Thinking Digital

Making sense of the marketing maze

2011-11-02T13:02:00.001Z

FMCG Magazine, issue 11 volume 13

Why is – and why should it be that – FMCG marketing feels so vague? Everyone thinks the be-all and end-all is the big TV campaign. It takes six months to write, three months to edit, a whole bunch of illustrators, animators, storyboardists and directors’ assistants, a hundred grand in production and a hundred more grand for a slot in Corrie. This elephantine effort would be fine, were it not for one tiny flaw: you know fifty per cent of it works, but you don’t know which fifty per cent. The elephant in the room is accountability, and in today’s climate marketers must, must be accountable, as must their marketing.

We’ve come out of a recession, and are wobbling around the edge of a second iteration. Consumer confidence is low, partly driven by what people see in the financial sections of the TV news and partly driven by the doom mongers in the red tops. Businesses like yours aren’t bonkers so there is close scrutiny of every budget from procurement to overheads to manufacturing to marketing. The days of the “Let’s do TV, it works for the big brands” being sufficient justification for the board are over.

There is a second driver at work here: FMCG brands don’t sell to consumers, you sell to intermediaries – Nisa, Bookers, Asda, Tesco. You might argue that they should be doing your marketing for you (in fact, perhaps you should argue; if you spent your TV budget on selling more lines into Tesco they would have a vested interest in pushing your products hard, and yet we have devised ourselves an effective if expensive pull-oriented strategy, presumably because such tactics are too much like hard work). Yet we compete for shelf-space, PoS, the (very) occasional appearance in a promotion or an ad. FMCG brands focus their marketing towards the end consumer, essentially cutting out the middle man and appealing for share of basket. Works beautifully for the supermarkets.

So, two drivers: bypassing the supermarkets to get straight to influencing the consumer, and a terrible lack of clarity about whether this consumer focus can become more focused. Oh, and a third factor: the supermarkets sneakily deciding to launch their own brands (as distinct from own-brand) competing directly with yours. Anyone would think you were in trouble.

Over the past sixteen years – in fact ever since the Snickers® MegaBite online community was created for the brand’s Euro96 sponsorship – digital has become a valid and very useful channel for reaching and engaging consumers. Multi-brand FMCG companies have created websites, communities, games, multimedia, email and mobile campaigns very successfully, if success is measured in awards, media exposure and word of mouth. Over the past ten years, online channels have become properly measurable. The rise of analytics, and analytics specialists, has allowed marketers to track users’ online behaviour in great detail. Marketers are familiar with terms like UX (User Experience), IA (Information Architecture) and User Journeys (a term we appropriated from the supermarkets as it happens). We can drive people to websites, deliver appropriate experiences that support the brand architecture (brand onion, pyramid, pretzel... your ad agency will have its own version), and increase dwell time (the amount of time a consumer spends wandering around, through engagement or confusion, your website).

Digital can track absolutely everything. So it’s slightly surprising that most FMCG brands have not, because they believe they cannot, tracked the value they get from it. In the days when nobody knows which fifty per cent of the advertising works, you would think that having such an auditable medium would be a lifeline.

Digital means a consumer’s activity can be tracked all the way through to a sale. For example, if you sell a tin of beans on your website, we can track a visitor from before they get to the site (their first click on a Google Adword or a banner) through the site, around the site, to the basket and to a successfully concluded sale. We can attribute sales value to visits, which in turn means we can optimise campaigns, spend more on the sources which produce the highest sales, and generally be pleased that you know which fifty per cent is which. We can distinguish good from bad and make commercial decisions based on evidence. And evidence-based marketing is what your board wants.

FMCG doesn’t trust digital in the same way. It’s why, for example, most brand campaigns have a limited shelf-life online, and why websites get replaced with alarming frequency. You’re marketing to the end consumer, but you’re selling indirectly. This perception is common among FMCG marketers: indirect means indistinct. Decision making is therefore down to gut instinct – and how many awards the campaign wins. For me, that makes online marketing for FMCG brands a hopeless case. I want to know how to attribute value, no matter how indirect the sale is.

So let’s discuss a method which means that indirect doesn’t necessarily make it quite so hopeless. We’ve used it over the last four years for McCain Foods.

