heart who takes a quantitative approach to marketing, and I thoroughly enjoyed it.

While I try to restrain my quant urges as a marketer, it’s fun to see someone make an unabashed pitch for why marketing is ultimately a technical pursuit.  Watch his short (8 minutes) preso and let me know what you think.

Thinking of Buying Your Marketing Database? Think Again!

I recently read an article about the money wasted purchasing contact names to build marketing databases (sadly, I can’t remember where), and it really hit home with me.  At my current company, the previous Marketing VP was a huge proponent of buying massive, industry-specific marketing lists with the sole purpose of “building up our database.”  Ah yes, the goal of all marketers…

However, as I read the article and fumed about the wasted money (between 50¢ and $2 per name for nearly 25,000 contacts), I had little more than gut feel to really know whether or not the lists did indeed provide marketing value.  As a good quant marketer, I decided to throw together a spreadsheet to determine if the purchase of B2B retail and e-commerce lists was worth the price.

A million stories, but no value? (Creative Commons: Alexander Kesselaar)


We purchased two types of lists: large, industry-specific databases from a list broker (between 700 and 9,000 contacts each), and smaller, campaign-specific lists from Jigsaw (between 150 and 1,000 contacts, targeted by job title, industry, and/or company name).  For the larger lists, the list “universe” contained anywhere from 10,000 to over 1 million total contacts and we purchased a smaller, randomly-selected chunk.

Caveats:  I looked at the purchased list data aggregated over the course of two years of email marketing, not on individual campaigns.  Therefore, the individual campaign results for these may vary.  The comparison numbers for targeted, non-purchased lists are for single campaigns.

Skimming 5% Off of the Top

First,  I was curious to see how many of the 25,000 contacts contained invalid email addresses (not bounces, but simply bad emails) – essentially how much money was wasted out of the gate due to stale or incorrect information.  It was just over 1,000 contacts, or around 4.3%.

After one list generated a 20% bounce rate (invalids, mailbox full, spam filter, etc.), our list broker gave two benchmarks against which to compare this (and I quote…):

  • “The stated average delivery rate is 80%-95% so that’s within the norm.”
  • “In today’s economy, a 20% bounce rate is not bad at all.”

Most list brokers will replace the invalid contacts with new ones, but looking at my results those replacements contained double the percentage of invalid contacts as the original lists, averaging close to 9% (albeit on a much smaller total).  So not only is there a >4% shrinkage on the original list, it gets worse on the replacements.

Surprisingly, Jigsaw had a higher rate of invalid email addresses than the larger lists at 5.6%.  Given the Jigsaw model, where users enter a contact’s details to earn points to “buy” other contacts, I’ve always naively expected the data to be cleaner and more complete.  However, since Jigsaw doesn’t seem to validate the data, users are almost incented to enter bogus data.

But overall, our 4.3% average was relatively low, so I guess it’s to be expected and I can’t/won’t complain.

Actual Activity

Since we primarily run email campaigns to generate leads, I looked at two metrics: any activity at all (web visit or email open) and sent-to-click-through rates. I used activity rate to give the lists the benefit of the doubt, assuming that the only way a contact would have visited our website was if they saw an unopened email and googled our name or just visited out of curiosity.

Of the eight large purchased lists, the best activity rate was 17% on a list of just under 1,000 contacts.  The average, however, was only 5.5%.  For the Jigsaw lists, the activity rate was a bit lower at 5.1%.  Again, I’ve always been under the impression that the Jigsaw contacts were more robust, but this is strike two.


The click-through rate was surprising.  Generally my email campaigns have a relatively good CTR, usually 10 – 50%, given the targeted nature of the content and the effective subject-to-content connection.  If I can get someone to open an email, there’s a good chance that they will click through.  Even better, my sent-to-click ratio runs in the 3 – 8% range.

The overall sent-to-click ratio for purchased lists was horrible, with just a 1.3% hit rate.  Large lists were below 1%, with a few having zero clicks across a half-dozen campaigns.  Jigsaw was much better, with a 2.6% sent-to-click ratio and approaching my results with non-purchased lists.

