Tag Archives: data segmentation

Data … big data? Or back to the Dark Ages

Back in the 80s, there was this thing called “junk mail”.  And it was so called because it involved blanket mailing a mass market with little or no targeting. In other words, the message was irrelevant to a huge proportion of the recipients, so just got thrown in the bin.

Then we discovered targeting, analysis, insight and profiling.  And the direct mail messages become more appropriate, relevant, cost effective, and considerably less irritating to the consumer.  A classic case of less was more.

I remember the day that “personalised laser text” became available, and we were able to send out mailings with personally addressed letters which referenced the prospect’s other interests.  Letters that said (something along the lines of)

Dear Mrs Bloggs,

Because of your interest in the world’s wild places, we wanted to introduce you to our our brand new books which demonstrate the extraordinary and dramatic nature of our own planet earthfrom volcanoes to earthquakes …. 

The letter, including that simple piece of “personal” text, was enclosed into a small envelope with a miniscule brochure and mailed out.  It achieved over three times the response of the standard pre-printed control direct mail letter which was mailed in large envelope with enormous, heavy, expensive brochure

But now the European Union is proposing to take us back to the Dark Ages and the days of blanket mailings.  Their new proposed legislation is currently in progress, and will impact every level of prospect marketing.

It’s quite clear that the increasing use of new technology makes revisions to current data law essential, particularly given consumer concern over privacy which has not helped by our own government’s appallingly cavalier behaviour and carelessness with our personal data.  (Some of the breaches committed by government departments would have, if committed by the data industry, have caused severe punitive measures.  Somehow when it’s the government which gets it wrong, the whole thing just quietly gets swept under the carpet. Rant over…)

However, in addition to technological and social media impact, the traditional media channels will suffer significant difficulties.

A brief summary of the key areas is listed below:

  1. Explicit consent to be granted by the recipient prior to any direct marketing – either by word or by action.  In practice this means that where consent is required, organisations must ask for permission to process data.  Without such explicit permission, marketing prospects will not be allowed to receive mailings or cold telemarketing calls.  Current legislation allows such mailings and / or calls to be made unless the prospect has actively opted out.
  2. The customer has the “right to be forgotten” – ie they can insist that their details are emoved from a database in their entirety.  This is entirely impractical.  Once deleted, when or if that customer appears again on the database (if, for example, rented from a third party list, or in the event that the customer makes another purchase), the customer’s request for deletion will have vanished.  So in practice, the “right to be forgotten” should trigger the inclusion of that customer into a ”suppression” or “do not mail” file so that there is no inappropriate future contact.
  3. Profiling or segmentation may not take place without consent.  This will have serious impact on those data businesses which hold shared transactional data from multiple companies, or geo-demographic data, or indeed simply work with marketing profiling models.
  4. List broking is likely to require significant changes to comply with new legislation.
  5. The definition of personal data has been extended to include, potentially, IP addresses and some cookies.  Quite apart from the fact that an IP address or cookie may be used by a number of individuals, this will make it much more difficult for businesses to analyse and profile web activity.  The impact on digital marketing will be significant and, arguably (given that there will be no ability to provide relevant, targeted marketing) counter-productive.
  6. Cost:  DMA (UK) Ltd research shows that complying with the proposed regulation could cost companies an average of £76,000 each. It estimates a total loss to UK industry of up to £47 billion in lost sales.  These costs come, in part, from:
  • Companies with 250 or more employees will need to appoint a data protection officer
  • Under current legislation, subject access requests can be charged at £10 each.  Under the proposed new legislation, this charge is to be eliminated. This is likely to result in increased numbers of requests.  In addition to the lost revenue from existing volumes of which is likely to increase the number of requests, frivolous and serious.
  • Every organisation that suffers a data security breach would have to notify Information commissioner within 24 hours
  • Right to compensation from the controller or the processor in the event of processing activity causing damage to a person
  • Increased fines / sanctions to be imposed

On the face of it, the picture looks pretty bleak.  But there’s no need to despair just yet – there is time to provide our views on required adjustment, amendment and refinement  before these proposals are ratified and become law in the UK.

But for that to happen, businesses need to act now.  There is a fantastically detailed amount of excellent information to be found at the DMA (UK) Ltd.     So have a look and check to see how the current proposals are likely to affect your business and your marketing.

