Category: Behavioral Targeting

So, you are communicating with your best customers using email. And, your strategic business objective is to append more of your customer file with email addresses, and increase the number of opt-in addresses you email. Because, of course, email is much cheaper than marketing using other channels, it presents opportunities to better target, and personalize, and improve relevancy.

But do your customers see it the way you do? Do your customers sense the value you have for their business as a result of your email communications?

Arguably, email does not enhance the emotional connections you want your best customers to have with your brand. Email doesn’t say “thank you” or “we appreciate your business” or “you’re special” very well. Certainly email allows you to cost-effectively increase the frequency of contact with your customers. But your customers know how cheap email is to send: that’s why they get so much of it!

Consider an Information Week report that came out today, regarding a study from Symantec. Spam is on the rise, and as of July, 2010, spam comprises 92% of all e-mail messages. This is the context of your best customer email marketing communications: a sea of spam.

Think about the most meaningful messages you’ve received from companies. Remember the hand-written postcard from the Nordstrom sales associate after your big purchase? Remember how the head chef in a fine restaurant you frequent came out to the table to greet you (and your friends), thank you, and buy that bottle of wine? Remember when your Zappos order came, including ’surprise’ free overnight shipping? Remember your stay at the Ritz-Carlton and how the Ritz-Carlton motto — “We are ladies and gentlemen serving ladies and gentlemen” – was put into action in the most basic and yet surprising ways? Remember the birthday card from a store you like, and the special thank you gift inside? Remember the genuine and highly personal contacts you have experienced that actually do engender loyalty, and repeat purchasing? Most of these experiences that stand out occur in the offline world, the real world.

Yes, email is part of the marketing mix, and an excellent channel and effective means of communicating with customers. Yes, you have objectives to retain customers, up-sell and cross-sell other products and services, increase the lifetime value of your customers, and generate more sales – and email helps you get there.

But, your best customers are your greatest asset. The 80/20 rule probably applies in your business, suggesting that 20% of your customers (your best customers) drive 80% of the revenue, and likely, most of your profit.

Customers want to know their business is valued. With so much competition, and commoditization, it’s easier and easier for customers to go elsewhere to buy product X or service Y. In a world of homogenized email, faceless companies, and other options just a click away, it’s more important than ever to stand out, deliver quality experiences for your best customers, be truly personal, and add meaning to the transaction.

People don’t want to be numbers, or treated like everybody else. People want recognition, and “surprise and delight” experiences that reinforce their brand choice. For your best customers, spend more, deploy direct and highly personal initiatives that go way beyond email, and let them know you care.

A recent McKinsey quarterly report by David Edelman goes further than most in paying off on the proposition to get more out of your digital marketing initiatives. McKinsey has found that “the most successful digital marketers focus on managing four core sources of value as they increase the percentage of marketing and channel spending that is directed to digital activities. First, they coordinate their activities to engage the consumer throughout an increasingly digital purchase journey. Second, they harness interest in their brands by syndicating content that empowers the consumer to build his or her own marketing identity and, in the process, to serve as a brand ambassador. Third, they recognize the need to think like a large-scale multimedia publisher as they manage a staggering increase in the content they create to support products, segments, channels, and promotions. Finally, these marketers strategically plot how to gather and use the plethora of digital data now available.”

While in summary form here these four sources of value may seem more like platitudes, but they are in fact excellent signposts for marketers on the road to realizing the promise of the digital revolution unfolding around us. And once again, we are reminded that our best approach is bottom-up (from the customer’s perspective) rather than top-down (from the marketer’s perspective). Taken together, these changes force companies to step back from tactical, day-to-day execution and take a more strategic view of where to invest and make changes. Reading the 7-page report is worthwhile and free but requires registration here.

We’re firm believers in the power of utilizing behavioral data to solve business problems. With the availability of reliable quantitative data, goals like marketing optimization and efficiency become a reality. Under the old database marketing paradigm, life was straightforward: Every marketing dollar was tracked against resulting customer-specific, transactional metrics. Inquiries, registrations, purchases, and profit could all be tied to addressable prospects and customers, and the cost of soliciting those actions could be calculated with precision. What we learned about consumer behavior informed our efforts, and the outcome was, in most cases, measurable improvement in our marketing efficiency over time.

But recently, the avalanche of new online data has threatened to derail us, cluttering our minds and our marketing dashboards with an ever-expanding array of disparate tables and graphs. A significant amount of time and effort is invested in compiling and reporting on these new metrics. But are all of them really advancing us toward our goal? Impressions, clicks, page views—where did the customers and sales go?

Author and business consultant Eric Ries wrote a post for the Harvard Business Review titled Entrepreneurs Beware of Vanity Metrics that really gets to the heart of the matter.  In it, he presents a discussion about Actionable metrics and their nemesis: Vanity metrics.  Whether you are a Start-up or Big Company, we think his observations apply to the multichannel marketing arena.  We agree with him that metrics should be:

Actionable—If you don’t believe it or you can’t repeat it, you can’t be confident in your decisions.
Accessible—To support effective business decision-making, reports must be understandable, available, and timely.
Auditable—Metrics must be credible, with no loss of integrity between the individual customers and atomic activities that roll up into summary numbers that appear in reports.