We started with a database of customers, acquired from a number of sources: bought lists, competition entries, newsletter opt-ins; in fact anywhere we could find data. We cleaned it up, got rid of the stale, unidentifiable, lapsed and suspect data, and created a robust base of legally opted-in people. We put together an email programme. This was pretty simple, consisting of product descriptions, recipe ideas, offers and simple calls to action. This gave us a backbone we could measure, and measure we did.

You will be familiar with the normal email marketing metrics: Open Rates, Click Through Rates and dwell time. We benchmarked the programme, making sure we had some consistency to start off with, so we could run some experiments. The first experiment: when should we send these emails? We sent the same email every couple of hours to a different section of the database to establish which time of day got the best open rates. At this best time of day we sent an email every day of the week to see which day of the week got the best open rates. Inside eight days we had the optimum send time.

The second experiment involved benchmarking against the real world. The assumption was that anyone in the database would be more engaged with the McCain brand than the general population (for obvious reasons: these people have opted in to regular emails, and they are getting regular brand exposure). What we wanted to do was to see if we could affect behaviour over time. Working alongside the brand tracking studies already being performed by Hall & Partners, Underwired created a comparable set of questions to mirror the study, in effect asking the same questions of the database so we could compare database versus general population at start, then after six months.

The results at the start were entirely predictable: 61% of people in the base loved the brand versus 20% in the general population. By the end, after the email marketing programme had been in action for six months, that score had risen to 64%, and in fact the gap had widened to 11%. The programme was clearly driving changes in perceptions of the brand, against a general fall in the advertising-only scores. But still, indirect and indistinct. How do we change this?

The next step for the campaign was to find a value benchmark. This consisted of two distinct phases: first find the comparison data, and second find a way to accurately measure any changes wrought by the digital activity. By using email only, the customer journey was kept very simple, and there was a built-in mechanism for running surveys so we could establish consumers’ shopping behaviour.

First we sourced a chunk of useful data. This came by way of Dunnhumby providing real-world shopper behaviour from Tesco customers; we sought out product choice, average purchase value and purchase frequency.

We continued this stage of the journey into attribution by refining the segmentation of the McCain database. The segmentation was fairly simple: brand engagers, brand resistors, category resistors, neutrals. This was also split demographically. The segmentation was tweaked to exactly match the Tesco shopper profiles so we could accurately compare one with the other.

So what have we found? We have discovered that when we put a person into the eCRM programme, in the first six months their purchase frequency goes up by 3%. Knowing what we know about average purchase value (in £s) and frequency for each segment, we can therefore easily find out not only how much the change is worth within the base, but also how much we should invest in acquiring more people into the database in order to drive ever-increasing incremental profit.

So what does this mean? Well, for one it means we know precisely which segments are worth investing in, how much to invest, and what the sales volumes we drive will be. This makes TV seem vague indeed – we do, now, know how to attribute value even when we’re marketing directly yet selling indirectly. We can justify every penny of the digital marketing budget (or at least that portion that’s spent on auditable campaigns) and, in a recession or in a post-recession world, that means we can be certain that what is being done is being done right.

What will happen to creative ideas as we hurtle into big data?

2011-10-24T10:46:00.000+01:00

Will we see creative ideas diminish as more and more data is collected about 'us', thus resulting in marketing and advertising that is geared to our preferences based on the data available about us? [from Quora]

Felix Velarde:

Creativity is solving problems, not coming up with cute ideas.

The next generation of CRM (which is arguably where all marketing is headed, partly because of the avilabilty of what you call Big data) is already centring around user-segmented brand experiences.

The best creative ideas therefore enable splintered expression, based on the recipient/electee's understanding of and motivations in relation to the brand. Great creative can be repurposed by the individual based on her own psychology - and therefore demands both insight and flexibility, because in essence it devolves responsibility for an imagination to the consumer rather than the marketing itself.

I've been in digital marketing for 17 years, eCRM for nine, and am heavily involved in the customer insight-based creative industry, and personally I think the most exciting times, and the most creatively challenging times, are still ahead of us.

Steve Jobs

2011-10-06T12:34:00.000+01:00

I started a publishing company in 1992 because I discovered I could start something myself because of the Macintosh.

