A Cold, Hard Dose Of Reality
With an Uplifting Conclusion That Proves Your Value!

Kevin Hillstrom
President, MineThatData...
A Frustrated Executive
“Yes, we have a Community Building team.
They’re off in ‘fun-land’ engaging with
customers, partici...
Dell Has An Unequaled Community, Right?

Kevin Hillstrom, President, MineThatData
http://blog.minethatdata.com
kevinh@mine...
Fun-Time At Dell
Dell Facebook Likes, Early 2013 = 4.7 Million.
Dell Facebook Likes, Winter 2013 = 6.4 Million.
Dell’s 2nd...
Pepsi Reduces Their Super Bowl Investment

Kevin Hillstrom, President, MineThatData
http://blog.minethatdata.com
kevinh@mi...
12 Months Later - $350,000,000 Lost Revenue
When tested in practice, a shift
from top-down interruptionbased marketing to ...
Communities In E-Commerce

Black Friday sales dropped for the first time in seven years. I guess Communities
didn’t genera...
Communities Allegedly Generate Value

If 4.7% of our customers generate 100% of our word of mouth, then are 95% of our
eff...
Communities Increase Spending By 20-30%?

If engaged, connected community members spend 20-30% more, then wouldn’t our
bus...
You Can Argue That All Of Social = $0

US GDP growth the past four years is about equal to historical averages, during the...
Fashion Communities Don’t Buy Anything?

Kevin Hillstrom, President, MineThatData
http://blog.minethatdata.com
kevinh@mine...
Why Focus on Community if $ Isn’t There?

Kevin Hillstrom, President, MineThatData
http://blog.minethatdata.com
kevinh@min...
#OhBoy

Kevin Hillstrom, President, MineThatData
http://blog.minethatdata.com
kevinh@minethatdata.com

13
Bad News – Engagement To Sales Ratio = Low

http://simplymeasured.com/blog/2013/08/15/how-to-tell-if-your-twitter-campaign...
Communities – Beyonce

Oh look, Communities works – just ask Beyonce!!
Kevin Hillstrom, President, MineThatData
http://blo...
Communities – Beyonce

Did Communities using Social Media cause the success, or did past history, name
recognition, and a ...
Communities – Lady GaGa

With a community of fanatics, Lady GaGa should be able to sell tens of millions of
CDs when a new...
Communities – Lady GaGa

The album is performing so bad that prices are heavily discounted – sales dropped
81% after the f...
Communities – Lady GaGa
“ARTPOP will be written about one day as a huge marketing failure, unique in every
way.” “… where ...
Communities – Who Needs Fans?

Burger King Norway gave a free Big Mac to customers to get the customers to not
like them o...
And So What If “Brands” Don’t Participate?
In the 4th quarter of 2013, Amazon only sent
four (4) @ replies on Twitter.
Fou...
If You Participate, Do Your Sales Decline?
Nokia is lauded as one of the top ten most
engaging “brands” of Q4-2013 on Twit...
Community Experts Contradict Themselves
4 – Your desire to sell will have to take
a backseat. This is the most important
l...
Describe The Sales Potential Of This Strategy

Describe to your CEO, right now, how a game of Tic Tac Toe between KitKat a...
Describe The Sales Potential Of This Strategy

We give any customer named “April” a free flight on April 1. How do we resp...
How Should Your CEO Respond To This?

“Community First, Then Business”. Why does the Community expert get to ignore
busine...
Communities: They’re Not About Selling?
“When it comes to social media, no one is looking to be sold
to. People are on soc...
A Disconnect
What is the most important metric when building a
community? Engagement!
What is the most important metric in...
Kevin is just a big, dumb
“HiPPo” (Highest Paid
Person’s Opinion). He
simply doesn’t ‘get’ how
you can “harness the
power”...
Maybe Community Experts
Don’t Understand How
Business Works?
Kevin Hillstrom, President, MineThatData
http://blog.minethat...
Business Success = Sell
Products / Services, Pay All
Expenses, And Have A Lot
Of Cash Left Over At The
End Of The Year.
Ke...
Community Success =
Engage With Customers,
Build Relationships, Solve
Problems.
#OhBoy
Kevin Hillstrom, President, MineTha...
New Definition Of
Community Success =
Engage With Customers,
And Build Relationships
That Lead To Quantifiable
Sales And P...
Kevin Hillstrom, President, MineThatData
http://blog.minethatdata.com
kevinh@minethatdata.com

