Linking Metrics to Marketing Results

Posted on January 11, 2012 by ghm_ie

It has been contented in early sections of this literature review that Return on Investment (ROI) is perhaps the most popular and widely used indicator of the performance of a specific marketing strategy. Earlier in this literature review, it was established that ROI is a commonly used tool in marketing metrics, alongside its traditional usage in financial information analysis. Alston (2009, p.4) contends that traditional metrics cannot be altered to use for the purposes of social media marketing strategy evaluation. He goes as far as to say “adapting traditional metrics to fit social media would be akin to sticking a square peg in a round hole”. This view is at odds to the research of O’Sullivan & Abela (2007) and Fisher (2009), whom contend that ROI is a highly useful tool in the evaluation of a social media marketing strategy, but not in the direct sense traditionally seen when dealing with metrics.

O’Sullivan & Abela (2007) and Fisher (2009) are of the view that ROI is not suitable for measuring the monetary return generated on investment in a social media strategy, due to the variety of platforms within the social media arena, and also the volume of qualitative information as opposed to quantitative data, which marketing practitioners tend to rely on in order to calculate ROI. This creates a significant issue for the modern-day marketing practitioner, whom, as identified earlier in this literature review, is coming under continuously increased pressure to demonstrate a positive ROI for his efforts.

O’Sullivan & Abela (2007) premise that the marketing activities of an organisation (i.e. through social media marketing) influence a set of intermediate outcomes (e.g. customer thoughts, feelings, knowledge, behaviour), which in turn influence the financial performance of that organisation. Therefore, if these intermediate outcomes can be accurately measured (through quantitative and/or qualitative analysis), they can in turn be used as a method of evaluating the ROI of the marketing strategy in use throughout the period of this set of intermediate outcomes being generated. In essence, the literature indicates that ROI on a social media marketing strategy cannot be calculated by simply adding up the cost of running the strategy and comparing it to that of sales, but more so by measuring the effect on intermediaries, and comparing those with the increase in sales. Whilst this may appear complex and long winded, it is essentially one additional element to the ROI equation.

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Quantitative vs Qualitative Metrics for Social Media

Posted on January 11, 2012 by ghm_ie

The fundamental differences between quantitative and qualitative metrics for social media have been offered over the previous pages. It is important at this point to briefly consider the advantages and disadvantages of both forms of evaluation.

Firstly, it vital to consider the time factor involved in gathering both sets of data. As is the case with quantitative data in traditional online marketing metrics (and indeed many other areas of research), it is much more readily compiled and available than qualitative. Many of the popular social media metrics discussed over the previous pages are freely available to the marketing practitioner within a matter of minutes upon demand. Quantitative metrics provide an insight ‘snapshot’ into the social media marketing activities of an organisation. It is important to note however, that as an independent data set, that is all quantitative metrics for social media provide.

Qualitative data is much more complex and rich, and is more costly and time consuming in both its collection and analysis, both for traditional areas of research, and for social media. There are however software and tools becoming increasingly popular and available to aid the marketing practitioner in qualitative analysis. These include third party applications which are capable of automatically carrying out conversation and sentiment analysis based on pre-defined inputs by the marketing practitioner.

It is likely that, regardless of the organization in question, selecting just quantitative or just qualitative metrics alone will be sufficient in successfully evaluating the performance of the social media marketing strategy.

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Social Media Marketing in the Irish S.M.E.

Posted on January 11, 2012 by ghm_ie

Amongst the numerous constraints in which the SME is faced with, is that of lack of marketing expertise, as identified by O’Dwyer et al (2009) amongst other researchers (Hsien and Liu, 1998). Such a lack of expertise may hold both positive and negative connotations for the small firm when considering engagement in social media marketing. Firstly, a lack of experience can be a positive driver towards adopting a social media marketing strategy, in that marketing practitioners may be more likely to engage in social media marketing than perhaps in other more ‘traditional’ areas of marketing. This may be due to the perception of ‘ease of use’ and ‘simplicity’ often associated with the use of the various popular social media websites. Given the high levels of personal usage associated with social networking websites such as Facebook, Twitter and YouTube in Ireland, many business owners will already be accustomed to using such tools. What may present itself negatively however in terms of lack of experience when dealing with a social media marketing strategy is that the lack of experience in marketing which has contributed to the choice in its selection may not necessarily mean the small firm marketing practitioner is aware of the potential pitfalls of implementing such a strategy. It is likely that a grounding in traditional and perhaps online marketing would be highly advantageous when engaging in a social media marketing strategy, as there will be a level of knowledge spill over between the various modes of marketing. The small firm may not have the advantage of having such pre-existing knowledge in the organisation.

