Value Company Data- Costs Of Data Breaches Rising

In this age of information, the value of data and intellectual property is very high indeed. It is key for any company to protect not only business trade secrets but customer records as well.

According to Ponemon Institute reports the episodes of data breaches are costing an average of US$197 per lost or stolen customer record during 2007. This is a huge financial impact for any business.

A PC world article notes that organizations that experience data breaches are paying more than ever to recover from the incidents and retain customers once the events become public knowledge, according to a new research report.

Based on their interviews with different organizations, the average total cost of the breaches rose to $6.3 million in 2007, compared to an average of $4.8 million in 2006 with the average number of records exposed in the breaches Ponemon studied was roughly 20,000 per incident, although among those organizations surveyed the incidents ranged from as few as 4,000 records to more than 125,000 records.

What do you lose in a data breach?

• Not only do you lose the actual records, you also incur estimated cost of lost business and so-called customer churn that results from notification of the data breach episodes.
• Your company loses stability. You end up providing customer support and credit monitoring services to affected individuals, along with budgets allocated for advertising and marketing efforts aimed at repairing companies' public images.
  

However the article does end on a positive note for businesses (although not necessarily for clients). Despite the fact that the cost of responding to a data breach has risen consistently over the three years that Ponemon has studied the phenomenon, the expert believes that in time the price of losing customer data will eventually fall.

The researcher said that the sheer volume of incidents will drive customers to become desensitized to the events, resulting in lowered remediation costs and business churn.

"People are already finding that it is hard to trace an incident of ID theft to a specific breach, and with the growing number of notifications they receive, they won't care as much about the problem," Ponemon said. "There seems to be a herd mentality emerging among customers that applies to the law of large numbers; if people feel they are in a pool of millions of others who have had their records stolen or lost, their thinking is that the probability of being victimized isn't as strong."

Data security is key for any business strategy. It is worthwhile to invest time, money and effort to make sure that your clients feel safe and secure doing business with you. In this age of information, the value of this data rises in proportion to the profit businesses expect from clients.

Learning Business Strategy From HSBC

In a Wall Street Journal article today, HSBC just made a major presentation to its English investors. After taking impairment charges on bad mortgages this year, HSBC Chairman Stephen Green on Friday said the bank is aligning its strategy with three major trends shaping the world economy:

1. Emerging markets are growing faster than rich countries
2. World trade is outpacing growth in gross domestic product
3. And people nearly everywhere are living longer.

If you think about it, these trends are instrumental to many international businesses and not only applicable to HSBC. Businesses should consider other emerging markets and capitalize on that growth. The world has grown much smaller in the last few years due to the advent of the internet. Medical advancement have led people to age (not exactly gracefully) in a functional length that can be made profitable by businesses.

9 Of Forbes' 20 Most Important Questions In Business

Forbes.com just released a very interesting article headlined "The 20 Most Important Questions In Business." It's great that they shared this with the rest of us. There are many budding entrepreneurs all over the world. Even employees can benefit from learning how overall business strategy will help them continue to have employment.

Basically it mentions how we don't really have all the answers. But the key to success in business is to ask the right questions. Studies estimate that just two-thirds of all start-ups survive the first two years, and less than half make it to the fourth.

Here are some highlights of the article about the question entrepreneurs have to answer in order to keep their businesses afloat. This is basically the shorter version of the article with some of my comments on the side:

What is your value proposition?

Without a need, there is no incentive for customers to pay. And without sales, you have no business. Period.

What differentiates your product from the competitors'?

If you want to win in business, you need to offer something tangibly valuable that the competition doesn't.

How much cash do you need to survive the early years?

Three words: Mind the cash.

What are your strengths?

Figure out what you're good at and stick to it. Don't go chasing red balloons

How big is the threat of new entrants?

The trick: building a loyal following before new competition steps in for a share of your market.

How much power do your suppliers have?

Basic rule of thumb: The fewer the number of suppliers, the more sway they have.

Does the business scale?

Think service businesses, where the need for people grows along with revenues.

What price will your customers pay?

Get this answer wrong and you could leave bags of money on the table--or worse, send customers running into the arms of the competition. Do your homework before you start selling

How committed are you to making this happen?

Fair warning: If you want to run the show, get ready to give everything--and then some.

Holiday Marketing Targeting Young Adults

An article from eMarketer reports that young adults will spend $634 per person, according to researcher Youth Trends.

Tops on their shopping lists:



Most of them will be shopping online too



Not only that but $158 of the average $634 in spending, young adults will spend on other purchases for themselves. That's a ttal of $48 billion on discretionary purchases this year made by young adults 18-30 years old.

