Click Rate

Over the past few weeks we have encouraged companies to make nine improvements to their email marketing efforts. Leverage the previous nine improvements, keep adding customer, behavior, purchase and product information on a daily basis with an automated customer data engine, and you will achieve our tenth improvement: Targeting.

 

If your email campaign is obsessed with relevant targeting, not only are you most likely committing the cardinal sin of “blasting,” you’re also behind the curve. You’re not competing effectively. A recent survey from email marketing provider AWeber shows that behavioral targeting dramatically increases email key performance indicators. By specifically targeting email campaigns toward subscribers who have taken an action (opened a particular email, clicked on a link, made a prior purchase), nearly 50 percent of respondents indicated that behavioral targeting increases their conversion rates either significantly or moderately. An overwhelming majority of respondents (71.4 percent) plan to increase their focus on behavioral targeting in their email campaigns over the next year. So avoid this marketing opportunity at your competitive risk.

 

Targeting is the sum total of the right email effort. If you are focused on the most relevant message to your customers, if you know the value of your customers, and if you are focused on each customer’s own unique lifecycle, you stand a very good chance of targeting them appropriately. You will avoid “nag marketing” that, when looked at from the customer’s perspective is seen as “Did you buy? Are you ready to buy now? You didn’t buy just now, so are you ready to buy now?”  Your marketing will be more like that of the personal trainer we mentioned in earlier that customizes a training program depending on an individual customer’s needs instead of being generic and telling everyone to go run a marathon on a broken leg. Most likely your customers will not follow-through on your suggestion.

 

 

 

 

In our last post on email marketing for retailers we talked about the commitment to a meaningful customer value exchange. That means your brand is going beyond asking a customer to join your list to receive “special offers” which are given to everyone, which can easily be done via in-store signage announcing the same offer. The exchange entails the customer providing you with their email and you, the brand, committing to give them something of real value, such as access to a limited product offering that the public does not have. Now the opted-in customer feels special, feels happy, feels like they have done the right thing. Brands need to use email to continually make the customer feel special, and not like just another email address receiving just another email blast.

 

A brand that has a customer strategy in place, supported by an articulated customer value exchange, needs to use these to grow and retain their customers. This is done by establishing a customer’s baseline behavior, setting their lifecycle direction and then measuring action and success. Blind investment into providing a customer value will make them happy, but this approach does not work if it loses the brand money. A brand that lacks an understanding of their customers must establish a set of baseline behaviors that will tell us what they do today. When we know this, we then need to use this to determine what we want them to do next. This is what we call their lifecycle direction.

 

Here’s what I mean. Suppose a casual food restaurant has a successful bar and dining business that they wish to continue to grow. They can market to their customers by blasting via all channels with a message like “come in more!” yet this will not really be meaningful to anyone, nor will it be effective. Using email well, the brand can target and measure based on a customer’s behavior and their expressed opinion. 

 

The baseline behavior can be established by measuring response to email as a whole, by the specific offers clicked on and downloaded, and by actual follow-through usage of the offers. (Note, usage can be measured via integration with the POS and payment system, yet it can also be done with collection and tabulation of paper based offers.) This will enable a breakdown of customers by their behavior; the below graph shows a simple example illustration of this:

 

100K Customers	Light	Medium	Heavy
Bar (60%)	40K	15K	5K
Dining (40%)	15K	13K	12K

 

In this example a Heavy customer is more valuable than a Medium customer, who is more valuable than a Light. Bar customers are less valuable than Dining and their behavior and product make-up are quite different. 

 

Now that we have this baseline behavior understanding of our customers, what do we do? What is the next best offer that we should give them? What is their appropriate lifecycle direction? We would like for all our customers to immediately become heavy dining customers, but this not practical in that it is too big of a change for most. A customer’s migration through their lifecycle is typically made up of numerous stages, each being a small change or step forward vs. a large leap. The lifecycle direction plan for our casual food restaurant example could start a positive migration in visit frequency (light to medium) being easier, and visit type (bar to dining) being harder.

 

Within this framework there are numerous variables, such as time of day, day of week, number of people in party, etc., yet the goal is to grow incremental behavior and, once a new level has been reached to maintain it going forward. Obviously there will be ebbs and flows in behavior, but now we have a means of generating insight, testing offers, targeting our marketing efforts and measuring the results and effectiveness. 

