Sales modelling and its value

I was one of two speakers at a ROMI conference in the Norwegian town Trondheim yesterday. The other speaker was Magne Supphellen , professor at the Norwegian Business School NHH.

He started by putting the whole aspect of measuring in to the total marketing/strategy picture by discussing the importance of an good and integrated marketing foundation:

1)   How important it is to make sure that your marketing is connected to your business strategy – and how many marketing departments that misses this point!

2)   Having clear guidelines for what you are trying to achieve trough your marketing. He had examples of companies that presented the objectives of successful marketing campaigns, but the objectives presented was not the same as they stated before the campaign, but other objectives the campaign achieved.

3)   Making sure that you has the guidelines for measuring ready before you start the campaign.

His point being that having clear and precise objectives defined before the campaign is launched give a better learning experience. They should be:

  • Relevant
  • Specific
  • Measurable
  • Time specific
  • Target group specific

And the requirements for cause/effect relationships is:

  1. Significant changes
  2. Cause before effect
  3. Excluding alternative cause variables

And this of course was the perfect intro to my presentation of econometrics measuring. Econometric measuring is the only way of excluding the other variables and give you the best picture of how you’re marketing effect can be measured.

And one of the most important elements of a good econometric model is to have clear and specific objectives about what you are trying to obtain.

As a simple example lets use the old sales funnel. Trying to explain what variables affects leads vs. prospects will give you different variables that will be tested in a econometric model. Leads (the first stage in your funnel) will have more variables based on your general marketing activity in the market, while doing a model on prospects will have more direct variables, since this is a group that’s already in your CRM system.

The two biggest obstacles, from the customer’s view, when it comes to econometric modelling is:

  1. They don’t believe in the modelling and they don’t understand how it works. Even though this is a straightforward process with a regression formula, many people do not understand it. The focus is not on whether they understand regression, but their believe that a regression analysis can predict which variables effects their marketing. And there is a group of scientists, The Austrian School of Economics, which agrees with this and says that doing econometric analysis on humans is useless since the human mind is so complex. At the moment this is a small group compared to those scientists that believe that econometric modelling can help you analyse human behavior.
  2. The other reason is the unwillingness to use media and marketing money on analytics. Which is strange because you do this to get more insight on what works and therefor you will be able to do more with less when you incorporate the learning you get from the modeling. From my own experience we had a factor of 3 to 1 (spending 1 and getting 3 back) by using the model.

You can read my previous postings on econometric modelling here:

Speaking at conference 1
Speaking at conference 2

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Doing a lecture on International Marketing and would appreciate your input!

I´m doing a lecture in International Marketing at the University of Management and Economics (ISM) in Lithuania this Saturday. It’s a full day lecture for Master of Science students and I am really looking forward to it.

We will go through the different stages of going global starting with world trade and then end up with what’s in it for a single company (and the consumers). Then we will talk about what’s important when trying to use a creative expression across different countries and cultures and end up talking about how to measure your activities.

All aspects of theory should now be covered and I have some examples of different issues when going abroad from my own experience and from others, but it would be great to get some more.

If you search Goolge for “international marketing blunders” you primarily get stories like how Electrolux failed in their creative approach entering the U.S. market with the ad below.

Actually I think Electrolux did this on purpose.

One of my own examples is from doing business in China. When we where doing a campaign in the Shanghai area one Chinese employee (in Norway) told us that we should develop a new logo for our school. Our logo was quadrangular and in China it would be a lot better Feng Shui if the logo were circular. So we did, and then tested it in Shanghai and the short feedback was; Who cares what shape you logo is…

I’m not saying that cultural aspects is of no importance, just don’t overemphasis the importance, and remember that even inside a country you will meet a lot of different cultures.

So now I am reaching out to you! Do you have any good examples of:

  • Same Marketing working well in different cultural markets (and why)?
  • Or Marketing that went wrong (and why)?
  • Examples of a good entry strategy for a product into a foreign market (and why)?
  • Or an entry strategy that went wrong (and why)?

Looking forward to your responses!

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Should you continue following me?

Changed my job – and my life
I haven’t been blogging in a while because of a job change. Feels like I have changed my life too. The thing is I haven’t gone from one Marketing Director job to another, which would have been a lot easier. No. I decided to do something completely different. I took a job as a lecturer at Oslo School of Management, a Business School in Norway.