For some generic comparison, Jupiter Research reported in 2006 that untargeted broadcast emails (with no personalization or segmentation) generated an average CTR of 9.5%.  Yes, this is CTR, not my sent-to-close ratio.

Worth the Money?

At this company, I’ve been able to drive an average lead gen cost-per-lead of around $20 across all marketing:  email, events, and advertising.  For email alone, it’s a bit higher at about $35 per lead.  This includes purchased, rented, and organic contacts.

Looking at the price of the purchased lists over the total number of actual leads generated, the cost-per-lead is about $105, or 3x my overall average for email.  Add to that the cost of increased spam scores and lost goodwill from unwanted emails, and even the cost of marketing automation (for which ours, Marketo, is priced partially on the size of your contact database).

Bottom line:  This analysis convinces me that list purchases are a poor marketing and business decision, and I never should have listened to the previous Marketing VP.  I guess this is just another reason why he’s no longer here…  😉

When Unsubscribe is Your Call to Action

Most email marketing advice takes a negative approach to the unsubscribe link, offering ways to reduce, eliminate, or talk your way out of prospects removing themselves from your marketing lists. However, there are cases when the opposite is, in fact, the better course of action or the required focus of a campaign. Let me explain…

The draft of our very effective email unsubscribe offer.

At my current company, I’ve been able to drive a huge amount of leads with some of our more compelling offers, especially the Behavioral Analytics For Dummies book, which has generated over 6,000 leads in just nine months. That may sound like a good thing, but that volume of leads – combined with leads from other campaigns – can overwhelm a sales team very quickly. With that many leads, our sales development and field sales reps spend more and more time on leads who were only interested in the offer, not our products. As lead volumes increase, so, obviously, does time wasted on uninterested leads.

Do you need a push?

This is where the magical unsubscribe offer originated. Since my campaigns had been very successful, I began to think that maybe the emails, calls-to-action, and content were too interesting. I was crushing my lead gen KPIs, but was overwhelming our team and needed a way to separate the proverbial (and valuable) wheat from the uninterested chaff.

While I toyed around with various messages to incent interested leads to act, it became clear that that was the wrong approach. Every email blast tries to incent interested leads to act, but essentially ignores the uninterested leads until the footer of the email. Working with my #1 marketing guru, John Love, we decided to focus the message on helping people to unsubscribe!

To begin, our subject line was, “You’ve responded, but are you really interested?” We offered the unsubscribe link as the very first call-to-action of the email: “If you’re really interested, we’d like to help you take the next step. For the rest of you, you can easily opt-out of these messages by clicking here.”

Then, we offered a few qualifying questions that allowed those curious but unsure to decide before moving on, with #5 being asking if they were too busy to improve their business. Again, we almost pushed people away with the subsequent sentence: ” If you answered yes to #5, then click here to be removed from our list and we won’t bother you any more. Our solution is not for everyone, and if you’re not spending a lot of time trying to better understand your customers, and are happy with the insights you’re getting, then please carry on.”

Partial list of email unsubscribe rates by industry (Source: The Sign-Up.to 2010 UK Email Marketing Benchmark Report)

Thank you for unsubscribing!

The results: Over 150 unsubs on just under 2,000 contacts, or a 7.5% unsubscribe rate! For perspective, my unsubscribe rate has been extremely low compared with some recent B2B benchmarks that list 0.6% as typical for IT solutions, or this estimate of 0.2 – 0.75% unsubs on lists to which you “communicate regularly.”

For comparison, my previous 2010 high volume of unsubs for a single campaign was 15 on a targeted list of 3,000 contacts – a more-typical 0.5%. However my rate is usually much, much lower, with just four or five total unsubs on campaigns that hit over 5,000 very targeted contacts.

Success in the form of failure

Overall, this was a huge success. On the “chaff” side, not only did we cut out a significant amount of wasted follow-up time, we also avoided damaging our brand by essentially spamming people who were not at all interested in our products or sales pitches.

On the “wheat” side, our marketing automation tool allowed us to pinpoint leads who opened the email but did not unsubscribe. I interpreted them as being somewhat interested, but not immediate. Those who actually clicked on the “real” call to action were immediately called by a sales rep, since they were obviously very interested.

