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It's Not the Size of the Data -- It's How You Use It: Smarter Marketing with Analytics and Dashboards

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Drowning in marketing data? Marketing analytics dashboards to the rescue! These transformative web-based tools gather, synthesize, and visually display essential data in real time, directly connecting marketing with performance. Whether your organization is a small startup or a multinational giant, this comprehensive guide explains how to design and implement a targeted analytics dashboard that improves your decisions and your profits.

Advance Praise for It's Not the Size of the...

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It's Not the Size of the Data -- It's How You Use It: Smarter Marketing with Analytics and Dashboards

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Overview

Drowning in marketing data? Marketing analytics dashboards to the rescue! These transformative web-based tools gather, synthesize, and visually display essential data in real time, directly connecting marketing with performance. Whether your organization is a small startup or a multinational giant, this comprehensive guide explains how to design and implement a targeted analytics dashboard that improves your decisions and your profits.

Advance Praise for It's Not the Size of the Data, It's How You Use It

"Provides a lucid and non-intimidating overview of marketing analytics. A must-have for any manager who is looking to use data and dashboards to drive strategic decision-making." -- Aninyda Ghose, Professor of Marketing, Co-Director of the Center for Business Analytics, New York University

"Big data in marketing is about looking for patterns in emotional behavior. This book teaches how to do that"-- Stan van den Broek, Shopper Insights Manager, SCA Hygiene Products

"Improved marketing infrastructure is the next area for major strides in improvement. Those that do so first will achieve a competitive advantage that will last for years. This step-by-step methodology, supported by a wealth of case studies, will help marketers achieve the next rung of success for their companies." -- Guy R. Powell, President of ProRelevant Marketing Solutions, and author of Marketing Calculator

"The demand for actionable marketing analytics is self-evident in this age of big data and marketing accountability. This book is unique." -- Dominique M. Hanssens, Bud Knapp Distinguished Professor of Marketing, UCLA

"Provides an applicable, evidence-based methodology for establishing which variables an organization should be following to improve its performance. This book will make you think and then help you act, an unusual combination." -- John Roberts, Professor of Marketing, the Australian National University and London Business School

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Editorial Reviews

From the Publisher

“Pauwels takes the reader into the world of big data and marketing dashboards….illustrates in an easy understandable manner how any company can improve performances using marketing dashboards…” --Christian Reiners blog

"…provides a wealth of information about managing and leveraging data...Essential and a must-read." --One Cause at a Time

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Product Details

  • ISBN-13: 9780814433959
  • Publisher: AMACOM
  • Publication date: 3/26/2014
  • Pages: 240
  • Sales rank: 639,343
  • Product dimensions: 5.90 (w) x 9.10 (h) x 1.10 (d)

Meet the Author

KOEN PAUWELS is an award-winning professor, consultant, and expert on the topic of marketing ROI. After receiving his Ph.D. at UCLA, he taught at Dartmouth's Tuck School of Business before joining Ozyegin University.

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Read an Excerpt

It's Not the Size of the Data It's How You Use It

Smarter Marketing with Analytics and Dashboards


By Koen Pauwels

AMACOM

Copyright © 2014 Koen Pauwels
All rights reserved.
ISBN: 978-0-8144-3395-9



CHAPTER 1

Marketing Analytics Dashboards: What, Why, Who, and How

Data is prolific but usually poorly digested, often irrelevant and some issues entirely lack the illumination of measurement.

—JOHN D.C. LITTLE, 1970


LITTLE'S QUOTE RINGS AS TRUE TODAY as it did more than forty years ago, reflecting the tension between the abundance of marketing data at our disposal and the lack of actionable insights that derive from it. The advent of the Internet and recent availability of "big data" have only increased the need to distill relevant information from a wealth of data. Don't get me wrong: I love big data, but, as with other things in life, it's not about size, but what you do with it. Managers I've worked with across industries and countries know that more data does not mean more insights for action. While many feel overwhelmed by big data, others feel they don't have enough of the right data to connect each marketing action to profit outcome. For example, a bricks-and-clicks client contrasted the wealth of information provided by Google Analytics with its inability to match direct mail lists with sales or to attribute a purchase to a specific marketing action (see the case study "The Right Chair #1" later in this chapter). They wanted a marketing analytics dashboard that connected online and offline marketing, metrics, and profits, and allowed the decision makers to run easy what-if scenarios. Feeling comfortable with comparing different plans, they ran a field experiment proving a fourteen-fold increase in profit—as promised by the analytics behind the dashboard.

