Joju Mangalam's Blog

In Defense of Daily Deal Sites..

Daily deal sites, especially Groupon (because it is publicly traded), have gone through bunch of negative publicity recently.

However, as a practicing marketing professional, I want state explicitly that Deals (DD) is a great channel for marketers.

If you are with no marketing budget, but still entrusted with bringing in new users, DD is a great tool. The real benefit is that it does not require any upfront marketing dollars.  Yes - margins can be negligible or even negative - but this is something your finance people are willing to forgive. Secretly, they are happy that you are actully bringing extra topline income. Costs be damned!

Couple of other advantages with DD that are not apparent:

 (1) A significant portion of customers who buy DD coupon don't redeem. This portion is lower,  the higher the deal price. 30% to 10% is a good range. Note that these customers can redeem the deal amount even after expiration (depending on state laws), but you can give apply it to the full price after expiration of the deal. This is likely be a profitable transaction.

(2) You can expect 5% to 10% in extra business from the publicity generated by DD.  Many customers dont like to deal with DD sites (because they have questions etc) and they will contact you directly. The benefit with these transactions is that you don't have to pay the commission to DD sites.

You can easily account for the above factors in the DD economics calculations.

I understand that all businesses are not appropriate for DD, but if your business is, you owe it to yourself to explore this option.

For Independent Consultants, ParetoCentral.com provides client leads in an innovative way

As my fellow independent consultants would attest, getting new consulting clients is not always easy. One has to be constantly on the lookout to find new opportunities. 

A new service, ParetoCentral.com, facilitate that initial connection between consultants and clients through Question & Answer format: Client asks a question and promise a cash reward for the consultant who best solves that question.  Consultants engage in confidential dialog with the client one-on-one through email (or Skype/phone) and eventually the best solution emerges.  Client pays the cash award to the best consultant.

During this process, all consultants get a chance to show off their expertise to the client.  When the client has a new project in the future, he/she can call on one of these consultants.

Check it out and spread the word!

Turbo-charging User Acquisitions Using Refer-A-Friend Coupons

Take any successful company that has grown its user base quickly and you will find “friend referral” as a key ingredient for that success.  For social sites, this happens organically if the site is compelling enough.  But generating referrals to eCommerce sites is more difficult because it involves the use of real money.  However, there is one way to facilitate such referrals – that is Refer-A-Friend Coupons.

There are several web 1.0 sites which painstakingly built their user bases using this technique – examples include PayPal and Half.com.  It essentially works like this: Refer a friend and the friend gets an incentive (coupon) that can be used in the first transaction. Once the friend completes a transaction, the referrer gets a coupon that can be used in a future transaction.

Such Refer-A-Friend coupons can be even more effective in this 2.0 era because one can refer to many friends seamlessly just by posting on a social network.  However, creating technology to track attributions and related analytics can be cumbersome and expensive.  That is one reason to go with third party tools like Extole, NextBee, or uRefer which are white label referral solutions.  They keep track of each user’s attribution.  The only component the business has to do is creating a coupon/promotion mechanism in the billing system.

Solutions like Extole and others can be customized to look like a part of any eCommerce site. Their infrastructure is flexible enough to implement different promotions like sweepstakes, challenges (i.e. get 1000 “likes” and everybody gets 50% off), etc in addition to coupons.  In this post, we will focus on coupons.

If an eCommerce site wants to start Refer-A-Friend coupon program, the best option is to start with some experiments.  I would suggest the following steps:

• Modify billing mechanism to accommodate unique coupon codes.  Create several hundreds or thousands of these unique codes as the budget allows.  (If you have enough developer resources, you can create an API that create dynamic coupon codes)
• Identify Test and Control population.  Test population gets the Refer-A-Friend coupon, while Control population does not get any.
•  The third party solutions take care of distributing the coupon codes to the referee and referrer.
• At the end of the campaign, compare the Test and Control performances and assess the ROI of coupon spend.  Adjust the coupon terms appropriately to meet financial goals.

