Monthly Archives: January 2006

The Downside of Marketing ROI

File this under: Oops.

Google’s stock has flown high on revenue from paid search and advertising. One of the most compelling motivations for allocating a bigger chunk of your marketing budget to paid search and online ads is the measurability of the click-stream. When you run an ad in, let’s say, a newspaper, you have to do a lot of engineering to create a campaign where impressions can be tracked to top-line revenue. Special discounts, special URLs or phone numbers, staggered drop dates–all just to be able to pinpoint how many people read the ad and then bought what was advertised.

On the Web, you can follow the clicks from an advertisement or listing directly through to the order page. You can adjust your campaigns to improve performance rapidly by testing different types of ads,  messages and placements until you identify the package that performs the best. Good marketing.

So Google, raking in the ad dollars hand over fist from the frenzy of marketers who want campaigns they can track, decided it would be a good idea to enhance their Advertising offering with Web analytics. If customers are coming to you because they can better track their marketing ROI, why not up the ante and provide them more powerful tools to track it? Brilliant.

Google went out and bought Urchin, a Web analytics company that’s been around for years offering  simplified reporting tools for tracking page views and visitors and other statistics about Web site performance. The plan was to provide Google’s advertisers with a way to track the click-throughs and conversions on their campaigns. They called it Google Analytics.

Unfortunately, Google went from raking in the cash to stepping on the rake and getting nailed by the handle. Forget about the debacle they had during their launch, the real story is that some users are beginning to find the analytics so useful they can slash their budget for paid search and online ads. The CEO of a well-known hosted application company told me that the analytics opened his eyes to the poor ROI of his online spend with Google, and now he’s looking for other channels to replace it.

I don’t know, is that like upselling the emperor on a big mirror so he can see the nice new clothes he just bought?

Don’t get me wrong–I think Adwords is a great product for certain types of marketing campaigns. But so many marketers have become double-fisted drinkers of the Adwords Kool-aid, I think the whole thing’s a little Bubble-icious. I just never thought it would be Google supplying the pin to pop it.

Engineering Upselling Opportunities

I have a theory about Starbucks. For being the world’s most successful coffee shop, they sell the worst coffee in the world. How is that possible? Have you ever tasted Starbuck’s coffee? I’m not talking about all the flavor-laced Dope-accino drinks, but the coffee. That burned and bitter sludge you have to drown with milk and sugar just to choke down. It’s awful. But through the brilliance of Starbucks’ marketing, it’s also guaranteed to be the closest caffeine fix to anywhere you happen to be in the world at any given moment.

For years I’ve stayed loyal to the neighborhood roasters with good coffee, and limited my Starbucks visits to those times when I was away from home. And it would annoy the hell out of me every time. You can’t order a "medium" coffee. It has to be "Grande". And it’s not just some pre-career Goth taking your change, it’s a Barrista. I’d stand there in line listening to all those abbreviated insider codes "double-quad-nowhip-mocha, extrahot", convinced I was on the fringes of some cult. The dependency. The special language. The willingness to donate handfuls of cash with a vacant happy stare. I finally realized the bad coffee was a way to separate the skeptics from the true believers.

When a Starbucks opened right next to my office, I found myself buying more of their crappy coffee, and then upgrading more frequently to a Latte just to avoid the torture. When I finally graduated completely from coffee to the poodle drinks, it struck me: Crappy coffee is an upselling opportunity. It’s what everyone initially comes for, it’s the cheapest thing on the menu, and it sucks. But for just a few dollars more, you get flavor. Any flavor you want. Any combination. And once you make the initial leap, a banquet of delights appears before you. Add a little chocolate, a little orange, a little cinnamon and whipped cream. It’s just money. And once you buy a Starbucks’ loyalty card, you won’t even tally up the transactions any more. Just dump some cash on the card every payday and you’re good to go.

I thought it was an amusing little theory–Starbucks makes its coffee undrinkable to migrate customers to a better tasting, more expensive beverage–a little marketing conspiracy theory to kill time in line with a client. But then I heard one of my friends talking about a recent experience with, and I started to wonder.

If you haven’t heard, Salesforce had a few hiccups in its service over the past few weeks. One of my friends runs a company that relies heavily on, routing its lead generation streams through the application. It turns out the outage wasn’t so much a blackout as it was a brownout. The system was continuously going up and down over the course of a week. Every time it went down, my friend’s IT team had to divert their prospecting feed away from Salesforce, and then restore the connection when it went back online. A little annoying to say the least. Finally they called the Salesforce support team and said, hey, why can’t you send us an alert when the system goes down and when it comes back up, so we can stay on top of this problem?

Are you ready for the response? Sure, Salesforce said, we can send you an alert, but that’s a service included in our Platinum Support Package. Would you like to upgrade?

When I heard the story, I had visions of a Salesforce executive standing behind a row of servers with a plug dangling from his hand watching the Platinum Support Upgrade Dashboard. Drinking a double caramel macchiato.