Rational Marketing

Author: Catherine

  • The Future of Marketing?

    Is it really the economy, or is the recovery sluggish because people are not being reached when they want to consider marketing messages?

    In a post that appeared on a Harvard Business Review blog, Dick Patton suggested that the four P’s of the traditional marketing mix (product, price, placement and promotion) be replaced. His article suggests a new acrostic: ROIDs

    • Responsibility marketing, including social responsibility, green marketing, and sustainability
    • Organizational leadership, requiring marketing to touch as much of the value chain as possible
    • Insights about customers, based on new analytic techniques that replace yesterday’s market research
    • Digital marketing, requiring companies to master an amorphous bundle of fast-changing media

    What about the four D’s?

    • Dependability, as in marketing that is accountable, conscientious and responsible
    • Direction, marketing should be an integral part of determining where the company goes
    • Discernment, understanding of customers and the environment
    • Digital, companies must harness the power of ever-changing media, but be careful not to give it more influence than it deserves

    Direct marketing needs to stay an integral part of this future; even as the environment, the rules, the models and what is really working and yielding results and returns on investment keep changing. Many businesses in many sectors have put more and more resources toward marketing using new technology, but the profits and revenue have not been created.

    We need to talk to people when they want to receive information, not when they are in the middle of trying to just get through 50 emails or when they are gathering information for what they are ready to buy right now.

  • Define Your Customers Part 2

    This is the second part from Target Marketing Magazine’s invitation to take a look at who your customers really are.

    What Customers Believe

    Understanding customer beliefs leads to building a powerful brand and can pay dividends in creative presentations and communications. Psychographics, or attitudinal data, are generally established by evaluating the thoughts and feelings of various cohort groups—groups of consumers in similar age ranges or stages of life.

    Overlaying your customer data with psychographic information allows you to classify customers in one of a number of predefined segments. These segments are named and grouped based on common beliefs held among members. Psychographic data goes beyond demographics by exploring how people feel about everything from finances to shopping to technology to family and friends to religion, and more. Often, “messaging briefs” or tips for communicating with each group better and more specifically to their own beliefs also accompany these overlays.

    If you conduct demographic and psychographic overlays you produce a picture of what the customer looks like and what she believes. To continue building a better picture of the customer, though, we have to know what she says.

    What Customers Will Tell You

    A good survey provides actionable answers to questions that discern the respondents in one group from those in another. By building a customer survey—one that can be executed online as well as over the phone—you can get the customer’s opinions of your brand as well as your competitors’ brands. The essence of brand differentiation is defining what you stand for and knowing what you don’t stand for in the mind of the customer.

    Asking customers a variety of questions about themselves, your company and the competition, you begin to develop an understanding of what’s important to them in making purchasing decisions and how you rate on those issues versus the competition. In a perfect scenario, you find that you excel in the areas that are most important to your customers and that you have a significant advantage over the competition in those same areas.

    Surveys don’t have to be long; seven minutes is an eternity on the phone. What surveys must do is ask the right questions. And to highlight your strengths even more, put non-buyers and lapsed buyers into the survey mix along with “better” customers. This way you see how your best buyers perceive you compared to your older buyers and nonbuyers.

    What Customers Buy

    Square-inch analysis, or squinch analysis, sheds light on product performance. In an effort to understand customer behavior completely, you should enhance your profiles with merchandise analysis. Asking questions like, “Do my best customers buy differently from my worst customers?” helps you address merchandise mix; price point; and creative issues in the catalog, on the Web site and in direct mail. It is at this stage that you’ve not only developed but implemented a better, more meaningful view of your customers.

    Demographics are great for modeling, but if you want to paint the best picture possible of who your customers are, you can  move beyond age and gender to an understanding of what they believe and what they think about your company. Putting all of the pieces of the customer information puzzle together allows you to build more targeted and relevant creative, a more appealing merchandise mix and a more profitable contact strategy by contributing to an ironclad brand positioning. To define yourself, you first must define your customers.

  • Define Your Customers Part 1

    Target Marketing Magazine printed an invitation to take a look at who your customers really are.

    Many marketers think of customers in straight-forward terms: females, 45 to 60 years old, $75,000-plus household incomes, for example. These broad-sweeping descriptors have a place in customer definitions but aren’t the end in defining who does business with you.

    Many of the data points necessary to understand your customer are available in your database. Purchasing data, for example, provides the foundation of analysis in marketing, merchandising and price points. But some of the more meaningful data—the information that allows you to complete the puzzle—is often available through knowledgeable providers. These professionals can offer data appends that allow you a more complete and robust view of who the customer really is.

