Jul 12, 2021 | Analytics, Management, Marketing
Marketers often hear the term ‘Standard Deviation’ during research debriefs, and conversations with operational personnel managing quality. Many do not know what the term means, and in what context to use it.
Standard Deviation is a statistical term that measures the variation in a set of values from the mean, or average of that set of values. The greater the standard deviation, the greater will be the spread of the data from its mean. In effect, it gives you a level of confidence in the conclusions drawn from the data.
Those values can be anything, from the time it takes for you to travel to work each day, to the variation in the size or weight of a widget coming off a production line, or indeed, from any individual part of that production line.
Take your pre-covid commute as an example. You live in Artarmon, 10km’s from your Sydney CBD office. The drive can take anything from 15 minutes to 110 minutes. If you recorded the time taken for a period, say 3 months, assuming you worked every weekday, you would have 130 data points of the time it took to make the commute, to and from work. Assume you took an average of those times, and it was 30 minutes. The Standard Deviation calculation ‘translated’ means that in 68.2% of the commutes, your travel time would be within one standard deviation of the mean of 30 minutes, and 95.4% of the commutes would be within two standard deviations of the mean of 30 minutes.
Let us assume the distribution of the data points led to a calculation of one standard deviation being 7 minutes. In other words, 68.2% of the time you would complete the trip between 23 and 37 minutes. That calculation also results in 2 standard deviations being 17 minutes, meaning that 95.4% of the time you made the commute between 47 and 13 minutes.
Those ‘outliers’ falling outside two standard deviations will be unusual situations. You went into work at 2.00am for a conference call overseas, and you got to the office in 10 minutes, and one morning, there was a ‘prang’ on the bridge, and it took over 2 hours to make the journey. These would be the journeys that made up the very unusual data points in the set, out at 3 standard deviations, within which 99.7% of journeys fell, or further.
This might seem a bit quantitative for many marketers, but if you are to be taken seriously in the boardroom, you need to be able to speak ‘Data’ the language of the boardroom. The typical marketing type assurances based on opinion and theory must be at least partly replaced by the quantitative language of the boardroom.
For those looking for a bit more, there are plenty of resources on the web, and there is a SD formula in Excel which leads you through the steps to do the calculation. However, in principle, the calculation has a few steps:
- Calculate the square of the differences between all the data points, and the mean, then add them up.
- Divide that sum by the sample size minus1, which gives you the variance. The variance is a statistical picture of how spread out the data points in the set are.
- Calculate the square root of the variance, to give the Standard deviation.
As a marketer, you do not have to know the formula, but you absolutely must understand what the term ‘standard deviation’ means, and where it is best used. It might be useful to ‘fiddle’ with the formula in Excel.
Header graph from Wikipedia.
May 31, 2021 | Analytics, Marketing, Social Media
‘Social Media Marketing’ has become a substitute in many people’s minds for ‘Marketing’.
It is sensible to have such a strategy, just as it is sensible to have an email marketing strategy, and a telephone marketing strategy, in the appropriate circumstances. However, to treat it as anything more than another tool in the marketer’s toolbox is to completely misunderstand the whole process of marketing.
Following is a reproduction of a note I sent after a long conversation with a potential client who runs a large function venue in a regional area. It all happened pre-covid, but it seems the sentiments were still valid, based on a similar conversation last week.
Thanks for taking the time to talk to me yesterday, you clearly have some challenging issues to be dealt with.
I suspect that the social media “brain-dump” over the phone I delivered yesterday may have been a little unclear, so I thought I would follow up with a few points that have consistently come through over the course of the work I have done in this space.
- To achieve anything at a cost that delivers leverage on your investment, you need a plan.
- A core part of that plan is establishing objectives for your activity, and in social media marketing the real objective should be to generate “leads”. Not sales, leads. Social media will not be effective directly selling a product such as yours. It can, however, be a very potent tool to identify and feed leads into a sales process that can be at least partially automated.
