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Analysis versus Good, Old-Fashioned Creative Gut Feeling

I really enjoyed a recent post I found on the Precision Marketing online magazine.  Jenny Hoffbrand  discusses Ian Ayres new book called Super Crunchers and a quote from the book that really summarizes the value of using analytics in the business, as opposed to relying on your “intuition” or gut-feeling: “Intuition and experiential expertise is losing out time and time again to number crunching. Businesses and governments are relying more and more on databases to guide their decisions.”

The post goes on to talk about Ayres recent keynote speech at the recent SPSS Directions Conference in Athens, Greece.  “Ayres used his platform at the conference to endorse the advancements being made in the field of predictive analytics and encouraged brand owners to use their data to determine the most suitable strategies for their marketing campaigns.”

Oftentimes, we see really savvy direct marketers get so tied up in the day-to-day that they forget the value of predictive analytics.  And, they go immediately to their gut feelings on what population to use in the upcoming direct mail campaign or what a certain segment consists of when they create their messaging.

And, time and time again, we see this “intuitive approach” fail.  Let’s face it — the smartest direct marketer in the world is probably not psychic.  We’ve seen very few direct marketers (actually none) who possess the ability to wave their hand over the server that houses their marketing database and pull out an “Ah — 45-65 years old, incomes of $100K+, with 1.3 children per household.”

I’m not bashing the customer intelligence that direct marketers obviously accrue over time, I’m simply emphasizing Ayres argument — that is when you dig into the data and analyze it scientifically you end up with a really robust — and highly accurate — idea of who your customers are, what segments may exist, who may be most responsive to your offerings, etc.

On the other hand, analytics isn’t all about number crunching either.  It’s about using the statistics to better mine the data, then using your business intelligence to look at the output and come to meaningful conclusions and recommendations on how to better conduct your direct marketing efforts.

That’s why there will always be a need for the creative process in direct marketing.  As Philip Keevill, creative director at Kitcatt Nohr Alexander Shaw, states: “If you get rid of intuition, you get rid of emotion. You can’t predict emotion with a machine.”

We agree with Hoffbrand . . . the two should be used together to create the best direct marketing strategy.

June 5, 2008 at 10:05 pm 8 comments

The Right Time for Marketing Analytics

You know that we’re firm believers in using analytics for more effective direct marketing.  More folks are becoming believers along with us these days.  Why?  Because you’ve got to be able to measure the effectiveness of your direct marketing efforts.  Part of this is due to the increased scrutiny of marketing budgets but, I think, it’s more due to our evolution as marketers.  Let’s face it, if we can’t prove that what we’re doing works, sooner or later a change will come — and it may not be positive.

I’ve been reading a lot of articles on this topic, and today I found one that really resonated with me.  It’s by Neil Mason of ClickZ Network.  In his article, “Why the Planets are Aligned for Analytics,” Neil gives us his post-analysis of the recent eMetrics Marketing Optimization Summit in San Francisco:

The stage was set on the first day with a keynote presentation from author Tom Davenport on Competing with Analytics. “The planets are aligned for analytics,” he said, meaning that all the necessary components for organizations to adopt and deploy analytical capabilities are being put in place. Those components are: data, enterprise, leadership, targets, and analysts.

“Using analysis is good, competing on analysis is better,” summed up the need to be able to move from insight to action. There’s no point knowing stuff if you don’t do anything about it. He described the five stages of an organization’s analytics capability from being “analytical impaired” at the low end of the scale to being “analytical competitors” at the other end. Organizations, such as Harrah’s and Marriott in the U.S. and Tesco in the U.K., deploy analytics as a source of competitive advantage.

Every time we’ve worked with an organization who embraces our analytical approach, we’ve had astounding success.  On the other hand, when working with harried direct marketers who don’t take the time to close the loop with analytics, we’ve seen something very different occur . . . folks running around like chickens with their heads cut off being very reactive as opposed to proactive.

We preach the gospel according to analytics to each and every one of our valued clients.  And, we continue to be relentless on this topic because we have seen so much success from utilizing an analytical approach.  We’ll make them all converts yet!

Have a great week!

June 2, 2008 at 5:51 pm Leave a comment

Effective E-Marketing Segmentation

Marketing Sherpa recently published this excellent case study on utilizing segmentation in e-marketing campaigns to grow lists and lift response rates — and all this in a time of economic downturn!