What does this mean for retailers? If you have products that are within the $158 range and are directed towards the young adult market, it would be beneficial to conceptualize promotions right now in this relation

What does this mean for management? Strategies should expand in terms of targeting the market. Although most businesses are geared towards the working population, because of convergence through the internet, the world has become so much smaller. More and more markets are becoming available online - younger and older.

Holiday Marketing Targeting Young Adults

An article from eMarketer reports that young adults will spend $634 per person, according to researcher Youth Trends.

Tops on their shopping lists:



Most of them will be shopping online too



Not only that but $158 of the average $634 in spending, young adults will spend on other purchases for themselves. That's a ttal of $48 billion on discretionary purchases this year made by young adults 18-30 years old.

What does this mean for retailers? If you have products that are within the $158 range and are directed towards the young adult market, it would be beneficial to conceptualize promotions right now in this relation

What does this mean for management? Strategies should expand in terms of targeting the market. Although most businesses are geared towards the working population, because of convergence through the internet, the world has become so much smaller. More and more markets are becoming available online - younger and older.

Organizing To Launch A Lead-Generating Campaign

Before launching any lead generation campaign, make sure all involved teams are on board and on the same page. The goals should be clearly defined and applicable to the different parties. The strategies should be in place to effectively be geared toward this similar goal

To start off, the campaign flow should be outlined carefully. Where does the process start and how will it end? How will you define its success or failure?

- Correlate the promotional material, collateral to be used with the goals

If the goal is to increase leads online, then the promotional material will be correlated to this goal. Most if not all efforts will then be concentrated online. You can start with search engine optimization (to enhance sign ups via the website), email campaigns, online linking campaigns and even search engine marketing if you've got enough money to play with

- Identify different response mechanisms

How do you want people to respond to your campaigns? Will there be a hotline number or d you want to course all campaign responses through your website or maybe a particular email address? These should be outlined carefully so your teams will be well-prepared to entertaian in-coming prospects and follow through on possible sales.

- Define the marketing message in line with the goal

Position the goal of your messages in the collateral in such a way that it will not be drowned by other content. Make this the focus of the entire piece. This should be the same for all pieces and for all campaigns if you're doing multiple campaigns at the same time

- Ensure that the user makes the most of your campaign

For the campaign to be effective, the user has to enjoy the experience. The campaign should be targeted enough to be appreciated by the right market. The flow of the campaign from ad to landing experience to response acceptance should be smooth and directed towards the goal.

Once these steps are properly outlined, the campaign should be able to push through without a hitch. These are macro perspectives of any campaign and not designed to sweat the small stuff. But once these are in place, the details will fit perfectly like pieces in a puzzle.

Can You Manage A Kindergarten Class?

I was a kindergarten teacher for a year and it's NOT easy. Imagine more than a dozen kids screaming and running and wanting to do other things while you try to teach. In the midst of all this chaos, you have to establish discipline and some form of learning. The good thing about children is that you will always grow attached to them. A level of responsibility, care and trust is given to a teacher by parents and this is what we try to live up to.

That's not to say managing adults would be much easier. Although more mature individuals know that they are paid to work and some people will succumb to what needs to be done because that's what the job entails, a manager should take the same responsibility for these people. As a manager, you won't always have brilliant or disciplined staff members, it will then be up to you to teach your staff not only to be better at the job they do but also as individuals.

According to "The New Dynamics of Strategy: Sensemaking is a Complex and Complicated World," from IBM Systems Journal, last 2003 by C.F. Kurtz and D. J. Snowden, one of my most admired knowledge management theorist David Snowden said that effective leaders manage chaos the way a kindergarten teacher manages her students...

"Experienced teachers allow a degree of freedom at the start of a session, then intervene to stabilize desirable patterns and destabilize undesirable ones, and when they are very clever, they seed the space so that the patterns they want are more likely to emerge."

And so my challenge to managers is just that. Can you manage a kindergarten class? Maybe you should start managing your department the way you would a kindergarten class.

(image from Strategic Talent Management)

Holiday Marketing – Crisis or Opportunity?

To different types of businesses, the holidays can either be a bane or a blessing. Some businesses become hectic while others become so quiet that they just have to pause operations during this time of the year. Here are some tips to prepare for the holidays, whether you’re looking to slow down or speed up business

1. Start now. Plan the coming holidays. What do you intend to do? When will you push sales? When will you close the books?
   
2. Look back and review how you’ve done in the past to determine if there’s some form of marketing that can help revenues this time of the year


3. Calendarize your holiday. Based on your history and trend for the year, how many staff members will you need to get through the holiday? Jot down everybody’s days off as well as your own

The holidays are what you make it.

