Data Science in Marketing: A Comprehensive Guide
Most marketing teams are leaving a lot of money on the table. According to Sitecore, the average US brand collects eight pieces of data per user, ranging from address to behavioral insights. Brands are collecting an extensive amount of data at various stages of the customer journey. Data science helps us leverage this data into actionable insight that results in a greater return on investment.
Data science methods like machine learning, clustering, and regression have moved marketing from a creative domain to a scientific one. By leveraging data science, marketing teams can extend their top-funnel approach to incorporate the full-funnel and uncover product and customer insights at scale in an unprecedented way. To do this, growth marketers should understand what data scientists can and cannot do as well as some of the methods and how marketing teams use data scientists.
What Data Science Is and Is Not?
There is a lot of confusion about what a data scientist does and does not do. Specifically, people often interchange the terms of data science and data analytics. The easiest way to differentiate between the two is that a data scientist looks to predict the future, while a data analyst looks to summarize the past. Data scientists make predictive models using regression, machine learning, and other advanced statistical methods, while a data analyst uses descriptive statistics to analyze past patterns.
A data scientist is not a software engineer. Their programming ability is enough to run machine learning and statistical analyses they need using platforms like R, Python, and SAS, but not to develop software or manage infrastructure like an engineer would. Data science is the intersection between business expertise, programming, and statistics, where programming is simply a medium to derive insights using statistics and business or domain expertise.
The data scientist toolbox uses artificial intelligence and mathematical modeling to unlock a new set of insights. A marketing data scientist can answer questions such as: Who are your most promising customers? What choice alternatives do consumers of your product have? How do people feel about your brand? What other products do your customers want to buy? By leveraging the data scientist, a marketing team can eliminate waste and target customers in ways that are cost-effective and personalized.
Understanding Data Science Workflow
Understanding the data science workflow will allow your marketing team to communicate with the data scientist effectively. After you have defined your task and gotten access to your data, the data scientist will perform some exploratory data analysis to get an idea of the right model to find the insight we are looking for. This could mean testing models on historical data sets and measuring its accuracy or a variety of other methods to create a benchmark against which to measure the success of whatever model we pick. After the model is chosen, the data is formatted in a workable way. This could involve figuring out how to deal with missing values, duplicates, or other variables that make the model harder to apply. The model is then run on a partition of the data in order to train it. The method chosen will mold itself to the data and then will allow you to apply the model to any dataset with the same parameters. Finally comes fine-tuning the model. This means the model isn’t overfitted to the data and that it runs as it is supposed to.
Examples and Use Cases of Data Science Applications in Marketing
Let us take a look at a scenario that most marketing professionals are deeply familiar with. A company is spending a small fortune on marketing, and the ads are getting a lot of visibility, but the return on investment is nowhere near expectations. Enter the data scientist. Through data collected on the website and social media pages, the data scientist can understand the customer base’s demographics. This understanding goes beyond age, geographic location, and gender of yesteryear. A simple affinity analysis (also known as a market basket analysis), wherein we analyze certain consumer behaviors’ co-occurrence, will give you details about what else this customer is likely to shop for.
Below is a visual depiction of an affinity analysis for grocery items. Using an affinity analysis, a marketer can see patterns like people who buy male cosmetics are also likely to buy bottled water.
While the market basket analysis has been employed for years by retailers, in the new age, it gives you insights beyond people who buy almond butter are also likely to buy bread. It might give you a less intuitive, but equally actionable insight such as foodies are also likely to be home décor enthusiasts and are likely to watch, “Yoga with Adriene,” on YouTube (affinities produced with the Think with Google toolbox). This allows you to market in new places where your client base is present, while still exposing you to a new audience, increasing your visibility without breaking the bank on marketing material.
Data Scientists Seek to Optimize Every Chance They Get
In data science and growth marketing, the name of the game is optimization. A growth marketer is aware that business success is, in large part, driven by profitable revenue. Tying a business’s marketing strategy to key performance indicators like customer lifetime value, incrementality, and cost per customer acquisition is absolutely necessary for a competitive business landscape. Businesses simply cannot afford to spend on marketing that does not contribute to their bottom line. A favorite tool of every data scientist and one that is absolutely necessary to the modern-day marketer to help with this is segmentation.
Some Key Benefits of Segmentation
Helps determine market opportunities
Tailor-made marketing initiatives
Product development and design insights
Pricing model insights
We can define segmentation as grouping or clustering of customers into groups based on different characteristics. Every marketer knows that different audiences respond to different narratives. This is where our data science toolkit comes in. Clustering customer segments together when you only have a few input variables is easy. However, the task becomes much more challenging as the number of variables grows. Data scientists use a machine learning method called clustering to figure out where the segments really are.
How Does Clustering Work?
Clustering algorithms are unsupervised, meaning the algorithm figures out what variables are similar to each other without input from the user. These clustering algorithms strive for the most mutually exclusive, collectively exhaustive segments. When employed correctly, this approach optimizes clusters in the most efficient way possible. It does not segment where segments are not needed and does not miss segments necessary for a targeted campaign. Not only are points within clusters similar to each other, the clusters themselves are dissimilar, meaning marketers can then tailor that each segment will respond to, rather than a generic campaign with low ROI.
If we look at the graph below, we see that the clustering algorithm groups the raw data into three separate clusters optimized for minimum distance between points and maximum distance between clusters. This particular algorithm works by cycling through a series of cluster centers and finding which one is most mutually exclusive, collectively exhaustive.
Full Funnel Optimization Leveraging AI
Machine learning and artificial intelligence are how marketing reaches the full funnel. Marketing campaigns have traditionally focused on awareness, acquisition, and activation. Through the use of data science, the growth marketer gets all the way down to retention, revenue, and referral. A business can forecast the customer lifetime value of new customers through the use of several machine learning and artificial intelligence methodologies. Rather than just focusing on a first sale, growth marketers employ data science insights to help companies to target longer customer relationships.
Data science allows you to understand the customer journey in a much deeper way than previously possible. Where do your best customers come from? Data scientists give you the insights to curate your marketing strategy to the customer that makes the most sense for you. Suddenly, your marketing team is directly impacting your revenue growth. Machine learning can predict churn rates, helping you develop a strategy to target customers who are not as engaged with the brand as you would like them to be. Your marketing team is now working on retention. This works all the way down to referrals. Artificial intelligence can help you determine which customers are influencers for your brand through qualitative analyses on the quality of content, brand affinity, and brand engagement. You can then target them to make their referral process simpler and more effective.
The insights artificial intelligence give you are seemingly endless. Marketers and data scientists alike know that at the end of the day, data is really about understanding people. In the age of social media, businesses have access to unfiltered, unbiased, real-time commentary from their customer base and people exposed to their brand. In the past, companies would spend a small fortune to hire a research firm to survey how people feel towards a product or campaign. In the 21st century, the data scientist is your research firm.
A simple sentiment analysis will give you an idea of how the public feels about your product. This information is invaluable. Sentiment analysis works by associating words with sentiments and then mining sources for text to measure the overall themes in the text. Most commonly for marketing, this is done through polarity, meaning words are assigned a value of positive, negative, or neutral. Finally, the outcome of the analysis is measured, giving the marketer feedback on how people responded to an ad. Here is a graphicby Irena Spasic, a data mining professor at Cardiff University, outlining components and expertise required for sentiment analysis.
This process is completely automated through the power of machine learning. Growth marketing bridges the gap between data and society. By understanding the power of data and its insights, growth marketers can make sure their campaigns speak to the society they live in.
Insights and Experimentation
Equally important as predicting these segments is understanding “why.” Data scientists look for causal relationships that growth marketers can then reverse engineer into an effective campaign. For example, let us hypothesize that clicks and conversion rate are positively correlated. The data scientist can test if that is true with a regression analysis, then the growth marketer, in partnership with the data scientist, can come up with experiments to test which campaigns produce more clicks, therefore a higher conversion rate.
The growth marketer is not just a creative, but a scientist, whose process involves constant experimentation.
An effective marketing strategy must always attempt to be ahead of the curve. This requires some level of risk, but with our data science toolkit, that risk is minimized. In the business world, we often get caught up in the “best practice,” rhetoric, when in reality, every business we have seen scale has done so by taking risks. The best practices of sixty years ago were risks at the time. Progression happens through experimentation, and data science equips you to perform a large volume of micro-experiments that together give you immense insight without making drastic or sudden changes, thereby mitigating the risk inherently present when trying something new.
The growth marketer can communicate the pain points of a business, while simultaneously understanding the public sentiment and developing a marketing strategy around that.
An oft-told adage in the data science world is that data scientists are storytellers. The insights derived from the data science toolkit are not just numbers. They help tell your business a narrative. What are our customers feeling? Where are we doing well? Where are we struggling? Data science in marketing is about answering these questions in a more efficient and cost-effective way. Similarly, marketers understand the importance of the narrative. Studies show that a consumer is much more likely to remember an ad when there is a narrative attached to it. The most effective advertisements are told as a story. The growth marketer is the 21st-century hybrid—a master of data and storytelling both to the business and the public. The growth marketer can communicate the pain points of a company, while simultaneously understanding the public sentiment and developing a marketing strategy around that.
Should You Hire a Data Scientist?
So, as a marketing executive, where should you start? It is just as important to recognize where your company is not ready to employ artificial intelligence as it is to recognize where it is necessary. Someone considering hiring a data scientist should be asking themselves questions like do I have enough data? Is that data sourced in a way a data scientist can access? An early-stage startup may not have the infrastructure or volume of data to necessitate hiring a data scientist. A large enterprise may need to consider its data pipelines before it can consider hiring one. Understanding what a data scientist can and cannot do is essential in deciding whether one is right for your team.
Maybe your company has some need for data science tools but has not employed them before. As is in marketing, when thinking about where to integrate data science and growth marketing tools into your marketing strategy, it is often best to capitalize on the low hanging fruit first. Certain tools and methods are easy to implement using data your company is already likely to have. For example, your company has likely already done demographic research and has the raw data somewhere. Clustering is a natural next step from there. Similarly, most businesses that are past the startup stage have the data to do at least some churn rate prediction, and from there, they can take steps to minimize it. Once your business has a big enough pool of data, you can venture into natural language processing and sentiment analysis to understand how consumers feel towards your product.
If you think you’re team could benefit from some advanced data analysis but not enough to hire a full-time employee we would love to talk about your needs to see if a NoGood squad acting as an extension of your teamcould solve your problems.
Three Examples of How Some Leading Brands Incorporate Data Science Into Their Marketing Mix
Netflix
At Netflix, they have a team of data scientists devoted to driving the messaging of their marketing campaigns. The growth data science team at Netflix measures the effectiveness of marketing and messaging through a causal approach, specifically incrementality. The Netflix model employs experimentation to understand how their audience is responding to notifications sent out for new content. At Netflix, the data scientist becomes both an engineer and a strategist. The data science team is responsible for driving the innovation roadmaps to improve experimentation and modeling techniques. This means that the data scientist decides what questions to ask to get to know the audience and work with business stakeholders to shape the strategy. A similar model is being employed by most companies running large marketing campaigns, including Facebook and Google.
Facebook has a marketing science team that consults across a variety of insights to give insights on understanding the impact and effectiveness of their client’s marketing campaigns. The goal of the team is to quantify, measure, and create strategies that effectively target consumers. The Facebook model is built on research and empirical methods and provides services such as Ads Research, Client Measurement, Consumer and Advertising Insights, and Auction and Delivery, everything from marketing strategy to programmatic buying.
The marketing data scientist at Google develops, optimizes, and implements actionable quantitative models for advertiser and publisher customers to drive marketing effectiveness and return on investment for Google’s clients. Google’s marketing data science team aims to improve data savvy to its clients by helping them interpret insights. Additionally, Google helps clients develop and implement new processes to optimize marketing efficiency and return on investment.
Optimization and Scale
The future is growth. Growth marketing is not just marketing for startups or scaleups; growth marketing is about optimizing your progression as a business. For a large enterprise, that might mean developing a new product to maintain your position. For a startup, it might mean driving conversion rates on your company’s website. Companies like Google, Facebook, and Netflix have created a new position in their marketing departments called the growth data scientist to find the insights while the growth marketer applies them. As the business landscape becomes more and more competitive, the growth marketer’s skillset, combining data literacy and marketing know-how, is essential to finding that path of least resistance to acquiring new customers and growing your business sustainably.
Practical Applications of Data Science in Marketing:
So what do we do with all of this insight? The answer is optimize. Here are a few practical applications that data science can help marketers trim the fat on their campaigns and better understand and target their customers:
Channel Optimization
By taking a look at where your greatest conversions are, you can choose what channels to use to bring your product to market. Data science can help you automate this process and make sure you are always getting the greatest possible ROI.
Customer Persona Development
Marketing and data science both take common approaches in their strategies, making assumptions, then validating or invalidating them. Data science can help you test the research and assumptions you make to develop who your customers are and then pivot if need be. Once you have a solid understanding of who your true customer persona is, the data will show you deeper insights about what channels they prefer and what content they are likely to respond to, hence further increasing marketing efficiency.
Lead Targeting and Lead Scoring
Seasoned marketers know that a business or product does not have just one customer persona, but several. The problem often arises that businesses are not sure which one will provide the greatest ROI. Data science allows you to track which customers have the greatest lifetime value (LTV) and then create a model to rank and target leads by LTV or any other KPI that makes sense for your business.
Sentiment Analysis
Sentiment analysis is a marketer’s natural best friend. Any marketer knows that the most important trait a marketer should possess is empathy. Sentiment analysis allows you to collect data at scale to help you empathize with the customer. It allows you to monitor their reactions and beliefs towards the information they receive and gives you feedback on content and how people are engaging with your campaign.
Product Development and Pricing Strategy
Data science will help you match the right product with your customer. By looking at insights given to you by customer persona data you can perform various clustering analyses to see what else they are likely to buy and what price they are likely to buy it at. These insights let you know exactly what your customer is looking for both from your current collection and give you data to develop new products they might be interested in.
Real-Time Data Insights
Data science also gives you the power to communicate with your customers quickly based on real-time data. For example, a marketer may want to target customers who have delayed flights. Data science allows you to find customers who fit the mold and market to them immediately. This helps marketers improve their customers’ experience by further personalizing content.
Beyond COVID-19 Digital Trends Market Report
Four months since the World Health Organization declared COVID-19 a worldwide pandemic, the world is slowly reopening after an unprecedented lockdown. The consumer market is changing, with declines in some...
Four months since the World Health Organization declared COVID-19 a worldwide pandemic, the world is slowly reopening after an unprecedented lockdown.
The consumer market is changing, with declines in some traditionally strong markets and drastic increases in others. A survey run by Statista highlights that 43% of people are likely to spend more than before on health and hygiene, followed by 40% in household cleaning products and 31% in online shopping for food and drinks. These changes extend into industries including travel, healthcare, fashion, and retail among others.
eCommerce vs Traditional Retail Trends
Over 40% of digital grocery shoppers during the lockdown were new to online grocery shopping prior to the pandemic, according to a Business Insider report. According to emarketer.com, both “food and beverage” and “health, personal care and beauty” were the fastest-growing eCommerce categories prior to the pandemic. Forecast for food and beverage sales were raised from 23.4% to 58.5% and health, personal care and beauty sales from 16.6% to 32.4%. Of new grocery online-shoppers, 68% would continue to shop online in the future, according to another study run by Aki Technologies and TapResearch.
Strong consumer brands (like Nike), that stayed emotionally connected with their fan-base during the pandemic, have witnessed a lift in online sales. That trend isn’t expected to fade away.
As shoppers flocked to Nike’s website for sneakers and workout gear, digital sales soared 75%.
Nike in-store sales will surpass the online ones though, as the country reopens. The Nike in-person shopping experience is hard to top, even with the best e-commerce site.
“Digital” is now a necessity and consumer brands are investing in improved e-commerce sites as well as stellar customer service and impeccable delivery.
Delivery Services
Even if ordering food became the norm from mid March to mid May, the 75% jump was only temporary. With lockdowns being lifted and restaurants reopening, people are going back to dining outside.
According to Twitter data, there were 250.000 tweets about ordering delivery from March 9 to March 22 (there were 80,000 Tweets about pizza alone), almost a 300% increase from the previous month.
People showed their support for their favorite restaurants by ordering from them, and platforms like Instagram rolled out interactive “food order” and “gift card” story stickers with their own unique content aimed at driving awareness of the new ways in which people can support their favorite local restaurants.
Grocery shopping apps experienced an increase in downloads with Instacart leading the way with a 218% increase in app downloads.
The company reportedly added over 300,000 people to their workforce to face the increase in demand of March and April.
Only about 3% or 4% of grocery spending in the U.S. was online before the pandemic. That market share has surged to 10% to 15%, according to research by consulting firm Bain & Company.
Experts say that will likely remain at a higher level because many customers have downloaded apps, tried new services and discovered their convenience.
Searches for recipes reached a peak two weeks from the lockdown as people tried to normalize their stay-at-home routines. The lift is comparable to the ones normally seen at Thanksgiving and Christmas.
Food Retail
The grocery store experience has been slow to evolve over the last century. While many companies have attempted to automate and digitize their processes, the industry as a whole has been stagnant in that regard. After the large scale shutdowns during the pandemic, online grocery shopping rose in demand dramatically.
Instacart, a grocery delivery service, reports its orders increased by 150% since the shutdowns. Instacart app downloads increased by 218%. The increase in demand has caught many companies by surprise, with companies like Amazon and Instacart going on hiring sprees in order to fill the gap. Amazon hired 175,000 operations and delivery specialists, but simultaneously limited online grocery shopping signups until they can keep up with sudden demand. Kroger even turned one of its physical stores into a fulfillment center for online orders.
While initial demand for groceries overall increased, it is hard to tell whether this will sustain itself as the pandemic settles, however the move to digital in the grocery industry is more permanent, with many companies opting to restructure their businesses around online delivery. Bain & Company reports that online grocery spending has increased by up to 4-fold since the beginning of the pandemic and the trend seems to only be getting stronger.
Travel Industry
Travel was not only one of the hardest sectors hit by COVID-19, with the biggest hospitality companies cutting up to 40% of their workforce, but one of the industries hit the most by venture capital disinvestments. VC-backed deals in travel tech have declined by 400% compared to the same time period last year due to the pandemic.
The industry group Airlines for America reports that about 2,400 aircraft have been grounded (more than a third of the US fleet), with cancellations “far outpacing” new bookings, causing airlines to burn through $10bn a month. The passenger “load factors”, a measure of the planes’ utilization, has gone from 80% to just 11% during the first four months of 2020.
85% of international flights were cancelled and airlines are still flying semi-empty planes but while flight searches have not yet returned to pre-covid numbers, people are starting to look for holidays, hotels and vacation rentals again.
In a survey commissioned by Airbnb, nearly half of US respondents said that once the lockdown restrictions lift, they would prefer to stay within a day’s drive for their first trip.
Since February, the number of Airbnb trips made within 200 miles from home, a distance most travellers could drive in a day, has increased from 30% to over 50% of total bookings.
According to the search trends for local accommodation, travel in the United States seems to be In recovery.
From May 17 to June 6, 2020, Airbnb processed more bookings for US listings than during the same time period in 2019.
During that period, 55% of the nights booked for travel to listings in the US were with Superhosts, compared to just 45% during the same time period in 2019.
Globally, over the first weekend of June, Airbnb saw year-over-year growth in gross booking value for all reservations made around the world for the first time since February.
Fashion
The Boston Consulting Group predicts that the fashion industry will lose up to $600 billion in sales in 2020 as opposed to 2019 due to the coronavirus pandemic. As the global economy contracts, the fashion industry will take an especially hard hit as retailers are closed and most of the world has ordered some version of shelter-in-place restrictions. The contracting economy also means less money to spend on luxury goods such as name brand fashions.
This is not without precedent. During the Great Depression, the 1918 flu outbreak and the Second World War, fashion shifted from luxury to practicality and then recovered as each crisis subsided in a relatively consistent fashion. Most experts expect the same drop and recovery to happen once again.
Collaboration and Video Conferencing Software
Since the beginning of the pandemic, an estimated 34% of workers are working from home. Research firm Gartner reports that 74% of organizations plan on keeping some of their employees working remotely on a permanent basis.
Consulting firm Global Workplace Analytics, estimates that around 30 percent of the workforce will continue to work from home at least part time after the pandemic is over, compared to the low single digits before the pandemic.
As we shift to a new workplace setting, we see technology play a more important role now that knowledge workers have familiarized themselves with collaboration tools and understand the value they pose. Platforms Zoom and Slack will likely carry into day-to-day activities long after the pandemic is over.
Slack added 9,000 new subscriptions between February and March, and 80% increase over the preceding 6 months
Microsoft teams grew its active users by 70% in a single month
Google Meets exceeded 100 million users in April
Zoom announced 300 million users, up 100 million users in a single month.
The growth in the number of users and the movement towards more permanent work from home policies indicate that collaboration softwares and tools will continue to grow after the pandemic.
Healthcare
The pandemic has forced lawmakers to allow telehealth accommodations that were previously only available to areas with restricted access to in person healthcare. Adoption now, due to pandemic-related democratization is at an all time high. Experts say that the pandemic has advanced the telehealth revolution by a decade or more with 42% of American adults having used telehealth services since the beginning of the pandemic, according to The Harris Poll.