Then we need to write to our MEPs – and the DMA has made this easy by providing this link which has all the vital information, including who your MEPs are.   We need to ask them to fight for the fair interests of business.

We’re all for sharing knowledge and information and enjoy a healthy debate, so if you have any questions, views, tips or knowledge, please  just “reply” below. Victoria Tuffill – victoria@tuffillverner.co.uk   01787 277742 or  07967 148398.   Feel free to visit our website.  And yes, we’re on Linked In, and Twitter

Multi-channel marketing, data … and fly fishing

As  keen fly fishers, we’ve travelled to a variety of rivers throughout Scotland, Wales, Ireland and, more exotically, Iceland and Russia for Atlantic salmon, Arctic char,  sea trout, brown trout, greyling and any other species that is prepared to jump on the end of our lines.

Despite my propensity to fall into rivers (tricky in chest waders which can fill up fast if you get it wrong), the experience has always been delightful.  Not just for the fishing, but also for everything that surrounds it – good company, the sight, smell and sounds of the river,  the scenery, the wildlife, and the good company that almost invariably accompanies a week of fishing.

So what does this have to do with marketing? Actually, pretty much everything.

Understanding your customers

Firstly, whether you’re fishing or marketing, you need to understand your prey and their circumstances.  Is the river in spate?  Or is it a dry ditch?  Are there likely to be problems reaching the fish?  Or indeed, landing them?  In fact, where are the fish?  What are they doing?  And how many are there?  Are they migratory?  If so, when will they run?  Are they a good size?  Are they fat and healthy, or diseased and thin?  Are they young or old, male or female, shy or aggressive?

Reaching your customers and prospects

Then you need to consider how to reach them.  Is it tricky to cast?  Is it too deep to get in and wade to get closer or a better angle?   What’s the wind direction?  Is the water too warm or too cold?  Is it a long, arduous climb to the hill lochs?  If so, is the end result worth the effort?  Having invested the time and energy in climbing the hill, is it a good idea to spend a little more time up there?  Perhaps even pitch a tent and spend a night or two to catch the dawn and evening rises and make the most of the opportunity?   How can you best stalk the fish in the clear waters of a chalk stream? How can you avoid the weed – either before or after hooking a fish!

What are the fishes’ motivations for taking a fly?  Is there a particular size or colour that will appeal?  How should it best be presented?  At what angle, depth and speed?  How frequently should you cast over a fish?  Especially if you can’t see it so can’t be absolutely certain that it’s even there.  And what do you do if a fish takes your fly, but not properly?   Vary the speed?  The depth?  Change the fly?  Go for something larger?  Or smaller?  Or a different pattern?

In addition to all of that, there’s a need to identify and understand the competition – Seals?  Otters?  Commercial fisheries?  Bears, or other predators?

Depending on the answers, you need to use appropriate and varied techniques to catch your fish.  For example, sea trout are shy creatures, best caught at night.  This means fishing in the dark, so you need to do your research during the day – spotting fish where you can, identifying likely fish-holding lies, working out the length of cast you’ll need, the speed and depth of the water.  That way you have the knowledge you need to have a fair chance of getting your fly out to the right place and fishing it well.

In a chalk stream where the water’s very clear, you need to stalk your brown trout, making sure you can’t be seen, then lay the fly gently upstream on the surface of the water so that it drifts right over their nose and becomes irresistible.

Salmon are different again.  Here you need to be able to read the water and understand where the fish will lie, then make sure you put the fly where they can see it and make them want it.  And it has to be the right fly, moving at the right speed and in the right way.  And when one takes, you don’t “strike” in the same way as for a trout.  Actually, Atlantic salmon don’t even eat when they’re in the river, so they need to be enticed to take your fly for other reasons.

Understanding your customers and prospects

Though it might be more accurate – and certainly more tactful – to refer to your potential customers as prospects rather than prey, all these issues equally impact marketers.  What’s the economic climate?  How much money is out there for consumers to spend on your products?  How much effort and budget is required to acquire a particular customer – and are they worth it to your business?  Where do they go to buy?  Online?  Over the telephone?  Bricks and mortar?  Do you need to segment your marketing to appeal to different lifestyles and demographics?  And is your product a must-have?  If not, how can you encourage consumers to buy – particularly in a poor economy, when your competition is as hungry as you so you need to fight harder to win – and keep – customers.

