Lifecycle Marketing

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.

So is email marketing. All the companies we deal with have a pretty good level of learned confidence in key areas. They have confidence in their people and product. But they lack confidence in their customers and that confidence can only come from key learning’s about your customers and then applying that learning to email campaigns. In short: Determine what you need to learn per the overall strategy that we’ve been discussing over the past two weeks here on our blog, and sync it with the customer lifecycle.

Here’s what you need to accomplish key customer learnings for an improved emails campaigns:

• Go beyond the basics: Every company gets the basics of name, address, and maybe even birthdays. But if you go beyond it you can implement the kind of surprise and delight tactics we discussed on our last segment that make email campaigns fun for your customers. Find out things about them that can be tied to their relationship with your brand, like their favorite holiday, book, musician, and even their hometown. This information opens up a lot of information that can be used to customize future campaigns. 

• Get preferences: This is very important in many areas of marketing, but critical in email marketing. Suppose a catalog apparel marketer is getting ready to redesign its website. They need to know the preferences of all their customers to know how often they want to receive emails inviting them to go that new site, and it will also need to know whether they still want to get that print version of the catalog that has been the foundations of its business. 

• Value Future Behaviors: Incentivize the customer via a solid value exchange to provide you information about their behavior (Lifecycle) and use this information to be relevant (targeting.) This doesn’t require a million dollar budget.  It can be done with integrated, closed-loop marketing. It can also be done with cleaver, bootstrap promotional marketing. It can even be done with a simple Thank You letter.

Remember that email is a process not an event. It is a relationship rather than a one-off conversion attempt. Learning as much about your customer as possible will give you the confidence necessary to go the whole round of 18 holes and end up in the lead vs. behind your competition.

The single view should enable analytics for the purpose of marketing. The focus of those analytics should always be our customer. Now, we all know that I am not like you and you are not like the person sitting next to you and so on. The analysis will show us how different we are. Yes, there are demographic differences and psychographic nuances, yet what really matters to your business is behavior. My behavior may be motivated by discounts (frugal Yankee) and you may be driven by quality (you want the best.) Knowing where a customer is along that specific lifecycle will also impact what they buy. If I’ve made 10 purchases and that person sitting next to you is another frugal Yankee, and they’ve only just made their first purchase, then we will most likely purchase something similar, yet different. The single view and the analysis will provide the strategic insight that can be translated down to actual tactics.

This insight gained from preference, lifecycle and actual behavior will also help to show which channel is optimum for marketing. Because of the price, we are tempted to use email for all customers, all the time. Sure, every campaign will generate an average level of incremental sales, while causing only “some customers” to opt-out. But that is a shortsighted and in the end economically inefficient way to view email for catalog marketing. Every customer that has engaged at the level of joining your email list is a good customer. When you lose a few because of an irrelevant email, those few build up over a short period of time. Eventually it will drive down your brand’s reputation. 

For catalogs the cost of printing and mailing does add up to a real number, often significant. Catalogs should be used only for those customers that are real buyers. Targeting beyond RFM is needed. Targeting should use the single view of the customer for segmentation, opportunity analysis, predictive customer and product modeling, and more. This will really show companies whether that print catalog represents value. It will also show who should receive emails echoing our catalogs, along with the appropriate associated offer level, the product to be featured, and the appropriate timing.

Now that we have dynamic catalogs and emails reaching out to targeted customers with different messages, offers, products and timing, we have cause to use both sides of our collective brains. Failing to do so will lead to a split brand personality. 

I want you to pretend for a moment that you’re a personal trainer. Here you are at your gym and you have two appointments booked on your schedule. One is at noon; the next at 12:30. The noon appointment comes in. He’s a 30 year old man recovering from a knee injury suffered while training for a marathon. He wants you to help him stay in great shape while he rehabs his knee and keeps his eye on a marathon he has planned for later in the year. Then the 12:30 comes in. She’s a 40 something mom who is a bit overweight and hasn’t worked out since college. She wants you to put her on a diet and exercise regiment that will simply get her on a healthier lifestyle. 

