Month: March 2011

When Considering Supply And Demand, Demand Generation!

On December 19, 1973, Johnny Carson’s writers took an ordinary news story and turned it into what some have called the greatest example of Demand Generation in the history of free enterprise. The story contained a statement by a Wisconsin Congressman named Harold Froehlich, who claimed that the federal Government was behind schedule in processing bids from toilet paper suppliers. In the article, Froehlich stated, “The United States may face a serious shortage of toilet tissue within a few months.”

That night in his Tonight Show monologue, Carson said, “You know what’s disappearing from the supermarket shelves? Toilet paper. There’s an acute shortage of toilet paper in the United States.”

By noon the next day, almost every store in the U.S. was out of toilet paper because more than 20 million viewers had heard Carson and told their friends about the “shortage.” Prior to the Great, Fake Toilet Paper Shortage of 1973, demand for a product had never been generated.

Even though generating demand for a product or service isn’t a new concept, the way marketers use demand generation has changed dramatically in the last few years.

For one thing, many of today’s marketers fail to recognize the difference between Lead Generation and Demand Generation, and therefore, use the two terms interchangeably. According to MarketingSherpa, in 2005, “We learned no one says lead generation marketing (or even just marketing). …The new term is Demand Generation.”

“Often confused with Demand Generation is the lead process itself. Converting demand into sales is a totally separate task. Many companies, however, will call themselves Demand Generation organizations when they are really lead generating.”

To create a cutting-edge Demand Generation program, an effective marketer must not only create awareness, but build on it. This is necessary for new brands and products, as well as for established ones. Creating and building awareness is the cornerstone of any Demand Generation program and every kind of marketing, including inbound, outbound, and social.

Once awareness has been created, the next phase of Demand Generation is known as Discovery. This is the phase in which a prospect learns about the service or product via online research, white papers, Webcasts or Webinars.

The third and final phase of Demand Generation is Validation, which takes place when the prospective customer and the vendor discuss the vendor’s solution for the customer.

Although it may be fashionable to mislabel Lead Generation as Demand Generation, clever marketers can generate demand for a product or service as well as generate leads for it. Demand both from your marketing partner because what makes a successful business is the ability to supply what’s in demand.

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I Knew This Article Was Going To Be About Predictive Modeling

How can marketers know what you’re going to buy before you know what you’re going to buy—let alone what you’ll eat, where you’ll eat it and how much you’ll pay for it? Good marketers get this information not from a crystal ball, but by engaging in database marketing at the highest level. They use Predictive Modeling.

It’s the same reason that the Vegas blackjack dealer and the pit boss share a smile when you step up to their table: They know there’s only a slim chance you’ll be taking home that stack of chips. They note the “classifiers” in your appearance and actions: the clothes, hesitant demeanor and darting eye movements. They see that you’re the opposite of the focused, relaxed gambler in his element.

Marketers identify the classifiers—or attributes—of their ideal customer, including such data as past buying habits, income level and much more. Predictive Modeling is the science of calculating what the model prospect wants and needs based on these classifiers. Predictive Modeling is also used to construct models of likely customer behavior based on particular measures like sales, marketing and customer-retention techniques. In other words, marketers can tell how customers will react to marketing messages, discounts, offers and other actions.

Predictive Modeling comes into play when the market is broken down into segments where customers share common wants and needs. Market segments may include:
a) Groups that have different needs and wants from other groups
b) Groups that have the same wants and needs as other groups
c) Groups that will respond similarly to stimuli in the market

Instead of sending the same marketing message to every potential customer, smart marketers make the most of every dollar by targeting groups most likely to buy and then tailoring their messages accordingly.

Statisticians utilize even more sophisticated elements of Predictive Modeling to further drill down to the exact customer they’re trying to attract. For instance, logistic regression is a sort of “reverse engineering” of Predictive Modeling. And Uplift Modeling is used to predict changes in probability caused by actions for limiting “churn”—natural customer attrition caused by moving, death or a shift in interest.

Predictive Modeling is a very valuable tool that marketers are refining in order to create highly pinpointed marketing campaigns.

But if you use Predictive Modeling, you already knew that.

The Source-erers Apprentice

Database marketing is a complex discipline that, when practiced correctly, can yield tremendous return on investment. There are several different types of database sources, which include customer data, demographic data, psychographic data, transaction data and marketing action data. Within each of these sources, there are differences between internal, external and primary data.

Customer data is any data that is provided by, owned by, or used by the customer, which can include data that was generated by the customer when using a service. For example, if a customer is using an online social networking site, the information provided by the customer is customer data. The information owned by the customer, such as the customer’s user name, and user password is also customer data. The data that the customer generates, such as a tweet on Twitter, or a wall post on Facebook, is once again, customer data.

Demography is the statistical study of human populations. Most Demographic Data is culled from the U.S. Census Report, which exposes data such as median income, single-dwelling unit, heads of households, etc. Demographic data has become more and more sophisticated as data-gathering tools have become more sophisticated. Targeted marketing utilizing demographic profiles, which are very precise, is now possible on many online sites.

Psychographic data relates to lifestyles, personalities, interests, attitudes, and values. If you were manufacturing a new waterproof, weatherproof tent, then the psychographic data that would expose your target would be that of frequenting campsites, shopping at online retailers that specialize in outdoor clothing and equipment, etc.

Transaction data is any data that a user inputs or is input on behalf of the user during a transaction. Your car is due for the 45,000 mile service. You pull up to the service writer at the dealership, and the service writer takes information from you. That information is transaction data. Now the dealership knows that you have 47,000 miles on your car and that you just had an oil change, and they will now send you a notice three months from now to remind you that you need another oil change. They will check the tread left on your tires, and perhaps send you a reminder to buy new tires.

Marketing action data is the data that is obtained from you during a marketing-driven plan. If you receive an offer to view a free white paper, and you have to register for that privilege, that registration information is marketing action data. When you take action on a marketing initiative, the data that you give is marketing action data.

Internal, external and primary sources of data: When data is compiled from within your own company, the data is internal. When data is purchased or obtained from a secondary source, such as the government (Census) or a list provider, or another company selling their list, the data is external. Raw data, which has not been manipulated, is known as primary data.