Some might argue, since I came from a CMO position at another Business School, that this change wasn’t to dramatic. Well, nothing would be further from the truth. Going from the administration to the academic side is really a game changer…

Lecturer in Sales and Sales Management
My research field will be sales and sales management.  By the end of 2012 I will start my Phd where I will dive into a lot of theory and methodology in the coming years and use this knowledge to expand the research on interesting aspects of sales issues, with some lecturing on the side.

How I use Social Media
So back to my heading: Should you continue following me? Well, I don’t know how you use Social Media but I use Twitter, Linkedin, Quara and maybe Google+ to expand my professional interests.

I use Facebook, Pinterest, Anybeat and Empire Avenue for more personal use. This means that numbers of friends on my more personal networks are low – most of them are real friends (the majority of them anyway :)), while on my professional sites I have an extended network of people that share my professional interest or who I find interesting and that might expand my view.

A change in focus
So, if you are following me because of my current profile, you will now see a change in my postings. Small in the beginning and increasing over time, that corresponds with my field of research, sales and sales management. The field of sales and sales management includes some of my previous fields, like marketing, social media marketing and mobile marketing. So there will still be some familiarity.

But if this is not your thing, you should probably consider unfollowing me. My experience is that the better match between what I post and your interest, the greater the chance for interaction.

I would love more interaction
And as a researcher interaction is a great thing. It would be great if I could use my social networks to actually do some research, and then I would be depending on your feedback and willingness to share and retweets.

What can I offer in return?
Well, my biggest contribution would be sharing the findings of my research through my blog!

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QR codes on the rise – but still in its infancy when it comes to quality

According to a study by Nellymoser the use of QR codes is growing rapidly with a 439% growth from Q1 to Q4 in 2011. See this blogpost from Simplyzesty for more on this.

It seams like all new technologies has to go through the same learning curve like their predecessors. The first newspapers webpage’s looked just like the printed versions of the same page and so on. Eventually it evolves into products like The Daily or the beauty of Wired magazine on tablets.

What surprises me is that so many still tries to go the whole learning curve from scratch without any learning from others previous experiences. It’s understandable if you really are pushing the limits and are trying out new cutting edge technology. But if you still do basic mistakes using QR codes in January 2012 you should probably do something else (maybe change creative agency…).

Take the below example from Oslo Sportslager, a Norwegian Sports Shop where they was using QR codes in today’s Newspaper. I think we all agree that from a user’s point of view using technology in advertising should be hassle free. And when it comes to QR codes you have one chance. The user tries it and if it doesn’t work they just move on.

The problem with this ad is that when it was used in the newspaper it got a bit grainy and I tried to scan it with 8 different QR programs on my iPhone. None of them worked.

You can see a black and white (the original was in colour) scan of the actual newspaper add here:

On their webpage they had a higher resolution version of the ad. 4 of the programs managed to scan these– which is useless of course since then you already are on their webpage…

What made it even worse is the page you come to when you finally managed to scan the QR code. As shown below, it’s just a normal webpage (at least about the right topic) not optimized for mobile.

When Oslo Sportslager evaluates this campaign the obvious conclusion will probably be that the use of QR code didn’t work to well for them. And this conclusion would of course be totally wrong and based on a really poorly executed campaign.

How cool wouldn’t it be if they used a clearer QR code and scanning it would bring you to a video of people skiing and then to a mobile optimized webpage with products… (as a minimum)

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Speaking at a new ROMI conference

I have, luckily enough, been chosen to speak at the 2012 ROMI conference hosted by the Norwegian advertiser association (all information in Norwegian), which is a professional organisation for advertisers.

I think this is one of the most important topics for marketers based on the pressure of documenting the effect of their marketing efforts. Even though there is many and very good solutions tracking traditional marketing, most marketers don’t use it. And in the era of social media and mobile the challenge is that there are no common (and good) solutions to measure the effect of these Medias on sales.

I will, as I did last year, speak much about a sophisticated solution for analysing what is driving sales. The model is called sales modelling or Econometric analysis. This is a great solution for letting you know exactly how much of your company’s sales are coming from (in this case) marketing. We have used this solution for 6 years now and I will present some new findings and learning’s compared to last time. You can find my previous post about this solution here.

Now I am reaching out to you (and please feel free to distribute this survey):

I will use the feedback of this survey (if any) in my presentation on the conference and, of course, write a post with the results if I get enough answers – so feel free to participate!

Click here for the short survey!

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Is online retailers killing the “Brick and Mortar” stores?

As the results of the holidays shopping are starting to come it certainly might look that way. But as expected there is not a single answer to the bad results for the Brick and mortar stores. And not every store is seeing a decline in sales during Christmas.

