The First 10 Metrics - Part I

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The first lecture in the metrics series - brand awareness, brand equity

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The First 10 Metrics - Part I

  1. 1. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED The First 10 Metrics – Part I Where Intelligent Marketing Begins
  2. 2. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED A Story Before We Start
  3. 3. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED When I first started teaching marketing measurement to executives, I was told quite rudely that I “didn’t understand.”
  4. 4. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED “Marketing is creative and you can’t measure creativity,” I was told.
  5. 5. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED So I asked a question of the executives –
  6. 6. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED “How many of you outsource the creative component of your marketing?”
  7. 7. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED 72% of the executives outsourced the creative
  8. 8. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED What does that tell us?
  9. 9. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Marketing organizations are not in the creative content business, but instead manage the process of marketing.
  10. 10. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Now, I know that most organizations and marketers struggle to measure their marketing activities given the hundreds of possible metrics.
  11. 11. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED I have consulted for Fortune 100 companies that have scorecards with more than 50 metrics, which took a great deal of time to put together and provided no value to the organization.
  12. 12. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Why?
  13. 13. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED There is too much data and these data do not provide managers with information they need to make decisions.
  14. 14. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED You need a simple approach to think through which metrics are important for a specific marketing activity
  15. 15. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Linking Marketing Activities to Metrics
  16. 16. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED In the 1960s, the standard marketing behavioral impact model was published. It was called the purchasing funnel.
  17. 17. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED The idea was that different marketing activities take the customer through the stages of awareness, evaluation, trial and loyalty
  18. 18. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED In other words, marketing activities are designed to “funnel” customers from awareness to ultimately becoming loyal customers.
  19. 19. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED
  20. 20. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Awareness Marketing  Awareness marketing comes in many forms – TV advertising, billboards, sports sponsorship, naming rights to stadiums  Awareness & branding are intimately related  A brand is a consumer perception of a particular product or service and may encompass the whole company  The perception is driven by marketing, experience with the product & recommendations from friends and colleagues
  21. 21. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Awareness Marketing  But in the purchasing cycle, awareness is furthest from the customer purchase  There is also a significant time delay between awareness marketing & actual sales  Financial metrics are not useful in measuring awareness & brand marketing
  22. 22. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Awareness Marketing  We use brand awareness surveys to track customer awareness across geographies and over time  Typical metrics measure the effectiveness of awareness marketing like number of attendees at events, eyeballs on a a website & media impressions
  23. 23. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Tiger Wood’s win in the 2005 Masters received $10.4 million of TV exposure for Nike
  24. 24. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Jeff Gordon received $9.9 million of exposure for DuPont brand when he won the 2005 Daytona 500
  25. 25. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED The problem is these metrics do not connect to purchase intent and do not capture the effectiveness of the marketing.
  26. 26. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Brand Awareness Metric Ability to Recall a Product or Service
  27. 27. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Top of Mind Recall means that in the purchasing cycle, your product/service will be one of the first the consumer thinks about to consider purchasing
  28. 28. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED How is it measured? By asking
  29. 29. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED For (product/service), what is the first name you think of? For (product/service), what other names have you heard of?
  30. 30. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED These questions uncover the unaided reception of your product/service and the relative ranking of brands relative to it
  31. 31. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED These questions are the starting point and should be refined for the specific campaigns with follow-on questions to uncover brand and messaging impact and intent to act (purchasing intent).
  32. 32. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Let’s look at bottled water
  33. 33. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Pure water is an odorless, tasteless liquid made from molecules of 2 hydrogen atoms and 1 oxygen atom (H2O) and approximately 70% of the Earth is cover in water
  34. 34. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED The point – as far as products go, water is pretty much on the low end of complexity and fairly abundant
  35. 35. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED But then there are bottled water brands… how many can you name?
  36. 36. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Why spend Rs. 20 a bottle for the brand and not drink the generic store brand when the products are identical?
  37. 37. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED “It’s really different – my water comes from a mountain spring high in the Alps.”
  38. 38. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Do you really think there is a guy hand dipping millions of bottles a month into a stream to fill those bottles?
  39. 39. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Bottled water emphasizes the power of brand – the product embodies a feeling, an experience, and perception of repeatable quality that the customer is willing to pay a premium for.
  40. 40. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Brand equity, the value of a brand, is difficult to express in a financial value.
  41. 41. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED One way is to take all the assets of the company and subtract it from the market valuation of the company based on stock price – the remaining value is the “brand.”
