Over the past 2 years, I've been busy testing several new retail marketing programs, hoping to find the "holy grail" within a sea of clutter, noise and reduced mass-media effectiveness.
One program that I've tested and implemented was a "Gives Back" cause marketing program that allows my customers to donate to their favorite church, charity, school, or any local or national non-profit organization of their choice, every time they shop at one of my stores.
In late 2007, in my new role as Vice-President of Marketing at S&K Menswear, my primary mission was to drive traffic to our stores and our e-commerce website, acquire new customers and improve our average sale. I needed to break away from the traditional mode of running monthly sale events, that were supported by very expensive TV advertising. This model was no longer working and needed to be changed fast.
The S&K Gives Back program was launched in partnership with Romeo Advertising in August, 2008. First, we developed a special Gives Back website that functioned as the source for enrollment and tracking, customer service assistance, program news and promotional materials. Next, we kicked-off the program at our corporate sales conference, and the feedback from our managers was extremely encouraging. They loved the fact that they now had a tactical marketing tool that they could use to engage each and every customer, and feel great about delivering the message.
The message to our customers was clear and simple; enroll your favorite non-profit, then enroll yourself and enourage as many members as possible to enroll, and every time they shop at S&K, they earn 5% cash for their organization. No member cards, coupons, special codes required.
After 9 months, we had 5,000 organizations enrolled in the program and the program was generating 2.5% of our total sales volume for the company. In addition, the average transaction was 25% higher than the company average, and approximately 50% of these shoppers were new customers.
We had University alumni groups, large church congregations, national charities, local charities, high schools and a host of other groups that participated in the program. We also held special shopping nights for several local groups, which resulted in additional store traffic. Earlier this year, we ended up hosting over 150 local events over a 2 week period.
The real value here is in its organic, grass-roots nature; where word-of-mouth referrals is the driving force behind our success, and we were only paying for sales as they were realized, without expensive, up-front mass media campaigns. We had churches posting messages in their bulletins, universities using their websites and charities distributing emails on behalf of the program.
I especially enjoyed reading the letters and emails from pastors, schools and charities thanking S&K for helping them raise much needed funds. That's what I call a real win-win-win for the retailer, customer and local non-profit groups.
Bryan Kipp is President of CMO Retail Solutions, LLC. He is focused on providing interim-CMO services and ROI-centric marketing programs to retail clients. Visit www.cmoretailsolutions.com
Wednesday, August 19, 2009
How to effectively utilize ROI metrics
It amazes me how the word “ROI” can have so many definitions and meaning within a retail organization. Some are familiar with the term, though never consistently utilize it to gain a competitive advantage. Others use it consistently, using metrics that they are familiar and comfortable with. Either way, formal ROI metrics for evaluating marketing effectiveness should be utilized by all retail marketing professionals.
Gone are the days of running expensive, inefficient mass media campaigns that focused on “hope” that customers would come running in to buy your product. If sales were healthy, the marketing team accepted much of the credit for driving sales. If sales were marginal, marketing was the first one to line up at the chopping block. In either case, there were too many variables involved to know what really happened.
Today, it’s all about quantifying each investment opportunity. Every CMO should require his or her managers to perform an ROI analysis on each proposed campaign. The analysis might be different between organizations due to different levels of selling costs, gross margins and whether fixed costs are pro-rated. It’s amazing how many “great” ideas came across my desk, but after performing an ROI analysis, determined it wasn’t financially possible.
I’ve become a big believer in revenue-sharing marketing programs, where we don’t pay unless a sale occurs. Program costs and markdown dollars can be easily projected and budgeted for, and assigned to the correct expense center. I tested a “Gives Back” cause-marketing program recently that provided a 5% donation with every qualified purchase and a fixed percentage operating cost. I signed a six month contract and established a revenue break-even target that I needed to hit, minimally. As the program progressed, we were able to establish trends that indicated whether the program was operating ahead or behind plan. Due to the quantifiable success of the program, we were able to allocate additional advertising dollars to the program to drive even more sales. In this case, you are shifting higher opportunity marketing dollars AWAY from underperforming programs – a good thing!
Even mass media campaigns should have an ROI target established, thought using different metrics. One proven way to do this is to establish a control group (or better yet – several), which could include specific customer segments or markets; as well as analyze trend changes in affected markets vs. control markets. You need to be careful to ensure you are filtering out as many variables as you can such as local events, weather, market size and cultural variances. At the end of the campaign, you should be able to have a good feel as to how your investment dollars were spent. You should always have a target or goal established to measure how close you were to meeting your target. This process will force you to become a smarter allocator of marketing funds.
Direct marketing, affiliate programs, affinity marketing, search, online, loyalty and coupons are terrific programs that are easily tracked by retail partners and don’t require a lot of up-front spend and rolling the dice. I had a lot of success with these types of programs over the past couple of years and I’m working to help retailers incorporate more of these proven and quantifiable programs into their marketing matrix.
Always keep an open mind to new ideas. Just make sure you do your homework before you take the plunge.
Bryan Kipp is President of CMO Retail Solutions, LLC. He provides interim CMO services and focuses on identifying and executing ROI-centric marketing programs for retail clients. Visit http://www.cmoretailsolutions.com/
Gone are the days of running expensive, inefficient mass media campaigns that focused on “hope” that customers would come running in to buy your product. If sales were healthy, the marketing team accepted much of the credit for driving sales. If sales were marginal, marketing was the first one to line up at the chopping block. In either case, there were too many variables involved to know what really happened.
Today, it’s all about quantifying each investment opportunity. Every CMO should require his or her managers to perform an ROI analysis on each proposed campaign. The analysis might be different between organizations due to different levels of selling costs, gross margins and whether fixed costs are pro-rated. It’s amazing how many “great” ideas came across my desk, but after performing an ROI analysis, determined it wasn’t financially possible.
I’ve become a big believer in revenue-sharing marketing programs, where we don’t pay unless a sale occurs. Program costs and markdown dollars can be easily projected and budgeted for, and assigned to the correct expense center. I tested a “Gives Back” cause-marketing program recently that provided a 5% donation with every qualified purchase and a fixed percentage operating cost. I signed a six month contract and established a revenue break-even target that I needed to hit, minimally. As the program progressed, we were able to establish trends that indicated whether the program was operating ahead or behind plan. Due to the quantifiable success of the program, we were able to allocate additional advertising dollars to the program to drive even more sales. In this case, you are shifting higher opportunity marketing dollars AWAY from underperforming programs – a good thing!
Even mass media campaigns should have an ROI target established, thought using different metrics. One proven way to do this is to establish a control group (or better yet – several), which could include specific customer segments or markets; as well as analyze trend changes in affected markets vs. control markets. You need to be careful to ensure you are filtering out as many variables as you can such as local events, weather, market size and cultural variances. At the end of the campaign, you should be able to have a good feel as to how your investment dollars were spent. You should always have a target or goal established to measure how close you were to meeting your target. This process will force you to become a smarter allocator of marketing funds.
Direct marketing, affiliate programs, affinity marketing, search, online, loyalty and coupons are terrific programs that are easily tracked by retail partners and don’t require a lot of up-front spend and rolling the dice. I had a lot of success with these types of programs over the past couple of years and I’m working to help retailers incorporate more of these proven and quantifiable programs into their marketing matrix.
Always keep an open mind to new ideas. Just make sure you do your homework before you take the plunge.
Bryan Kipp is President of CMO Retail Solutions, LLC. He provides interim CMO services and focuses on identifying and executing ROI-centric marketing programs for retail clients. Visit http://www.cmoretailsolutions.com/
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