34
Why Must I Prove Engagement = Sales / Profit?
Your Executive Team, regardless of your opinion of them, is
compensated and ...
Why Must I Prove Engagement = Sales / Profit?
How does an Executive earn a bonus?
Typical Bonus Structure:
• 50% of bonus ...
Why Must I Prove Engagement = Sales / Profit?
Executive Motivation:
1. Greatly Increase Annual Sales.
2. Greatly Increase ...
Why Must I Prove Engagement = Sales / Profit?

If you want to have success … stop
speaking the language of the Social /
Co...
The Language of the Executive

If Social / Communities are all about
Engaging Customers, then you must
Engage with your Ex...
You Connect Customers To The Company!
You connect
customers to your
products / services –
yielding $ for the
Executive.

K...
You Matter!
You Are Important!

Kevin Hillstrom, President, MineThatData
http://blog.minethatdata.com
kevinh@minethatdata....
Community Value Varies
I generate 70% of my annual revenue from my
community.
Businesses between ₤1 and ₤10,000,000 in
ann...
Community Value Varies
Once a business is +/- ₤50,000,000 … a
different set of dynamics occur … the
community begins to lo...
Know Your Customer / User
If this is your customer
… age 60 … do not
expect great results
from your community
building pro...
Know Your Customer / User
If your customer / user
is +/- 45 years old,
you’re entering prime
“community” territory.
Here, ...
Know Your Customer / User
If your customer / user
is +/- 30 years old, it
may be that
community / social is
your marketing...
Know That Your CEO May Be From A Different
Generation Than Your Customer

Kevin Hillstrom, President, MineThatData
http://...
Customers Have Value
Find somebody who analyzes customer
behavior. Ask this person three simple
questions.
1. What is the ...
Customers Have Value
Example:

Customers who bought in 2012 have a 40%
chance of buying again in 2013.
If the customer pur...
Customers Have Value
Simple Customer Value:
40% repurchase rate times ₤200 per customer
= ₤80.
35% flows-through to profit...
Customers Have Value
We now know two important facts.

First, each customer that your community
impacts is worth up to ₤80...
Customers Have Value
Say your community is able to diffuse 5,000
situations where customers are angry with
your brand.
5,0...
Incremental Value Matters, A Lot
Say your community improves the purchase
experience for a customer.
It is common to find ...
Incremental Value Matters, A Lot
Say you have 30,000 customers in your
community. Assume you increase the value of
these c...
New Customers = Double Value!!
If your community recruits new customers, you
get to “double-dip” – that’s a good thing!
Yo...
New Customers = Double Value!!
Say your community adds 1,000 customers per
year.
1st Transaction = ₤100 * 1,000 = ₤100,000...
New Customers = Double Value!!
In addition to the ₤100,000 sales & ₤35,000
profit, we earn the downstream benefit of our
e...
Add It All Up!
In my example, there’s a lot of benefit to a
community – benefit that helps Executives
meet their goals.
In...
Then There‘s Product Information
Say your community recommends a new
product or service.
Say your company launches the pro...
Where Possible – Compare Equal Customers
₤250 - ₤500 Buyers In 2012.
• Non-Community Buyers Spent ₤80 in 2013.
• Community...
It’s Not Your Fault When A Business Is Dying
Many community-centric businesses are not
experiencing growth.
This is not th...
Know Your Metrics
What is the probability of an average customer
buying something in the next year?
If the customer buys s...
Know Your Metrics – Then Fight Back!!
Once you know that you are generated three,
four, or five times your annual salary i...
You!

Kevin Hillstrom, President, MineThatData
http://blog.minethatdata.com
kevinh@minethatdata.com

64
The Executive

Kevin Hillstrom, President, MineThatData
http://blog.minethatdata.com
kevinh@minethatdata.com

65
What You Create For Your Company!

Kevin Hillstrom, President, MineThatData
http://blog.minethatdata.com
kevinh@minethatda...
You Matter!
You Are Important!

