Analyze Your Customers

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!

There has been a ton of talk on looking at performance-based marketing versus the traditional way of looking at performance by planning direct marketing campaigns based upon how many pieces you can mail at a certain cost per thousand (cpm). Or the number of folks you can call for a certain cost per call. The thinking has been that if you can reach a certain cost per piece, call, campaign, etc., you’ll be spending your dollars most efficiently while meeting your marketing budgetary numbers.

Not so much any more . . . more marketers are now utilizing the concept of performance-based marketing instead of looking at the simple costs of each campaign. The reasoning that I’ve heard for this is that this is the right thing to do “in a time of recession . . .” oh boy, here we go again. Whatever economic state that we happen to be in right now, there is certainly more pressure than ever on marketers to be able to prove that the money that is spent will net in getting money back. I’ve even heard some say that if they spend $100 they want to be sure that they’ll at least get the $100 back. Yikes . . . whatever happened to the good old days when we insisted that we actually made money from our direct marketing efforts?

The truth is that we are still on the hook for making certain that we are squeezing every cent out of our marketing expenditures, and if you’re measuring the results of each marketing campaign because you have to prove that what you are doing is working then you are, very much indeed, involved in performance-based marketing. In fact, I’m not sure when we haven’t been. Again, the beauty of direct marketing is that it can so easily be measured and analyzed so that you can re-group, tweak and refine your campaigns over time.

Granted, there are those companies out there who are lucky enough to be involved in industries where they can blindly market or advertise and continue to make money but these companies are becoming fewer and further between. Most of the companies that we work with need solid proof from us that what we are recommending is positively impacting their bottom line. Trust us when we say that we are relentless as we scan our response rates, conversion rates, open rates, etc.

We analyze our client’s customer bases to ensure that we get the best understanding that can possibly be obtained of who their customers are. Then we scan the marketplace for data that will perform in only the most optimum way for our clients’ direct marketing campaigns. Then, we analyze the data. What is working? What isn’t working? What is working just OK? How can it be changed to increase the response rate?

By intelligently applying the tenets of performance-based marketing, we can ensure that we are increasing the profitability of every customer portfolio consistently. And by the way, while we’re at it, we’re increasing our own profitability, too. It’s a win-win scenario!

Next time you find yourself only looking at the cost per piece . . . really dig down into what that really means and how it will impact your overall profitability. It behooves us all to look at direct marketing expenditures from all perspectives, then blend those ideas that make the most sense for your business into a strategy that will bring you the most profitability.

I recently read a great blog post that discussed the importance of data mining and the value that it can bring to your business.  The article reminded readers that it doesn’t necessarily have to be an expensive undertaking to conduct a deep dive into your data assets in order to get a better understanding of your customer base.  And, darn it, it’s true!

Certainly there are plenty of companies out there who specialize in working with large corporations with many divisions, many product groupings, many customer interactions, etc.  An analysis of this type would take a lot of planning, time and money — to be sure.  However, if you aren’t that complex of an organization, you can really get a great understanding of your customer base and not have to spend a ton of money to do it.

Just to give you some food for thought, we perform customer profile studies for around $1,000.  OK, granted, there are analytical companies out there bursting out in hysterical laughter over this amount.  Whatever!

But, the truth is it can be done.  We append a full suite of demographic data and compare it to a nationwide sample so that you can really get a good idea of how your customers differ from prospects in the areas in which you market.  We provide a full set of great reports on your customer base that illustrates who your customers really are.  Then, as an added bonus, we provide you with reporting of your customers versus your prospects so you can see how they differ, how penetrated you are in certain areas, and how to plan your next direct marketing campaigns.

This is not an advertisement for our services (I swear, it’s not).  The reason that I’m going into such detail on this subject is to prove to you that you can mine your customer database and profile your customers and it doesn’t have to take your entire marketing budget to do it.

Interestingly enough, there are those who will scoff at this.  How can these people ever accurately profile your customers for $1,000?  Well, we can . . . and truthfully, they could, too.  It’s a paradigm shift that is long overdue.

Enough of my rant . . . just know that you can pull intelligence from the data that you collect on your valuable customers.  And, it can be analyzed so that you can better understand your customer relationships and market much more intelligently without breaking the bank.

If you’ve done this and had success, we’d love to hear your stories!  Toss us a comment.

To continue on our theme of riding out the economy by utilizing an analytical approach, think about all of the things that you measure.  We’ve already discussed going through and assessing what you are measuring and ensuring that every element does have an impact on overall corporate profitability goals.  Now, let’s dig a little deeper to ensure that we aren’t missing anything that could be important.

Part of the goal of this exercise is not only to ensure that you are capturing everything that is important . . . but also to check out if your systems are tied together in order to link together the information captured and measured efficiently.

