Martha Stewart - Extending the Brand
Let's apply this CRO perspective to Martha Stewart Omnimedia. Each business segment and delivery channel has a distinct and separate revenue structure and customer base. Licensing fees drive branded merchandise; the catalog/Web business is a gross margin-based business, and the media business is an advertising model.
Assume there's a finite number of targeted outbound contacts/marketing impressions to which the consumer could cost effectively be pushed. Should Martha Stewart Omnimedia "spend" those contacts with a primary call to action to visit the Martha Stewart collection at Kmart, to touch and feel its branded merchandise? Should it spend them to drive consumers to its Web site? Or should it spend them on a primary call to action to subscribe to Martha Stewart Living, or to watch the TV show to maximize viewership and thereby advertising revenue?
Most likely the targeted contact and content strategy involves a combination of these approaches. But how are these decisions made?
Tools Push the Strategy
Traditional direct marketing tools rely on a customer database that's populated with purchase and non-purchase interactions and appended data, anchored in a comprehensive, consolidated customer record. In this situation, it's not enough to use key variables such as RFM (recency, frequency, monetary) value used in segmentation driven by transaction behavior.
Rather, applying CRO principles would combine a strategic view of the entire organization's business drivers with principles and models from traditional and retail marketing, defining new tools to make more of its total customer base—and effectively help extend the brand.
Thus, these are the questions a company could be asking, and how Martha Stewart Omnimedia might apply them to its business:
• What is the value to the enterprise of each customer interaction (touchpoint)? For instance, what is the hard revenue Martha Stewart realizes when a consumer buys a branded product at Kmart?
Scott Davis is managing partner of the Chicago office of Prophet and Cathy Halligan is a director with its San Francisco office. Prophet is a strategic professional services firm specializing in brand leadership and brand-driven growth. For more information, visit www.prophet.com.