Kevin Hillstrom, President, MineThatData
http://blog.minethatdata.com
kevinh@minethatdata....
Questions?

Kevin Hillstrom
President, MineThatData
kevinh@minethatdata.com
206-853-8278
http://blog.minethatdata.com

Kev...
Community Workshop:
Coffehouse Chain Mocha Madness
Mocha Madness was created in 2009 as a
London-based competitor to Starb...
Community Workshop:
Coffehouse Chain Mocha Madness
Mocha Madness is looking to differentiate
itself from Starbucks. The pr...
Community Workshop:
Coffehouse Chain Mocha Madness
The owner (female age = 39) feels that Mocha
Madness should be a warm b...
Starbucks Community (Liked by Owner)

Kevin Hillstrom, President, MineThatData
http://blog.minethatdata.com
kevinh@minetha...
Starbucks Community (Liked by Owner)

Kevin Hillstrom, President, MineThatData
http://blog.minethatdata.com
kevinh@minetha...
Starbucks Community (Liked by Owner)

Kevin Hillstrom, President, MineThatData
http://blog.minethatdata.com
kevinh@minetha...
Starbucks Community (Liked by Owner)

Kevin Hillstrom, President, MineThatData
http://blog.minethatdata.com
kevinh@minetha...
Best Buy Community (Liked by CEO)

Kevin Hillstrom, President, MineThatData
http://blog.minethatdata.com
kevinh@minethatda...
Best Buy Community (Liked by CEO)

Kevin Hillstrom, President, MineThatData
http://blog.minethatdata.com
kevinh@minethatda...
Community Workshop:
Coffehouse Chain Mocha Madness

Things to know:
1 – CEO and Owner do not see eye-to-eye. The
CEO is re...
Community Workshop:
Coffehouse Chain Mocha Madness

Things to know:
2 – The CEO receives a bonus equal to 100% of
his sala...
Community Workshop:
Coffehouse Chain Mocha Madness

Things to know:
3 – The average customer is 37 years old, 75%
female.
...
Community Workshop:
Coffehouse Chain Mocha Madness

Things to know:
5 – The average store has 1,500 customers who
purchase...
Community Workshop:
Coffehouse Chain Mocha Madness

Your job:
1 – Knowing how the CEO and Owner disagree,
what would a com...
Community Workshop:
Coffehouse Chain Mocha Madness

Your job:
3 – How would you build the size of the
community over time?...
Community Workshop:
Coffehouse Chain Mocha Madness

Your job:
5 – How would you measure the success of the
community? How ...
Community Workshop:
Coffehouse Chain Mocha Madness

Your job:
6 – How will you convince the CEO that
branding is as import...
Community Workshop:
Coffehouse Chain Mocha Madness

Your job:
8 – Provide one or two examples of community
programs that y...
Community Workshop:
Coffehouse Chain Mocha Madness

Divide into three teams.
You have 45 minutes to complete your
proposal...
Community Workshop:
Coffehouse Chain Mocha Madness

Go – And Have Fun!
Kevin Hillstrom, President, MineThatData
http://blo...
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Kevin Hillstrom at Vircomm14 - 'Mine that data - A cold hard dose of reality'

