My Only Guarantee: If You’re Not A/B Testing, Your Marketing Programs Aren’t As Good As They Could Be

March 29th, 2010

There are not a lot of certainties for small business owners, but the one thing I can guarantee is that you’re not always right.  Neither are the marketing consultants you might talk to or the “best practices” articles you might read.  That’s why A/B testing is the one thing guaranteed to improve virtually every marketing program you have.

The concept behind A/B testing is pretty straightforward.  Try making one, and only one, change to your marketing campaign and see if it makes you more or less money.  For example, would more people respond to a restaurant promotion offering $20 off the total bill or a free bottle of wine?  We can guess or make assumptions all day long, but the only way to know for sure is to test the two offers head to head.  If you’re doing a direct mail promotion, this literally means splitting your mailing list into two groups and presenting one offer to one group and the other offer to the second group.  It’s very important that you only change one thing at a time, so keep every other aspect of the promotion identical, including when the mailings are sent (i.e. send them all at the same time).  Larger businesses with high volumes and big budgets can try something called multivariate testing where you change multiple things at the same time, but it’s far more complicated and expensive so I wouldn’t generally worry about that for most small business marketing programs.

There are a couple of other very important things to keep in mind when A/B testing your marketing programs.  First, you’re going to need to ensure you can track the results.  This includes measuring the difference in both the expenses and revenues.  For example, if you increase your promotion incentive from $10 to $20, you can’t just look at response rates to see which is better.  The $20 version needs enough additional responses to make up for the increased cost.  Also, you need to ensure there’s a way for you to tell which promotion generated the purchase.  For some channels like Search Engine Marketing (Google advertising), this is easy.  For other channels like a restaurant direct mail promotion, it may be a bit harder (but it’s still possible) to track the net profit generated for each test group.

The last thing I’ll touch on for now is the topic of sample size.  I’m not going to spend a lot of time talking about statistics, but it’s important to understand that your two test groups must be large enough to ensure that one group didn’t outperform the other purely by chance.  If you randomly mail different promotions to two groups of ten people and one person responds from Group A and two people respond from Group B, it will look like Group B was dramatically more successful.  However, because the groups were so small, you don’t really know if it was a better promotion or just random chance that made it more successful.    The more people you randomly include in each group, the more confident you can be that it was the change in your promotion that drove the increased response rate.

To summarize, here are the key things to remember for A/B testing:

  1. Only test one variable at a time
  2. You need to be able to track the results
  3. You need a large enough sample size
  4. You should start right away to improve the profitability of your marketing campaigns

I’ve discussed direct mail quite a bit, but A/B testing is also important for other marketing channels like search engine marketing and your general website.  I’ll have more on this topic in the coming posts.  In the meantime, thank you for reading.

Forrester Research Post on Customer Satisfaction Surveys

February 23rd, 2010

I came across a Forrester Research blog post on Customer Satisfaction Surveys that I wanted to share.  I discuss several of their points in detail in my article entitled “Keys to a Successful Loyalty Program”.

However, if you don’t have time to read my full article, or just want to see who else shares these opinions, definately check out the Forrester blog.

Until next time, thanks for reading.

Mistakes To Avoid With Customer Satisaction Surveys

February 5th, 2010

Satisfaction surveys are a great way to get an idea of how your customers feel about your business, but it’s easy to make some common mistakes that will erode the value.  Here are some things to keep in mind when launch your satisfaction survey.

