The Future of Communications & Social Media

I don't think that social media is any where close to killing other more traditional forms of communication. People are just discovering a new way to communicate with each other.

Other forms of communication have entered the marketplace over time. Texting (which is also a short and sweet communication avenue) has't stopped people from talking on the phone. While faxing isn't as popular as it once was, every office still has a fax machine that is used regularly. Radio is no longer the way most people get news, but most of us still spend a lot of time listening to it in the car. As communication evolves into new mediums, the total volume of all communication rises instead of all traffic from one medium completely switching to another.

Social media is just adding to the mix of communication avenues and raising the total volume of communication in the world. The Sony video mentions that the amount of information generated in 2010 is more than the sum of the 5000 years previous. This is a trend that will continue and social media is helping to drive it. I still about as much time on the phone as I did 5 years ago, I just happen to spend more time texting and participating in social media. So, my total volume has increased. There will always be a place for print magazines and radio. The saturation of these types might decrease overtime but social media can never replace other more traditional forms of communication. As with everything before, someday a new communications craze will make the social media we find today old news. It will be interesting to see what that new form of communications will be.

Messaging in Social Media

From my experience, messaging in social media needs to be authentic, not overly sales driven and creative. You never know what is going to take off and go viral. Messaging that tends to resonate with people seems to be overwhelmingly creative and positive or terribly negative. There is not much middle ground.

From a business perspective, in order to engage people in the social space, the messaging needs to be quick and simple. Social users tend to consume small bits of information quickly before moving on to the next great thing. Therefore, messaging in the social space needs to be short and sweet. Unique information needs to be communicated efficiently. Clearly, this takes various forms depending upon the platform being used (YouTube videos under 3 minutes, Tweets under 140 characters, quick and clever Facebook Posts, appropriately organized Flickr and Pinterest accounts and blog entries that are only a couple of paragraphs long). The sales message needs to be strategically mixed in but not the general focus of all content. A business wants to become a thought leader or content resource for their specific markets. Once this is established, then a small sales message can be mixed in.

If engagement from fans, followers etc is what the company is going for, then the opportunities for interaction need to also be quick and easily accomplished. Social media by nature teaches people to have a short attention span. Messaging in the social space is completely different from other more traditional communication mediums. For the Colorado Springs CVB, a lot of things are discovered through trial and error. For instance, we have found that "write a caption for this photo" or "fill in the blank" posts on Facebook tend to be more successful than the other types of posts that we have tried. Social media will continue to evolve and we will have to evolve our messaging along with it.

Colorado Springs CVB and Social Media

The Colorado Springs CVB does have a strong presence in social media. Our social media efforts were strategically assigned to our internal public relations person which I think is quite smart. She does a very nice job of balancing our message with a good variety of content across various platforms while maintaining a consistent voice. We have found that playing in the social space is nice to augment the other parts of our marketing mix. As our presence has grown we have found that our website referrals from the various platforms have improved and now make up a significant portion of our web traffic. Some channels like Facebook, YouTube and blogs allow us to push content to "our people" without them having to specifically seek out more content about Colorado Springs.

Like mentioned in the materials for this week, social media can definitely be a double edged sword. But, it's definitely a space that we have to be in. Recently, as I have mentioned in previous posts, we launched a new brand platform for Colorado Springs. Immediately the local social media crowd was vicious in its critique of the creative execution of the logo. I was honestly stunned by level of venom focused against a logo, some turning into personal attacks. (I guess this is one of those marketing scars that you mentioned at the beginning of this course). One very active local blogger organized an anti-logo Facebook page and went out to the mainstream media. Our local independent paper started a redesign contest. Our mayor pulled his support for the entire branding project, not just the logo. Of course, whatever bleeds leads in media and we hunkered down for the onslaught. Eventually 700 people joined the Facebook page (not very many out of a city of 600,000), but they were a very loud group. So, we decided to meet with the most vocal a few days later in person. Instead of becoming defensive, we endeavored to listen to them and come up with a viable solution to address the concerns that were raised. We are currently in the process of redoing the logo. But, this is an example of the power of social media. If we had launched a new brand 3 or more years ago, we wouldn't have encountered this issue. I think the lesson learned here is that it is best to meet the concerns and criticism head on and engage people in a professional way. Ignoring the social media crowd isn't going to make it any better.