  1. 1. A Cold, Hard Dose Of Reality With an Uplifting Conclusion That Proves Your Value! Kevin Hillstrom President, MineThatData Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com kevinh@minethatdata.com 1
  2. 2. A Frustrated Executive “Yes, we have a Community Building team. They’re off in ‘fun-land’ engaging with customers, participating in conversations. Meanwhile, I’m just trying to keep from getting fired. I have to figure out how to save the business so that the Community team can get paid to have ‘fun-time’ with customers.” Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com kevinh@minethatdata.com 2
  3. 3. Dell Has An Unequaled Community, Right? Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com kevinh@minethatdata.com 3
  4. 4. Fun-Time At Dell Dell Facebook Likes, Early 2013 = 4.7 Million. Dell Facebook Likes, Winter 2013 = 6.4 Million. Dell’s 2nd Quarter Computing Division Sales = -5% to 2012. How might the Community team at Dell defend the work they do? Sales = Down. Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com kevinh@minethatdata.com 4
  5. 5. Pepsi Reduces Their Super Bowl Investment Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com kevinh@minethatdata.com 5
  6. 6. 12 Months Later - $350,000,000 Lost Revenue When tested in practice, a shift from top-down interruptionbased marketing to bottoms-up social media community management resulted in $350 million in lost sales … and, Pepsi fell to 3rd place, losing ground to Diet Coke. Sales fell 8 times faster after the shift in strategy than before the social media strategy was initiated. http://adcontrarian.blogspot.com/2011/03/socialmedias-massive-failure.html Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com kevinh@minethatdata.com 6
  7. 7. Communities In E-Commerce Black Friday sales dropped for the first time in seven years. I guess Communities didn’t generate enough value to cause sales to happen, right? Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com kevinh@minethatdata.com 7
  8. 8. Communities Allegedly Generate Value If 4.7% of our customers generate 100% of our word of mouth, then are 95% of our efforts nearly pointless? Are the 4.7% biased in any way? Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com http://www.mackcollier.com/customers-social-online-word-of-mouth/ kevinh@minethatdata.com 8
  9. 9. Communities Increase Spending By 20-30%? If engaged, connected community members spend 20-30% more, then wouldn’t our businesses be growing so fast, across the board, that our results would be amazing?! Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com http://www.mackcollier.com/customers-social-online-word-of-mouth/ kevinh@minethatdata.com 9
  10. 10. You Can Argue That All Of Social = $0 US GDP growth the past four years is about equal to historical averages, during the “age of communities / social” Kevin Hillstrom, President, MineThatData http://www.multpl.com/us-gdp-inflation-adjusted/table http://blog.minethatdata.com kevinh@minethatdata.com 10
  11. 11. Fashion Communities Don’t Buy Anything? Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com kevinh@minethatdata.com 11
  12. 12. Why Focus on Community if $ Isn’t There? Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com kevinh@minethatdata.com 12
  13. 13. #OhBoy Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com kevinh@minethatdata.com 13
  14. 14. Bad News – Engagement To Sales Ratio = Low http://simplymeasured.com/blog/2013/08/15/how-to-tell-if-your-twitter-campaign-actuallyworked/?utm_source=twt&utm_medium=soc&utm_campaign=blg Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com kevinh@minethatdata.com 14
  15. 15. Communities – Beyonce Oh look, Communities works – just ask Beyonce!! Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com kevinh@minethatdata.com 15
  16. 16. Communities – Beyonce Did Communities using Social Media cause the success, or did past history, name recognition, and a “surprise” cause success that spread via word of mouth? Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com kevinh@minethatdata.com 16
  17. 17. Communities – Lady GaGa With a community of fanatics, Lady GaGa should be able to sell tens of millions of CDs when a new CD is released … right?! Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com kevinh@minethatdata.com 17
  18. 18. Communities – Lady GaGa The album is performing so bad that prices are heavily discounted – sales dropped 81% after the first week – a catastrophe. Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com kevinh@minethatdata.com 18
  19. 19. Communities – Lady GaGa “ARTPOP will be written about one day as a huge marketing failure, unique in every way.” “… where are all of her fans, her ‘little monsters’? They certainly didn’t like what they heard.” “She directed the entire campaign, went against the advice of others, and wound up losing a ton of money ($25 million seems severe, but lots) for herself and for Universal Music.” “… ARTPOP has sold just 300,000 copies in two weeks, down 75% from her 2011 album. And sales dropped 81% the following week.” http://www.showbiz411.com/2013/11/26/lady-gaga-artpop-poops-out-second-weekdrop-of-81 Clearly, her community had nothing to do with this drop, right? I mean, she had a huge, engaged community, right? If true, then her community, her fans, had nothing to do with prior successes, right? Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com kevinh@minethatdata.com 19
