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  • Do You Need All That Data?

    Just in case we get lost in over-analyzing everything, including customer data, Ron Ashkenas suggested that we step back and think about what is really useful in a post for the Harvard Business Review.

    Organizations love data: numbers, reports, trend lines, graphs, spreadsheets — the more the better. And, as a result, many organizations have a substantial internal factory that churns out data on a regular basis, as well as external resources on call that produce data for onetime studies and questions. But what’s the evidence that all of this data is worth the cost and indeed leads to better business decisions? Is some amount of data collection unnecessary, perhaps even damaging by creating complexity and confusion?

    For many years the CEO of a premier consumer products company insisted on a monthly business review process that was highly data-intensive. At its core was a “book” that contained cost and sales data for every product sold in the company, broken down by business unit, channel, geography, and consumer segment. This book (available electronically but always printed by the executive team) was several inches thick. It was produced each month by many hundreds of finance, product management, and information technology people who spent thousands of hours collecting, assessing, analyzing, reconciling, and sorting the data.

    Since this was the CEO’s way of running the business, no one really questioned whether all of this activity really was worth it, although many complained about the time required. When a new CEO came on the scene a he decided that the business would do just fine with quarterly reviews and exception-only reporting. Suddenly the entire data-production industry of this company was reduced substantially — and the company didn’t miss a beat.

    Obviously different CEO’s have different needs for data. Some want their decisions to be based on as much hard data as possible; others want just enough data to either reinforce or challenge their intuition; and still others may prefer a combination of hard, analytical data with anecdotal and qualitative input. These preferences at the top of the company often influence the “data culture” that is created. In all cases, though, managers would do well to ask themselves four questions about their data process as a way of improving the return on what is often a substantial (but not always visible) investment:

    1. Are we asking the right questions? Many companies collect the data that is available, rather than the data that is needed to help make decisions and run the business. So the starting point for simplifying and improving data processes is to be clear about a limited number of key questions that you want the data to help you answer — and then focus the data collection around those rather than everything else that is possible.
    2. Does our data tell a story? Most data comes in fragments. To be useful, these individual bits of information need to be put together into a coherent explanation of the business situation, which means integrating data into a “story”. While “enterprise data systems” have been useful in driving consistent data definitions so that things can be added and compared, they don’t automatically create the story. Instead, managers should consider in advance what data is needed to convey the story that they will be required to tell.
    3. Does our data help us look ahead rather than behind? Most of the data that is collected in companies tells managers how they performed in a past period — but is less effective in predicting future performance. Therefore it is important to ask what data, at what time frames, will help us get ahead of the curve instead of just reacting.
    4. Do we have a good mix of quantitative and qualitative data? Neither quantitative nor qualitative data tells the whole story. For example, to make good product and pricing decisions, we need to know not only what is being sold to whom, but also why some products are selling more than others.

    Clearly business data and its analysis are critical for organizations to succeed — which is underscored by the fact that companies like IBM are investing billions of dollars in acquisitions in the business intelligence and analytics space. But even the best automated tools won’t be effective unless managers are clear about the questions raised above.

    What’s your assessment of data in your company? Is there anything we can do to help you make sense of what you have?

  • Scrubbing Data

    Deliver Magazine reported that despite the ROI potential from data hygiene, many companies still haven’t cleaned up their lists.

    Data management is still a hot topic for many companies these days. Marketers too often focus on how best to use the data rather than spending enough time wondering whether the data itself is clean. Good data hygiene can have a significant impact on your company’s ROI, minimizing waste and building trust with consumers by contacting them at the correct address.

    Rod Ford, founder and chief executive officer of CognitiveDATA, a data-quality management company discusses a few of the misconceptions about data hygiene with Deliver.

    Deliver: Why aren’t companies today putting enough resources into data quality?

    Ford: Data hygiene is typically grossly under-budgeted. Many direct marketers spend less than 1 percent of their overall direct marketing budget on data quality.

    Deliver: Why do companies say that they value data quality but not fund it properly?

    Ford: Many organizations live under the misconception that their data is already highly accurate. This is because they are passing this data through vintage tools a few times a year and not finding incorrect addresses or other problems with the data.

    Deliver: What should marketers be doing to improve data quality?

    Ford: Several issues are forcing marketers to be more efficient in their mailings. The green movement and the push toward less waste in the mail stream is one. Then there’s the fact that response rates have declined because, during the recession, the consumer has less discretionary income than in the past. Finally, direct mailers are facing rising costs in almost every area of mail production. These issues already were forcing marketers to take a closer look at data hygiene before the recession hit. What the macroeconomic environment has done is accelerate the adoption of data-hygiene technology.

    Deliver: Do you think that marketers will go back to ignoring data hygiene once the economy recovers?