On a positive note, usually our job at the CVB is to market to out of town travelers. Normally this group is friendly to Colorado Springs and isn't aware of some of our local political issues. This is where social media gets fun for us. Social media allows us to be creative in how we communicate to the traveling public. Last summer, I had the crazy idea to try and do 55 Colorado Springs region attractions in 5 days. We decided this would be our 2011 social campaign. I was joined by our PR manager and our CEO's daughter who was on vacation from college on this epic adventure. On less than a shoestring budget (literally $500 which pretty much covered our lunches and gas) and with lots of great support from our attractions, we did it! We tweeted and posted to Facebook and Flickr as we went. We also took video shots on a $200 flip camera along the way. The engagement from our current fans was great and we even got recognized on the street on Day 4. By the time we finally edited our videos together it was late in September, so we decided to hold the videos until this year to better coincide with our travel planning season. We finally launched the videos a couple of weeks ago through all social channels and also in more traditional marketing avenues like email and our annual Visitor Guide. The point of "55 in 5" is to show that there is so much to do here that you need to stay a bit longer on vacation or come back for another trip. The campaign also gave us the opportunity to highlight some of our smaller attractions that often do not get as much love. Since the launch 2 weeks ago, we have grown our Facebook fans by 30% and have had over 6,000 views of the videos on YouTube. We are also beginning to get some organic search engine traffic around 55 in 5 keywords, our attractions community feels great that they have all been highlighted and local political officials have complimented our organization's efforts. Social is the central piece of this campaign but it is translating over into other pieces of our marketing efforts. So far, I would consider the campaign a success. We are currently brainstorming for our next social media campaign. 55 in 5 will be tough to beat.

Here is the intro from our 55 Colorado Springs Attractions in 5 Days Adventure! The rest of the videos can be found at http://www.youtube.com/visitcos

Week 12 Goals

This week's focus on every day is day one will be interesting in light of the power of social media in the marketing and business landscape. I will read the assigned article as well as watch the two videos associated with this lesson.

Practical Issues of Implementing CLV

I think from a practical standpoint, the most prevalent issue of implementing a CLV system is that it requires significant upfront investment to get the system in place. Often older systems are outdated, have incomplete information and are not layed out in a format that is easily accessed, exportable or translated to the new system. Cleaning the data in order to ready it for a move can be very costly and time consuming.

At work, we recently went through a CLV switch which was incredibly painful. While in theory, the amount of information that we were trying to condense into single records for each consumer we had in our system what a great idea, they actual switch was riddled with many obstacles. The first problem is that the database system that we were sold was not meant for destination marketing companies but rather for sales companies. We had to bend the system to do things it wasn't built for. In our case, the switch took 6 months and actually caused us to encounter every marketer's worst nightmare, we started to drop orders and conversions because the interface between our website and the database system was complicated that every Visitor Guide order or enewsletter sign up was not going into the system for fulfillment. So, we had numerous people calling, saying they had ordered a guide, but had not yet received it and I had no record of it in the system. AHHH!!! We made the conversion that we worked so hard to get and then weren't fulfilling it. To make matters worse, the vendor didn't believe we had a problem. The root of the problem was that the CLV system was so complicated on the back end to get it to work that the simple "catch and throw" action (receive a visitor guide order, put it in the mail) that should be easily accomplished was not. Eventually, we retrieved all of our old data and switched back to our older system which was reliable.

One of the other problems with CLV is that now that you have collected all of this great information, what do you do with it. To tailor individual communications and come up with the content and time to market on a mass customization level also takes significant levels of investment. With a marketing staff of 2, we find it very difficult to keep all of the other balls in the air while really utilizing our database to its full potential. I guess this is one of those times where there is always room for improvement. With a new agency and database solution this year, we are hoping to make significant strides in this area.

Rosewood Case

The Rosewood Case is discussed in my memo for this week.