Policy makers are now pushing to reform the healthcare industry to allow for more telehealth accommodations after the pandemic is over. Telehealth will serve as the new doctor’s office with physical visits being reserved only for procedures and hospitals for more urgent or invasive matters, such as responding to a pandemic or surgeries. Additionally, as the pandemic has hit manufacturing centers such as China hard, there has been a move to diversify drug manufacturing supply chains to avoid shortages caused by border closings or other global trade complications according to officials at the Food and Drug administration. This also means a return to local drug manufacturing, with many pharmaceutical companies looking to establish local factories to be able to quickly replenish supplies as the pandemic continues.
The Impact of 2020 Election Year on Paid Media and Performance Marketing
According to an estimate from the Center for Responsive Politics, new political election spending projections for 2020 will now hit $10.8 billion – 50% higher than the 2016 presidential election....
According to an estimate from the Center for Responsive Politics, new political election spending projections for 2020 will now hit $10.8 billion – 50% higher than the 2016 presidential election. According to the group, the 50% increase over the $6.5 billion total in 2016 would be another political advertising election record.
Google alone has seen $620,249,000 in total political ad spend since May 2018, as shown in its transparency report.
According to Wesleyan Media Project (in conjunction with the Center for Responsive Politics), since mid-April, the Biden campaign has spent $101.8 million across Facebook and Google, while the Trump campaign has spent $135.2 million. So far, a cumulative $2.19 billion has been spent during the 2020 cycle.
Political campaigns are relying on digital ads in 2020 far more than they ever have before. As a result, many advertisers are seeing a rise in CPMs and CPAs over the past few months due to the increased competition.
Here are a few tips by our performance marketing experts to help you navigate and weather the election time:
Review your CPM and CPA by states. You may want to pause ads in swing states that typically see heavy ad spend before and during elections. In 2020 the primary swing states are Arizona, Florida, Michigan, North Carolina, Pennsylvania, and Wisconsin. We can see disproportionate spending on these states on Google’s transparency report.
Focus on your high-value audiences. The broader your audience is, the more likely you will be competing for users’ news feed inventories come election time. Identify which audiences yield the most significant return and cut the excess during election time. For example, if your campaigns rely heavily on prospecting audiences, consider doubling down on high-value audiences such as retargeting or any other first-party customer lists. Consider layering on audience targeting to refine your audience size.
Double down on email or SMS. Instead of paying more to reach the same audience, keep your current customers and leads engaged with a robust email strategy with tailored content. Email and SMS can be a great way to reach your audience with more personalized messaging, and it has a better chance of being noticed in their inbox or phones versus their crowded social news feeds.
Get creative with ad creative! An excellent creative always wins attention and performs, political or not. A good creative that drives engagement will decrease your CPM and CPA, which will help make up for the increased costs from the influx of political campaign money into the ad auctions. Review your creative library, make sure to run your winning creative, and continue to experiment with new creatives to get to a CPM and CPA that makes sense for your business.
Having a diversified performance strategy is key to weathering an election year’s impact on your ad buying economics. Consider moving budget to platforms that don’t allow political ads during this time of year. Here is a breakdown of ad platforms and their stance on political ads.
Complete Guide to Performance Marketing for eCommerce in 2021
Let’s face the facts, marketing in the DTC and eCommerce space is difficult. Ads are getting more and more expensive. Customer acquisition costs are rising and the unit economics are...
Let’s face the facts, marketing in the DTC and eCommerce space is difficult. Ads are getting more and more expensive. Customer acquisition costs are rising and the unit economics are not looking so good.
Simply put, managing all this can give even the most experienced marketers headaches. With so many choices, brands and companies fighting to get noticed, the question is:
What can I do in 2021 to grow my eCommerce business? Performance Marketing might just be the answer!
Nowadays we track and optimize everything from our steps and calorie intake to our sleep patterns and location. So it only makes sense that you are tracking and optimizing marketing results for your eCommerce business. Performance marketing will leverage tactics to understand the how, when, why, and where for all of your marketing efforts.
In this complete guide to performance marketing for eCommerce, you’ll learn all the steps you need to launch your own effective performance marketing strategy. If this is your first introduction to performance marketing, you are in for a treat!
Please reference our marketing glossary as often as you need.
You can skip ahead using any of the links below.
What is performance marketing?
What is performance marketing for eCommerce?
Step 1: Make sure your site is ready
Step 2: Set real goals and stick to them
Step 3: Define your target customer
Step 4: Define your value props
Step 5: Find the right channels for your target customer
Step 6: Find the right channels for your budget
Step 7: Write ad copy that converts
Step 8: Optimize
Ready to kick off performance marketing for your eCommerce business?
Performance Marketing Glossary
What is Performance Marketing?
To put it simply, performance marketing is digital advertising that can be clearly measured and evaluated in real-time. This means leveraging channels like Google Ads, Facebook, Instagram, and others to create trackable marketing that allows you to make effective decisions based on concrete data gathered from your actual market.
Performance marketing at its core is made of 2 parts: acquisition and optimization. Keep reading and we’ll tell you how to effectively use both.
“What gets measured, gets improved.” – Peter Drucker
What is Performance Marketing for eCommerce?
Performance marketing for eCommerce is using strategic digital advertising tactics to drive online sales. It is especially critical to use performance marketing strategies because the customer is already online. This means that the barrier to get them to click over to your site is greatly decreased.
You can then leverage the data to determine where and when your customers are hanging out online and how to effectively reach them. For example, if your eCommerce business sells basketballs and you know that your target customer is in their 20’s, lives in the US, is a frequent online shopper, and is part of a basketball league – you could set up Facebook ads to target them specifically. From this, you can determine other attributes shared by customers who purchase and then optimize your ads to get even closer to the people you know will convert to customers.
A DNVB (digitally native vertical brand) cannot go without this type of performance marketing because they sell online. Their customers are online, their brand is online, and their marketing should be as well. Just look at the most popular sites in the US based on a study done by Statista. The clear winners are Google and Facebook. If the majority of people in the US are on these sites, chances are your customers are too.
Most popular websites in the US as of Feb 2016
What makes performance marketing different than other types of marketing?
The ability to pay per action and only for results is what sets performance marketing apart from other more traditional advertising channels. You can take out an ad in a newspaper and assume that you will reach everyone in their audience, but you will never know for certain. Some companies have attempted to make up for the lack of measurement tools by including a unique coupon code in their ads. You may get close to knowing how many coupon codes were used, but you will never get the same finite data that you would from the calculated approach of performance marketing.
Knowing exactly where your marketing dollars are going and what ROAS (return on ad spend) they are driving is expected by most advertisers and it should be by you as well.
Our tried and true approach
Below you’ll learn the exact steps we take when we start mapping out a performance marketing strategy. Follow the steps as closely as you can and you will be able to create your very own effective performance marketing plan.
Step 1: Making Sure Your Site Is Ready
You can drive all the traffic in the world to your site, but if you don’t have a clear buy button how do you expect to make any sales? Before allocating your budget to the performance marketing tactics we’re about to share; spend some time cleaning up your site.
Is your checkout easy to navigate? Is every call to action clear and accessible? Also, consider what will happen post-purchase. Do you have an email drip campaign set up to follow up with email subscribers, cart-abandoners, or buyers?
Ensuring your site is prepared to handle all the conversions send to it is the first step in setting yourself up for performance marketing success.
Step 2: Set Real Goals and Stick To Them
Performance marketing for eCommerce is extremely methodical. The first step is to create a plan and to set clear goals. The most obvious goal is sales, but other types of goals include email sign-ups, LTV (life-time value), avg. session duration, clicks, or app downloads.
Often people will start their marketing strategy by creating Instagram posts or sponsoring email newsletters. Try not to be distracted by these types of things. While they can definitely be helpful, they are not performance marketing tactics that will drive measurable growth quickly.
Step 3: Define Your Target Customer
Who is most likely to complete the action you set out in your goals above? This doesn’t have to be just one person, define different target personas for people who you believe will convert. Staying with our basketball example, personas may include parents who have kids that play basketball, basketball enthusiasts, and even coaches or schools who represent basketball programs.
The goal here is to set defined personas. It would be ideal to use your current customer base to create these personas but the more information you have from the start the better. If you don’t, conduct research and do the best you can. The best part about performance marketing is that you can continuously optimize.
Step 4: Define Your Value Propositions
Why should someone buy basketballs from you specifically? How are your basketballs going to improve their lives? It’s really important to get this message across to customers. Don’t just tell your customers that your product is the best, let them know how it is going to solve a problem and improve their lives in some way.
A basketball is great, but a basketball that inspires your teenage son to hang out with his dad on a Friday night is better. List some of these defined value props and save them. You can use them as inspiration for your advertisements later.
Step 5: Find The Right Channels For Your Target Customer
Look back at the customer personas you created earlier. Do you have a persona that spends their time on Snapchat? Are you trying to reach a professional crowd who scrolls through LinkedIn? The most important part of performance marketing is meeting your audience where they already are! Think about this and research what kind of people are hanging out on each channel, then you can choose the ones that align with your ideal audience.
To determine what channels you want to start with, think about your product holistically. Assess your goals and pair personas with channels that make sense. Most people use Google and a lot of people are also on both Facebook and Instagram. These are some of the better channels to start with – not only are they the most popular, but they are able to drive conversions at the lowest CPC (cost per click) when compared to other channels.
Keep your goals and target audience in mind when choosing the right channels. Are you trying to drive sales but your eCommerce business is fairly new? Facebook and Instagram are designed to encourage discovery which means that these channels might be a good fit. Google, on the other hand, might be better for people searching for something specific. If your customers don’t know you exist yet and you sell a product that is widely available, this could be a tougher channel for you. However, if you sell a product that people search for, and your brand is new – you might find success with Google.
Each channel has its own positives and negatives, and you will need to determine which ones are right for your business. Some of the most popular performance marketing channels are Google Ads, Google Shopping, Facebook, Instagram, YouTube, Pinterest, LinkedIn, Snapchat, Reddit, and Twitter.
Here is a list of other channels that may suit your business:
ChannelWho should consider testing this channelGoogle Search AdsMost businesses, eCommerce DTC brandsGoogle Shopping AdsMost eCommerce companies selling a physical productInstagram AdsMost eCommerce companiesFacebook AdsMost eCommerce companiesReferralsAll eCommerce companies Ad Networks like Taboola or OutbrainMost eCommerce companies Pinterest AdseCommerce companies targeting women aged 20-45Snapchat AdseCommerce companies targeting people under the age of 30YouTube AdseCommerce companies selling physical products that are highly visual or would benefit from tutorials. Examples of this would be beauty, home goods or even building suppliesBing AdsCompanies targeting a slightly older and wealthier crowd who are frequently womenLinkedIn AdsB2B companies, recruiters, SaaS companies with big budgets. LinkedIn tends to be one of the most expensive channels on a CAC basisTwitter AdsUnless you have a specific reason for testing twitter, most eCommerce businesses should avoid testing itReddit AdsThis channel is designed for and attracts an extremely anti-ad crowd, so while you may read otherwise elsewhere we don’t recommend testing Reddit ads unless you have a very specific reason.Affiliate ProgramsMost eCommerce businessesSearch Engine Optimization (SEO)All eCommerce businesses
Step 6: Find The Right Channels For Your Budget
Not every customer is on every platform, and not every company has the required budget to excel on every channel. Determining the right channels for your business and allocating your budget effectively will be essential.
Start with your average customer acquisition cost or CAC. Once you determine how much it costs before a customer pays you, you have a better understanding of your budget. If you don’t know how to calculate this, check it out in our glossary. Not all channels cost the same and you will want to start with the lowest hanging fruit (lowest costing channel with the highest rate of conversions).
Step 7: Write Ad Copy That Converts
You don’t need to be Shakespeare to write ad copy that converts to sales. Take a look at this ad copy created by Zendesk:
They have a defined value prop and easy call to action. A customer’s mindset once reading ad copy such as this may be: “Do I want my customers to be more engaged, more satisfied, and more likely to buy what I’m selling? Yes! Does this mean I should try Zendesk chat? Maybe!”
Zendesk is also leveraging neuro-marketing through the arrangement of their colors and fonts. If you’re interested in learning more about this, watch our video Neuro-Marketing: Hacking Into Consumers Minds.
The most important thing to keep in mind when writing ad copy is defining how your customers will benefit. Don’t go on bragging about every single product feature. Potential customers want to know why they should care. As an example, it’s great that your new clothing line has a jacket with 10 pockets, but why should consumers care? In your ad copy, translate how this feature will create value for your audience. Write concise copy that provides the ultimate solution for customers.
An exercise that can help is to write all of the potential problems a customer might have if they shopped at a competitor and what effects this would cause. Try to write out as many as you can.
For example, if someone was shopping at a competing basketball eCommerce site, our list would look like this:
ProblemEffectSolutionIf shopping at competitor X, the basketball quality is poor.Basketball won’t last as long, causing them to replace it often and costing them more money. Our basketballs are designed to last up to 5 years. Less money spent, more baskets made.If shopping at competitor X, ship times are very long.Basketball won’t make it in time to play this weekend causing them to miss out on quality family time.Overnight shipping available so that when your kid finally has time for you, you won’t miss your chance to show him what’s up.
Step 8: Optimize and Improve
Your campaigns are launched, congrats! Now is when you take a good look at the data. Are the results meeting the goals and expectations you set at the beginning? Probably not. It is very unlikely that every part of your strategy will be successful. This is when performance marketing kicks into full gear.Through performance marketing tactics you can optimize and start to improve your results.
Determine which channels are performing the best, the worst, and understand why. Are doing things on certain channels that you could leverage in others? Take a look at your budget. Are you spending your budget appropriately? In some cases, you have done everything to improve and optimize a specific ad or campaign but it still fails to do well. In this case, leverage what works and continue to push channels that are effective. Shut down what doesn’t work, but make sure to learn from those failures so you can bring these learnings forward for any other strategy you may create in the future.
Another optimization strategy that often gets overlooked, is managing the days and times in which your ads are being served, or your ad schedule. In both Facebook and Google Ads, you can review what time and day your ads are converting the most. If you’re running your ads 24/7, you may be wasting your budget on clicks that have lower intent. Take a look at the times and days that work best, and then optimize to ensure your ads will show when you need them to.
As mentioned earlier, performance marketing in 2021 is all about measuring, learning, and optimizing.
Ready to kick off performance marketing for your eCommerce business?
You’ve made it to the end of this guide and now you’re ready to implement performance marketing tactics for your eCommerce business! I’m sure you realize the importance of performance marketing and how vital it is for your business. Old traditional marketing tactics simply won’t get you the results you want in 2021.
However, we understand that getting traction and implementing a performance marketing strategy is not easy. Perhaps your best course of action in the beginning is partnering with a great agency that can deliver immediate results for you. So if you are a small to medium-sized business generating at least $3M in annual revenue, consider reaching out to our team for a possible partnership.
Performance Marketing Glossary
The following are the top acronyms, definitions, and formulas you will need to know to run a successful performance marketing campaign for your eCommerce business.
CAC (customer acquisition cost) – This is the overall cost for you to get a new customer. This can be calculated by dividing the total amount spent on acquiring customers by the number of customers you acquired with that spend.
Example: If you spent $5000 acquiring new customers and from that you got 500 new customers, your CAC would be $10.
Channel – A specific platform you can reach customers.
Conversion – When a customer takes the desired action. A conversion can be a sale, email sign up, button click, etc.
CPC (cost-per-click) – The amount you pay for a click on your ad.
CTA (call to action) – A button or link that tells your customer where to take action on your site.
Customer Persona – A hypothesis of your customer; where they consume content, who they are, and ultimately how they are most likely to take action with your service or product.
eCommerce – electronic + commerce; refers to transactions conducted via the internet.
DNVB (digitally native vertical brand) – A brand born online, which sells and ships its own product.
Drip Campaign – A flow of emails set to deliver to a subscriber after they take a specific action on the site. For eCommerce, this may be after email sign-up, abandoned cart, or purchase.
DTC (direct to consumer) – A direct to consumer company manufactures and sells its own product without the need for a middleman. This is also known as a vertical retailer.
Impression – When your ad has the potential to be seen in front of a user. This is the least expensive action as it often doesn’t lead to a conversion but is often used to promote brand awareness.
LTV (lifetime value) – Can be the estimated profit, revenue, or value a business will achieve throughout the entire relationship with a customer.
Performance Marketing – Any type of marketing that has clear and measurable data such as sales, email sign-ups, pdf downloads, etc.
PPC (pay-per-click) – This is an ad model where you pay only when your ad is clicked on.
ROAS (return on ad spend) – Your return on investment, so to speak.
Example: If you spend $1000 on an ad and it converts to $6000 in sales – you have a 6x ROAS! ($6000/$1000 x 100= 600%)
Value Propositions – The value that is promised as a result of taking an action.
TikTok Advertising: The All-in-One 2021 Guide
From banana bread to Tiger King, 2020 has been a year filled with activities centered around being at home. We baked at home, shopped from home, and of course, worked...
From banana bread to Tiger King, 2020 has been a year filled with activities centered around being at home. We baked at home, shopped from home, and of course, worked from home. But one platform has managed to keep all of us on our toes and connected across the globe.
TikTok, since its 2016 launch, has found a way to be the next biggest thing in the world of social media, especially in 2020. In a tough year for many brands. TikTok not only prevailed but it also thrived—being named Ad Age’s No.1 Marketer of the Year. Not only are individuals using it for content creation- but it has sparked a new era of influencers, shopping, and even news updates. TikTok’s increasing growth has made it one of the rivals of Snapchat, Facebook, as well as the new social media for marketers to master. With over 2 billion downloads and 100 million active users in the U.S., the platform has continued to attract brands looking to reach younger audiences.
Similar to Facebook, Instagram, and Snapchat- brands, businesses, and individuals have the opportunity to use TikTok as a means of advertising their business. Companies across the globe have already begun to take these strides in 2020- finding unique ways to show their creative side, show off new collections, and even provide more transparency into their organization.If you’re looking for some help getting started on TikTok we’d love to talk about your goals and how we could help your brand grow!
This blog breaks down our top 10 favorite TikTok ads of 2020 and gives you a look into using TikTok advertising. After all, a new year means new ads!
Who is Using TikTok Advertising?
Although influencers like Charli D’Amelio and David Dobrik have taken the TikTok world by storm- companies from all industries have found ways of promoting their brands across the globe. From the newest collections at Paris fashion week to your local pop-up shops- TikTok advertising allows companies of every type an opportunity to show their products. Luxury industries like Burberry, Gucci, and YSL have showcased their luxury in addicting bite-sized bits for us to lust over.
The fast-food industry has taken speed and savings to a new level. Using TikTok advertising, companies like McDonald’s, Chipotle, and Wendys have found unique ways to connect with customers and turn up the cravings around new product launches. Tech companies have also found their way into TikTok advertisements. Apple’s iconic keynote featured a product release of a whole suite of their products- now a quick 30-second clip when you open the Tik Tok app.
We’ve seen a lot of brands and companies find unique ways of honing their voices and product lines during this year- but TikToks have just been the start:
How to Use Tik Tok Ad Manager
Check out these simple steps to get started with your TikTok business account:
Create your TikTok business account by going to TikTok Business Center. By clicking sign up in the top right-hand corner you can create up to three accounts in their respective time zones.
Add your users and members through email or send them a link using the feature labeled “Members”. They can have two access points: General Business account and Ad account access. Within these two layers come additional restrictions that can be customized to your team.
Manage your assets and Tik Tok Formats through the “Ad Account”. You will have to set-up a new Ad account and add your business account information. As a user, you may have to inform your administrator and have them approve your request.
Create your ads and start engaging your audiences! Once you’re all set, make sure to explore Tik Tok’s community and see how you can leverage various formats to support your growth!
What are the TikTok ad formats?
How exactly do you start advertising on TikTok and which is the best way to do so? TikTok offers a variety of ways to spread the word about your product, brand or service and have users engage with it. We’re breaking down all the ways you can start-
Brand Takeover- an ad is shown on the app launch screen. Prior to landing on your “For You” pages and starting your daily scroll, you’ll be greeted with a short and sweet ad. These will either be a 3-second static image or a 3-5 second video without audio. Given the format, these ads are best suited for awareness campaigns but advertisers should expect to pay premium prices for this spot especially since TikTok will only show one Brand Takeover Ad to a user each day.
TopView ads– The easiest way to think about TopView ads is just as a slightly delayed Brand Takeover Ad. They are 60-second videos designed to target your audience in the most effective way possible. These placements are guaranteed to be the first thing your user sees and will most likely interact with.
In-Feed Ad- similar to ads you’re familiar with on Facebook or Instagram, but they’re a part of your daily “For You” feed. This ad format can run up to 60 seconds of video with sound and blends seamlessly into your scrolling and exploring.
Branded Hashtag Challenge- The TikTok staple that has people trending and using products in more ways than ever. This format encourages user-generated content. Users actively participate in creating themed content that incorporates the branded hashtag. This content is then compiled in a hashtag challenge page and can be viewed by others. This feedback loop has been a great way to create community and build an average engagement rate of 8.5% for this ad format. Tik Tok will even help get you started if you’re interested in launching one for your brand.
Branded Effect- Similar to Instagram filters and Snapchat lenses these visual stickers, filters, and special effects are created for users to engage and use them on their own feed. Branded effects are accessible on the first page of the effects panel for three days at a time and available to search even beyond that time frame.
The wide variety of ad formats allows your brand great creative flexibility and room for experimentation. Other brands have already created powerful and engaging TikTok ads that have significantly increased their visibility on the platform. Let’s have a look at them now.
Top Brand Ad Campaigns of 2020
December is always a month of “Best Of” lists and this year TikTok hopped aboard the trend, highlighting brands and campaigns that inspired them in 2020. One standout snippet from the report: “43% of heavy Tik Tok users feel that the advertising on TikTok seamlessly blends in with the organic content enjoyed on the “For You” feed.” The platform prides itself on their “Don’t make ads, make Tik Toks” ethos, and it’s clearly paying off as the platform is one of the best at ad integration.