I started one of the first web design agencies in 1994 because I was inspired by a vision of what could be done with an Apple Mac. I spent a fortnight getting my Mac online, not my first frustration with them, nor my last, but the sense of achievement, of empowerment, when I'd done it was incredible. I helped create the multimedia programme and helped write the code that made an MPEG card work in a Mac for the first time in the UK, for the kiosks for a British Design & Art Directors Club (D&AD) Festival of Excellence. I crashed every Quadra I ever drove.

I was a fanatic. As a multimedia entrepreneur, Mac gave me the power to realise and evangelise a changing media world. Steve's vision was echoed by many, many people, and standing on the shoulders of this giant his machines were used to express the new media reality.

Many of us who were at the vanguard of digital media would not be where we are today were it not for this one visionary man. Thank you Steve, the world is a richer place because of you, and a poorer one without you.

Felix Velarde
London

Le Manoir Aux Quat' Saisons and the Twitter Glitch

2011-07-18T17:36:00.003+01:00

I love food. I'm a hopeless ~~glutton~~ foodie - I'll save up to eat at very poncy restaurants just so I can have my tastebuds tickled with divine ephemera (the ponciness may have rubbed off). I tend to fall in love with specific places and go back time and again. One of my all-time favourites is Le Manoir Aux Quat' Saisons in Oxfordshire; I was once in reception checking out after a sublime day and night for a birthday when my wife got into conversation with chef patron Raymond Blanc and we ended up staying for a second night's feasting.

I also love brands. I'm a brand marketer at heart, and for seventeen years I've expressed that through digital. I quite naturally follow Le Manoir on Twitter. In my daily twitterfeed Le Manoir constitutes a very minor part - my feed is full of marketing and digital industry stuff that's important to me. But every time I see Le Manoir's logo on a passing tweet it subliminally reminds me that I'm hungry and might well like to pop over to Oxfordshire soon.

Today they changed their avatar. It's suddenly absolutely tiny. I dropped them a tweet to say I couldn't read it any more. I got the short and I have to say teensy bit snotty riposte that it "conforms to the brand's guidelines, sorry to disappoint you". Well, it may well conform to your brand guidelines, but the point is it doesn't work. You've removed one of the main reasons for maintaining a corporate Twitter feed: free advertising to people who are predisposed to you. If you take away your brand awareness, then what, may I ask, are you doing it for? If it ain't advertising - as you so adroitly point out, you've done it because it conforms to brand guidelines - then it's corporate waste.

Much as I love the food, advertised for free by Messrs. Michelin and by those foodies and gourmands (myself included) who rave about it (though Le Manoir is probably 50% about the stunning location and gardens and 50% about the grub), your approach to actively generating brand exposure could do with a little more care. The excuse that I may not be able to read it but it doesn't matter because it fits the brand guidelines is naïve and silly. Get an extension to your guidelines so you can carry on doing marketing properly - or break the rules a bit. Live a little. But make yourselves invisible and your presence on Twitter will slowly and inexcusably fade from memory.

In search of a fourth dimension in segmentation

2011-05-16T13:39:00.000+01:00

In 2008 McCain Foods, an FMCG brand, decided to embark on an eCRM (Electronic Customer Relationship Marketing) programme. The original premise was that the company wanted to establish whether, by engaging consumers using email, the effectiveness of digital could be measured in terms the advertising world understands well - brand consideration and brand preference. The eCRM programme scored some quick wins through segmentation, including an increase in brand consideration of 11%. But what really started to attract attention was the methodology used to establish and track value in terms of purchase frequency and sales revenues, through comparing like-for-like segmentation with supermarket data.

The original brief for McCain Foods' eCRM account was simple: establish whether or not digital could be used as a channel for changing brand consideration. The context was straightforward too: in an advertising ecosystem where TV is the principal means of affecting brand preference, and in which TV audience reach is becoming fragmented and diffuse, is there a new way of using digital to shift consumers' perception?

One suspects it is a common question. The McCain brief came a decade after the more basic questions about whether digital could offer a new channel for effecting sales were answered by the likes of Amazon, and five years after eCRM strategies for online retailer brands like Virgin (and in particular Virgin Holidays) demonstrated that relevant contact using pertinent, timely emails brought cross- and up-sell efficiency to the new digital retail channels. A whole universe of retailers have, and do, use eCRM to drive sales through their online stores and optimise the ongoing contact with their customers.

