Perspective on marketing: no easy answers

I enjoyed reading this article in Entrepreneur, and I decided to dig a little deeper into the concepts discussed. In particular, the article referred to ROAS, or Return On Advertising Spend. A Google search provides the following automatic answer:

The formula is quite simple. You simply divide the revenue that is produced by advertising by the dollar amount that is spent on that particular advertising to arrive at your ROAS.

Unfortunately, as the author of the article noted, the marketing challenge is never that simple. ROAS is frequently used to select advertising channels. In the real world, ad channels don't perform independently, and the length of the sales cycle has to be adjusted from both the product and the target audience. No easy answers. 

Entrepreneur: Marketing Is Still an Art (and a Science), 2019-Dec-28 by George Deeb

And lastly, we were managing our agency to optimize the wrong data metric. We were pushing them to drive an immediate ROAS. The problem with that was the only transactions that happened immediately, were the small ticket online ecommerce orders worth $500 each. Not the big $5,000 offline orders we wanted to be closing, which had a longer 2-3 month sales cycle. We immediately shifted gears and told our agency not to worry about immediate ROAS (we would track that in 3-4 months). Instead, the only data point we care about is driving big-ticket leads into our sales pipeline (that we know won’t close for 2-3 months). In this case, patience for proving ROAS would be a virtue. 

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Flourish by nurturing both kinds of social capital

Alex Pentland, author of Social Physics, is one of the under-recognized leaders of sociology research. He recently shared his work on distinguishing two kinds of social capital: 

  • Bonding capital is built by sticking with your tribe
  • Bridging capital is built by exploring and building connections outside your tribe. 

Quartz: A pioneer of wearable technology explains how it can connect instead of divide us, 2019-Dec-17 by Jenny Anderson

There is tension between the two types of capital. “This is one of the fundamental conflicts of the human nature,” he says. “People need that tribe that reinforces them, but new opportunities and things come from exploring,” he said.

The people who build up bridging capital by pushing themselves out of their comfort zones and getting away from the tribe tend to do better in life (pdf). They learn different perspectives, see more opportunities, and make more money. “They just live better,” Pentland says. “But it is uncomfortable.”

The key is to invest in both types of capital. But few are aware of how they divide their time between the two (or that they even exist). Pentland’s hope is that awareness of how people live might incentivize them to live better, so he’s spent 20 years developing metrics to quantify social connections.

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To build trust, ask questions and listen carefully

We have the mistaken impression that people trust us because we do what we say. Actually, they trust us because we ask what they do. 

Trillion Dollar Coach, by Eric Schmidt, Jonathan Rosenberg & Alan Eagle, 2019 by Harper Business

When you listen to people, they feel valued. A 2003 study from Lund University in Sweden finds that “mundane, almost trivial” things like listening and chatting with employees are important aspects of successful leadership, because “people feel more respected, visible and less anonymous, and included in teamwork.” And a 2016 paper finds that this form of “respectful inquiry,” where the leader asks open questions and listens attentively to the response, is effective because it heightens the “follower’s” feelings of competence (feeling challenged and experiencing mastery), relatedness (feeling of belonging), and autonomy (feeling in control and having options). Those three factors are sort of the holy trinity of the self-determination theory of human motivation, originally developed by Edward L. Deci and Richard M. Ry...

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