Sustainable Competitive Advantage in 2015: How customer-first - - PowerPoint PPT Presentation

Sustainable Competitive Advantage in 2015:

How customer-first science is transforming the way companies achieve a superior position

What particular piece of technology produced this duplicate?

Audience Question

Audience Question

What particular piece of technology produced this duplicate?

Audience Question

Hectograph – A printing process which involves the transfer of an original, prepared with special inks, to a pan of gelatin or a gelatin pad pulled tight on a metal

• frame. Invented in 1869 by Mikhail Alisov.

Hectograph vs. Copy Machine

INTRODUCTION:

How would you interpret the following data set?

We need to understand the unprecedented

• pportunity to know our customers

POINT I:

WE ARE IN THE EARLY STAGES OF ANOTHER

REVOLUTION IN THE HISTORY OF EXCHANGE.

The Unprecedented Opportunity 1

• 1. Earlier changes were driven by stored communication; then by

computational power.

Key Observations

The Unprecedented Opportunity 1

How would you interpret this dataset? 1

• Cuneiform script is one of the earliest

known systems of writing, distinguished by its wedge-shaped marks on clay tablets, made by means of a blunt reed for a stylus.

• This tablet represents what would be

approximately 1,000 bits of data today.

Cuneiform Script 1

Vs.

Cuneiform Script 1

If you stacked an 8GB thumb drive’s equivalent of cuneiform tablets one on top of another, you could make it to the moon and back.

Cuneiform Script 1

• 1. Earlier changes were driven by stored communication; then by

computational power.

• 2. The next revolution will be powered by the increase of stored

communication, and of computational power, but especially by connectivity.

• 3. Every thing will have a brain and every brain will talk to everything.

Key Observations

The Unprecedented Opportunity 1

The Consumer Every thing will have a brain and every brain will talk to everything.

The Unprecedented Opportunity 1

WE ARE IN THE EARLY STAGES OF ANOTHER

REVOLUTION IN THE HISTORY OF EXCHANGE.

THE WEB CAN TRANSCEND ITS ROLE AS A CHANNEL

AND BECOME THE GREATEST BEHAVIORAL LAB IN THE HISTORY OF MANKIND.

The Unprecedented Opportunity 1

• 1. A myriad of decisions are occurring online and every single

decision can be patterned into rich predictive insights.

Key Observations

The Unprecedented Opportunity 1

Value Proposition

By evaluating the decisions in the conversion process, we were able to predict that there is something causing the customer concern and/or difficulty at this precise juncture of the process.

Experiment: Background 1

Background: An online printing company that specializes in delivering printed marketing materials with minimal turnaround. Goal: To increase the number of purchases online. Research Question: Which product page will result in the largest purchase rate? Test Design: A/B Variable Cluster test. Experiment ID: TP1568 Record Location: MECLABS Research Library Research Partner: [Protected] Research Notes:

Experiment: Background 1

Original Treatment

C = 4m + 3v + 2(i-f) - 2a

Experiment: Side-by-side 1

Design Conversion Rate

Control

4.03%

Treatment

7.55%

Relative Difference 87.4%

87.4% Increase in Conversions

The treatment page increased the rate of conversion by 87.4%

 What you need to understand: By re-sequencing product and process

information, the new product page template achieved an 87.4% increase in conversions.

Experiment: Results 1

9.4%

5,368%

19%

34.6%

Because the changes did not alter CMS content, they were further tested across additional SKUs

87.4%

Experiment: Results 1

• 1. A myriad of decisions are occurring online and every single

decision can be patterned into rich predictive insights.

• 2. The Web should be considered first, not just in campaign planning,

but even in product development.

Key Observations

1 The Unprecedented Opportunity

Normative Product and Marketing Develop Progression

Often, we view our website as simply a channel to be utilized after the development of a product.

1 The Web as a Laboratory

Normative Product and Marketing Develop Progression

However, the Web should be utilized as a strategic customer lab to determine the most viable product and marketing strategy.

1 The Web as a Laboratory

• 1. A myriad of decisions are occurring online and every single

decision can be patterned into rich predictive insights.

• 2. The Web should be considered first, not just in campaign planning,

but even in product development.

• 3. The Web is no longer a piece of the marketing mix. It permeates

every element of the marketing mix.

Key Observations

1 The Unprecedented Opportunity

• E-commerce and m-commerce growth

rates are significantly cannibalizing retail.

• By 2016, online and mobile sales are

predicted to grow by as much as 42.3%.

• Conversely, retail sales are predicted

to shrink by 11.5%.

The traditional view of e-commerce

Percent Annual Sales

2013

Channels

1 The Web Permeates Every Element

• E-commerce and m-commerce growth

rates are significantly cannibalizing retail.

