Monday, June 30, 2008

Transactional Consumer Data can drive Marketing ROI

Credit card companies and other firms with transactional data mine that information to generate targeted marketing communications to generate high ROI campaigns. As marketers this is what we try to accomplish. But let's take the power of transactional data farther. What if, in addition to marketing to consumers based on mining transactional data, we put the informative power of the information into the hands of our consumers? Scary? Perhaps. Consider this. If MasterCard, Visa, or American Express were ubiquitous and able to capture all of my transactions (ok, Amex may not have the retail footprint), and track changes in spending behavior, what would it be worth to me to view these trends? I'd certainly be open to using my MC or Visa exclusively to be sure the analytical information delivered to me represented my full spending.

Think about the power of this exchange: In return for my commitment to increase my 'share of wallet' (transactions) with my credit card provider, they deliver to me compelling information about my spending behavior patterns. Suddenly, my credit card provider is an asset as my partner in managing my lifestyle spending rather than simply being a transactional cost center. By changing the thinking and approach to how the data is used, this could take the relationship to another level and generate a powerful ROI to the credit card firm.

Note that this could also work in other realms. If my local grocer provided a comprehensive analysis of my grocery shopping trends (think of charts similar to your mutual fund reports) I would be more willing to provide 100% share of my grocery shopping to that grocer to ensure that the information accurately reflects my total behavior. (Hey, I've been eating more veggies, and less meat....but I'm buying more ice cream these days.)

The key point is that marketers can enhance ROI by recognizing the power of the data that they own and how that data is presented to customers.

Thursday, June 19, 2008

Brand Value

Brand marketers can learn about ways to drive the ROI and value of their brands by learning from other disciplines. For example, in the world of business acquisition and sale the factors that are used to analyze core business valuation can be used to assess the strength and potential ROI of an existing brand. Buyers and sellers will conduct a SWOT anaylsis of the business, just as brand marketers anlayze the competitive strength of brands. In the acquisition world, the multiple used against EBIDTA is generally larger for larger businesses than small businesses. So to, this general rule might be applied to evaluate the relative strength of a brand. Larger share brands are generally (although not always - strength in a key niche can be valuable) more valuable than lower share brands, and there has been sufficient research conducted to document the strenght and added value of being the share leader. Business valuations typically also look at the concentration among key customers. Too much business with a core customer may lower the overall valuation because of the increased risk. This holds true for brands - too much concetration with WalMart can be dangerous for the brand. Business valuations may be lower for business where the owner is sole rainmaker and future sales are at risk when a change in control occurs. For brands, brand value may be at greater risk when a brand spokesperson or long-term brand leader has too great a role in the personality of the brand. So,take a moment and see what you can learn by looking at your brandin the eyes of a potential buyer.