  20. 20. Communities – Who Needs Fans? Burger King Norway gave a free Big Mac to customers to get the customers to not like them on their new page – and most accepted the offer! What’s up with that? http://www.fastcocreate.com/3023025/should-you-be-ditching-a-ton-ofyour-facebook-fans-heres-why-burger-king-did-just-that Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com kevinh@minethatdata.com 20
  21. 21. And So What If “Brands” Don’t Participate? In the 4th quarter of 2013, Amazon only sent four (4) @ replies on Twitter. Four! Sales during the 4th quarter increased 20%. More proof that engagement is irrelevant, and you don’t need a community to succeed. http://simplymeasured.com/blog/2014/01/24/the-10-most-engagingbrands-ontwitter/?utm_source=lin&utm_medium=soc&utm_campaign=blg Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com kevinh@minethatdata.com 21
  22. 22. If You Participate, Do Your Sales Decline? Nokia is lauded as one of the top ten most engaging “brands” of Q4-2013 on Twitter. And yet, Nokia’s sales are about half of what they were in 2007. Does this mean that engagement / community causes businesses to sink into oblivion? http://simplymeasured.com/blog/2014/01/24/the-10-most-engagingbrands-ontwitter/?utm_source=lin&utm_medium=soc&utm_campaign=blg Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com kevinh@minethatdata.com 22
  23. 23. Community Experts Contradict Themselves 4 – Your desire to sell will have to take a backseat. This is the most important lesson to creating valuable content for customers, and the most difficult for most brands to grasp. The great thing about social media is that it makes things happen indirectly. What this means is that you have to stop thinking of social media and online content as a way to directly drive sales. Instead, view these tools as a way to directly create value for customers, with the understanding that doing so will indirectly lead to sales. Mack Collier - http://www.mackcollier.com/brands-guide-tocreating-content-that-earns-attention/ Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com kevinh@minethatdata.com 23
  24. 24. Describe The Sales Potential Of This Strategy Describe to your CEO, right now, how a game of Tic Tac Toe between KitKat and Oreo generates an increase in annual profit for either company? http://www.slideshare.net/bengrossman/10-social-best-practices-from-the-best-social-brands-of-2013 Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com kevinh@minethatdata.com 24
  25. 25. Describe The Sales Potential Of This Strategy We give any customer named “April” a free flight on April 1. How do we respond to community enthusiasts named “June”? Or what happens if your name is “Roger”? http://www.slideshare.net/bengrossman/10-social-best-practices-from-the-best-social-brands-of-2013 Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com kevinh@minethatdata.com 25
  26. 26. How Should Your CEO Respond To This? “Community First, Then Business”. Why does the Community expert get to ignore business while everybody else must focus on business first? http://www.slideshare.net/bengrossman/10-social-best-practices-from-the-best-social-brands-of-2013 Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com kevinh@minethatdata.com 26
  27. 27. Communities: They’re Not About Selling? “When it comes to social media, no one is looking to be sold to. People are on social networks to be entertained … don’t harass people with sales pitches.” Amy Hall http://socialmediatoday.com/amynhall/1917321/3-rules-engagement-successful-social-selling “You have to woo potential clients by being enchanting and engaging.” Trish Forant http://www.salesforcemarketingcloud.com/blog/2011/10/socialmedia-engagement-is-the-key-to-social-selling/ “Social Media is not strictly about sales … in fact, attempting to sell something over social media is guaranteed to backfire.” Joe McKendrick http://www.skyword.com/blog/the-impact-of-contentmarketing-for-engagement-on-social-media/ Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com kevinh@minethatdata.com 27
  28. 28. A Disconnect What is the most important metric when building a community? Engagement! What is the most important metric in business? Sales and Profit. Notice the disconnect? Maybe if communities are designed to “not sell”, then the result is to “sell nothing”???????? Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com kevinh@minethatdata.com 28
  29. 29. Kevin is just a big, dumb “HiPPo” (Highest Paid Person’s Opinion). He simply doesn’t ‘get’ how you can “harness the power” of Communities. Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com kevinh@minethatdata.com 29
  30. 30. Maybe Community Experts Don’t Understand How Business Works? Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com kevinh@minethatdata.com 30
  31. 31. Business Success = Sell Products / Services, Pay All Expenses, And Have A Lot Of Cash Left Over At The End Of The Year. Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com kevinh@minethatdata.com 31
  32. 32. Community Success = Engage With Customers, Build Relationships, Solve Problems. #OhBoy Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com kevinh@minethatdata.com 32
