• For instance, Steve Rubel and David Armano from Edelmen have spoken at length about how there’s simply too much content and not enough time. New and innovative models for filtering and curation are mandatory for social integration to work in the age of hundreds of millions of social posts per day. They identify curation as a key trend.

• Shiv Singh from Pepsi explains how social media marketing fits into a broader view of real-time marketing and why he’s betting his career and his tenure at Pepsi on this emerging field.

• Jeremiah Owyang of Altimeter reports that Social Integration into websites is CMO’s #1 priority.

• Brian Solis suggests 70% of the online audience is passive, and with so much content being created, 2011 is the “year of curation” to achieve relevance.

Eleven months ago, just before we formed Mass Relevance, I wrote a thesis on why there is massive growth in enterprise-level social curation (note: “social curation” is a fancy word for aggregating, filtering, moderating, and displaying social content). In simple terms, here’s what we (and those above) see happening…

1. First, there is massive growth in social content. That much is obvious, and it’s not slowing down.
2. Second, there is massive growth and fragmentation in the digital “surfaces” where audiences and customers spend time (web, apps, mobile sites, TV, social network, displays).
3. Finally, audiences are demonstrating short attention span. Real-time, social content is proven to get more engagement and interaction within owned and paid media (aforementioned “surfaces”). Why? Social conversations aren’t viewed as advertising or broadcasting. They represent authentic voices. Someone “like me”.

Our mission is to serve our clients in the middle of these dynamic movements to find relevance from a mass of content, and bring it out to your mass audience in relevant ways.

We believe the convergence of these and other foundational shifts represent the next stage in the evolution of digital and social media. While there are still great opportunities inside social networking sites (the “feed” or “tab”), we are helping marketing and media companies capitalize on the new wave of opportunities outside of them.

For media companies and publishers, we enable scalable, high precision curation of the social conversation connected to your core content wherever it’s being consumed – an example of this is our work powering social media integration for The X Factor, The Voice, and the White House Twitter Town Hall.

For brands, retailers, and agencies, you can now have at-hand virtually any brand- or topic relevant conversation across social media and integrate it safely and seamlessly into your brand and marketing experiences – be that online, mobile device, or on-premise.

We want to reduce the barriers to fully tap into the brand engagement power of social content. We look forward to continuing to push the limit of social curation and integration.

Learn more about what our curation platform and services (labs, curation, studios) can do for you. You can request a demo. And follow us on Twitter or Facebook to stay tuned for some exciting things to come!

Sam Decker

I read a fascinating global study on what CEOs think of Marketers, by the Fournaise Marketing Group. Some of the interesting findings for me are:

• They keep on talking about brand, brand values, brand equity and other similar parameters that their top management has great difficulties linking back to results that really matter: revenue, sales, EBIT or even market valuation (77%)
• They focus too much on the latest marketing trends such as social media, because they believe they represent the new marketing frontiers – but can rarely demonstrate how these trends will help them generate more business for the company (74%)
• They are always asking for more money, but can rarely explain how much incremental business this money will generate (72%)
• They bombard their stakeholders with marketing data that hardly relate to or mean anything for the company’s P&L (70%)

The average tenure of a CMO is still less than two years. largely because of the issues identified above.

The responsibility for this gap is as much to the CEO as the CMO. If CMOs were surveyed they’d suggest that the CEO doesn’t understand or appreciate what moves a customer to purchase.

There’s no right answer, but I believe for the CMO, the ideal profile is one that is ‘middle brained’. A person that focuses on metrics (and understands P&L) but doesn’t forgoe the creative side. CMOs should constantly be balancing the two, and determine strategy, tactics and priorities.

Sam Decker

Steve Rubel, social media thought leader and Executive Vice President for Edelman, referred to this shift in web dynamics as The Validation Era. The implications of this era apply to anyone trying to reach an audience: brands, retailers, broadcasters and publishers.

In the 1990s, there was an explosion in business interest in the web. Many properties sprouted up as part of The Commercialization Era, where being a web voice was costly, so media companies and huge venture-backed startups took control of the scene.

However, it quickly became obvious that people were more interested in letting their own voices be heard than corporate America. Hence, the Democratization Era dominated most of the 2000s, as evidenced by massive growth in social tools and social networking. The price of publishing went down to nearly zero with powerful services like WordPress and Tumblr allowing everyone and anyone to be a media outlet.