A lot of marketing consultants talk about firing your bad customers, which makes a lot of sense. In this case, I took that concept, moved it upstream and fired our poor leads. I’m sure someone out there is thinking that I probably made it too easy for some potential business to slam the door on us. Probably. But the leads that demonstrated proactive interest are those that our sales reps are going to have an easier time engaging.

Bottom line:  As a sales rep once told me, “The next best thing to winning is losing quickly.” By getting those uninterested leads out of our system, we did exactly that!

Rethinking How We Work: HP’s Interview with Jason Fried

I’ll be totally honest:  I wasn’t a huge fan of Basecamp before this week.  Sure, it’s a fine tool for sharing files and managing project-based communications, but it’s not really all that intuitive and it lacks anything more than simple, limited functionality.  We use it at my current company to manage all of our new customer projects, our internal product management and technical release milestones, and even as a repository for our marketing collateral and sales tools.  But other than a central location for messages and file revision management, I just don’t see any compelling value above and beyond existing tools.

I recently watched an interview with Jason Fried, CEO of 37signals and creator of Basecamp and other collaboration and team management tools.  Fried absolutely changed my mindset about what Basecamp is, where its value lies, and why it is an amazing tool perfectly designed to solve a single, simple problem.  Furthermore, he demonstrated the immense value of marketing via thought leadership and by framing the conversation around a much larger issue, in this case the transformation of the workplace.

I’ve embedded the video below, but you can view all of HP’s Input|Output interviews here.  It is well worth the 60-minute investment, and Fried has incredible insights on the evolution of the workplace and how today’s workplace norms are actually counter-productive.  But even more, he has fantastic insights on start-ups, marketing, and how to build a sustainable business.  Here are just a few interesting tidbits:

  • When asked about how his products stack up against the competition, he answers with, “Our products do less than the competition.” That sounds like a tough sell until you hear him explain that they purposefully design simple products that do a limited number of things really well.
  • On why a bootstrapped company has an advantage over a venture-backed one, his concept is that “a venture-backed company has to spend money from day one” while a bootstrapped company has to make money from day one.  An entrepreneur is better off focusing on making money, not spending it.
  • On modeling your company or team after Google or Apple or Amazon, he thinks that just because they exploded doesn’t make it a good model for you.  Those companies, and other super-successful companies, are anomalies.  Model yours after companies in your same space, realm, universe.
  • Working alone, or working remotely, is much more effective than today’s standard of cubes and team workspaces.  On one hand, your biggest interruptions are caused by others talking to or around you.  On the other hand, he thinks that, if you’re denied daily face-to-face interactions, your creativity and productivity skyrockets when you do finally get together.
  • If they need a new tool, they build it.  And, if they needed it, others probably do too, so they sell it.  Obvious, but this is almost a lost art in Silicon Valley – selling a software solution that people already need.

One area where I do disagree with Fried is around marketing in general, which he gets to at the end (around the 57-minute mark).  37signals doesn’t have a marketing person and they don’t believe in the concept of a “marketing department.” Their website reflects that as a run-on mishmash of text, images, videos, quotes, and colors. He estimated that they have spent less than $20k on marketing over the past 5+ years, which is appalling to me.  Yes, they are profitable, but they could be so much more so with a focused market strategy.

I do, however, totally agree with his point that everyone within an organization should have a marketing mindset.  That marketing should permeate every aspect of the business – in the error message, in support, in the product’s button text, etc. – and that marketing is everyone’s responsibility.

If you do watch the entire video, definitely stay to the very end to hear their “commercial.”  It’s very realistic, and effective!

Bottom line:  With marketing as a recognized part of everyone’s role, 37signals has done a great job of succeeding without a dedicated marketing role.  By focusing on the bigger issue (workplace effectiveness), they have elevated the conversation to an intellectual level, well beyond just selling software.  That’s really where Fried shine:  as a visionary.  Someone who I’d want to work with, and someone who can very effectively articulate the bigger picture that drives the success of their product.

Fried did absolutely zero promotion of 37signals during the interview, and that was the best selling tactic he could have used!