Sustainable Competitive Advantage in 2015 - MECLABS · • E-commerce and m-commerce growth rates...

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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

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 opportunity 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

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 Consumer

Every thing will have a brain and every brain will talk to

everything.

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.

1. A myriad of decisions are occurring online and every single decision can be patterned into rich predictive insights.

Key Observations

Value Proposition

Customers

70% 75%

25% 35%

65% 55%

45% 10%

70% 95%

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.

* Exact Completion and Abandon Numbers have been Anonymized

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% IN CONVERSIONS

5,368% IN CONVERSIONS

19% IN CLICKTHROUGH

34.6% IN CLICKTHROUGH

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

87.4% IN CONVERSIONS

Experiment: Results 1

2. The Web should be considered first, not just in campaign planning, but even in product development.

Key Observations

1 The Unprecedented Opportunity

Product Development

Creative Brief

Campaign Planning

Media Placement

Digital Promotion

Behavioral Testing

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

Product Development

Creative Brief

Campaign Planning

Media Placement

Digital Promotion

Normative Product and Marketing Develop Progression

Behavioral Testing

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

Behavioral Testing

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%.

Online

Brick-and-mortar

The traditional view of e-commerce

Mobile

2013 (3.7%)*

(5.2%)*

(13%)*

(78.1%)*

Channels

RIS News, 2013 Cross-Channel Tech Trends Study in partnership with Edgell Knowledge Networks, Oct 8, 2013, courtesy www.em\Marketer.com

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%.

Online

Brick-and-mortar

The traditional view of e-commerce

Mobile

(19.1%)*

(6.8%)*

(69.1%)*

(4.9%)*

Channels

RIS News, 2013 Cross-Channel Tech Trends Study in partnership with Edgell Knowledge Networks, Oct 8, 2013, courtesy www.em\Marketer.com

• 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 online before purchasing in store.

• 35% of shoppers who research on mobile purchase in-store.

• 93% of people who used mobile to research go on to make a purchase.

The evolving view of e-commerce 80%

Offline sales

Online sales

Web-influenced offline sales

1Turning Showrooming into a Customer Engagement Opportunity, Edgell Knowledge Network, December 2012

1Forrester: US Cross-Channel Retail Forecast, 2012-2017, October 29, 2013

Channels

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

1Turning Showrooming into a Customer Engagement Opportunity, Edgell Knowledge Network, December 2012

• 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

• In the customer’s connected world of commerce, a change in experience in one channel can affect their behavior in another.

Change in experience

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).

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 ourselves into a false sense of security. But the hope of our future rests on 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

Subject Line: Open this now for Special Savings Subject Line: Get Unlimited Access to [Product] with Home Delivery

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

Subject Line: Open this now for Special Savings

Subject Line: Get Unlimited Access to [Product] with Home Delivery

Email B

Email A

2 Group Activity: Poll Results

Email B Email A

181% In Conversion

2 Group Activity: Test Results

Category Page B Category Page A

2 Group Activity: Which Category Page Won?

Keyword: CatPageB Keyword: CatPageA

Category Page A

Category Page B

Treatment B Treatment A

20% In Conversion

2 Group Activity: Test Results

Article Page A Article Page B

2 Group Activity: Which Article Page Won?

Keyword: ArtPageA Keyword: ArtPageB

Article Page A

Article Page B

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 on 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)

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

40.00%

45.00%

50.00%

Conversion Rate

Article #1 Article #2 Article #3 Article #4 Article #5

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

40.00%

45.00%

50.00%

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

Article #1 Article #2 Article #3 Article #4 Article #5

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

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.

Customer Gap Customer Marketer

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 opinions 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

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

• 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 on Authority

Treatment 2 Focused on Network

Treatment 3 Focused on 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

The treatment page increased the rate of conversion by 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

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

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

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. Your value proposition is what powers the customer’s attraction up the cognitive fabric of the funnel.

Key Principles

“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

of the medium.”

“The marketer does not optimize marketing campaigns, the marketer

optimizes thought sequences.”

Reflection #5 The Marketing As Philosopher www.meclabs.com/philosophy

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).”

Reflection #28 The Marketing As Philosopher www.meclabs.com/philosophy

2 The Force of the Value Proposition

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

52% In Conversion

2 Example

84% In Conversion

2 Example

155% In Conversion

2 Example

548% In Conversion

2 Example

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

Page 2 Page 3

• 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

Version B

Version A

Page 2

Experiment #1: Side-by-side

Design WR Start Rate

Control 3.81%

Treatment 2.70%

% Relative Change: -29.1%

Decrease in conversion rate 29%

Version B’s content decreased the rate of conversion by 29.1%

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.

• 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.

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

Control Treatment

Experiment #2: Side-by-side

Design Conversion Rate

Control 1.89% Treatment 2.34%

% Relative Change: 23.6%

Relative increase in conversion rate

The treatment page increased the rate of conversion by 23.6%.

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.

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

Sustainable Competitive Advantage in 2015 - MECLABS · • E-commerce and m-commerce growth rates...

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