(image from MSNBC.MSN.com)

Ready, Market, Shop! Holiday Shopping Statistics

4 out of 10 will reduce spend of the holidays. However even if Americans are projected to spend less this holiday, total revenue as a result of gifts purchased expected to remain the same compared to 2006 according to 22nd Annual Holiday Survey

Areas where spending is likely to be down include home improvements, socializing/entertaining, charitable donations, home/holiday furnishings and non-gift clothing. However, people intend to buy an average of 23 gifts this year - highest over the last 6 years, with women planning to buy more. Older consumers (61-74 years old) plan to spend more than a quarter more than the average consumer.

The backdrop to these spending expectations:

• American consumers are less optimistic about the economy, with only 57% of consumers surveyed saying the economy will improve or remain the same next year.
• However, the vast majority (85%) say they feel secure about their jobs, which is about even with last year.

What does this mean for businesses?

• Would be best to capitalize on the status quo and generally compliment existing product lines with what consumers are most likely to buy or are interested in buying.
• Marketing campaigns should be geared towards the holiday season.
• Management should be aware of the trade-offs of the season: exchanging cost of offers for more volume sales resulting in hopefully more absolute dollars at the end of the day.
• Target markets should be considered carefully in accordance with product offerings. In this case though, the more mature market will likely be competitive

More Readers Putting Down Newspaper To Visit Websites

The Audit Bureau of Circulations reports that American newspaper circulations declined by 3% over the spring and summer, reflecting how readers are shifting to the Internet for news.



Web readership on the other hand has climbed. What does this mean for major newspapers? An overall business strategy to move from print circulation to the online medium. Executives noted that newspaper Web sites — unlike their print counterparts — drew a lot of young adults, who are sought by advertisers. But advertisers have generally not considered an online reader to be as valuable as a print reader, so it remains to be seen what effect the numbers will have.

If we let economics run its course, the internet has definitely overtaken the print industry. More of almost every market is located online. This doesn't mean though that print will die. Whereas the web is virtual, print is still tangible and since it still has an edge in terms of seniority, I doubt print will go away but business-wise. Management should start thinking about exploring the online medium vs. the long trusted print industry. This shows that the better business strategy for now would be for major newspapers to start beefing up their online portfolios.

Marketing And Finance Cease Fire (Part 2 - 4 Steps To A Resolution)

Finance, while always aiming for top line is also much concerned about the bottom line as well as close measurement of returns on each type of spending. This then manifests in their desire to make sure that marketing is bridled and audited to properly show returns. This is where the marketing's planned projection comes in (also termed marketing budget, marketing plan). It will be a little more complicated and will necessitate the following characteristics:

1. Reflect core business perspectives - The requirement of each marketing campaign must align with the business itself. Branding will go hand in hand with lead generation efforts or the campaign is merely marketing faux - a feeble imitation of a campaign that will only ruin user experience (confuse prospects and mislead potential clients) as the company's overall brand is inconsistent with the marketing efforts. If you're company wants to be the classy chick in the bar then allocate time, budget, effort and marketing design that suits this image.
   Marketing communication to Finance: Align marketing spend with expected incoming revenues. Where possible, equate spend as a percentage/ portion of what is to be expected. Quantify in dollars generated the multiple effects of one campaign. How many additional leads will this campaign generate as a spill over? How much more revenue will it make in this related revenue stream?


2. Consider timing - Revenue generating campaigns in marketing aren't instant success stories. More often they have a cumulative effect that will be seen over a period of time.
   Marketing communication to Finance: Commit to metrics that can quantify success or failure. Apply IRR (Internal Rate of Returns) calculations to arrive at expected long term revenues in the context of current performance. Where possible use Finance jargon as well - they'll appreciate that too.
   
3. Don't put all your eggs in one basket - avoid allocating the entire budget to one or two marketing efforts. Although it is wiser to specialize and perfect one campaign than to launch a dozen mediocre ones, take the opportunity to explore and test other activities. These will serve as fall-back mechanisms should campaign efforts be hindered by technical issues or natural calamities that may be beyond your control.
   Marketing communication to Finance: This is a tough one as finance by the very nature of that function will always require returns on any allocated spend amount. In this case, commit to returns on any test campaign - even if it is just enough to break even with the cost. Never commit to making a profit from it though. Keep the spending to a minimum at all times. And when possible, assimilate the cost into existing marketing efforts.
   
