About business, planning, startups, digital marketing, management, futurism, and other braindrops by Octavian Mihai, marketing executive and entrepreneur, New York City
Some notes regarding digital strategic planning, data & tactics. Will detail them in the next posts. This might seem complicated. Strategy is about asking the right questions, having the right data and setting the right priorities. Those who take shortcuts on strategy are just lousy tacticians.
Sometimes communicating is repeating. So here we go again trying to make an argument for building business cases in advertising. (You might know that I’m a big fan of P. Drucker’s down to earth and common sense business approach.)
MEASURE IN ORDER TO MANAGE
Any business operation must be measurable. Including advertising. But I’m not talking about putting numbers on a pretty dashboard.Those actionable KPIs must always be the result of a specific business case.
A business case is a simple walk-though justification of the business objective that generated the advertising operation.
As a digital business planner you need to learn to help your clients to derive the right KPIs from their business objective. This is why it is imperative that you start by defining the right business case. (You can see an example of a business case here.)
CLEAR BUSINESS OBJECTIVES
Some business objectives are easier to measure than others. (more on business objectives here)
For instance: increasing sales, increasing the customer satisfaction can easily be supported by very simple KPIs (e.g. from 12% to 18%, etc).
However, some advertising objectives sound as if they came from a graduate level social engineering course: e.g. Changing consumer behaviour…
Whenever faced with these kinds of demands, we can always translate them into a specific business objective. Exactly how do we want to change the consumer behaviour? By how much? etc.
After analysis, you should be able to define the value to be created by the specific business objective. The business case will present a path to profitability if that business objective is attained.
EXAMPLE: A CLEAR BUSINESS OBJECTIVE
Business objective: Increase from 7% to 14% the use of a smartphone while watching TV.
Reasoning for the business case: By increasing by 100% our customers’ use of smartphones while watching TV we can increase their engagement with the brand by 10% and also the download of our custom TV watching app by 200%.
The 10% engagement increase will generate $X in customer loyalty and decrease in attrition rate by 3%, +4% social media equity and +5% in customer recommendations, etc. This will result in a cumulative revenue increase of $YM over the next 3 years.
You always need to know why you are doing a specific operation and analyze all the pertinent details.
Business Objective -> Business Case -> KPIs / Metrics -> Program Maturity Model -> Prerequisite Programs -> Planning
So the conclusion to take away as an advertising planner is that you should always be able to justify your advertising initiative with a business case. And that business case has to support the business objective.
Magic mirror on the wall who’s the digital plannerest of them all
Digital Business Planning Review
So far I’ve been trying to make the following points:
The digital / social media planner and strategist role must have a very strong business component (metrics, analytics, and general business model understanding).
Increase the Customer Recommendations by 20% in the next 12 months.
Business Case
Customer base: 600 000
Customer annual value: $1 000 (Annual revenue $600 000 000)
Customer annual net profit: $200 (Annual profit $120 000 000) (20%)
Customer annual churn: 30%
Current recommendation rate: 20%
Recommendation conversion rate: 50%
On average a customer recommends 2 people.
A 20% increase in recommendations (from 20% to 24%) = 4% increase in total recommendations at a 30% churn rate, both cumulative over 3 years = 53.5K customer years
So the increase program will generate in net profit of $10.7M over 3 years.
Determine a budget based on previous programs. Say $1.7M over one year.
KPI / Metrics
Increase by 24K new consumer recommendations for a $1.7M budget.
Program Maturity Model
Determine the maturity level by assessing the quality of current digital programs.
Let’s assume the client program review reveals the following programs maturity:
Digital business model and objectives – Level Advanced (needed Advanced) Digital analytics & monitoring – Level Basic (needed Advanced) Digital and social media framework strategy and implementation – Level Advanced (needed Advanced) Social media policies & governance – Level Advanced (needed Advanced) Community building and engagement – Level Basic 8% (needed Advanced 12-15%) Social CRM – Level None (needed Basic)
Prerequisite Programs
Based on previous analysis here are the necessary programs needed to execute the business objective in a single strategy.
Implement a more advanced digital analytics & monitoring solution
Increase the community engagement from 8% to 12%.
Implement a Social CRM
=====
Now you’re ready to do the planning. And you have 3 new programs to implement…. And only $1.7M… Get ready to build more business cases and negotiate.
You cannot commit to the required business objective with deficient prerequisite programs.
More soon. Would love to hear from you, does this make sense to you?
This is a post about the importance of numbers and data when doing strategic planning.