Wouldn't it be great if you could drive your company like a car or a plane? Thousands of bits and pieces of potentially important information feed into the few metrics that show up on your vehicle dashboard. You don't need to know everything that is under the hood to drive the vehicle!

In the last decade, the implementation of data analytics and dashboards has generated and saved millions of dollars at hundreds of firms, some of which I was fortunate to work with. Firms are using dashboards to track marketing effectiveness and guide decision making in industries as disparate as business communication (Avaya), online services (Google), financial services (Ameritrade, Morgan Stanley), systems integration (Unisys), technology and electronics (SAP, Lenovo), fast-moving consumer goods (Heineken), and manufacturing (Timken).

SAP and Vanguard provide excellent video case studies on the benefits of dashboards—and the currently unfulfilled opportunities they present. Their dashboards measure outcomes important to each business, intermediate funnel metrics, their marketing campaigns, and other activities that drive them. The SAP video shows how an individual decision maker uses the dashboard, while the Harvard video case on Vanguard4 shows how the dashboard is used in group decision making, in this case an executive meeting. As a result, marketing has moved from an expense to an investment with measurable returns.

Still, most current dashboards fail to leverage data analytics to provide the needed insights for action. Vanguard CMO Sean Hagerty acknowledges: "What is missing is the connection between the individual activities and those outcomes. The next question is: how do you link the long-term measures to the short-term measures? So do awareness and image attributes translate to sales? And I don't know how to answer the question. That I think is the Holy Grail. We have not really solved that." Indeed, many managers continue to be disappointed with their ability to connect marketing actions to key performance indicators and ultimately to the financial outcomes (sales, profits, stock market capitalization) that matter to the company and pay the bonuses of C-level executives. The current frustration or fatigue rests with "reporting dashboards." Reporting dashboards simply track metrics without showing which matters most to performance, and they don't permit the user to shift marketing budgets around and compare the predicted outcome in what-if analyses. Enter "marketing analytics," which provides the backbone of the visually attractive dashboard face.

Marketing analytics translates rich data into actionable insights and what-if analyses to test different scenarios. The case study below illustrates that analytics can yield a huge competitive advantage even for small and medium-sized enterprises (SMEs).

Answering questions like these can lead to an improved understanding of the role of marketing communications activities and planning of appropriate strategic actions. Throughout this book, you will learn about how Inofec overcame obstacles along the journey, including database creation, dashboard implementation, and the design of a field experiment that demonstrated a fourteen-fold profit increase over the status quo.


WHAT IS A MARKETING ANALYTICS DASHBOARD?

Just like your car's dashboard, a marketing analytics dashboard brings the firm's key market-based metrics into a single display. It provides a concise set of interconnected performance drivers to be viewed in common throughout the organization.

Inofec's dashboard is shown in Figure 1–1. It is but one example of what a dashboard might look like. Hundreds of alternative designs are available at dashboardspy.com, and Chapter 11 helps you to choose among them to fit your needs best.

Let's break down the key elements of the dashboard definition:

* Concise set: A dashboard's purpose is to help users focus their attention on a few metrics. However, different users often focus on different metrics (typically the ones they can influence and/or that they are evaluated against), and some people are comfortable with more metrics than others, much like an airplane pilot navigates a bigger dashboard than a car driver does. Dashboards solve this issue by allowing users to customize the display to the user's preferences and to "drill down" to different page views with more detailed metrics.

* Interconnected: A simple scorecard of metrics does not make a marketing analytics dashboard: The dashboard should help users understand how the business works and how their (proposed) actions can change the (predicted) performance! To this end, a dashboard needs an underlying (back-office) model that connects the metrics. In the Inofec dashboard shown in Figure 1–1, the user changes the marketing inputs and watches the projected profits (based on the analytics) change in real time. The next case study, "Cars: From Begging HQ to Talking Trade-Offs," illustrates the importance of the analytics dashboard for a major car company. Just like car drivers, dashboard users need to know what happens when they hit the brakes or shift gears, but they don't need to know exactly how the engine operates under the hood. Still, the existence of the engine is crucial.

* Key performance drivers: The presented metrics have been shown to be important, leading indicators of performance, either by experience and/or by scientific testing in the underlying model. We have seen many cases in which managers got obsessed with metrics that did not drive results. A good dashboard refocuses its users on the metrics that truly matter.

* To be viewed: Dashboards visualize information through devices such as gauges, charts, and tables, often color-coded for easy summarization.