Finally, the current Validation Era is all about getting relevant and intimate content or interactions to the surface. We’ve amassed all these democratized sources of information, so now its time to filter them down to only the most trusted inputs. We are finally finding signal from the noise by validating our connections before getting overwhelmed, and making relevancy the rule of the road.

Online content trends are changing fast, as ideas of online marketing and content marketing continue to evolve. Which marketing concepts play into the social reality of 2011?

The Validation Era is an appropriate construct to highlight several themes (or “memes”) that are drawing a lot of buzz from marketers. Understanding these five will help marketers achieve the new era mindset of driving results.

Curation

One major way we are filtering the web and forcing quality is through curation. The concept of curation originates from the museum curator. As the selector of the masterpieces and keeper of the collection, the curator must make sure the gallery is coherent, thematic, and maintained. There is so much art – both new and historical – these experts sift out only the best.

Similarly, there is so much content on the web…especially social content, growing exponentially. We need content curators (tools and people) to filter the best content, with the criteria of relevance, coherence, and context. Drilling down into greater detail to select just the right content has never been as advanced as it is now.

The steps of curation are to aggregate (source content), filter (automated rules), moderate (optional hand selection) and display (visualizing the content in context). With social content, you can add a step by creating interaction with your audience. For example, with Mass Relevance, NBC Sports feeds expert tweets about a hockey game next to the online video. The audience can ask experts questions and post votes for their teams by tweeting.

While many different groups can serve as trusted curators, brands have a unique opportunity to take on this role. Each brand has a target audience with a unique set of interests. They can curate content that is important to them, becoming thought-leaders, trusted advisors, and trend-spotters. As long as curation takes place, stimulating content will continue to surface and companies will improve at delivering value.

Brand as Journalist / Brand as Media

Similar to the concept of curation, brands are using their reach to serve relevant information. Through curation or creation, brands are bringing stories that reflect their promise to customers. Similarly to how bloggers have carved out many niches and built trust with their audience, companies hope to do the same.

A great example of this is Red Bull, a $5 billion dollar company that basically has ONE product – an energy drink. Go to their web site. It looks like a sports media site, with a tiny link at the top left to see their product. I’ve been to their headquarters, where they have video studios, magazine editors, and event producers. They sponsor sports and athletes that represent the spirit of the brand, and use media (and social media) to amplify that message.

Take Intuit as another example. Their blog (http://blog.intuit.com/) highlights small business news and case studies of small companies overcoming challenges, and is a big hit with their audience demographic.

Companies understand that it is necessary to facilitate and drive online discussions around the promise of their brand for two primary reasons: (1) if they are driving the conversation, then somebody else (aka the competitor) is not; (2) if they are driving the conversation, then they have the ability to add value to the conversation and build the brand further.

The key is – can brands avoid looking like they are only serving their own corporate agenda? Being neutral is difficult, making the brand journalist a challenging concept in practice. However when done right, companies have a unique opportunity to stand out amongst competition.

Real-time Marketing

There once was a dream that marketing research would be instantaneous so that markets would not change by the time the information was ready and opportunities would not be lost.  Technology granted that wish.  Now large amounts of consumer data are instantly like firehoses to marketers and there are digital tools that: (a) capture real-time data, (b) develop real-time insight, and (c) enable real-time interaction.  Throw in the ability to amplify and spread relevant content to multiple marketing channels (i.e. web, TV, mobile) simultaneously and companies now end up with the ability to instantly market in relevant ways at all times. The companies that leverage this technology can use time as an advantage because they now refine products/services instantly based on feedback from customers in the marketplace.

Shiv Singh, director of digital for PepsiCo, presented the concept of real-time marketing at the Conversational Marketing Summit. The steps he suggested to real-time marketing include: (1) Real-time Insights; (2) Real-time Response; (3) Real-time Content Studio; (4) Real-time Co-creation; (5) Real-time Distribution; and (6) Real-time Engagement. Clients use Mass Relevance to surface, respond, create and distribute real-time social content throughout owned distribution channels and through media partners (ex: advertising, publishers, etc.).