CLV and the Tourism Industry

Many companies in the tourism industry use CLV to help them manage their profitability and target the right customers at the right times. As mentioned in previous posts, convention and visitor bureaus are a bit of a different animal. We don't make any transactions at all. Other than ordering a visitor guide or making a booking through a third-party system, we don't actually deliver the final service to a customer. We are simply the marketing arm of the local government. This means that we don't control any pricing, product or customer service aspects of spending a vacation in Colorado Springs. Instead our main function is to inspire people to travel here.

That being said, we do try to use some loose estimates provided by the state of Colorado to predict the average length of stay and average spend for different types of customers who visit us. These values combined with industry standard formulas, mostly provided by the national trade organization, help us to predict the value of different large groups or events that come into town and how much economic impact they have brought to our city over several years. Based on these numbers, we are able to strategically choose which large scale projects and events to pursue with our limited funds. Essentially we are very picky when deciding which customers to invest in. Some are definitely more valuable than others. One unique part of the meeting travel business is that most large meetings rotate from destination to destination from year to year. The national trade association provides a large database where most CVBs cooperate together and share economic impact information from past meetings and events that they have hosted. Information includes actual size of the group, where they stayed, length of stay and other pertinent information. It's almost like an industry wide CLV system. CVBs are very aware of what groups are more valuable than others. This information system is invaluable as our sales team decides which meetings to pursue. It is definitely true that sometimes "the juice is not worth the squeeze."

As far as leisure travel goes, we routinely cleanse our database of names and email addresses to cull out those list members who are no longer responding to our marketing efforts. While emails are relatively inexpensive at around 2 cents per email, when you have hundreds of thousands of email addresses the expense to mail to the entire list can be quite large. Our current database system allows me to track behaviors over time (number of visitor guide orders, bookings, interest based email opt-ins, etc) for each individual email address and is very helpful in targeting and focusing our marketing to reach the appropriate people at the right time. Or deciding to drop that contact from future communications all together.

While I don't use CLV as heavily as I would if I actually had a tangible product to deliver to a customer, we still find ways to utilize the technology to be more efficient with our marketing and advertising dollars.

Brands and the Balance Sheet

I think that brands should be represented on the balance sheet. The truth is that brands can be an incredibly valuable asset. Companies spend a lot of time, money and other resources to develop the value of brands. Powerful brands can make significant difference in the level of sales from one competitor to another and the market recognizes these facts and adjusts the share price accordingly.

Often many advertising and marketing campaigns spend significant amounts of money just to increase the value of a brand. Noting that ROI on campgaings is key, without the brand asset on the company balance sheet it seems as though cash was used without any return.

I understand that brands may be hard to value and the value may fluctuate from year to year, but there are plenty of other assets that are included on the balance sheet that are also difficult to evaluate. Brands could be evaluated every year just like goodwill is. Also, brands from acquired firms are placed on the balance sheet, so see no reason why a homegrown brand shouldn't receive the same accounting treatment.  I think there is very little debate that the value of brands is essential to the overall value of a firm and as a result should appear on the balance sheet.

Favorite Brands

While I would not describe myself as someone who strongly favors brands (I am generally thrifty and prefer to shop around for the best deal) there are a couple of brands that I prefer and will pay a premium for.

My first favorite brand is KitchenAid. More specifically, KitchenAid mixers. I have found out the hard way that when it comes to kitchen appliances, generally you get what you pay for. After literally killing 2 stand mixers in 4 years, I decided to purchase the mixer that my parents own, a KitchenAid Professional 600 Series Mixer. It is incredible and well worth the $350 I paid for it. I swear it would grind gravel into a fine powder if I tried. The engine is outstanding. I can't say that I was surprised by the quality of the mixer. I knew that KitchenAid is known for quality and performance and I have not been disappointed. I am now a loyal KitchenAid customer and will purchase other KitchenAid appliances in the future. The really fascinating thing is that everyone I talk to about cooking or my mixer feels the same exact way about their KitchenAids. I guess KitchenAid's quality products have developed a wide following of brand evangelists. I love my mixer!