  1. Don’t ask questions if you don’t care about the answer.  People don’t really enjoy taking surveys, so you want to keep it as short as you can to collect only the information you can act upon.  It’s so easy to keep piling on questions that seem interesting at the time, but ultimately you’ll never go back to and use.  I’ve also seen people ask about things they either can’t or won’t change.  If you aren’t going to address an issue, don’t set the expectations with your customers that you are by asking about it.  Nothing infuriates customers more than when they take the time to give feedback only to have it ignored.  On a similar note, only include demographic questions if you’re going to use them in the analysis.  People don’t like giving personal information, so don’t ask for it unless you’re prepared to use it (which isn’t the same as saying not to get it and use it, because it can be valuable).
  2. You’re survey is a reflection on your company. Okay, I know how tempting it is to get a free version of SurveyMonkey, thrown together a few questions, and get on your way.  Please resist the temptation.  You would never prepare a big sales presentation with an unbranded, unprofessional looking template you found on the internet or design your brochures in MS Word (I hope).   Even if you do use something like SurveyMonkey , go ahead and pay for the professional version so you can add your logo and customize the design.
  3. Pre-test the survey.  By that I mean don’t just have someone skim over it for typos (although they should do that too), but actually have them take it.  Have them look for questions that are confusing, biased or leading, or use company lingo that outsiders won’t understand.  Ask about the survey length.  Then take a look at the data after a few people have taken it.  Sometimes people don’t interpret a question the way you intended it and you’ll need to re-phrase.  It’s better to know all that before you send the survey to all your customers.
  4. Mutually exclusive and exhaustive option set.  Okay, so this is a good example of industry lingo I just advised against.  What this means is when you ask a multiple choice question, the possible answers shouldn’t overlap and should cover all possible options.  For example, if you ask how often someone typically eats at your restaurant, don’t give these options:
    1. 1-2 times per month
    2. 2-4 times per month
    3. 4-8 times per month

If they eat at your restaurant 2 times per month, which option would they select?  How about if they eat there daily?  A better option would be:

  1. Less than once per month
  2. 1-2 times per month
  3. 3-4 times per month
  4. 5-8 times per month
  5. 9 or more times per month

That’s a good start.  I could keep going on this for a while, but I’ll stop here and likely come back to this topic again in the future.  In the meantime, feel free to post questions you might have in the comments section below or contact us for a more in depth conversation.  Until next time, thank you for reading.

Customer Satisfaction Surveys – A Missing Ingredient For Small Business

February 2nd, 2010

Every business should have a customer satisfaction / loyalty survey.  Small businesses, this includes you as well.  While popular ways for small businesses to get customer feedback including informal customer conversations and listening to customer complaints may be cheap and easy, they simply don’t give you enough information and may not be representative of your overall customer base.  In other words, the needs of the “squeaky wheels” might not be the same as your overall customer base.  More importantly, they may not be the same as your most profitable customer base.

Customer satisfaction surveys allow you to ask about a broad range of topics.  They let you see what problems need to be addressed right now and if your latest improvement efforts are working.  They can also give you new ideas on what types of products or services your customers would like to you offer in the future.

Launching a satisfaction survey isn’t too difficult and can be very valuable, but there are some common pitfalls you’ll want to avoid when starting out.  Stay tuned for my next post where I’ll address some best practices and things to avoid in your customer satisfaction survey.  Until next time, thank you for reading.

The Power of Customer Relationship Management (CRM) For Small Business

February 2nd, 2010

In my last post, I explained what a CRM system is and some of the many uses for both small businesses as well as larger ones.  While simply having and utilizing a CRM system can instantly increase marketing productivity and communications, in truth there’s a lot more to be gained by integrating the system with a CRM process or mindset.  When done properly, truly implementing Customer Relationship Management processes can help increase sales and marketing ROI, identify and retain your most profitable customers, and generally increase the profitability of your small business.

At its core, CRM supports the key business principle of customer segmentation.  The premise of segmentation is that not all people care about the same things and they don’t act in the same way.  If you don’t actively segment your customers, you’re hurting your customer relationships in several ways:

  1. You’re not treating your best customers as well as you should because you’re not presenting them with special promotions and perks
  2. You’re spending too many resources on unprofitable customers
  3. You’re incenting your customers to ignore you by barraging them with many communications they don’t find relevant

A CRM system will allow you to track customer behavior, demographic information, and details about their key interests.   Truly implementing CRM into your business means using that information to personalize and strengthen your customer relationships.  For example, let’s think about a non-profit who’s interested in generating donations and recruiting volunteers.  A very common approach is to send out a monthly newsletter informing everyone on their mailing list of key activities or issues.  Perhaps they also rotate requests between donating and volunteering.  However, many of the donors may be out of state or busy executives with no interest or history in volunteering.  Further, perhaps a subset of donors has gone dormant and hasn’t responded to mailings in over a year.  By understanding your relationships, you could save money by eliminating the volunteer request mailings to out-of-state donors and potentially eliminating mailings to dormant donors all together (or create a special phone campaign targeting donors that have stopped responding to mailings).  This serves both to increase your marketing ROI as well as strengthen your donor relationships by not pestering them with things they don’t care about.  There are countless other examples of how this concept can be utilized.  For example, periodically running a report of your most profitable accounts (which aren’t always the biggest) and having an executive personally call to check in and thank them can go a long way.  If you haven’t read my earlier post entitled, “Not All Customers Are Created Equal – Stop Treating Them Like They Are”, I encourage you to scroll down and take a look for some deeper discussing around the benefits of customer segmentation.