We’ll look into :
– How to Calculate the Investment in your Business Objective Based Marketing Program
– What data we need to gather in order to create a successful digital plan and strategy
– The Programs that could be associated with this business objective
A FICTIVE CASE STUDY
Say the board of a mobile company decides that one of the business objectives is to Increase the Customer Recommendations by 20% in the next 12 months.
Assume the we are talking about direct and influent recommendations (for instance as a response to a personal query “Do you like your phone? Should I buy one?”; a mere Facebook like won’t be considered a recommendation). Also this is not an exercise in online ads (ppc, etc.). We stay focused on the business objective.
SOME BASIC FICTIVE DATA
Gather all the necessary business data.
Customer base: 600 000
Customer annual value: $1 000 (Annual revenue $600 000 000)
Customer annual net profit: $200 (Annual profit $120 000 000) (20%)
Customer annual churn: 30%
Current recommendation rate: 20%
Business objective recommendation rate: 24%
Recommendation conversion rate: 50%
On average a customer recommends 2 people.
4% increase in recommendations results in 2×2% increase in new clients (24K).
At a 30% churn rate over 3 years we end up with 24K+16.8K+11.8 = 52K
Calculate for the new Customer recommendations + respective churn, cca 1.5K
So the increase program will generate in net profit about 53.5K consumer years or $10.7M over 3 years.
Say invest 20% of the potential profitability. That will generate an additional investment of 1.7M/year in the Recommendation program for a $9M profit. (I would keep this number for now and adjust it once the exact operations are determined. see Programs).
KPIS
Determine the KPIs
20% increase, from 20% to 24%
12 000 more customers to recommend the product to an average of 2 people
24 000 new customers
Investment $1.7M
Estimated net profit: 9M.
Of course assuming that profitability, consumer churn, recommendation rate and conversion stay the same.
REVIEW
In conclusion:
We have 600K consumers
120K will already recommend the product
We need to get 12K more existing consumers to recommend and we have $1.7M ($142 per recommending customer or $71 per recommendation).
OWNED MEDIA CHANNELS
Gather more data by listing all the current owned eco-system.
Facebook page 100K fans (98% customers) with 8% engagement (8K fans interact every month)
Customer newsletter 20K subscribers with 20% open rate (4K customers)
400K print invoices / month + 200K electronic invoices
300K website visits from existing customers over the year (50% will come to the website)
50K Twitter followers with 2% engagement rate (1K)
40K have the mobile app
20K in store visit from existing customers.
EXISTING MARKETING CALENDAR
Analyse the existing marketing calendar and media plan.
Q1 & Q3 Digital & Social media engagement campaigns
Q2 Digital notoriety campaign
Q4 Global all platforms new product launch
Monthly social media contests / campaigns (by topics: Customer care, Client recommendations incentives, FB community building, etc)
IT’S ALL ABOUT DATA
Ask the right questions. Get more data.
Having the right data is crucial. Any answer the following questions has the power to change the digital strategy.
Do we know who are the customers who already recommend?
Do we know what the customers who make recommendations have in common? (product, service, customer experience?)
Do we know to whom they are recommending the product? (friends, family, etc?)
Are the customers who make recommendations proportionally represented over social media?
Can we assume that 20% of the 8K who interact on Facebook already made a recommendation? Or are they more around 40%?
STRATEGIC CONSIDERATIONS
Once the right data is gathered the strategy writes itself.
Understand the target audience (the consumers who haven’t recommended the product yet, but are very disposed to do so)?
On what channels are they most active?
Create the tools / mechanisms for them to quickly recommend should they want to
Develop a value proposition
Tailor a creative advertising solution
Determine the types of operations / campaigns
Integrate them in the existing marketing calendar
Set up a monitoring solution
Plan for at least one or two cycles (to have an opportunity for improvement)
Execute, monitor, optimize
PROGRAMS
Determine if you have all the prerequisite programs in place.
I have started the post by defining the business objective to Increase the Customer Recommendations by 20% in the next 12 months. Now we want to attach some of the previous programs to the business objective.
What are the prerequisite programs that the client needs to have in place before tackling this objective? It all depends on what digital properties will play a role. However some of them are pretty essential.
Digital business model and objectives 101 – having a digital business model, objectives, business cases Digital analytics & monitoring 101 – determine the reporting format, and the necessary data to collect and analyse Digital and social media framework strategy and implementation 101 – determine and implement the optimal digital eco-system Social media policies & governance – produce, legally approve and publicize the policies, terms and rules Community building and engagement 101 – develop monitoring, operations and content plans to build the social media community and its engagement
Social CRM 101 – have implemented a social CRM solution that along with the digital analytics and monitoring system will provide the proper strategic insights and support the campaigns
======
This post went a bit too long and I hope you were able to follow. I have left out a bunch of small details and consideration, however I hope it was insightful. Looking forward to your comments.