• By 2016, online and mobile sales are

predicted to grow by as much as 42.3%.

• Conversely, retail sales are predicted

to shrink by 11.5%.

The traditional view of e-commerce

Percent Annual Sales

2016

Channels

1 The Web Permeates Every Element

• By 2017, 56% of all offline sales will be

influenced by the Web.

• Over 90% of customers ages 18-43 use a

smartphone while shopping in store.

• 78% of respondents reported researching
• nline before purchasing in store.
• 35% of shoppers who research on mobile

• 93% of people who used mobile to research

go on to make a purchase.

The evolving view of e-commerce

Percent Annual Sales 2017

• ffline sales

Channels

1 The Web Permeates Every Element

The evolving view of e-commerce

“Getting into data, analytics, or mobile isn’t even a decision anymore, so we should stop calling it e-commerce and call it just commerce.”

• Chris Fletcher, Research Director, Gartner

“Macy’s has stopped breaking out its online sales, taking the position that stores and the web are now so interconnected that it’s not meaningful to separate sales by channel.”

• Macy’s 2013 Annual Report

1 The Web Permeates Every Element

• The customer has moved from distinct

worlds of transaction (i.e., e-commerce, Brick-and-Mortar) to a single connected world of commerce (c-commerce).

The evolving view of ecommerce

1 The Web Permeates Every Element

• In the customer’s connected world of

commerce, a change in experience in

• ne channel can affect their behavior

in another.

The evolving view of e-commerce

Channels

• The customer has moved from distinct

worlds of transaction (i.e. e-commerce, Brick and Mortar) to a single connected world of commerce (c-commerce).

1 The Web Permeates Every Element

INTRODUCTION:

How would you interpret the following data set?

We need to understand how to leverage this opportunity to secure sustainable competitive advantage POINT II:

WHAT DRIVES SUSTAINABLE COMPETITIVE ADVANTAGE

IS NOT A PROCESS, A TECHNOLOGY OR A FINANCIAL POSITION;

IT IS CUSTOMER WISDOM.

2 Securing Competitive Advantage

• 1. Company-centric logic is pleasantly irrational. We use it to lull
• urselves into a false sense of security. But the hope of our future rests
• n customer-centric logic.
• 2. Customer-centric logic is grounded in customer wisdom. All wisdom is

a function of pattern recognition.

• 3. Pattern recognition enables us to extend past experiences into future

experiences.

Key Principles

2 Securing Competitive Advantage

Email B Email A

2 Group Activity: Which Email Won?

Keyword: EmailB Keyword: EmailA

2 Group Activity: Which Page Won?

Vote Now!

Text the keyword to 22-333 or go to MarketingSherpa.com/LivePoll

2 Group Activity: Poll Results

Email B Email A

181%

2 Group Activity: Test Results

Category Page B Category Page A

2 Group Activity: Which Category Page Won?

Keyword: CatPageB Keyword: CatPageA

2 Group Activity: Which Page Won?

Vote Now!

Text the keyword to 22-333 or go to MarketingSherpa.com/LivePoll

2 Group Activity: Poll Results

Treatment B Treatment A

20%

2 Group Activity: Test Results

Article Page A Article Page B

2 Group Activity: Which Article Page Won?

Keyword: ArtPageA Keyword: ArtPageB

2 Group Activity: Which Page Won?

Vote Now!

Text the keyword to 22-333 or go to MarketingSherpa.com/LivePoll

2 Group Activity: Poll Results

Background: The only physician’s-only social network, Sermo. Goal: To increase lead rate. Primary research question: Which barrier page will result in a higher lead rate for returning visitors? Approach: A/B variable cluster split test

Experiment ID: Sermo Barrier Page Test Location: MECLABS Research Library Test Protocol Number: TP1483 Research Notes:



2 Experiment: Background

• Each article page focused
• n one specific piece of

research performed with Sermo’s platform.

• To see the details of the

research, prospects would enter their information into a modal box lead form.

Article Page Study Summary (email)

2 Experiment: Background

2 Experiment: Background

Conversion Rate

2 Experiment: Background

Conversion Rate

There is approximately a 30% variation in conversion rate from the highest to lowest performing articles.

2 Experiment: Background

From Observation to Hypothesis:

• The wide variance in

conversion rates indicated that some articles were far more relevant than others.

• Thus, we hypothesized that

the customer needs to be presented more opportunities to discover relevance.

Original Page

2 Experiment: Control

Treatment

• So we reduced the amount of

real-estate dedicated to the current article.

• We eliminated post statistics

while still keeping the primary content.

• And then listed newsworthy

headlines and publish dates of the most recent Sermo surveys in the primary column.