Meaningful connection was more important in 2020 than ever before, and looking back we’ve seen partner brands in nearly every vertical bring our community together through authentic, unforgettable, and inspiring TikTok videos.
~ Bryan Thoensen, Head of Content Partnerships at TikTok
Pepsi
Pepsi’s #ThatsWhatILike campaign ushered in a new decade by encouraging consumers to unapologetically do what they enjoy, even in the face of others’ judgment – whether it’s clapping at the end of a movie, wearing an over-the-top costume for the fun of it, or simply enjoying a Pepsi. The campaign resulted in over 13 billion views and expertly played into the TikTok ethos by encouraging a barrage of silly videos that usually included Pepsi in some way. At the core of any good hashtag challenge is free advertising and Pepsi won big on this one.
L’Oreal
L’Oreal’s #LetsFaceIt campaign aimed to de-stigmatize mask-wearing this summer by reminding us that looking and feeling your most beautiful is never out of style, even while wearing a mask. Given the thriving ecosystem of beauty/makeup in 2
Bagel Bites
Bagel Bites #BagelBopsContest offered up a chance to win $10,000 for people who made videos featuring an official audio clip the brand commissioned about pizza being the perfect food for anytime of day. The contest encouraged users to “remix”- sing, lip-sync, or dance to the official audio and use the hashtag for a chance to win. The contest drew a total of 3.6 billion views over its 1 month run time.
Gushers
In addition to having a great organic presence on the platform, Gushers TikTok ads are some of the best. They really take the mantra of “Don’t make ads, make TikToks” to heart. Their first ad featured a boy fishing with Gushers captioned “Worms catch fish… Gushers catch friends?!” made a big splash and blew up their comments section. Users were asking if the video was even an ad because it looked like a post that would be on the “For You” page organically.
Cheetos
Similar to the Pepsi campaign above the Cheetos #DejaTuHuella campaign encouraged users to show the world “what they are fuego ????” at, whether it’s “film, fashion, art, dance, or food.” The campaign surrounded Cheetos’ new product releases focused on their iconic, finger-staining, Flamin’ Hot Cheetos. The campaign hashtag translated literally into “leave your mark” or “leave your heat” and was accompanied by a Bad Bunny song right on the tailwinds of him being announced as the most listened to artist of 2020 according to Spotify’s year end Wrapped streaming report. The campaign is still relatively new [as of 12/16] but has 120 million views and growing. Earlier in the year Cheetos also ran the #CantTouchThisChallenge which gave users a creative outlet to showcase their best “Cheetle” covered fingers rendition to the TikTok community.
Bumble
Working closely with TikTok, Bumble created an entirely new, always-on acquisition channel with significant scale, using clever TikTok-style direct response ads. The brand also worked with notable Creators, such as David Dobrik and Brittany Broski, to build native video content that seamlessly blended into “For You feeds”. By tapping notable creators with significant organic followings Bumble successfully leaned in to the “Don’t Make Ads, Make TikToks” and served relevant, relatable content to an engaged audience. The campaign is listed as a case study on the TikTok site along with the results of the campaign – 5X increase in App Install Volume along with a 64% decrease in cost-per-registration
NYX Gloss
NYX Gloss partnered with TikTok to develop the #ButterGlossPop Branded Hashtag Challenge. This premium branded campaign was specifically designed to have viral impact and inspire content across the platform. The #ButterGlossPop challenge prompted the TikTok community to apply Butter Gloss with their own personal flair to be entered into a sweepstakes for a chance to win $1200 in NYX Makeup. The campaign was a knockout success because of an original, high energy catchy song and clear instructions made it easy for creators to release their creative potential. The campaign resulted in 2M+ user-generated videos and over 11B+ video views along with 42% lift in brand awareness.
In addition, the campaign included an integrated shopping experience that positioned the easily accessible product line directly in front of an engaged and interested audience, inspiring lower funnel action.
ASOS
ASOS leveraged a Branded Hashtag Challenge Plus for the brilliant #AySauceChallenge. It invited the community to “channel their ASOS vibe” and show off their three best outfits with a series of outfit changes over the course of three weeks in the U.K. and U.S., set to bespoke music and an interactive augmented reality Branded Effect.
The Branded Hashtag Challenge Plus also included a spot on TikTok’s trending hashtags list and a bundle of additional ads—TopView, One Day Max and Brand Premium In-Feed Ads—all of which turbocharged exposure for the campaign and pushed users to the central challenge page, where all UGC entries were housed. ASOS also worked with 28 popular U.K. and U.S. Creators to kick-off the challenge and provide inspiration for users to follow while also building the credibility of ASOS’ brand presence on the platform. Using Creators allowed ASOS to tap into an enormous combined following, paving the way for almost 500k videos created and 1.2B+ video views in just 6 days.
Simmons
Simmons Mattresses, working collaboratively with agency partners and TikTok, launched the #Snoozzzapalooza Branded Hashtag Challenge, one of TikTok’s premium Branded Solutions that is specifically designed for virality. This Hashtag Challenge encouraged the quarantined community to literally stage dive into a bed over the summer festival season without any live music due to Covid-19.
Simmons partnered with comedians, dancers, athletes, and celebs to cast a huge net and inspire as much of the community as possible to participate. Each of the creators uniquely imagined the challenge, transforming their rooms and creatively using the platform to showcase their vision of the ideal at-home music festival. To drive maximum participation and awareness, Simmons equipped the #Snoozzzapalooza Hashtag Challenge with a fun, upbeat original track that got the community moving.
The campaign resulted in 2M+ videos, amassing six billion total views, and an engagement rate of 20%. The six-day campaign boosted brand engagement through creative participation, raised brand awareness among Gen Z on the platform, and spurred a +107% increase in traffic to Simmons.com week over week.
Overall, we know that everyone has been counting down the days of 2020 and TikTok has been no exception in making this year unique. Brands and companies all over the globe have been able to creatively engage users, create content, and advertise their companies in new ways during this unprecedented year.
Growth Marketing Trends & Predictions for 2021
A new year is always significant- it’s new plans, new workouts, and of course, new trends across the board. From the latest fashion to this year’s key areas of growth,..
A new year is always significant- it’s new plans, new workouts, and of course, new trends across the board. From the latest fashion to this year’s key areas of growth, we have got your back. As we wrap up the first week of this year, the start to 2021 feels different from 2020, and we think huge opportunities are opening up for your growth space.
Our 2021 growth trends and predictions come from a few different areas but are sure to help shift your eyes from a 2020 vision. If you’re looking for a growth partner to help make these trends a reality for your business – we have the squad for you!
Adapting to New Requirements
Technological advancements have fueled the majority of the growth marketing trends on this list. However, each advancement is coupled with concerns about the use of personal data and privacy.
2020 kicked off with California instituting the California Consumer Privacy Act (CCPA), which required large companies to disclose what they’re doing with the data they collect on their users. It also gave users the ability to request those companies not to sell it (with harsh penalties for non-compliance). While significant, this law will just be the tip of the iceberg.
Government Regulations
Election years always add increased tensions, and while 2020’s election has been one for the history books, the emergence of the tech world and regulations has been making headlines. Facebook’s lawsuit by the Federal Trade Commission and 48 states demonstrated a long awaited conversation around competition and social media’s depth in our lives. This was on the heels of Google’s antitrust lawsuit paving the way for more privacy concerns, data protection, and just how much technology guides our everyday lives.
As regulations and frustrations continue to grow, we can expect more regulations are coming to us in 2021. Tech giants like Google and Facebook are preparing for this after nearly two decades of no significant push back. We can all see this coming, but what does this mean for growth? On the other hand, an opportunity arises for privacy-first based companies. Browsers and internet companies such as Brave and Ghostery have room to accelerate their growth and be at the forefront of this sector.
Privacy
Regulations are just the stepping stone in terms of what’s on the horizon for tech. Privacy has been a mounting issue across the board for a few years, but in 2021, we can see growth and changes being implemented immediately. The upcoming security updates with iOS 14 between Facebook and Apple have marketers and companies rethinking strategies and getting ahead of the curve in terms of their transparency.
Tracking cookies and browser-based tracking are about to die, and that’s going to cause a massive headache for advertisers. Apple’s Intelligent Tracking Prevention (ITP) and Firefox’s Enhanced Tracking Protection (ETP) have been blocking third-party cookies for years now, and Google’s Chrome browser – by far the most popular among users – is about to do the same. In a world with no more cookies and closed off access- marketers need to be at the forefront of understanding how this will be impacting their targeting efforts and which directions to move their strategies. These will be areas marketers are doubling down on, making branding all the more critical.
Skate to Where the Consumer is Going
With the above mentioned new rules and restrictions on data usage, many of the tried and true tactics will no longer be available, which means many marketers will have to start a new playbook. However, as technology continues to advance, there will always be new channels opening up. Smart marketers will work to make their impact first, while there is still time to stand out and innovate.
Voice Search
While it may not be among the newest growth marketing trends, voice technology develops in both its power and adoption, growing to an estimated 122.7 users in 2021. The brands that thrive will be the ones that adapt the best and the quickest.
As Google evolves from a “search” engine to an “answer” engine, their Featured Snippets (or SERP Position Zero) have led to a rise of zero-click searches and a drop in organic CTR. This not only makes this spot incredibly important for SEO (or perhaps more accurately, VEO), but the holy grail for capturing the voice search as this will be the result that Google Home or Alexa will read from.
Another trend to keep an eye on is Alexa Skills Marketing. Similar to how when smartphone apps took the world by storm and every brand decided they needed one, brands are starting to move into the Alexa Skills space. Like apps, the winning brands will be the ones that offer a useful utility, as well as a strong CTA. Ask Purina, Johnnie Walker, and Zyrtec – Your Daily AllergyCast are all great examples of brands that found a way to bring value to their customers, while also developing brand relationships and finding ways to facilitate product sales into the experience.
SMS
Again, not a new technology, but one that will take on a renewed importance going forward. If you look back at some brand patterns, it makes sense. After social media continued to decrease organic reach on their platforms, brands realized the importance of their email lists, as it was the only consistent way they could stay in front of their customers. While email remains important, it’s becoming more and more crowded, making it difficult for brands to stand out. Why compete in a crowded inbox for a 20% open rate and 6% response rate, when you can go straight to SMS for a 98% open rate and 45% response? 54% of consumers want marketing text messages, but currently, only 11% of companies are utilizing this channel!
Of course, like all things, there will be rules to follow. The Telephone Consumer Protection Act (TCPA) is a federal law that forbids companies to send text messages to consumers who have not given their consent. Privacy needs to be top of mind when planning your message strategy. Ensure customers have opted to receive text messages, always provide them with the option to opt-out, and don’t spam users with too many messages.
Subscription Models
The beauty of the subscription model is that it allows paying consumers to engage with various platforms, content, or services and keep them hooked. Their subscription fee gives them access at a price point that can’t be beaten and a product line worth so much more. Creators of all types have launched their forms of subscription and content channels. These mediums can be anything from OnlyFans to Patreon or Substack. A subscription allows for a new content channel while gaining a mass following. It also enables creators to build community with one another as well as build a brand. With this type of growth opportunity, a content subscription is the next big thing for every creator with content and a wifi connection.
Performance Branding
The primary purpose of a marketer is to get one thing: conversion. Marketers have been finding ways to personalize messages, retarget, and optimize their budgets to ultimately get a better and more precise understanding of their customers’ journey. Over time this has been especially true in terms of marketing budgets that focus on improving lead generation and building brand awareness and trust. While these processes have been tried and true, there’s no doubting one thing: data speaks for itself. The movement towards data-driven performance marketing allows marketers to hone in on their customer journey, especially when strategies are increasingly more digital. With regulations in place and growing technologies, your data is more granular and precise in analyzing your shoppers’ preferences. There is no longer a “one-size fits all” strategy to marketing- it is based on the individual level, specific customer journeys, and clear data sets. We’re sure this works, and it will be driving growth through 2021.
Brands are Building Community for Conversions
It’s no secret that humans crave community. The more the world becomes digital, the more people search for other like-minded individuals to discuss their shared interests, answer questions, and build relationships.
In many ways, 2020 was the perfect storm for online communities. Not only were we more isolated and more desperate for connection, but one of the more contentious elections of all time drove everyone to define the causes and issues that matter most to them. This resulted in not just massive opportunity for community-related platforms, but also for brands to build affinity by showing what they believe in.
Aligning with Values
For years, we have seen companies run reports regarding customer sentiment, brand, and trust. The key to selling products and services is identifying what your consumers care about. 2020, of all years, brought the idea of values to the consumers’ forefront. Although we’ve known this for years, brands realized the power of community and values. With the intersection of social media and social movement in the spotlight, brands realized that their values need to be transparent. Building community is rooted in values. Companies like Fenty, Patagonia, and Glossier have seen immense success by finding communities and building relationships within these areas.
In 2020, this was highlighted through politics, activism, and social movement. It’s no longer enough to just be mission-driven, but instead transparent, community-building, and involved with what’s going on in the world. Through the Black Lives Matter Movement, we’ve seen political tension and a global pandemic which brands have aligned themselves and how consumers have responded. Brands with communities are at the forefront and measure the brand’s success. To build that community, you need to be aligned with your consumer’s values-based on real-world issues and taking a stance. In 2021, building a brand is impressive; building a community is innovative.
Niche Communities
In a year where travel was limited, technology was necessary, and socializing was all done at a distance, community means more than ever. It connects those closest to you and those too far to reach, but ultimately it is contingent on values and interests. Social media has done wonders in terms of revolutionizing the community. Platforms like Facebook, Instagram, and Twitter have moved past physical barriers to cultivate a different world that existed online.
However, these platforms have had their limitations. There is a growing decline in engagement and value that brands get from mainstream platforms such as Facebook, LinkedIn, and YouTube. 2020 opened a space for content growth and a new form of creativity. Creators exist in so many ways and are finding their spotlight through new mediums of content generation. The rise of the smaller quality and niche communities have moved individuals off these platforms and to new mediums in which creators find their talents emerge and build them with others.
Examples include:
For Gamers – Twitch
For Writers – Medium, Substack
For Investors/Entrepreneurs – Clubhouse
For Designers/Creatives – Behance, Dribble
For Musicians – Soundcloud
Adapting to a Post-Covid Culture
You can’t write a piece about 2021 trends without acknowledging the role COVID-19 has had in re-shaping our daily lives. While many of us are eagerly waiting for things to get back to normal, people have adopted several new habits that may not be going away any time soon.
Remote Collaboration
Collaborative spaces, WeWork, and flexible work schedules seemed like the new normal in 2020. Now flexibility is the new normal with the ability to work from anywhere at any time. The shift to remote work opens up a new era focused on video conferencing, collaboration tools, and messaging applications. Companies, co-workers, partners, and employees all have found new ways of working and connecting from all around the world. Companies such as Zoom, Notion, and Slack have been the real winners adapting to this landscape and growing culture at this time. This makes possibilities endless- companies can grow and recruit from anywhere in the world. The tools that help you get there are growing and adapting at incredible rates, telling us the story of this shift one day at a time. Building these communities are going to be critical in 2021.
Retail
The retail industry has found a new surge in the eCommerce market. If you’re a retailer, you know brick and mortar was on its way out, and omnichannel strategies were the new normal. Now more than ever, with platforms like TikTok, Shopify, and Amazon, connecting from consumer to retailer is more vital than ever. Not only have the strategies and mechanisms for retailers shifted, but the types of products at the forefront have changed as well. Before the Covid-19 pandemic, consumers focused on luxury, preparation for new collections, and spring and summer fashion. With people being at home, staying at home, and even working out from home, retail has switched this focus to loungewear, activewear, home care, and home organization. Companies across the globe have switched from couture to comfy, making home feel like an all-inclusive space. Not only in clothing, but home improvement, activities, furnishing, and grocery have used innovative strategies to make sure consumers were happy being at home. Brands such as CVS, Walmart, and Target have grown to the top of the retail world over this past year and continue into 2021.
New Start-Up Hubs?
Many people first saw the US shift from one coast to another with the rise of Silicon Valley. Then, we have the images of once-bustling cities like New York abandoned during the coronavirus pandemic in 2020. Now, in 2021 everyone’s moving again- only this time it is South (Beach). Miami has been home to nightlife, college spring breaks, music festivals, and more. But 2021 could make it the new growth start-up and VC hub. Miami has a new partner in crime also emerging. Austin, Texas, is becoming the next hub for huge companies like DropBox and icons like Elon Musk. “Recently, it emerged that hedge fund Elliott Management Corp. is moving its Manhattan headquarters to South Florida, and that private equity giant Blackstone Group Inc. will open an office there. Goldman Sachs Group Inc. is reportedly considering relocating part of its asset management operations to the region, too. It’s not just happening on the East Coast. In the last few months, the venture capitalists David Blumberg and Keith Rabois decamped from the San Francisco Bay Area to Miami.” The dramatic shift to Miami and Austin comes from a few different places, but no doubt its impacts are felt- leaving cities like SF and NYC in the dust. This shift could be detrimental to the existing cities, not only in terms of businesses but also in tax revenue. NYC is estimated to lose upwards of 1 billion dollars.
Utilizing Growth Trends for 2021
As you build out your 2021 marketing plan, it’s likely building off what was successful in 2020, and rightfully so. Marketing isn’t always about quantity or changing your whole plan, but rather making the improvements needed to give you the edge and learning where you can go.
However, each plan should include some optimizations, such as f prioritizing quality or maybe your copywriter. Within the above growth marketing trends, think about what makes sense for your business or what could have the most significant potential impact. If you’re stuck or need a partner, you know where to find us.
Banza’s Marketing Strategy: How The Pasta Brand Dominated The Category
In the 2005 bestseller and business classic, Blue Ocean Strategy, authors W. Chan Kim and Renee Mauborgne define market strategies as either “Red Oceans” or “Blue Oceans.” In a Red...
In the 2005 bestseller and business classic, Blue Ocean Strategy, authors W. Chan Kim and Renee Mauborgne define market strategies as either “Red Oceans” or “Blue Oceans.” In a Red Ocean, a business enters an established market space, exploiting existing demand and striving to beat the existing competition. On the other hand, in a Blue Ocean, a company creates a new market space where competition doesn’t exist, so the challenge becomes to create and capture new demand.
Both strategies have their own pros, cons, risks, and benefits. For example, while a Red Ocean may be more competitive, a business knows that there is demand, so the challenge is differentiation. However, constant competition often results in having to drive down prices to compete, which puts somewhat of a ceiling on growth. In a Blue Ocean, while there’s a risk in seeing if you can create demand in your new category, the rewards are much greater.
When Banza launched in late 2014, they were the first to create and enter the chickpea pasta market. With a great product and robust marketing strategy, they’ve been able to dominate the space, launch distribution deals in 12,000+ stores, including Whole Foods and Target, and raise funds from some of the most prominent players in the food industry.
Creating a Category
If creating a category was easy, everyone would do it. As mentioned, there is some risk in this strategy. There are no guarantees that you’ll be able to create demand for a product people have never heard of, let alone capture it and convince someone to buy. However, a business can still set itself up for success with smart strategy and data.
In a NY Times interview in 2016, founder Brian Rudolph said, “I couldn’t find a single person who didn’t want a healthier pasta.” While this statement by itself is a bit anecdotal, there is some data to support this.
For one, interest in gluten-free diets had been steadily rising for several years, reaching its apex in November 2013, according to Google Trends data.
Additionally, Rudolph says that he first created Banza in his kitchen while following the Slow Carb Diet, coined and popularized by Tim Ferriss in the Four Hour Body, released a few years earlier. Tim Ferriss has a famously active fanbase, so Rudolph knew he had a passionate audience he could tap into, leveraging communities like Reddit to reach potential fans.
Combine that with the fact that the average American consumes nearly 20 lbs of pasta per year, and it becomes a much safer bet that a significant population would be interested in a more healthy alternative, even if only for some of their meals.
In many ways, Banza followed in the footsteps of Chobani, who set the standard in creating a healthy alternative to an existing popular food. (Banza even joined the Chobani Incubator while getting started, where they received some valuable grant money, and even more valuable advice and guidance).
Launch and PR Rise
Rudolph first toyed with the idea in college, when, on his path to eating healthier, he began experimenting with chickpeas, specifically in pasta. He first tested the waters with his product with a crowdfunding campaign on Venture for America. The campaign raised nearly $18,000, where it won the VFA contest worth an additional $10,000.
From there, Banza got the opportunity of a lifetime, getting featured on the CNBC reality show “Restaurant Startup,” where they ultimately convinced judge and restaurateur Joe Bastianich to invest in the company.
From there, Banza continued to rack up recognition from various entrepreneurial and innovation groups, scoring some major press wins, including Time magazine’s Top 25 Inventions of 2015, CircleUp25’s Most Innovative Consumer and Retail Brands of 2017, and CNN’s Best Products of 2018.
Driving Engagement
While PR wins are always worth celebrating (and valuable SEO backlinks), they aren’t the cure for long term success. Long-term success requires getting in front of your customers on a regular basis via multiple touchpoints.
A brand in a Red Ocean would likely accomplish this by competing in the advertising world. They’d launch campaigns across search and social, selling specific benefits of your product versus their competitors and driving users down the funnel in a way that they’re likely familiar with.
However, these tactics aren’t as turn-key for a brand in a Blue Ocean. There is only so much real estate on a text or social media ad, which makes it difficult to tell your product story in a quick and concise way.
