Tuesday, June 12, 2018
When You Can't Believe Marketing Research Findings
10:12 pm edt
(A Note: Our background is marketing research, so this issue
may strike you as somewhat hypocritical. But, we've always prided ourselves in fielding thoughtful marketing research
and encouraging our clients to be equally guardful in how they interpret research results. So consider the following
as an example of what can happen if one either naively interprets research findings or actively seeks findings to support
a business proposition.)
If we unquestioningly accept marketing research findings many of us will be pretty excited
to hear results of a research study cited by the Huffington Post. According to this research,
“70% of millennials are willing to pay more for a product that makes an impact on issues they care about.”1 Since
there are over 53 million millennials now working in the US, spending as much as $2.45 trillion annually, their
willingness to support social cause marketing sounds like a 'fact' that’s too good to be ignored when contemplating
marketing strategies for the future.
But, Proceed with Care!
However, things often aren’t always what they seem. Just a few months ago, in a story about social
cause marketing for this column (March 14, 2018), we cited Tom’s Shoes as a preeminent proponent. Virtually every discussion of social cause marketing includes
Tom’s. We, too, cited the company known and widely praised for its policy of giving away one pair of shoes to
children who can’t afford shoes for every pair of Tom’s it sells. Tom’s is widely praised for this
policy and its contribution to the company’s apparent success. A societally positive ‘slam dunk’;
a huge strategic success. But a May 3, 2018 headline from Bloomberg (“Even
Wall Street Couldn’t Protect Toms Shoes from Retail’s Storm”) describes a markedly different reality.
While Tom’s did generate revenue of $91 million in the fourth quarter of 2017, it reported only $8 million in profit
and is currently carrying about $350 M in total debt .
So, What's the Problem?
It seems the bulk of Tom's’ business is based on its $54 a pair trademarked
Alpargata slip-ons. That’s the shoe that for every pair Tom’s sells, they give a pair away. But unfortunately
(for Tom’s) competition has entered the market, and no matter how sincere potential customers were when they told researchers
they’d pay more for a product that “makes an impact on issues they care about”, in reality more and more
are buying bargain alternatives. Tom’s and its touted social cause marketing is in trouble!
Skechers has created a shoe it calls “Bobs,” which mirrors Tom’s design, mimics Tom’s charitable business
model and sells for half the price of Tom’s shoes. Then, discount stores like Target and Payless joined the frenzy
by selling their own knock-offs of Tom’s that can be found for $20 or even less. At the end of the day, consumers’
cash register behavior has proved far different from their ‘lofty’ answers to marketing research questions.
This ‘disconnect’ really shouldn’t come as a surprise. For years marketing researchers have
wrestled with the challenge getting honest answers from respondents. Instead, many survey/study participants answer
by positioning themselves as the person they think they should be, or the person others expect them
to be, rather than the person they actually are! We are all familiar with surveys
that would suggest the public loves to attend the opera or reads the classics over pulp literature. (These are all the
result of social desirability bias.) And, research which allows such departures from reality suffer the consequences.)
A Better Predictor
When it comes to money and the support of noble causes it might be more reliable for researchers to think
like the traditional direct marketer. As Ed Nash (a direct marketing legend) is reported to have frequently observed,
“the only research I care about happens when a prospective customer looks at my product and decides to open her/his
wallet and hand over the cash to make the purchase”.
Attitudinal research has its place, and sometimes
it’s the best information one can get (or for product concepts, the only customer input you can get),
but it’s hard to find anything more reliable than measuring actual consumer behavior. Thanks
to today’s online sales and our ability to make various offers, using various promotions, at varied prices to potential
customers, we can come closer to Ed Nash’s classic skepticism, than would ever have imagined! Given multiple options
and our ability to track, not attitudes but actual purchases made with consumers’ own very real money, we can observe
which choice(s) they actually make. Such results will better support generalization to which product mix(es) should
work in the broader market.
Tuesday, January 16, 2018
How Well Do You Convert Leads Into Sales?
4:51 pm est
Most of us have
worked in a sales capacity; if not by title, then by need. We’ve seen how difficult it is to uncover leads and
how it’s even tougher to actually close on them. We've found a study that documents the difficulty of lead discovery
and quantifies how pitifully low conversion rates actually are.
A Broad and Objective
The study is from Implisit and
was conducted in the business-to-business environment. It offers more understanding of relative conversion-to-sales
rates from various different lead-sources. Based on input from nearly 500 US-based companies Implisit reports
3.6% of leads from customer-referrals and employee-referrals convert to sales. Imagine, 1,000 leads producing a paltry 36 closed sales! However,
3.6% looks pretty hot when it's compared to conversion rates from other lead-sources. Consider:
- 1.6% for website leads
- 1.5% for Facebook/Twitter/Social
for advertising and marketing leads
- 0.6% for trade show leads
- 0.5% for webinar leads
these closure rates probably aren’t a complete surprise. If you consider it further, the superiority of personal recommendations
(referrals) shouldn't be a surprise at all. We’ve previously cited research from Nielsen and other organizations
to reinforce our belief in the power of personal communications versus institutional sources. People simply trust other
There's No Hiding From the Numbers
Yes, Implisit gathered these numbers in a B-to-B environment.
No doubt many consumer products enjoy higher close rates. But even so if generating new sales weren’t so critical
we might be tempted to ‘throw in the towel’ on the lot. After all, the highest conversion rate is a measly 3.6%!
Or, the Reality
The answer might just have to be one of generating a lot
more leads - the most productive type of leads - those generated by customer and employee word of mouth.
Unfortunately, no matter how great your product or service, even the most loyal of customers usually don’t generate
the level of word of mouth you deserve. And strange as it seems, even those people whose paychecks are dependent on
your company’s success (your employees) may not be of the mindset or have the total corporate picture needed to speak
to their friends, neighbors, relatives or strangers about your brand.
Turning Customers (and Employees) Into Everyday Advocates
Positive word of mouth can be an incredibly powerful force
in encouraging potential customer to consider and buy a brand, but it doesn’t easily happen without some facilitation.
Both customers and employees need a well-orchestrated word of mouth management program; one that provides them:
so they can effectively lobby for your brand.
Until such individuals are reminded of their connection to your brand they won’t be motivated to promote it. This
holds unless and until an incident or event occurs that provides them with an opportunity (and content) to share about your
brand. Unfortunately, most such opportunities are moments of failure; and the news that's disseminated about your brand
But we all have the chance to 'arm' our customers and employees with positive stories to tell;
providing them both with opportunities and content. And, the amazing truth? It's all free! Your everyday
advocates are just waiting to be activated!