Stage one is understanding your prospect.  Who are they?  Male?  Female?  Young?  Old?  Parents?  Single? Homeowners?  Students? Living at home?  Renting?  Where are they in their lifecycle?

Where do they live?  What’s on their mind?   What, why, when and how often do they buy? Is there a seasonal bias? What’s their disposable income?    What do they read or watch on TV or online?  What technology do they use?  Tablets?  Smarphones?  Smart TVs?  Or paper?  Or all of those?  Do they interact with social media?  Consumer or business?  What are their hobbies?  Are they in debt?  And so on.   Whether you’re in retail, or publishing,  financial services or telcos, technology or utilities, charities or even politics, the above issues all need to be considered within a marketing campaign.Does your product appeal to a mass market or a specific segment of the market?

And that kind of knowledge requires data – both historic behaviour and research from your own customer database, also data from third parties, which is readily available and can provide you with a wealth of geo-demographic, lifestyle, behavioural, purchase history, financial, risk and fraud data.

Of course, data’s of absolutely no use at all unless it’s turned into meaningful insight that your business can use to allow intelligent, informed decision making.  Not only that, but the ever-growing volume, sources and complexity of consumer data can be overwhelming, so it’s essential  that effective, relevant and actionable data and insights are identified for strategic  and selected to provide the best data strategy for the business throughout the customer lifecycle.  The basic goal must be to use the right data to have the right customer conversations at the right time through the right channels.

Once you know enough about them, you can start to understand the size of your market, and where to go to find prospects who look like your own customers and consider how best to attract them.  Which will be the subjects of upcoming blogs.

One final thought.  The first time you visit a river, it’s helpful to take a ghillie, who will know where the fish lie, and how best to fish for them.  Listen to every word they say and all the advice they give, so that you can learn as much as you can for the next time you want to fish that – and other – rivers. Ghillies are a canny breed, so they’ll know what you’re doing, but will generally be helpful.  

The same is true of marketing.  At TVA we are happy to act as ghillies or guides – so if you’d like to discuss how you could use and benefit from advice on data or any direct marketing channels, please don’t hesitate to give me a call.  As ever, if I can help, I’ll be happy to.  If not, I’ll make sure I point you towards people who will provide sensible, strategic advice.

Victoria Tuffill,  Partner, Tuffill Verner Associates – Multi-channel and direct marketing

Tel:         +44 (0)7967 148398  /  +44 (0)1787 277742

Email:     victoria@tuffillverner.co.uk      Multi-channel consultancy       Linked In      Twitter

 

Loyalty schemes – where bribery isn’t corruption …

Loyalty programmes

New customer acquisition is the expensive part of the marketing cycle, so from the moment a new customer starts to buy, a marketer’s thoughts need to focus on customer retention.  If you can encourage a customer to keep buying from you, the level of revenue, advocacy, good will, knowledge and data you can acquire from them will be invaluable – across metrics such as sales, profitability and retention.

So for me, looking after your customers, recognising their importance to you, and rewarding them appropriately are essential factors in business.  Particularly given the increasing ease and speed with which consumers can – and do – hop from brand to brand, provider to provider.

There is a strong argument that good overall product, pricing and service is the best way of generating long term customer relationships.  You just have to look at Apple to see the truth of that.   But there is no doubt that customer loyalty schemes can help strengthen customer relationships and retention by reducing churn and switchers, particularly given the sheer volume of loyalty schemes in the market. Tesco’s Cubcard loyalty programme is an excellent example.

Because so many businesses use loyalty schemes in one form or another, not doing so can put a business at a disadvantage. Obviously if competitors offer broadly the same product, price, service and quality, and one offers a loyalty scheme while the other does not, from the consumer’s viewpoint the choice becomes straightforward.  One of the suppliers is giving them additional value. For example, coffee.  Given my coffee consumption, a free cup of good coffee every 6 visits works for me! But quality is key – no loyalty card offering free cups of filthy coffee would make me buy filthy coffee more than once.

