If My Marketing ROI Is Going Up, Why Are Sales Going Down?

That is the basic title of an article in Advertising Age yesterday. The title, of course, got my attention. I was pretty sure I knew the answer, but decided to see what the author had to say. Sure enough, while she was more elegant, the bottom line is simple:

1. Marketers are measuring the wrong things.
2. Marketers are misleading themselves and their management to believe ROI is improving.

The only way ROI can actually go up if sales (the metric that matters) go down is if Marketing was spending a lot less to get good results. If that were actually true (which it isn’t), then it would be sensible to invest even more in Marketing (assuming there were more good things to do, or one could do more of the things that were working), so that sales would go up instead of down.

The article suggests it’s a paradox. It isn’t. It’s bad math or bad measurement … or both. We have several articles on our website about the ability for mid-market companies to use much more sophisticated data and measurements today so that you are not mislead, or made to look foolish.

Mitch

 

Advertisements

A Downside to Big Data and Data Mining for Marketers

By now anyone who is a marketing professional knows that analytics, big data, data mining etc. are key tools that must be mastered. Unfortunately for too many it has become a crutch or excuse to stop thinking. Another downside is that too many marketers spend even less time than they did before “observing the native in its natural habitat.” They are relying almost exclusively on “data” to drive their decisions. I am a fan of data driven marketing, just not exclusively.

Another “downside” to this reliance on data is unintended consequences. Facebook has been selling ads for a while. One of the things businesses like about advertising on Facebook is the ability to target specific audiences. Facebook really does have way more information about their users than most users want to realize. That information is provided to advertisers to target. So far, so good.

However, this reliance on data by the people at Facebook caused a hugely embarrassing situation for them: turns out you could target people who hate Jews specifically. Turns out one of the targeting options was field of study. Over 2,000 people had listed their field of study as “Jew hater.” In addition the algorithms that Facebook used to help their advertisers target the right people included “why Jews rule the world” and “burn Jews” as fields of study that could be correlated to Jew haters.

Did Facebook offer this service on purpose? Of course not. In fact they have removed field of study as a targeting choice. Previously, their data had allowed people to exclude certain ethnic groups from their ads. They stopped that eventually as well.

How did this happen? Reliance on big data and suspension of critical thinking in my opinion. Data is good. Data without critical thinking and first hand observation as a supplement, can be misleading.

Mitch

Another Example of the Power of Focus

Over the years I have written several posts on the power of focus. (Heck there is a category for it on the blog page). Today’s example is Chili’s which is reducing its menu by 40 items from 125 to 75 because “Over the years, like many bar and grill chains, Chili’s chased consumer trends, expanded the menu and tried to be all things to all guests, therefore compromising execution and resulting in a fuzzy food reputation,” Chili’s said in a statement.

Focus brings power. As our former team member, David Palmer was wont to say, “There is no business that can’t improve its performance by narrowing its focus.” In n Out Burger with its original menu outperforms McDonald’s with its over-bloated menu (which it is reducing).

Reread some of my earlier posts on this topic and then ask yourself, where should you be focused.

Mitch

Focus and Say Cheese

10798951 – pizza.

As I have started almost all the posts in this series on focus, … focus matters. Pursuing top line growth to impress Wall Street usually  fails as the top line grows (if it does), while the bottom shrinks, or at least profit margins do. The power of focus is irrefutable.

And here yet is another example: Leprino Foods. What is their focus: mozzarella cheese for large pizza chains. They are in fact the world’s largest producer of pizza cheese. A billion pounds a year of mozzarella. They have 85% market share and profit margins that are much better than most dairy industry companies. All thru relentless focus.

The company has four key values: quality (they have never had a recall which only a handful of dairy companies can say); service; price (40% of the cost of a pizza is in the cheese); ethics. Their absolute focus on mozzarella for pizza allows them to innovate (they have over 50 patents) and know how to help their customers so selling is “easy.”

They make more money than others, have billions in revenue and a laser focus. Meanwhile “smarter’ companies keep looking to diversify, and meanwhile don’t make money.

Mitch

Is Brick & Mortar Really Dying?

Is it brick and mortar that is dying or brain-dead, non-merchants who are finally being pushed out of business? Many of my clients are forced to deal with big box retail buyers who are so focused on rebates, shipping allowances, distribution center contributions, advertising allowances and lower prices that their companies no longer focus on being retail merchants.

I have written before how Lowes (one of those big box retailers I am talking about above), lost out on at least $10,000 in business from me because they couldn’t be bothered to sell it. That story link is about a dishwasher. On another trip they lost out on carpeting and flooring for an entire house as well as some other items for a similar reason.

I am reminded again about the dichotomy. Last week Amazon opened a brick and mortar book store in a shopping center/area in San Jose called Santana Row. They have opened about nine stores so far around the country. What is most funny to me about this one is that it is across the street in the center from where a Borders used to be located. Maybe Borders was just on the wrong side of the street … yeah right.

BTW, Amazon took over a vacated Brooks Brother’s location. Now there is a retailer that seems to have failed to keep up with the times. As Jeff Bezos said recently, “if your customers aren’t getting younger, you’re going out of business.” Something Cadillac almost didn’t learn in time.

Mitch

No Action Talk Only

I have accused the airlines, who spend countless dollars claiming to be customer-focused, of operating on the premise that passengers are an inconvenience to the efficient movement of airplanes.

I recently discovered an amazon vendor that may have the airlines beat. Here is the statement and review at the top of their seller page:

0% positive in the last 12 months (54 ratings)
sdg265 is committed to providing each customer with the highest standard of customer service.

They may be committed but based on 0% positive ratings in 12 months, perhaps they need to be ‘committed’ as delusional. Why they are still a seller on amazon, is my real question.

Mitch

Too Much Choice

Bud Light, like many mainstream beers, has suffered a downturn in sales as craft beers have continued to make inroads. The number of craft beers is growing rapidly and while most hold minimal market share, each takes some sales from the so-called mainstream beers.

The big brewers have been struggling to find effective strategies against the craft brewers and some have launched their own craft brands. The craft brews are using classic guerilla marketing tactics and filling a clear need that the big brewers have ignored. So what else can the big brewers do?

Bud Light is recognizing and trying to leverage two ideas to stem their share loss. The ideas are:
1. If you can’t fix it feature it
2. Too many choices causes consumers confusion and causes them to buy less

In a press release last week, Bud Light announced their approach and showcased two ads. They are focused on the simplicity of their beer: Four ingredients, that’s it. Beer is beer, and they do it right. Secondly, it is easier to know your beer than to have to look it up on the internet to decide if you want to buy it.

Will this strategy work? Clearly, I don’t know, and I like it. I am unclear if the slide in Bud Light sales is driven by less demand for light beer or the inroads of craft beers … or both. This campaign should help them either way.

Mitch