Reijonen (2010, p.43) observes that SME’s to a large extent focus on the needs of the customer, and often “the aim is to develop meaningful and sincere relationships with customers”. As has been noted widely in the literature (e.g. Mayfield, 2009; Pattinson, 2009; Robbins, 2010) is that the majority (if not all) social media platforms provide the opportunity to build and develop relationships with those which the SME interacts with. Social media provides an excellent medium to allow the marketing practitioners of small firms to engage in a customer relationship management style process. Firms can use social media to identify potential customers for their products/services, and make contact with them through the various social media websites. Furthermore, social media can be used as an effective tool for maintaining effective lines of communication between the business and the customer on an ongoing basis.

Another factor which may encourage SME owner/managers to engage in social media marketing is that of relative ease and flexibility. It has been highlighted in the literature that the majority of mainstream social media platforms and outlets (such as Facebook, Twitter, Blogging) are relatively simple in technical operation (Gillin, 2009; Robbins, 2010). This will undoubtedly prove a popular reason in the selection of social media as a marketing strategy within the small firm, as previously identified, may lack expertise in technical areas. However, the same authors note that social media marketing requires a substantial investment in time in order to successfully implement the strategy. Whilst it has been widely acknowledged that small firms, particularly in their early stages of development will lack capital resources (such as cash to implement a marketing strategy)  may have the resource of time at a greater disposal. Furthermore, the increasing growth and popularity of social media engagement via mobile devices (iPhone/iPads, smartphones, netbooks etc.) affords the modern-day marketing practitioner with increased access and availability to social media websites, and therefore the ability to manage the social media marketing strategy whilst travelling, out of office or even from home. In addition, Heathfield (1997, p.13) identified that SME’s are “flexible and can respond more quickly than large organisations to changing market requirements, this flexibility forming a vital competitive strength.” With this in mind, the SME may be well placed to implement and continuously manage a social media marketing strategy, given the degree of flexibility required to manage the strategy. Responses must be efficient and effective, and the lower (possibly non-existent) level of bureaucracy/red-tape in small when compared to that of larger firms may be of great assistance in this regard.

The internet is currently considered as one of the few marketing tools which enable small firms to compete on a level ground alongside larger organisations (Hsien and Liu, 1998), creating significant opportunity for affordable and effective dynamism and versatility (Poon and Jevons, 1997). Social media in particular has been identified as a low cost method of reaching and interacting with customers and potential customers, not only in comparison to traditional marketing methods, but even in comparison to traditional online marketing techniques. (Shih, 2009; Robbins, 2010). Human capital (time) has been identified as the only significant cost associated with a social media marketing strategy in the small firm. The amount of time required however, as identified earlier in this literature review (Gillin, 2009; Robbins, 2010), is certainly significant in comparison to other areas of marketing. It is likely however that many small firms underestimate the amount of time required to successfully manage the social media marketing strategy.

Hamill and Gregory (1997) view the internet as a mechanism through which small firms trying to operate within specific niche markets will have the ability to access the “critical mass of customers necessary for success”. Social media is perhaps the ideal mode of marketing in this respect, given the access that the marketing practitioner of a small firm has to the internet would be relatively equal to that of a larger organisation. It is in this way that the internet has helped reduce the many disparities in terms of marketing ability between small and large firms.

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Brand Equity & Metrics – Measuring the Invisible Asset

Posted on January 6, 2012 by ghm_ie

An emerging factor in the consumer marketing theory, which is becoming increasingly recognised through the evolution of marketing metrics, is that of the measurement of brand equity, due its place within the intangible assets of shareholder wealth (Barwise & Farley, 2004). According to Leone et al (2006), much of the initial interest in the area of brand equity came about as a result of mergers and acquisitions of companies, in which accountants attempted to utilise marketing metrics as a tool for placing an economic value on the public brand of the company.

Ambler (2003) defines brand equity as “the reservoir of cash flow that has been earned by good marketing but has yet to materialise as sales or profits”. Given that under this definition brand equity can be considered future revenues, it seems prudent that appropriate metrics are in place to measure this intangible asset. Brand equity has been noted in the literature for some time (Lassar et al., 1995; Bla, 1999), however the processes, tools  and methods for measuring brand equity is becoming increasingly discussed in the popular press and academic literature. Measurement of brand equity encompasses the measurement of factors such as consumer satisfaction, market share, brand awareness and brand loyalty. Such metrics are useful for demonstrating how the investment in marketing activities has contributed to the overall picture of market penetration (Ambler, 2003), helping to quantify and justify the investment for shareholders, along with assisting management in placing a “balance sheet valuation” on brand equity (Lassar et al., 1995).