- There will be investment required in the process, particularly the development of the ‘content’ and messages you send, irrespective of the level of automation.
- The starting point to developing the messages as it should always be, is the definition of the value of the product you are selling to the receiver of the communication. This is the point where your mix will be challenging, as the wedding reception product you have will be different to the corporate function product, although held in the same room, just re-arranged, and with differing support services. Similarly, the person to whom you are marketing the wedding product will be different to the one likely to be the buyer of the corporate function. Defining all this is critically important, much more now in the time of social media because of its ability to deliver a specifically targeted series of messages to a well-defined individual potential buyer.
- You can develop metrics that will give you indications of the effectiveness and impact of your activity. However, the problem of attribution is a significant one. Which piece of content, or ‘marketing collateral’ was the driver of the move towards the objective of a sale? Any digital agency that tells you they have that absolutely nailed is dreaming. However, you do now have the opportunity to test all parts of the process in a multitude of ways and optimise over time.
- The nurturing requires a “toolbox” of content, aimed at the individuals inhabiting specific target markets that you are setting out to reach. Some of this content can be challenging to create, but once done, can be used, and re-used, improved, and used again for little cost, providing your investment with considerable leverage. In your case, you do not have to do everything at once, pick a market (like weddings) and create a few pieces of content, such as the “Guide to the big day” I suggested yesterday, together with a few supporting pieces such as photos of decoration options, flower seasonality guides, and checklists of the really little things that make a difference on the day. These will both alleviate the planning headaches of the wedding planner, and make your life easier by neutralising those last minute panics.
- Once you have some of this, you can utilise social media to target the buyer. For example, Facebook and Pinterest will probably work for the bride to be, but LinkedIn may be better for the corporate buyer. In corporate it is rarely the one signing the cheque that does the investigation into venue options. Having such targeted message recipients means you can get some useful measurements of the outcomes of your social media spend, that can be supported by some of the other media options you are already using. I am however, a great believer, based on the results of the years, of being able to create a “conversation” with potential customers via social media, but this is just an automated and ubiquitous version of the opportunities we have always had to communicate, as evidenced by this story which goes back many years that I related in a post back in 2013.
As a last word, it is really difficult to find people who genuinely understand all this stuff and can implement as well. There are many around who will promise the world, and deliver something entirely different, when they deliver anything beyond an invoice. However, if you are curious, and prepared to explore the options, much can be done very effectively, and the outcomes are measurable and cost accountable.
If it costs you $50, or even a couple of hundred dollars to find, nurture and convert a prospect for a wedding reception into a sale, is that a worthwhile investment? I suspect so.
Let me know if I can help you develop and implement a plan that will deliver a return on the investment you have made in a terrific venue. Just do not be seduced by the hyperbolic nonsense sprouted by many self-styled ‘Social media experts’
Header cartoon credit: Hugh McLeod at www.gapingvoid.com
Apr 23, 2021 | Analytics, Management
Every plan I have ever seen, business plan, strategic plan, house plan, office layout plan, is made up of a set of assumptions about the future.
To varying degrees these assumptions are based on two sorts of ‘facts’. These so called ‘facts’ are not accurate reflections of reality, but expectations with varying degrees of validity. They seem to fall into two categories:
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- ‘Facts’ about the future, often distorted by perspective, misunderstanding, incomplete information, and a host of other variables.
- ‘Facts’ that are really just an extension of the status quo extended into the future.
These ‘facts’ are then fed into a process of some sort and used to develop a plan in the mistaken belief that the future will look little different to the past.
Therefore, the first responsibility of anyone doing a plan is to find a mechanism to test the key assumptions in the plan, and adjust as necessary.
Failure to test the key assumptions, which are the drivers of the performance of the plan when implemented, is the best way I know to really stuff it up.
Having a plan that does not reflect reality ensures either: that every decision that will be made during implementation is suboptimal, leading to poor outcomes, or that the plan is discarded, and normal chaos resumed.
I am never sure which is the worse outcome.
