• Customer retention rate = The percentage of customers who stay with you over the total number of customers.  The downside is that this number ignores the fact that some customers are more important/valuable than others.
• Revenue retention rate = Percentage of total potential revenue retained.  This metric misses the impact of account expansion but works better in environments with predictable customer contracts.
• Average customer revenue (revenue yield) = total revenue divided by the number of customers.  This  gives you a sense of how well you are growing your wallet share with customers.
• Repeat purchase rate: As the name implies, this reflects the percentage of business from existing customers.
• Net promoter score: The industry standard metric captures how likely a customer is to tell a friend about your business.

I’ve seen a range of approaches and find that more than one metric is often needed to tell the whole story.

Did I miss any other meaningful retention metrics?

Early yesterday morning I received an email from the campaign reminding me that it wasn’t over yet and there was still time to send that viral video to friends.  They were encouraging me to send to ten friends and they would send it to ten friends…You get the idea.

We all know that identifying a target market is imperative to any marketer.  That is frequently followed by the slow, painful process of compiling a list of likely targets or a “prospect universe”.  Whether you build it yourself or buy it from a third party, it is often difficult to capture more than 75% of a population.  Each new data source shows diminishing returns so you need to think creatively about how to source new names.  Inbound and outbound marketing helps but the acquisition costs can be prohibitive.

This viral Obama video was impressive.  I didn’t hesitate to forward it on and unwittingly gave them my name for a future appeal (OK, I should have read the privacy policy more carefully).  Getting people to share their name and interests in exchange for information or entertainment is a proven acquisition technique and we just witnessed a group that mastered this art.

Can you suggest any other creative examples of ways to economically build a prospect database?

MIT Entrepreneurship Center Reception What can I say - Ken Morse knows how to throw a party.  I didn’t count but there must have been over 400 people crammed into the MIT Faculty Club.  The idea is bring together entrepreneurs, students and venture capitalist together for one evening to mix and mingle.  I know, MIT people have a lousy reputation for networking skills but Ken is trying to change this.  The event was sponsored by Highland Capital, Goodwin Proctor and Agilent.

If there is a slowdown in the Boston startup world, it wasn’t obvious to me. People were enthusiastically pitching ideas to friends and investors.  This is one major reason why I love Boston.  Even in the midst of our current capital crisis, the universities continue to churn out technology start-ups.  They may need to work a little harder for capital right now but they will always drive our growth in good times and bad.

I met great people like Brian Halligan, CEO of Hubspot and learned more about their inbound marketing platform.  It seems like the social media infrastructure guys like Hubspot will continue thrive as business figure out how to make money using these new technologies.  I also bumped into fellow Sloanies Sean Brown who has returned to McKinsey after a stint running Alumni Relations at the Sloan School as well as Tim Rowe of the Cambridge Innovation Center.  It was also nice to catch up with Jack McCollough of the CCR Group and my former Sloan protege John Hebert who is doing well at Genzyme.

As a favor to Ken (many of us owe him a great deal for his sage advice and candid feedback), here is a plug for the E-center at MIT.  Take a look at the link for ways to get involved.  It isn’t just for MIT grads.

More from the WBUR Tweetup to come this weekend.  Stay tuned.

FM Days

• Connected - The best metrics are related to your overall business goals. This means things like program revenue or cost per new customer.
• Results-oriented - Whenever possible try to connect activity to specific results.  Don’t get confused by activity-based metrics like homepage visits or page views. Think about measures that reflect real results like converted leads.
• Have benchmarks - Are there industry-specific numbers you can compare your metrics with?  Checkout  Lynne Harrold’s recent post for some ideas for selecting the right benchmark. She references a variety of places to find relevant numbers for comparison including the Direct Marketing Association and Marketing Sherpa.

In the end, they are numbers not an answers.  They can illustrate progress (or the lack thereof) and help mediate differences of opinions.  Choose them carefully.