On top of that, even if Banza were able to grab some attention with its differentiation, consumers would be understandably skeptical, and perhaps timid to try it.
Banza realized that for long-term growth, they needed to find a way for users to engage with their products, and have real people vouch for its quality and taste. That’s where influencers came in.
Food has long been one of the top industries for influencer marketing. Food is not only an essential, daily element of people’s lives, but it also becomes an area for creativity and craft. Social media has become the go-to spot for people to share tips or their latest food porn creation. Besides food, health and fitness are among the next biggest industries for influencers, as many people love to share their secrets to success and their fitness journeys. Banza was at the perfect intersection of these and used it to their advantage.
In the early days, Rudolph himself reached out to influencers and bloggers who he thought would be interested in his product. He then sent them personalized messages, with references to things they had made or written about, along with an invitation to try Banza. This strategy built up a great deal of momentum, where not only did Banza build up demand among consumers but also among influencers who wanted to share their own creations.
Because of the different interest segments that Banza is able to tap into, the influencer content was always able to remain fresh. Some users re-created classic Italian dishes but made them more healthy by swapping out traditional pasta for Banza. Others focused on the health element, creating dishes that showed their readers how they could re-introduce pasta to their diets and maintain their fitness goals. Others just wanted to show off their creativity.
As of 2018, Banza said they received around 30,000 pieces of user-generated content, 80% of which came from users who had never posted about Banza before.
Product Expansion
A Blue Ocean can only stay blue for so long. Once people start to see growth in a new category, competitors flock in to steal market share, competing on price, taste, or other product variations. Banza, however, had built up enough brand equity to not only stand out in their category but safely expand into new ones.
User-generated content doesn’t only help spread the word about your brand. It can also provide valuable insights about how consumers are using your product, what they like and don’t like, and what they might like to see next. After seeing post after post of Banza being used as a carb substitute in grain bowls, the next product launch became clear. In 2019, Banza released chickpea rice with three times the protein, twice the fiber, and 30% fewer net carbs than brown rice. This product was easy for customers to adopt, as not only had the market been made for chickpea as a carb alternative, but clear user signals showed they were ready for this product as well.
This expansion continued in 2020 when Banza entered another carb-heavy category – frozen pizzas. This release also piggy-backed off user comfort with chickpeas, but Banza also paid attention to the creativity they saw within their UGC. That why with pizzas, they released both pre-made pies as well as plain crusts for consumers to put their own creative juices to work.
Takeaway
Much like marketing, product creation can often be a copycat game. Where there’s demand, a smart marketer can almost always find room within a category with their playbook of strategies and tactics. It’s almost formulaic.
But there will always be a ceiling to growth in those categories. Take some notes from Banza’s marketing strategy, and look for your own blue oceans. Instead of battling your competitors at the margins, what are some areas where there is no competition? Look for those spaces that still solve problems, and it’s full steam ahead!
Klarna’s Marketing Strategy: The Unique Growth Story Behind The Brand
There are a lot of theories exploring the relationship between emotion and reason. The push and pull between the two concepts have long been at the basis of the multitude...
There are a lot of theories exploring the relationship between emotion and reason.
The push and pull between the two concepts have long been at the basis of the multitude of approaches to marketing. In 2006, in his book called The Happiness Hypothesis, psychologist Jonathan Haidt introduced a new metaphor to illustrate the underlying forces of behavioral change. Haidt’s analogy argues that human nature has two sides: there is the emotional side, the Elephant, and the rational side, the Rider.
This concept of duality in human behavior and nature is known by many other names, including System One and System Two presented in another book, Thinking Fast and Slow, by Daniel Kahneman. And while the same idea of a human mind following emotional or reason-driven cues to make decisions has many different names today, one thing is true: it plays a crucial role in how brands develop their growth marketing strategies and connect with consumers.
When Klarna was founded in 2005, it entered an arena saturated with companies and brands speaking to the reason of their customers, offering logical solutions on how to save money, and focusing on the transactional aspect of shopping. In this sea of brands, Klarna’s marketing strategy developed in a different direction. In addition to a superior checkout experience, the Swedish bank started speaking to the emotional nature of its customers. It offered an end-to-end inspirational and “smoooth” shopping journey, which became the key driver of Klarna’s exponential growth.
What Is Klarna?
Klarna is a unicorn financial technology company, also a bank, with its roots in Sweden that has been transforming how consumers shop and pay for products online. The Swedish company offers a payment service that allows online shoppers to make purchases from major retailers without necessarily completing the full payment at checkout. Instead, shoppers can divide their payments for their purchases in four interest-fee installments automatically charged every two weeks, or choose to pay the full amount within 30 days. They also have the option to also take advantage of Klarna’s credit options to finance larger purchases over six to 36 months.
Early Years: Speaking to the Rider
Founded in Stockholm in 2005, Klarna was on a mission to make online shopping as easy as possible. Since then, Klarna has become one of Europe’s largest banks with 90,000,000 customers, over 200,000 merchants, and at least 1,000,000 transactions a day.
Before it became the fintech unicorn with an edgy identity and a promise of a “smoooth” shopping experience, Klarna entered the Swedish market with a simple and logical pitch — “Buy now, pay later” and “Buy safely online.” Just like many other players in the field, from PayPal to Afterpay to commercial banks, Klarna speaks to the customers’ inner Rider, appealing to their reason by offering secure and easy ways to shop and save. Early-stage Klarna’s blue, trust-inspiring color is different from today’s eye-catching, playful, and young pink color palette the company has adopted.
As the company expanded in Europe, entering competitive markets from Austria to the UK, it reached more than $2 billion in valuation by 2015, officially claiming the title of a unicorn. That year, the company officially launched in the US and prepared to take the payment industry in the United States by storm. By 2016, Klarna had successfully been ranked 8th on CNBC’s 2016 Disruptor 50 list, surpassing such iconic startups as Snapchat, Slack, and Spotify.
The Rise of the “Smoooth”
The period between 2016-2017 was that exact turning point that made Klarna the wild success story it is today.
The transformation began with the launch of the proprietary concept of “Smoooth” shopping — spelled exactly like that, with three “o’s.” The bank began the process of shedding the older layers of seriousness so typical to the financial industry; it began taking solid steps away from the traditional, reason-driven marketing and growth pattern so many competitors in the field complied to — and with it, kicked off the disruption of the payment industry immediately.
The campaign that crystallized the “smoooth” idea involved a series of odd, quirky, whimsical videos infused with color and animation. The execution of the campaign videos was so realistic, that the unicorn was contacted by animal rights criticizing the company for a video featuring an animated wish on a slide.
Smoooth, indeed.
Klarna also took its final step in completely abandoning the cold and serious (or as they call it, boring) blue hues and instead embraced the bold imagery and the pink color the brand is recognized for today.
Once the “smoooth” term, along with the appearance and identity of the brand, was coined, Klarna added a new touchpoint for customers to interact with the brand — the Klarna application. This launch was significant for a few reasons.
First, it took the concept of “smoooth” purchasing yet another step further, taking over the end-to-end shopping experience and expanding beyond an easy and simple checkout process. With the app, Klarna now promised inspiration, product browsing, and exploration that would lead to complete purchases. Essentially, Klarna ensured consistency in “smooothness” of the entire shopping process including inspiration and motivation to buy, easy payment, and a seamless post-purchase process.
As another key touchpoint for interaction with customers, Klarna created another opportunity to maintain consistency in tone, identity, and mission that would apply the concept of “smoooth” shopping beyond the product itself and to the strong connections the brand was building with its customer base.
“Every aspect of what we do oozes smoooth,” the Klarna website says. “Smoooth payment experience, smoooth technical solutions, smoooth office, smoo… OK, you get the point.”
And then came 2019 — and with it, the most daring campaign that set Klarna apart from all other players in the rigid fintech industry, for good.
Klarna kicked the year off with their biggest marketing campaign to date, “Get Smoooth,” featuring Snoop Dogg as spokesperson and investor. As an homage to the campaign, Snoop Dogg even changed his name to “Smoooth Dogg” temporarily. Klarna’s Chief Marketing Officer, David Sandström, told Campaign Live in an interview: “We asked: ‘Can one of the smoothest people in the world be even smoother by using our product?’ Banks are seen as stiff and we’re trying to change that with Snoop Dogg.”
The campaign became an immediate success with extensive press and social media coverage worldwide — and crystallized Klarna’s status as an emotion- and creativity-driven industry disruptor.
Klarna Today: a Creative Disruptor
Klarna’s fresh marketing and branding strategy was a pivotal point in its efforts to gain market share and establish a strong foothold in an otherwise saturated marketplace, creating a brand that consumers have come to connect with. Across all the possible touchpoints where customers interact with the company, Klarna makes sure it puts its reinvented brand at the forefront at all times, developing emotional bonds with shoppers and stepping outside of the traditional logic-driven and “serious” marketing strategy so typical of the fintech industry.
Klarna is, no doubt, disruptive in every way possible. From a superior product offering to a growth strategy driven by strategic partnerships, customer-centricity, and an agile internal organization, the brand has taken the fintech industry by storm and continues to push the boundaries of the payment industry “normal.”
Customer Centricity
The role of the customer is also indispensable in Klarna’s strategic growth and expansion. At the root of every strategic decision Klarna makes is in the best interest of the shopper — and this connection the brand has built is deeply emotional and personal.
Klarna goes the extra mile to create experiences uniquely tailored to the preferences and personalities of its users.
The brand hosted a pop-up experience in October 2019, “House of Klarna”. The pop-up consisted of a series of talks by C-suite executives, beauty and lifestyle sessions, and even yoga. The 10-day experience wasn’t simply a strategy to gain more publicity; Klarna designed an out-of-the-box, premium customer experience for its current and potential shoppers to interact with the brand and develop a liking towards it. On the brand’s behalf, this was a push to truly engage the shoppers’ internal Elephants — something unprecedented in the payment and fintech industries.
Around the same time, Klarna also tapped into the world of dog owners and dog lovers through its first-ever pop-up — or rather, pup-up — grooming salon for a quirky, whimsical grooming experience. The campaign, ironically called “Who Is a Great Shopper,” didn’t just provide grooming services; it was an opportunity for dog owners and aficionados to shop for the ones they loved the most — their best animal friends. Klarna put the shoppers and their furry friends at the heart of the campaign, celebrating their love relationship while essentially nurturing a relationship of its own — namely, one between Klarna’s brand and its shoppers.
In October 2020, Klarna hosted an immersive gaming experience, Playing for Keeps, to announce the new partnership with GameStop and engage the global gaming community in an online interactive event. The community was given the chance to play against two professional gamers, SypherPK and KittyPlays. All of the items in the gaming experience, from consoles to gaming chairs and even apparel, were winnable and taken away from the live stream in real-time, one by one, after each player’s victory. The event also featured celebrity guest appearances by Snoop Dogg and Lil Yachty.
Strategic Partnerships
Klarna’s list of partners has been growing exponentially and already involves over 200,000 merchants worldwide. Major names like Zara, Nike, ASOS, Missguided, and Sephora chose Klarna for its customer-centric and extraordinary approach to engage users and scale.
Klarna’s genius lies in its ability to select strategic partnerships that share similar ideologies as the company when it comes to inspiring customers, prioritizing their needs, and having a loyal following and a wide reach — especially among younger shoppers.
Among Klarna’s partnerships that fall into this category of bold, young, and inspirational brands is Missguided. In October 2020, the partnership brought a seamless shopping experience to the Missguided customers in the US, while Klarna got the opportunity to tap into the merchant’s loyal customer base of young and edgy women. “Missguided is synonymous with bold, forward-thinking fashion that lets millennial women express their self-confidence,” said David Sykes, Head of US at Klarna. “We’re very pleased to partner with Missguided in the US to ensure their customers here can shop and pay with the same level of confidence and freedom that they bring to every other aspect of their lives.”
Another symbiotic partnership in the one with ASOS, which gave Klarna access to ASOS’s 80 million active customers in 240 countries. ASOS’s mission of “Giving young people the confidence to be whoever they want to be” closely aligns with Klarna’s inspirational, “elephant-centric” promise.
Internal Agility
Klarna’s nature as a creative disruptor isn’t just externally driven; its internal structure is also unlike any other in the industry. The company’s internal teams and departments, including and especially the marketing department, operate like startups — autonomously, ensuring a flat structure and capacity to scale and grow quickly while each team having different priorities to focus on.
Today, the European unicorn has four marketing domains: Branding, Merchant Acquisition and Growth, Communications and PR, Consumer Growth, and Loyalty. Each of the domains has different competencies. The Branding domain, responsible for the creative genius driving the emotional value of the brand, has a combination of marketers, designers, and copywriters.
Klarna has formed an in-house Brand Studio — the creative force behind the brand’s unique identity that sets the brand apart and creates inspirational experiences for the users. The Studio’s mission is to build a lifestyle brand in an otherwise rational and facts-driven industry. It also facilitates the partnership with external agencies, ensuring brand consistency across all the channels, from the app to social media and beyond.
Klarna’s Growth Loop
Klarna’s path to growth is, by all means, fueled by its emphasis on building brand equity through emotional relationships with the buyers and the superior (or “smoooth”) shopping experience that the brand provides. But the success of Klarna’s model goes beyond its creative approach to marketing in an otherwise reason-driven industry. Klarna’s genius is in developing a growth loop that is driven by its quirky brand and premium checkout service.
Essentially, Klarna built a sustainable model that attracts new customers and keeps bringing them back continuously. This customer acquisition model provides the brand with a solid, uninterrupted pipeline of shoppers that —instead, the number of buyers using Klarna increases quickly while keeping the overall customer acquisition cost low.
So what does Klarna’s unique growth loop look like and how does it operate? Let’s take a look.
Klarna places its logo on partner brands’ websites and at the checkout points, promoting their easy, pay-in-four-installments checkout option and reminding the buyer of all the creative marketing activations that established an emotional connection.
The new (or returning) buyer sees Klarna’s logo as a stress-free payment method upon checkout and clicks on it.
The buyer signs up for the payment service, potentially downloads the application, and seamlessly completes the payment.
The buyer receives customized email updates and push notifications that inspire to shop for new items — all based on the shopper’s unique purchasing behavior. Having gone through a smooth and enjoyable shopping experience, returning users will click on Klarna’s method again when they shop next, while new buyers will see Klarna’s logo and immediately be drawn to the simple checkout experience the brand promises.
In this loop, everything works together to remind the customer about the “smooothness” of shopping with Klarna. With the careful placement of Klarna’s pink and recognizable logo, the brand draws in new customers with the buy-now-pay-later promise and leers loyal customers back through the pleasant and inspirational experience that all of Klarna’s touchpoints (from checkout to in-app browsing) offer. At the same time, all of Klarna’s creative marketing efforts contribute to helping the customers remember and associate enjoyment, seamlessness, and inspiration with the shopping service.
In other words, Klarna’s growth strategy isn’t solely based on brand or performance; the brand doesn’t concentrate its efforts and investment into creativity or analytics one at a time. Instead, the unicorn’s success lies in bridging the gap between brand design and performance marketing, creating a holistic performance branding strategy that results in rapid and overarching growth — a more successful approach than the traditional focus on one marketing direction or the other.
Takeaway
Klarna’s epic entrance into the payment industry has changed the game rules, to say the least. While the competitors have been following the same common patterns of speaking to the Riders of their customers, appealing to their sense of reason, focusing on the transactional aspect of shopping, Klarna moved in the complete opposite direction; they put the customer at the center of its brand strategy and develop an emotional bond with the shoppers all while connecting with their inner Elephants.
Klarna’s creativity-driven approach to growth and scaling allowed the brand to provide a full, end-to-end shopping experience that inspires shoppers to find what they love and complete the purchase seamlessly. What Klarna has mastered is consistency — its promise of a “smoooth” experience extends beyond the purchase process and into all interaction points with customers, from pop-up experiences to marketing campaigns and in-app experiences. The brand exudes the concept of “smoooth” through and through.
What Klarna did was create a whole new approach to marketing in the fintech industry.Klarna has built brand equity around seamless customer experiences and customer loyalty, and leverage the powerful brand image it has built to activate a growth loop that continuously adds new users to its funnel while keeping the returning customers engaged and loyal.
Relentless customer-centricity and creativity in Klarna’s approach to internal and external processes have helped the brand become a one-of-its-kind disruptor in an otherwise stern industry. Klarna has carved out its own niche in the market, making other industry players rethink their relationships with customers and the value of emotional bonds that last a long time.
Content Marketing Strategy: An Expert’s Guide to Content Success
Content is the backbone of any company. Your website (and the copy on it), blog posts, emails, social media, and pretty much anything that communicates an idea or message to...
Content is the backbone of any company. Your website (and the copy on it), blog posts, emails, social media, and pretty much anything that communicates an idea or message to the outside world is a form of content. When marketers think about content marketing they often only think of a blog, but the most successful companies often leverage content in many different formats, with different goals for different stages of the Buyer’s Journey. Content is a huge investment of time and energy, but when done right the compounding effects of a successful content marketing strategy can pay off in the form of cheap future growth.
Skip to the TLDR and Content Marketing Strategy Guide
The State of Content Marketing
The internet today is almost inconceivably large and ever-expanding. It’s estimated that there are approximately 600 million blogs currently running, with more than 1.7 billion websites in existence. The explosion of content marketing as a growth strategy began in the late 2000s and has only accelerated since then, making it harder every year to actually break through and drive organic traffic.
Despite all this growth, there seems to be more noise and lower-quality content than ever before. In every industry, we’ve seen an influx of spending and a massive increase in content creation, but often a lack of a cohesive content marketing strategy to follow suit. Many companies think about content as just keywords and SEO but people and increasingly search engines know the difference between fluff content and real valuable content.
The Internet as we know it has been around for about 20 years now, and it’s massive. But that doesn’t mean you can’t find a niche or approach to content that sets you apart from your competition. With this guide, we’ll help you develop a strategy to do just that.
To get the most out of this guide, we recommend reading through it once and then going back through it a second time to really sit down and execute each step. It’s perfectly fine to use materials you’ve created in the past as a starting point, but don’t let that tie you to your current approach or limit your thinking.
If you want to create a great content strategy that actually cuts through the noise in 2021, you need to think outside the box. In the content game, it can be easy to get caught up in a particular routine or strategy and produce so much “content” that it becomes just a task with no purpose.
Creating content that really stands out in such a crowded landscape is no small feat and, at least for now, requires a lot of effort and time. For now, we humans are still ahead because we’re able to connect disparate ideas together in ways that even the most sophisticated AI can’t imagine. That said, GPT3 is just around the corner, and with the right priming and guidance, AI-powered text generators will enable a company or individual to create a full blog following a strategy like the one outlined in this guide in months instead of years.
We’re excited to see how GPT3 and other AI-enabled products will start to reduce the effort involved in content creation in the next few years.
Content is hard.
In many categories, oversaturation makes it difficult to ever break through to the first page of Google, let alone to really stand out and make an impression. Regardless if you’re starting from scratch or working to expand content at a semi-established company, the continual process of producing content takes time, energy, and a lot of effort if you want to do it right.
Content marketing is a marathon, not a sprint.
We’d be remiss to talk about the difficulties of content without also mentioning SEO, a crucial element in the content puzzle. We only briefly dive into SEO in this guide because it’s already long enough, but we highly recommend this guide as a deep dive and refresher for anyone unsure about the intricacies of search engine optimization. Content marketing strategy is inextricably linked to SEO and one without the other is a recipe for failure.
Given the incredibly competitive organic search landscape for certain industries, traditional content marketing based solely around a blog is notfor every business. Luckily, there are many approaches to content you can take and it really depends on the target audiences and the goals a business is trying to achieve.
When done right, Content Marketing is a much cheaper way to attract new customers, especially if your business is lucky enough to be solving a new problem or working in a new niche or category.
Content marketing is expensive and can also require a lot of patience. Compounding is a powerful and often overlooked force, but it’s the name of the game when it comes to content, as well as investing, learning, and many of the most important aspects of a successful life.
Content can be a significant investment that can take time to take off and show results, and this is where many B2B companies run into trouble. Paid channels can be easily turned on and off, for whatever reason. Content, on the other hand, takes months, often years, to really build solid momentum. If you’re going to spend that much time working on content, you better have a solid strategy.
Inbound isn’t all it’s hyped up to be
Contrary to what the content marketing “experts” at Hubspot would have you believe, inbound traffic is not always better. When content is created with the sole purpose of ranking in search, we often end up with fluffy, non-meaningful content.
As marketers, we often live in a dichotomy between certain metrics and KPIs like views or likes that don’t necessarily correlate to success at a larger scale. Just because your website is getting more organic traffic doesn’t necessarily mean your business is growing if your content isn’t serving its intended purpose. We’ll get into creating actionable goals and metrics later, but the main takeaway is simple: focus on quality over quantity.
Two very important things to keep in mind: just because content lives and is consumed on the web doesn’t mean it’s SEO. Second, more traffic is not always quality traffic.
Content and SEO should definitely overlap, but great marketers know that they are ultimately designed to achieve different goals. The two should go hand in hand and work together to drive your overall marketing strategy. Without quality content, you won’t be able to take full advantage of SEO, as relevant and useful content will motivate your visitors to stay on your site longer which will positively impact your search rankings.
The New Paradigm in Content
In the early days of the internet and into the 2000s, search engines were far less sophisticated than they are today, and SEO strategies were able to game the algorithm to create content that would rank regardless of its actual value.