It is likely that some sites would be more successful than others in referral schemes. However, each eCommerce business owes it to itself to test it out and see how promising Refer-A-Friend scheme is for them.

Online personalization with just an email address

Online businesses nowadays make signups very easy to increase conversion.  This means avoiding questions to get key information of the user such as gender, age, income, and so on.  As a result, many businesses are left just with just an email address from the user.

It turns out that you can do a lot of personalization with just an email address!  This is thanks to crop of emerging third party data providers.  They include Rapleaf and Qwerly.

These companies essentially use social networks, games, and applications to associate each email with associated personal information – such as age, gender, location, interests, income, etc.  In many cases, they don’t provide exact stat – for example, they won’t provide an individual’s age, rather just the age range.  However, this is good enough for most personalization projects.

Of various players, I like Rapleaf the most.  This is because they have managed to associate email addresses with physical addresses using advanced algorithms. This enable them to connect each email with demographic information already attached to physical addresses (from traditional providers like Acxiom and Experian).  Thus, Rapleaf is able to provide more information from an email address than most other players.

(Note:  There was a huge controversy on Rapleaf and its data collection practices in late 2010. The company seems to have weathered the storm and says it has instituted rigid controls on its data collection practices.)

Rapleaf and Qwerly follow a freemium model.  Rapleaf, for example, allows you to get basic information associated with emails - such as gender, age range, and location - free of charge.  When you need more information, you need to pay up.  That said, basic data comprising of gender, age rage, and location is a good start for any personalization project.

Expanding "Rewards" Programs to Accommodate Social Media Marketing

I am a big fan of Rewards programs in the style of frequent flyer plans. Such programs encourage loyal customers and foster a sense of competition to gain higher status levels. This competition can be focused internally (sense of personal achievement) or externally (to win amongst others).

Rewards program and Coupons program can co-exist and should be used for different purposes.  Rewards program is to foster steady loyalty while coupon is to initiate specific behavior – such as increasing purchases in a particular item or category or reactivating lapsing users.

Rewards programs are typically designed for specific purchase transactions. With the emergence of social media, other user behaviors such as “share”, “like”, etc are also candidates to be included within the Rewards framework. 

This, however, is harder if the rewards use cash as currency (like 2% of purchase price as the reward).  You don’t want to say “Get $2 if you ‘like’ us on facebook..”  It is much easier if Rewards uses a virtual currency such as points.  Thus, it is much easier to say “Gain extra 10 points if you ‘like’ us on facebook..”

This way, Rewards can be extended for many activities that increase your company’s profile in social web. Examples include:

 “Like us on Facebook and get 10 points!”

“Follow us on Twitter and get 10 points”

“Share your purchase on Facebook and get 20 points!|

“Write a review for your recent purchase of XXXX and we will reward you 25 points!”

“Would you create a video testimonial for us? We will reward you 100 points!”

And so on.

Your competition may be already doing these. Don’t left far behind.

Options for Analytics for Mobile Marketing

If you are getting started with mobile marketing, the best option is using Google Analytics. It works similar to standard web sites.  Google provides codes to embed in applications (as well as in mobile web sites).  Then Google Analytics interface provides all statistics familiar to web sites – such as time of usage, number of visitors, navigation flows etc.  (If the standard web sites are accessed from smart phones, and if the web site is enabled with Google analytics, the relevant statistics will automatically appear in reports.)

If Google analytics is not good enough for your mobile analytic needs, the other options are Flurry and Localytics. Both are “real-time” analytic applications.  Flurry is a free application (they make money with premium offerings to cross sell apps / rich media clips).  Localytics has a free version and premium version (premium version provides more reporting options).