 

Email is a critical component within this plan. It is fast, flexible, targetable and measurable. We can use it to help establish our baseline behavior and to migrate our customers along their lifecycle direction, using a mix of primary, and secondary offers along with articulating the relevant value exchange. Anything else is a monologue when it's a customer dialogue that counts. 

 

 

Seems like just when companies get used to a technology and a customer strategy to apply it to, everything changes. But as always there’s customer opportunity in what seems to be a technology chaos. It is with this spirit that companies need to approach the busy intersection of email and social media.

Customers are opening email, forwarding email, and posting about the content on social networks. As we’ve written about before, email is amplified. Now we see data to back it up. Technology has amplified email. In fact email messages that include options to share content on social media sites drive significant increases in click-throughs according to a new study released today by GetResponse, an email marketing firm.

Specifically, the company’s study of 500 million e-mails sent using the service found that emails that included options like share on Facebook or Twitter generated a 30% higher click-through rate than emails without them. Moreover, when e-mails included at least three different sharing options, publishers experienced a 55% higher CTR on average.

Despite these findings, GetResponse reports that only 11.2% of emails actually offer three or more sharing options. That’s up a bit from stats published last year on the same subject, but still low considering what are becoming increasingly clear benefits of social media integration.

As we have written about on this blog recently, it’s time for companies to consider the amplification effect and take advantage of it. We’ve partnered with a company called hearforward to develop a tool to accomplish, measure, and manage email amplification. Expect to read more about it in the near future.

 

In my last post I discussed the need for an overarching customer strategy. In order to even think about an email campaign, companies must have a defined approach to how they plan to extedn the customer experience in order to get, keep and grow customers.

Communication from the brand is very much a part of the customer experience. It needs to be an extension driven by following the details of the customer strategy. Companies need to know what they’re trying to do, why they’re trying to do it, and how it translates into tactics.

After defining that customer strategy, I think companies need to drastically improve their understanding of the customer lifecycle. All customers are not the same. If you’re a fashion retailer you have the high-end occasional shopper who is distinctly different from the working mom who refreshed her wardrobe every spring and fall. If you’re a casual dining chain you have the happy hour customer who eats, shoots, and leaves by six. This customer is light years away from the Saturday night date customer that comes early for drinks, drops a lot of money on a complete dinner with wine, and then finishes up with a cocktail. An email campaign can influence each different customer group, extending their existing behavior. But the question a company needs to ask is this: Where are you taking them and what are the steps along the way?

This should tie to the overall strategy and move customers from their current behavior to a point where they can be termed a “Best Customer.” Best customer is not defined by open rate and click rate. Best customer is defined by behavior. Email campaigns have to guide customers on that road. And its not the kind of journey marked by “are we there yet?” kind of nagging. Customers don’t buy everything. But they can be influenced on their journey toward fulfilling their potential of buying what they are most likely to want and need.

Example: Let’s go back to that couple at the casual dining chain for a weekend date. If that chain has a database with that customer’s behavior with the ability to analyze what it looks like over time, and if it has data on enough “look alike” customers, it can determine what that customer can be encouraged to most likely do next. Maybe the customer can be encouraged to bring friends next time. Or maybe an email campaign can simply extend a thank you to encourage repeat visits. “We want to be your date spot every time.” But it will alienate that customer if the wrong destination or next action is communicated. Having an off-target offer occasionally is not enough to drive them away, yet doing it regularly will. For example, An email campaign offering discounts is not necessary, because they’re spending money. An offer that encourages you to “bring the family” is probably irrelevant if this customer is dating.

Companies have to know. Guessing is not an acceptable approach for email campaigns. Your marketing department that is responsible for the customer email communications should Ask what that customer can should do next, and should be asked to get them there. The email is not the end goal. It should be a provocative, targeted catalyst to drive your customers to remain engaged and act again.

Talk about a dichotomy. On one side of the customer strategy we espouse at Customer Portfolios, we want clients to get as close as possible to the nirvana of true one-to-one marketing. Your marketing campaign’s message, timing and relevance should be as customized as possible for each customer. But on the other side of that coin, we’re in a business climate in which social networks have conditioned those customers to spread the word, even if that word was specifically designed for them. We start with one-to-one and the customers make it one to many. Even if it’s a simple email.