Again, collecting customer information is the first step and will improve productivity, but fully utilizing that information to personalize relationships is the key to drastically improving your business and profitability.  Until next time, thank you for reading.

If You Don’t Have A Customer Relationship Management (CRM) System, You Need One!

January 28th, 2010

In speaking with many small businesses, it’s become very clear that a high percentage of business owners don’t know what CRM is, let alone have a CRM system and a process to use it.  With that in mind, here’s a brief overview of CRM systems.  My next post will cover some of the many ways to use CRM to give help your business a competitive edge and improve your profitability.

A CRM system is essentially a powerful but user-friendly database that allows you to track valuable information about your prospects and customers.   CRM systems are fully customizable and can store information like contact information, demographic profiles, product interests, past purchase behavior, contract details, and sales opportunity details.  They have powerful reporting engines that let you slice your data almost every way imaginable.  Some can even be integrated into your business website so when a prospect fills out a contact form, a lead with all their information is created in the system and it alerts you via e-mail.  You can also control access so employees can only see or edit appropriate sections.

There are many different systems, but my preference is for several reasons.  First, it’s amazingly affordable and scalable.  The most basic version is $60 per user per year (as of 1/28/10) and you can get a lot of great features for $204 per user per year.  Second, it’s an online model so you can access your system from any computer with internet access.  There’s no software to install.  Lastly, it’s simply a very powerful but intuitive system and you can be up and running in a couple of hours with some basic training.

A CRM system is valuable if you use it for nothing more than a central depository for tracking customer information.  However, that’s just the beginning.  In my next post I’ll discuss how you can really improve your business processes, marketing ROI, customer retention, and more by leveraging the full power of CRM.  Until next time, thank you for reading.

Search Engine Marketing (SEM) Top Money Wasters – Part 3 of 3

January 4th, 2010

I’ve already talked about how small businesses can waste a lot of money advertising on Google by not using geo-targeting and negative keywords.  These concepts aren’t too hard to understand.  The third SEM money waster is a little trickier, so I’m not going to go into too much detail.

Mistake #3:  Overusing Broad Match.  I don’t want this to be a boring lesson in SEM, so I’m just going to try to get the high level concept across in this post and focus on the money wasting problem.  Google has three ways to bid on a search term.  I’ll illustrate with a quick example.  If you’re a dentist in Seattle and you want your ad to appear when someone searches in Google for “Dentist recommendations”, your main options Exact Match, Phrase Match, and Broad Match.  For now, I’ll just focus on Broad Match, which is commonly used.  Broad match gets you the most volume because Google and the others will show your ad even if the words are shifted around or sometimes even if synonyms are used.

For example, if you broad match “Dentist recommendations”, your ad will also show if someone types in “Dentist recommended toothbrush”.  If I were a dentist in Seattle, I wouldn’t want to pay for that second search.  By the way, 1-800-Dentist is falling victim to this at the time of this writing.  They come up #1 on “Dentist recommended toothbrush”, ahead of Sonicare and a consumer search site.  When I clicked on their ad (sorry 1-800-Dentist, I owe you $5), I saw no mention of toothbrushes.

Now there are advantages to incorporating broad match and certainly including negative keyword helps.  The big takeaway here is if you decided to manage your own SEM program (or you have a friend of a friend who knows a guy who’s doing it for you), check to make sure you’re not primarily (or only) using broad match.   If you are, it’s time for a tune-up.

Well that’s all for now.  If you have any other big money wasters, please feel free to share in the comments section below.  Until next time, thank you for reading.

Search Engine Marketing (SEM) Top Money Wasters – Part 2 of 3

December 21st, 2009

My last post talked about how companies could throw their money away with Google advertising if they don’t use geo-targeting.  The good news there is that at least it’s a bit obvious when you set up your Google campaigns that geo-targeting is an option and it’s pretty intuitive.  Mistake #2 is not quite as obvious.