• These companies just need time to be merged with others with more traffic and/or advertising revenue
• The damage caused by the failure of someone like Twitter could be severe and extremely difficult to contain
• Pension funds often invest in venture capital funds and we wouldn’t want retirees to be at risk
• The bailout could be structured as a loan until they can find a deep-pocketed acquirer or revenue model
• These small business owners shouldn’t be penalized for the predatory lending of a few greedy investors
• Joe the Tumblr shouldn’t have to pay to share his status updates
• Americans would face lower incomes, lower home values, higher borrowing costs for housing, education and other living expenses, lower retirement savings, and rising unemployment (OK, that was taken directly from Senate testimony by New York Federal Reserve Bank President Tim Geithner and is not related to this post)
• If we lose online friendships then the terrorists win (watchout @amandachapel…)
• There would be chaos on college campuses across the country if students didn’t have a place to share their drunken photos
• Thousands and thousands and thousands of social media bankruptcies would create as much systemic risk as one Facebook or Myspace faliure
  

My guess is the bailout would cost less than $25 billion over the next five years to keep these companies solvent and Valleywag full of anecdotes about Web 2.0’s young and vapid.

I need more content for my impending congressional testimony.  Any suggestions?

Disclaimer: This post brought to you in part by @limeduck’s irresponsible use of cough medicine

Is it time for F’edcompany.com to make its big comeback?

1. It seems like mainstream corporate types (ie enterprise customers like EMC) are taking it slow with social media.  Like other new technologies, they are carefully evaluating it (in this case inside the firewall first) as another tool to help them improve their business.
2. Absent a  a clearly articulated ROI, there will still be alot of testing with social media before acceptance in the enterprise C-suite.
3. I heard my first fear-based argument for social media engagement.  David Alston of Radian6 used an analogy of someone standing in front of your company shout bad things about you at the top of his lungs.  If this were about your company would your PR team ignore them?  I enjoyed the demo of his their platform but it probably makes him nuts when people say “why can’t you just use a Google alert to track these things”.
4. As Peter Kim reminded us, CMOs are general managers typically with short tenure.  They need to think about ROI first and coolness second.
5. There are still more vendors and consultants at these events than prospective clients or end user types.  The irony is that I’m a potential customer looking for solutions and no one even tried to sell to me.

For more from SMB9 Boston, check out Twitter with hashtag #smb9.  Twitter may have jumped the shark but it is still the medium of choice for real-time sharing.  And you can still follow me at @tangyslice…

So how can we make the brand development process more agile?  Here are some ideas.

• Start with a straw list of ideas to test
• Dedicate one wall in your office to post these ideas and your competitive landscape
• Use less expensive, faster-to-deploy exploratory research techniques like online focus groups to supplement your traditional customer outreach
• Continuously adapt, test and kill concepts as you acquire data from the market
• Get your team to use Digg or Delicious to share competitive marketing
• Brainstorm frequently to make sure you are innovating and expanding your list
• Share the ideas with your team on a regular basis
• Concept test final idea using email surveys as a sanity check
• And last but not least, trust your gut as this a creative process not a geometric proof

Did I miss anything?  I would welcome your thoughts and experiences.

• Can we trust our politicians when they say we need a massive bank bailout?
• Can I trust that this charity will spend my money wisely?
• Can I trust this online business is not some elaborate phishing scheme to clean out my bank account?

Over the years, some of the brightest marketing minds have explored ways to build trust between a customer and business. In 2003, Glen Urban, former Dean of the MIT Sloan School of Management (and my grad school research adviser) published a paper titled “The Trust Imperative” which shares things you can do to build trust. It highlights specific ideas like “being transparent in all you do” and “helping customers help themselves”.

Even though this research was performed almost 10 years ago, I marvel at how the key points of it are still relevant today for online businesses. You can find the full paper here.

2. I’ve seen a couple of recent articles about Twitter jumping the shark.  I can’t quantify it but it feels like oversharing is down within my cohort.

3. Are we starting to see signs of the social media bubble bursting on the west coast?

4. Don’t forget about Myspace.  With all the buzz surrounding Facebook these days it is easy to forget who has more search traffic.