* In common throughout the organization: A dashboard makes it easy to share information and to get all stakeholders on the same page (often literally). There's still plenty of room for discussion on how to interpret the facts and what to do next, but at least it is clear what the facts are. Many companies also share dashboard views with partners such as suppliers, agencies, and customers, which helps to align the supply chain around common goals.


Integration Is King

Integration is key to each of the elements above, and is the clear but tough-to-achieve answer in today's challenging times. Organizations need integration on at least three levels:

1. Data. Understanding the firm's market and its position within the market requires information and data from diverse sources at different levels of aggregation and covering different time periods. The dashboard provides a common organizing framework.

2. Processes. The dashboard helps management relate inputs, such as marketing expenditures, to measures of market performance, such as market share and sales and ultimately of financial performance, such as profits, cash flows, and shareholder value, thus building a bridge between internal and external reporting.

3. Viewpoints. Whether assessing the market, performance, or planning, a dashboard allows different executives, in different departments and locations, to share the same, equally measured input (i.e., to view the firm's market situation in the same light).


Why Integration Is Lacking in So Many Organizations

At one extreme, different systems and departments often use their own metrics, based on their own data, processes, and viewpoints. How can marketing and finance agree if they don't speak the same language? At the other extreme, some companies wrongly believe in one "silver bullet" metric that captures all that is important. A single metric may have worked, for example, for an encyclopedia salesman, selling a single durable product on commission while facing little local competition. For organizations, however, the evidence is clear: The silver bullet metric is an illusion. Organizations have both short-term and long-term interests; they need to consider both qualitative and quantitative information and must be able to differentiate the performance impact of their own actions from the influences of the environment.

In sum, a marketing analytics dashboard:

* Offers integration of diverse business activities, some of them qualitative, with performance outcomes.

* Measures both the short-term results of marketing and the long-term health of the marketing asset.

* Isolates the effects of marketing actions from the other influences on corporate performance.


WHY MARKETING ANALYTICS DASHBOARDS?

Marketing analytics dashboards respond to the increasing complexity and diversity of marketing data faced by senior management in the information age—of which the Cars case study is just one example. In our experience across industries and firms, managers mention at least four factors driving the need for dashboards: poor data organization, managerial bias, increasing pressure on marketing, and the need for cross-departmental integration.


Poor Organization

Data overload is obvious in the fragmentation of media, multichannel management, and the proliferation of product lines and services. Information technology makes it possible for firms to collect and analyze data on customer activities across touch points and channels.

Unisys, for example, gathers hundreds of metrics generated by brand tracking, CRM programs, tradeshows, media reports, satisfaction studies, and blogs. Service- and contract-based markets always give firms individual-level data, but online tracking of browsing use now does so for virtually any company. This proliferation requires greater data organization as indicated in the successful examples of the "information-based strategy" at Capital One or "information-based customer management" at Barclays Bank.


Managerial Bias

Human processing capacities remain limited, and research has demonstrated the presence and danger of managerial biases arising from shortcuts in information processing and decision making. For example, managers anchor their new decisions based on old decisions and do not adjust enough based on incoming information. The result is that brands and regions that got large marketing budgets in the past will continue to get large budgets, even if the money is now more useful elsewhere.

Firms that see analytic capabilities as a key element of their strategy outperform their peers since they know what products their customers want, what prices those customers will pay, how many items each will buy, and what triggers will make people buy more.


Increasing Pressure on Marketing

CEOs, CFOs, and CMOs demand more accountability from the marketing department. Marketing is challenged both to drive growth and to keep costs under control, with the immediate focus on either objective swinging with the business cycle. Broad surveys of marketing and nonmarketing professionals consistently reveal increased expectations regarding marketing accountability as well as its effect on the marketing department's influence within a company.

The goals of the typical marketing department have been revealed as disconnected from companies' leadership agendas. As a result, CMOs are advised to agree on a "marketing contract" with the CEO that specifies exactly which metrics marketing is supposed to improve. In this regard, a dashboard helps ensure everyone is "on the same page" to detect and discuss marketing successes and failures.


The Need for Cross-Departmental Integration

The ability of marketing to reach across functions to accomplish company goals is an increasingly important determinant of its success. Many firms have integrated marketing, innovation, and strategic growth leadership into a single corporate function. Companies facing disruptive cross-national mergers and global expansion especially need integration. This brings together marketing departments with different values, performance metrics, and reporting practices. Standardized tools and processes for efficiency are key to driving growth in such organizations.


WHO USES MARKETING ANALYTICS DASHBOARDS?