It’s an element of uncontrolled marketing, but it also provides an opportunity. I call it the “brand amplification effect.” There is a way to plan for it. Look at your company in search results, social networks, and product review sites and you will see the chatter and link sharing that amplifies your original branding and marketing campaign. A few companies have developed specific solutions to try to add some planning and order to the situation. ExactTarget, in collaboration with ShareThis, provides a new way to engage with email subscribers. It enables subscribers to instantly share emails to their entire network of contacts with the click of a button. By using tools like this companies can understand the impact of social networking in the context of your overall marketing efforts. You can also quantify the results of your social marketing efforts and get actionable data to drive future marketing efforts. It also connects social media sharing activity and profile information with the email data mart to execute programs based on a holistic subscriber profile. 

We have our own take on the amplification effect. Customer Portfolios has partnered with hearforward to facilitate rapid integration of social media. If you haven’t heard of hearforward you will. It’s a pure-play social media firm focused on integrated analytics and is designed specifically to provide greater context for email marketing efforts and drive improvements in retention and engagement. It allows you to understand where the email and its message has been amplified through real-time data from thousands of sources including Twitter, Facebook, blogs, forums, news and video sites. It can reduce attrition by leveraging next-generation lights-out marketing programs and at the bottom line it measures, tests, and improves the viral distance of email communications.

I think many companies want to attack social media first. But that beast is hard to manage. All companies can do is plant the seeds for good social networking feedback by having an excellent customer experience and relevant communications. Email is easier to attack. What we need to measure is its effect. That effect is much louder than it used to be. The sound of one-to-one is now the sound of one-to-many. Companies need to listen.

On the surface it seems so manageable and straightforward. After all, BtoB marketing lists are certainly smaller than BtoC lists. The customer segments are fewer and it would seem that the opportunities for true one-to-one marketing are many. But BtoB marketing comes with some serious pitfalls. They are different than those presented by BtoC but nonetheless challenging.

I see three specific challenges that marketers will have to deal with in order to make BtoB marketing an effort that will yield real results in the form of lead creation and marketing ROI. 

Complexity of Transactions: BtoB is rarely a simple transaction. One to one consumer marketing is born out of the retail, direct to consumer world. In the pre-Internet days the biggest challenges associated with getting a direct marketing program off the ground was getting the data assembled, cleaned and standardized and pushed to a mailing house on time. As the process developed over the decades, this process became more commonly known as the Extract, Transfer, Load (ETL) process. At the end of the process, media would go out via postal service or phone and finally email. If all went according to plan, orders would come in through any one of the retail sales channels: store, customer service call center and finally Web. But BtoB companies are often selling complicated and more abstract things like “contracts” or “policies,” many products bundled together like chemicals or construction materials, or an even more abstract service. Typically, you want to have your marketing efforts driven by purchasing behavior and complex products and services make targeting those behaviors more difficult.

The introduction of the “organization” into the database adds a new dimension to the data, and a level of complexity. B2C data is relatively easy. The customer has a name, billing and shipping addresses, and a credit card number, with data integrity enforced in the transactional web environment or through a loyalty program where you can tie a card number or coupon back to the same individual each time. But in the BtoB world, you are selling to organizations rather than people. There is inevitably a many-to-many relationship between an organization record and a contact and resolving this not a simple matter. Add to this the layers of hierarchy in a company, divisions, acquisitions, satellite offices, home offices etc. and determining what contacts and addresses can be bundled together into a single sales opportunity is a formidable problem.

Measuring ROI is difficult under ideal conditions and in B2B can actually be contentious. In the B2C environment, there are opportunities for “explicit” measurement. Send an email, click on the email, place an order. This pattern is easy to track and search for in the B2C database and it is easy to create a link between the marketing effort and the result. In the B2B environment ROI has to be measured “implicitly” by guessing causality between outbound communications and a subsequent purchase. This is complicated by the fact the sale is closed by a sales team way downstream and potentially weeks or months from the initial marketing effort. Although many companies are working to close the ROI gap, it’s still an issue. B2B marketers need clear goals and clear outcomes before executing a plan and an agreed upon method for measuring success.  