    Let’s look at several techniques you can use to learn more about your customers (and even your noncustomers) and how, put together, they give you the intelligence and insights to tighten your brand, improve your marketing and boost profits.

    What Customers Are

    The first step in building a comprehensive customer profile is the application of demographic data. There are more than a thousand different demographic variables that can be appended to the typical consumer’s name and address record. These demographics, or descriptive characteristics, can range from age and income to gender and ethnicity to home ownership and consumer credit availability. By compiling data from a variety of outside sources, a professional list provider can overlay demographics data onto any consumer data file and provide back either a series of descriptive reports or, better yet, appended data for additional analysis.

    The demographics most commonly employed in developing customer profiles are generally age, income and gender. Additionally though, it can be powerful to know more about the customer, like how much she paid for her home and how long she’s lived there; how wealthy she is, beyond just annual income estimates; etc. By applying these data points, you start to paint a picture of the person “materially”—essentially the 45- to 60-year-old, $75,000-plus household income female mentioned earlier. The additional demos also allow for more understanding about the kind of home she lives in, how thin she spreads her income, how settled she is and more. And from a marketing standpoint, demographics can enhance RFM (recency, frequency, monetary value) selection as well.

    In the next post we will look at customer beliefs (psychographics) and the meaning of purchasing patterns.

  • For Designers

    As you work on putting together your direct mail piece, one designer shares his rules. Some of them may be valid for you, others maybe not. We just want to get you started.

    From: Design Elements: A Graphic Style Manual by Timothy Samara

    1. Have a concept
    2. Communicate don’t decorate
    3. Speak with one visual voice
    4. Use two typefaces maximum
    5. Show one thing first
    6. Pick colors on purpose
    7. If you can do more with less, do it.
    8. Negative space is magical
    9. Treat type as image
    10. Keep type friendly
    11. Be universal, it’s not about you
    12. Squish and separate: create rhythms in density and openness
    13. Firecrackers and rising sun: distribute light and dark
    14. Be decisive
    15. Measure with your eyes
    16. Make what you need; don’t scavenge
    17. Ignore fashion
    18. Move it! Static equals dull
    19. Look to history, but don’t repeat it
    20. Symmetry is not good

  • Postcard Design Idea Sparks

    We found some ideas about postcard design at this site from Chuck Green on Ideabook.com.

    What is the purpose of a post card?

    “Greetings from” and rotating racks decorated with pictures of places great and small—those are the type of messages associated with post cards. The marketing potential of a simple card is unbounded. You can show something such as a photograph of a new product, a remodeled showroom or the impressive gear you use to provide your service. You can double your advertising impact by sending cards to your mailing list with a reprint of your magazine ad. Send a reminder of an upcoming event. Ask for an appointment and follow up with a phone call. Step one? Establish a clear mission for your card.

    Why is it done the way it’s done

    Why are post cards designed the way they are? For reasons of cost and contact. First, since private postal cards were authorized by Congress in the late 1800’s, they have been the among the least expensive way to put a printed piece in the hands of your prospect. And because a standard post card can’t be smaller than 3 1/2 by 5 inches or larger than 4 1/4 by 6 inches it is easy to handle, sort, and deliver. Plus, the design improves your odds of making contact. A post card message is out in the open, eliminating the real possibility your prospect might toss a sealed envelope.

    If cost is less important than impact, you may spend a few cents more to mail a card up to 6 1/8 by 11 1/2 inches—a size that demands more attention.

    How can You do it most effectively?

    With your mission and a strategy established, the challenge is to execute effectively. Let’s say you have a list of a few hundred prospects with whom you hope to establish a relationship. You could use the shotgun approach and run a series of ads in a local publication that you hope they might see. Or you could pinpoint your prospects by printing a half dozen series of post cards, each featuring a different advantage of doing business with you, and mail them, one each month for the next six months. Which would be more effective?

    Start with these post card ideas and create your own variations, see more information about postcards.