The benefits of marketing analytics dashboards are relevant to companies of any size and in any kind of industry. This book provides dozens of case studies in companies ranging from sixty employees to hundreds of thousands and in industries ranging from fast-moving consumer goods to online travel. In the broader area of dashboards (not necessarily connected to analytics), the footnotes for this chapter list over 200 companies, including:

* Business communication (Avaya, Cisco)

* Consumer credit (Capital One)

* Education (Montgomery County Public Schools of Rockville, Maryland)

* Fast-moving consumer goods (Heineken)

* Gaming (Harrah's)

* Government (Connecticut Economic Dashboard, Atlanta Dashboard)

* Hospitality (Hilton)

* Investment banking (Morgan Stanley)

* Mutual funds (Vanguard)

* Online services (Google)

* Systems integration (Unisys)

* Technology (SAP)

* Transportation (Virginia)

* TV broadcasting (British Sky)


As to who within these companies uses dashboards, users come from all management levels. We have seen dashboards used by CEOs, CMOs, CFOs, and COOs; by brand managers, marketing specialists, production managers, and R&D managers; by the sales force, you name it.


HOW CAN A MARKETING ANALYTICS DASHBOARD HELP YOU?

A marketing analytics dashboard can help you in several ways. In particular, they help you provide better and faster answers to typical management questions:

1. What happened? Dashboards enable consistent measurements and regular monitoring.

2. Why did it happen? Analytics dashboards relate management action to key performance indicators and hard performance.

3. What will happen if? Analytics dashboards enable what-if analysis to predict the perfomance outcomes of alternative scenarios and plans.

4. What should happen? Analytics dashboards allow you to optimize or at least improve decisions and communicate this process more transparently.


Several well-known companies have experienced these benefits.

A dashboard enforces consistency in measures and measurement procedures across departments and business units. For example, Avaya operates in over fifty countries and diverse markets, with varying marketing tactics. Before the dashboard project, the company had no commonality of systems around the globe (limiting data gathering), different definitions of what constitutes a "qualified lead" (a key performance metric in the hand-off from marketing to sales for business-to-business companies), and a lack of regional interest in gathering metrics.

A dashboard helps to monitor performance. Monitoring in turn may be both evaluative (who or what performed well?) and developmental (what have we learned?). Google provides a good example: Dashboard metrics are early indicators of performance, and if a dip occurs in, for example, the "trust and privacy" metric, the company takes corrective action.

A dashboard may be used to plan (what should our goals and strategies be for the future given where we are now?). For example, Ameritrade started with corporate scorecards from the strategic planning department to develop a dashboard that plugs in to the planning cycle and is tied to quarterly compensation.


(Continues...)

Excerpted from It's Not the Size of the Data It's How You Use It by Koen Pauwels. Copyright © 2014 Koen Pauwels. Excerpted by permission of AMACOM.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
Excerpts are provided by Dial-A-Book Inc. solely for the personal use of visitors to this web site.

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Table of Contents

Contents

Foreword by Laura Patterson xiii

Acknowledgments xvii

Introduction: Decisions That Data and Analytics

Can Inform xix

PART I: WHAT MARKETING ANALYTICS DASHBOARDS

CAN DO FOR YOU

Chapter 1: Marketing Analytics Dashboards:

What, Why, Who, and How 3

CASE STUDY The Right Chair #1: Marketing Analytics

Gives SMEs a Competitive Advantage 5

What Is a Marketing Analytics Dashboard? 7

CASE STUDY Cars: From Begging HQ to Talking Trade-Offs 10

Why Marketing Analytics Dashboards? 14

Who Uses Marketing Analytics Dashboards? 15

How Can a Marketing Analytics Dashboard Help You? 16

Wrap-Up and Manager’s Memo 18

Chapter 2: Compare the Marketing Analytics Dashboard

to Your Current Scoring System 21

Reporting Versus Analytics in Dashboards 22

Marketing Analytics Dashboards and Balanced Scorecards 23

CASE STUDY City Performance: From Charlotte’s Balanced

Scorecard to Atlanta’s Dashboard 27

Decision Support Tools and Marketing Mix Models 29

Dashboard Building Blocks: Metrics and Key Performance Indicators 31

Wrap-Up and Manager’s Memo 33

PART II: PLAN YOUR MARKETING ANALYTICS

DASHBOARD

Chapter 3: Start with the Vision 39

Business Strategy Drives the Dashboard 40

CASE STUDY Unisys Makes Goal Alignment a Key Priority 40

How Goal Alignment Increases Performance 42

Top-Down or Bottom-Up Design? 44

Communicating Upward: Harnessing Top Management Support 47

CASE STUDY Dashboards Empower Middle Management:

Discover Financial Services 48

Wrap-Up and Manager’s Memo 49

Chapter 4: Assemble Your Team 51

Cross-Functional Development Teams 52

CASE STUDY Not All Fun and EB Games 53

Team Management Is Ongoing 54

Sustained Assistance from Top Management 57

Wrap-Up and Manager’s Memo 58

Chapter 5: Gain IT Support on Big and Not-So-Big Data 60

IT Is from Jupiter, and Business Is from Mercury 61

CASE STUDY Inside and Outside Data at a Multichannel

Retailer 63

Moving IT Closer to Business 63

Moving Business Closer to IT 66

Wrap-Up and Manager’s Memo 67

Chapter 6: Build Your Database 69

Planning the Right Database 69

Building Your Database In-House 71

CASE STUDY The Right Chair #2: The Longest Journey

Starts with the First Database Step 74

Outsourcing Your Database 76

Testing and Managing Your Database 77

Wrap-Up and Manager’s Memo 80

PART III: DESIGN YOUR MARKETING ANALYTICS

DASHBOARD

Chapter 7: Generate Potential Key

Performance indicators 83

What Could Make or Break Your Business? 83

How to Structure Interviews to Generate KPIs and Structure

KPIs into Groups 85

CASE STUDY IT Firm Generates and Organizes 150+ Metrics 87

Shortcuts? Start with the Competition or with Company

Objectives 88

Clarify for All What Each KPI Means 92

01-IND-FM-4_Front Matter 12/11/13 11:44 AM Page ix

CASE STUDY The Right Call #1: What Is a Qualified Lead? 93

Wrap-Up and Manager’s Memo 94

Chapter 8: Eliminate to Select Key Leading

Performance Indicators 97

Why Not Ask Customers What’s Important? 99

CASE STUDY First Tennessee Bank Tests Its Metrics 103

Which Indicators Lead Peformance? Granger Casuality in Action 104

CASE STUDY From 99 Metrics to 17 LPIs 106

Which Indicators Are Key? Vector Autoregressive Modeling 108

How KLPIs Improve Insights in Different Industries 112

Wrap-Up and Manager’s Memo 121

Chapter 9: Include Emerging Channels: KLPIs for

Online and Social Media 123

What Is Truly Different Online? 124

Customer-Initiated Contact Metrics 126

Capturing Conversation Topic Dynamics in Social Media 129

CASE STUDY Fashion Retailer Analyzes the Effects

of Social Media 134

Wrap-Up and Manager’s Memo 138

Chapter 10: Emerging Markets Frontier: Metrics

Across Countries 141

The Need for Standardized, Global Metrics 142

Consumer Protection Lowers Marketing Responsiveness of

Consumer Awareness 145

Individualism Increases Marketing Responsiveness of Brand

Consideration and Liking 146

Income Increases the Sales Conversion of Brand Liking 147

CASE STUDY How Advertising Effects Differ in an Emerging

and a Mature Market 149

Wrap-Up and Manager’s Memo 150

Chapter 11: Design the Layout and Dashboard

Prototype 153

Dashboard Structure: Seven Must-Haves 153

Data Display on the Dashboard 158

Data Visualization 160

CASE STUDY Data Visualization at Procter & Gamble 163

Wrap-Up and Manager’s Memo 165

PART IV: LIVE YOUR MARKETING ANALYTICS

DASHBOARD

Chapter 12: Launch and Renewal of the Marketing

Analytics Dashboard 169

Dashboard Implementation Roadmap 169

Execution Challenges 174

CASE STUDY The Right Call #2: Implementation Challenges 174

Key Implementation Success Factors 177

Renewing the Marketing Analystics Dashboard 180

Wrap-Up and Manager’s Memo 181

Chapter 13: Change Your Decision Making: From

Interpretation to Action 183

Adapt the Dashboard Output 185

Decide on Rules for Setting Marketing Budget and

Allocation 189

CASE STUDY Online Marketing Effects: Shifting

Euros Away from Last-Click Misattribution 190

Addressing Implementation Challenges 199

Wrap-Up and Manager’s Memo 201

Chapter 14: Nurture the Culture and Practice of

Accountability 203

Organizational Culture Is Crucial to Dashboard Success 203

Motivating Employees to Use the Dashboard 205

The Practice of Accountability 207

How to Support Accountability Throughout the Organization 208

Wrap-Up and Manager’s Memo 211

Conclusion: Call to Action 213

Notes 217

Index 225

About the Author 231

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