Social Media Post-Casting / Integration

Post-casting and social integration is all about distribution. In addition to monitoring and engaging with the real-time firehose, why not also harness it for your customers to see? Brands are looking for ways to present info in new engaging ways that take advantage of what is happening now – because real-time posts are way more relevant, timely, and engaging. Companies are integrating what customers are saying about their brand into their ‘surfaces’ (TV, mobile, web site, etc.).

For example, Purell uses Mass Relevance to post the Twitter feed of anything relevant to their brand on the bottom of every page of their site.

Mass Relevance creates modules for integrating social content into web sites, mobile apps and TV display, like this one for elections coverage.

Mass Relevance also recently powered the presentation of tweets on the hit NBC show The Voice. When the social media room was shown, a banner appeared at the bottom of the screen displaying real-time curated tweets from fans across the world. Beyond television, other social media post-casting opportunities include website widgets, real-time polls, billboards, and social Q&A sessions.

The benefits of this capability are: (1) it creates ‘social proof’ for a brand; (2) it gives customers the opportunity to be part of the brand; and (3) it synchronizes a fragmented community around a topic in the right context. When a company creates a social media post-cast, visitors are driven to the website because the data is now compiled, lives in a single place, and has a social scene. Whether they post content or not, visitors feel like they’re more a part of the experience than if just a marketer or show were to broadcast to them. As a result, visitors are then more likely to explore other pages on the website, follow the brand for future viewing, like them on Facebook, follow them on Twitter, post something so that they can see themselves on the company’s website, and take action to purchase.

Content Shifting

Coined by New York venture capitalist and startup guru Fred Wilson, content shifting is all about moving your content around. People don’t want their music, video, and other multimedia to be chained to specific times and places. If I discover a song on satellite radio, I may want to listen to it on my iPod. If I watch a YouTube video of a concert by The Arcade Fire, I want to see it on my television and listen to it on my surround sound system.

Similarly, content like tweets and Facebook posts are on their given web platforms, but moving that content onto different websites or apps can be very difficult. Some services though are trying to free your content. For example, the Flipboard iPad app brings in content from Facebook, Twitter, and various blogs, presenting it in a magazine-like format perfect for leisurely consumption.

Many of the memes above relate to content shifting. As a brand journalist — curating, integrating and post-casting – you’ve essentially shifted content for your audience into your contact points to create relevance. Said another way, while several consumer apps are nodes of shifted content, brands can provide these nodes themselves.

Closing thoughts

Audiences are adapting faster than ever before. They’re adopting technology faster as technology accelerates ahead of them. As a result, their experiences are becoming more fragmented across multiple contact points (or “surfaces”), requiring new ways to distribute and engage them.

Companies participating in the social world strive to stand out and ultimately have their efforts grow their business. How can you make your content more portable? How can you leverage real-time social posts to engage your audience? How can you be seen as a thought-leader and first-responder in your topic area? The companies that answer these questions will have unique advantages over their less savvy competitors.

Brand experiences and sales conversions can improve when technology such as Mass Relevance creates experiences that engage consumers and drive valuable interaction. The ability to become relevant in the Validation Era is becoming more attainable, and having the agility to leverage this trend is a tremendous opportunity for marketers.

Sam Decker

(contributors: Tim Gaspar and Cress Terrell)

With over 140 million tweets per day, it can be very difficult to find the signal of relevant tweets amongst the noise. This challenge has been highlighted recently by Steven Rosenbaum in his new book Curation Nation.

The problem of finding the most relevant tweets is even larger during big events. On the night of the Oscars there were over 1.2M tweets related to the show. We worked with the Oscars to filter and moderate the best tweets during the show, using our social curation platform, TweetRiver. We managed streams of topics, such as mentions by nominees and total tweets. This gave the audience a ‘left brain’ sense of what was happening.

Then, through a blend of automated and distributed human moderation, we were able to select the best tweets from celebrities, nominees, family of nominees, and the general audience. These tweets were featured alongside the stats in a visualized page we hosted for on E! Entertainment online. The best tweets were featured on the Oscars site and were retweeted by the Academy. As a result, the Academy was the most retweeted account of the night and reached millions of people.