  33. 33. New Definition Of Community Success = Engage With Customers, And Build Relationships That Lead To Quantifiable Sales And Profit Gains. Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com kevinh@minethatdata.com 33
  34. 34. Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com kevinh@minethatdata.com 34
  35. 35. Why Must I Prove Engagement = Sales / Profit? Your Executive Team, regardless of your opinion of them, is compensated and rewarded for both short-term sales/profit, and long-term sales/profit. Typical Executive: • ₤150,000 per year base salary. • ₤100,000 per year bonus, based on sales / profit improvement. • Stock Options or Equity that pay when future business success comes to fruition. The bonus, by the way, is the biggest motivator for an Kevin Hillstrom, President, MineThatData Executive. http://blog.minethatdata.com kevinh@minethatdata.com 35
  36. 36. Why Must I Prove Engagement = Sales / Profit? How does an Executive earn a bonus? Typical Bonus Structure: • 50% of bonus is paid if annual sales goals are exceeded. • 30% of bonus is paid if annual profit goals are exceeded. • 20% of bonus is paid if personal goals are exceeded. Do you see the words “engagement”, “community”, “customer satisfaction”, or “social” in any of the three aspects of an Executive Bonus payout? Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com kevinh@minethatdata.com 36
  37. 37. Why Must I Prove Engagement = Sales / Profit? Executive Motivation: 1. Greatly Increase Annual Sales. 2. Greatly Increase Annual Profit. 3. Perform Exceedingly Well On Personal Goals. If we want Social / Communities to resonate with the “CSuite”, then everything we communicate has to align with Sales, with Profit, and with Personal Goals. Otherwise, why would the Executive listen to us? Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com kevinh@minethatdata.com 37
  38. 38. Why Must I Prove Engagement = Sales / Profit? If you want to have success … stop speaking the language of the Social / Community elite … and start speaking the language of the Executive! Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com kevinh@minethatdata.com 38
  39. 39. The Language of the Executive If Social / Communities are all about Engaging Customers, then you must Engage with your Executive Team. You must demonstrate you are helping them achieve their goals. Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com kevinh@minethatdata.com 39
  40. 40. You Connect Customers To The Company! You connect customers to your products / services – yielding $ for the Executive. Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com kevinh@minethatdata.com 40
  41. 41. You Matter! You Are Important! Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com kevinh@minethatdata.com 41
  42. 42. Community Value Varies I generate 70% of my annual revenue from my community. Businesses between ₤1 and ₤10,000,000 in annual revenue, catering to a younger customer, will frequently generate 25% to 50% of annual revenue from their community. Then, the relationship changes. Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com kevinh@minethatdata.com 42
  43. 43. Community Value Varies Once a business is +/- ₤50,000,000 … a different set of dynamics occur … the community begins to lose power as a sales driver. Once a business is +/- ₤500,000,000, communities generally yield +/- 1% of annual volume. However, 1% of a very big number is still a big number!! Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com kevinh@minethatdata.com 43
  44. 44. Know Your Customer / User If this is your customer … age 60 … do not expect great results from your community building programs. S/he is likely to respond to old-school tactics. Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com kevinh@minethatdata.com 44
  45. 45. Know Your Customer / User If your customer / user is +/- 45 years old, you’re entering prime “community” territory. Here, communities can be a viable marketing strategy. Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com kevinh@minethatdata.com 45
  46. 46. Know Your Customer / User If your customer / user is +/- 30 years old, it may be that community / social is your marketing strategy! Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com kevinh@minethatdata.com 46
  47. 47. Know That Your CEO May Be From A Different Generation Than Your Customer Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com kevinh@minethatdata.com 47
  48. 48. Customers Have Value Find somebody who analyzes customer behavior. Ask this person three simple questions. 1. What is the probability of a customer who purchased in 2012 buying again in 2013? 2. If the customer buys, how much does (s)he spend in 2013? 3. What % of sales flow-through to profit? Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com kevinh@minethatdata.com 48
  49. 49. Customers Have Value Example: Customers who bought in 2012 have a 40% chance of buying again in 2013. If the customer purchases, the customer spends ₤200 per year. 35% of sales flow-through to profit. Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com kevinh@minethatdata.com 49
  50. 50. Customers Have Value Simple Customer Value: 40% repurchase rate times ₤200 per customer = ₤80. 35% flows-through to profit … 0.35 * ₤80 = ₤28. Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com kevinh@minethatdata.com 50