SUMMARY
An e-retailer has been using gender- and store-specific email promotions to lift revenue and grow their customer mailing list.

CHALLENGE
With consumers tightening their spending habits, many email marketers will be happy to see any kind of sales increase this year. James Connell, Senior Director for Ecommerce, Digital Marketing & New Media, Roots, a Canadian-based clothing multichannel retailer, realized late last year that his company might be affected, too. That’s why he and his team decided it was a perfect time to boost the relevancy of their emails.

“We needed to do a much better job of driving people to something that’s relevant,” Connell says. “I had been signing up for our competitors’ emails, and I had been getting mostly messages that didn’t apply to me. That was educational.”

Connell saw more relevancy as a competitive advantage their brand could pounce on. And with response rates dropping and consumer spending falling, he wanted to test some new ideas to optimize their email program.

Connell and his team were already following best practices on privacy and deliverability, but they were essentially sending the same offer to their whole email list over and over again. They knew the next step should be list segmentation … and time was of the essence because of the gloomy economic forecast.

CAMPAIGN
First, Connell began by identifying some key areas where they could improve email relevancy.

Three areas:
o Targeting women and men with gender-specific offers
o Segmenting email lists even further based on their 128 store locations
o Identifying which days of the week were best for email by testing *every* day — not just the industry-proven midweek days

Here are the five major tactics Connell and his team followed:

Tactic #1. Segment customer list by store location and gender
To deliver more targeted messages, Connell organized their list names into separate files according to store locations. They took the ZIP Code attached to each name from past online purchases and then assigned it to the closest store.

Then, he and his team divided the customer list even further into separate files for men and women. They manually went through their customer list to make the new files. For customers without distinctly male or female first names and purchase patterns, they created another file they labeled “undetermined.”

Tactic #2. Identify ‘un-determineds’
They didn’t stop with simply segmenting their customer list. Every ‘un-determined’ name was emailed a survey to get seven data points:
o Name
o Gender
o State/province
o Last purchase date at Roots.com
o Last purchase date in a Roots factory outlet store
o Favorite department
o If they were interested in Roots’ yoga department

The survey of “un-determineds” allowed Connell and his team to further segment their customer files by gender and their 124 Canadian and 4 US stores.

Tactic #3. Promote sign-ups at each store
The survey process also involved creating email sign-up forms for each store. New customers were offered the chance to win various prizes if they signed up. Store managers turned the names into Connell and his team by shop and city location.

Tactic #4. Create segmented offers
In the end, customers received both store- and gender-specific offers that involved printing out an email coupon (usually a discount on an item) to take to the nearby outlet.

  • The copy pointed out that the offer was good not only online but also at their local Roots store.
  • The address and a directions link were included to encourage redemption at the stores.

If a customer walked into the store without the email coupon but still mentioned the promotion, the stores gave them the same discount. Each store manager was responsible for reporting the number of redemptions back to Connell by phone or email after the promotion expired. There was no digitally computable coupon code.

Customers who were not within driving distance of the stores did not receive these offers. They were put into a separate online-only customer file. They received gender-specific offers that were designed to purely drive online sales.

Tactic #5. Test emailing *every* day of the week
Connell didn’t want to leave any money on the table by taking for granted the industry’s almost de facto ‘best days’ [Monday through Thursday] for emails. So, they tested every day of the week, including Saturday and Sunday.

RESULTS

Connell has no doubt that the segmentation tactics have increased the relevancy of the clothier’s email campaigns. At the same time, email-based sales have increased by 14% compared to the same period the year before.

“We’re happy to be getting a lift in these difficult economical times and expect the percent to continue to grow as we do more segmentation. We are seeing higher opens, click-throughs and better ROI. And because of the increased relevance, our emails get forwarded more often and we are increasing our subscriber base.”

Connell and his team grew their subscriber base by 22% during the first six weeks of the campaign with the in-store email component. “About half the stores have participated in the email promotions so far, and that number is increasing.”

They also saw “a steady 40%” completion rate of the surveys sent to clarify a customer’s gender and local store and they’ve been getting a 15% redemption rate for the email-exclusive offers as reported by the store managers.

Giving discounts to people who mentioned the email offer — without proof that they received an email — also appears to have been the right move. “We encourage email sign-ups in the store, so it makes sense to accept the promotions in that setting to help create more of a multi-channel identity.”