Apr 16, 2021 | Analytics, Change, Operations
‘Digitisation’ like many other ‘ation’ words has become a cliché, thrown around with no specific meaning that is consistent and generally understood.
It has many parts, ‘Industry 4.0’, IoT, AI, AR, and so on, but what do you have to do to ‘Digitise’? It is way more than upgrading your ERP and CRM systems, it requires wholesale change from the way most businesses have evolved.
Following is a partial list, gleaned from those with whom I work, and the experience that has come from those interactions.
Have a goal. Like any journey, digitisation is nothing without a goal, something to work towards and measure progress against.
Leaders walk the walk. Again, generic advice for any behaviour you want to see in an organisation, it will be absent unless the leadership displays it. An enterprise that aspires to ‘digitise’ when the leadership stubbornly refuses to digitise themselves, will not see much progress down the ranks.
Recognise digital is a culture, not a set of tools. Tweaking current business models and tool sets will not be enough, there needs to be a change in the way the enterprise engages with the world and manages itself.
Customers first. Success has always come to those who put customers first, but it has never been as apparent and such a source of competitive advantage as it is now. When a customer can actually see you putting them first, or not, they are able to make quick choices. They will either become your extended marketing team, or if not happy with you, potentially do a lot of damage.
Do not adapt, adopt. Adding bits on, making a hybrid, as you would when you extend your house, will not work. You must design the digital experience inside and out from the ground up with the objective as the guiding light.
Employee power. We are talking about harnessing the intellectual power and motivation of stakeholders, and particularly employees in this exercise, without whom, it is no better than window dressing. Empowering employees is a core part of the culture change required; they go hand in hand.
Collaboration and co-creation. Progress is increasingly being achieved by ecosystems, rather than enterprises on their own. Figuring out how you collaborate to compete is necessary.
Kill the legacy. Legacy systems only hold you back, you must be prepared to move them on as you would an old piece of equipment in the factory. Often legacy systems work well, you are comfortable with them, but they no longer offer the key ingredient to digitisation, the ability to communicate with other systems and deliver useable, leverageable data.
Make it measurable. As in any project, being able to measure progress towards the goal, ensures resources are allocated appropriately, and that accountabilities are clear is essential to progress.
None of this is easy. Anyone who tells you it is has never done it. It is however essential, and like everything that is new, it pays to take small steps first, gain some confidence, understand better the costs and benefits, find some skilled help, and keep moving forward.
Header cartoon credit: Dilbert once again delivers enduring wisdom.
Apr 1, 2021 | Analytics, Marketing
So called ‘Digital Marketing’ has become an end in itself. Instead, it should be a potentially potent tool in the marketer’s toolbox when used well in the process of delivering value. I see it often spoken of and treated as if it were a separate functional discipline, then it fails. All sorts of rubbish is then wheeled out to explain the failure and move responsibility elsewhere.
It seems to me that the failure of understanding the real nature of digital marketing falls into 7 distinct buckets.
- ‘Digital marketing’ is seen as an event, a set piece, and not part of an ongoing commitment to delivering information and value to customers and potential customers.
- There is no sense of the end point, a vision, the picture on the jigsaw cover. The absence of a clear objective makes consistent production of compelling communication virtually impossible.
- There is a lack of commitment from the top. Many inhabitants of the corner office are older guys trained in accounting, engineering, and the law. Many still consider marketing to be a cost, to be managed short term, rather than an investment in the long term. Often so-called marketers do too little to address this misunderstanding. Instead, they continue to sketch out a few bits of ‘content’ to throw against the digital wall, hoping something works.
- No-one holds accountability for the work, and its results. Digital marketing tends to be a subsection of the overall marketing and sales programs, and it tends to be the least understood. As a result, it is pushed off to the juniors, after all, they know all about this technology stuff.
- All things to all people rather than highly relevant to a few. Digital is mixed up with a mistaken understanding of genuine inbound marketing activity. Inbound sounds nice, but how are we going to set ourselves up as an expert in the face of the competition. Nobody can be all things to all people. If you are a small business, be the expert in your specific niche, your geography, with those on your list of current and lapsed customers. You do not have to be the biggest in the world, just the best to a select few.