It's actually very easy to see the effects of an eCRM programme when you can track a customer from first moment of truth, say an eyeball on a cookie-dropping interactive ad, or a click on an Adword all the way through to lifetime value via a checkout mechanism. There is little mileage in labouring the arguments for segmentation per se (other than the observation that a three audience segmentation served by three separate email campaigns increases the effective return by 50%). That given, typically in the progression of an eCRM programme there is a straightforward series of steps that happens:

Demographic segmentation
Customer Touchpoint Planning (also known as Customer Touchpoint Management or Customer Journey Planning) for each of these segments
Test emails are sent
Results tell us something of the recipients' behaviour (both interms of reaction to calls to action as well as, further down the line, transactional and value-oriented behaviour)

The results deliver the next dimension of segmentation: behavioural, which attempts to infer likely behaviour from previous behaviour to inform messaging relevance. A new set of tailored emails is sent and the programme is refined. At this point planning insights need to be brought to bear to hypothesise motivational drivers.

Take working mum Sue. If we don't understand her motivations and drivers, we may look simply to her working mum status, infer she lacks the time to cook a proper meal, and promote the speed at which Oven Fries can be prepared. Actually, if we think more about motivation rather than circumstance, she doesn't have time to create original things to do with her young children. If she has a certain background (something we can easily establish) we may find she is motivated primarily by her kids' welfare, reinforced by her lack of time. This may offer some direction for us when we create messaging that will appeal to her directly and quickly.

These "What" and "Why" segmentation layers are key to what happens in subsequent phases. Without this "3D" approach to segmentation, all that is happening is a tightening of efficiency. And actually just the first two make for a pretty well oiled machine. But it does not help us identify motivation, and an individual's motivation may have a substantial effect on what will or won't encourage them to engage or buy. Adding the motivation element adds effectiveness.

McCain Foods took this approach. The segmentation they had already performed on their base of several hundred thousand email addresses was broad, seven in total, and attitudinal in nature. At one end there were brand resistors, at the other brand advocates. Resistors divided into two broad camps: those that were resistant to the frozen potato products category in general, and those who were consumers of the product but were resistant to the brand on the basis of price (or perceived price) differences and were likely to opt for supermarket own-brand rather than branded products.

The segmentation was tweaked to match exactly the then-commercially available datasets available from Dunnhumby describing Tesco (the UK's largest supermarket chain) shopper behaviour.

Data, as is usual for most brands, had been acquired more or less by accretion; competition entries, some bought data, some from third party partners, some from website opt-ins, voucher promotions, field marketing activities and so on.

All the data was piled into a generic segment, and as segment affinity was identified through behaviour (which links they clicked) or responses to questions (outbound questionnaires, additional promotions), records were assigned to the appropriate segment.

The usual persona development was then performed on each segment, creating a set of usable pen portraits that allowed creative to be briefed efficiently. This persona work was validated using highly tailored surveys sent to samples from each of the seven segments, and in turn this enabled the creation of subsets. At this stage the base consisted of seven broad attitudinal segments, split into demographic subsets. The persona development allowed the creation of some notional motivational drivers.

So how does this help? Well, let's take Sue Example. Sue is a category resistor. Sue went to college, and has a young child. So far so demographic. Sue is well educated, is unlikely to believe everything she is told by advertising, and she probably thinks frozen fries aren't good for us. Sue is primarily concerned about the wellbeing of her child. McCain's principal products are made of potato and sunflower oil, and nothing else. But saying "they are good for your child" over and over again is unlikely to change Sue's attitude.

But we know she has somehow ended up on the database, and if we can find a creative way of engaging her then we may have a chance. The creative execution used for Sue in the email campaign that ran for ten months used motivation as a starting point for the solution. In month one Sue received an email introducing Farmer John and his red tractor for printing out and colouring in. In month two Farmer John illustrated how a field is ploughed. In month three how potatoes are planted. In month four, the lifecycle of a potato. In month five, the painting-by-numbers included harvesting. And so on. By the end, Sue knew that if it was McCain, it was good for you. She had had some safe, fun, kitchen-table activity for her child. And her attitudes had changed.

