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The O.P.E.N. Imperative for Consumers and Business Results

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The O.P.E.N. Imperative for Consumers and Business Results

  2. 2. LITMUS THE O.P.E.N. IMPERATIVE FOR CONSUMERS AND BUSINESS RESULTSEXECUTIVE SUMMARYWhen Resource Interactive published The OPEN Brand: When Push Comes to Pull in aWeb-Made World in 2008, the Internet had been shifting power away from brands andtoward consumers for more than a decade. But through the rapid rise of social media,the strengthening consumer voice was amplified. Consumers were creating and sharingcontent and influencing each other directly, and many brands, to regain their own influence,began to open up to consumer involvement in their brand’s messages and offerings. Ourearly recommendations that brands foster participatory relationships with consumers basedon shared values has emerged as nothing less than the bottom-up consumer imperativeof the digital age. Open branding has also become a verifiable business growth strategy.Through our O.P.E.N. Indicator that leverages multidimensional analyses of both consumersurvey research and publically available Compound Average Revenue Growth (CAGR), wefound a statistically significant correlation between openness, likelihood to recommendand purchase intent, and between openness and 5- and 9-year CAGRs. Measuring andstrategically optimizing a brand’s On-Demand, Personal, Engaging and Networked(O.P.E.N.) experiential attributes demonstrably creates better business results.INTRODUCTION: AN O.P.E.N. REVIEWFrom the outset, we wanted open branding to be both philosophy and strategic framework.As a philosophy, it enabled us to position client projects as part of the open innovationmarketplace where consumers have a recognized role in shaping new brand value includingcontent, products, services or experiences. As a new framework for digital marketing, itbecame the common thread throughout our offerings, as it clarified the objectives for ourwork based on the four attributes of an optimal open brand experience:On-demandPersonalEngagingNetworkedAs a way to measure an open brand in the marketplace, we then developed the OPENAssessment, an expert heuristic that evaluates tactics in Mobile, Social and the Web onhow well they deliver On-Demand, Personal, Engaging and Networked experiences. Thesebaseline assessments of brands inform everything from budgets to social media marketingplans to ecommerce upgrades.O.P.E.N. IMPERATIVE I ©2011 I WWW.RESOURCE.COM 2
  3. 3. LITMUS THE O.P.E.N. IMPERATIVE FOR CONSUMERS AND BUSINESS RESULTS AN OPEN ASSESSMENT AL SO PROVIDES A COMPETITIVE ANALYSIS TO SHOW A BR AND’SOPEN STATUS REL ATIVE TO OTHERS IN THE RELE VANT VERTICAL. In the past three years, the O.P.E.N. mandate has come to life in several successful campaigns and new revenue for our clients. But a new challenge has presented itself: to move beyond expert analysis and provide a real consumer-based metric for open branding that could become an industry standard. Does an open brand drive consumers to further consumption and the brand to growth? To answer these questions, we adopted a twofold approach. First, Resource Interactive commissioned Harris Interactive and Ipsos to survey members of their online consumer panels about how, if at all, the key elements of open brands were related to consumer purchase intent and their likelihood to recommend brands. Second, we studied the 5-year and 9-year revenue CAGRs of our publically traded brands and analyzed their growth over the period of time they had implemented an open brand strategy. THE O.P.E.N. INDICATOR: CONNECTING THE DOTS Methodology Harris Interactive surveyed 5,300 members of its online consumer panel in February/March 2011 to obtain consumer opinions on a total of 55 consumer goods, retail and technology/ service brands. The survey’s eight core questions (answerable on a 0-to-10 scale) were designed to reveal the consumer’s perception of the brand relative to various O.P.E.N. experiential attributes. In addition, each consumer rated their purchase intent and likelihood to recommend the brand. Ultimately, we had more than 31,000 unique person-brand responses. O.P.E.N. IMPERATIVE I ©2011 I WWW.RESOURCE.COM 3
