How to Know If Your Social Media Is Paying Off
By David Rogers | May 23, 2011
One of the most exciting aspects of digital marketing is its measurability. From website visitors, to ad impressions, to geo-location of discounts, every digital marketing initiative seems to produce its own bountiful data–in sharp contrast to many aspects of the pre-digital world. (Anyone know how many customers saw your billboard?)
But just because you can measure your digital marketing does not always mean it is easy to know if your efforts are paying off. Sure, you’ve added a thousand Facebook fans, but how much are those Facebook fans worth? How much value is your blog generating for your firm? What about your online community for sourcing innovative ideas from customers? Much as we might wish for it, there is no single “silver bullet” metric to measure the impact of all digital marketing in a single bold stroke. Instead, businesses need to develop a variety of metrics to measure the return on their own digital marketing efforts.
Figure out your goal
The first key to developing good metrics is to know your objectives. Are you trying to support market entry and drive awareness of a new product line? To build a relationship and maintain loyalty among your existing customers? To reduce the cost of customer service by helping customers help each other in an online community?
Secondly, understand how close your metrics are to measuring a financial value delivered to your business. Some digital metrics measure firm value quite precisely, whereas many others are almost useless.
I find that it is helpful to think of digital marketing metrics as falling into one of three broad stages:
Stage 1: Activity Metrics
This is the lowliest level of digital metrics. By definition, an activity metric is one that really only tells you that “something is happening.” Classic examples are: number of page views, site visitors, Facebook fans, or members joining your online brand community. Not that you should ignore these numbers or fail to gather them (they can be helpful in tracking trends, and benchmarking). But you should never be satisfied with activity metrics alone. Don’t get stuck on stage 1.
Stage 2: Engagement Metrics
“Engagement” is one of the most over-used, and under-defined terms in marketing. So let me propose a definition here: an engagement metric is anything that measures the level of your customer’s involvement, attention, and commitment. Examples could include: average time spent by members in your online community, percent of Facebook fans who “like” or comment on your wall posts, or the number of ideas actually submitted to your innovation sourcing site. Engagement metrics are much more meaningful than activity metrics. And in some cases, they may be the best measure that you can get. (It’s hard to ever know how many cars were sold because 20,000 people “liked” your pre-launch product photos on Facebook). At the same time, it is hard to justify a major marketing investment on engagement metrics alone. So wherever possible, you want to reach beyond stage 2 to the next stage.
Stage 3: Business Metrics
Business metrics measure the impact of digital marketing on critical business outcomes: your KPIs (key performance indicators), or ROI (return on investment). Business metrics could include direct sales through a digital channel, lead generation, or cost savings to existing business processes. If you are running an online forum to generate innovative business ideas from customers—how many of their ideas did you bring to market? What was the business value achieved, perhaps in terms of new sales, better customer retention, or increased market share? These may be financial measures, or established KPIs used across your business, such as a Net Promoter Score. Business metrics allow you to optimize your digital efforts, compare their results with traditional marketing activities, and decide how to best allocate budgets.
Books can be filled (and have been) with metrics for every kind of digital medium and every digital marketing program. But as you look at what’s being measured in your own company, it’s critical to make sure you know which stage of metrics you are operating at. Because only when you get to stage 3 can you actually answer the most important question: is my digital marketing paying off?
What are you measuring in your own digital marketing? What stage do your measurements fall into?
****
David Rogers examines the five core strategies of successful networked businesses in his newest book, “The Network Is Your Customer: Five Strategies to Thrive in a Digital Age.” He teaches Digital Marketing Strategy at Columbia Business School, where he is Executive Director of the Center on Global Brand Leadership. Rogers has advised and developed marketing and digital strategies for numerous companies such as SAP, Eli Lilly, and Visa. Find him on Twitter at http://twitter.com/david_rogers
MY THOUGHTS
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Friday, May 27, 2011
Friday, May 6, 2011
Gettng Paying Customers Thru the Web
6 YouSendIt Lessons for Increasing Customer Conversion Rates
By Erik Sherman | May 5, 2011
Any business depends on converting prospects into paying customers. For a technology business like YouSendIt.com, which uses a freemium business model of giving away service and getting a small portion of customers to opt into a paid account, conversion rates are critical.