Google’s goal is to get customers to click on ads to find what they are looking for with the least amount of effort. Today, it is estimated that less than X percent of searchers ever view below the 5th organic result. In order to better achieve this goal, over the past decade, Google has introduced a flood of new features like featured snippets and widgets along with ads that crowd out search results and push organic content deeper down the page. At the same time, Google has begun to give greater weight to engagement factors like bounce rate and time spent on-page, which give a better indication of “value” to the reader.
Old [SEO-Stuffed Content]
Utilitarian: Looks and reads like a Wikipedia page or a mere how-to guide, no lasting expression of the brand
Non-expert: Can often be written by someone with zero relevant experience
No value add: Consolidates existing content without adding new data
Boring: Often very forgettable content with questionable impact on your business. Boring to write and boring to read
New Approach
Contrarian: Strong opinions that inspire discussion, social sharing, and backlinks
Expert: Demonstrates deep industry knowledge and experience
Value-added: Adds new data, opinions, and analysis to the discourse
Differentiated: Not just another boring SEO post
The old approach can still be used to rank for a lot of keywords, but that doesn’t always correlate with sales. It’s not enough to just get people to your website, you need to build trust. You need to show expertise and build credibility by bringing new ideas to the table. It’s a large and tedious task to get someone to part with their money, and SEO content is bad at driving sales because it doesn’t give a potential customer any reason to trust you.
Compare that to the new method: doing the opposite of the old, SEO-crammed utilitarian content.
If you want to write content that really gets a reader’s attention you need to have an opinion, provide truly thought-provoking ideas, or material that’s fortified with deep insight and expertise. Articles tend to consolidate information available elsewhere on the internet rather than taking a stand of their own, which may save readers a little effort but is unlikely to persuade them to buy anything.
“Information alone is rarely valuable. It’s the expert interpretation of that information that matters.”
Content that focuses on quality and big ideas before SEO can have a much bigger impact on the business itself because it builds that trust. This is the type of content that a potential customer will turn to during a sales call. For a brand just starting out, one or two pieces of content written by a CEO/founder will often do much more than 5-10 SEO-focused articles, assuming you have a funnel that is at least somewhat optimized and some alternative channels to reach customers. It’s never too early to start building an email list so you can take charge of communicating with your customers, and an opinionated expert article that stands out and adds value to the conversation is the way to do it.
High-quality content that fleshes out an argument and takes a stance may not always show up at the top of Google, but it’s far more likely to generate backlinks and organic shares on social media or across the web. These organic shares and subsequent readers will find value in the quality of the ideas, and this expert aura will then be bestowed upon the company itself.
Harry’s Marketing Strategy: How The Men’s Razor Brand Dominated The Category
As marketers, looking at past successful campaigns is an integral part of staying ahead of the trends and gaining inspiration from new strategies. If you’ve ever looked at noteworthy brand case studies, you’ve surely seen mentions of New York men’s razor company Harry’s. So what makes Harry’s so noteworthy and how did the brand go from the new kid on the block to a multi-million dollar company in a matter of months?
Company Background
Harry’s was formed in 2012 by Andy Katz-Mayfield and Jeff Raider with the goal to create a high-quality razor experience, without the exorbitant costs associated with the majority of existing players in the industry. With the increasing success of (predominantly) mail-in product services like Warby Parker and MeUndies, the duo knew they wanted to incorporate this business model within the shaving world (while producing a product that differs in quality from the likes of Dollar Shave Club). Andy and Jeff then set out to work out product production logistics and found the ideal existing high-quality razor factory all the way in Germany (which they eventually fully purchased after a few years). The factory, currently consisting of over 600 German engineers, designers, and production workers, was able to deliver the exact top-notch product that the duo was looking for.
Once the main business and production plan was set in motion, it was time to deliver a pre-launch strategy that would set the basis for the company’s success. Below, we highlight the different factors that turned the little startup into an industry giant.
The Power of Storytelling
Storytelling is a vital yet often underused aspect of marketing, and one that really helped cement Harry’s as the powerhouse it’s become. The brand had a tough feat ahead of them, trying to go head-to-head with Gillette, which at the time owned 70% of the market for razors. Everyone loves a good underdog story, and Harry’s capitalized on this fact by branding themselves as the new kids on the block that could take on the giant. A true David vs Goliath story, rebels going head-to-head with the empire, they created the perfect rootable product. Harry’s was designed to free the market from paying a ludicrous amount of money on shaving equipment, while still offering a high-quality product that couldn’t compare to Gillette’s cheaper alternatives.
To make matters easier for Harry’s, their hero fell right into place when Gillette began attacking the brand, claiming people were leaving Harry’s and switching back to using Gillette products. Harry’s saw a golden opportunity here to surge their underdog hero status and combat Gillette head-on. They began an entire paid advertising campaign debunking Gillette’s false claims, directly acknowledging the attacks and displaying direct comparisons between the two products. This is the moment the audience craves in any epic saga, the main battle between the hero and the villain, the final showdown between Luke and Vader (too many Star Wars references?).
Not only were the ads successful, but Harry’s took it a step further and created an entire landing page comparing the two products and highlighting the benefits of their brand. This included everything from category breakdowns to screenshots of tweets from real customers confirming the opposite of Gillette’s claims, and switching from the giant in favor of Harry’s.
The final hook on the landing page? Giving users the option to try out Harry’s for themselves with a cheap trial set that’s sure not to break the bank. Ultimately, Harry’s was able to take all of the negative attention being directed at their brand and use it as a means to not only increase sales, but their overall reputation.
The storytelling aspect of Harry’s marketing strategy was also able to drive a ton of organic support for the company. People loved the underdog narrative so much that they went on social media to showcase their support for the brand, while also trying to combat the corporate beast that is Gillette. Create a hero archetype and expect people to want to come to your defense.
Time to Reach Out to Some Old Friends: The Stellar Referral Program
It’s impossible to talk about Harry’s success without diving into its superb pre-launch referral program. The brand wanted to create buzz around the product and did so through mystery and with a slew of product incentives. The pre-launch site was simple and didn’t reveal too much about the product just yet. All it took was a simple picture of a razor with language hinting at “Harry’s is coming.” From a consumer perspective, this attracted people to want to sign up and learn more about this new sleek razor. The main CTA for the page was to get users to sign up to be the first to learn about the launch and details of the brand.
Upon signing up, users were then taken to a page encouraging them to invite their friends to add their emails, and the more friends they referred, the more free prizes they received. 5 referrals got you a free shaving cream, 10 got you a Truman handle with a blade, 25 a free shaving set, and 50 a one-year free supply of blades. It’s easy to see why people were driven to invite so many of their friends and colleagues — a feature that got Harry’s a total of 100,000 email sign-ups in a single week.
Let’s talk about the simplicity of this referral program. All Harry’s had to do was create an incredibly simple and cheap landing page, and the rest fell into their lap. A solid referral program makes your audience do your work for you by having them spread the word and increase brand awareness organically.
Today, there are countless examples of great referral software that can help you achieve your goals and stay organized in the process. These vary by price depending on the different functionalities you want to include, and the severity of how large you want your referral program to actually be.
All About Partnership
Visibility was critical for the brand in its early pre-launch stages. The referral program was an excellent way to increase word-of-mouth awareness for the product, but the team didn’t stop there. In order to really tap into a wider audience, Harry’s conducted mass outreach to publications, blogs, and magazines with their product to test. Authenticity was key here, and they weren’t interested in running bling media sponsorships. The Harry’s team included personalized notes to each sender, with individuals ranging from grooming editors at magazines to podcast hosts. They drove this type of awareness without the need to spend advertising dollars and ended up receiving organic praise on the product. This led to positive reviews from the likes of GQ editors who gave the product a glowing review to podcast hosts who would be asked about their razors organically without the conversation coming off like a paid advertisement. The main prerequisite to a solid partnership for the Harry’s brand was a mutual appreciation for the product itself, which was more important to them than inauthentic advertising of the brand.
On top of mutually beneficial promotion partnerships, Harry’s massively benefited from a retail deal with Target in 2016 to sell their Harry’s products in stores.“Our brands share many of the same values,” co-founder Katz-Mayfield expressed while discussing the partnership. “For example, we both appreciate exceptional design, we’re focused on offering high-quality, affordable products and we always try to put customers first.” With Walmart’s brand-new redesigned website in 2018, they knew they wanted fresh new products to appeal to millennial consumers… enter Harry’s. The corporation partnered with Harry’s to initially sell its products in 2,200 U.S stores.
It’s important to remember that these big partnerships came about years after Harry’s initiated their early success. You have to establish yourself as a leader in your category and showcase enough potential to be able to have the big guys throw the big bucks your way, and that’s exactly what Harry’s did.
Decide for Yourself
Besides perfecting a flawless shave for a low price, Harry’s also excelled in delivering a near-perfect user journey. The company gave its prospective customers different options in order to acquire them as a new business. A consumer didn’t complete their purchase? They’d shortly get a cart abandonment email reminding them to complete their purchase. But their efforts don’t end there. Harry’s offered more incentive for the end users by offering them a free trial of the product in order to decrease the initial commitment. If the free trial didn’t work, they also promoted their lowest-cost product pack for only $15. In this case, offering alternative options, even if it meant getting prospects to spend less money on their order, was the perfect way to finalize the deal to buy someone in on the product. Once the consumer was ready to make their purchase (based on any of the options they might have chosen from their email), they were then offered an upsell opportunity in order to try to increase the overall order value. For extra customization, Harry’s allowed the customers to choose their own designated shave plan during their free trial, as well as a handle color, to make the entire experience uniquely personalized.
Another big feat for Harry’s was their hyper-personalized and to-the-point advertising. If a user expressed any type of interest in the company, the ads fully acknowledged their place in the funnel process and tried to win them with very direct language. The creative in the ads offered more benefits and reasons why this interested yet not activated customer should make the switch, getting their attention with snappy language and offer-based headlines. Similar to the cart abandonment email campaigns, these ads also offered the user a trial offer to get them to fully buy into the product.
Conclusion
The Harry’s marketing model was something to be admired and studied, not only within the shaving industry but within all marketers and brands alike. Multiple organizations have and continue to model their digital efforts after the shaving company’s strong overall plan.
One of the biggest lessons from the work Harry’s achieved is careful consideration for every step of the marketing process. The company didn’t need a big team or a ludicrous advertising budget; what they did have was exemplary storytelling, the ability to build strong relationships, and well-thought-out strategies to drive their consumers to not only purchase their product but to promote it within their networks.
With these specifically curated tactics, the new grooming company wasn’t only able to make a dent in the industry, it was able to command it.
Chaos Needs a Plan
BY BRIAN PORTER
One year into the COVID-19 pandemic, there have been positives and negatives, but managers still need to plan for continued uncertainty.
So, here we are, about one year after a “limited” global shutdown caused governments around the world to close borders, companies to consider their risk profiles, and the Tokyo 2020 games to be shifted to the Tokyo 2021 games. At the time of this writing, the games are still planned for this coming summer.
Let’s consider some of the major changes that have come about in everyday life because of COVID-19 responses:
Masks required in many or most public places
Physical distancing recommendations outside the home
Limited number of people at gatherings
Videoconferences rather than “in-person” now the norm
Reduced travel for business and personal purposes
Less time with extended families
Delayed weddings, funerals, and other special events
Soaring and then dropping unemployment, which remains above historic lows
Significant decline in math and reading skills for children • Mandated curfews in some cities
Significantly increased domestic violence numbers
Increase in suicidal thoughts, especially in younger generations
It’s not all bad, though. We have also seen several beneficial aspects to the 2020 isolation period:
Less business travel, which is good for the individual and families but not for airlines
Lower fuel prices for those who do have to travel
Increased focus on health and exercise for some
Increase in baking, which is good for those who like eating!
When the pandemic restrictions first hit the workplace about a year ago, a general feeling of helplessness seemed to permeate just about every person. The chaos of disrupted business required a varied approach to doing jobs, including WFH (work from home), alternating schedules, and modification of normal processes. So many individuals, employees, and managers took the initial two-week shutdown as a vacation rather than a way to consider risk and improve ways of getting things done.
However, some of the best managers and executives saw an opportunity to modify and thrive, rather than sit back and wait. The rest were confused and didn’t have a clue how to move forward. You may have determined who you were in spring 2020. More important, it’s up to you to decide who you will be during spring 2021 and moving forward. How will you address the unknown in the future?
PROJECT MANAGEMENT TOOLS CAN HELP
“Plans are worthless, but planning is everything.”
—General Dwight D. Eisenhower
Organizations, whether for-profit, nonprofit, or government, just need to plan. There may be those who are on one side or the other of the “predictive” or “agile” argument. Neither approach is correct by itself, especially in a time of chaos. It takes a balance of short-term responses and long-term adjustments, which will require both agile and predictive methods to assess and respond with better results.
Just to be clear, here’s an analogy for understanding how the two methods would be used when taking a trip from New York to California:
If a 100% predictive method is used, the project manager will focus on details from the very start to the very finish using the IPEMC (initiating, planning, executing, monitoring and controlling, and closing) process groups. They will outline each turn and every stop and calculate estimated fuel efficiency for the entire journey.
If a 100% agile method is used, the team will only consider the direction they are heading and estimate how far they might travel in a day. Each morning, the team will consider what the plan for the day should be. To this team, an agile daily stand-up meeting includes yesterday’s accomplishments, goals for today, and the challenges blocking these goals.
Both methods require planning, but one assumes a known end and that all details can be calculated. The other addresses the short term with more flexibility.
Let’s use both methods and address this the AMA way!
Analyze the situation
Make a plan
Adapt as needed
ANALYZE THE SITUATION—DON’T FLINCH!
All too often, managers flinch at sudden changes in the market, employee resignations or, in 2020, a pandemic. Those that “flinched” canceled life for two weeks and then came back without a plan. Instead, when faced with a business or personal situation that causes great change, you should pause and consider the situation. Observe all ways the organization, employees, and you as an individual will be affected.
I recall a disaster movie where people saw a meteor coming at them and started to panic, shouting and running in every direction. One “leader” got on a megaphone and yelled “Stop,” causing everyone to look at him. He shouted, “Look where it’s heading!” After a moment they all noted the direction and ran to the side, avoiding running into the peril. They stopped for a moment and decided how to respond.
When chaos or disaster strikes business, you may need to tell yourself “Stop” for a moment and figure out where things are heading, instead of responding by panicking. Consider all the elements that need to be addressed:
Policy. Consider newly instituted local, state, and federal restrictions. How might some of these restrictions threaten business, but also open opportunities?
Product. There will be changes in demand for products or services provided by the organization. This could mean a significant drop or a significant increase. Perhaps a portion of the organization will see a drop and the other portion will see a gain.
Process. There are external forces that can invalidate your current processes. Perhaps you have performed business only in a face-to-face modality for years, but now you have changed to digital or physical delivery. What other factors might force change to your existing processes?
People. Your employees will have fears and concerns. Unemployment is a big concern, but for others during the 2020 pandemic, the fear was not of losing their job but determining how to do the job effectively with children studying at home.
Sometimes, a proposed change itself is enough to cause panic and fear. Judging the level of anxiety will help a manager determine urgency for a change versus importance of the change
MAKE A PLAN, OR START PLANNING?
After completing a thorough analysis of the situation, the manager can now use some project management tools to focus on planning. I’ve noted that project managers are a lot like NFL football coaches. We spend the majority of our week in planning and just a small portion performing the execution component. Here are some specific ways to help staff and the organization through times of chaos, starting with the people:
For Yourself
Get your bearings. Just as airlines instruct passengers to put the oxygen mask on themselves first, before helping others, you need to make sure you are ready to face the issue head-on. This means you need to clarify the scope of your efforts. Whether they are projects or process (operations), you need to ensure that you are clear on the scope and vision of your efforts.
Sleep right. Without sleep, you will not be focused enough to make good decisions.
Eat right. Eating or drinking excessively will only hamper your health.
Exercise right. Make sure to take a few minutes every morning to get the circulation flowing and metabolism started. Even a few sit-ups and some jogging in place can really help a person’s mood and metabolic rate.
Add tools. Consider what you need to monitor the business and marketplace within logical constraints, not emotional triggers. Resource management is one of the 10 knowledge areas in project management, and it gets less attention than scope, schedule, or cost (budget) management. Don’t ignore it! Determine the resources required to be successful, such as a computer, headphones, technology, and so on.
For Employees
Team meetings. Regular team meetings, including agile daily stand-ups, will help keep people on track and connected. During any “chaos” event, a feeling of helplessness and loneliness is the enemy. Remove the fears and help the team.
One-on-one check-in. Make sure to have individual conversations, not just group discussions. Certain employees may feel left out because they are too shy to speak up in the group setting. Pay attention to their needs as well.
Team “fun” exercises. The intent is to build camaraderie beyond the basic interactions while working. Find a way to team build. A few ideas include Dave and Buster events and virtual happy hours (everybody has their own snacks and drinks but shares time chatting with one another).
Technology needs. During any upset in business, the first thing some managers do is to cut back on resources to avoid unnecessary costs. However, updating technology and looking forward may provide efficiencies and confidence needed to make it through the disaster. More, not less!
For the Organization
Once you have a plan for yourself and employees, now think of the business:
Policy. What changes to policy will be required? The pandemic changed a lot of company practices requiring individuals to work at the office or onsite. Overnight, something that was prohibited became not only the norm but a requirement. During the next “chaos” event, what policies might be revisited? Even if it is a weather-related or a financial, competitive, health, or other unknown event that causes the change, evaluate and be willing to drop or modify policies for the new reality.
Product. Perhaps competition is adamant and aggressive about new products, and they disrupt what has been a comfortable position for your organization. Cities replaced rural and agricultural living in the 1870s. Digital media displaced newspapers in the 1990s. Online banking has displaced much of “personal banking” over the past 30 years. Electric cars have and will continue to displace fossil-fuel vehicles in the years to come.
Process. Consider how many small and large food chains had to change from dine-in to pick-up or delivery modalities during 2020 within a few weeks’ time. Manufacturing lines had to space employees out rather than “maximize” space usage. For some, shortcuts were taken, but that’s not recommended. Instead, re-envision a new process that meets the chaos situation.
ADAPT AS NEEDED
Recognize that every plan needs to be flexible. Whether short-term or long-term planning has occurred, we need to be open to further unexpected surprises. This is where the battle between agile and predictive project management tools can instead be a helpful selection process.
A Guide to the Project Management Body of Knowledge, Seventh Edition, or PMBOK© 7, is scheduled to be released in late March 2021 and is intended to focus on outcomes. Project managers should use the correct tools from any methodology that is appropriate for their project. This means that some managers will need a lot of adaptive or agile tools upfront, but also should think long-term predictive tools for when things settle.
Think of it this way: When you have an emergency, you use an ambulance. If there is no emergency, you use your regular vehicle.
In the short term after “chaos” hits, consider using agile tools because it means that you will get through the day or week providing some form of value. Use 15-minute daily stand-up meetings to get feedback on what has been completed, what will be completed, and roadblocks for each team member. Approach the plan for only a week or two to make sure that every effort is worth the time. If something is not going to bring value in the next couple of weeks, then delay or eliminate that activity.
Once things begin to settle down, you can make the long- term plans such as formal six-month, one-year, two- year, and five-year strategies for operational and project modifications. Use predictive tools such as formal calendars and resource scheduling tools. Proper sequencing will keep you from wasting precious resources during tough times.
Whether the disaster you face is temporary or permanent does not matter. If it is a condition related to financial, resource, scheduling, communication, or scope elements, it does not matter. You can tailor your response to the situation at hand by using AMA: Analyze, Make a Plan, Adapt!
ABOUT THE AUTHOR:
Brian Porter is an adjunct instructor at American Management Association. Porter has handled all aspects of product development and project management, including ideation, development, testing, documentation, NRTL listing, field testing, patent preparation, market rollouts, training, litigation support, and every other aspect of bringing a product to market.
How Post-Pandemic Leaders Can Drive Performance and Innovation
By: Inga Carboni and Rob Cross
Increasingly, organizations rely on networks of agile teams to get work done—a trend that will only intensify as we move into a hybrid, post-COVID world.
This transition will be difficult for leaders in part because they will need to manage collaboration without some of the structures they have grown used to—face-to-face interaction and co-location promoting serendipity, to name a few.
But other trends have also been emerging that require a new look at teams in the post-pandemic world. For example, employees are on many more teams—twice as many as they were five years ago—and teams are larger and more geographically dispersed than in the past. Research reported in Creative Conspiracy indicated that the average team size in U.S. companies in 2013 was 15. And while Katherine Klein of Wharton reported back in 2006 that the ideal team size is five people (and accepted wisdom these days is five to nine people), it is not unusual for individuals at present to find themselves on, or even leading, teams of 20 or more, many of whose members may be in different time zones and accessible mainly through electronic communication.
As people are put into more and bigger teams much more rapidly than ever before, we need new ways of driving results. Increasingly, researchers and practitioners are reconceptualizing teams as networks that need to form rapidly to produce needed results. This research is showing that the structure of internal relationships (social capital) contributes as much to team success as does the composition of the team (human capital).
To better understand the practices that yield performance in today’s teams, we conducted 90-minute interviews with more than 100 high-performing leaders in 20 different organizations. Each individual was identified as having successfully led multiple teams over at least 10 years. The organizations included a wide range of industries (for example, financial services, high tech, consulting, manufacturing, food services, hospitality) and ranged in size from several thousand to hundreds of thousands of employees. Here, we summarize what these leaders did to enable performance through collaboration.
CULTIVATING INTERNAL TEAM COLLABORATION
We found that high-performing team leaders optimize network structures. In contrast to advice based on old models of team development, the leaders in our study did not focus excessively on team-building activities, nor did they limit their efforts to building strong one-on-one relationships with team members. Instead, they assessed and shaped the relationships among team members, purposefully redesigning the network structure to optimize it for team performance. More specifically, they manage the center, integrate the edge, minimize silos, and generate agility.