Brand equity therefore, would appear to be a prime example of how marketing practitioners can utilise a variety of metrics to not only justify expenditure on marketing activities, but also demonstrate the value of such activities for specific events and purposes, such as the sale of an organisation, or in the event of a merger or formation of an alliance/partnership.

The key question however, is how do we go about measuring levels of brand equity. In corporate acquisitions, a goodwill figure is normally attached to the selling price, in which brand equity normally forms a key component. One common method of engaging in brand equity metrics, is the measurement of sales performance increases period on period, based on adjustments in the branding and overall marketing strategy of the organisation. This in some way allows marketing practitioners to evaluate the increase in performance of the product to adjustments to the marketing plan.

Social media is rapidly becoming a key component of the brand equity “suite”, as a successful social media presence and strategy is becoming increasingly valued to the shareholders and stakeholders of the firm. Investment in time and capital into the social media marketing strategy can be seen as an indirect input into the brand equity of the firm. Given the pace at which the social media marketing arena is evolving, it is difficult to say just how metrics and brand equity in social media will develop, but one thing is for certain, and that is social media now forms an integral part of the brand equity of a firm.

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Know your Active Monthly User’s Figure

Posted on July 31, 2011 by ghm_ie

Perhaps one of the most fitting examples of the tools available in Social Media Marketing Metrics is that of Facebook Insights.

“Insights provides Facebook Page owners … with metrics around their content. By understanding and analyzing trends within user growth and demographics, consumption of content, and creation of content, Page owners … are better equipped to improve their business with Facebook.” (Walter, 2010)

Insights is a tool which most Facebook Page owners will be familar with, particurally due to the weekly Insights Activity email which you can now choose to receive. This email provides a Page owner with a valuable ‘snap-shot’ of how their Facebook Page is performing across a variety of metrics, including not only the number of ‘Likes’, but more so importantly, the number of ‘Active Monthly Users’. This figure is crucial given the move made by Facebook a number of months ago to limit the posts which appear in your Newsfeed to those of which you are an Active Monthly User. Simply, any post which you make will now only appear in the Newsfeed of your AMU’s (unless they have specifically set otherwise – which is not likely!).

For this reason, it is this figure which should be of a far greater concern to any Facebook Page owner/manager than total ‘Likes’. Again this is a classic example of quality not quantity in terms of people who Like your businesses Page. AMU’s are in theory determined by the number of people whom interact with your page in some shape or form over the period of a month. What is troubling however is that Facebook are very tight-lipped surrounding the details of what defines interaction. From what I can figure however, interaction includes a Facebook user clicking on to your businesses page, without necessarily posting or commenting on anything while there. So take a lesson from that, and make sure that you give a reason for people to regularly visit your Facebook page!

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Is Social Media the new paradigm of the Marketing Mix?

Posted on May 5, 2011 by ghm_ie

The Social Web – the combination of various social networks, such as video and photo sharing, blogs and tools such as Twitter and Facebook, is bring the customer voice to a fore in a way never seen before. And the rate at which this evolution has occurred is outstanding. Many are now arguing that Social Media is becoming a firmly embedded additional element of the Marketing and Promotion Mix.

One of the things that makes Social Media unique is that it not only allows businesses to talk to consumers, but also consumers to talk to one another. What this means for businesses is beginning to be explored more in-depth. Recent research has indicated that 34% of bloggers post about consumer and product experiences. With this level of discussion taking place it is essential that firms consider Social Media as an integral process of the Marketing Mix.

‘‘Conventional marketing wisdom has long held that a dissatisfied customer tells ten people. But that is out of date. In the new age of social media, he or she has the tools to tell 10 million’’

The evidence of the power of Social Media in consumer-to-consumer interaction can be seen very obviously in the hotel/hospitality and restaurant business. The impactTripadvisor Logoofnegative, or even neutral reviews posted on the leading Travel Social Media websites (Expedia, TripAdvisor etc.) is widely noted throughout the industry, with many hoteliers and restaurateurs keeping a constant check on these websites (and rightfully so!). What is emerging in this area is that the degree to which Social Media is embedded in the Marketing and Promotion Mix of a firm is determined by the activities and industries of that firm. Social Media can be, and is being, utilised across almost all industry sectors, however the degree, and also the manner in which it is implemented will vary significantly.

There is little doubt that Social Media is a new paradigm within the Marketing and Promotion Mix. This has occurred both out of desire as well as necessity. Social Media encompasses a range of varying elements from other areas of marketing, such as relationship marketing, and customer relationship management. The job of the Marketer has become more broad and extensive, but also even more exciting, as the pace of change and technological development continues to increase.

