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Having been a marketer for more that 15 years, I have a degree education in Marketing that effectively predates the internet.
What I, and most other communicators my age and older were taught was to periodically survey customers and string the results of those surveys together to track customer sentiment, detect trends and identify opportunities.
Today this approach still guides the allocation of billions of marketing dollars across the world.
Balance sheet approach
I consider this the balance sheet approach to customer tracking.
Each period (year, quarter, month) an organisation surveys the market, plots the results, compares customer sentiment across periods, reviews its strategy and makes appropriate communications expenditure decisions.
Fifteen years ago this was the only approach available to communications, and it had worked well for many years, particularly in slower moving industries.
However as change has increased tempo, some flaws have appeared.
Rapid changes are undetectable
The balance sheet approach only detects changes occurring across multiple survey periods. Any changes within a period are undetectable.
This leaves organisations at risk of missing opportunities arising in shorter time frames. An example is the rapid adoption of digital cameras. Film camera leaders lost enormous market share and shareholder value to industry newcomers who were faster to react to the trend.
Film camera makers were aware of the trend to digital. However their customer sentiment balance sheets did not provide sufficient information for these companies to be convinced of their need to change direction quickly. As a result it has taken years for them to recover.
Poor communications effectiveness tracking
Secondly the approach does not effectively support tracking of marketing and communications effectiveness.
If you survey your customers twice a year, and in that period run six different campaigns, place 40 advertisements and 100 news articles, how can you really determine which campaigns, advertisements or articles were most effective in causing a positive sentiment change?
Without being able to track effectiveness, how is it possible for an organisation to improve it's allocation of resources and communications dollars over time?
Does not scale - more surveys do not improve analysis
If change increases page, the logical step under the balance sheet approach is to hold more frequent surveys.
This reduces the time between data points, helps organisations to catch major shifts in sentiment sooner, and allows them to detect smaller shifts that could become major opportunities.
This approach works to a degree. However it increases the cost of research and customers begin to chafe under the burden of surveys - lying or lowering their view of the organisation.
As a result over time the approach results in diminishing returns - it simply doesn't scale.
Instead new approaches are necessary.
Revolutionary change - real-time monitoring, the cashflow approach
Since widespread adoption of the internet and the introduction of social media tools it has become possible for organisations to track customer sentiment virtually in real time.
Rather than surveying at set intervals it is now possible to continuously monitor customer sentiment, detecting smaller shifts across smaller audience segments.
This allows organisations to respond in shorter-timeframes, exploiting opportunities, influencing shifts and measuring communications effectiveness for each communication.
This is a revolutionary change for communicators and can be difficult for those my age and older to frame within our past experience.
To help with this I call it the cashflow statement approach to customer sentiment.
Whereas balance sheets measure an organisation's position at set points in time and assist strategic level decisions, cashflow statements look at the organisation's daily or hourly position, supporting tactical decisions as well as testing overall strategic approaches.
As described above, I see the two approaches working hand-in hand.
- Regular surveys detect larger sentiment changes over time,
- real-time community monitoring detects smaller, but no less significant, changes and provides an early warning for large, often abrupt, market shifts (discontinuities).
Impacts for government communicators
Framing this for the public sector, public consultancy has for a long time been a key consideration for government policy and decisions.
Online conversations are another channel now available for the government to understand and track citizen sentiment.
It is an avenue whereby the government can engage more broadly - at lower cost - with community groups, individuals and corporations.
Best yet, it's not a one-way mirror, as is market research. It is a conversation that the government can participate in.
I'll explore approaches for how the government can effectively engage in this conversation in other posts.
For now, have a read of the Social Web Analytics eBook 2008 for more information on how to use online channels to monitor the conversations already in progress.
Craig,
ReplyDeleteI like your accountancy analogy - balance sheet and cashflow statement. Looks like an effective way to communicate the differences, strengths and weaknesses, of the two approaches to improving one's understanding of the marketplace.