Manage the center. To manage the center, the leaders in our study took steps to prevent the people who are most centrally connected in the network from becoming overloaded with collaborative demands. Collaborative work (that is, time spent on phone calls, in virtual or face-to-face meetings, and on email or other collaborative technologies) is rarely evenly distributed. Very often, a small set of people— leaders, experts, long-tenured colleagues, or colleagues with whom others enjoy interacting—absorb a much higher volume of collaborative work than do others. Typically, 3% to 5% of the people account for 20% to 35% of the value-added relationships—collaborations that generate sales, efficiency gains, key innovations, or other forms of value.
This means that relatively few employees have a substantial and quantifiable impact on performance, yet, often, they are not managed any differently than those who do not make comparable contributions. All overwhelmed employees suffer due to the volume and diversity of demands; their work quality often falls off, they are at much greater risk for burnout, and they are far more likely to leave the organization.
The leaders in our study engage in three practices and a number of actions to manage the center of their teams. These leaders ensure that individuals, in general, or those in certain roles within the group do not become so overloaded with collaborative demands that they are unable to support their colleagues in a timely fashion; they identify and reward/ acknowledge employees who engage in collaborative behaviors that make their colleagues more effective; and they seek out influential team members to promote alignment and team engagement.
Simple network analysis techniques can quickly reveal people at risk for collaborative overload. Take 10 minutes to draw the network map of your team, and who turns to whom for information to get work done. Have two or three teammates review the diagram and make additions as needed. Use this information to distribute collaborative demand more equitably.
You should publicly acknowledge and celebrate collaborative behaviors to promote engagement and signal the importance of collaboration. For example, set a regular reminder to spend 30 minutes once a week to thank a small number of people for their efforts in the way that means the most to each person, such as a handwritten note, an email with cc’ing of partners, a private conversation, or recognition of that individual’s contribution during a team meeting. And you should invest time to locate and proactively engage negative opinion leaders. Crafting mutual wins early can pay off substantially over time.
Integrate the edge. Integrating the edges of a team’s network structure means pulling in people who are not fully included in the team’s interactions. Frequently this means newcomers and remote workers. But surprisingly, we also find that 20% to 30% of the employees considered as top talent—those on top talent lists or in the top 20% performance category— migrate to the fringe of the network. Often, these are people who have learned how to meet their revenue or other performance management objectives without making much of a contribution to their colleagues’ efforts.
To integrate the edges of their teams, the leaders in our study rapidly integrate newcomers, proactively engage remote and virtual group members to ensure integration, create short forums for serendipitous interactions, and ensure that subject-matter experts and high performers are available to help their colleagues in a timely manner.
To integrate newcomers, assign them a “buddy” who is respected and well connected in the network. One way to engage remote and virtual team members is by instituting events such as “watercooler Wednesdays” in which all team members can join an instant message group, such as WhatsApp, for informal conversations about binge-worthy shows or holiday shopping. And to increase collaborative accessibility to high performers, have them serve as technical consultants.
Minimize silos. A big part of a leader’s work is minimizing silos. Collaborative breakdowns diminish performance and innovation and have various causes. In one case, it might be poor communication technology. In another, it might be that none of the groups that should be working together knows what expertise exists in the other groups or understands how that expertise can support their work. Misaligned incentive schemes also can foster parochial behaviors, as can leaders who do not like each other. Companies often try to minimize silos by launching cultural change programs, formal reorganizations, or new collaborative technologies, but these broad solutions often do not address the issues that impede collaboration at crucial network junctures.
To minimize silos, the leaders in our study facilitated connectivity at specific silos across functional lines, physical distance, hierarchical levels, demographics, or expertise domains where collaboration is critical to performance. They also ensured that cliques or subgroups do not form within the team in ways that diminish alignment, performance, or engagement.
We suggest that leaders locate efficiency losses for targeted action by setting up weekly check-in meetings with people whose role requires them to work across boundaries to help them understand when and how to include others earlier in the process. And to prevent the formation of an “inner circle” subgroup, purposefully invite quieter voices into the conversation and force reluctant but capable members to take on added responsibilities.
Generate agility. Generating agility encourages team members to efficiently and adaptively work together in ways that respond to environmental demands. In a recent Korn Ferry survey that queried more than 750 CEOs worldwide about how their companies could succeed during the pandemic, one in four stated that “breaking down hierarchies and building agility” was paramount. Agility requires team members to collaborate rapidly and to easily share their sometimes differing perspectives on how best to respond to an environmental demand.
To boost their teams’ agility, the leaders in our study assess and streamline collaborative activities within the team to promote efficiency and engagement and cultivate diversity in network interactions to promote team agility and innovation. We suggest that you employ formal or informal approaches to analyzing collaborative time demands, such as plotting a grid of work streams and standing meetings that are employed to coordinate work. Then, reconsider the purpose, agenda, and required participation in each meeting. And you should leverage moments of connection—however brief— with people who represent different subcultures. This can be done by chatting for a minute or two with someone at the company café or asking someone about his or her weekend when a meeting ends early.
Team performance in a post-COVID world will require more intentional cultivation of networks. Rather than leading with available tools—video calls and instant messaging—more successful leaders will necessarily need to reflect on the points in the network they are trying to influence. Taking more targeted actions to promote desired collaboration will both yield performance and keep leaders and employees from burning out.
ABOUT THE AUTHORS
Rob Cross is the Edward A. Madden Professor of Global Leadership at Babson College and a co-founder and research director of the Connected Commons. He is the author of 85 articles and five books, including the upcoming book Beyond Collaborative Overload with Harvard Business Review Press.
Inga Carboni is on faculty at William and Mary and a research associate with the Connected Commons. She has published extensively in both academic and practical outlets on the topic of networks.
How to Lead Through the Pandemic and the Recovery Phase
By: Tomas Chamorro-Premuzic
Among the wide range of fascinating insights from the 100-year-old science of leadership, perhaps none are as uncomfortable as the notion of a significant gap between the qualities that propel people into leadership roles and those that are actually needed to be an effective leader.
As I highlighted in my last book, Why Do So Many Incompetent Men Become Leaders? (And How to Fix It) (Harvard Business Review, 2019), this gap also explains the pervasive gender imbalance in leadership: When we select leaders on the basis of their confidence, charisma, or power hunger, it should not surprise us that we end up with more male than female leaders. By the same token, these parameters explain why leaders are not typically known for their competence, humility, or integrity, and why narcissistic individuals over-index at the top of any organizational hierarchy or system.
If this was a problem before the pandemic, it is now a disturbing reality, one that accounts for the widespread leadership failures around the globe. Too many leaders are out of depth, exposed, and have nowhere to hide. As I observed in my March 15, 2020 article in Forbes, “Why Are Some Leaders Better at Managing a Crisis?”, while many of the key features of the pandemic are not as “unprecedented” as most people think—so yes, the word has been overused in unprecedented ways—there is surely one unique aspect to this crisis: It is a global leadership experiment like we have never seen before. Leaders around the world are being put through the same test, with unparalleled access to the same standardized KPIs, and the world is watching closely.
Furthermore, since we have never dealt with this virus before, let alone a digital-age pandemic, it has been largely impossible for leaders to rely on their past performance and expertise to mitigate this crisis. Instead, every leader has had to start from scratch, with a blank slate, and work out how best to mitigate the damaging consequences of this devastating virus.
THE POSITIVE CHARACTERISTICS OF CRISIS LEADERSHIP
As organizations (and indeed societies) prepare to face the next phases of this pandemic, there is no question that leadership will remain a key focus area. With that, it is important to reflect on what we have learned so far, not just from this crisis but also from the robust body of research derived from solid decades of organizational psychology and an increasingly interdisciplinary science of leadership.
Crisis leadership is just good leadership. There is a long tradition of research around crisis management, which has identified some of the decisive traits and behaviors to predict how some leaders are much better able to manage crises than others. In my talk at the Global Leadership Network’s event in August 2020, “Six Traits Leaders Typically Lack During Crisis,” I outlined that higher levels of intelligence, curiosity, humility, resilience, empathy, and integrity are all critical to improve leaders’ performance during a crisis. And as it turns out, these traits also elevate leaders’ performance during good times—that is, when there is not a crisis. But in a crisis, leadership matters even more: Leaders’ right and wrong decisions will exacerbate effects on their followers, raising the stakes to a matter of life and death. So while mediocre leaders may go unnoticed in good times, we pay a high price for leadership incompetence when the challenge is big.
The good news, however, is that we don’t need to completely revise our leadership models so they are crisis-proof. In fact, all we need to do is select good leaders. Of course, in a logical world, we wouldn’t have needed a pandemic to realize that people are generally better off when their leaders are smart, curious, humble, resilient, empathetic, and honest—or at least show some of these qualities—but in the real world we did. Our only hope is that the crisis reminds us of the importance of picking leaders based on their competence, rather than on their ability to entertain, seem confident, or successfully acquire power irrespective of their intentions or talent. By the same token, we would be suffering a lot less from this crisis if we had made it a habit to pick leaders with these foundational talent attributes, so here’s to learning this lesson and improving things in the future.
Context still matters. Although crisis leadership is in essence just good leadership, the context still matters. Indeed, according to “When and How Team Leaders Matter,” by J. Richard Hackman and Ruth Wageman (Organizational Behavior, 2005) over 60% of well-performing teams could attribute their performance to “someone’s personality or behavior—and that someone frequently was the team leader.”
And as Barbara Kellerman and I noted in our February 16, 2021 article in Fast Company, followers matter. This has been clear during the pandemic, as even in the case of high-performing leaders—such as Jacinda Ardern of New Zealand or Tsai Ing-wen of Taiwan—there were some favorable conditions, such as location, technological infrastructure, healthcare system, and indeed good followers, that enabled them to tackle the pandemic with success. By the same token, one cannot fully blame Donald Trump or Jair Bolsonaro for their country’s poor results, because inequality, size, governance, and the mindset and culture shaping follower behavior independently influenced results. Of course, in the case of the United States we are seeing in real time how much can change when we change the leader, but it is always hard to draw conclusions with an N of 1, and even though Biden’s administration deserves praise for its vaccine rollout, it is also true that the vaccines were produced during his predecessor’s mandate.
Organizations can change. A silver lining from this crisis is that incompetent leaders have been exposed (and in some instances also eliminated), which of course came at a high price. One hope is that organizations learn the lesson and start to take leadership selection more seriously. This will require the willingness and ability to become more datadriven in their assessment of leaders. As Jeffrey Pfeffer points out in his book Leadership BS: Fixing Workplaces and Careers One Truth at a Time (Harper Business, 2015), and as I noted in The Talent Delusion: Why Data, Not Intuition, Is the Key to Unlocking Human Potential (Piatkus, 2017), even before the pandemic there was clear evidence for the idea that leadership competence is the exception rather than the norm. Indeed, if leaders were chosen on talent, Gallup would not report that only about 22% of the global workforce is engaged (this, in mostly large or leading organizations).
In a world where leadership and management roles were assigned on the basis of competence, most people would trust their boss and be inspired by them. Instead, the average experience people have with their bosses is rather more discouraging, if not traumatic. And we continue to see reports of toxic leaders who derail and whose dark side keeps harming their teams and organizations.
Destructive leadership was rampant before the pandemic, and science-based tools could do much to mitigate it. It is noteworthy that the emergence of artificial intelligence and analytics could help, because the only way to evaluate leaders is to actually analyze how they behave and link these data to organizational outcomes. Yet there is clearly a human tendency to distrust AI and campaign against it as a biased tool. Meanwhile, human biases are alive and well, and they will continue to advance people’s careers on the basis of privilege, nepotism, political influence, and “culture fit.”
We’ve all heard it many times: Crises are opportunities to change, as well as traumatic periods of transition where the old is not ready to die, and the new is not ready to emerge. Our big hope is that our old and outdated leadership archetypes, and our tendency to select people based on style rather than substance or confidence rather than competence, will die or at least fade away with this crisis. That way, we can look forward to a future where our lives are not put in the hands of those who are in it for themselves, or have no capacity to make things better for us, but rather are smart, kind, and honest leaders. AQ
ABOUT THE AUTHOR
Tomas Chamorro-Premuzic is the chief talent scientist at ManpowerGroup, a professor of business psychology at University College London and at Columbia University, and an associate at Harvard’s Entrepreneurial Finance Lab.
7 Challenges That New Managers Need to Prepare For
By: American Management Association
Many people work hard for a promotion into management. Unfortunately, many of those same people aren’t prepared for how hard they’ll have to work after they’ve achieved that coveted promotion in order to be perceived as a manager by their staff, peers and senior management. Not surprisingly, the transition from individual contributor to manager can be stressful, as numerous studies have found. According to one study by an HR consultancy, nearly six out of ten managers rated the stress level of being promoted to manager as second only to dealing with a divorce.
Having the title of manager doesn’t automatically confer power, privilege or respect. But the title of manager can secure such recognition and launch a rewarding career for those who are prepared for the challenges that accompany their new role. A world leader in professional development for nearly a century, American Management Association (AMA) has identified seven challenges new managers commonly face and offers tips to help overcome them:
1. Managing expectations
Knowing what your team—and senior management—expects of you is every new manager’s first order of business. Working conscientiously to manage and meet those expectations greatly affects a new manager’s success.
2. Establishing credibility
Amidst all the stress, it’s easy for new managers to feel insecure and question their own ability. As a new manager, it’s important to remember: You got the promotion because you earned it. Find confidence by taking stock of your past leadership experiences and your outstanding skills. To be seen, heard and believed as a manager, bring your expertise to the job every day.
3. Balancing technical and management expertise
Being a manager requires a new set of skills. As a manager, you are no longer responsible for producing—now, your job is to get things done through and with other people. Your success isn’t just measured by what you do, but by what your staff is able to achieve. Avoid the pitfall of micromanaging your staff’s work, and instead give them the guidance and space to succeed.
4. Finding rewards in different places
As a new manager, you might at first miss being recognized for your individual contributions and achievements. You may not always feel the same sense of accomplishment you felt as a staff member. For your own job satisfaction, look for other rewards—perhaps in how you’ve helped your staff work through a conflict or improved your team’s ability to work together.
5. Managing time
As a new manager, you still have to manage your own time efficiently. But now, you rely on your staff’s ability to make efficient use of their time as well. Be aware of how the demands you place on your staff affect your own time management. Work to make it easier for them to meet deadlines and give you the information you need on time.
6. Managing change
Yes, change can be stressful. Yet, it’s unavoidable and pervasive. As a manager, one of your new roles will be that of a change agent. So, get comfortable with change. Not only will you be called on to implement change—sometimes exciting, sometimes unsettling—but you must be prepared to help your staff accept change and support them through it.
7. Supporting risk-tasking
Taking risks is the key to achieving breakthroughs. Be an example by taking risks and taking action to get results—and encourage your team to follow. Recognize that allowing your team to make mistakes can often lead to the most creative solutions.
A new manager’s job is stressful. Being aware of and ready to handle common challenges if and when they arise will help ease that stress and smooth the transition. Above all, do not expect too much too soon. As a new manager, give your staff and upper management time to adjust and see you in a new way. Be patient with yourself too.
6 Ways to Strengthen Collaboration at Work
By: American Management Association
Regardless of changes to how and where we work, team members still need to successfully collaborate to get good results and keep a business running. In a recent survey, American Management Association (AMA) asked its members and seminar participants to rank several capabilities critical to thriving in the post-pandemic workplace. Managing and motivating a remote or hybrid team was among the top three priorities, along with improving virtual communication skills and building and maintaining strong relationships.
Whether team members work side-by-side in the same office or screen-to-screen from different buildings, neighborhoods, or countries, good results depend on strong collaboration. But that doesn’t always “just happen.” Building effective collaboration starts with establishing a firm foundation. Key components include shared goals, deliverables, products, or services; agreed-upon guiding values, principles, or norms; disciplined processes, roles, and responsibilities; and sufficient resources. Still, even with all of the essential building blocks in place, sometimes a team struggles to work well together because some people aren’t natural collaborators.
How can managers get buy-in for collaboration at work? A world leader in professional development for nearly a century, AMA stresses the importance of making a clear business case for collaboration, setting an example by being collaborative, and encouraging reluctant collaborators through coaching, support, and recognition. Here are six steps for motivating tentative collaborators and improving collaboration team wide:
1. Be an ally. Don’t be a naysayer or, worse, an adversary. To foster collaboration, welcome input from all collaborators, regardless of their experience or comfort level. Simple statements, such as “I like your suggestions” or “That sounds like an interesting idea,” often speak volumes, letting team members know that you value their opinions.
2. Say what you see or sense. If you observe or pick up on something troubling, say something. For instance, you might say, “You seem a little reluctant to share your opinions.” Do this in a way that’s genuine, caring, and without criticism to avoid making the reluctant collaborator feel singled out and even more uncomfortable.
3. Ask and listen. When someone is having trouble collaborating, take the time to find out why. Ask them to share their concerns or feelings, perhaps starting with, “What can you tell me about that issue?” Then, listen to their response.
4. Reinforce the benefits of collaboration. Talk up collaboration until it becomes a shared value and an everyday best practice. Offer ongoing encouragement, such as, “The team seems to be getting closer to an answer. Let’s keep going.”
5. Seek out suggestions for improvement. Your team members are the ones working together after all. You might be missing something. “What would make this whole process work better for you?” might be a question to ask everyone on the team—weak and strong collaborators alike.
6. Offer choices, not demands. Managers should hold team members accountable when they refuse to collaborate. But when dealing with a person who isn’t a natural collaborator, threats and punitive consequences tend to be counterproductive. Instead, try asking, “Could you give me two or three ideas tomorrow morning?”
With the right approach, anyone can be a valued collaborator. Everyone has good ideas. All it takes is a little time and care to ensure that your team makes the most of them.
5 Steps for Managing Conflict and Improving Teamwork
By: American Management Association
As every manager knows, a cohesive and smooth-functioning team is crucial to the success of any task or project. In today’s global business world and emerging post-COVID workplace, teams are increasingly virtual or hybrid. Yet, whether they collaborate through technology or work together in an actual office, team members are bound to have different opinions, ideas, work styles and perspectives. Those differences often give rise to conflict. Sometimes, conflict can be creative, an energizing force that leads to innovation. However, when conflict is not productive and not addressed, it can derail teamwork, leading to declines in morale and productivity, misunderstandings, and animosity. At its worst, conflict can become toxic.
To get a handle on conflict before it escalates and does harm to their teams, managers must first know what type of conflict they’re dealing with. There are two basic types of conflict: task- (or process) related and relational. Task-related conflict typically occurs in complex projects where work between team members is interdependent and reciprocal, such as when one person’s ability to begin their task depends on another person’s task first being completed. If left unchecked, this common type of conflict can lead to the second, and potentially more damaging, type. For example, clashing views on how best to execute a task might feed into cultural stereotypes and fuel heated arguments between team members.
Learning how to de-escalate conflict is essential to keep a team on track and work proceeding. From American Management Association (AMA), a world leader in professional development for nearly a century, here are five steps for effectively managing task-related conflict:
Step 1: Identification
First, identify the source of the conflict. Ask the opposing team members to explain their side, clearly and calmly. Have each person involved write a simple statement of what the issue is, either on a whiteboard during a meeting or by posting on a shared site.
Step 2: Response
Second, allow each person involved to respond to the issue and the other side’s position. For virtual and hybrid teams, consider using Chat, Word Comments, or the Word Tracking function. With on-site teams, invite opposing team members to engage in a discussion. Set firm boundaries to ensure respectful communication, with zero-tolerance for name-calling or derisive comments.
Step 3: Resolution
Third, analyze all the facts of the situation. Using a systematic decision-making process, work towards a solution that’s acceptable and do-able for all team members.
Step 4: Enactment
Fourth, put the agreed upon solution into practice and monitor progress. This step is where any necessary adjustments can be made.
Step 5: Evaluation
Fifth, evaluate how well the solution worked and whether it’s workable on a long-term basis. Note any changes needed to improve the process moving forward.
Effectively managing task-related conflict minimizes the incidence of relational conflict in the workplace—though it can still creep in. Virtual and hybrid teams can be more vulnerable to relational conflict. Relying on technology as the primary or only means of communication can create difficulties in establishing a shared context, building rapport, and navigating cultural differences. Here are a few tips for avoiding relational conflict in the workplace:
Increase awareness of symptoms. Ignoring a team member’s snide aside or casual use of a demeaning label opens the door to a harmful pattern. Simply commenting on less-than-optimal behaviors immediately sends a clear message about what will not be tolerated.
Set ground rules for conduct. For example, if email responses are expected within 24 hours, ensure this is enforced. In addition to reducing conflict, this helps to maintain consistency, workflow and productivity.
Place a priority on building trust. While leaders establish the culture and set an example, building trust is a team-wide effort. Make sure every team member knows that they’re responsible for building trust and, in turn, managing conflict before it escalates.
Conflict in the workplace happens—it’s natural when people with differences work together. But conflict doesn’t have to deter teamwork and impact results. By keeping AMA’s five-step process and expert tips in mind, conflict is highly manageable and easy to monitor and minimize.
4 Steps for Conducting a Painless Performance Appraisal
By: American Management Association
Nearly everyone dreads them. Performance appraisals are challenging—to both managers and their team members. So, why do companies continue to practice this anxiety-inducing formal exercise and repeat it annually, if not biannually or even quarterly? Despite their notorious reputation, performance appraisals serve an important two-fold purpose: to help the manager determine the value and productivity an employee contributes to the organization, and to help employees overcome their weaknesses, develop their strengths, and progress in their career.