Connell couldn’t offer specific numbers on the best days for emails. But he says Tuesday and Wednesday proved to be their best send days. Still, team members were intrigued by the numbers they received on the Sunday tests.

“We are seeing surprisingly high click-throughs on Sunday emails. There’s a lag time in sends for that day where people open up and click on Monday and even Tuesday. With the click-throughs you see midweek, they happen very quickly or they don’t happen at all.”

May 9, 2008 at 10:40 pm 1 comment

Use Personalization with Marketing Analytics to Increase ROI

It’s no secret that in this down economy direct marketers are continuing to find themselves under more and more pressure to do more with less — while at the same time continuing to deliver better results.

Recently, we were talking with a colleague about using more personalized communications when marketing to customers and prospects.  Our colleague, Michael Hurley, works for Imago Digital.  They use personalized marketing — and several forms of it — on their most successful direct marketing campaigns that they create for their clients.  It turns out that this is an excellent idea — you should see some of their response and conversion rates on these personalized campaigns.  They are through the roof when compared to traditional direct mail campaigns.

You may ask “why all the hub-bub on personalized communications?”  Well, to nobody’s surprise, personalized marketing is very customer-focused.  And, being customer-focused works!  In fact, there are many case studies that present success stories when utilizing personalized messaging.  The results of these studies are tied to huge increases in ROI on direct marketing campaigns.

We recommend taking this success to the next level by combining personalization with marketing analytics. And why not combine personalization with known attributes about your customers or prospects?  Doing so can grab hold of the recipient’s attention by communicating the most relevant message to the right groups of people.

There are a couple of ways to accomplish this. First, start out by profiling your customers to better understand what attributes that they possess that make them your customers.  You’ll end up with a good idea of exactly what your buyers look like.  Once you’ve accomplished this for your customers, look at a representative sample of folks who aren’t yet your customers and determine which of them look most like your buyers.  By targeting those prospects that most closely resemble your customers, you’ll be increasing your chances of turning prospects into customers.

Next, you can segment your customer universe to hone in on those groups that share certain characteristics, then design your messages to speak to those characteristics.  As seen in our previous post on creating effective segmentation plans, it’s amazing how effectively you can “speak” to your customers when you better understand who they are financially, ethnically, psychographically, etc.

So, as you are planning future campaigns, think about using personalization along with marketing analytics to really increase your results.  Over time, you’ll notice the profitability of your marketing efforts increasing, along with the products sold and lifetime value of your customer base.  This is a winning scenario that we promise will make you more successful!

May 5, 2008 at 11:16 pm 3 comments

Using Analytics to Unlock the Power of Your Customer Data

One of our pet peeves is unorganized, dirty customer data.  I know — we must lead very sad lives for this to be the case.

However, here’s the scenario we find again and again.  We’re helping a client plan their direct marketing strategy.  We ask them for a sample of their customer data.  We find that it is in such a terrible state of disarray that no one can make heads nor tails of it . . . arghhh!  Or, worse, they have a difficult time finding the actual “owner” of the database.  It can get messy!  But out of disarray comes opportunity — it’s the whole making lemonade out of lemons thing.

I’ve seen many articles lately stating that companies just aren’t getting the most from their customer data.  And, we’ve seen this to be quite true.  And most of the time it’s because of unorganized data.  However, the beauty of a dirty database is that there is such a wealth of opportunity waiting to be unlocked if you bring in an analytic approach.  And, you can start by mining your customer database and uncovering all of the elements that make your customers your customers. Data mining gives you the power to market to your customers more effectively — appealing to their needs and ultimately getting them to respond and buy.

Starting out with data exploration, you’ll begin to see common themes emerge that you never knew existed.  Mining your customer data provides you with the intelligence to set your direct marketing strategy, and really make your products and services appeal to your customers, which in turn, creates a stronger relationship with them.

So, the next time you think that your database is a mess and that you can’t get IT to give you the information that you need in order to conduct your direct marketing campaigns effectively, bring in the data miners.  Unleash them on your data (give us a call — it makes us happy to do this stuff!) and let them help you realize the gold nuggets that have been locked away in your customer database.  We promise that data mining will pay dividends in terms of customer loyalty and response.

April 24, 2008 at 11:45 pm 1 comment

Performance-Based Marketing

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.

April 21, 2008 at 9:51 pm Leave a comment

Adding an Analytical Approach to your Direct Marketing Strategy

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.

April 18, 2008 at 12:18 am Leave a comment

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