    Ford: Right now, direct mailers are learning important lessons about the impact of more accurate data. When you reduce the number of undeliverable pieces of mail in a campaign, this increases the overall response rate, for example. These lessons will transcend whatever is happening in the economy.

  • Another Reason for List Hygiene

    Deliver Magazine told of a valid reason to regularly scrub mailing lists. Sure, mailings sent to the deceased get responses — but they’re usually from distressed family members commenting on how disrespectful and downright rude the company is for sending it in the first place.

    “Not only is this a waste of a company’s time and money, it also can be extremely damaging to a brand, resulting in customers lost rather than gained,” says Kirk Schuh, vice president of marketing delivery services at ARGI, a database marketing company. “Regularly cleansing files must become part of a marketer’s regular list hygiene routine”, Schuh says. “Deceased suppression is a delicate issue,” he adds. “No matter how vigilant marketers are, their lists always can benefit from routine maintenance and enhancement.”

  • Customer Data Best Practices

    The Aberdeen Group published a report in December, 2009 that explored customer database practices to reveal how organizations are capturing, storing, analyzing and acting on customer data.

    The Best Performing Organizations:

    • Currently achieve 163% mean class Return on Marketing Investment (ROMI); 9% average year over year growth in ROMI
    • 51% year over year mean class growth in revenue

    The best performing firms shared several common characteristics, including:

    • 46% access a full view of customers across all departments and functions in the organization (versus 14% among laggards)
    • 52% improve or enhance customer data through regular marketing and IT collaboration (versus 21% of laggards)

    The study recommended that companies wishing to become more like a best performing organization:

    • Develop a formal data hygiene (cleansing, enrichment, de-duplication and regular updates) strategy. A lack of formal data hygiene can prevent organizations from using customer data in more personalized engagement.
    • Enhance existing records with periodic augmentation and enrichment. Only 32% of all respondents actively augmented customer data for accuracy. But, 48% plan to incorporate database enrichment services in their 2010 budget for improving the customer database.

    What can you do to maintain and enrich your customer information?

    1. Even if you don’t want to send mail to your customers right now, process your list through the National Change of Address database. This is a simple service that will provide move information for individuals, families, and businesses. Learn more about your current and previous customers by obtaining their current addresses. Our reports will identify undeliverable and incomplete addresses. You will know that some of your valuable customers have had changes in their lives and organizations.
    2. Think about enriching your customer list with more information. For consumers we can add income, demographic and home characteristic information to your existing data file. For businesses we can add “firmographic” data including number of years in business, number of employees, industry classification and estimated annual revenue.

    If you are not sure what information would be best for your business, we are great at asking the right questions to get you started.

  • Go Beyond Customer Segmentation and Explore Predictive Analytics Part 2

    Direct Marketing Magazine shared some ideas about predictive analytics.

    Predictive Analytics Road Map

    To get the most out of customer segmentation analysis, organizations could create road maps incorporating the following steps:

    1. Determine the Overall Business Objective. Get everyone on the same path and in agreement with what you want to accomplish, such as improving the yield on lead-generation efforts, identifying cross-sell opportunities or identifying customers most likely to go to a competitor.
    2. Capture All Potential Customer Data. Segmentation begins with gathering customer data from a wide variety of resources, including data warehouses, point-of-sale systems and loyalty programs. A database of static customer information is valuable, but until key active knowledge is applied—like preferences or motivations—there’s an incomplete picture of the customer. Capturing feedback from any touchpoint—in any language—provides a clearer understanding of customers’ needs, preferences and attitudes, and improves the segmentation process.
    3. Perform Recency, Frequency and Monetary (RFM) Analysis. To obtain the most accurate picture of customer lifetime value, organizations first should perform RFM analysis to classify customers according to: those who have spent the most—the most often and most recently; those who have spent the most—the most monetarily, but may not have purchased in a long time; those who spend the most in the fewest number of transactions; and those who spend the least, or rarely, and have not purchased in a long time.
    4. Outline the Segmentation Process. Once customers have been identified based on purchasing patterns, then segmentation analysis can begin to get to the core of the audience you want to target. The key to a successful segmentation program is to first define the many ways the results can be used. An approach might take the following path:
      • Create customer segments to enable differential marketing programs.
      • Use past purchase data and demographics to construct customer subgroups.
      • Isolate key performance factors linked to long-term customer value as major data drivers for the segmentation.
      • Use cluster analysis to form homogenous groups of differently valued customers.
      • Use techniques such as rule induction to automatically extract the profile of each cluster.
      • Align the marketing spending priorities against each subgroup.
      • Link product line or category affinity to each subgroup.
      • Develop marketing plans incorporating value-based budgeting and category affinity to make programs more relevant and efficient.
    5. Auto-Segmentation. With a customer base more clearly defined through effective segmentation, organizations then can add predictive modeling functionality within each segment to produce greater insight that’s required to more effectively and efficiently acquire, grow and retain the right customers, and also identify fraud and minimize risk. The modeling functionality in predictive analytics technology helps organizations accurately determine which customers best match specific offers or campaigns. By eliminating the guesswork when targeting customer groups, organizations quickly increase ROI through more efficient use of resources and reduced spending.
    6. Deploy and Share Results Throughout the Business. The final step is to create an environment in which an organization can manage and automate its analytical processes and easily deploy the results across the enterprise—thus improving productivity and collaboration and increasing ROI. This includes the ability to automate the database scoring process, publish and distribute output and reports, and integrate the analytical process into other business applications. For example, when a customer calls a call center, that agent should be able to pull up information on that specific customer and know what type of offer should be made at that particular time.