According to Reuters Sears is closing down as many as 120 of their of its Kmart and namesake big-box stores due to sharp decline in sales.

But the reason is not necessarily the online competitors, but according to some analyst other brick and mortar stores like Wal-Mart. Another reason is that the company has let stores deteriorate, while analysts also cite poor locations and “ho-hum” merchandise for its ongoing decline.

According to Financial Times UK retailers has seen a boost in holiday sales, despite the crises in the Eurozone. But many have not been able to do this without high discounts, eating into their final earnings.

But according to IBMs Coremetrics Benchmark survey the online sales for the holiday were very strong with mobile showing of like a strong channel with more than 100% growth since 2011, and more than 160% since 2010.

But when it comes to online being the killer of the bricks and mortars, the jury is still out…

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A long tail SEM strategy gave us 30% cost reduction and increased CTR with 143%

Our SEM, search engine marketing, strategy has been the same for many years.

Based on the success of Google adWords marketing over the years a lot of words have been moving out of our price range and to overcome this hurdle many has come up with different strategies to bypass this problem.

Change the name

When we first started talking to SEM experts some of them told us that we should probably change the name of the school. Our schools name is “BI Norwegian Business School” but most people call us (at least in Norway) just “BI”. Searching on “BI” on Google bring up more than a billion hits with Business Intelligence on the top. Mind you, we don’t do to bad in this search.

The SEM experts concern was that we would not be able to dominate this search phrase in the future. Would of course be a drastic step to move away from one of Norway’s best known brand names.

Find another more unique phrase to dominate

One strategy was to think of another name than e.g Business School with more than 2 billions hits, but that was the strategy of everyone else too and now the term Business University has more than 3 billion hits, which was a whole other story just a year ago.

A very good example of such a strategy is BGL Groups site, a site that aims to help consumers compare the market to find the best price and deals for them on a range of products. Here they have a lot of competitors and searching “compare the market” gives you more than 1 billion hits. They introduced a campaign with Meerkats and called the site Compare the Meerkats instead. Backed with a clever film concept and other marketing this strategy became a huge hit. Today “compare the Meerkat” produces more than 3 million hits, but back when the campaign started it didn’t give you much.

Long tail strategy

Based on the increased amount of data online the consumers have changed their way of searching. According to Google each user uses 3-5 different search words for each search they do; the obvious thing to do when you try to narrow your search and produce more relevant hits.

And this is what long tail SEM (or SEO) is all about. We used to buy a couple of thousand words and short combinations. With our long tail strategy we buy a combination of more than 50 000 words. The result is lower cost and high probability of conversions. In theory it would look like the picture below (courtesy of our agency Ignitas).

In reality this is precisely what happened:

Since the user uses more words in the search and these combinations is the same words we buy, the relevance for the user’s increases, and the number on our ads increases.

We have run the new strategy for about three months now and when comparing it to the strategy used the same period last year we increased the CTR from 1,22% too 2,96%. Up 143% in three months. And at the same time cut the cost by 30%.

When we have more data over a longer time span we expect this numbers to increase even more, since we have spend a lot of time during the first three months to adjust the set up.

When looking at just the last couple of weeks of the test period we have cut cost by 50% and the CTR is up by close to 300%.

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Why QR codes is not for everyone – 3 Golden Rules

It seams that two groups have manifested themselves when it comes to using QR codes in Marketing. Those who tell you that you cant live without it and those who tell you that you’re stupid to be using them. As with everything else the truth lies somewhere in between and it depends mostly on your market and target group if you should include it into you marketing strategy or not.

Rule No 1 Know you target group!

Geographical Market
According to Vision Mobile Smartphone’s account for just 27% of all mobile phones word wide. But when broken down to regions there are big differences between Northern America and Europe with more than 50% smart phones and Latin America with 17%. So if you’re doing a campaign in Paraguay you might want to hold back on your QR code investment for the time being.

Target groups
When looking at target groups there is also great differences. According to Nielsen, if your target group is between 25-34 the smart phone penetration is 62% (US numbers). In a lot younger an older target groups the penetration is as low as 18%. According to Archrival the best group that you should consider using QR codes on is college students. They did a survey in 24 Colleges around the US and found that 81% of the students owned a smart phone and 80% had previously seen a QR code.

Now put them together
We have campuses in Norway, China and Lithuania. In our campus in Lithuania we have been using QR codes for more than a year, but with no significant effect. Strange based on the findings from Archrival but not so strange based on the smart phone penetration in the region (Eastern Europe) which is around 14%.