  42. 42. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED But this isn’t correct because there are so many unknowns that end up multiplying together that the derived “brand equity” is almost a random number
  43. 43. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED The better approach is to use surveys to ask how much a person will be willing to pay for the branded vs. non-branded product
  44. 44. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED The percentage difference multiplied by product sales is the approximate value of the brand.
  45. 45. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED A Simple Example  Branded Product = 1000  Non-Branded = 500  Product Sales = 400,000  Find the Percentage Difference (1000/500) = 200%  Multiply by Product Sales 200% x 400,000 = 800,000 Brand Value = 800,000
  46. 46. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Another way is with the internet and SMS messaging
  47. 47. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Placing a URL or SMS number on a billboard can quantify the impact of the marketing telling you how many people acted as a result of the awareness advertising.
  48. 48. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED
  49. 49. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Evaluation Marketing  Evaluation marketing is designed to drive customer purchase intent by enabling customer to compare different products or services  Examples are – product white papers, print ads with breakdowns of the benefits and features, product brochures and websites with product descriptions
  50. 50. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Evaluation Marketing  Evaluation marketing demonstrates the value proposition of the product/service, the benefits and cost trade-offs  The challenge is the time delay between the evaluation and purchase that could be weeks, months or longer depending on the product  Another challenge is linking the evaluative marketing with an actual purchase
  51. 51. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Evaluation Marketing  Standard metrics for evaluative marketing include product information downloads for a website or impressions of marketing print ads  However, these metrics do not measure the impact of evaluative marketing well  So how do we quantify the effectiveness?  We find metrics that point to future sales
  52. 52. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Dell competes based on price because it has a low-cost direct channel to the customer and outstanding supply-chain management that drives low-cost manufacturing.
  53. 53. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED In Dell advertising, the price of the product is prominently featured in Dell’s evaluative marketing with a list of the facts.
  54. 54. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED This is a great method if the customer criteria is solely price – it lets them quickly evaluate product features and weigh the price against performance trade-offs.
  55. 55. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Apple takes a different approach in its evaluative marketing, emphasizing the cool designs and product innovations
  56. 56. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Apple iPhone ads highlight the innovative benefits of the technology, such as the App Store
  57. 57. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED When we look at Apple laptops, Apple charges a price premium over Dell and de-emphasizes price in the evaluative marketing – you don’t see the price on the Apple website until you configure your computer
  58. 58. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED So how do we define a metric with these things in mind?
  59. 59. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Anyone who has purchased a car has probably gone to a dealer and picked up brochures for the new cars that fit their purchasing criteria & then done side-by-side comparison of these glossy documents
  60. 60. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED These brochures are examples of evaluative marketing in the auto business, but what is the value of the glossy brochure?
  61. 61. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED That is hard to quantify, but we can define a metric that is a measure of future purchasing intent that embodies the collective impact of the evaluative marketing activities – the test drive.
  62. 62. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Metric 2 – The Test Drive Customer Pretest of a Product/Service Prior to Purchase
  63. 63. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED It turns out that someone who test- drives a car is very likely to purchase the car. The purchase probability is not 100% because of a test drive, instead there is a probability of purchase.
  64. 64. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED By measuring the number of test drives and the number of customers who subsequently purchase, we calculate the average probability of purchase.
  65. 65. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Number of purchases /number of test drives = average probability of purchase
  66. 66. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Test drives are a leading metric that point to future sales. So evaluative marketing should be designed to increase the number of test drives by increasing the amount of foot traffic.
  67. 67. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED So we design experiments and measure traffic and test drives resulting from specific marketing activities.
  68. 68. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Intel Chip Sales
  69. 69. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Intel has a greater than 80% market share in processors for Windows- based PCs and servers. This almost monopoly power drives Intel’s sales model.
  70. 70. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED It has a very large direct sales force that engages OEM partners with the goal of selling additional Intel chips on the motherboard.
  71. 71. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Intel’s sale cycle takes roughly 18 months, from initial discussions to the manufacture of OEM boards with new Intel processors. This poses a problem for because of the long sales cycle.
  72. 72. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED How does Intel do their test drive?
  73. 73. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Within a few months of the initial discussions with Intel, the OEM must create a team to study the feasibility of incorporating the Intel product into the motherboard.
  74. 74. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED This is the “design win” for Intel and the test drive that points to future revenues.
  75. 75. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Why?
  76. 76. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED When the OEM puts together a team to investigate manufacturing feasibility, it requires people and money, which is not possible without an implied commitment to purchase.
  77. 77. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED By collecting data from its operational CRM, Intel can measure the conversion rate from design wins to sales to predict the probability of future sales revenues.
