What I Love About Marketing: My Definition of Marketing

Filed Under Professional Development, Thought-Provoking Content | 2 Comments

One of my favorite questions to ask is “What is your passion?” The answer allows me to learn about a person so much more…It allows to learn about the object of passion (a professional occupation or interest), so much more. At the same time, I was numerously asked as well: Why Marketing? Why not Finance or something else? So, it would be only fair to share my own definition of it.

Marketing for me is not a matter of pure message crafting and information repackaging. It is not about creative eye-pleasing presentation…It is not about selling and convincing people into a purchasing decision. I say that without discounting the monetary value this function brings to the bottom line. There is no question that marketing initiatives have to be accountable and measurable, add value and contribute to ROI. But, the true motivation is not of dollar value.

Mainly, for me, marketing is connecting with people and understanding what makes their hearts and minds resonate. It has to do with the emotional aspect of social interaction that brings change or moves forward even the most logical planning and strategy. You need emotion to bring change to life. You need emotion to instigate progress.

As an occupation, marketing is:

- Flexible: it allows adjustments in the flow of events; it is applicable across industries, geographies and cultures! You practice and transfer it anywhere in the world! People will consume and trade as long as we exist!
- Dynamic: it is never boring! Constant change what can be better?!
- Broad: the scope of jobs to do, projects to accomplish and specialties to immerse into is as large as the ocean, enough for a life time!
- Deep: one can find 3-5 specialties and become very knowledgeable about them and still enjoy the challenge of change.

On the other hand, being a marketer allows playing so many roles! When I was little, I was dreaming to be an actress (so typical). Being a marketer provides so many opportunities to act and I love it every time I learn something new (play a new role)!

My favorites are:

- When I do market research, I become a detective, a CIA agent, “sometimes under cover”, trying to understand what makes those foreign species (new target market or user) tick…what makes them happy? What connects them? What drives them? What makes them laugh? What makes them “them”?

- When I do competitive assessment and strategy, I become a warrior, General with an army to lead and ability to predict the next steps of the contender.

- When I engage in writing and planning ads or event management, I become a producer, an entertainer and even a magician depending on the mystery level the audience craves for. Mystery does not necessarily exclude clarity and simplicity.

- When I engage in business development, I become a connector, a merchant that fuels the trade of information, opportunities and people.

- When I develop promotions, I exercise my creative mind and imagine myself being a painter that aims to draw a well-balanced masterpiece that brings harmony and evokes a following. Or, I could be an alchemist that works hard on the new recipe of the multiplying substance that has the ability to grow exponentially…

Thirdly, the challenge to curb this trade (marketing) and make it more intelligent, accountable and measurable provides lots of room for thought, experimentation and testing. Marketing can be and should be intelligent. Marketing should be supported not only by emotion, but logic (data, information).

Marketing is the driving force for change in consumer behavior. It is not a self-serving influence and persuasion; it is effective communication that drives our actions through emotion, connectedness or affiliation with the other humans and places our market choices based on common sense.

My Lifetime Value (LTV) as a Customer for Amazon

Filed Under CRM | 2 Comments

Last three weeks of the MBA…cannot wait till I am done and ready to pursue my next adventures! However, I promised to share my recent learning on calculation of lifetime value in the database marketing class. My individual project required the calculation of my LTV to a service I have an extended relationship with. Amazon was my choice.

Relationship and Frequency Data:
- Length of active relationship = 9 months
- Average purchase over 6 months is $ 36.57
- Average frequency: 1.5 per month
- Average order: 3 books
- 99% of orders are books

Assumptions:
- Acquisition costs = $ 25
- Variable costs = 18 %
- Retention rates: 95.9% for first 6 months, 97% for the next 6 months, 98% for the next 24

There are 4 levels of customer engagement:

Level 1: Beginner (Free Super Saver)
Level 2: Purchase Patterns Captured (Buy 4, Get 1 Free)
Level 3: Heavy User, Hooked (Amazon Prime)
Level 4: Heavy User is Rewarded by Savings (Amazon Visa Card)

Each level of marketing programs reinforces continuous purchasing behavior, increases frequency and average purchase value that are paramount for increasing overall LTV.

Presently, I am a consumer on Level 3, as Amazon Prime Buyer. With the assumption of 3 years as my projected life experience with Amazon, the LTV amounts to $634. My switching costs are quite significant at this point and comprise of $79 of annual fee, ease of use, loss of automated purchase process, brand equity, security and trust that the service of the competitor might or might not be delivered.

As far as the effectiveness of this program, it did increase my frequency by eliminating time and quantity restrictions. I purchase twice as much on demand, increasing my total spending by 50 %. Simultaneously, it ensures committed 11-12 orders per year based on the annual fee that is a pre-paid shipping expense, thus increasing overall probability of purchase.

