Analyze Your Customers

This article’s title really intrigued me: Trust-Based Targeting.

Hmmm. Now, as a direct marketing and analytical specialist, I’m an expert in targeting. I’m aware of the wide array of data that is available to target both customers and prospects, B2B and B2C. So, what the heck does Trust-Based Targeting refer to? Clearly, I had to read more!

It’s an intriguing concept, and one that might actually help with the eventual measurement and better targeting of social media. The article outlines mEgo’s approach that allows consumers to choose the kinds of messaging and targeting behaviors that fit their own needs and interests, all in the area of social marketing.

The premise behind mEgo’s offering is that their users self-create some pretty elaborate and detailed profiles. Then, users decide which parts of their profiles can be shared to advertisers. Finally, users are paid (I believe through donations to their chosen charity) when advertisers use their data for targeting.

“Going back to how mEgo intends to roll out our advertising strategy: We will provide a transparent description of how users’ data is used and, most importantly, allow users to filter which information is publicly available and used for targeting. MEgo members will have complete control of what portions of their profile they’ll permit us to use to target ads. For example, a mEgo user interested in music may choose to view only ads for indie bands generated from a list of their favorite musicians. As an extra step in transparency, we also literally show users the keywords our platform generates for serving the ads they see.”

The article contained an excellent case study for an Adidas social media campaign. It illustrated the viral nature of m’Ego’s offering and is probably the best illustration of this new targeting concept.

I can’t wait to see how (if) other marketers adopt this model. I salivate over the rich data that I may be analyzing in the near future!

But I think that the key things to remember here are trust and transparency–two essentials to this new offering.

“The lesson learned: It is essential that brands earn and keep consumer’s trust in order to be able to effectively market to them. Without trust, the greatest marketing system in the world can’t work. Set the expectation of complete transparency between marketer and consumer, and you convert your consumer from being fearful into being an advocate.”

As analytical experts who often rely on external data to fuel our studies, and our clients’ marketing programs, we thought we’d share some results on data costs.

From Direct Magazine, check out this report on the price of data and leads. The article cites a Worldata study called “Winter 2008 List Price Index”, and it reports on changes in data costs year-over-year.

Very interesting stuff, especially if you need help in budgeting costs. Here are some highlights of the study:

• The cost for e-mail lists is decreasing slightly (by $2 per thousand, while consumer e-mail lists dropped by $3 per thousand).
• But e-mail lists still remain fairly pricey, at an average cost of $287 per thousand for permission-based B2B marketing and $135 per thousand for B2C permission e-mail.
• The average cost for Donor lists is $85 per thousand.
• Business Merchandise Buyer lists go for $118 per thousand while Consumer Merchandise Buyers average $103 per thousand.
• Consumer Magazine Subscriber list costs average $108 per thousand.

And, this quote from the Direct Magazine article should help you understand what to expect when you are buying lead data.

“Cost-per-lead data, which the Boca Raton, FL-based firm began tracking last quarter, had a slight increase in its pricing, due to jumps in B-to-B leads. Cost-per-lead consumer programs averaged $1.30 per lead, a slight decrease over last quarter, while cost-per-lead B-to-B Programs averaged $4.90 per lead, an increase of 7% over last quarter.”

Unfortunately, the study does not include average data costs for compiled data (such as consumer lists from Acxiom or Experian, or business lists from InfoUSA or D&B). Compiled data is definitely a less expensive option. And, Occupant lists (you know the direct mail that is not even addressed to a name, simply to “Occupant” or “Resident”) are even cheaper.

Still, this study gives great insight into what’s going on in the list/data industry and provides you with an educated guess as to data costs if you are budgeting a direct mail or e-mail campaign.

I came across this chart and remembered the fact that sometimes a picture is worth a thousand words.

So, if you have analytical expertise, you’re in good shape to ride out (and even thrive in) this crazy economy.

And, for more encouraging marketing news, check out this post from our Direct Marketing Blog. A little hint–marketing budgets don’t seem to be on the chopping block, even in this economy!

You know that we’re huge advocates of using statistical techniques to improve marketing performance. So, when I listened to Richard Sharp, VP of Marketing for Marqui speak on the topic of lead scoring at the Innotech e-marketing conference last month, I knew it would be a great session. Richard spoke about how important it is for marketing to qualify leads through an objective scoring system, prior to handing the right leads over to sales.