4. Be realistic - Market research is vital to any campaign. From the point of product or campaign development (so called marketing reconnaissance), to tracking and monitoring campaign performance (this might also be termed the point of auditing). Marketing efforts and projections are more solid when grounded on baseline data. The results or revenues expected should be proportional to the allocated marketing budget as illustrated by data that has (at the very least) already been achieved.
   Marketing communication to Finance: This will be a conservative projection, but it will be real. Finance professionals are more likely to lean towards conservativism. Marketing spend is not just an activity that takes place in the present, it is an investment in the future. The revenues will not come back at once, but over a period of time as explained in point #1 - timing considerations.

Finance will be able to understand the metrics when it is properly presented. Finance after all is the mother of all mathematics in any given company. However onus is still on marketing to relay the adequate key performance indicators (KPI's) of each campaign as well as the management information to fuel the continued support.

In sum, marketing campaigns have an overriding effect. It can impact various audiences and create elements that will generate a spill over towards other goals (such as brand awareness) and other revenue generating streams. But this will occur over time and not instantaneously. Finance will need some help to understand that.

Oftentimes, Marketing and finance don't see eye to eye because of the nature of their functions. But that doesn't mean they can't get along. The key here is communication. Even if it means marketing will have to speak the terms of finance in order to relay the need of the campaigns and finance will have to understand some marketing concepts in order to understand and be able to justify spend - the knowledge transfer will be worth the effort.

Marketing And Finance Cease Fire (Part 1 - Source of the Friction)

Just like the 'cat and mouse' relationship, there has always been known friction between a company's marketing and finance departments primarily on account of marketing spend. Marketing after all spends money to make money so to speak. There is then an occurrence of natural polarity, marketing and finance usually gravitating towards opposite sides. In the past I have been hounded by one finance person after another seeking explanation as to why I spend this much in marketing, how I spend it and where are the returns.

Now in order to make ends meet with Finance, there has to be first - mutual respect. I have the highest respect for a number of finance professionals. I have grown my own analytics section in the marketing department just so there is straightforward and clear communication. One of the main proponents to instill is not just peace but understanding to explain that we are all on the same side with adherence to the same company goals.

To achieve this, communication is vital. However this communication shouldn't just be peripheral or meaningless chatter, but instead purposeful conversations that exchange ideas and transfer knowledge. May it be a debate, argument or what-have-you - it is very important that a routine dialog be maintained by both parties to arrive at agreements, directions and decisions. This though should be supplemented by plans, documentations and carefully crafted strategies.
Marketing will have to take upon itself the initiative to operate on a planned budget/ projection (and more importantly - stick to it). This isn't any ordinary money-in/ money-out plan.

Marketing is dynamic. Marketing must be equipped to respond to competitor offers, technological advances and industry trends in as close to real time as possible so as not to be left behind. I speak from personal experience when I say that it is not always easy for marketing to adhere to a strict set of rules, and this is typically where the frictions originate. Marketing's goal is always closely tied to top line targets, while these same targets are often influenced by Sales team performance as well. Making it rather difficult to capture the performance of marketing without sales - or vice versa.

The right marketing projection will then bridge the gap between Marketing and Finance and bring together mutual expectations to allow communication through this one project that of course fuels top line and protects bottom line.

More Discounts and More Promotions For The 2007 Holiday Season

Marketing projections have been made that more holiday discounts and promotions should be available this holiday season as 73% of all US retailers.

Al Ferrara, a Partner in the Retail and Consumer Product Practice at BDO Seidman projects that, "A 5% holiday growth forecast is a full percentage point higher than the forecast of the National Retail Federation, but represents a large drop in optimism among retail CMOs when you consider this same group of professionals predicted 7.8 percent growth for the 2006 holiday season."

Highlights of the BDO Seidman Retail Compass Survey of CMOs

• More than half of all leading retailers expect flat holiday shopping season. Although they think that there will be an increase compared to last year (41% of them think there will be a 5% increase)
  


• The very reason why marketers don't go on holidays during the holiday - 26% of annual sales revenue come in during the holiday shopping season. In 2006, this was 24%
  


• A major concern for the holiday is credit concerns (mostly on account of interest rates and the subprime lending crisis), next to that are fuel costs and the weak housing market. All of which are pretty much interlocked - credit concerns, fuel or energy costs and housing are the top 3 factors that may affect holiday sales in 2007.

• There is also the news about safety issues regarding Chinese products which has affected inventory assortment for many retailers.
  
  

About the study: The BDO Seidman Retail Compass Survey is a national telephone survey conducted in October 2007 by Market Measurement, Inc. Its executive interviewers spoke directly to 100 chief marketing officers, using a telephone survey conducted within a pure random sample of the nation’s largest retailers, excluding automotive dealers and restaurants. The retailers were among the largest in the country, with revenues of more than $100 million, including 15% of the top 100 based on annual sales revenue.