Make it Count
During the weeks leading up to a marketing effort, a top campaign strategist does everything possible to glean customer insight. Targets are segmented based on profit and potential, augmented with demographic and life stage data, and enriched with customer attitudinal data and their individually expressed needs.
The challenge then becomes directing marketing dollars and sales capacity at those with the highest potential to become long-term profitable customers. Here’s a sure-fire way not to do it: bombard them with direct mail, phone calls, e-mails and text messages.
Creating a smart integrated marketing campaign has become a key issue among senior marketing executives. An Association of National Advertisers (ANA) poll of marketers reported that integrated communications was the top concern in 2008 and 2007. It was the fourth most critical concern in 2006.
E-mail and text-message advertising were in their infancies during the last recession. Social media advertising was unknown. Direct mail is still a vibrant option and the do-not-call list has actually increased the success rate for telemarketers. But this wealth of channels comes at the same time marketers are being asked to produce higher results with fewer dollars. (One-third of those surveyed in the most recent ANA survey reported their budgets were being slashed.)
Beyond cost efficiency, intelligent marketing is important to building customer loyalty. Most consumers have added companies to their personal “do not buy” list after being inundated by one too many e-mails, text messages or mailers. It’s not that they don’t like the company’s products; they are just exhausted by the thought of the company’s multiple e-mails or having to toss all those extra catalogs that would be sent were they to place another order. Today, more than ever before, delivering the right messages to the right customers is central to remaining relevant.
Forget Tradition
Traditional prioritization or rules-based systems are insufficient for maximizing the success of outreach activities. Companies need to look at contact optimization solutions. These solutions can evaluate multiple campaigns simultaneously using mathematical formulae and predictive analytics to determine which products should be offered to individual targets for maximum return. They can define objectives; quickly change constraints and rerun scenarios with different parameters; and seamlessly integrate these findings into existing campaign management solutions.
Traditional systems aren’t effective at testing different concepts to see how various segments are reacting to strategies. It’s critical to be able to compare and contrast scenarios and see the likely result before pulling the trigger.
Contact optimization can end up ruffling feathers within organizations, but will yield better results. When it is not used, often the product line with the biggest budget or the more senior staff rides roughshod over campaigns for startup products. When it is applied at the enterprise level, it looks across products, offers and channels to determine the optimal solution for the company. This mitigates the conflicts that often arise between product groups and channel marketing teams by guiding the discussion with empirical evidence.
Companies that implement optimization programs become smarter about their efforts. They quickly see the classic “throw up a bunch of messages and hope something sticks” approach doesn’t work anymore. A more scientific approach also helps companies avoid cross-sell conflicts that lead to lower revenue and profit.
Telecommunications companies in particular do not want to contact customers with a cross-sell opportunity that might actually cause them to cancel a profitable service to select a less profitable offering. With optimization, the telecommunications companies can segment customers effectively and run scenarios to maximize profitable cross-sell opportunities.
It’s hard for marketers to think of contacting customers as detrimental. In an industry that came to expect a 1% to 2% response rate for almost anything it did, more efforts, more direct mail pieces, more e-mails seemed to be the way to go. But in an era of tight budgets and easily offended customers, effective contact strategies can lower marketing costs, increase return on investment, and produce happier customers.
Jeff Gilleland is the global customer intelligence strategist at SAS. Karen Heath is a managing practice principal in HP’s BI Solutions group.
WHAT MATTERS MOST
SURE, OPTIMIZATION PROGRAMS PRODUCE BETTER ECONOMIC RESULTS. THEY ALSO ALIGN TEAMS AND DECISION-MAKING AROUND THE RESULTS THAT MATTER MOST. SOME EXAMPLES:
A large financial services institution, with multiple marketing channels and myriad products, had limited channel capacity. It wanted to move beyond standard database analytics to lift campaign returns. With a solution that included predictive modeling, the bank was able to create a multichannel offer selection and targeting solution that achieved a 50% return on investment.
A leading telecommunications company was conducting four monthly campaigns that touted its DSL, wireless, cable and telephone offerings. The company wanted to maximize customer lifetime value, but no one could determine which combination of campaigns would provide the highest ROI. After implementing an on-demand optimization solution, the company increased its profit stream by $6 million in the first month.
A successful catalog retailer had multiple call centers, direct mail and e-mail channels available, but did not know how to distribute offers, or combinations of offers, across these various channels. By leveraging an existing modeling effort, the company was able to exploit the knowledge it gained about these different channels for significant campaign performance improvements.