Today the print catalog is still a powerful tool that contributes to converting the coveted sale. Although it no longer stands alone, it feeds the mix of outbound marketing channels, including email, phone, text, and social media. Additionally, the impact of the catalog on consumer's lives and the company's database can vary wildly, depending on the data, segmentation analysis and lifecycle channel understanding that goes into the targeting of those that will receive a company's catalog.

Certainly there is skill in the development process and execution that can generate substantial revenue from catalogs. But that revenue by itself pales next to the opportunity of using a print catalog to feed a multichannel retail engine, revving on customer data and its relevant opportunity for high-octane cross-promotions and loyalty programs. The real opportunity is to move beyond the standard catalog mantra of R-F-M (recency of last purchase, frequency of purchases and monetary value of purchases) to segmentation by past purchases, channel preference, lifecycle stage, and next best offer modeling. This is made possible with a marketing database foundation that is fully integrated with all the touchpoints providing a single view of each customer. This view allows for analysis of the customer showing what they have done, what they will do and then showing if they actually did do it. The up-side is infinite.

The opportunity now is to use the catalog in the marketing mix for targeting those customers that are most likely to convert via the most relevant marketing “push”, while avoiding those we know will convert with just an email, postcard or on their own with no encouragement. The approach is as traditional as the print catalog, and as old-fashioned as thrift. But with the right mix of print, online, and even socially enabled marketing catalog marketers can  target the right customers with the right catalog to earn decidedly modern revenue. 

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:

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. 

I saw another interesting research study today that reported that 50% of email users delete marketing emails within two seconds of opening them. That’s according to Litmus Analytics. I’d hate to be one of those companies. It means they’ve engaged half their customers powerfully enough to get them to take that necessary step. But it means the email content is failing.

Any company suffering from a high deletion rate has most likely made a critical mistake that relates to my June 19 post on improving retail email practices. That one pointed out the need to drastically improve your understanding of the customer lifecycle. All customers are not the same. They don’t buy the same products as their neighbor or colleague now, and they won’t have the same value to your company a year from now. Yet, too many companies send the same email to the same customer at the same time. That will crash your open rate for sure.

I’ll also bet that companies who have high deletion rates do not consider the value exchange inherent in email marketing. You, the retailer, are sending your customers much more than an email. You sending them communications that promises value. They provide value by giving you their money, and maybe even an ongoing stream of information. If you are not giving them a valuable communication in return, of course they aren’t going to you’re your email or share it. They’ll hit the delete button as a force of habit. And you have wasted precious time, effort, personnel and customer equity.

A commitment to value exchange means your company is going beyond asking a customer to join your list with the possibility that they will be invited to special events or extended a discount at some point. Retailing is much more immediate than that. You need to use email to make the customer feel special. And there’s no magic algorithm to do it.

Here’s three ways to improve what I call your value exchange quotient (VQ).

1. Base your frequency on customer data. If I say “buy” twice, that translates to “bye-bye.” Email cannot be yet another way to nag customers into a purchase or information-based relationship. Use customer data to understand how often different customers want to receive an email. It’s not about your email marketing program that says “blast the back-to-school discount every week starting August 15.” It’s about the customer data that indicates the email list members that have school-aged kids, and have responded to frequent emails in the past.
2.  Attach an offer. Even if you properly segment your list and send relevant timely messages, include a compelling offer. Just letting the customer know there’s a back to school offer is not enough. Offer a loyalty program if the customer has more than two kids, for example. Offer a discount for holiday purchases to keep the back-to-school customer coming back.
3. Work hard and work smart. I use the exercise analogy. The guy who’s 30 pounds overweight and drinking beer every night in front of the TV is not going to run a marathon next week. But he could go for a walk instead of drinking beer. If you have not been running an email program that extends value now, don’t expect that you will win awards for one next month. But you can begin to identify the communications that will be valuable to them and move customers toward higher value to your company. That takes hard work, rigorous analysis, and always striving for the next level of value.