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Case Study: KLM’s flight to Social Media success

Posted on March 18, 2011 by ghm_ie

KLM, or Royal Dutch Airlines, is one of the Europe’s largest international carriers,KLM on Facebookemploying over 33,000 and boasting a fleet in excess of 115 aircraft. The airline carries with it an iconic ‘Flying Blue’ brand easily recognisable by frequent flyers across the globe, and are also a member of the SkyTeam airline alliance. Being one of the world’s longest established airlines (1919), the company maintains a legacy of quality and luxury, something associated with only a select number of airlines today. In order to maintain such high levels of quality and customer service, KLM have readily adapted Social Media as a method of Relationship Marketing. The primary tools upon which KLM have based their new Social Media strategy on are Facebook (pictured) and Twitter. Both, (in particular Facebook however) offer a public and open platform upon which passengers/customers voice problems they are currently experiencing, questions regarding a booking/upcoming/past flight, and comments, both positive and negative on any aspect of the KLM operation.

KLM FacebookKLM’s implementation of Social Media exploded into it’s own during the Volcanic Ash incident of 2010, in which thousands of flights across Europe were cancelled, leaving countless numbers stranded in airports across the world. Such a remarkable incident is an operational nightmare for an airline to say the least. However KLM demonstrated the power of Social Media throughout this crisis, with passengers asking specific questions on their flights, baggage, bookings etc., and customers with similar queries followed this interaction in real time. Flight cancellations and airport closures were made public to thousands of Facebook and Twitter followers in seconds, reducing the need for customers ringing KLM Customer Service, Airport Information etc. The team working for KLM Customer Service were shown to be doing their utmost for their passengers, and this was all customers could ask at such a time.

Many can learn from the case of KLM, and how they have employed Social Media. Although KLM is an extremely large organisation, the merits and benefits of Relationship Marketing through Social Media can be exploited by any organisation, regardless of size or industry.

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Social media and it’s role in the relationship marketing practices of the SME.

Posted on February 27, 2011 by ghm_ie

Proposal Title:

Social media and it’s role in the relationship marketing practices of the SME.

 

Background:

Contemporary research into services marketing and industrial marketing demonstrates that a new approach to marketing is required. This new approach is based on the building and management of relationships. (Grönroos, 1994). Furthermore, There is a supposed paradigm shift from transactional based marketing to relationship marketing theory, which has been discussed for a number of years (Buttle, 1996). Geiger & Martin in a 1999 study of the online marketing practices of small Irish firms found evidence that there are still major gaps in relating the conceptual ideology surrounding relationship marketing to current business practices.

In a more recent study by Grönroos (1996), he found that focus is shifting from the activities of attracting customers to activities which concern having customers and taking care of them. The core of relationship marketing is relations, a maintenance of relations between the company and the actors in its micro-environment, i.e. suppliers, market intermediaries, the public and of course customers as the most important actor. Over the last decade or more, relationship marketing, direct marketing and database marketing have combined to create a powerful new marketing paradigm. This paradigm is referred to in the literature as ‘customer relationship management’ (Chaffey et al, 2006).

The simplicity of the model (4 P’s) seduces teachers to ‘toolbox thinking’ instead of constantly reminding them of the fact that marketing is a social process with far more facets than simply that (Gordan, 1999). A key question posed by the literature is that can the 4 P’s be adjusted or reworked in order to encompass a more relationship based approach to marketing, or should it be replaced completely with a more suitable theoretical framework. The traditional marketing mix approach appears too limited to provide a usable framework for assessing and developing customer relationships in many industries and should be replaced by the relationship marketing alternative model where the focus is on customers, relationships and interaction over time, rather than markets and products.

Closely aligned with this is the research of Sharma and Sheth (2004) have stressed the importance of an emerging trend from mass marketing to what is now widely known as ‘one-to-one’ marketing, also known as ‘customer-centric marketing’, much of which may take place through social media, and in doing so, the benefits of relationship marketing begin to become evident. Social Media as a term achieved broad popularity in 2005, and is usually applied to describe the various forms of media content that are publicly available and created by end-users.

Scope:

“We don’t have a choice on whether we do social media, the question is: how well we do it” – Erik Qualman

Although widely discussed throughout the literature, and widely accepted as being difficult to attribute one single definition, Grönroos (1996) defined marketing as a process “to establish, maintain and enhance… relationships with customers and other partners at a profit, so that the objectives of the parties involved are met.”