No matter what template or process an organization uses, the difficult work of conducting a performance appraisal falls squarely on the shoulders of the manager. After thoroughly assessing a team member’s overall capabilities and specific results, achievements, and shortfalls over the past year or months, as well as their potential for growth and success moving forward, the manager must then sit down and discuss it all with the employee, one-on-one and face-to-face, whether in person or virtually. It’s no wonder both managers and team members resist or procrastinate when it comes to carrying out this company-mandated process.
A world leader in professional development for nearly a century, American Management Association (AMA) is committed to making those difficult performance appraisal discussions easier for managers and not so dreadful for employees. For starters, here’s a four-step process that every manager can apply to any employee review:
1. Let the employee know what to expect. Open by explaining the purpose and process for the performance appraisal discussion. Place a priority on constructive feedback and strategies to support the employee’s development, rather than harsh criticism and warnings.
2. Start with the problem. First, focus on your concerns about the team member’s weaknesses. It might be something as simple as, “Lately, I’ve noticed you’ve been missing deadlines.” Why begin with a problem? Because it’s uncomfortable—so get it over with and move on. Once the worst is out of the way, the employee’s tensions will be relieved. For example, if the person keeps anticipating criticism, they might not even hear it when you praise them.
3. Come up with a solution together. Ask the employee for their take on the problem. Then help them come up with a workable solution. Talk it through together. Share your insights and highlight the development areas the employee should work on—for example, “Working on your time management skills could help things go more smoothly.” Aim to incorporate goals that are SMART: Specific, Measurable, Achievable, Relevant, and Time-Bound.
4. Recognize their strengths. End the discussion by talking about the team member’s strengths. Give specific examples—for example, “You did an excellent job with the marketing proposal last month.” Acknowledging what the person does well is likely to motivate them to want to do better, instead of leaving them feeling demoralized. Wrap up the performance appraisal on a positive note of praise and encouragement.
This four-step process is meant as a framework. Every manager should develop their own style. Try other approaches and decide what works best for you and your team. Practice makes perfect—and with it, performance appraisals really can be painless. And remember: A performance appraisal discussion provides managers with an opportunity to call attention to a team member’s achievements and affirm their future potential.
The effect of talent management practices on employee retention at the Namibia University of Science and Technology: Middle-level administration staff
Jacobina Amushila, Mark H.R. Bussin
Introduction
Orientation
Talent management (TM) is one of the modern functions of human resource management (HRM) and the most inspiring topics in management (Hatum & Preve, 2015). Talent plays an important role as a part of the HRM function in managing all employees within the organisation that leads to high performance (Tetik, 2016, p. 44). The role of HRM has rapidly changed from only concentrating on hiring, employee benefits and payroll to strategic human resources whereby the focus is on sustaining and driving business strategies. This raises questions about the necessity of re-skilling of HRM functions (Sparrow & Makram, 2015, p. 249). This represents a major shift in how business executives view the value of HRM, as they understand the strategic value of TM and the impact that strong talent can have on financial outcomes (Silzer & Dowell, 2010, p. 3). Silzer and Dowell (2010, p. 3) further state that ‘talent is becoming recognised as a core competitive asset in any business organisation and serves as a currency of business’.
Namibia has been facing major challenges in retaining talent in most key sectors of the economy (Deloitte, 2015, p. 4). According to Letchmiah and Thomas (2017), it is still a major concern for many organisations to retain top-performing employees and thus, leadership strength is negatively affected. Talent management (TM) is the process that ensures an organisation has access to the human capital and helps in attracting, developing, engaging, retaining and utilising talent to the mutual benefit of the business and employees (Bussin, 2014, p. 17). However, employee retention can be defined as ‘an organisation’s ability to hold and keep in the possession and to engage the services of high potentials and value contributors in mission-critical and scarce skills positions’ (Bussin, 2014, p. 26):
Organisations used to view talent as an audience, like fish waiting to be caught and not as a community, an ecosystem or fish swimming all over the global talent pool that are harder to catch. (Frost & Turner, 2016)
Research purpose and objectives
Talent management, as such, is well researched in most parts of the world; however, it is limited in Namibian industries, as it is a fairly new approach in many organisations in Namibia. Therefore, although the shortage of talented workforce has attracted vast attention, the literature gives little recommendations on how to deal with it. The researcher is of the opinion that the problem is that organisations are still attached to the old perception of human resources and thus, there is a lack of understanding on the effects of TM on employee retention. Thus, the Namibia University of Science and Technology (NUST) may continue to face challenges in retaining key employees or absenteeism if TM is not implemented. The institution may extend its recruiting to foreign labour markets. Neither the NUST nor the Ministry of Education has commissioned to research and explore recruitment and retention trials facing NUST and the higher education sector in general to analyse the root causes (Van Hoof, 2020). The institutions of higher learning are vital to the success and growth of the Namibian economy. Retention of highly talented employees appears to be a concern at NUST given a high staff turnover (Deloitte, 2020). Research focused on retaining highly skilled employees might influence the institution’s success and growth, especially employees who are the key drivers in steering the institution in the right direction. If the challenges of retention are not addressed, this will probably negatively affect the university’s overall performance in terms of growth and professional support service to the education sector (Nambira & Enkali, 2019, p. 4). There might be a repeat of the threat in 2012 of employees striking, because of a lack of salary and increment benefits (NUST annual report: 2013). When employees strike, major drawback to the institution are caused because the absence of administration staff hinders service delivery to the students.
The researcher was motivated to undertake this study regarding employee recruitment, turnover and retention of high talent because it is deemed necessary by the fact that high performing and talented employees continue leaving the institution sighting similar reasons for leaving. It is envisaged to propose recommendations that will assist NUST in addressing challenges faced by the institution. The researcher attempted to obtain an understanding and insight into the institution’s recruitment and retention strategies.
To address the scarcity of literature that exists on the relationship between TM and employee retention within NUST and to understand whether implementation of TM can reduce employee retention, the following objectives will be explored:
To determine the impact of TM on employee retention at NUST.
To find the benefits that the institution can achieve by implementing TM.
To formulate the retention strategies adopted by the institution to reduce turnover.
To determine the effect that TM has on employee turnover.
To explore the relationship between TM and employee retention at NUST.
Literature review
The conceptual clarification of talent
According to Silzer and Dowell (2010):
[T]he term talent dates back to ancient Greeks and biblical times, starting as a measure of weight, then becoming a unit of money and later meaning a person’s value or innate abilities. (p. 13)
We might now refer to a person with innate abilities as a ‘gifted’ individual. There is no universal accepted definition of what talent constitutes, as different organisations and different sectors define talent in a wide range of ways. A few will regard employees who are the current top performers as talent, whilst others also classify those with ‘high potential’ (HIPO) as talent (Bussin, 2014, p. 46). Bussin (2014) further adopted a definition as stated in the Chartered Institute of Personnel and Development (CIPD) (2012) that:
[T]alent consists of those individuals who can make a difference to organisational performance either through their immediate contribution or in the longer term, by demonstrating the highest levels of potential.
Letchmiah and Thomas (2017, p. 3) define a ‘talented employee as the one who drives consistent excellent business performance through competency, commitment and involvement and has shown the potential to move up’. Silzer and Dowell (2010, p. 13) further stated that in an organisation, talent could refer to:
an individual’s skills and abilities (talents) and what the person can do or contribute to the organisation
a specific person usually implying she has specific skills and abilities in some area, or
a group of employees in the organisation impacting superior performance and potential.
Egerova (2014), as cited by Van Zyl, Mathafena and Ras (2017, p. 2), believes that:
[T]he increasing attention to talent is affected by factors such as globalisation, knowledge-based reimbursement, changing the world of labour and also new forms of organisational and demographic changes. In some organisations, talent does not make a great difference about organisational performance. (p. 2)
‘Many bureaucratic organisations have been designed and structured so individuals do not need to perform at a superior level, they simply need to perform at an adequate level’ (Lawler, 2017, p. 10).
Talent management defined and the need for attention
According to Blass (2009, p. 17), cynics argued that ‘TM is just another human resources fad, but few fads seem to have turned themselves into a new trench in the labour market’. The roots of TM can be traced back to the downsizing and outsourcing trends in the 1990s, including the slimming down of graduate recruitment schemes. TM became more popular after McKinsey & Company coined the term ‘War for talent’ in 1997 for their research on TM and practices (Van Zyl et al., 2017, p. 1). Bussin (2014) stated that:
[M]any organisations responded to this ‘wake-up call’ by building methodologies, processes, and talent review mechanisms aiming to attract and retain critical talent and skills required to compete and ‘win the war’. (p. 85)
According to Van Zyl et al. (2017, p. 2), TM has progressed quickly up the corporate agenda in the recent years, which is apparent from the number of research papers published over the last few years. Typically, according to Poisat, Mey and Sharp (2018, p. 2), TM has three mainstream definitions: firstly, it is the description of a new HRM term; secondly, an insinuation of succession planning; and finally, the general management of talented individuals in the organisation. Bussin (2014) further stated that:
[E]ven after many years, organisations are still struggling with ensuring they have the right people, with the right skills, doing the right things, at the right time to achieve business results.
Armstrong (2012, p. 719) defines TM as ‘ensuring that the organisation has talented people it needs to attain its aims and objectives’. The term TM may simply refer to management succession planning or management development activities. Mahlahla (2018) mentioned that TM has three main goals, namely:
to identify, handpick and develop employees who provide superior performance and stimulate others to perform with the same confidence,
to find, develop and position highly qualified backup personnel for key positions in the organisation,
to allocate resources, namely, rewards, training, coaching, job assignments and other inducements to employees based on their genuine or potential contribution to excellence.
Chee’s (2017) study on TM mentioned effective TM planning, leadership, continuous support, organisational unity, work-life balance and other environmental factors where important strengths to retain talented employees in the organisation.
According to Riccio (2010, p. 17), there is a shortage of TM in educational institutions as they spend too little time identifying their future leaders whilst claiming to be institutions for higher learning and training. Several researchers share the same view that there is a need for TM in every organisation and it must be incorporated to create and maintain a strong association of human resources development. Letchmiah and Thomas (2017) mentioned that TM relates to the implementation of integrated strategies that are designed to increase efficiency by developing improved processes for attracting, developing, retaining and utilising individuals with required talents and aptitude to meet existing and future organisational needs. Overall, according to Van Zyl et al. (2017, p. 2), there seems to be a lack of linkage between TM practices and the broader human resources system.
Employee retention
Talent retention is all the activities and practices used by organisations to avoid the departure of talent. ‘Because of the high costs associated with losing talent, it is difficult for organisations to gain and maintain a competitive advantage without retaining their talent’ (Ott, Tolentino, & Michailova, 2018, p. 16). Kibui, Gachunga and Namusonge (2014, p. 421) mentioned that employee engagement and employer–employee relationship should be durable, constant and link the employee to the organisation’s common values and by how the organisation responds to the needs of the employee. However, the South African Board for People Practices found in its annual HRM survey as cited by Erasmus, Grobler and Van Niekerk (2015, p. 34) that a significant 32% of South African organisations do not concern themselves with retention phenomenon, but at least 46% indicated the problem as a concern.
According to Lawler (2017), a major issue in talent development is talent retention. Talent retention as identified by Sparrow and Makram (2015, p. 250) is talent protection and is the process whereby organisations develop isolating implements to protect its talent resources from being lost to other organisations. Turnover is expensive from an administrative and development viewpoint, but its greatest expense often is the opportunity of the talent lost. Arguably, the economic downturn at the start of this decade has caused many employees to stay in jobs that they might have left earlier. As the economy recovers, up to half of the managers could be looking for new jobs as long hours, lower salaries and benefits coupled with their perception of ungrateful and greedy senior leadership, which propels disgruntled employees to leave as more opportunities become available (Blass, 2009, p. 13). The study of Onyango, Nzulwa and Kwena (2017, p. 637) revealed that employee retention involves taking measures to encourage employees to remain in the organisation for the maximum period of time. Onyango et al. (2017, p. 638) further define employee retention as a systematic effort by employers to create and foster an environment that encourages employees to remain with the organisation.
A significant number of employees leave their jobs before they have spent a year with the organisation (Lawler, 2017). Retention strategies should be adopted to strengthen the ability of organisations to attract and retain their workforce. Employee retention is important for building a productive, committed and healthy workforce (Onyango et al., 2017, p. 637). Kibui et al. (2014, p. 422) emphasised that retention is mainly to prevent the loss of competent employees in the organisation, which could cause harm to productivity and service delivery. Remarkably, in understanding challenges faced by organisations to retain staff, it is vital to understand employee turnover (Dhanpat, Modau, Lugisani, Mabojane, & Phiri, 2018).
The talent management strategies to enhance retention in an organisation
A TM strategy according to Armstrong (2012) consists of a view on how the TM processes blend with the organisation’s overall objective to acquire and nurture talent wherever it is. According to Poisat et al. (2018), TM strategies must be adjusted to accommodate the diverse values, features and attitudes towards work and corporate world view of the different generational associates working together. According to Bussin (2014, p. 81), succession management is one tactic to overcome leadership succession risks. Koranteng (2014, p. 23) further suggested that a succession system would be more successful if it is highly formalised, has a system of checks and balances, has adequate resources, has broad information, uses capability rather than governmental criteria for individual selection and has reliable staff. According to Robertson (2015), coaching new employees is important to incorporate coaching into a TM strategy to enable an increase in employee engagement and achieve talent development goals such as problem-solving capabilities and strategic thinking. TM suggests that organisations must be purposeful with their retention techniques to help engaging with newly recruited employees considered top performers. ‘The techniques may include selection techniques, developmental opportunities, and mobility within the organisations and promotion prospects’ (Letchmiah & Thomas, 2017). According to Davis (2016, p. 25), creative assignments is stating that “one cherished resource many organisations overlook is the value of existing employees. Attention on recruiting top talent is a priority for an organisation but so is the talent. Creative assignments is one of the many ways that organisations employ to increase the efforts and abilities of employees whilst performing tasks.
According to Bussin (2014, p. 74), talent development is learning and development of talent and is one of the most important components of a TM strategy and the development needs to be customised and experiential. Developing the right talent and doing so in the correct way is critical to the effectiveness of each organisation (Lawler, 2017). The aim is to use the business strategy to explore the talent attraction and development that may occur. Leadership development according to Armstrong (2012) is rather an unfavourable statement for those who are leaders by birth although there is a saying that leaders are born not made. However, further defines leadership development as a sense to acquire, develop and utilise leadership capabilities or the potential for it. Armstrong (2012) suggested possible conditions for effective leadership development as clear learning objectives, the opportunity for active practice, relevant timely feedback, suitable follow-up activities and a suitable mix of training methods. Employee engagement is one fascinating concept that comes along every few years in the HRM field that is fuelled by an intense business need and introduced into practice so quickly that it creates consternation and confusion in research and academic communities (Silzer & Dowell, 2010, p. 439).
Constructive retention strategies
All organisations are challenged with attracting and retaining a quality workforce to attain operational excellence and competitive advantage (Sparrow & Cooper, 2017, p. 78). Dhanpat et al. (2018) mentioned that it is vital to note that when organisations recruit HIPO individuals, they must develop and implement retention strategies immediately to prevent employees from leaving. According to Turner and Kalman (2014), retention is not only about money but also a universal process that will span most aspects of an individual’s management.
Mentorship programmes: Mentoring plays a key role in helping employees gain awareness into how senior leaders operate (Davies & Kourdi, 2010, p. 66). Organisations having employees mentored is one of the valued and effective professional development prospects they can offer employees. New employees can learn the ropes from an expert through a wealth of guidance, encouragement and support that will provide personal and professional benefits that lead to better performance.
Recognition and rewards system: According to Letchmiah and Thomas (2017), employees who perceive contributions equal to the benefits they receive are less likely to leave their jobs. The appreciation can be as simple as leaving a small note on the employee table, sincere email, a gift card, an extra day off or, as a surprise to a deserving individual, an internal promotion. To succeed in the war for talent, organisations need to clearly understand how numerous reward factors influence whether talented performers stay or leave their jobs (Pregnolato, Bussin, & Schechter, 2017).
Employee compensation: Mahlahla (2018) stated that other researches are on the opinion that the significance of financial compensation strategy on retaining employees varies as per individual and is not necessarily a motivator for everyone. Compensation plays a key role in attracting employees, improves an individual’s organisational commitment and ensures employee retention (Dhanpat et al., 2018).
An ideal package may include a salary, 13th checks, medical aid, pension, and retirement plans, generous paid leave and paid studies.
Communication and feedback: Dhanpat et al. (2018) emphasise that proper and frequent feedback is vital in retaining employees because employees perceive organisational support and increase commitment in the long-term. It is crucial to regularly connect with each employee and not allow issues to build up.
Perform exit interviews: According to Amsbary and Powell (2018):
[S]ome people switch jobs, moving because of a better salary and benefits and working environments while others burn out by working too long and too hard at a single position.
It is very difficult for an organisation to figure out why an employee is leaving unless the employee is asked. That is why Amsbary and Powell (2018) revealed that:
[I]t is vital for an organisation to schedule an exit interview with all employees who decide to resign. Since an exit interview is the last meeting between an employer and an employee, it will give a last chance for the employee to contribute to the organisation’s success. Organisations will be able to form trends and implement an effective change program to reduce or even avoid high turnover and improve retention.
Benefits of talent management
According to Sparrow and Cooper (2017, p. 51), TM has become a burning topic in management over the past few decades. The understanding of the TM topic has progressed in recent times, and the quality of experiential evidence has advanced and has countless benefits that organisations can utilise.
Retaining top talents: According to Letchmiah and Thomas (2017):
[T]op-performing employees are at times unnoticed and seen as organisational assets. As a result, employees become unhappy with and detached from their current employers and begin to look for new job opportunities where they feel more valued and appreciated. (p. 2)
Erasmus et al. (2015, p. 34) highlight that retaining high-quality talent is important to organisations as it eliminates the hiring, selection and onboarding costs otherwise suffered in replacing best professional talent.
Getting the right person for right position: Organisations that attract and retain the right talent and treat it well, reward it, develop it and deploy it correctly perform better than those that simply fill jobs (Lawler, 2017). The right person in the right job will give a better alignment between employee’s interests and job profile that leads to increased job satisfaction and their needs.
Enhanced professional development decisions: Poisat et al. (2018) state that the work environment is important for employee satisfaction and a positive relationship between management and employees. They further indicate that such a relationship needs to be of mutual respect, trust and confidence in employee’s capabilities.
Improved hiring: The success of an organisation’s hiring strategy is determined by an effective TM system that leads to a quality workforce (Van Zyl et al., 2017). As the saying goes, there is no successful talent at the top without bottom talent.
Competitive advantage: Engaged, motivated and skilled employees work in the strategic direction of the organisation’s goals and objectives, which creates a competitive advantage (Ott et al., 2018, p. 17).
Employee motivation and commitment: Poisat et al. (2018) state that that an organisation’s effective TM strategy helps them to keep their employees motivated and committed. A motivated workforce discourages employees to leave the organisation and do their job effectively. Not all employees are driven by money, so they will need to feel engaged and feel safe to be fulfilled.
Employee turnover
Employee turnover is a concern in many worldwide organisations, which decreases the operating costs of organisations, leaving significant effects on talent loss and disruptions in business activities (Dhanpat et al., 2018). Theron, Barkhuizen and Du Plessis (2014) distinguish between avoidable turnover (identified as those employees who express turnover intentions but do not resign) and unavoidable turnover (described as voluntary resignations because of various reasons that organisations have no control over). Narayanan (2016, p. 35) states that over the past few decades, management practitioners have shown more interest in the labour turnover model as it is always a significant concern to many organisations.
Mamun and Hasan (2017, p. 63) blame it on the organisation’s top management as they pay less attention and do not concentrate on this major issue, as they are possibly not capable of recognising the situation on how labour turnover harms the organisation’s overall performance. Ahmed, Sabir and Khoza (2016, p. 89) narrate that employee turnover results in the access and opportunity to enter into new employment. Armstrong (2012) believes that it is necessary to measure labour turnover and calculate its cost to estimate future losses for planning and also to recognise the motives on why people leave their employment. Numerous researchers, including the studies of Ahmed et al. (2016, p. 90), highlight similar factors on why people leave their jobs, such as lack of proper induction and orientation, a mismatch between experience, qualification and salary offered, poor training and development, low-grade working environment, career promotion and bad influence of co-workers. Besides these causes, Silzer and Dowell (2010, p. 240) added that employees also leave because they do not feel appreciated and because management fails to set clear job expectations for prospective employees.
Challenges associated with talent management
According to Sparrow, Scullion and Tarique (2014) ‘there are many debates and criticisms about the way TM is applied in practice and the topic is still lacking a definition and needs theological growth’. TM offers a fresh approach to addressing the hot topic through human resources affluence as many challenges need to be considered, especially the organisational level and employee level challenges (Silzer & Dowell, 2010, p. 753).
The study of Mogwere (2014, p. 23) stipulates that it ‘is important to remember that challenges differ from organisation to organisation even from one continent to another regarding experiencing and a shortage of talent’. Mogwere (2014, p. 23) uses Africa as an example, where organisations lack the ability to hire and retain a qualified workforce and face challenges such as poor salaries, working conditions, proper employee engagement and reduced rewards. Another challenge according to Mogwere (2014, p. 23) emphasises talent shortage resulting from the deteriorating quality of the education system, because of low funding caused by inadequate education and lack of facilities, equipment and tools; the most critical challenge is the lack of qualified academic staff. The studies of Koranteng (2014, p. 30) added that factors such as the current economic crises, hiring and selection, cultural diversities and proper human resources planning are affecting the management of talents.