But there’s more to conversion than hoping that someone will ask you to dance. That realization, combined with practical applications of direct response marketing, is what has helped YouSendIt, which lets people send large files, to increase its conversion rate by 200 percent to 300 percent. A phone conversation with CEO Ivan Koon offered lessons for companies that are heavy on tech but less savvy on the necessary direct marketing.
In-product promotion
The first step was to add promotional elements when people sent files. “We used to do zero promotion as you sent a file,” says Koon. “Now at a critical moment, like you’re trying to attach a second file, we’ll say a multi-file [transmission] is a premium service and click here to upgrade.”
Lesson 1: Hit people up for paid conversion when they need a service you charge for.
At first, YouSendIt would pull a person out of the process and force them through a sales process:
Look at a comparison chart of account types.
Choose the account type.
Enter credit card information.
Press send.
Many people abandoned the process. Now, when someone tries to send files that are larger than the free option or multiple files, the person gets a form offering premium service. “It drastically changed the conversion rate,” Koon says. “Don’t take the customer out of the send flow ”
Lesson 2: Make the upgrade process as simple as possible, or you lose customers.
For a while, the company offered a pay-per-use (PPU) option, but dropped it from the form. “We don’t want you to buy PPU. We want you to buy subscription. It makes more business sense to us,” he says.
Stretch the price
Next step was to test price elasticity. For years, customers bought monthly subscriptions over annual at a 9 to 1 rate. But monthly increases the chance of someone discontinuing use. “In the second half of 2009, we started to target different people based on [things like] usage frequency and offer them the annual plan at a lower price,” Koon says.
Lesson 3: Often you make more money when you charge less, so test pricing.
YouSendIt’s annual premium price is $109. The company tested $99, $89, and other prices until it found “a pretty optimal annual price” that maximized the total revenue from subscribers. During these trials, YouSendIt kept the $9.99 a month price fixed. “We want to set a main street price,” says Koon. “We don’t want to confuse the user too much. ”
Lesson 4: Give customers a perception of stability so they can compare pricing or other terms and have the sense of getting a bargain.
Not only did YouSendIt make more money overall, but the churn rate of annual customers is much lower than for monthly, which reduces overall customer acquisition costs. The company’s paying customers are in a roughly 50-50 split now between annual and monthly plans, with only about 5 percent remaining pay-per-use.
Get by with a little help from some friends
Up through the end of 2010, 70 percent of customers came from word-of-mouth, with the remaining being people who had received files through YouSendIt and decided to use the service to send files as well. The company was missing many other opportunities, so began to test search marketing and, starting January 2011, became the large file attachment solution for Yahoo Mail.
That last step doubled new registered traffic overnight, from 320,000 to 600,000 by February. In March, the number jumped to 800,000. YouSendIt has begun an in-product conversion program with Yahoo. Through the rest of the year, it will strike deals with other sites to increase the flow of prospects.
Lesson 5: Experiment with different ways to reach customers. Don’t sit on your laurels.
YouSendIt has found that the direct marketing process is a real grind. “If you just make an assumption, 75 percent of the time it will be wrong,” Koon says. “The kind of people that will fail in direct marketing are the people who are adamant that their ideas sounded good.”
Lesson 6: Keep trying and don’t be discouraged. If it was easy, everyone would do it and you’d have no competitive advantage.
Later this year, YouSendIt plans to introduce new product lines: persistent storage, file synchronization, and electronic signatures. “I think we’re going to have to test like crazy to figure out how to package it,” Koon says.
MY THOUGHTS
I don't know. Marketing has never been way down my alley. Maybe reading enough information about it will make something inside me click. Something akin to an acquired taste. Feeling like throwing-up in the beginning. Managing to take in a few punishing gulps. Getting used to the taste somehow. And eventually liking, even loving, the taste which was absolutely awful in the beginning.