My second favorite brand is also cooking related. A couple of years ago a small boutique oil and vinegar shop opened in Manitou Springs and joined the Convention & Visitors Bureau where I work. Our membership manager who is also an avid cook was raving about it so, I figured I would give it a try. The shop is called The Olive Tap and has only 1 location in Colorado, a few other shops around the Chicago area and an online store. Walking into this store is an experience. The air smells so wonderful and the staff is very helpful. But the real star of the show is the amazing varieties of olive oils and balsamic vinegar from around the world. Each one has a specific flavor ranging from chipotle olive oil to black currant balsamic vinegar. The store also has a nice variety of other spices for sale. Each oil or vinegar can be tasted using small white cups that you fill directly from the large containers. Once you decide what you want to purchase, a staff member will fill a fresh bottle so that the oils and vinegars don't get stale on a shelf. The prices aren't cheap but the flavors are amazing. Honestly, the Tuscan olive oil is so tasty it makes any marinade, pizza, pasta or sandwich incredible. Surprisingly this normally thrifty grocery shopper, thinks nothing of driving all the way across town and paying $15 for a small bottle of this liquid gold. I know The Olive Tap represents quality, flavor and attention to service. Even after I move away from Colorado, I will continue to order their products online and pay even more to have it shipped to me. I'm hooked! To me, The Olive Tap is a unique company that does markets a very specific product very well. Who knew that a store that sells mostly oil and vinegar could be so successful. It sure is packed every time I go. Feel free to check it out here if you want. The Olive Tap

This video from one of the stores in IL and is a bit larger than our local store.

What makes a brand valuable & how do they create value

Brands are incredibly powerful. They serve as a mental shortcut for consumers. Brands convey an incredible amount of information from price level to quality to other brand "truths." Valuable brands have achieved a significant positive initial recognition among the company's target markets. They evoke an emotion from consumers. For instance, everyone knows exactly what the Mercedes-Benz brand means - luxury, cars, foreign made, class, sophistication, aspiration, etc. The simple mark conveys so much to all of us because most people have a need for transportation or more specifically, a car.

But, brands don't have to be so widely known to be valuable. Take the example of Specialized. For those people who aren't interested in cycling, they might not know of this brand. But, for cyclists and cycling enthusiasts, Specialized has a very recognizable brand that conveys high performance, quality, fit, function and many other characteristics that people look for in cycling equipment. So, in this case, while all people might not be aware of Specialized, the appropriate target market(s) are and that makes this brand valuable.

Brands have to strike a cord and are so much more than just a logo. They are the essence of what a company or product wants to be and communicate to customers. Companies communicate brands through a variety of platforms including PR, font choice, style of copy, look and feel of the overall marketing strategy. Brands are valuable because they are a symbol of trust and are a mental shortcut for consumers.

Week 10 Goals

For this week, I will read over the two articles on Brand Valuation and the Mismanagement of Customer Loyalty. I will also view the two videos on CRM and also the breeze session about branding and how to value them. Since this week is the first lesson in the "think long term" section, it will be interesting to think of both customer relationship management and brand value in the context of the long term value and success of a firm. I will also begin working on the Tiger Woods brand valuation project for submission next week.

Future Culinarian Promotions

In the future, Culinarian needs to find other ways to stimulate interest in their brand. I don't think promotional pricing should be an avenue that Culinarian uses in the future. It degrades its hard won brand equity. It also establishes unrealistic expectations among trade partners and erodes margins.

Instead Culinarian, might investigate partnering with a well known food personality to generate more excitement over the Culinarian products. Choosing the right endorser is key in this situation. They would need to find a chef who is personable but comes across as someone who appreciates the fine quality of exceptional cookware. Once this partnership is in place, Culinarian will have infinite possibilities for unique promotions that don't rely on price reductions. Many people purchase products that are associated with their favorite celebrities and this could create some pull excitement. With demand from the buying public stimulating orders, trade partners desires for price promotions won't be as important. With the endorsement, the pricing of products would need to be reevaluated as endorsements can be expensive.

It is important for Culinarian to continue to promote its products. If it does not, other competitors will certainly fill the void. The key is making sure to choose the appropriate type of promotion that makes sense for the company. There are plenty of ways to be inventive, clever and unique in the marketing realm. Instead of doing what others have always done, it is time to venture out and take part in different promotional strategies that communicate the quality of Culinarian effectively while staying true to the Culinarian brand and message of luxury cookware. With the appropriate promotion, the company won't have to worry about reducing margins to generate orders, they will be able to gain market share and expand its distribution saturation.