Customer perceived value as part of the transaction process can be calculated as customer benefit divided by customer sacrifice. The “adding value” component of relationship marketing can be utilised in order to reduce the perceived sacrifice by the customer. Such methods/mechanisms of sacrifice reduction may include online Business-to-Consumer interaction through the social media (Twitter and Facebook being prime examples). This can be used as both a complaint management system, but also as a tool for marketing interaction, in lieu of both acute events requiring B-2-C communication, but also as a mode of continuous open interaction with consumers and other stakeholders in the marketplace.

Gronroos (1996) suggests that relationship marketing at an operational level rests on three cornerstones: direct contact with customers and other key stakeholders, a database to store customer information, and a customer-orientated service system. Each of these three practices can be supported by the internet; consequently, it is argued that the internet could offer a unique opportunity for firms to put into practice relationship marketing (Geiger & Martin, 1999). If one aim of relationship marketing is to reduce transaction costs in business exchanges (Buttle, 1996), the internet presents a medium where information costs are relatively low for both side. Following the recent trends of the internet, as demonstrated by the explosion in popularity of various social media outlets, it would seem prudent that research be conducted on the benefits to the SME for practicing relationship marketing through social media.

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Significance of the internet for marketing

Posted on January 30, 2011 by ghm_ie

The answer to this question may seem obvious, but how significant is internet marketing in the business world? This needs to be looked at in a number of ways. Firstly, the industry in which the business is operating in will be a determining factor on the impact of the internet in the marketing strategy of that business. For example, the airlines now have an exponential reliance on the internet as the ‘delivery mode’ of their sales. EasyJet (UK based budget airline) currently make in excess of 95% of their ticket sales online, with Ryanair achieving a similar figure. Notwithstanding ticket sales, a high percentage of ancillary sales (hotel bookings, car rental etc.) takes place online, and increasingly, customer service issues are now sought to be resolved online. The case is similar for the vast majority of all other airlines, as the day of the travel agent issuing physical airline tickets seems far by-gone.

Chaffey et al (2006) observes that the marketing applications of the Internet may be categorised into the long recognised and established channels of offline marketing. These include:

  • Advertising medium – initially the most common business application of the internet, and to a large degree, remains so. Social media is now providing a enormous surge in this application.
  • Direct-responce medium – Through prompt-based advertising on search engines, customers are encouraged to ‘click’ through to the website of a business, the advertisement based upon the input of the customer into the search engine.
  • Sales platform – Method of making sales online, including receipt of payment. Airlines, hotels, car rental agents and ticketed events to name but a few being the major utilizers of such medium.
  • Distribution channel – The Internet has now become a popular channel for businesses to distribute/deliver their content to customers. Apple, through the iTunes store are one such example, in that they deliver music, videos, applications and more on-demand to the customer. No physical product is exchanged throughout the transaction.
  • Customer service mechanism – Through email, social media, blogs and support tickets, businesses may communicate and interact with their customers pre, during and post-purchase. This rapidly becoming a highly efficient manner (both in terms of time and cost) to resolve customer issues, and can also impact hugely on the reputation of the business if not carried out correctly.

The Internet has the ability to support the full range of marketing functions, and in doing so helps to reduce costs, facilitate new methods of communication (both internally and externally to the business), improve customer service and ultimately increase sales.

References:
Chaffey, D. (2006) Internet marketing – Strategy, Implementation and Practice. Essex: Pearson Education.
Deighton, J. (1996) The future of interactive marketing, Harvard Business Review, November-December, 151-62.
Hoffman, D.L. and Novak, T.P. (1996) Marketing in hypermedia computer-mediated environments: conceptual foundations, Journal of Marketing, 60 (July) 50-68
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Possible Thesis Topics:

Posted on January 11, 2011 by ghm_ie

Social media and its role in online marketing for the SME:

  • The use of social media in the integration of the online marketing strategy of SME’s
  • Passive ad avoidance (banner blindness) – reduction in popularity in graphical internet advertisements, and its implications on the positive use of social media by businesses.
  • Consumer-led buying process, made possible through reviews and feedback on products/services by consumers who have previously purchased (perfect example, hotels – review websites such as Trip Advisor, Expedia etc.)
  • Viral marketing – business develops a viral advertisement, posts on YouTube, spreads on Facebook, talked about on Twitter. (This could be a possible topic in itself – is viral marketing feasible for the small firm – it should be, as it is low cost, however requires a high degree of creativity and time.
  • Maybe look at digital/web design, and how social media in its various forms can be integreated into an existing website, or it should be considered in the design of a new website.
  • All of this must focus on the small Irish firm. Looking at firms with export potential is key, particurally for the purposes of PhD research, considering the current circumstances.
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