We couldn’t agree more and we decided to highlight a Marqui client success in today’s post. This success story comes directly from their sales literature.

Background and Client
Strangeloop Networks develops a family of network appliances designed to help businesses optimize the performance of their website or web-based application. Their business clients can then deliver new features and applications faster and at a lower cost without changes to software code or hardware infrastructure.

Challenges
Strangeloop Networks was a newly launched company that needed to hit the ground running. With limited marketing staff and budget, they still had to deliver enough sales-ready leads for their team. They had to transform their website from “brochure-ware” into an active lead generation component. They also had to create lead generation campaigns that could easily plug into their existing Salesforce CRM and Google Analytics web analytics package. They wanted a more effective means of evaluating their marketing programs instead of relying on conflicting anecdotal information from their sales team.

Solution
Strangeloop selected the Marqui Marketing Automation Suite, as it included key features and guaranteed a fast implementation. The Marqui Marketing Automation Suite provided both web content management and marketing campaign tools, offering a single-vendor solution. Total implementation time including training was only a few weeks before they were able to start running their first lead generation campaign.

Results

* Executed campaigns 3x faster
* Reduced budget for external contractors by $14,400 annually
* Increased conversion rate by 10% each onth
* Established automated workflow for managing and approving content
* Ability to track profitability of multi-channel campaigns

All in all, sounds pretty impressive! It’s great to see small businesses succeed by being clever, and by choosing the right technology.

You know you’re getting old when news doesn’t seem like news. You’ve heard it before. Same old story. Can you relate?

It’s certainly how I felt reading this story from DM News: Study says CMOs are failing to use CRM well.

“Marketers worldwide are under-utilizing data and analyt­ics, particularly when it comes to customer retention, according to a recent study released by the Chief Marketing Officer Council.

Only half of marketers have a strategy in place for growing key account relationships, and 45% believe CRM systems are not effective enough. Further, only 15% of companies rated them­selves extremely good or effective at integrating disparate customer data sources, and 6% of marketers reported having “excellent knowl­edge” of customer data such as demographics, psychographics or transactional history.”

The article goes on to talk about how so many companies continue to be focused on new customer acquisition and fall short in developing strategies designed to retain the customer.

In today’s environment of short-term gratification (we must meet sales goals THIS MONTH; we have to report favorable earnings THIS QUARTER), I tend to understand why a long-term, customer-centric strategy might fall by the wayside. Couple the need for immediate results with an ever-shrinking marketing staff and budget, and I start to wonder how any company can think strategically and look at long-term benefits.

But, here’s the kicker–this way of thinking with the customer in mind is a necessity. Customers today are aware of the data and technology that is available to corporations. They see it used to their advantage in their everyday dealings (the classic example is shopping with Amazon). They expect you to know all about them. They want you to anticipate their needs. They need you to serve them the right price plan or the right mix of products. If you won’t do it, you’re in danger of losing that customer.

It may be time to look at your customer touch-points and make sure that you’re doing all you can to keep those customers happy.

Following is a short-list of ideas that might jump-start the evaluation process:

• Have you empowered your call center or customer service folks to really assist customers calling in with issues? Are they able to make real fixes and solve problems?
• Do you have a handle on your customer relationships? Have you done the analysis and database work to understand exactly what products and services each customer is buying from you (or has purchased in the past)?
• Do you have a strategy in-place to make sure that you are maximizing the profit potential from each and every customer? Do you make the right up-sell and cross-sell offers, when the customer is most likely to be shopping?
• Conversely, do you have a strategy in place to ensure that you are not over-serving your customer? For example, are they on a price plan that is too big for their needs, hence they’re paying too much? Trust me, eventually, your customer will realize that they’ve been paying too much for your service, and they’ll leave you. To retain this customer and maximize their lifetime value, perhaps you should be pro-active and “right-size” their plan, before they do…

Luckily, we direct marketers, with our background and experience in data mining and using analytics to understand–and predict–customer behavior, are well-positioned to make a positive impact on customer marketing. Nancy and I have re-focused our direct marketing consulting practice to be centered on analytics and data. It’s that important, we believe.

Perhaps it’s time to become the customer advocate within your organization!