So, how to accomplish this? You’ve already taken a hard look at the right things to measure.  Within those things (i.e., each direct marketing campaign), are you measuring all of the aspects that will contribute to your profitability?  Sure, you’re measuring response rates . . . but are you taking it the next step to see how many of those who responded actually converted or spent dollars with you?  Of those that convert, are you looking at what they purchased?  You may have a myriad of product offerings, for example.  So, those responders/converters that were driven to your website and purchased, which product did they buy?  Was it a profitable conversion?

I’m not trying to be a nit-picker, trust me.  However, these are very important questions.  Let me give you a clearer example of what I mean.  Let’s say you sell products on your website that range from $5 to $100.  And, you also offer free information in the form of documents that people can download.  If you received an outstanding response rate of 5%, yet all of those folks that visited your website bought only $5 items and downloaded the free info, your campaign may not have been as profitable as you desired.  It may be that it was — I’m just saying take a look at all of the elements so that you can measure the ROI.  This way, you can accurately report on how successful each campaign was and you can tweak it for the future to make each upcoming campaign even more successful.

Make sense?

Part of this means that you have to ensure that all of your customer touch-point systems work fluidly together.  In other words, if you are driving prospects to your website and to your call center, make sure that you have the analytical tools in place to track that campaign from both places.  This way, when you roll up your results, you can get a true, overall picture of the campaign effectiveness.  In addition, it allows you to measure another piece — which direct marketing channel performed better at getting customers to convert — was it your website or your call center?

As promised in our last post, here are a few more analytical marketing ideas that will help all Marketers be successful — no matter what the economic climate.

Here’s the next idea: Get everybody involved. Lots of times, Marketing is accused of operating in a vacuum, not being in touch with sales or corporate objectives. Hence, budgets get cut and marketing resources have to begin to fight for their jobs.

In times like this, plan some meetings — some real meetings.  Schedule time to get an accurate view from your CEO, from IT, from Sales — get their ideas on how they measure marketing effectiveness. They can give you some great ideas as to what metrics they believe need to be put in place. Better yet, align your measurements so that you are all working towards the same or complimentary goals. One of the reasons that Marketing gets a bad rap is because the goals across divisions are not aligned correctly. Thus, one division’s objectives may be in absolute conflict with Marketings objectives. This is not going to result in happy campers in the different divisions.  What it might result in is missed objectives . . . resulting in cut budgets . . . resulting in fewer resources.  You get the idea.

So, go talk to your corporate Leaders. Get a good understanding of their specific corporate objectives and make sure that marketing’s goals and metrics align as exactly as possible with corporate goals.

Next meet with Sales — here is where the most conflict may come from . . . have you ever heard this? “These leads suck!” Yep, in marketing we all have heard this.  And, this is what Sales hears from Marketing: “Sales can’t close any of our leads to save their lives!” Not an environment conducive to success.  Perhaps its just that Marketing and Sales needs to sit down and discuss each other’s objectives. Then, they need to revise those objectives so that they are very closely aligned.  This way, Marketing can go acquire the data that will facilitate sales success in reaching their objectives.

In addition, Sales can provide Marketing with their bird’s eye view of the customer.  Then, Marketing can share with Sales what their customer profile studies have told them. Armed with more complete information, they can better target their customer base, create better messaging that will more likely resonate with their customers, and find the most responsive, targeted prospects for sales to call on.

Who ever thought it would all come down to being able to communicate?  And whoever thought communication would be called analysis?  Well, it isn’t — but an analytical approach can certainly help to facilitate better communication!

Stay tuned to the next post for our final word on this subject!

We talk a lot about using an analytical approach in your direct marketing efforts.  And, it’s only because we are passionate about it!  We know that by using statistics and sound business knowledge, you can become an effective direct marketing machine.  Better yet, you can add profitability to your company’s bottom line — and you can prove your contribution.

We wanted to bring up another way that you can utilize an analytical approach.  In a faltering economy, you can use analytics to measure if what you are doing today still makes sense — and how you should be planning for the future.

We’ll present a couple of ideas on today’s post and continue to give you more food for thought as the week wears on.

First, take a solid look at your current marketing plan and how well it is lined up with what your company is attempting to accomplish — i.e., your company goals.  Traditionally, we set up our marketing objectives and then re-visit them at year-end.  Right now, that probably isn’t going to cut it.  You may want to consider performing an analysis of how you are currently quantifying your objectives and how those objectives are assisting your overall company bottom line.  As part of the analysis, take a close look at what you are currently measuring and why?  Does it still make sense?  What you may determine is that you need to add in other elements to track and measure — or that some of the things that you are measuring today are no longer relevant to your business.