The conventional wisdom is that anything a marketing team can do in the B2C world will translate to the multi-channel B2C environment, and possibly even be easier considering the smaller data volumes. That’s the myth. In reality, the challenges mentioned above are common stumbling blocks to launching a successful B2B marketing effort. The good news is none of these problems are deal breakers. A well designed and thought out process for managing these types of complexities can lead to profitable marketing programs.  

 

With the economy still sorting itself out and the post-holiday period giving a chance to review 2009, I suppose it would easy for retailers, restaurants or any business to put customers in two segments. Those two segments: buyers and non-buyers. But retailing is never that simple and segmentation has never been more important.

We’ve been among those evangelizing segmentation for years. The more mainstream analytics business has caught up to the science of segmentation particularly behavioral segmentation.  Best-selling books such as Predictably Irrational  (Arielly, 2008) and Nudge  (Sunstein, 2008) detail the nuances of individuals’ behavior through the use of careful, controlled studies. Findings frequently run counter to popular understanding, and researchers in this space are uncovering a wealth of opportunities for understanding consumer behavior.  A recent article in TIME magazine recounts the team of behavioralists leveraged by the successful Obama campaign, and the likely implications of the behavioral revolution in American politics (Grunwald, 2009).

Behavioral segmentation seeks to identify discrete groups of people based on actual behavior.  To accomplish this, databases are often used to track and record customer behavior.  One of the most common ways that customer behavior is collected is through the use of loyalty programs.  Other ways that customer behavior can be tracked include responses to email campaigns, direct mail campaigns, or website activity through a website that requires its users to register in order to access content.

All of these data capture mechanisms provide insight into actual customer behavior, including but not limited to:

·         the products that a customer has purchased

·         the frequency with which a customer visits a store or website

·         the type of content a customer has accessed on a website

·         the average amount of a given customer’s transaction,

·         the number of emails that a customer has opened or clicked

·         direct mail pieces that a customer has responded to

Often, the sheer volume of behavioral data can be overwhelming.  A single table designed to record the history of email sends may easily result in hundreds of millions of records for medium to large list sizes. Some results from behavior-based loyalty will be easy to see. Incremental spending and profit cultivated from the targeted customer groups will grow. ROI for the overall loyalty program will spike with more efficient spending. Customers will become more engaged across all channels and more responsive to targeted offers. Companies can also expect some welcome unforeseen  consequences beyond these more predictable ones.

1)       Database growth: The overall size of a company’s database will grow if behavior-based loyalty is embraced. This will be rooted in a commitment to enticing the right customers to engage with the company and enroll in an exciting rather than predictable program. It will grow in strength from the continued interaction that customers have with your program, continuing to leave tracks of their purchase behaviors and evidence of their attitudes and emotions. Emotional connection with behavior-based loyalty will simply be stronger and the database will gain quality as a result.

2)       Segment strength: Because behavior-based loyalty starts from the standpoint of changing the behavior of a specific group, the company owns that knowledge. It knows how to get a specific segment to move their behavior and then move the needle on sales. “It’s not realistic to expect that you can move an entire customer base,” says MacCurrach. “But you can move the right segment of that customer base with the right knowledge and the right reward scheme.”

3)       Trackable programs: A company doesn’t have to guess about a loyalty program if behavior is at the center. It can use the knowledge gained to answer definitively questions such as did this offer work? Did the reward work? Did the customer respond with incremental behavior?

4)       Create buzz: It’s always one step tougher to predict and measure the word of mouth value created by a loyalty program, but it much more likely that customers and the press will advocate a program that surprises them rather than one that rewards them predictably.

Most importantly retailers in most every vertical need to embrace behavioral based loyalty to move from “I think I know my customer” to “I know my customer.” Knowing your customers is an essential competitive advantage. Knowing what will make them more profitable through a surprise and delight strategy is the next level of customer knowledge and the true cutting edge of customer loyalty. Without it a company runs the risk of being just another number among the 701 million retail industry loyalty programs. By employing it, retailers have a shot at making loyalty programs work for their customers and for a neglected part of their interests – the bottom line.