A key insight missing in the above analytic applications is the user demographic information.  The analytic apps only provide transactional data (users, visits, time, navigation, and so on). Ever wish you could super impose user data to the transactional data?  Your wish is coming true.  A company called Groundtruth has partnered with Localytics to bring aggregated demographic data from user base of major carriers including ATT, Sprint, and Verizon.  Examples of such analytics can be seen here.

Demographic analytics mentioned above can better guide application roadmap and new app development.  I would strongly suggest app developers “graduate” to such demographic analytics as soon as possible.

Joju is a consultant specializing in Marketing Strategy and Planning for Startups. His is especially focused in quantifying and maximizing revenues for every dollar spent in Marketing. He is an  expert in low-cost customer acquisition strategies and in maximizing customer value through the power of marketing analytics.   Contact him at jojumangalam@yahoo.com

Good and Bad of Zynga’s RewardVille (as a loyalty program)

Zynga’s RewardVille is the social game industry’s most significant foray into loyalty programs. I have been using RewardVille for couple of weeks and it is obvious that Zynga has put a lot of planning into the program. Thanks to RewardVille, an average social gamer is more likely stick with Zynga games than to go to competition. For the player to switch to another game, it has to be compelling enough and differentiated enough from Zynga’s other games (which is a tall order).

RewardVille works like this: When I play Zynga games, I automatically earn zPoints.  I need certain zPoints to reach a zLevel.  At each zLevel, I get zCoins (in increasingly higher rates) that can be exchanged for virtual goods to be used in specific Zynga games.

The good and the bad of Rewardville are as follows. Let us start with the bad’s:

The Bad:

·         It looks complicated!  There are zPoints, zLevels, and zCoins…!  I feel that Zynga could have made the program simpler.

·         I am not sure how I am earning zPoints.  I just earn, and I have to trust Zynga to do the right accounting.  So there is certain opaqueness to the program.

The good:

·         The rewards are virtual goods, which don’t cost anything to Zynga!  Compare this to reward programs of eBay and Southwest, where they pony up real $$$ as rewards.  Thus, RewardVille is a bean counter’s dream come true.

·         Zynga has the complete flexibility on the “cost” of these virtual goods.  i.e. How many zCoins are needed to buy a virtual good like street lamp.  The ratios can be adjusted to make some items scarce while others easy to get. This gives levers to manipulate user’s behavior.

·         The idea of zLevels and the status bar to reach the next level is a classic loyalty trick – and it works

·         I earn more zCoins when I reach higher zLevels – this gives me additional incentive to stick with Zynga, even while moving on to other games

·         Easy for everybody to participate.  Signup to RewardVille is a snap and people reach the first level very quickly.  It gives them incentive to keep going.  Keeping the initial barrier low is a great strategy for reward plans.

·         RewardVille toolbar is always on top of games I play, like CityVille – this gives me constant reminder of the loyalty program

Obviously the good vastly outnumber the bad – which indicates that Zynga has put a lot of thought into Rewardville.  I can think of some other improvements to make Rewardville even more compelling, such as:

·         A leader board comparing friends’ zCoins and ZLevels would inject some competitive juice to players.  Zynga already does this in the context of individual games.  It can be brought to RewardVille as well.

·         Team competition – Team up with other friends to earn combined zPoints.  Teams get the most zPoints get additional rewards.

·         Individual challenges – do this by X date to get a special reward.

Ideas like these can be added to RewardVille in the future, of course.

Zynga has made an art of making products simple to use outside, while you know a lot goes on inside to encourage users to keep playing and even part with their money.  Zynga has brought that skill to Rewardville.  The competition better take note.

Foursquare falls short as a loyalty tool

The other day I was watching the Masters from my couch while eating potato chips.  I was never a big user of Foursquare.  I decided to try to check in to my gym which is three blocks away.  Yes!  I was able to get credit for a workout without leaving my couch (while eating potato chips).