Culinarian's Promotion Success

The price promotion had successful and unsuccessful points. As far as successes go, Culinarian energized its trade partners and the customers that actually received discount seemed to respond positively to it. Also, Culinarian learned that it might be able to operate with lower average inventory costs during periods of normal sales. While the company will need to ramp up production previous to future promotions, by reducing inventory to appropriate levels during the down periods, Culinarian might be able to become more financially efficient.

Even though 80% of the customers were already Culinarian customers, the new 20% was exposed to the company which might encourage repeat purchases later. This is a double edged sword because the price discount might have spurred on the new customers and they might be unwilling to purchase at regular Culinarian prices later. They might be difficult customers to convert in the future.

Also, it does seem that the later gift purchase promotion did work for the company and was successful with consumers. This hints at the fact that Culinarian might be able to work on future promotions that don't include a flat discount that might be absorbed by the retailers but rather other bundling promotions. The risk here is alienating the trade partners along the way. There are many stakeholders and goals to consider when developing future promotions. It is important to "put the customer first" but in this case retailer reactions need to be taken into account as well as other channel partners.

As mentioned in my previous post, I don't think the promotion was successful overall because the intended price discount wasn't passed onto all consumers. Also, this promotion established unrealistic expectations among trade partners and consumers. If Culinarian wants to remain positioned as a luxury, premium cookware brand, price promotions might not be well advised. The promotion also lost money and cannibalized from future Culinarian sales. This eats into margins and prevents the company from achieving the 15% revenue growth goal. While the promotion might have energized sales people for a short period of time, it didn't really accomplish the goals set out by the CEO. There are probably other ways to use pull instead of push to generate more sales and enthusiasm.

Culinarian's Previous Promotion

Based on the case, I don't think the previous promotion accomplished the goals set out by the CEO, Audrey Roux. She set four strategic priorities for the company (1) widen its distribution network, (2) increase its market share of the premium cookware segment, (3) preserve its prestigious image and (4) continue to capture revenue growth of at least 15%, while maintaining pretax earnings margins 12%.

First, from the response cards it seems to be pretty clear that the the promotion was used by a very large number of previous Culinarian customers. 80% is very large percentage and means that the company didn't really broaden its customer base. Also noting that Culinarian is a premium brand the additional customers that the company did attract through this promotion are likely to not be individuals that will repurchase without the price promotion incentive. These are probably not typical "Culinarian" customers and are unlikely to be as profitable as regular customers over the long term for the company. This fact is reinforced by 70% positive response on the importance of price discounts in their purchase decisions.

Also without complete buy-in from the retailers, this promotion did not reach as far into the consumer mindset as Culinarian originally anticipated. It seems as though many of the retailers just preordered stock for future months in order to take advantage of the discount instead of passing it along to the consumers. Also, since Culinarian was relying on the retailers to do the promotion of this discount, the message was driven by the retailer and therefore wasn't highlighted by those firms that were simply stocking up instead of pushing the product out. Saturation of the branding and messaging in the larger advertising and communications market was less than anticipated.

I also think that the price reductions on product other than clearance items dilutes the luxury brand equity that Culinarian has worked hard to establish. By diminishing this cache, Culinarian walks a delicate line that could possibly put them in no man's land in the market. They run the risk that despite the quality of the product, the consumer automatically discounts the product by the previous price promotion amounts. Production costs are likely to remain the same and customers will be unwilling to pay a fair price. This would be a difficult situation to reverse and certainly wouldn't help them gain premium cookware market share.

All things considered, I think it is probably true that the price promotion did more harm than good. While we can debate the merits of the consultant analysis, the fact is that regardless of the financial outcome, this promotion didn't achieve the goals set out by the CEO. The price promotion might have momentarily appeased the trade, but it has established an expectation for future discounts that might be harder to turn back from. This promotion was not profitable or successful.

Week 9 Goals

This week I will read the Culinarian case and apply the concepts we discussed in the Breeze session to analyze the case.