Dear Dr. pROfIt

Let's take a look at social media in 2010: We continually hear about brands that have a half-million or million Facebook fans. Well, that’s wonderful. That’s validation that social media provides a channel for consumers to interact with a brand. It isn’t, however, validation that social media creates orders.

The honest answer is that they're all right, and that’s a very frustrating answer.

When you evaluate customer spend on an incremental basis, you quickly find that new channels provide little incremental value in the early stages of development. What happens is that brand loyalty counts for so much more than does the excitement of new channels.

Focus on the data points that directly lead to profit as your top priority. Focus on customer actions as your second priority. Everything after that contributes much less value.

Should my marketing team offer personalized marketing materials to customers, based on how far the customer lives from a store?

My boss thinks that free shipping and 20 percent off promotions are the key to competing with brands online. My team thinks we're giving our business away for free. Who's right?