2 Experiment: Treatment

Original Page Treatment

One specific article Multiple specific articles

2 Experiment: Side-by-side

• Rel. Increase in 2nd visit email captures

197%

The treatment template increased 2nd visit lead capture by 197.3%

Design Capture Rate Control (single article) 18.18% Treatment (multi-article 54.05%

% Relative Change: 197.3%

2 Experiment: Results

WHAT DRIVES SUSTAINABLE COMPETITIVE ADVANTAGE

IS NOT A PROCESS, A TECHNOLOGY OR A FINANCIAL POSITION;

IT IS CUSTOMER WISDOM.

THERE IS A GAP BETWEEN WHAT WE KNOW AND WHAT WE NEED

TO KNOW ABOUT THE CUSTOMER. THE EXPERIMENTAL

BRIDGE IS THE KEY TO SPANNING THIS GAP.

2 Securing Competitive Advantage

Customer Gap

Customer Marketer

2

• 1. Testing isn’t a glorious endeavor; it is a necessary evil. Our need to test

is directly proportionate to our lack of wisdom.

• 2. The company that wins the future will be the company that re-forms
• pinions as hypothesis, that augments the social dynamic with a

science dynamic, and replaces speculation with experimentation.

• 3. This company does not replace the creative with the scientific. It uses

the creative process to form rich hypotheses; it uses science to validate those hypotheses.

Key Principles

2 Securing Competitive Advantage

Goal: To determine which aspect of the offer had the greatest appeal to customers Primary Research Question: Which focus will produce the highest click-through rate? Primary Metric: Clickthrough rate Test Hypothesis: Connecting to the aspect of value that has the greatest appeal will result in an increase in customer engagement.

Experiment ID: Protected Location: MECLABS Research Library Test Protocol Number: TP1825



2 Experiment: Background

• The leaders of this group

wanted to know what it was about their offer that had the greatest appeal to the customer.

• They couldn’t come to a

consensus, so they tested three distinct aspects of the core offer.

2 Experiment: Homepage

One hypothesis was that the greatest appeal came from its history and authority in the space. To test that hypothesis, the marketers created this treatment:

• “For almost 60 years ...”
• “… inventing the industry in 1954 …”
• “… most authoritative source of news …”

2 Experiment: Treatment 1

Another hypothesis was that the greatest appeal came from the size of its network. To test that hypothesis, the marketers created this treatment:

• “Over 200,000 media outlets ...”
• “… hundreds of thousands of

journalists …”

• “… 170 different countries …”
• “… most comprehensive media network in the

world …”

2 Experiment: Treatment 2

Yet another hypothesis was that the greatest appeal came from its customer service. To test that hypothesis, the marketers created this treatment:

• “… exceptional custom service ...”
• “… 200,000 errors caught each year …”
• “… work personally … one-on-one …”
• “… available 24h/d, 365d/y …”

2 Experiment: Treatement 3

Treatment 1 Focused

• n Authority

Treatment 2 Focused

• n Network

Treatment 3 Focused

• n Customer Service

2 Experiment: Side-by-side

Design Conversion Rate Percent Relative Change Treatment 1 (Authority) 2.6% 26% Treatment 2 (Network) 2.1%

• Treatment 3 (Customer Service)

2.5% 25%

Relative increase in conversion rate

26%

What You Need to Understand: By testing the different value categories, we were able to determine the most appealing aspect of the offer – the value proposition.

!

2 Experiment: Results

WHAT DRIVES SUSTAINABLE COMPETITIVE ADVANTAGE

IS NOT A PROCESS, A TECHNOLOGY OR A FINANCIAL POSITION;

IT IS CUSTOMER WISDOM.

THERE IS A GAP BETWEEN WHAT WE KNOW AND WHAT WE NEED

TO KNOW ABOUT THE CUSTOMER. THE EXPERIMENTAL

BRIDGE IS THE KEY TO SPANNING THIS GAP.

THE APEX OF CUSTOMER WISDOM IS THE VALUE PROPOSITION.

SURVIVE ON POCKETS OF IGNORANCE.

IN THE ABSENCE OF A VALUE PROPOSITION, A COMPANY IS LEFT TO

2 Securing Competitive Advantage

Before we go any further, take a moment and write down the value proposition of your company



2 What is your value proposition?

• 1. The value proposition is the ultimate justification of the customer’s

“yes”, and thus of the company’s existence. The job of leadership is not to build a company, but rather to create a customer.

Key Principles

2 Securing Competitive Advantage

Ongoing literature review of:

• More than 1,100

academic articles

• 20 popular authors including:
• Starch
• Hopkins
• Reeves
• Kotler
• Porter
• Lanning
• Review spanning from 1890s to

present

2 Value Proposition Research

2 Value Proposition Research

• 1. The value proposition is the ultimate justification of the customer’s

“yes”, and thus of the company’s existence. The job of leadership is not to build a company, but rather to create a customer.