Mistake #2:  Not using Negative Keywords.  If you are an architect in Seattle, you might be interested in paying for a term like “Seattle architect”.  Would you also like to pay for “Seattle architect careers” or “Seattle architect classes”?  Almost certainly not.  However, there are restaurants out there paying to attract people looking for free recipes and dentists paying to attract people looking for dentist approved toothbrushes.  That’s where Negative Keywords come in.

Negative keywords are terms that you tell Google and the other search engines you specifically don’t want.  In my examples above, you might include the words job, career, degree, classes, landmarks, and dozens or even hundreds of other terms.  Much like geo-targeting, it’s not a complicated concept to understand, but if you don’t use it, you’re throwing your advertising budget out the window.

The last mistake in the series is coming up soon – Overusing Broad Match.  Until then, thank you for reading.

Search Engine Marketing (SEM) Top Money Wasters – Part 1 of 3

September 16th, 2009

As much as I love search engine marketing (Google advertising), there are some major mistakes that you can make to flush your marketing budget down the toilet in a hurry.  I’ll discuss three of the biggest mistakes over the next few posts.  If you’re running your own SEM program and you’re making these mistakes, the good news is that it’s not so hard to fix them.  If you’re using an agency or professional search engine marketer, it wouldn’t hurt to confirm that they’re on the right track.

Mistake #1:  Not geo-targeting.  One of the coolest things about Google advertising, especially for small businesses, is that you can specify the geographic location where Google shows your ads.  For example, if you’re a dentist in Seattle, you can tell Google to only show your ads to people located within 10 miles of your office.  Google will look at the IP address of the shopper and try to determine their physical location.  Also, if someone types in “Seattle dentists”, Google would likely see this as a good match and show your ad.

Let me share a real life example of a small business owner who was just throwing away money.  I was researching competition for a client who runs an architecture firm.  I live in Seattle and typed “home remodel” into Google.  The top ad was a drywall contractor in Florida.   Unless the contractor was planning on flying across the country to work on my remodel – doubtful – he was throwing that money away.  What’s worse is that if he wasn’t using other controls like daily spend limits, he could have potentially drained his annual advertising budget in a week because Google estimates that “home remodel” could get up to a couple thousand hits per day, and I’d guess that term costs at least $4 per click.

Even if you do business across the US or in multiple countries, Google will let you target the specific locations and even specific languages if you’d like.  Not taking advantage of this tool is just giving your money away.  Stay tuned for Mistake #2 – Not using Negative Keywords.  Until then, thank you for reading.

Customer Loyalty is Made by Emotional Connections

September 16th, 2009

I recently conducted a research survey where I offered participants a chance to win one of three $50 gift cards for completing the survey (an effective, cost-effective way to boost survey response rates).  A customer jokingly wrote back telling me that a competitor gave her a $50 gift card for completing their survey and it wasn’t fair that I was just giving her a tiny chance to win a gift card.  From her language it was pretty clear she was just teasing.  However, I wrote back telling her that I couldn’t stand to be outshined by our competitor and was sending her a $100 gift card to thank her for her participation and show her that I valued her business.  I also jokingly let her know not to get spoiled and expect this every time.  She wrote back saying that she was stunned by the response and thanked me profusely.  Odds are she told some colleagues and friends about it, and she’ll probably re-tell the story when she goes to spend the gift card.

The next time a competitor calls that customer trying to lure her away, they’ll have a much tougher hurdle ahead of them because now, my customer has a stronger emotional connection to my company and she knows she truly is a valued customer and we’re going to take care of her.

Companies like Enterprise Rental Car and Nordstrom have known about this concept for a while and have become very successful by developing practices to delight their customers.

It’s amazing how big an impression an extremely inexpensive gesture can have on someone.  Think about a restaurant manager walking the floor who overhears someone complaining to their friends about the glass of wine they ordered and swoops in and offers to bring them something else free of charge.  For just a few dollars, that manager can turn what could have been a festering, relationship-souring experience into a great experience they’ll remember the next time someone asks that guest for a restaurant recommendation.

Regardless of your business, there are countless opportunities for you to go above and beyond to delight your customers (especially your most profitable customers).  Think about how you would feel if the president of your big, faceless cable company called to personally thank you for your business – probably pretty pleased.  Your customers could feel that way about you.  Until next time, thank you for reading.