The fake check-in is often mentioned as a reason why businesses don’t trust foursquare stats to determine their loyal customers.  Some merchants have experimented with foursquare as a loyalty tool in the following ways:

•  “Mayor Special” – Mayors get $1 off on drinks at Starbucks
• Every 5^th check-in you get free drink
• Show the merchant you have checked in and you get a truffle free
•  Free something in the first check-in

Fake check-in obviously affects the first two schemes while the later two seems reasonable ideas.

To its credit, Foursquare is always experimenting on how to become a loyalty tool.  The latest rage seems to be integrating with loyalty cards. Examples include:

·   Integration with Amex: You link your Foursquare account to Amex card and each time you use Amex, you get a notification by Foursquare and some perks.  (I see limited value in this scheme except that “old” “stodgy” brand likeAmex get associated with a currently cool brand like Foursquare)

·   Integration with Vovus loyalty card by Safeway.  Connect with Foursquare and each time you swipe the loyalty card, you get printed coupons based on your other foursquare check-in behavior (This is an interesting concept. However associating old fashioned printed coupons with Foursquare does not seem to be a good fit. There are coupon-less alternatives like Offermatic that Foursquare should associate with).

·   Integration with Tasti-dlite loyalty card. Each time you use the card and check in to Foursquare (that broadcasts that you are in the ice cream shop), you get extra perks through loyalty card. (This is a straightforward reward for publicity generated by your check-ins).

Integration with loyalty card is one way Foursquare can address its inherent weaknesses of false check-ins.  The ideal option for Foursquare to hit big is to make itself a loyalty card.  However, Foursquare needs to do fixes for authentic check-ins (like Shopkick has done) to be fully embraced by the merchant as a loyalty tool.

CRM for consumer-facing business

CRM (Customer Relationship Management) involves getting a comprehensive view of each customer and acting on those insights to foster engagement, loyalty, and optimal value by the customer.  CRM has been implemented in businesses in various ways. Many of them, especially in B2B, deploy a technology like SalesForce.com to deal with Sales, Marketing, and Customer Support Issues.  B2C companies with millions of customers use a different approach, which involves implementing a comprehensive customer data warehouse and deploying point solutions to deal with various customer-facing activities (emails, customer support, loyalty, promotions, etc.)

In the case of B2C, a hybrid approach also works – For example, top buyer segment would be managed using a technology like SalesForce.com, where all touch points are tracked and continually analyzed for insights.  Lower value segments will be tracked less comprehensively using point solution applications. Still, customer data warehouse is the single source for truth in these hybrid systems.

One fact is certain - CRM activities makes up a large portion of marketing budget pie, and it is a long-term commitment.  Therefore, it is important that marketers do a lot of thinking, planning, and experimenting before going headlong into CRM.

I recommend an excellent article on how to use data warehouse for CRM, which is very relevant to B2C companies. It outlines the following CRM functions that can be accomplished using a customer-centric data warehouse:

• Single customer view – Avoid duplications and achieve a single, comprehensive view of customer. Qualify by level of relationship (prospect, registered, purchased)

• Permission management – Type of communications that customer is willing to receive.

• Campaign segmentation – Ability to target customers by demographic, psychographic, and transaction parameters

• Customer services/support – Only some of this data might belong to data warehouse.  But it captures customer touch points with support. This can be a valuable up-sell and cross-sell channel. Companies like Zappos and Charles Schwab are good practitioners of this.

• Customer analysis – Calculate crucial business metrics such as Customer Value Score, Total Customer Value, Customer Lifetime Value, and so on.

• Personalization – Analyze past transaction behavior and life stage considerations and recommend new products

• Customer loyalty scheme – Efforts to keep customer loyal (for example, have they been offered rewards or coupons program?) Ideally this will also have a metric that reflects customer’s loyalty.

The word “CRM” is commonly perceived as a piece of technology.  Rather, it is a set of crucial customer-centric practices and the infrastructure to enable them. Deploying a customer-centric data warehouse or CRM software is just the first step towards that end.