In fact, over the first ten months of the activity, engagement with brand resistors (measured simply by open and click-through rates) went up from 14% to 63%.

Using a brand tracking agency to measure national brand consideration and brand preference scores, the campaign was benchmarked so that the effects of the eCRM activity could be established. An assumption was made that the effects of TV, in-store and outdoor advertising would be felt by consumers both in and not in the eCRM database and could therefore be factored out. That said, clearly those in the programme would naturally index higher than the national average simply by dint of being exposed to the brand's messages (let alone because it was partly a self-selecting audience) - 61% versus 20%. By the end of the first year this had changed markedly: while the national score had fallen to 12%, the brand consideration score in the eCRM base had risen to 64%. This measure, the de facto standard for measuring the effectiveness of television advertising, showed that eCRM did indeed have a place in the arsenal of high level marketing.

Taking the next logical step in measurement would, for an online retail brand, be easy. Measuring the correlation between changes in brand consideration or preference and actual sales would be straightforward given a directly auditable transactional process. For an FMCG brand whose sales are entirely through third parties (and actually, it doesn't matter whether the product is ultimately online or in physical stores; any sales chain where the sale is owned by a third party vendor has the same challenges) there are some reasonably robust estimation models for making assumptions about how well marketing drives revenues. However, direct attribution remains a real challenge. McCain Foods was in the very fortunate position of being able to benchmark changes in the attitudes and behaviour, including sales behaviour, against data available commercially from its largest third party vendor, Tesco. The segmentation exactly matched. And purchase data was available through the Tesco Clubcard shopper database, which collected information about every Clubcard holder's shopping basket at every checkout in the country. McCain could see, in detail, purchase volumes by product, by segment, by location and by value.

Address data was not available, so individual records could not be extracted and compared to the base, however McCain already had a regular programme of surveys called 'Golden Questions', which allowed interrogation of shopping habits. Normalising the response data gave a viable means of benchmarking changes over time, attributable to the motivation-based activity of the eCRM programme.

In the six months of the primary study, benchmarked against the national Tesco data, average purchase frequency went up by 3%. Matched against average transaction value, and combined with a 25% growth of the identified "brand engager" segment, sales revenue for the highest-responding segment rose by 38% - a number in seven figures.

The development of the eCRM programme became much more important to the brand, and in 2010 a website was launched to support the activity. Based on behavioural targeting principles, the site serves content based on segmentation inferred from the first few clicks on the site. So, if a visitor is known (and identified using an opt-in Cookie) the content they are served will be based entirely on the predefined customer journey (or touchpoint plan) through the comms programme, based again on tapping into motivation-based insights. If a visitor is not yet known, then the opening interfaces are designed to offer choices that require visitors to effectively self-select into tentative demographic (kids, no kids, partnered, likely to be single) and behavioural (shops for household, influences family activities) segments. Using a content management system that is integrated with the content management and eCRM broadcast and analytics suite, each visitor gets content that is appropriate to the (inferred) segmentation.

As soon as possible, visitors are encouraged to opt in to on-site tracking so the final segmentation can be nailed down and the visitor brought into the on- and off-site eCRM campaign. The driver for this is a promotion mechanic called Spud Shillings, tokens that are awarded for various activities including viewing recipe videos, downloading meal planners, sharing content using social networks including Facebook, and uploading content (which is encouraged within segments that are likely to respond using a simple model based on Forrester's Social Technographics profiling). These tokens can be redeemed for product discounts or for third party promotions, for example free cinema tickets, kids' activities or sporting events. Again, activities and selections are written back to the database to inform much more granular segmentation and so that we can analyse the effects of particular calls to action and the usefulness of trade partnerships for future planning.