  4. 4. LITMUS THE O.P.E.N. IMPERATIVE FOR CONSUMERS AND BUSINESS RESULTSTo standardize the findings, Resource Interactive created an “O.P.E.N. Indicator” score basedon the responses to the eight core questions and then correlated that score with those forpurchase intent and likelihood to recommend.We also then analyzed 5-year CAGR and 9-year CAGR for our publically traded brandsand performed a regression analysis against those brands’ O.P.E.N. scores.SURVEYED BRANDSThe 55 retail, consumer goods, and technology/services brands about which consumers weresurveyed are:Retail Brands Consumer Goods Brands Technology/Service BrandsAce Hardware Clairol AppleAmazon Coca-Cola AT&TBehr Dove DellBenjamin Moore Fancy Feast DirectTVBest Buy Friskies Hewlett-PackardCVS Garnier HTCExpress Head & Shoulders IntuitGap Herbal Essences MicrosoftThe Home Depot John Frieda NetflixJCPenney Kellogg’s NintendoKohl’s L’Oreal VerizonThe Limited Meow MixLowe’s Nature ValleyMacy’s Nine LivesSears PanteneSherwin-Williams PepsiTarget Purina Cat ChowVictoria’s Secret QuakerVS PINK SchickWalgreens Selsun BlueWalmart Smucker’sZappos VenusO.P.E.N. IMPERATIVE I ©2011 I WWW.RESOURCE.COM 4
  5. 5. LITMUS THE O.P.E.N. IMPERATIVE FOR CONSUMERS AND BUSINESS RESULTSSCORING POINTS WITH CONSUMERS AND BRANDSThousands of consumers, 55 brands and eight questions later, did the survey results bear outour O.P.E.N. premise?Indeed, they did. We found there is a statistically significant relationship between a consumer’sperception of a brand’s openness and their purchase intent (99% confidence interval).Additionally, there is a statistically significant relationship between a consumer’s perceptionof openness and their likelihood to recommend (99% confidence interval). The bottom line isthat the more open the brand, the higher the purchase intent and likelihood to recommend,meaning an open brand strategy can lead to key business results.The study also found that the total variance of O.P.E.N. scores across the brands evaluated to datewas 2.5 points on a 10-point scale. However, the range of purchase intent scores was 5. Therefore,it appears that a brand’s O.P.E.N.-ness is an amplifier: a relatively small change in O.P.E.N. scorecorrelates to a much larger change in consumers’ purchase intent. Specifically, a one-point-higher O.P.E.N. score correlates with a 2.5-point increase in purchase intent for consumer goodscompanies, a 1.75-point increase in retail, and a 1.77-point increase in technology. 9 Retail 8 Consumer Goods Tech 7 Purchase 6 Intent 5 4 3 3 4 5 6 7 O.P.E.N ScoreO.P.E.N. IMPERATIVE I ©2011 I WWW.RESOURCE.COM 5
  6. 6. LITMUS THE O.P.E.N. IMPERATIVE FOR CONSUMERS AND BUSINESS RESULTSWe then extended the analysis to see if a brand’s O.P.E.N. score was a predictor of the moredirect financial measure of revenue. Recognizing that there are factors beyond simply thedegree to which a brand is O.P.E.N. that determine top line results, we were unsure whetherthe influence of O.P.E.N. would be strong enough to be picked up through the noise of theseother factors.We looked at the 5-year CAGR and 9-year CAGR for the 28 brands included in our surveys forwhich annual revenue data was available and performed a regression analysis against thosebrands’ O.P.E.N. scores. The result was that we did see a statistically significant relationship(>95% confidence) between O.P.E.N. score and revenue CAGR (p-value of .023 for the 5-yearCAGR and p-value of .020 for the 9-year CAGR).To visualize this result, we calculated the average cumulative revenue growth by year for theten brands in the sample that had the highest O.P.E.N. scores and for those brands that hadthe lowest O.P.E.N. scores and plotted them over time. The result is striking: 500% 450% Low O.P.E.N. Score BrandsCumulatative Average Revenue Growth 400% High O.P.E.N. Score Brands 350% 300% 250% 200% 150% 100% 50% 0% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010O.P.E.N. IMPERATIVE I ©2011 I WWW.RESOURCE.COM 6
  7. 7. LITMUS THE O.P.E.N. IMPERATIVE FOR CONSUMERS AND BUSINESS RESULTSDON’T WAIT TO O.P.E.N.!Consumer goods, retail and technology brands alike can increase the openness of theirbrands and engage consumers to further consumption and great business results. In essence:O.P.E.N. = success among consumers, both for direct transactions and for tapping into thereferral power of their extended networks.More work is underway as we continue to build the repository of open brands. We plan toconduct similar studies on an ongoing basis to measure brands over time. In the meantime,with this latest evidence that the numbers add up, we encourage brands to step up and openup. Your consumers are waiting.Take our O.P.E.N. assessment and have your brand and your competitors added to ourIndicator database to see just how open your brand is and what you need to do to grow.Please contact:Melissa DorkoDirector of Business Development614.621.2888mdorko@resource.comO.P.E.N. IMPERATIVE I ©2011 I WWW.RESOURCE.COM 7