Rule No 2 Creative

Again according to Archrival when the College students were asked about the probability of using a QR code, 75% answered “Not likely”. When we also know that the younger target group has a very high “display fatigue” when it comes to commercials, it goes without saying that the use of QR codes has to be very creative. We all have now probably heard about the Tesco case in Shout Korea.

Rule No 3 testing
Again, according to Archrival (great guys and girls), only 21% of the students successfully scanned the QR code in their test. When we are working with our agencies developing QR codes most testing is done on screen or from a print out from a laser writer. And of course in house where the internet connection is, normally, very good. You should test the QR code on the same kind of paper (or solutions) that you would use in the campaign and ideally on the location it would probably be used (if possible – like on boards).


Your best shot of making it work: College students in the US, with great creative

Your worst shot: Grandparents in rural areas in Peru

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PR has no affect on sales…

You know the phrase “blinded by the light”? In addition to being a great Manfred Mann’s song it also reflects what happens to us when our product or company gets a beating in the press and all hell breaks loose internally and everybody runs around trying to put out the fire. But for the outsiders, even those who buys the product or from our company, it doesn’t seem to have much effect on their willingness to buy.

Can it be proved?
Of course this will make a lot of you start protesting and come up with tons of examples where PR indeed seemed to have an effect on short term sales. And I mean seems. The problem with most of these cases is that you might see a drop in sales during bad PR, but most haven’t really used any methods to confirm that the drop really is because of the bad PR. There is really only one way of doing this, and if you use it you can, with a probability of probably 80-95%, say that is has an effect or not. And I can, with a probability of 96,6% say that PR has no effect on our recruitment of bachelor students (being a private foundation, the students apply and pays to attend, so its just as much a sale as any other high end service product).

The method that will give you these answers is econometrics, or sales modeling. We are using econometrics to find the main factors that affects someone to apply. By doing so you will have a pretty good view of what factors affects your sales, and what doesn’t, and you can concentrate on the factors that have the biggest impact on your costumer’s decision to buy.

We evaluated about 160 cases of press during one year. About 10 of them were negative, 16 positive and the rest neutral. I will not go into the definition, but the first two should be easy to understand… 10 of 160 might not seem to be much, but the timing of the bad press was critical based on the application deadline and went on for a couple of weeks, but still didn’t  affect the target group’s decision to apply.

Some conclusions
First I will stress that this is not my attempt to make PR unimportant, it isn’t. What I am trying to stress is that things like bad press is normally a big thing for a company and can take away the focus for looking at the real reason for why your sales is taking a plunge.

  • My first conclusion is that this is a finding during one year and when this has been evaluated over several years it will be easier to conclude that this is in fact the case that PR does not have any short term effect on sales.
  • It seams to me that if PR should have such an affect it has to be consistent and over a longer time span nationally. Shell and Enron is companies that felt this the hard way during the years.
  • That PR doesn’t have an effect on sales in the short run doesn’t imply that it has no effect. As a factor for building a strong brand over time, PR is an important contributor, if used strategically.
  • The above example is of a high end service product with a lot of involvement from the buyer. So it’s impossible to say that the conclusion would be the same for FMCG products.

 If you have any good examples where PR has been measured using econometrics it would be great to hear from you!

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The fine line between communication and information…

The communication part relates both to marketing and PR…

Back in September we had local government election here in Norway and before the election I started to receive a lot of political propaganda/advertising/information – whatever you want to call it… In my eyes; marketing.

The law when it comes to marketing in Norway is pretty strict and there is particularly one issue that gets a lot of attention (from the public), and that is advertising delivered in your private letter box. It’s estimated that an average household in Norway receives approximately 45 kilogram of mass advertising each year.

But there is a way to stop it, kind of… In 2008 the new advertising law stated that if you put a “No thank you” sticker on your letter box it is illegal to put advertising in it if its not addressed to you. I have (as the marketer I am) of course done this.

But according to the marketing law political propoganda is not advertising and therefore legal to distribute. On the other hand; A local bus company (although they are private, they are doing this on a governmental contract and many places there is no alternative) had to stop distribute their timetable this way, because the local government viewed this as advertising…

So it’s clear that we have a long way to go towards a common understanding of the term “marketing” or “communication” and “advertising”. Which again makes it clear how important the work of International Chamber of Commerce’s and other is to make a common directions for how to conduct good marketing.  International Chamber of Commerce’s just released their new global marketing code.

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