Certainly there was a lot going on that night. Through social curation we were able to bring some signal to the noise and bring the best content to audiences tuning into their ‘second screen’ allowing Oscars viewers to watch reactions and commentary from a global live audience while watching and hearing the Oscars on TV. Read more in our Oscars case study >>

Sam Decker

First, the good news. Brands are starting to ‘listen’ to what people are saying. There are great listening and social media management platforms available, such as Spredfast (plug disclosure…I’m an advisor). However, it’s typically a few people inside the company that are paying attention to user generated content. There’s still a long way to go to make this listening penetrate the depths of an organization to achieve what I call “Customer Oxygen”.

Then, there’s the analytics. There are a lot of ways to analyze the data of what people are saying. Many solutions are out there. The gap here is in making the analysis actionable and operational.

But then, once the listening and analysis is going, brands have the biggest challenge with content. What do they say? How do they say it? They have difficulty finding their ‘social voice’, and figuring out what to say where.
This is the big content gap.

There are two ways to solve this, not mutually exlusive. First, they can improve their own voice through training and making social interaction with customers part of more people’s job. But second, and more importantly, they can be facilitators of the voice of customers that are already occurring.

People are already out there talking about topics, brands, and people at an exponentially increasing rate. There is far more user generated content by the mass of minority than can be consumed by the mass majority. Yet, there is a high degree of interest to read social and user generated content as long as it’s relevant.

Let’s face it, we value the unbiased, relevant, and raw voice of our fellow ‘man’. So the question is how to aggregate, curate and display those voices in the right places and right context to engage customers. The content from others fills the big content gap, both in cost of creation and in credible relevance, to attract new customers.

Sam Decker

I’m excited to announce a company my co-founders and I have formed to go after a big market problem. Today we announced the launch and funding of my new company, Mass Relevance, co-founded with Brian Dainton and Eric Falcao. You can see early coverage at the Statesman, AustinStartup (more full story here) and TechCrunch. I foreshadowed this announcement with a market thesis post I just wrote, and the point that there’s a big content gap in the market.

Chloe Sladden on how Twitter and TV work well together
Also, there was a serendipitously-timed cover story in Fast Company on Twitter and TV that is at the bullseye of what Mass Relevance is doing, specifically serving entertainment and media. And you can see this blog post by Brian on how Twitter (and our product, TweetRiver) can help rescue live TV.

We will have our website up soon, with a Mass Relevance blog. In the meantime, I’ll update you here and on Twitter through @samdecker as well as @massrelevance.

Here’s the press release going out…

Social Marketing Innovator Sam Decker Launches New Company to Help Brands Achieve Real-Time Engagement

Mass Relevance Secures Nearly $2 Million in Series A Funding from FLOODGATE and Austin Ventures

Austin, Texas — December 21, 2010 – Social marketing innovator Sam Decker today unveiled Mass Relevance, a new company that helps consumer brands effectively use real-time social content to drive engagement on television, web, and mobile. Founded by Decker, a former Dell executive and founding CMO of Bazaarvoice, and joined by co-founders Brian Dainton and Eric Falcao, Mass Relevance is aimed at content and marketing executives who want to activate engaging experiences via real-time conversations, commentary and insights culled from millions of social activities taking place every moment around the globe. The company uniquely combines a cutting-edge social syndication technology that can instantly aggregate, curate and deliver the best content for any context with an enterprise SaaS infrastructure to meet the needs of the needs of the Fortune 500.

Decker, who will lead Mass Relevance as President and CEO, is known across the industry as a marketing innovator who pioneered social commerce as a category and delivered measurable results for 1,000 leading brands like Best Buy, Macy’s and Dell.

“The number one thing that I learned at Bazaarvoice is that people pay attention to content from others, and they will tune in to brands that facilitate this content as part of the experiences they create. However, given the overwhelming number of conversations coming in from all directions all at once, it’s often impossible to focus a lens on the ones that are most relevant for a given time, place, audience, and outcome. There is a tremendous opportunity to bring the most relevant content from the masses, to the masses – in real-time, wherever they spend their time.”

Mass Relevance also announced that it has secured nearly $2 million from FLOODGATE and Austin Ventures in a Series A round, and FLOODGATE’s Mike Maples, Jr. will take a seat on the Board of Directors. Mass Relevance has attracted tremendous interest from the venture community and the highly competitive round remains open for a few more strategic angel investors in the media and entertainment industry.