A second key area where your analytical approach will really help you is in looking at your internal data stores.  We’ve performed data assessments for some of our clients and let us tell you . . . it is an excellent exercise.  Take stock of what data you are collecting today and what is missing.  Also, take a look at the data that you purchase.  We’ve found in more cases than not, that large organizations sometimes don’t have a good handle on all of the data purchases.  This results in lots of data being purchased — some of it redundant — and at a price-point much higher than if it was comprehensively purchased for the organization as a whole.   This analytical exercise also will give you a succinct idea of where your data is located between and across divisions company-wide.

Look for more of our economy-friendly analytical ideas coming right up!

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.

We’ve done a lot of talking about how to implement an analytical approach into your direct marketing strategy . . . but what about mobile marketing? Yesterday, we posted on our Direct Marketing blog about the increasing importance of Mobile Marketing — and how it will continue to grow over the next few years (to an estimated $19 Billion by 2012).

Well, to build on that theme, in a recent Businesswire article it is reported that mobile marketers have already jumped on the analytical bandwagon.  In fact, the article reports on Bango Analytics, who provides a hosted service that allows mobile marketers everywhere to connect their sites to Bango’s analytical service to receive results — who’s responding, how long are they on the site, where are they clicking, etc — for free and in minutes. Very forward-thinking!

Bango has published some of their results on click through and conversion rates from these mobile advertising campaigns. “Banner and text ads on mobile websites typically have a click through rate of 2-8% with a conversion rate of 2-5% which can be as high as 12% on some networks.” So, very high conversion rates! In addition, Bango’s data “clearly shows that when the offer is closely aligned to the needs of a particular consumer profile, click-through and conversion rates increase, often doubling.” For those of you who have been reading our blog for a while now, you know that we truly believe in the power of the customer profile. Here, again it is proven to increase conversion rates on mobile marketing campaigns. The bottom line here? You’ve got to really understand and define your customer base. With these types of response rates, it is crazy not to go through the customer profile exercise.

The other thing to consider about the use of this free analytical service, is that mobile site owners can easily determine the characteristics of those most receptive to their marketing message. According to the article, “This information is then used to focus marketing campaigns on the countries, networks and handsets which return the highest conversion rates.”

Kudos to Bango for being savvy enough to offer this service to their customers — this is using intelligent marketing at it’s best. Bango benefits by gaining more clients, and by offering this value-added service, their clients benefit by marketing more specifically to those prospects who will be most highly likely to respond and convert. This is a true win-win scenario!

I recently attended a trade show — it was a traditional direct marketing event at its best.  It catered to printers, lettershops and data firms — as well as those industries that supported them.  I cruised around the exhibition hall chanting my analytical mantra to those folks who would hear it.  Actually, it turned out to be a great experience for me because there were some firms there who are very open — and see the value of — integrating an analytical approach into their direct marketing strategy.

Interestingly enough, the folks who seemed most open to my message were firms that specialized in marketing data.  And of those firms, those who really understood the power of targeting through analytics got most excited about potentially partnering with our company.

This is an important concept in a sluggish economy.  You must really understand your customers so that you can keep them loyal, while acquiring new ones at the same time.  What makes them your customers?  What do they look like demographically or from a lifestyles perspective?  What are their likes and dislikes?  Do they have children?  How much money do they make?

If you can answer these questions, you’ll be well on your way to understanding how better to market to your customers, and how to target those prospects that most resemble them for the greatest DM success.

Here’s another case to consider.  CNN Online News has recently reported that Rugs Direct has partnered with Omniture to “gain increased understanding of consumer trends and behaviors associated with the company’s Web site content, promotions and merchandising strategies.”  Rugs Direct is one of the countries largest providers of area rugs.  According to Rugs Direct President, Randy Kremer, “From personalized products to exclusive merchandise, we use our online channel to drive a significant portion of our sales. It’s important that we understand how to effectively acquire new customers, present them with relevant offers and achieve the highest levels of customer satisfaction. Omniture promises to provide us with online marketing and search technologies as well as significant retail consulting expertise — augmenting our in-house marketing team to execute on targeted campaigns and gain increased ROI.”

See . . . it doesn’t matter if you’re marketing online, offline or both.  Here is an example of a perfect partnership.  Rugs Direct knew exactly what was missing in their marketing plan, and Omniture provided them with the technology to better understand their valuable customers.  They provided Rugs Direct with analytical support in addition to the search technologies to better hone in and attract new customers.  The end result?  More profitability!

Hence, my mantra.  Whether you’re attending a traditional direct marketing tradeshow or working with a savvy, online e-tailer companies are getting it.  It is no longer even thinkable to blanket the marketplace with your message.  We must make those we are targeting want to do business with us because of our relevant, interesting and targeted offers.  Using an analytical approach will help you structure the strategy that will get you there.  Doing this will ensure that you will be a successful marketer — regardless of the state of the economy.

Long live intelligent direct marketing!

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.