In these turbulent economic times, it’s refreshing to see some good news for our industry. It seems that the core skills of database marketing and analytics continue to be valued by employers. From BtoB Online’s Daily Report:

“Two-thirds of marketers (67%) says resources for database and analytics to support online marketing efforts call for the most marketing investment this year, according to Alterian, an enterprise marketing company, which released the results of its fifth annual marketing survey on Tuesday.”

Interesting that this survey calls out “online” marketing, but we’ll take that! Database marketing and analytics expertise are definitely transferable.

We challenge direct marketers to think outside the box and consider how your skills can apply to many different areas of marketing. Even if you’ve only had specific experience in, say, direct mail, so many of the disciplines you use can be translated to online marketing. And, if that is where companies are investing, then it might be a good idea to highlight your resume with examples of how your skills can improve online programs.

Here are a couple of examples that come to mind immediately:

1. Apply segmentation strategies to e-mail campaigns. While e-mail remains an inexpensive channel, it’s no longer good enough to blast the same message to your entire list (and then do it over and over and over again). Increasingly, e-mail marketers are segmenting their customer and prospect lists and presenting the appropriate offer and message. They’re starting to understand the importance of understanding how frequency impacts results. Who better than traditional direct marketers (who may only have segmented a postal mailing list so far) to teach e-mail marketers how to mine their database and understand customer segments?
2. Use ROI techniques to understand and measure the effectiveness of social media campaigns. Like database and analytics, social media is another area that corporations believe that they need to invest in (or miss the boat). As a leader in using numbers and results to justify your direct marketing spending, take those skills over to the world of social marketing. Attempt to quantify every investment (even if it’s only the costs of someone’s time taken to blog, for instance). Articulate to senior management, for example, how your social marketing efforts are targeting your market with pinpoint precision. Simply take your deep understanding of building your ROI for each campaign/program to the world of social marketing, and you’ll be ahead of most of your competitors.

The above are only two examples of how you can migrate your direct marketing expertise to other, potentially more high-growth, areas within your organization.

Think about where your specific skills can apply (or have applied) to high-growth online marketing initiatives. And, please, share them here!

As bloggers with an analytical bent, we talk about direct marketing strategy in just about every post. You know by now that our approach is based on solid analysis that is the basis for all of our strategy.  Unfortunately, however, we continue to see so many marketers in a frenzied state — just trying to get the campaigns out on time without fully thinking through how they will track and measure them on the back end. Therefore, the measurement step never occurs, or occurs half-way, and only as an afterthought.

What to do about this? Well, we found this excellent article in MultiChannel Merchant  that gives you some excellent advice on how to integrate analytics and data mining into your strategy. The article, written by Rich Brough or Transcontinental Database Marketing in Toronto, provides his ideas on what he feels are “the six stages in the hierarchy of data analytics, and the value of each to a well-rounded strategic approach.”  What’s also interesting is that Brough’s steps are nearly identical to the steps we take in our own analytical approach.  Brough emphasizes that the first thing that marketers need to employ is a consistent approach up-front to identify opportunities within the customer base. He argues that while this may take some time to put in place, the results will be well worth the effort. Therefore, he identifies these six stages for us to consider as part of building this framework:

1) Data access: This is the foundation on which marketers build by collecting all pertinent information about customers, including name, address, demographic data, history of transactions, product and service purchases, and responses to past campaigns. Every business should earmark the appropriate resources to ensure this data is as accurate and up-to-date as possible.

2) Reporting/profiling: Key performance indicators are developed and applied to track the performance of customer relationship management (CRM) initiatives over time and across customer segments. Here, marketers can also track client migrations across various segments, compare responders versus non-responders, and gauge campaign response over time.

3) Current value: The underlying premise for CRM is that not all customers provide equal value to an organization. Therefore, the first step for any CRM initiative is to measure customers by their value to the organization.

For example, 20% of clients might account for 80% of a company’s business, and would be worth a lot of the marketer’s time and money. Another 30% might be designated as moderately valuable, but having the potential to move up into the top 20%; they’d require a different kind of pitch.

The last 50% could account for just 5% of the company’s business; they are less committed, motivated largely by price, and require still another approach (or, maybe, none at all).

4) Segmentation: In this stage, marketers identify prospects who share similar characteristics – who, therefore, belong to one of several specific segments.

This provides the opportunity to focus on the highest-value segments and acquire new customers who match the segments identified as most desirable. As well, sales pitches can be custom-tailored to suit each segment using what is known about those segments. Customers can be segmented using many criteria.

