In technical terms, the recession is over. And depending on which indicators are examined, the economy seems to be on the rebound. The question for marketers, then, becomes… rebounding to where?
Consider:
* $112 billion – 37% of all advertising – is wasted in the US alone, according to research from Rex Briggs and Greg Stuart, authors of “What Sticks”;
* Only 22% of the consumers feel advertising is credible, according to Edelman Financial Services’ Trust Barometer; and
* 80% of online advertising fails to reach its intended audience, per comScore.
Consumers have changed. They have taken control of the conversation and are no longer interested in hearing one-sided, one-size-fits-all marketing messages. In the new marketing era, survival of the fittest means adaptation.
So what does adapting mean to marketers – a breed accustomed to controlling customer conversations to drive conversion? How will this group give up control and still deliver results?
Adapting starts with making the customer the center of marketing. Not the product. Not the brand. Not the channel. The customer. However, customers are not created equal. Some are worth more than others.
Consider those whose purchases are spurred by discounts, who return the majority of what they buy and who make numerous complaints to customer service. They are not high-value customers. Given a choice, why find more customers like these?
The more productive approach is to identify the highest-value customers and learn everything about them. It is not enough to have one isolated view of a customer. Marketers must learn about multiple aspects such as: What are their online behaviors? What are their purchase patterns across each channel? What are their demographic and psychographic attributes?
Recognizing customers in various media channels may be difficult, but it is not impossible. The key is integrating information to gain a more complete perspective of the customer. Using robust matching criteria to link extensive online and offline channel data can improve the accuracy of a marketer’s view of a customer. Without linkage, multiple views of John Smith exist within a marketer’s files. Each contains important information and yet in isolation, provides misleading signals.
Linking data, rather than investing in yet another data warehouse, allows a marketer to take advantage of some fairly substantial benefits, such as rooting out unproductive media and service experiences. Marketers typically have an opportunity to redirect 15-30% of unproductive media/campaigns to higher-performing alternatives.
A smart approach pursues both “big money” and “easy money.” Big money is about aligning strategy, resources, and funding to deliver maximum payoff. Media budget optimization, growth in market share, faster time to market, and growth in customer lifetime value are all great levers for big money.
A favorite big money strategy is the “concentration multiplier”, which helps allocate marketing spend proportional to predicted impact on customer lifetime value. It is not unreasonable to expect a return on investment boost three to five times higher when using this strategy than when not incorporating customer value into marketing decisions.
Then there’s easy money. Broad-sweeping strategic initiatives often take time to show value. To mollify those in a marketer’s organization who have concerns about a new program, it’s important to harvest easy money along the way.
Generally, easy money is about media arbitrage and narrowcasting, with a focus on delivering financial value on a quarterly basis. For example, connecting outbound campaigns with Web site behavior can drive return on investment twice as high than for those campaigns which aren’t linked. Similar or better results can be achieved by coordinating messaging across channels.
Narrowcasting is another easy way to drive return. Instead of broadcasting, marketers can try narrowcasting – suppressing marketing efforts to unproductive contacts, and versioning messages among productive ones. Research by Yahoo shows an 11-to-one return on investment when using this approach.
While the digitally connected world is continually expanding, two simple truths are now evident and are key to success in this new era: First, a relatively small portion of a brand’s customers actually deliver all the profits, and second, media is becoming increasingly addressable. Great opportunity exists for brands that choose to focus marketing efforts on their most valuable customers and continually strive to better understand and engage them.
But this will require a shift in marketers’ approach to campaigns. They’ll need to invest resources to find, acquire and nurture more of them; examine their needs, buying habits and traits and think of them multi-dimensionally; learn from each step of engagement and develop a logical institutional memory that captures their interactions; and engage them with using all the insights, at the moment of truth.
If this approach is combined with a series of quick wins -- high return on investment, low-effort projects – along the way, marketers will adapt well and deliver successful results.
Tim Suther is chief marketing officer and senior vice president of Acxiom.