Research design
This study was performed based on a qualitative research design to understand the effect of TM on employee retention at NUST. According to Bertram and Christiansen (2014, p. 40), ‘research design is a plan of how the researcher intends to methodically collect and analyse the data that is needed to answer the research questions’. The research information was solicited from both primary and secondary data. The researcher made use of a one-on-one interview with semi-structured questions with the study participants.
Research approach
The researcher adopted a qualitative research method by making use of a case study approach because of the complexity and nature of the study. According to Beaudry and Miller (2016):
[A] qualitative research remains constant among other approaches with distinctive features such as, the research focuses on people in their natural settings, samples are small and they are sensitive to setting and purpose, data analysis is inductive, and the researcher was the key instrument for data collection and is engaged with visible players. (p. 39)
Research strategy
The primary source of data for this study was obtained through the semi-structured interviews administered to the participants for both the middle-level administrative employees and the director of HRM.
Research method
Research setting
Interviews were conducted at NUST, which is a Namibian public tertiary educational institution that has recently transformed to a full-fledged university. The institution has grown since its academy years and employed close to 1000 employees, which comprise academic and administrative staff, and enrolled about 13 000 students in 2019. The research was conducted according to ethical rules, procedures and guidelines of NUST obtained from the department of the deputy vice-chancellor of innovation and research.
Entrée and establishing researcher roles
The primary researcher performed the role of interviewer.
Research participants and sampling methods
The 39 potential participants of the study were identified by finding all the names of the individuals that fitted the criteria for the target population. Detailed informed consent forms were e-mailed to participants seeking permission and approval to conduct interviews for gathering responses determining the influence of TM on employee retention of the sample population to address the research questions. An introductory e-mail on the setting up of convenient interview meeting times and venues that ensured confidentiality was sent out to individuals who had by that time consented to participate in the study. Interviews were conducted by first explaining the interview protocol and setting out the aims and objectives of the study. At the end of data collection through the structured interviews, 22 participants were interviewed, which represented a response rate of almost 58%. It was considered sufficient because data saturated well before then.
According to Bertram and Christiansen (2014, p. 59), ‘sampling encompasses making decisions about which people, settings, behaviours, and events will be included in the study by deciding how many individual groups or objects will be observed’. The unit of analysis of this research paper was the administrative middle-level management staff of NUST, because this group of administrative staff is where key activities of NUST revolve.
The researcher approached 39 participants who met the criteria from all 13 administration departments of NUST, meaning it was 3 participants from each department. Of the possible 39 participants approached, 22 were available and able to make the interviews. Data saturated long before all 22 interviews were completed. The sample selected was of the participants in employment for not less than 1 year because they have the knowledge based on the research problem. The participants selected were interviewed and the semi-structured were from the office of the vice-chancellor; office of the deputy vice-chancellor, administration and finance; office of the bursar; office of the registrar; human resources; library; centre for open and lifelong learning; department of auxiliary services; centre for teaching and learning; centre for corporative education unit; dean of students; centre for enterprise development and the department of information and communication technology.
Data collection methods
The data collection method was through semi-structured interviews with the participants selected as the middle-level administration staff members. The respondents answered the interview questions freely according to their ethics and principles without being exposed. The researcher adopted the use of open-ended and closed-ended questions to make it easier for data analysis. Semi-structured interviews lasted from 30 to 45 minutes and the researcher made audio recordings of all the interviews that were later transcribed and analysed.
Data recording
The researcher maintained a file to keep all the handwritten notes of what was said by the respondents because it was easy to lose crucial information if the papers were loose and no respondent would want to be interviewed twice and time was of essence. With the fast-paced technology world, the researcher made use of audio recording that was transcribed before analysis began.
Strategies employed to ensure data quality and integrity
The most cited concept of trustworthiness of quality criteria of this research method is that of Guba and Lincoln of 1985 and thus, this research’s trustworthiness was established by using credibility, transferability, dependability and conformability strategies. To that extent, the researcher ensured that data and data analysis will be credible and trustworthy. The participants were encouraged to support their statements with examples where necessary and the researcher studied the raw data to develop a theory to provide intended insight. Characteristics of data were examined by developing codes and core categories, recording and labelling them. The researcher ensured sending all interview transcripts back to respondents for feedback and correct any misinterpretations through member checking. The researcher made use of good descriptions of the respondent’s answers and the full research process. This enabled the reader to see if findings were in harmony with their experiences and to make transferability judgement decision. To increase dependability, the researcher ensured that the research process is logical, traceable and clearly documented.
The proposed research was conducted according to ethical rules, procedures and guidelines of NUST obtained from the department of the deputy vice-chancellor of innovation and research. Permission to conduct the research was obtained from the registrar, the consent form was developed to safeguard the participants and consent was sought from all participants before starting the interviews. According to Wiley (2013, p. 42), in the research setting, discretion means that identifiable information about individuals, collected during the process of research, will not be disclosed and that the identity of research participants will be protected through a process designed to ensure anonymity, unless they specified to be identified.
Data analysis
According to Beaudry and Miller (2016, p. 45), ‘in qualitative research, data analysis depends on the procedures for organising and reducing data and summarising results’. After collecting the information, the researcher carefully read the handwritten notes and listened to the audios to identify patterns amongst the data collected. Responses differed from the respondent’s different ways of answering the question on how they felt and thought. Thereafter, responses were transcribed into an excel worksheet for data analysis. It is a crucial step for analysing and organising qualitative data to be able to understand, see and allocate codes to sensitive and indirect data collected throughout the study. Responses for each question were assessed and analysed for key words and phrases for which codes were allocated. The codes that were identified were then organised into one dataset applicable to each question. The dataset was then analysed for resemblances, differences and replicate themes and organised order theme bands, categorised patterns and emerging themes for which each theme was named. This report underscored the themes for TM and employee retention, which emerged from the responses utilising thematic analysis technique. Thematic analysis is a search for patterns and themes within a dataset that discovers commonalities of capabilities, thoughts, beliefs, opinions and views, thus addressing the research questions being examined.
Reporting style
The study was reported as per the guidelines of the American Psychological Association (APA).
Ethical considerations
Ethical clearance was obtained from the Southern Business School, SBS-20201-0014-MM.
Results
The results are presented against the objectives of the study.
Research objective 1: To determine the impact of TM on employee retention at the NUST
The encounters of the study showed that NUST is not yet at the phase where it is supposed to be in terms of TM development and employee retention. At this stage, TM has not yet made significant progress and development to where it can influence employee retention. The findings exposed shortcomings in the implementation, such as the lack of overall leadership commitment that was found to be deficient and may impede delivery. The findings showed that the institution has invested in allocating fair salaries although it has not reached a point where non-monetary incentives have satisfied the policy of talent attraction and fulfil employee job satisfaction. Poor employee retention in NUST was also attributed to slow planning of developing a TM programme that could have been implemented ages ago, while others may be from the financial challenges that the institution was facing as a result of slow funding from the government.
Research objective 2: To find the benefits that the institution can achieve by implementing TM
The concept of TM has different meanings for different people, which means that the benefits of implementing a TM programme will differ from organisation to organisation. This is similar to the previous studies as most kinds of literature cited that TM implementation is crucial to recruit and develop talent not just for meeting today’s needs but also keeping in mind the organisation’s future. Thus, developing TM and managing it properly by keeping employees engaged and motivated is beneficial to NUST’s sustainability. To achieve that, the findings expressed that developing a TM strategy in line with the institution’s vision needs to be implemented.
There was a perception that TM improves employee commitment and support to employees throughout their employment and therefore retains top talents. The NUST has made it a priority to complete the implementation of TM to achieve competitive advantage in terms of retaining high performers in administrative operations.
Research objective 3: To formulate the retention strategies adopted by the institution to reduce turnover
This objective was to frame retention strategies that NUST is utilising to minimise employee turnover. This was made by establishing whether there was an understanding of the concept of employee retention and what it seeks to achieve in terms of what level the concept contributes effectively to the TM system. The findings revealed an insignificant percentage of lack of understanding of retention; many understood that retention strategies are necessary and critical for the institution to improve its capacity to retain its high performing employees. The respondents were not keen to identify institutional retention strategies, with individuals emphasising job dissatisfaction because of the institution holding on to traditional HRM practices. However, few respondents commended the strategy of allowing individuals to study with fees waiver options although it was limited compared to the opportunity given to the academics. The majority were rather suggesting strategies that would aid in reducing employee turnover and recommend for exit interviews to be performed to know the reasons behind employees leaving.
Research objective 4: To determine how effective TM is on employee turnover in the NUST
This research objective was to determine the effectiveness of TM process in NUST. The findings concur with the conclusions of various authors and kinds of literature mutually acknowledging that TM as a process ensures that the right skills are acquired, nurtured and retained by the organisations. The findings identified one primary reason that employees leave NUST is the lack of matching non-monetary incentives with that of their competitors. However, career development, job satisfaction and performance management in TM are important factors influencing an individual’s decision to stay. The results show that TM would anticipate HRM activities such as recruitment and selection, coaching, training and development and performance management to minimise employee turnover.
Research objective 5: To explore the relationship between TM and employee retention at the NUST
Many scholars, just like the findings of this study, revealed a positive relationship between the institution’s TM systems and its employees. The findings further showed that employee retention is a major factor in reducing talented employees’ turnover. Therefore, management should give much attention to talented staff to retain their services in the long-term.
It was perceived that talented employees always have high expectations regarding compensation packages but must be include attractive non-monetary benefits in the packages. Career development, job satisfaction and performance management appear to have a close association with low turnover rates maximising the institution’s overall performance. The study concluded that TM cannot be separated from employee retention because they go hand in hand.
Discussion
Outline of the results
The main objective of the research study was to discover the influence of TM on employee retention at NUST. From the qualitative analysis of the results of the interview protocol, the study discovered that TM practices have a significant effect on employee retention at NUST. NUST has gradually benefitted from introducing TM and developing a performance management tool from the analysis yielding several positive outcomes, with the aim to largely benefit after the complete implementation.
The findings also observed the importance of top management playing their key role in the TM programme to ensure the practice of talent retention whilst minimising employee turnover. The results on talent retention strategies showed absent retention strategies except for the old traditional processes in place that helped little in retaining employees. The literature review revealed several retention strategies to challenge the attraction and retention of a talented workforce.
The study findings expect employees to gain more attractive TM benefits that can motivate them to be more loyal to the institution. The study findings state that employees must adjust to change for TM to help them achieve their personal goals and objectives to develop their personal growth. To validate the above findings and finding the way forward, the next step is to address the analysis from the results of the four themes that emerged. The findings from the first theme of talent attraction were to identify and understand the processes of attracting new hires. It was discovered that employees were more attracted to non-monetary incentives compared to monetary incentives. The findings showed the lack of career development is one of the major reasons that employees leave their jobs. In the findings, respondents stated the lack of growth opportunities within administration although the details were not given professionally of exit interviews. Findings noted was increased turnover in the past few years because of burnout and non-monetary incentives offered by other institutions that NUST could not match and now calls for solutions to remain competitive and retain key talent.
The major theme of employee turnover attracted job satisfaction as the sub-theme and findings revealed that employees suffered from job dissatisfaction. The findings suggest that managers do not pay sufficient attention to the performance of employees and ignore the importance of job satisfaction. The study discovered that performance will be emphasised by developing a performance management tool at NUST. The findings concluded that the institution should manage its performance management to strengthen its capabilities and competitiveness in the operating environment. The results of performance management provide a basis for self-development and in TM to ensure the support and guidance that people need to develop and improve.
Practical implications
The findings of this study have important implications for the employers, especially those in the education industry, and the advancement of knowledge in managing and retaining HIPO employees at the institution. The findings of this study help the line and HRM managers in developing and implementing successful TM practices that would help align the core objectives of the institution. The institution should develop retention strategies based on the needs of its top talents and control the strengths that the institutional culture encourages and provides. This allows the institution to have a competitive advantage against other competitors by developing a TM strategy that would be consistent and efficient simultaneously. This study will also provide a vision to the institution as to how TM influences employee retention, so the institution can improve in developing, promoting and retaining talent to meet the existing and future needs.
As compensation of non-monetary incentives, career development, job satisfaction and performance management had the most significance, the institution should pay much attention to these four factors to keep the employee with the institution for a longer time. Line management must assume responsibility and accountability for the outcomes of managing talent in their respective units and departments. Constant communication and feedback are to be carried out continuously by direct management with the employees in a professional, open and honest manner. Finally, the study would also enable us to promote transparency amongst the management and employees in increasing their performance and indirectly help the institution to increase their productivity and ultimately lead to institution profit. The recommended practices for this study will offer the direction to higher educational institutions in determining which of the TM strategies are more effective to retain employees and what urges them to stay and work with the institution on a long-term basis.
Limitations and recommendations
Many interviews were performed via Phone, Zoom or Teams. This limitation was because of the international outbreak of COVID-19 that led to the country’s partial lockdown. The interventions were very strict because of the nature of spreading of the virus and thus led to social distancing and restricted travelling. Many respondents were not willing to risk attracting the virus. The challenge was also that respondents were not willing to provide the completely frank information as regard to the sensitivity of the study subject as they feared victimisation from top management. Another limitation was the lack of reliable responses as some of the data were recorded with cell phones, especially the ones gathered via the Phone app, and thus limited the research and analysis on some questions pertaining to this study.
Regarding empirical knowledge expansion, the study recommends to organisations and/or institutions wishing to restrict the drain of talent, increase job satisfaction to have well-motivated and effective employees and create better business results need to take practical steps to address these challenges. The strategies should increase the value of the organisation and preserve its sustainable competitive advantage.
Regarding organisational recommendations, the following should be practiced by NUST:
Policymakers should revise and improve the HRM policies, including their TM and retention policy, as HRM policies directly influence employees’ working conditions.
Implementation and correct application of talent retention strategies by applying the hierarchy of needs theory to understand employees’ needs in the institution by predicting the actions and behaviours of employees under different situations.
Creating proper rewarding structure to enhance job satisfaction and therefore retention that may include fair benefits from the employee rebate systems for all employees and at all levels.
Introducing a 360-degree performance appraisal method built in the new developed performance management tool and trying to tap from internal talent pool before a vacancy is advertised to the public.
Creating an insignificant incentive approach.
Conclusion
The Namibia University of Science and Technology has embraced the development of TM combined with the performance management tool as part of its HRM management operations and practices. From the findings and discussion, majority TM practices that were found to have been adopted by the institution have a relationship with employee retention. Talent management practices to a greater extent determine employee retention; NUST needs to develop other practices such as knowledge management, health and safety and also employee engagement. This research study also established that successful TM is driven by a talent mind-set in which managers in the institution regard TM as their responsibility and not the sole responsibility of the HRM department. Failing to retain high-performing employees in NUST is costly just as for any other organisation because of costs associated with high turnover. Talent management practices can facilitate the development of employees, enhance service delivery and also give NUST an enhanced group image.
ERP Systems: Breaking Down Organizational Readiness and Sustainability Considerations for Implementation
Trish Nguyen from TPG
"If employees don’t feel like the leadership team is behind a transformation, they are not going to be either. This is essential for the change management of implementing an ERP or any other system into an organization and have it be successful over the long term"
What is an ERP and why might an organization need one? How can it make someone’s life/job easier?
An ERP is enterprise resource planning. It’s essentially an integrated management system of a company’s main business processes, through software and technology. Typically, it’s a suite of applications that are integrated or modules that an organization uses to collect, manage, store and use the data for their business activities.
It makes somebody’s life or job easier because it’s designed to track business resources such as cash or materials or production capabilities. And then they balance that out with business commitments. The data from purchase orders, HR, payables and more, is shared across departments, making it a single source of the truth in real-time. This makes all department functions work seamlessly together.
Are there any key considerations that a company should think about before implementing an ERP system? Are there any cautions or pitfalls that are common?
Buy-in from leadership
The leadership team must have a willingness to champion the integration, build that organizational support. If employees don’t feel like the leadership team is behind a transformation, they are not going to be either. This is essential for the change management of implementing an ERP or any other system into an organization and have it be successful over the long term.
2. Understanding of the organization’s business process requirements
Before implementing an ERP, companies need to know what the current state of their existing processes is, including how mature they are and how much mature documentation exists around those processes. From a finance perspective, understanding the critical reporting elements and what the information system needs to provide.
3. Clean data
Having clean data, and having a good plan in place to be able to migrate the good data into an ERP is critical. The system is only as good as its data. Does the company have the right team and competencies to undertake an integration? What gaps exist? And what mitigation plan is being put in place?
4. Capacity
Does the organization have enough capacity to undertake the integration? Do your people have the bandwidth to undertake this (and the necessary training hours that come with it) on top of their existing jobs?
How has an integrated ERP system evolved and how will it continue to evolve in a virtual / post-COVID-19 world?
Any system through this pandemic must support increased collaboration. A lot of companies are still on traditional hardware-based ERPs, while some have moved to cloud-based platforms. For those with older systems, when work-from-home orders began in March of 2020, there was a scramble to get new technology integrated to enable remote working. In 2021 and beyond, it is likely that organizations will continue to place more importance on making sure their employee can access everything online.
What trends or innovations are emerging in the space right now. Are there any opportunities that companies should be taking advantage of?
Increased use of cloud-based systems
As mentioned above, one of the benefits of internet-based systems is the accessibility of real-time data and up-to-date software. Any time there is an update or upgrade, it is automatic across the company. This also makes it a lot easier to integrate with other applications. With this, companies will continue to look into what they can integrate together, to make their systems easier to use.
2. Demand for niche systems
There’s a growing demand for more niche solutions to optimize processes for both businesses and vendors. ERP systems started with the big guys (i.e. Oracle, SAP etc.). Now, companies are looking for ERPS that specifically serve their industry or niche business needs with features and functionalities that companies operating in this niche market would use. It’s no longer a generic software.
3.AI Integration
Companies are facing an increase in the number of complex and unstructured data that they’re collecting and that they’re having to analyze. Integrating an ERP with some sort of artificial intelligence platform makes it a lot easier to process that information.
Optimizing Accounts Payable (AP) Processes to Free up Cash
Jennifer Phan from The Poirier Group
"Processing invoices may seem quite simple and easy from receiving the invoice to issuing payment. However, there are often many manual tasks that are performed behind the scenes. These manual tasks include invoice data entry, scanning invoices, following up with approvals, providing payment updates/remittances and mailing cheques which often causes bottlenecks."
Why is optimizing AP processes so important for a company’s ability to free up cash and strengthen its working capital?
Optimizing AP processes is often not on many organizations’ list of priorities. As it is a back-office function, the importance of improving AP processes is often overlooked. In theory, if a business simply delays invoice payments to the last possible date, this will allow the business to have more cash on hand to maximize free cash flow. However, with this approach, the business will put themselves at risk of service/delivery delays, late payment charges, and will build a poor relationship with suppliers which will indirectly impact the business down the road.
Businesses need to optimize AP processes as it will help free up cash and strengthen working capital. If optimized, this will allow businesses to fund growth and build shareholder value. With an optimized AP process, there are structured processes in place so that invoices are received and processed within a timely manner. However, as part of this process, management must emphasize the importance of optimizing work capital in its culture as it involves collaboration within the whole organization from submitting POs, receiving invoices, and reviewing/approving invoices to processing payment for the invoice.
What are the main activities to optimize to improve accounts payable processing and reduce bottlenecks? How can automation help?
With the advanced technology that we have today, we would always see efficiencies with automation.
Processing invoices may seem quite simple and easy from receiving the invoice to issuing payment. However, there are often many manual tasks that are performed behind the scenes. These manual tasks include invoice data entry, scanning invoices, following up with approvals, providing payment updates/remittances and mailing cheques (just to name a few) which often causes bottlenecks. In essence, the more manual tasks that are involved in the AP process, the more bottlenecks and human errors occur.
A great way to reduce bottlenecks is to use AP automation software. Tasks such as scanning invoices, entering invoice data, matching invoices against PO, and routing invoices for approvals can all be automated. This will greatly reduce invoice processing time and human errors while freeing up time from repeatable tasks to reallocate to value-add tasks.
How can you select and negotiate with vendors to create favourable buying terms? (i.e customer service quality, payment terms, price etc.)
During the vendor negotiation process, always negotiate for longer payment terms or early payment discounts to save costs or free up cash flow. It helps to utilize a vendor evaluation and selection matrix (or a decision matrix) to compare different vendor pricing and offerings to help with the decision process. This matrix can be leveraged during the negotiation process to induce suppliers for better pricing/payment terms and services.
What are some best practices companies can adopt to create both quick wins and long-term results?
Go paperless!
There are many options for electronic payment nowadays. Companies should move away from issuing cheque payments and transition to the different forms of electronic payments available today. When companies issue cheque payments, it requires a lot of admin work. The cheque needs to be issued, signed off and then mailed out (which often time takes 3-5 days to arrive at the destination). If the cheque is stale dated it needs to be re-issued and if it gets lost in the mail a stop payment needs to be processed. All of this admin work can be eliminated if businesses move towards electronic payments. With electronic payments, payments are made quicker, it is more secured and it does not require as much admin work.
Create and manage an AP workflow
Proper management of AP workflows is very important. Oftentimes, particularly near month-end, quarter-end, or year-end closing, there are high volumes of invoices that need to be posted before the books are closed. Without a proper workflow in place, it is common to see a backlog of invoices in the queue pending approvals which can cause delays or often an oversight in approvals due to the high volume of invoices that needs to be reviewed.