But segments should focus on identifying customers with similar product and service needs as implied through neighborhood socio-demographic characteristics, life stage, usage behavior, or needs and attitudes as identified by market research.

5) Predictive analytics: Use this to predict each customer’s likelihood to initiate a particular activity in future based on their unique characteristics and past behavior.

The benefits represent a “win-win” for the organization and its customers, with marketing ROI rising, and customers receiving more relevant offers – the principle of “right message to the right customer.” Predictive models are developed to assist marketing at all stages of the customer lifecycle, including acquisition, cross-sell and up-sell, retention, and re-activation.

6) Potential value: This is assessed by combining each customer’s current value with their potential to buy more in the future. As with current value, potential value creates an even clearer way to identify the most valuable customers, the ones worth keeping.

It also helps to identify those less valuable customers with potential for entering the most-valuable category, and those low-value clients on whom it may not be necessary to spend as much.

I’m sure that you’ll agree that this is excellent advice. As Brogh’s states: “Using these six stages, marketers can develop a database-marketing strategic framework that differentiates customers based on the value they currently contribute to an organization, their product and service needs, and their potential future value.” This is a much more strategic approach to direct marketing, and one that will have a positive impact on your ROI.

Let’s face it, if we are consistently in a hurry in getting out our campaigns, we need to be as efficient as possible. This approach may take some time to set up at the beginning. However, as you move through time, your campaigns will take you less time to create, they’ll be more responsive, you’ll be targeting the most profitable customers, and you’ll be able to demonstrate that your DM efforts are paying off — in terms of bottom-line profitability.

So many businesspeople view their customers as one large undefined group. They analyze their business in terms of sales made and profits realized. However, we’ve seen that many businesspeople do not understand the importance of obtaining a thorough understanding of their customers.

And, without a thorough understanding, it’s virtually impossible to ensure that you are developing the appropriate strategies for today, and for tomorrow. If you don’t have a handle on the make-up of your customer base, it’s tough to create new products, for example, or to plan new marketing campaigns.

Analyze Your Customers Profile services provides marketers with the tools to think strategically and ensure that your business grows based on a deep understanding of your customers.

Profiling Objective
Customer profiling answers one or more of the following questions:

1. What does my customer base look like, in terms of core demographics, real property data and behavioral data?
2. Are there any surprises in my customer base? Do I really have a good understanding of my customers?
3. How do customers differ from prospects? What types of attributes make my customers unique—different from the universe at large?
4. How well have I penetrated my market? How much prospecting opportunity is there in the marketplace, in terms of numbers of qualified leads?

With the Analyze Your Customers comprehensive report package, we’ve answered each of the above questions!

The Customer Profile report package:

Your report package includes the following:

• Overview of the processing performed, including a recap of data analyzed
• Complete Customer Profile Reports
• Customer and Prospect Profile Comparison Reports
• Key findings
• Prospecting recommendations

We deliver a comprehensive report package that analyzes your customers in terms of consumer attributes such as demographics, purchase history and real estate characteristics. For businesses, we report on size, type and other key characteristics.

Analyze Your Customers Profile services give you the data to think strategically and ensure that your business grows based on a deep understanding of your customers.

The best way to see the value of this report package is to actually see a sample report. Sign up here and we’ll send you the report, at no charge, of course.

We’ve all received them—those credit card offers shouting: You’re “Pre-Approved” for this fabulous, low-interest card! Or, how about those mailings from your local auto dealership telling you to come on in and walk out with the new car that you’re “pre-qualified” for?

Now, how did they know that your current auto lease was just about to expire? Or, that you were searching for a new credit card to transfer balances from your old card—the card that was charging you an arm and a leg in interest?

It’s pretty simple, actually. Financial services marketers have the ability to access consumer credit reports, and present marketing offers to the people they believe will most need them.

Just think about the information on your own credit report. It lists the various loans you have along with any associated balances on the accounts. It also contains the types of credit cards you carry. It reports on when you took a car loan, and which company you used for financing. Your mortgage (and monthly payments) are known. Whether you’ve had late payments or even if there’s a bankruptcy on file is included on your credit report.