This is the second set of note regarding the social media framework I’m building with Rock&Social.
In the previous post we have defined Business Objectives, now we want to define a set of digital and social media Programs that will be used to answer specific objectives. In a subsequent posts I will link specific business objective with a series of tracks, and later on detail each track from a planning perspective (timelines, budgets, strategic impact, etc.).
Following is a list of digital programs (in no particular order). The 201, is a more advanced version of the 101 and usually has several other programs as prerequisites. Essentially, the goal of this framework is to create an easy model of detecting digital planning solutions to business objectives.
See the programs as iterative projects (or operations), in need of regular monitoring and update in order to attain the business objectives.
DIGITAL AND SOCIAL MEDIA PROGRAMS
Digital business model and objectives 101, 201 Optimize the business model to include the digital and social opportunities. Determine the business objectives, metrics, success business cases and acquire business leaders’ approval. Approve the budget and the roadmap to attain the determined business objectives.
Social business culture 101, 201 Determine the roadmap for creating a social business culture
Digital planning and social operations 101 Determine how the digital and social objective will be accomplished – internal operations, external operations, budgets, planning, etc.
Social media policies & governance 101 Create the social media policies and regulations, legal approvals, determine the stakeholders, etc.
Digital analytics & monitoring 101 Get the right tools and procedures in place – determine the reporting format, create a crisis plan, stakeholder analysis
Digital and social media framework strategy and implementation 101, 201 Ensure all the digital is strategically connected and optimized
Sales funnel 101 Set up sales funnel strategy and tools, include the digital and social to the existing sales funnel.
Build community 101, 201 Determine the community platform (FB, forum, subreddit), community building tactics, promotional, newsletters, convert current consumers, community value proposition (push&pull)
Build community engagement 101, 201 Content planning, community management, tactics and metrics
Likeliness to recommend 101, 201 Determine the factors that influence the likeliness to recommend, implement the proper tools, and develop the communication program to increase L2R.
Social brand awareness building 101 Determine the factors that influence the brand awareness, benchmark against competition, monitor and implement the necessary advertising campaigns to build awareness.
Customer social support 101, 201 Build the customer support processes and implement a technological solution, provide a training program.
Social CRM 101 Create customer relationship objectives, procure and implement a technological solution, provide a training program.
Create a social media department Validate the business needs, plan, fund, build a social media department.
======
The previous programs are examples meat to create a better understanding of what it takes to attain a specific business objective. More in the following post.
The rapid evolution of digital and social media technologies over the past 10 years generated a dilution of goal of strategic planning in this space. Very often communication and technology professionals take the role of what should be a business discipline. For the past year we have made a conscious shift at Rock&Social to focus almost exclusively on business services and less on basic communication.
I am currently preparing a detailed framework of digital planning. The goal is to present a formalized top-down approach; from the business objectives to the communication tactics. Over the next couple weeks I will post bits and pieces of my research and work-in-progress.
Following is a list of business objectives that should guide the business digital planning. (in no particular order)
WHAT IS YOUR BUSINESS OBJECTIVE?
Optimize the digital business model Metrics: build several business cases that prove the viability of using digital opportunities
Build a targeted social media community Metrics: increase the size of the bull’s eye community (specific number, benchmark on competition, etc).
Increase the social community engagement Metrics: increase in the community engagement (a series of KPIs like: mentions, interactions with the brand over the social space, call-to-action conversions, etc)
Increase my business’ social awareness Metrics: increase the number of positive mentions (specific number, benchmark on competition, etc).
Develop a social customer support solution Metrics: Successfully implement a customer support solution, optimise the operations, train the team, etc.
Increase sales Metrics: Increase the sales using the new and existing sales funnels (specific number or interval)
Create a social media department Metrics: Successfully create the departments’ business model, recruit, train, and operate until becoming independent the said department.
Implement a social CRM Metrics: Successfully implement a social CRM that takes into account the existing customers and the social community. Use this CRM to drive other business objective as to increase sales, return sales, customer engagement, likeliness to recommend, etc.
Increase the likeliness to recommend Metrics: Increase the likeliness to recommend (over a specific period of time to a specific number, benchmark on competition, etc).
Become a social brand Metrics: Successfully build an engaged community, strong brand equity and be overall recognized as a social brand (specific KPIs for several variables including mentions, community engagement, likeliness to recommend, benchmarks against competitors, social sales improvements, etc).
====
These are only a couple of business objectives that should guide the thinking of any business leader and digital planner before any communication tactic is deployed. Looking forward to your comments.