There are numerous types of loyalty programme, including money off, discounts, vouchers, retail loyalty and credit cards, gifts, prizes, points, cashback, competitions and so many more. The scheme can be developed for an individual business who wants, for example, to encourage their active customers to buy more and stay loyal, or reactivate their inactive customers; there are non-competitive businesses who can work in partnership to increase their customer base (such as Amazon and Virgin Wines);  or groups of businesses – for example, towns who want to encourage their inhabitants to shop locally rather than visit the supermarket.

What is important is that the loyalty programme should reward customers for behaviour that is profitable to the business.  There are any number of metrics – from spend to length of relationship, or even speed of payment.  My hairdresser has a loyalty card which gives me a 10% discount every 5th haircut.   It wouldn’t work if he didn’t do a good job, but he does, so that makes me feel good, and yes, I’ll spread the word.  It would be nice if he’d increase it year on year, but alas, he knows he doesn’t need to!

Loyalty programmes also afford an opportunity to reactivate those consumers who used to buy from you but have, for some reason, stopped doing so. These customers will be more responsive than cold prospects.  Assuming you have a marketing database, you will have their purchase history so will understand what, when and how they have bought.  You’ll know how much they’ve spent, so will be able to segment according to their value to you as a customer.

One of the key issues in any loyalty scheme is data and segmentation.  And this is where Tesco excel.  Their offers – from grocery to financial, to mobile phones and more – are highly targeted based on the incredible amount of data they hold on their customers and what they buy.

In the case of reactivation, it may be that, once you’ve looked at a lapsed customer’s data, you’ll discover that you don’t want to retain or reactivate them –  there’s absolutely no point in incentivising your bad customers to continue buying from you if they are losing you money.  And there is a myriad of reasons why they may be poor customers for you – perhaps you are having to chase debt, or pay out excessive claims (particularly in insurance or telco), or maybe the customer will only buy low margin or loss-leader products, or are expensive to maintain and (for example in financial services) you make no money out of them.

For customer acquisition and retention at the same time, one of the best loyalty schemes I’ve seen is from Naked Wines. A 25% discount off all future orders – which means that you always get 25% off your next wine order, and it shows up as real money available when you go online to buy your next case.

So you end up paying a painless (continuous payment) £20 per month.  When you go online to buy, that £20 has become £20 plus the 25% discount – it becomes tremendously easy to buy and increasingly difficult to move away!

Loyal customers who recommend you to their friends because of your product, offer, quality, engagement and loyalty schemes now have a multitude of opportunities to spread the word through social media as well as face to face.  So your “reach” or awareness among your market becomes significantly stronger.

But to generate that level of advocacy means that your loyalty scheme should be unique, compelling, targeted and benefit both the consumer and the business.  If you can enthuse your customers enough for them to want to spread the word among their friends, then they’ll be enthusiastic enough to enjoy it, take advantage of it, and remain a loyal customer.

We’ll welcome your thoughts or comments on this post – and if you’d like to discuss how you could use and benefit from loyalty programmes, please don’t hesitate to give me a call.  If I can help, I’ll be happy to.  If not, I’ll at least point you to someone who will provide sensible strategic advice.

Victoria Tuffill
Partner, Tuffill Verner Associates – Multi-channel and direct marketing

Tel:         +44 (0)7967 148398  /  +44 (0)1787 277742
Email:     victoria@tuffillverner.co.uk
Web:       http://www.tuffillverner.co.uk

Victoria Tuffill is a direct marketing consultant with over 30 years experience. She founded Tuffill Verner Associates consultancy with Alastair Tuffill in 1996. She is also founder and Director of Fraudscreen – a data tool that assists in the prevention of 1st party fraud. Her experience ranges across businesses including publishing, home shopping, insurance, utilities, telcos and collections.

© Victoria Tuffill and Tuffill Verner Associates, October 2012. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Victoria Tuffill and Tuffill Verner Associates with appropriate and specific direction to the original content.

Keeping Continuity Alive and Kicking

A firm staple in many a Direct Marketers diet, continuity programs present great opportunities to leverage sustainable ROI, and it seems fairly obvious – doesn’t it?  Having a portfolio of products  (or services) that are continuity based carries great benefits for business and consumer alike – but that initial, often significant investment is completely reliant on the lifetime value of those customers and their loyalty to the product they ‘signed-up’ for to be successful.  In essence that could be anything from the classic monthly subscription to magazines & books through vintage wines, chocolate and training courses.