• 2. Your value proposition is what powers the customer’s attraction up the

cognitive fabric of the funnel.

Key Principles

2 Securing Competitive Advantage

“The funnel analogy distorts reality. People are not falling into your funnel, they are falling out.” “The funnel is the message stretched like a cognitive fabric around the frame

• f the medium.”

“The marketer does not optimize marketing campaigns, the marketer

• ptimizes thought sequences.”

2 The Inverted Funnel

“It is not enough to develop a value proposition – one must be able to measure and intensify its force.” “Our prospects must understand (clarity) so they can believe (credibility) that only we (exclusivity) have what they want (appeal).”

2 The Force of the Value Proposition

• 1. The value proposition is the ultimate justification of the customer’s

“yes”, and thus of the company’s existence. The job of leadership is not to build a company, but rather to create a customer.

• 2. Your value proposition is what powers the customer’s attraction up the

cognitive fabric of the funnel.

• 3. Your company’s competitive advantage is directly proportionate to the

force of its value proposition. Your company’s future is directly proportionate to the potential force of your value proposition.

Key Principles

2 Securing Competitive Advantage

52%

2 Example

84%

2 Example

155%

2 Example

548%

2 Example

INTRODUCTION:

How would you interpret the following data set?

How the Boston Globe is Leveraging Testing to Secure Sustainable Competitive Advantage A FINAL CASE STUDY

Peter Doucette

Executive Director of Circulation, Sales & Marketing The Boston Globe Peter Doucette is responsible for all consumer-facing aspects of circulation and audience development for both print and digital subscribers, consumer strategy, CRM, customer service, and customer loyalty. Doucette joined The Boston Globe in 2007 and has served in a number of roles in the circulation department. Prior to his present role, he was director of circulation marketing, where he was an architect for the premium-focused circulation strategy, a critical component in the financial turnaround of The Boston Globe in 2009. Prior to that, Doucette was the director of home delivery and single copy circulation, where he was responsible for growing revenue for the Globe's home delivery business, maximizing newsstand sales and profitability, and increasing customer satisfaction and engagement.

Background

Slide shown in 2012…

Experiment ID: The Boston Globe Location: MECLABS Research Library Test Protocol Number: TP1666

Background: Newspaper, The Boston Globe, selling subscriptions for home delivery. Goal: To increase home delivery subscription rate. Primary Research Question: Which treatment will generate the highest home delivery subscription rate? Approach: A/B variable cluster test Research Notes:



Experiment #1: Background

• Their original checkout process had all necessary steps presented in a stacked, linear style

between multiple pages

Experiment #1: Control

• The team tested a major

redesign of the checkout utilizing a popular accordion-style technology to try to reduce friction and increase response.

Experiment #1: Treatment

Experiment #1: Side-by-side

Design WR Start Rate Control 3.81% Treatment 2.70%

% Relative Change:

• 29.1%

Decrease in conversion rate

29%

What You Need to Understand: By changing the presentation technology of required information input, the result was 29% less completed conversions compared to Version A.

!

Experiment #1: Results

• It was clear that the original home

delivery checkout page was already doing many things right.

• However, after reflection, the team

hypothesized that the accordion checkout required too much thinking for non-technical readers.

• So the team created a treatment that

showed every piece of the form and increased brand-consistency.

Why?

Experiment #1: Results

• It was clear that the original home

delivery checkout page was already doing many things right.

• However, after reflection, the team

hypothesized that the accordion checkout required too much thinking for non-technical readers.

• So the team created a treatment that

showed every piece of the form and increased brand-consistency.

Why?

Experiment #1: Results

Experiment ID: The Boston Globe Location: MECLABS Research Library Test Protocol Number: TP1740 Background: Newspaper, The Boston Globe, selling subscriptions for home delivery. Goal: To increase home delivery subscription rate. Primary Research Question: Which treatment will generate the highest home delivery subscription rate? Approach: A/B variable cluster test Research Notes:



Experiment #2: Background

• New copy and images are used

to emphasize the value proposition of the offer.

• Boxes that interrupted the eye-

path flow of the page are removed.

• Call-to-action is clearer and

implies value.

• Credibility indicators and

satisfaction guarantees are added.

Experiment #2: Control

Experiment #2: Side-by-side

Design Conversion Rate Control 1.89% Treatment 2.34%

% Relative Change: 23.6%

Relative increase in conversion rate

24%

What You Need to Understand: By changing the presentation of required information input, the result was 23.6% more completed conversions compared to the original page.

!

Experiment #2: Results

Slides shown in 2013…

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Sustainable Competitive Advantage in 2015:

How customer-first science is transforming the way companies achieve a superior position