By Erik Sherman | May 5, 2011
Any business depends on converting prospects into paying customers. For a technology business like YouSendIt.com, which uses a freemium business model of giving away service and getting a small portion of customers to opt into a paid account, conversion rates are critical.
But there’s more to conversion than hoping that someone will ask you to dance. That realization, combined with practical applications of direct response marketing, is what has helped YouSendIt, which lets people send large files, to increase its conversion rate by 200 percent to 300 percent. A phone conversation with CEO Ivan Koon offered lessons for companies that are heavy on tech but less savvy on the necessary direct marketing.
In-product promotion
The first step was to add promotional elements when people sent files. “We used to do zero promotion as you sent a file,” says Koon. “Now at a critical moment, like you’re trying to attach a second file, we’ll say a multi-file [transmission] is a premium service and click here to upgrade.”
Lesson 1: Hit people up for paid conversion when they need a service you charge for.
At first, YouSendIt would pull a person out of the process and force them through a sales process:
Look at a comparison chart of account types.
Choose the account type.
Enter credit card information.
Press send.
Many people abandoned the process. Now, when someone tries to send files that are larger than the free option or multiple files, the person gets a form offering premium service. “It drastically changed the conversion rate,” Koon says. “Don’t take the customer out of the send flow ”
Lesson 2: Make the upgrade process as simple as possible, or you lose customers.
For a while, the company offered a pay-per-use (PPU) option, but dropped it from the form. “We don’t want you to buy PPU. We want you to buy subscription. It makes more business sense to us,” he says.
Stretch the price
Next step was to test price elasticity. For years, customers bought monthly subscriptions over annual at a 9 to 1 rate. But monthly increases the chance of someone discontinuing use. “In the second half of 2009, we started to target different people based on [things like] usage frequency and offer them the annual plan at a lower price,” Koon says.
Lesson 3: Often you make more money when you charge less, so test pricing.
YouSendIt’s annual premium price is $109. The company tested $99, $89, and other prices until it found “a pretty optimal annual price” that maximized the total revenue from subscribers. During these trials, YouSendIt kept the $9.99 a month price fixed. “We want to set a main street price,” says Koon. “We don’t want to confuse the user too much. ”
Lesson 4: Give customers a perception of stability so they can compare pricing or other terms and have the sense of getting a bargain.
Not only did YouSendIt make more money overall, but the churn rate of annual customers is much lower than for monthly, which reduces overall customer acquisition costs. The company’s paying customers are in a roughly 50-50 split now between annual and monthly plans, with only about 5 percent remaining pay-per-use.
Get by with a little help from some friends
Up through the end of 2010, 70 percent of customers came from word-of-mouth, with the remaining being people who had received files through YouSendIt and decided to use the service to send files as well. The company was missing many other opportunities, so began to test search marketing and, starting January 2011, became the large file attachment solution for Yahoo Mail.
That last step doubled new registered traffic overnight, from 320,000 to 600,000 by February. In March, the number jumped to 800,000. YouSendIt has begun an in-product conversion program with Yahoo. Through the rest of the year, it will strike deals with other sites to increase the flow of prospects.
Lesson 5: Experiment with different ways to reach customers. Don’t sit on your laurels.
YouSendIt has found that the direct marketing process is a real grind. “If you just make an assumption, 75 percent of the time it will be wrong,” Koon says. “The kind of people that will fail in direct marketing are the people who are adamant that their ideas sounded good.”
Lesson 6: Keep trying and don’t be discouraged. If it was easy, everyone would do it and you’d have no competitive advantage.
Later this year, YouSendIt plans to introduce new product lines: persistent storage, file synchronization, and electronic signatures. “I think we’re going to have to test like crazy to figure out how to package it,” Koon says.
MY THOUGHTS
I don't know. Marketing has never been way down my alley. Maybe reading enough information about it will make something inside me click. Something akin to an acquired taste. Feeling like throwing-up in the beginning. Managing to take in a few punishing gulps. Getting used to the taste somehow. And eventually liking, even loving, the taste which was absolutely awful in the beginning.
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