“Sam is a phenomenal executive who combines vision, leadership, and big results,” said Maples. “He built Dell.com into the largest consumer eCommerce site at $3.5 billion in annual sales, and helped drive Bazaarvoice from a tiny start-up to an established category leader. Now, with Mass Relevance, he has an opportunity to define and lead another new market as one of a select group of companies that bring social experiences to the enterprise. Curation is a concept whose time has come, and this team has the technology and vision to lead in this space and drive real business results.”

Mass Relevance Market Opportunity

An explosion of social experiences has hit the mainstream. Consumers are increasingly connected to people, brands and content through Facebook, Twitter, Foursquare, others – and contributing more and more content through mobile devices. Twitter hosts 30 million tweets about TV shows each day, and Facebook is expected to double in size from 500 million to 1 billion profiles in the next two years.
As social continues to grow exponentially, so does the challenge for brands, media, and retailers. Consumers are demanding that a growing percentage of their experience be geared towards content from their peers. However, interactions are becoming more fragmented, multiplying the complexity of engaging audiences. New opportunities to engage consumers exist – but success requires matching the right “useful” social content to the right audience in real time.

In this world where social is valued above all else, a platform to find, curate and display relevant social content is a tremendous competitive advantage for brands, media and retailers who want to attract an audience. Mass Relevance is uniquely positioned to help brands drive real-time engagement through social syndication that delivers the most relevant social content for a given context that includes time, place, audience and desired outcome. The company is the first to provide a complete stack of SaaS social aggregation, curation and syndication technology and services that allow brands to engage audiences with real-time content. These experiences deliver tangible engagement metrics like audience viewership, time on site, page views, ad views, conversions and sales.

Mass Relevance Leadership

Decker brings more than 17 years of leadership in digital marketing, social commerce, and start-up growth to his role as CEO of Mass Relevance, including the ability to precisely identify the emerging needs of businesses and innovate measurable, high-impact solutions to new challenges. As founding CMO of Bazaarvoice, Decker helped build the core platform of Bazaarvoice’s products and helped drive the company’s growth to category leader serving 1,000 brands. Before joining Bazaarvoice, he spent 7 years of leadership at Dell in the marketing, eBusiness and customer-centricity. At Mass Relevance, he will work hand in hand with co-founders and premier Ruby developers Brian Dainton and Eric Falcao, who will serve as Director of Products and Director of Platform.

In addition, Decker has tapped the expertise of the thought leaders and visionaries who are defining the next era of media and content to serve on the Mass Relevance Advisory Board. These include: Ze Frank, one of the world’s foremost experts in the intersection of technology and creativity in web design, marketing, and new forms form of media; Jonah Bloom, former Editor of Ad Age and current CEO and Editor in Chief of Breaking Media; Brad Berens, Chief Content Officer for ad:tech, the iMedia Summits and the CMO Network and Senior Research Fellow at the USC Annenberg Center for the Digital Future; and Mike Edelhart, a long-standing media and Internet start-up investor and executive.

“Social Curation is an incredibly complex task, and the companies who nail it are the ones who end up making history,” said Ze Frank. “There will be a winner in this space, and I am excited to work with Sam to make sure it’s Mass Relevance.”

Sam Decker

How do you evaluate and analyze the profitability of Groupon?

Already there are a lot of competitors with Groupon, and several more that are headed toward even more niche group buying capabilities, focused by interest, small city, or people groups. The group buying strategy will continue, and so will the conversation about this. But the model of giving a significant (50%+) discount on goods and services has its dangers. So it piqued my curiosity to analyze this from an economic perspective.

On the plus side, this is a pay-for-performance approach to customer acquisitions. And it’s a sudden and (mostly) predictable burst of new customers and revenue.

On the cautionary side, you’re paying for that acquisition with negative margin. Do business owners really know (or at least rationally evaluate) the complete profitability of these customers? If I were doing this, I’d look as much as possible at the total economic impact, as there are some overlooked aspects to this type of promotion.

A fascinating study on Groupon effectiveness by Utpal Dholakia of Rice University cited that 66% of small business owners report Groupon to be profitable. In discussing this with him, that figure is a self-reported, which is valud to understand how the owners think about the outcome. It is natural for an owner to believe and report they made a profitable decision. But this is not to say that 66% of Groupon promotions actually are profitable. I would assert most small business owners were not instrumented or had taken the time to fully analyze profitability.