    Hit the Target

    With predictive analytics technology, organizations can move toward a one-to-one conversation with customers. Insight gained from even the most elementary analysis of customer characteristics can have profound implications on the business and result in marketing success.

  • Go Beyond Customer Segmentation and Explore Predictive Analytics Part 1

    Direct Marketing Magazine shared some ideas about predictive analytics.

    Personalize Customer Relationships

    Segmentation is a way of grouping people or organizations with similar demographic profiles, attitudes, purchasing patterns, buying behaviors or other attributes. This helps to understand customers more thoroughly and thus market to them more effectively.

    Many businesses use segmentation to recognize that customers have some unique characteristics. But they stop when going further may be possible, for this reason, segmentation can be a “blunt instrument,” leading to “one-to-some” marketing. It can perpetuate “accepted wisdom” about customers and the market that are not necessarily accurate.

    Marketers can add predictive analytics to the segmentation process to generate insight needed to more effectively and efficiently acquire, grow and retain the right customers. The result could be a better understanding of what products and services customers are likely to want next. Predictive analytics can be thought of as auto-segmentation. This technology can discover groupings in customer data and find relevant patterns that are likely to be more subtle, extracting greater predictive insight than traditional segmentation. This would ensure that insight obtained into what customers want and how they behave, and marketing decisions made would be evidence-based and result in more profitable outcomes from one-to-one customer interactions.

    Predictive analytics incorporates data collection, statistics, modeling and deployment capabilities. This drives the entire segmentation process, from gathering customer information at every interaction to analyzing the data and providing specific, real-time recommendations on the best action to take at a particular time, with a particular customer. The result is more effective customer relationship management strategies, including advertising and marketing campaigns; upsell and cross-sell initiatives; and long-term customer loyalty, retention and rewards programs.

    In the next post we will look at a predictive analytics “road map”.

  • Tips for Print Buying

    We are all being pressured to produce more with less. More powerful campaigns, more cutting-edge designs, more targeted pieces, more tangible ROI, more pizzazz than your competitors’ materials, more pressure to deliver faster with less money in your marketing budget.

    These tips should apply in any economy, but right now it is so important to save every possible fraction of a cent.

    1. Maintain a list of vendors and their capabilities, they offer different services at different prices, this is due the differences in press sizes and other equipment features. Also track information about concerns, list the name of the vendor, dates and any possible problems.
    2. Get recommendations from other buyers and designers who produce similar types of materials, ask about pricing, service, ability to meet deadlines.
    3. Don’t expect printing to be done overnight.
    4. What matters most to you, delivery date, price, print quality or “wow!”? Know your priorities and share them with your printer.
    5. Get quotes from new suppliers and develop relationships during times when you are not busy, the more details you provide a potential printer, the better estimate you will receive.
    6. If you plan to mail the pieces, think about schedules, post office regulations, designing for mailing, USPS rates/costs, mailing lists, mailing houses, fulfillment, and so on. Dean’s Mailing is happy to review proofs before they go to press to look for possible improvements.
    7. Take advantage of payment terms and discounts.
    8. Consider direct paper stock purchases, paper is the biggest cost factor of a print job.
    9. Meet with paper vendors to determine what paper stocks can bring the most value and look for incentive programs.
    10. Work with up to five printers, don’t concentrate all your resources with just one vendor.
    11. Find the printers who can offer your more; creative ideas, lots of experience, current with the technology, and people who understand your business.

  • Make the Most of What You Have

    Direct Magazine published an article titled, “Make the Most of What You’ve Got”. Author, Carol Lustig, shared some realistic practical information with a great attitude. She talked about how her information technology systems were not completely up to date and she was not able to get the exact customer purchase data that she wanted to use for a new campaign.

    The result was that working with what was available, a new campaign has been launched and customer relationships are being retained using targeted specific information.

    We have talked about the ideals of customer segmentation and market analysis, but the other side of those ideas is that we just need to do something! Maybe that something is just to start with what we have.