Retrospectively, I made a smooth transition from the prior 2 levels:

- Level 1 (Free Super Savor) made me buy in triplets manner which drove consistent purchase order to be roughly $28. At this stage, my LTV amounted to $348 over 3 year period.
- Level 2 (Buy 3 Get 1 Free) made me buy more books, increasing the level of frequency and ensuring that average order always amounts to $ 49. At that stage, my LTV was $ 507.
- Level 3 (Amazon Prime) increased my LTV to $ 634.
- Level 4 implies getting Amazon credit card. This could be a significant step transferring a heavy user, like me into a lifelong customer, however, the one time savings of $30 and the hassle of having another credit card is not enticing enough.







The 4 level approach works well while acquiring new users and transferring them into heavy users and ultimately into loyal customers.

Frequency of purchase, volume and average purchase value play a major role while affecting LTV, thus the following initiatives are advisable to expand into:

- Cross-selling is optimal to generate higher frequencies of purchase. Bundle packaging and offerings could be considered as alternative offerings based on the search data.
- Branding initiatives could help to seed awareness and repeat the message that online you can find it at Amazon: all the goods, ranked, recommended, traded – already pursuing community engagement
- Utilizing referral campaigns to potentially eliminate acquisition costs and carry the branding message (though the latter are quite low)
- Developing an alternative to the level 4 program (Amazon credit card), perhaps just a points card for customers that are not responsive to getting another credit card. It can still provide the same data, but alleviate the commitment factor implied in the financial decision of signing up for a credit card.
- Not sure how I missed it, but Amazon does a good job utilizing social media and web widgets to generate more interaction and customer involvement. Brian Oberkirsh has a great post on it here. I wish the design and usability of Amazon could be better and user friendly..too busy and too much going on for me when I sign up.

P.S. Just ran into a good chart on Bnet brought by iProspect on the Purchasing Power of Web Sites. Clearly, Amazon tops the score. (Added on May 15, 2007)
Purchasing Power of Web Sites (IProspect)


Why We Marketers Should Adopt Another Segmentation Tool - Personas from User Experience Design

Filed Under Cool Ideas, Effective Communications, Conference, Segmenting and Profiling | Leave a Comment

The best discovery from last week was stumbling upon Steve Mudler’s session at Webvisions on personas . It almost feels like the more I learn, the more is out there still awaiting for discovery. Two weeks ago, I was rambling on the database marketing and its behavioristic approach to segmenting. I was thrilled and motivated to learn as much as I can about it. Last week, my attention radar caught the concept from the user design (scenario design) field - creating “personas” to segment potential customers and be able to communicate better with them, while resonating with their specific challenges. “Personas”, as a market segmentation tool does bring: focus, empathy, consensus, better designs and communications.

If I narrow down to the two major benefits of this technique, I would mention its flexibility and applicability to real life situations we marketers face and its fundamental psychological truth about discrepancies of people’s words and actions.

The greatest part about creating “personas” is that it allows segmenting your market while you engage into the limited market research initiatives. Let’s face it - most of the time, we (marketers) have limited budget and resources (people and time) and there is so much that we could do but we cannot afford….How do you find out what your potential customers will want and to what they would respond to if you only have 4 weeks, 4 people and no budget? You can only interview a small number of people, you can do so much as opposing to engaging in the ideal long and steady market research process that we learnt from the books or that is feasible if a specialized agency does it for us for a good sum.

Well, we have “personas”! Steve Mudler actually shares his expertise on it in his book ” The User is Always Right”, As an example, creating personas becomes a good segmentation alternative in the real life situation where you are developing a channel for a newly developed product or a “newly-is-still-in-development- product-that-is-has-to-sell-in-6-months”. There are three primary approaches, based on the type of research, scope and analysis performed:

• Qualitative personas (based on interviews, as an example)
• Qualitative personas with quantitative validation (interviews and surveys)
• Quantitative personas (surveys, data from the CRM systems, etc.)

Thus, it allows you to apply this technique to any scope of research that you are doing. Flexibility makes it a good model.

Another useful disclaimer that all of us - marketers performing research should always keep in mind is that what people say is not what they necessarily do. What they say is important as it reflects their goals and attitudes as well as perceptions and aspirations of being seen in a certain light. What people do is just as important, since actual behavior can reveal more about people than what they say. Behavior reveals patterns around which you can design your product or communication strategy. Again, the perfect combination of promise and action, if those are consistent – you got your answer and you are on the right track, if those are conflicting, you have to test your hypothesis again or change it completely.

    Content Disclaimer

      Everything posted on this blog is a product of my own thoughts, ideas, reflections based on the professional interests. It is based on the public information, works of the colleagues and fellow researchers that are cited respectfully and my opinions as an industry professional.