Multichannel merchants, flush with customer data, often find
themselves paralyzed with too much information, too many ideas, and too little
time and resources to use the wealth of information that lies within their
customer files.While the most
sophisticated direct marketers have applied for decades statistical modeling
techniques for teasing out subtle insights to optimize catalog and direct mail
investment, the majority of traditional retailers who evolved into equally
robust direct merchants through their e-commerce and e-mail investments have
remained on the outside looking in.
Being an active member of both multichannel retail and
direct marketing communities, I’ve seen firsthand the wide differences in
practices and personalities of these two groups.In the common ground of new customer acquisition via the Web, the
differences are clearly delineated.
Think about the simple path from lead generation to
conversion.Direct marketers are among
the most proficient users of high-volume, low-cost lead generation products
like “incentive offers” (win a free ipod), faux surveys and
co-registration.These channels provide
a site visit but also an e-mail address (for future contact) and key pieces of
additional information (for future targeting).The “path” itself narrows, offering few options to find additional
information, comparison shop, or navigate in any way other than from landing to
purchase to payment to confirmation.The number of landing pages and paths often counts in the dozens at any
given time, constantly being adapted on the fly based on highest levels of
conversion.
Leads that do not convert are remarketed (assuming the
consumer has given e-mail marketing permission) using multiple offers, multiple
creative versions – again in a scientific and rigorous methodology of
continuous testing, learning, and optimization.
Multichannel merchants’ prospecting, in contrast, employs
much softer, user-driven approaches such as affiliate marketing, search engine
marketing (and optimization), and graphical display advertising.Leads that come through these channels come
with no additional personal information (for remarketing) – though they are
typically more qualified in their purchase intent.Merchants have done a much better job customizing landing pages,
particularly for search, but prospects land on open sites free to navigate,
compare, and ultimately get distracted from their original intent.
That softer approach is not going to change – nor should
it.The significant differences between
direct marketers and multichannel direct merchants (brand perception, product
and category breadth, longer term customer relationships) lend themselves to
these very different approaches.
With that said, what can multichannel direct merchants learn
from their direct marketing cousins in order to improve their performance? We
recommend the following tactics:
Expansion of lead
generation channels.Be willing to
take a chance on a few rogue sources of data.The keys to success while doing this are to insist upon receiving only
leads from sources that closely match your targeted demographics or to have all
leads pre-qualified with a few telling survey questions.If the media company or list broker cannot
ensure that the leads are pre-qualified, steer clear.Second, test success of the investment as rigorously as you would
optimize your search buys – both with regard to initial purchase as well as
long-term value.A simple metric to
watch is the degree to which these leads remove themselves from your e-mail
list.A high rate is cause for double
the concern:the payback won’t be there
on the cost and more important, if these leads mark you as spam, you jeopardize
the deliverability of your entire list.
Better customer
profiling capture.Ask questions of
your customers that are relevant to providing them with better service and give
you keen insights on how, what, and when to best market to them.Some examples that we’ve seen work are:
·Category interest
·Brand preferences
·Body type and sizes
·Channel preferences
·Birthday
Each of these data points can be applied explicitly to both
the targeting and content of your e-mail marketing campaigns, and where
capabilities exist, allow you to customize the content and featured items on
your Website.
Hypothesis-driven transaction mining and marketing.Almost every multichannel merchant employs
some degree of transactional data to their e-mail marketing campaigns.While a few have invested in analytics tools
and analytical professionals to sift through the terabytes of data to tease out
insights, we have a real fondness for merchants who pose and test hypotheses on
a continual basis.
Here are some of the hypotheses that we’ve seen multichannel
merchants test successfully:
·Sales-sensitive (and insensitive) customer
behavior.Limit price-reducing
promotions to customers who have shown the highest levels of conversion in the
past, while offering more product-focused e-mails to less sensitive consumers
before markdown.
·RFM combinations.The infinite combinations of recency, frequency, and cumulative monetary
value offer just as many ways to target and test.For example, how would you reach out to a customer that had made
three transactions in the past six months for an amount in excess of $250, but
you had not heard from in 60 days?
·Birthdays.Who
wouldn’t like to hear from you on their birthday with a special offer?
Promotional creativity.Direct marketers know how to sell.We’ve all heard:“But
that’s not all!Call in the next 18
minutes and you’ll receive not one but six glow in the dark shoelaces.”Merchants should use their direct channels
to promote offers not available to everyone in their stores.Use your e-mail marketing to send small (but
statistically relevant) quantities bundling, discount, gift with purchase, and
other offers that you would never dream of opening up to everyone.Sure they’ll end up on bulletin boards and
coupon sites, but these sites as just another way to expand you lead
generation.
Bottom line, there’s a lot to learn from our cousins in the
direct marketing world without tarnishing your brand or turning to the dark
side.
David Rosen is senior vice
president of Loyalty Lab (www.loyaltylab.com),
a San Francisco-based developer of customer loyalty programs for the retail
industry.