  51. 51. Customers Have Value We now know two important facts. First, each customer that your community impacts is worth up to ₤80 per year. Second, each customer that your community impacts is worth up to ₤28 profit per year. These are metrics your Executive Team understands. Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com kevinh@minethatdata.com 51
  52. 52. Customers Have Value Say your community is able to diffuse 5,000 situations where customers are angry with your brand. 5,000 * ₤80 = ₤400,000 net sales / sales turnover. In addition, 5,000 * ₤28 = ₤140,000 profit. Executives love this stuff! And you paid for your own salary! Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com kevinh@minethatdata.com 52
  53. 53. Incremental Value Matters, A Lot Say your community improves the purchase experience for a customer. It is common to find that community marketing activities can improve customer spend by +/- 10% per year. If that is the case, then we can quantify the impact of community management on the business. Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com kevinh@minethatdata.com 53
  54. 54. Incremental Value Matters, A Lot Say you have 30,000 customers in your community. Assume you increase the value of these customers by 10%. ₤80 * 0.10 * 30,000 = ₤240,000. ₤28 * 0.10 * 30,000 = ₤84,000. Again, you more than paid for your annual salary, and you helped the Exec reach her goals! Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com kevinh@minethatdata.com 54
  55. 55. New Customers = Double Value!! If your community recruits new customers, you get to “double-dip” – that’s a good thing! You get the value of the initial transaction. You get the value of the customer over the next twelve months! Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com kevinh@minethatdata.com 55
  56. 56. New Customers = Double Value!! Say your community adds 1,000 customers per year. 1st Transaction = ₤100 * 1,000 = ₤100,000 net sales / sales turnover. 1st Transaction = ₤35,000 profit. Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com kevinh@minethatdata.com 56
  57. 57. New Customers = Double Value!! In addition to the ₤100,000 sales & ₤35,000 profit, we earn the downstream benefit of our efforts: 1,000 new buyers @ ₤80 each = ₤80,000 sales. 1,000 new buyers @ ₤28 each = ₤28,000 profit. Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com kevinh@minethatdata.com 57
  58. 58. Add It All Up! In my example, there’s a lot of benefit to a community – benefit that helps Executives meet their goals. In my example: • ₤850,000 net sales / sales turnover. • ₤267,000 profit. Oh! Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com kevinh@minethatdata.com 58
  59. 59. Then There‘s Product Information Say your community recommends a new product or service. Say your company launches the product / service, and generates ₤150,000 from that product. You (and your community) is the cause of that revenue. Take credit for it! You did this! Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com kevinh@minethatdata.com 59
  60. 60. Where Possible – Compare Equal Customers ₤250 - ₤500 Buyers In 2012. • Non-Community Buyers Spent ₤80 in 2013. • Community Buyers Spent ₤88 in 2013. • Incremental Gain is 10%. Do not pick “community buyers” and say they are worth ₤88 (hint – Pinterest). Do not compare “community buyers” to other, lowervalue customers. Equalize your customers! Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com kevinh@minethatdata.com 60
  61. 61. It’s Not Your Fault When A Business Is Dying Many community-centric businesses are not experiencing growth. This is not the fault of the community manager! If anything, the community manager is slowing the rate of decline. Your efforts may stave off the slow death of your business, or help reverse the trend. Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com kevinh@minethatdata.com 61
  62. 62. Know Your Metrics What is the probability of an average customer buying something in the next year? If the customer buys something, how much will the customer spend? Multiply these two metrics together – then multiply by your profit factor. Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com kevinh@minethatdata.com 62
  63. 63. Know Your Metrics – Then Fight Back!! Once you know that you are generated three, four, or five times your annual salary in profit, you can make a case for getting more resources, more help! You matter. Your work is important! Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com kevinh@minethatdata.com 63
  64. 64. You! Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com kevinh@minethatdata.com 64
  65. 65. The Executive Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com kevinh@minethatdata.com 65
  66. 66. What You Create For Your Company! Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com kevinh@minethatdata.com 66
  67. 67. You Matter! You Are Important! Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com kevinh@minethatdata.com 67
  68. 68. Questions? Kevin Hillstrom President, MineThatData kevinh@minethatdata.com 206-853-8278 http://blog.minethatdata.com Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com kevinh@minethatdata.com 68