Utpal and I agree that the analysis for full profitability may not be possible for the average small business owner. Epsecially at the detail I’m about to outline. However, if I were running a business, I’d at least want to logically think through the assumptions of profitability and measure what I could…otherwise, I would be headed down a slippery slope.

This kind of customer acquisition can become a ‘drug’ to a business looking for revenue, and yet the total P&L impact may not be understood. Groupon reports that 95% of businesses would run Groupon again, though Utpal’s study suggests it’s more like 68%. Both are self reported figures. How many actually DID use Groupon again? I digress.

Let’s use a fictitious example to walk through what the “ideal” analysis would include.

Assume you’re the owner of a spa salon and you offer a coupon of $50 for $100 of spa services (to make it easy), and you sell 1,000 of them.

You get $25 from each sale (because typically 50% of the $50 goes to the group buying site). If you had 50% margin on the $100 list price, then you’re losing $25 on each deal and 1,000 of these coupons is costing you $25,000 in negative margin.

On the plus side you’ve acquired 1,000 new customers. However, how many of those actually are ‘new’? This is the first key assumption and the maturity and visibility of your company will be important in determining this value. Let’s assume 20% of those who received the coupon would’ve bought at full price. That’s 200 customers that would’ve given you $10k in margin, but instead cost you $5,000.

That’s a $15k net swing.

The remaining customers are new, 800 customers that cost you $20k in negative margin But, how many will buy again at full price over the year? This is another key assumption and the type of business you have an the kind of service or product you provide have impact on the lifetime value calculation. For this exercise let’s assume 20% of the 800 new customers will come back and spend $100 in services again three more times in the year. That’s 160 customers driving $150/yr in margin (3x $50 margin) = $24k in margin.

Here’s the margin math so far:

200 existing customers in lost margin = -$15k

640 customers who won’t come back = -$16k

160 customers with 3x 1yr full margin value = +$24k

It’s unprofitable so far. Ah, but we’re not done!

How many of the 1,000 customers never redeemed the coupon? Let’s assume 10% don’t execute on the coupon before it expires. That’s 100 coupon purchases where you get $25 each with no cost of goods, $2,500 in positive margin.

Now, how many of the 900 customers who DO redeem buy something else when they turn in the coupon? Let’s assume 30% of those customers spend 30% more. that’s 180 customers spending $30 in full margin ($15) = $2,700 positive margin.

And, what’s the brand recognition worth of the campaign itself? This is the most difficult to measure and understand. Yet it’s probably the assumption Groupon wants you to believe in the most, which is one of the reasons they invest in great copywriting for their offers. There are a lot of assumptions to think through on this…how many are seeing the promotion, how well is your company marketed, how many of the audience already knew about your business, what’s the acquisition opportunity of this kind of awareness-building, etc.? For the sake of this exercise, let’s just assume that 25,000 people see this promotion and 1% of that audience will visit you at full price, assuming the same $100 of service they purchase 4x a year. That’s 250 new customers spending $400 ($200 in margin) = $50,000 in margin.

Ok, so let’s net out the total economic impact:

200 existing customers in lost margin = -$15k

640 coupon customers who won’t come back = -$16k

160 customers with 3x 1yr full margin value = +$24k

100 coupons not redeemed = $2,500

180 customers buy more on site = $2,700

250 new full margin customers from campaign awareness = $50,000

Total margin impact for year: $48,200

I haven’t touched on the possible word of mouth impact from customers that experience the product/service (see my Mashable article) or value of acquiring customer data, or value of learning something from these customers.

Now, there are a ton of assumptions in this exercise you can argue. I just made these numbers up. If the awareness didn’t bring any customers in after the coupon, the example is not profitable. The point is to illustrate the factors to think through and debate with yourself.

Also, every business is different, every group buying site campaign is different, and you could do it at different times of the year which would all effect the economic outcome. The one-year value of doing a group buy coupon could be negative margin as much as it could be positive margin in this exercise.

For example, when Groupon did the Gap promotion, perhaps the % of customers that would’ve bought from them anyway is much higher. Everyone is aware of Gap, so I doubt they got as much upside on the awareness building from the campaign. If anything, they may have told customers that it’s possible to get a better deal at Gap if you look for a coupon or wait, so perhaps they lost a higher percentage of full margin customers. The turnout for Gap may have been very bad from a one-year margin calculation and a brand impact. Or, perhaps the majority of people who redeemed coupon spent twice as much at full margin and therefore they didn’t lose money. Though I still question the incremental lifetime value opportunity from these customers. In my experience coupon users are discount shoppers. The thrill is in getting the best possible deal, so money spent beyond the coupon is not a deal.