    1. Bust the size barrier. Once you exceed the 4 1/4 by 6 inch maximum for a standard-sized card, you may as well take advantage of the 6 1/8 by 11 1/2 inch maximum. You’ll pay extra to mail it, but this super-sized format allows more dramatic graphics and a more detailed message.
    2. Request a response. Every good marketing piece has a specific call to action. Why not ask your prospect to respond on the spot? This post card has two missions—first, to request some survey information. The “How’d we do?” half is detached and returned to the sender by business reply mail. The second half, labeled “Keep this card by your phone,” is a way to keep the company’s name in front of the customer. The postage for this 2-card format may be higher, but the added value can be well worth it.
    3. Work the cliche. The old-fashioned picture post card is a theme you can use to your advantage. This design plays on what you expect a post card to be. But what looks like a souvenir from a museum is actually an announcement from a restaurant. A painting by the Impressionist Monet graces one side, the message, set in elegant type is opposite.
    4. Make contact. The reason direct mail is all dressed up with fonts and graphics is because it wasn’t long ago letters and cards were mostly handwritten—fancy type and pictures were something different. Today, the opposite true? Don’t you pay special attention to a handwritten message? The idea here is to print a supply of post cards on which you can jot down messages that keep you in the front of your customer’s mind.
    5. Create a ticket. When you use a post card as a discount coupon or a ticket to an event, you raise the possibility of a response. The message here is obvious—bring the card in and get a discount.
    6. Publish a mystery. You may have seen this technique used on billboards—pieces are added one at a time until, one day, you drive by and discover the total message. The same type of mystery message can be posted and solved in a series of post cards. You simply divide the finished message into puzzle pieces and sent them in sequence. In most cases, the cost of printing cards drops substantially when you print several different designs at the same time—you may be surprised to find how practical this possibility is.
    7. Make news. Post cards are great for spreading the news. Next time a new captain takes the wheel, you move to a new location, announce a product, or add a new service—publish the news by post card.

  • On Creativity

    Creativity Sparks

    1. Do something mindless (take a long drive on familiar roads, do housework or yard work, take a long bike ride or walk)
    2. Find diversity as in thinking, images, people (colleges, libraries, museums, city parks…)
    3. Fill your head (Read books, newspapers, magazines, surf the Internet, watch movies, documentaries, listen to radio, talk to people)
    4. Take a lesson from a kid (kids are a model of creativity and energy, they have no mental boundaries)
    5. Go to the edge (do something that scares, break some rules, make self uncomfortable, create challenges for body and brain)

    Creativity Killers

    1. Fear of risk, failure, looking stupid
    2. Routines (because we have always done it that way)
    3. Sameness (people who think the same way)
    4. Premature judgement
    5. Digression
    6. Unrealistic Deadlines
    7. Stakeholders who “know” everything
    8. Yourself (running on empty, “I think I can’t”, doing nothing, lack of discipline)

  • Five Marketing Steps

    A refresher for some of you and perhaps a fresh outlook on some basics.

    Step 1: Understand your customer

    See other posts about segmentation and definition

    Step 2: Create value for your customer

    • Focus on product or service features
    • Enhance the social skills of your employees
    • Use price as an additional customer value
    • Provide credit or payment terms to meet the needs of your customers
    • Enhance the image of your product, service or store
    • Provide service, before and after sale
    • Think of your location as another service for your customer
    • Present convenience
    • Set a mood with the atmosphere of your place of business

    Step 3: Communicate your value to your target market

    • Everything you do communicates
    • Word of mouth is critical
    • You never get a second chance to make a first impression
    • Keep it simple

    Step 4: Make it easy for the customer to buy

    • Set hours of operation that are convenient for customers
    • Make credit readily available
    • Select convenient locations (for retailers)
    • Find good retail outlets (for manufacturers)
    • Deliver products to customers in a reasonable and timely manner

    Step 5: Create long term relationships

  • Expand Markets And Optimize Costs With Segmentation Strategy Part 3

    This is a continuation of Target Marketing Magazine’s article about customer segmentation.

    Modeling for Performance

    Behavioral models can help you refine campaigns and follow-up marketing by allowing you to predict the likelihood of profit-driving behaviors such as payment, multiple orders and renewal. Model-based, predictive segmentations can be applied in the following ways:

    • Refine descriptive segments to increase campaign impact.
    • Manage campaign costs by eliminating lower-performing groups.
    • Expand market reach by targeting the top-performing groups.
    • Segment incoming orders for fulfillment and upsell by profiling for profitable behaviors.

    As an example, imagine that your descriptive Segment Y is statistically more likely to respond to a given offer, but the payment rate for the group is only 50 percent. Let’s say your business requires a 60 percent payment rate on new orders to be profitable. A net payment model can help you identify the individuals (or households) who are more likely to respond and pay within the segment. By subsegmenting the group, you can see that targeting only the top 80 percent of the file is likely to achieve your 60 percent cutoff.