  69. 69. Community Workshop: Coffehouse Chain Mocha Madness Mocha Madness was created in 2009 as a London-based competitor to Starbucks. With thirty stores, Mocha Madness is one of the fastest growing coffee-centric businesses in the UK. Predictably, the brand differentiates itself from Starbucks with Chocolate! Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com kevinh@minethatdata.com 69
  70. 70. Community Workshop: Coffehouse Chain Mocha Madness Mocha Madness is looking to differentiate itself from Starbucks. The product (chocolatecentric) might be sufficiently differentiated, but many perceive Mocha Madness as a Starbucks clone. The Owner and CEO have different views of how the “brand” can relate to customers. Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com kevinh@minethatdata.com 70
  71. 71. Community Workshop: Coffehouse Chain Mocha Madness The owner (female age = 39) feels that Mocha Madness should be a warm brand that embraces community. The CEO (male age = 62), an old-school retail operator, thinks that product is the answer – that customers just want coffee at a fair price, and wants to get in-and-out of the store quickly. Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com kevinh@minethatdata.com 71
  72. 72. Starbucks Community (Liked by Owner) Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com kevinh@minethatdata.com 72
  73. 73. Starbucks Community (Liked by Owner) Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com kevinh@minethatdata.com 73
  74. 74. Starbucks Community (Liked by Owner) Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com kevinh@minethatdata.com 74
  75. 75. Starbucks Community (Liked by Owner) Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com kevinh@minethatdata.com 75
  76. 76. Best Buy Community (Liked by CEO) Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com kevinh@minethatdata.com 76
  77. 77. Best Buy Community (Liked by CEO) Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com kevinh@minethatdata.com 77
  78. 78. Community Workshop: Coffehouse Chain Mocha Madness Things to know: 1 – CEO and Owner do not see eye-to-eye. The CEO is results based, likes everything proven. Owner is brand-focused, thinks everything will take care of itself if done well, over time. Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com kevinh@minethatdata.com 78
  79. 79. Community Workshop: Coffehouse Chain Mocha Madness Things to know: 2 – The CEO receives a bonus equal to 100% of his salary if annual sales increase by ₤5,000,000 and if annual profit increases by ₤1,000,000 this year. Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com kevinh@minethatdata.com 79
  80. 80. Community Workshop: Coffehouse Chain Mocha Madness Things to know: 3 – The average customer is 37 years old, 75% female. 4 – The average customer buys in-store 3 times a week, spending ₤5 per visit. The company generates ₤1 profit from each visit. Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com kevinh@minethatdata.com 80
  81. 81. Community Workshop: Coffehouse Chain Mocha Madness Things to know: 5 – The average store has 1,500 customers who purchase at least one time per year. 6 – At 30 stores, and 1,500 customers per store, annual revenue = ₤34,000,000. Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com kevinh@minethatdata.com 81
  82. 82. Community Workshop: Coffehouse Chain Mocha Madness Your job: 1 – Knowing how the CEO and Owner disagree, what would a community-centric program look like at Mocha Madness? 2 – How would you inform customers of the new community-centric program? Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com kevinh@minethatdata.com 82
  83. 83. Community Workshop: Coffehouse Chain Mocha Madness Your job: 3 – How would you build the size of the community over time? 4 – How would you reward the community for their ideas? Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com kevinh@minethatdata.com 83
  84. 84. Community Workshop: Coffehouse Chain Mocha Madness Your job: 5 – How would you measure the success of the community? How would you tie your measurement plan to the sales / profit bonus structure given to the CEO by the Owner? Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com kevinh@minethatdata.com 84
  85. 85. Community Workshop: Coffehouse Chain Mocha Madness Your job: 6 – How will you convince the CEO that branding is as important as immediate ROI? 7 – How will your efforts generate enough ROI to pay your salary. Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com kevinh@minethatdata.com 85
  86. 86. Community Workshop: Coffehouse Chain Mocha Madness Your job: 8 – Provide one or two examples of community programs that you hope to emulate. What do those programs do well? Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com kevinh@minethatdata.com 86
  87. 87. Community Workshop: Coffehouse Chain Mocha Madness Divide into three teams. You have 45 minutes to complete your proposal. You will present your results to me – I am the CEO of Mocha Madness. Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com kevinh@minethatdata.com 87
  88. 88. Community Workshop: Coffehouse Chain Mocha Madness Go – And Have Fun! Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com kevinh@minethatdata.com 88
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