    Please talk to us, we are here to save you every possible fraction of a cent on postage and that sensibility can help you make the most from what you already have (creative ideas, artwork, customer information, extra mailing pieces, samples…).

  • Media Choices

    The multitude of media choices available to target and deliver  messages is amazing. And there are more options headed our way. This means that readers are strapped for time and bombarded with marketing communications, great writing alone probably won’t get your messages opened and read. Pat Friesen offered some understanding of how to deliver the message at the right time and in the right place in Target Marketing Magazine.

    Tips for delivering maximum impact from a direct marketing writer.

    • Don’t be overwhelmed by choices. Remember what’s worked in the past, and test new options that make strategic sense for reaching your audience and meeting your business objectives.

    • Apply common sense and basic direct marketing principles. Measure and evaluate results, including initial response, closure rates, average order size (dollars and units), abandon/cancellation rates, lifetime value, etc. Remember, direct marketers track and measure the level of response.

    • Cheaper on the front end isn’t necessarily more cost-effective on the back end. Track, measure and compare results.

    • Not all media is direct response media … but that doesn’t mean you shouldn’t use it. Public relations, special events, and social media are marketing tools with the power to influence buying decisions. Use them accordingly.

    • Don’t put all your eggs in one basket. Even with a successful 15 percent to 20 percent e-mail open rate, you still are not reaching 80 percent to 85 percent of your highly qualified buyers. Common sense dictates using both e-mail and postal mail to maximize results.

    • Just because you know your offer is on your Web site or featured in your organization’s magazine, that doesn’t mean your customer knows it. A targeted phone call, e-mail, letter or even a postcard may be appropriate to communicate your offer.

    • Not all messages are appropriate for all media. A letter still looks more personal, more valuable and more confidential than e-mail. It’s also less easily “trashed” by mistake or intentionally. If you offer financial services or other products of personal importance (e.g., legal, medical, upscale travel), don’t forgo postal mail for e-mail without testing.

    • Put your message with a measurable call to action on your shipping box or packing materials. Create a product insert (not package) that encourages a second purchase. Be creative, be inventive and put your message in multiple places where your customer will see it.

    • Some market segments respond better to specific types of media than others. For example, mature audiences 75-plus years old remain more comfortable with postal mail even if they have e-mail addresses.

    • Test. Studies, case histories and anecdotal reports confirm that marketers who are most successful across the board using all types of media follow the direct marketer’s mantra of test, test, test.

    • Don’t take a message written for one medium and plop it into another without careful review. Be aware that e-newsletters are different than ink-on-paper newsletters. Web ads are read differently than space ads. Readers’ expectations after opening an e-mail are different than after pulling a letter out of an envelope.

    • All messages (no matter which type of media delivers them) have hot spots. Know where they are, and use them to your advantage.

    • Consider the appropriateness of your media. The media you use for prospecting may not be the same as you use for communicating with your customers.

    • Use different media to communicate with different customer segments. Just because you send a personal First Class letter with a 44-cent stamp to the top 20 percent of your customers who generate 80 percent of your sales doesn’t mean you have to mail First Class letters to all your customers.

    • Save money; prospect within your own database. Cross-sell, upgrade, reactivate. They are very cost-effective ways to generate new business.

    • If you limit yourself to using only one medium, you limit your opportunity for success. The more places consumers see you and the more ways they hear from you, the better they know you, the more they like you and the better they trust you.

    • When your contact strategy includes a series of messages, have a strategy for your mix of media. Do what is appropriate for your message, audience and business objective. It could be an initial phone call, followed by a personal letter, then e-mail communications.

    • No matter how cheap it is, media isn’t a good investment if it doesn’t generate the cost-effective results you need. Weigh the pros and cons of any media choice including cost, open rates, security concerns, deliverability rates, recipients’ perceptions of the medium, how it supports your brand, etc.

    • Timing is as important as the media and message. Factor in time of delivery, holidays, how soon is too soon and how often is too often.

  • Inexpensive Marketing Maneuvers

    Forbes Magazine featured a story about some marketing ideas. Our favorite was to make your customer the star.

    Using a classic cooperative strategy, you could create their marketing for them. If you provide services or products to other businesses, can you help them with creative marketing featuring your products. Do you sell framing materials to frame shops, create postcards featuring finished frames.

    To feed egos of your customers, feature a few them enjoying your products and services. Make them look really good, help them say smart, witty things or touch on their vanity with great lighting, hair and makeup.

    To draw your customers into your creative process, what about a creative writing, illustration or visual contest? The contest could be tied to something new like a product launch and the reward for submitting an entry could be a sample of the new product. Contests are also great opportunities for publicity and free media coverage. Since you really want to stay in touch with your current and past customers, sending them a postcard or letter explaining the contest accomplishes many goals at once.