Idea 8: Consider Testing Credit Pre-screen Services

The wealth of credit information is critical to marketers. You can understand if a consumer needs your product/service. Further, you’ll know (based on other commitments and payment history) if they’ll be inclined to pay you. And, there are literally hundreds of credit attributes available to be mined and maximized in your targeting efforts.

The use of credit data can lessen the risk that your firm takes on in direct marketing campaigns. If you utilize it today, you know it makes your CFO happy that you are effectively managing the risk of your customer portfolio as you continue to bring on new clients.

As marketers, we want to reach as many people as possible; we want high response rates. However, it’s key to keep approval rates high, too. The secret is finding that appropriate middle ground – where you are taking on some risk but still building your overall profitability.

So, what’s the catch? Why aren’t all direct marketers using this valuable source of data?

The answer: Most marketers are regulated against using credit data. There’s an act called the Fair Credit Reporting Act (FCRA) that limits marketers’ access to consumer credit data. While the following provides an overview of legal requirements, for complete information, we urge you to visit the Federal Trade Commission’s website: www.ftc.gov/credit.

FCRA: An Overview

Here’s the biggest requirement: Users of credit data must have a “Permissable Purpose”. For marketing programs, this means that the marketer must extend a valid (called “firm”) offer of credit to the consumer. In other words, if you are using consumer credit data to understand if you should make an offer to a specific individual, you then have to move forward and extend that offer. The marketer/lender is obligated to make good on its offer of a loan, credit card or other financial product, once they have been privy to an individual’s credit information.

We’ve just scratched the surface of how to use consumer credit data in your marketing efforts. But, if you’re a financial marketer of consumer products, you definitely should explore working with consumer credit data. Yes, the legislation is complicated, and yes, the contracts process is grueling. However, the data is valuable. You can target your market with pinpoint precision, reaching those consumers most in need of your specific product or service.

Prior Test-and-Learn articles:

Idea 1: Evaluate Testing Strategies for New Customer Acquisition Programs

Idea 2: Get Your Analytical House in Order

Idea 3: Integrate Your Data to Understand Your Customer Relationships

Idea 4: Grow Your Customer Relationships

Idea 5: Evaluate Your Retention Program

Idea 6: Test New Channels to Reach Your Customer Base

Idea 7: Test to See if Generational Attributes Impact Results

Our fourth article in this weeks’ Test-and-Learn series focuses on testing components that you may not currently be evaluating. It’s pretty common to test creative, list and offer, but in our experience we see fewer marketers looking at:

1. Channel–are there channels that you should be using that you currently ignore?
2. How do generational attributes impact campaign success?

Idea 6: Test New Channels to Reach Your Customer Base

It’s key to integrate all of your marketing efforts in order to maximize the marketing investment. If done correctly, a multi-channel marketing approach should reap more profits than the sum of the programs deployed alone.

It’s critical to understand the correct communications ‘path’. For example, should you send a direct mail piece, followed up with a phone call? Should you also e-mail? And, how do you control for the other offers out there in print or on TV?

It’s also imperative to understand channel preferences. Do you know which customers prefer to receive a catalog, which like e-mail, and which customers simply want to be left alone—they’ll contact you when they’re ready to buy? There are some tactical methodologies that can maximize your overall marketing investment, including using predictive modeling that considers how your customers have interacted with you in the past to predict how they’d like to interact with you in the future.

We’ve written a White Paper that features market leading channel integration practices. Let us know (via e-mail or comment) if you’d like a copy.

Idea 7: Test to See if Generational Attributes Impact Results

Today there are five living generations. Each one interprets information differently and possesses unique buying behaviors. The generation of the future, The Millennials will be your decision-makers in 2010 and beyond. It is important to understand this generation as you are planning product and service enhancements, and as you develop future marketing strategy.

The Millennials are the largest in size of any generation and will significantly impact each of us in our marketing efforts. Consider tweaking your message and/or offer so that it resonates with each of the five generations. If done correctly, you should see improved results as you are communicating with them in a language they can understand.

By the way, we’ve also documented the key attributes of each of the generational groups. Let us know if you’d like this document.

Prior Test-and-Learn articles:

Idea 1: Evaluate Testing Strategies for New Customer Acquisition Programs

Idea 2: Get Your Analytical House in Order

Idea 3: Integrate Your Data to Understand Your Customer Relationships

Idea 4: Grow Your Customer Relationships

Idea 5: Evaluate Your Retention Program