- Results are not measured properly, vanity measures are all that are collected, and they tell you nothing about cause and effect.
- The work is done quickly, without thought, passion, creativity, so does not grab a potential customer by the purse. It is just another deadline hit, then move onto the next one, tomorrow. The search for the ‘big idea’ that resonates and differentiates seems to have been replaced by many mediocre bland and ‘safe’ ideas. The big idea remains elusive, and of great value, but we seem to be no longer looking for it as we are distracted by the acceptance of the many mediocre ideas. Not a great exchange. Occasionally you find the big idea, hiding in plain sight, which is where it usually hides, but is so hard to identify.
- A final one. There is no permission, as in Seth Godin’s definition of permission marketing, as requoted in Tom Fishburnes cartoon narrative, with which I absolutely agree. This is all about the consumer, and treating them with respect, something that increasingly many so-called marketers do not do.
Header cartoon credit: Tom Fishburne at www.Marketoonist.com
Mar 15, 2021 | Analytics, Management
We are all familiar with the Pareto Principal: the 80/20 rule, first articulated by Italian mathematician Vilfredo Pareto in 1906. Pareto saw this unequal distribution in all sorts of unexpected places, after first noticing that 20% of the pea pods in his garden produce 80% of the peas. (what is it about peas and scientific insight?) At the time, he was studying the distribution of wealth in Italy, and noticed that 80% of the land was owned by 20% of the people. Further study confirmed the ratio of roughly 80/20 held firm across just about everything he looked at.
In the years since, the ratio holds, and has become a point of ‘first principal’ in every field of endeavour from science to sport, nature, and our personal lives.
Why is it so?
The reason is simple when you think about it.
‘Accumulative advantage’ and the 1 percent rule.
We all understand that a dominating force in our lives is that the winner takes all. Nobody remembers who came second! To win, you only must be fractionally better, 1 percent, than the next best, but you get to take all the advantages. You win once, collect the advantages, which facilitates winning again tomorrow, and again taking all the advantages, and moving away just a little more from those that come in second. Over repeated cycles, the accumulated advantage of being just a fraction better means you take the lion’s share of the rewards.
The rich get richer!
As a kid I was a reasonable tennis player. The club at which I played held regular ‘social’ tournaments broken down into age groups. In my age group, there was a bloke who was marginally better than me, based on results. He beat me almost every time, it was always close, always hard to pick which of us was the better player while playing, but the results spoke for themselves. 1 percent (maybe in this case, 2 percent) made the difference, and I was the forgotten runner up almost every time. Since 2000, there has been 77 grand slam tournaments played, 2020 had only one, the US Open for the obvious reason. Of those tournaments, 3 players have dominated the men’s singles: Federer, Nadal, and Djokovic. Between them they have won 60 times. A spread of 77.9%, and hardly anyone could name more than 1 of the other winners over those years. Within those numbers, if you just look at the French Open, played 15 times since 2005, when Nadal won for the first time, he has won 13 times.
In a memo dated October 2, 2002, then Microsoft CEO Steve Ballmer wrote to staff ”
“About 20 percent of the bugs causes 80 percent of all errors, and–this is stunning to me–1 percent of bugs caused half of all errors.”
Both are just more of the examples of accumulated advantage, the tiny ‘1 percenters’ that add up to a dominating number.
It is this tiny 1 % advantage that drives the 80/20 rule, the accumulated advantage that goes to those who have a tiny advantage, in a winner takes all environment.
In my work with clients, I use the Pareto principal as a core of the investigation into the sources of ‘baggage’ all businesses accumulate that can be eliminated. Then go a step further and encourage them to ‘Pareto the Pareto’. In other words, take Steve Ballmer’s insight, when you have identified the 20% that cause the 80%, go looking for the 1% that cause the 50%.