The point is there are a lot of factors that go into the determination if this is a good strategy for one business vs. another. Here are some factors I would consider if I were a small business considering if a group buying strategy was worthwhile:

1. Awareness – if your company already has high awareness in your market then the awareness building benefit of the group buying campaign is less positive. Further, if you have high awareness, than the % of existing customers who buy with a coupon could be high.
2. Repeat Business – Do you have a business that has repeat customers? 50% off a vehicle registration service is not as good as 50% off a haircut. If you have repeat business, then you have a higher likelihood (and of calculating) for lifetime value of a customer acquired.
3. Differentiation – How differentiated is your business, product and/or service. If you’re a burger joint as good as many others, than customers may take you up on your coupon, but go to the next burger joint with a coupon next time.
4. Word of Mouth – Related to repeat business, what is the likelihood that someone who experiences your business at a discount will be delighted, and how word-of-mouth-worthy is your experience. Interestingly, Certain types of businesses or products can have a higher word of mouth quotient than others. A zip line company has more WOM than a nail salon. And customer experience matters. Uptal’s research reports that if employees were happy with the incoming customers, the owner was more likely to believe the promotion was profitable. Things like group-buying sites will require businesses to create better products and services, otherwise you will lose the LTV benefits of acquiring customers. See my Mashable article.
5. Upsells – What’s the likelihood people who come in with a coupon will buy more at full price? The type of product and service will make a difference, as much as how upsells are executed. According to Utpal’s study.
6. Breakage – what is the likelihood people will not execute on the coupon? Are you far away; is the dollar amount small, is scheduling involved?
7. Data – How much data can you capture about the customer? That enables you to remarket (assuming you do so) and raise the return business assumption. And what is your ability to capture and analyze the measurements above? This doesn’t change the outcome, but it does better inform you if you should do it again. Otherwise, it may be too tempting to do something like this again that could put you out of business.

Of course, I didn’t calculate your time and opportunity cost to evaluate, execute and analyze all this to determine if you should do a group discount. Add that to the mix as well!

Again, I don’t assume small business owners can or will go to this level of detail in analysis. The point is to consider the characteristics above, to go through a rational decision making process, and then measure what you can to determine how to use group buying.

Sam Decker

The Bazaarvoice Pizza ThrowdownTaste tests and focus groups had execs at Domino’s Pizza cringing as unhappy pizzaphiles gave brutally honest feedback on the taste of their pizza. Domino’s executives had a choice to make: go about their business – as many brands would – or learn from this negative feedback and change their 50 year old recipe.

Domino’s chose wisely, embracing customer oxygen and revamping their recipe. We hear the “what about negative reviews?” question all the time. What Domino’s finally realized is an idea Bazaarvoice promotes to our clients each day – negative reviews are a gift, an opportunity to improve your products and services to further delight your customers. We’ve seen this philosophy work wonders for clients like Oriental Trading Company and Land of Nod.

Where many brands would privately have gone about their business by rationalizing or ignoring the feedback, Domino’s did the opposite. And the pizza chain took their efforts a step further, launching a national campaign promoting how bad their pizza used to be. Their message was simple: “We were failing you. We finally heard you. Here’s what we did about it. Won’t you try us again?”

As passionate advocates of customer oxygen, we naturally applauded these campaigns. But we were curious, as the ads no doubt intended – is the new Domino’s recipe really better? We decided to conduct our own scientific test (NOT… but we think close enough) to see how listening to and acting on the opinions of their customers had benefited the chain.

The Bazaarvoice Pizza Throwdown

Tasters’ stated preferences before the taste test

We found ten self-proclaimed pizza connoisseurs to participate in a taste test of Domino’s against its top two national competitors – Pizza Hut and Papa John’s. We ordered large cheese pizzas with original crust from each, testing the competitors on the pizza basics.

Before the test, we asked the tasters to tell us which pizza they thought they liked best. Papa John’s was the clear favorite, with 60% of the vote.