    Building a solid model requires that you have results from previous campaigns to that segment and that the modeler has access to a large source of relevant data. The resulting model can dramatically expand the reach of your marketing campaigns and significantly increase ROI by helping you identify and target only the most profitable groups. The result? Your overall mail costs go down because you don’t promote to the entire file, but your net response stays more or less the same and payment goes up. You deliver higher ROI.

    Models also can help you expand list populations by letting you mine segments that you haven’t been able to work with before. If you’ve been using on a 60-day selection, the model should let you expand to a 90- or 120-day selection, providing larger universes.

    Finally, your models also can work for you in untargeted media or other channels. Models can be applied to responders—or in real time on your site—to help you make decisions about fulfillment, upsell targeting and future marketing contact.

  • Expand Markets And Optimize Costs With Segmentation Strategy Part 2

    This is a continuation of Target Marketing Magazine’s article about customer segmentation.

    Third Party Information

    The data you have on your customers, great as it is, just isn’t a complete picture. Understanding what, when, where and how consumers do business across a large group of marketers gives you insight you can’t get from your housefile. New sources of data can help you create broad-based, descriptive segments that provide opportunity for product development, channel selection and increased lifetime value. Understanding your customers through the prism of third-party data sources helps you see far deeper into your customers and gives you a more intensive understanding of their buying interests and behaviors. Consider some of the outside data attributes you can use:

    • RFM: Recency, frequency, monetary value.
    • Product Type: Continuity, one-shot, online subscriber, magazine, music, video, sweeps.
    • Affinity Type: History, health, gardening, sports, cooking, home, crafts, kids.
    • Acquisition Channel: Mail, telemarketing, e-mail, Web store, package insert.
    • Performance: Fast payer, slow payer, returner, write-off, repeat buyer, renewer.

    Suppose you discover that many of your customers have a strong interest in something you don’t sell, like gardening products. Or if your customers have a strong affinity for video, you might consider offering a DVD as a premium. As you develop insight into which groups prefer specific offers via specific channels, you run the risk of making your segments so small that they are no longer truly predictive. Segments can only show you that, on average, a certain group is likely to perform in a certain way. Groups can be too small to be statistically predictive.

    Make sure your segments are statistically significant, big enough to be actionable, and likely to remain stable and consistent while you execute your expanded marketing plans. Chances are you’ll begin to see a pickup in response as you reach out to new prospects in new ways.

    In the next post we will look at what can be gained by modeling your lists.

  • Expand Markets And Optimize Costs With Segmentation Strategy Part 1

    Target Marketing Magazine published an article about customer segmentation.

    Why Rethink?

    Everyone talks about reaching the right consumer with the right offer at the right time, but how do you deliver? Many marketers do a great job capturing, tracking and leveraging customer data. They know what segments work and which don’t. But today, every marketer’s “ideal customer segment” is a moving target—and growing increasingly fragmented as consumer attention flits from medium to medium. In this environment, it doesn’t make sense to expect your legacy segmentation strategy to be as reliable as it once was.

    The first question to ask yourself is: Are your existing segmentations meeting your business objectives? Everyone seeks higher response, but is that enough? What about net payment rates? Or lifetime value?

    Looking Into—and Beyond—Your Customer List (Housefile)

    Building a segmentation strategy that gives you the flexibility to operate profitably in a multichannel world starts with reviewing your housefile. Simple segmentations are readily apparent: actives and expires; payers and nonpayers; product interests and demographics. These descriptions are great for doing things like selecting list sources and segments for mailings. Descriptive segments are useful for customizing creative. For instance, if you are fielding an offer for political biographies, you use your descriptive segmentation to change the copy and featured book for the Republicans versus the Democrats you’re targeting.

    Successful descriptive segmentations move beyond intuitive target groups by using statistical techniques to uncover correlations and segments that may not be readily apparent. Overlaying additional data can significantly deepen and broaden the resulting segments.

    Four rules for developing descriptive marketing segmentations.

    1. Mutual exclusivity. Groups of households or individuals should be homogenous and unique.
    2. Business rules. Only consider segmenting based on variables that are appropriate and actionable for the entire available universe.
    3. Actionable. A good segmentation provides basic guides for crafting custom offers and customer relationship management.
    4. Statistical data discovery methods. Develop segmentation rules that identify data-driven variations in your populations.

    In the next post we will look at what can be gained by enriching your list with demographic or purchase of other products information.