  78. 78. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED So, for Intel, the focus is on improving evaluative marketing material to drive more design wins
  79. 79. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED What do we learn?
  80. 80. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED The test drive is an essential metric at the evaluation marketing stage of the purchasing cycle
  81. 81. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED You should first decide what the “test drive” for your product is, then design the evaluative marketing campaigns to incentivize the test drive.
  82. 82. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED
  83. 83. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Metric 3 - Churn The Percentage of Existing Customers Who Stop Purchasing Your Product
  84. 84. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Churn is the essential loyalty metric because it measures the percentage of existing customers who stop purchasing your products/services each year
  85. 85. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Customer churn is an interesting metric and impacts some industries more than others.
  86. 86. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED For example, the U.S. cell phone industry, for example, has a churn rate on average of 22% per year.
  87. 87. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED That means in 4 years, a firm could potentially lose all of its customers.
  88. 88. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED In South Africa, the churn rate is 50%.
  89. 89. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED When we talk about loyalty marketing, there is again a significant time delay between the marketing activity and the repurchase, especially if the product is a high-end appliance.
  90. 90. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED This is part of the reason why churn is such an important metric – reducing the average annual churn rate over the product life cycle can be directly translated to improving annual sales.
  91. 91. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Where do we start?
  92. 92. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Firms that do not know who their customers are often don’t know what their churn rate is.
  93. 93. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED My friend Bob & his Lexus
  94. 94. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Bob lives in an old house in the Chicago area with a garage door that is somewhat small. One day, he scrapped the side door of his Lexus while pulling into the garage.
  95. 95. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Now, we all know how much it costs to get a small dent fixed and for a Lexus that price can easily be tripled, so Bob went to the Lexus dealership expecting the worst…
  96. 96. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED When he got the dealership, the dealer took the keys to his Lexus and gave him a free loaner car and told Bob to return at the end of the day.
  97. 97. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED When Bob got back, he asked “How much do I owe for the repairs?”
  98. 98. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED “There is no charge sir. Touch ups are free.”
  99. 99. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED How much does that improve customer loyalty?
  100. 100. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED In the auto industry, Lexus has incredibly loyal customer – approximately 70% of Lexus owners repurchase a Lexus as their next car.
  101. 101. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED So how do we calculate Lexus’ churn rate?
  102. 102. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Lexus Churn Rate  If we assume that a car is purchased every 5 years, that means Lexus has a churn rate of 30% over 5 years  Since churn is calculated on an annual basis, in one year Lexus loses 6% of its customers  6% x 5 years = 30%
  103. 103. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED How does Lexus keep their churn rate so low?
  104. 104. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Loyalty marketing initiatives for Lexus include – a free loaner car, free car washes, free breakfast on Saturday morning at certain dealerships, a free subscription to the Lexus lifestyle magazine and of course, free touch-ups.
  105. 105. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Free touch-ups are important to Lexus because so many Lexus owners trade in their old Lexus for a new one.
  106. 106. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED This low-cost service prevents rust and increases the resale value of the “pre-owned” Lexus after trade-in.
  107. 107. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED This is the best type of loyalty marketing because it is low-cost to the company, high perceived value to the customer and creates opportunity for the sale of additional high-margin products/services, building loyalty & increasing retention.
  108. 108. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Loyalty marketing reduces churn!
  109. 109. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Calculating Churn  Customer Base – 100,000  Annual Revenue/Customer – 1,000  Annual Churn Rate – 30%  Revenue without Churn – 100,000,000  Customers Lost to Churn – 30,000  Revenue Lost to Churn – 30,000,000  Revenue After Churn – 70,000,000
  110. 110. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Most business-to-consumer (B2C) companies have direct access to customer data.
  111. 111. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED For these companies, a loyalty card and/or branded credit card is often the key to measuring and tracking churn, and frequent flyer point rewards or card-only discounts incentivize continuous purchases.
  112. 112. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Churn measurement may seem challenging, though, especially for B2B companies, if you do not know who your customers are.
  113. 113. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED How do we get started?
  114. 114. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED First, measure your customer churn rate either by tracking repeat purchases or through surveys.
  115. 115. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED More likely than not, the churn is higher than you think.
  116. 116. HTTP://EMAGINE-GROUP.COM BRAND FOCUSED, SOCIALLY ACTIVE, DIGITALLY ENABLED Implement loyalty marketing campaigns to the highest value customers and run experiments on a small sample to measure the effectiveness of the campaigns

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