Each taster was blindfolded to ensure responses were based solely on taste. They were then asked to taste a slice of each competitor’s pizza, and give their reviews, rating each pizza on sauce, crust, cheese, and overall taste.

The Results

We weren’t sure what to expect. Even if Domino’s didn’t win, we thought they still had a great story to tell, as they’d demonstrated action and accountability to customer feedback. But fortunately for this story and for Domino’s, the new and improved pizza was the clear winner, with 50% of the tasters picking the chain’s new recipe as the tastiest pie.

Domino’s outperformed the competitors in every aspect of the test, earning 3.8 out of a possible 5 stars for overall taste.

Pizza components’ taster ratings

You can watch how the taste test was done in our video here and on Youtube:

By embracing their customers’ negative feedback, Domino’s was able to improve their product quality and impress their customers. And not only are customers happy with the change, but so are shareholders! Apparently the campaign is expected to be a sales hit – Domino’s stock is up close to 50% over prices three months ago.

Operationalizing customer feedback to radically improve an entire organization is something we help our clients do every day. Does your business have the tools to embrace the voice of the customer?

]]> http://www.thesocialcmo.com/blog/2010/03/pizza-throwdown-puts-domino%e2%80%99s-pizza-turnaround-to-the-test/feed/ 1 http://www.thesocialcmo.com/blog/2010/01/new-%e2%80%9cparticipation-chain%e2%80%9d-white-paper-%e2%80%93-tying-contributions-together-to-gain-deeper-customer-engagement%e2%80%a6-and-results/ http://www.thesocialcmo.com/blog/2010/01/new-%e2%80%9cparticipation-chain%e2%80%9d-white-paper-%e2%80%93-tying-contributions-together-to-gain-deeper-customer-engagement%e2%80%a6-and-results/#comments Sat, 30 Jan 2010 03:03:14 +0000 admin http://www.thesocialcmo.com/blog/?p=173 Ze Frank and I were having dinner a several months ago at a fantastic Thai “hole in the wall” in New York. The conversation turned to a subject we think about a lot, albeit coming from different perspectives. We started talking about how conversations and ongoing touchpoints really make the difference – when actions build upon each other, it can be incredibly impactful. We decided to call this the “participation chain.”

Consider a research study that involved phone calls to Dallas residents from Hunger Relief Committee. One set of residents received a call asking if the organization could come to their homes to sell them cookies to benefit the charity; the second set of residents were asked the same question, but the caller first asked, “How are you feeling this evening?” and waited for an answer. This one question nearly doubled the number of positive responses from residents. Further, once the volunteers were in their homes, almost all participants who’d been asked this question actually made a purchase.

This one question made all the difference, showing that the more time a consumer spends with you (assuming it’s a positive experience, of course) directly relates to how likely they are to spend money with you. We’re constantly creating new ideas and ways for consumers to easily interact with brands – like voting for favorite stories. So how are brands reaching out – transparently, authentically – to encourage more interactions with consumers?

We’ve all seen sweepstakes and other gimmicky ways that brands have basically tried to build their databases, but user-generated content on a site really gives brands opportunities to create real dialogue online that’s actually meaningful to other consumers. For example, we’ve seen brands have great success with topics and campaigns that don’t tie directly to products – like PETCO’s Howl-O-Ween campaign, which encouraged pet owners to share photos of their pets’ Halloween costumes. PETCO knows their target consumers love their pets and want to show them off, and this campaign gave customers and prospects a whole new way to connect with PETCO, which could pay off for months and years to come.

Amazon has a lot of ways for users to interact with their brand. Of course, they encourage product reviews, and also encourage voting on review helpfulness. They also allow users to create wish lists and registries, and customize recommendations based on the types of items they’ve purchased in the past.

Bazaarvoice clients are constantly finding new ways to interact with consumers online – responding to reviews, answering shopper questions online, and highlighting top participants in other media, like blogs. Free People does a great job highlighting their top reviewers, and a recent webinar discussed how brands make the most of their top contributors.

The new white paper Ze and I wrote together, “Participation Chains Connect Customers to Your Brand,” delves into how important an authentic brand/consumer conversation is, and the real impact it has on businesses. We also go into detail about maximizing the results of these interactions.

Download your copy of “Participation Chains Connect Customers to Your Brand.” We’d love to hear how increased interactions have helped drive increased sales (or other business metrics) for you.

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