In recent times, trends have not been great with the departure of several established continuity based companies hitting the wall, having lost their edge in this passive revenue sphere.  The factors that such perpetuity programs were forecast upon are far more volatile, helping to erode the ROI along the continuity journey. Vital LTV falls sharply as customers (across B2B & B2C) tighten belts and withdraw from subscriptions or continuity programs too early to realise the revenues needed to tick the ‘success’ box.

Of course – that’s exactly the offer we marketers often promote at the outset – there is no commitment – free to cancel at any time.  The difference is now more customers take us up on the offer – flexing their rights and greater confidence to change their minds, buy something else, respond to a new offer etc.

Analysis is key to proactive rather than passive marketing

Analysing conversion and cancellation rates over time – any business can see what’s happening after the event, but preventing it is another project entirely.  Its relative of course, not every business and product needs an equal % of initial customers to get past month x before being a valuable asset.  The great news is that business can intervene at any stage with a little creative thinking about improving customer loyalty, and without breaking the bank.

Having a high degree of segmentation and promotional material across multiple channels & offers is expensive and can be an operations nightmare, particularly if you are working with a legacy system. Crucially, work with what tools you can access and optimise them quickly – get the timing and message right and it will procure the best results possible for you.

Multi-channel opportunities can really come into play here, allowing flexible, integrated marketing strategies to work in harmony with tactical opportunities offering highly relevant communication at the right time via the right channel.  Longstanding or fixed strategies can become stale, justifiably focused on the critical initial conversion rates whether from acquisition or retention campaigns. The golden rule of quality data (not just the transactional) apply but crucially, need to extend well beyond the early order stages.

All customers are not equal …

The behaviour of customers needs to be known before it can be understood and responded to appropriately. This is not easy – we all know transactional data is not the same as behaviour – it’s just not multi-dimensional enough in an age where customers can behave erratically and spontaneously across all the channels available to them. I might order online – and complain by phone, followed by a letter….that I post on Facebook … with my angry face on Pinterest! Furthermore, as a continuity customer, I may not interact with the organisation at all along the way, until I decide to stop buying.

Of course – if you’re starting out with a continuity portfolio – getting the right infrastructure at the start will reap rewards later on.  Use a specialist multi-channel team that work together to think of EVERYTHING – you don’t need to implement everything straight away but at least have it on the watch list, creating an environment that can proactively adapt quickly to changes and demands as they arise.

Enhance every customer touchpoint as a key step to engage more, add value and gather the data needed to make the decisions that work – obviously not a process reserved for continuity programs alone, but generally better practiced for new orders or repeat business. Creating additional or tactical touchpoints is now easier than ever with online channels providing cost-effective platforms to increase contact and test ideas without significant costs when there is not necessarily a direct sale at the end of it. Equally, using more traditional methods like telemarketing and telephony in general, via non-sales routes can have a significant role to play in enhancing the relationship.

Sustainable continuity marketing has to embrace CRM principles and a large dose of common sense, ensuring we extend the life of customers and their loyalty levels as far as possible – whilst also realising it could be a shorter journey for the vast majority.  In the good old days, marketers relied heavily on customer apathy to generate this pot of passive income – getting them to and beyond break-even into profit was more about hoping they won’t back out, that they valued the offering enough to stay with an organisation.

Customers are wiser and better-informed with more choice than ever before, so marketers must also raise their game and think creatively to ensure continuity programs stay alive and kicking.

By Googie Oktem, August 2012

With 25 years expertise in the Direct Marketing industry including agency and clientside roles, Googie has a reputation for getting the job done! She has been consulting since 2001, working with clients to implement and deliver successful ROI-driven projects, both online and offline. Her specialist knowledge of using telemarketing resources and call centres produces great results for clients and suppliers, exceeding client KPIs and reducing costs on numerous end-to-end telemarketing projects.

© Googie Oktem and Tuffill Verner Associates, August 2012. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Googie Oktem and Tuffill Verner Associates with appropriate and specific direction to the original content.