The Web brings us a lot of instant gratification and a mountain of data. As Mr. Ries accurately points out, people have a tendency to believe (and take credit for) positive metrics while they excuse (and deflect responsibility for) negative ones.  The most successful organizations will be those with the objectivity to discriminate between the actionable and the feel-good data. In other words, let’s be picky about what we measure and separate metrics that capture the essence of consumer behavior from metrics that reflect our own marketing department’s output.  If we maintain our focus and believe in our metrics—positive and negative—our business decision-making will be cheaper, clearer, and better.

Dan Ariely, behavioral economist and author of Predictably Irrational, made a highly enlightening and entertaining presentation on the flawed nature of the human decision making process. Using examples ranging from magazine subscriptions to organ donor registration forms, Ariely shows how the wording, selection, and arrangement of choices can have a massive influence on the outcome:

In an article published on MarketingProfs, Michael Barr describes how Hyundai has successfully stayed afloat in a sinking industry. From the source:

Hyundai discovered that as the market changed so did their segmentation. Significant numbers of prospects were no longer focusing on gas mileage performance, and they weren’t necessarily looking for more discounts…Hyundai determined that the fear of losing one’s job was a high barrier preventing prospective buyers from purchasing a car.

After defining the segment, the company developed and aligned sales and marketing strategies to reach this new segment. By targeting prospects concerned about job security, Hyundai broadened its audience and increased the number of customers who considered its cars.

Hyundai was one of a few auto makers that posted an increase in sales in January. They took the shakey economy head-on and won. Read the full article here.

Natalie Zmuda of AdAge wrote an article today about the big winners in retail over the last year. The grocery giant Kroger was ranked among them, thanks to gas discounts, free groceries earned through loyalty cards and 10% off all purchases made with tax rebate checks. Kroger also gives credit to their highly targeted and personalized direct marketing campaigns. From the source:

“We understand and appreciate that no two customers are alike,” said David Dillon, Kroger’s chairman-CEO. “Some may live in the same city, some in the same neighborhood and even on the same street, but we know that they don’t have the same shopping habits. This level of personalization is a direct link to our customers [that] no other U.S. grocery retailer can replicate.”

We love your approach Mr. Dillon. Why send canned beet coupons to an entire ZIP when you know that only 317 loyalty card members have bought them in the past month?

The Federal Trade Commission released a 48-page report this week addressing concerns about behavioral targeting practices in online advertising. Of course the larger issue at hand is privacy rights, and whether marketers need consumer consent to track behavioral data.

While the FTC cited “financial data, data about children, health information, precise geographic location information and Social Security numbers” as examples of sensitive information that could be tracked by marketers, they concluded that behavioral targeting practices should be self-regulated.

This declaration had plenty of caveats, including the strong recommendation that any website collecting information for behavioral marketing should provide a clear privacy policy, give consumers a choice to opt out of tracking, and retain data only as long as necessary for legitimate business needs.

If you’re into reading stodgy government reports in their entirety, feel free to download the PDF. Your tax dollars paid for it, after all.

While the campaign of President-elect Barack Obama is crediting an array of factors for his victory, behind closed doors they would surely give a big nod to the skillful use of data mining.

Fast Company rounded up a few political strategists to talk about their segmentation and data mining techniques. There’s a couple of interesting findings for us marketers in the article—like don’t shy away from data that paints a human picture of your target. Michael Meyers, President of Target Point Consulting, had this to say:

We’re always looking for a better mousetrap. We’ve come up with about 30 major DNA strands within the electorate, such as soccer moms, Nascar dads, evangelical earth stewards, country-club Republicans, married-to-their-mortgage families. Then we say, ‘These people need war-on-terror messages, these people need education messages, these people need tax messages.

As marketers, we work on this all of the time—identifying targets, crafting meaningful messages, and motivating specific actions. And consumers, much like the electorate, continue to carry on mostly unaware of these efforts.

I’d been thinking a lot lately about how much control consumers really have over product desire. When your marketing is viewed as an irrelevant interruption, it’s awful easy for consumers to delete/throw away/carry on with their day. But by using concrete behavioral data to personalize and localize your marketing, consumers will discover a true value in your brand and welcome future communications. ChiefMarketer.com recently published an article I wrote on this subject. A little taste…

“Marketers are in business to sell desired products, and consumers tell you what they want all the time. They speak through transactions and interactions. Brands that listen up and communicate back with products and promotions understand the value of behavioral targeting.”

While consumers willingly provide personal information (aka marketing gold) to online merchants, it often remains unused. According to a MyBuys/e-tailing survey, consumers are comfortable with personal information being used to make their shopping experience more relevant, though feel that need isn’t being met.

From MediaBuyerPlanner.com:

“77 percent say they have made additional purchases when they have encountered personalized product recommendations online - more than half say they usually peruse those recommendations when offered.

More than one-third of consumers (36 percent) indicate that they award more loyalty to merchants who meet demand for true personalization in the shopping experience.”

More from the source…