So what does the future hold? The next step will be the incorporation of social media tools into the site, at a level significantly higher than simple 'share this' or 'like'-type functions. The recent launch of Google Analytics beta tools for tracking on-page activities at event level, so that clicks on a video play button or expansions of a rollover can be tracked, have provided the brand with the means to build analytics into the site to a previously impossible degree. Coupled with Facebook's API, which allows developers to bring the entire Facebook suite of tools (including share with specific friends, messaging, live chat, content distribution) onto a brand-hosted site, this means we can start to add a fourth dimension to the segmentation: advocacy. This will revolutionise what McCain and other brands involved in the testing of the tools can do with eCRM. No longer are we limited to the attributes of the customer, or the motivations behind their behaviour. The door has been opened to a deeper understanding of how specific individuals interact with their own networks, and this profound extra dimension could help grow customer bases exponentially amongst audiences we could never otherwise identify or, if truth be told, credibly or relevantly reach.

Measuring the value of FMCG brand marketing

2011-05-05T20:07:00.001+01:00

FMCG marketing is a peculiar art. Brand marketing using consumer channels only incidentally targets the people who buy their products from them (the retailer's buyers) – so marketers are doing the work they might argue they want the retailer to do. In essence, the FMCG brand bypasses the intermediary and reaches out to influence the end consumer, hoping their demand will motivate retailers to decide to stock their products. By way of persuasion, brands use the consumer marketing they do to convince retail buyers that their product will be in demand, so to buy ahead of demand. There's a little inference, quite a bit of assumption, and a sprinkling of hope and magic dust. But perhaps not that much measurement, except well after the fact once the sales figures have come in at the end of the quarter.

This has in fact always been a problem for traditional marketing channels. Advertising has to date been measured using wonderfully vague but industry standard "brand consideration" scores. The numbers in themselves are relatively meaningless, because at bottom it's a benchmarking score, not a value attribution. But it does give us a means of comparing before and after and this with that, provided we can survey a sufficiently representative sample size.

Until the advent of digital, the assumption was that brand consideration and eventual total sales was as much as could be done. With the coming of the web, for e-commerce brands, suddenly it all became very joined up, and we could see the direct results of a call to action on a customer. Once this had been established for campaign-based marketing, marketers moved on to incorporating eCRM - long-term engagement strategies - into the list of activities whose value could be attributed to a tangible commercial result.

For non-ecommerce situations however it has been frustrating that nothing substantially better than brand consideration, the old advertising-oriented KPI, has taken over as the principal yardstick for marketers. The new digital standard metrics that have been added are once again comparative: dwell time on site, page impressions, open rates, click-through rates and recall. They allow some kind of industry and ‘before-and-after’ benchmarking, but contribute little by way of showing us what value a campaign has contributed.

In 2008 McCain Foods, the dominant (read: most successful) frozen potato products manufacturer, started an eCRM programme. The company used segmented email campaigns to try and drive changes in attitude that could be measured over time.

Quite sensibly, they started with brand engagement indicators, improving open rates, click-through rates and dwell time. One of its segments, brand resistors (typified by people who felt the category was unappealing due to perceived wellbeing issues or the brand unappealing due to perceived premium pricing), went from a 14% engagement rate to 63% over the course of ten months - great indicators. But no indication of what this meant in terms of commercial value.

Brand consideration was measured within each segment, and compared to the same scores in the general population. McCain quite quickly proved that engaging people in timely, relevant and meaningful dialogue over time could have a direct effect on brand consideration. The gap between those in the eCRM programme and those not in the programme widened by 11% in ten months. If this kind of marketing was judged in the same way as TV, it was a screaming success. But McCain wanted to go one step further and find a way of attributing actual commercial value to its online marketing. With limited budgets, and a new recession, being able to state that spending £1 generated £26 in incremental sales would be marketing nirvana.

So McCain set about devising a way to measure changes in value driven by its eCRM campaigns. The segmentation was tweaked so it exactly matched the commercially available Tesco segmentation. A Golden Questions Survey benchmarked eCRM programme participants' purchase behaviour (frequency, product choices, average spend per month), and this was compared with the Tesco data corresponding to the same segment. The eCRM programme was rolled out for each segment with relevant, engaging content and offers. And over time the survey was repeated, comparing the eCRM customers' behaviour with their Tesco analogues. In the most engaged segment of around 50,000 people, average purchase frequency went up by 3.1% in six months. Multiplying this rise in frequency by average transaction value showed a staggering rise in incremental revenue over the year. And because it can tell you precisely how much money it makes for every £1 it spends, McCain has invested hugely in expanding its eCRM programme, developing sophisticated new websites and online campaigns. By using some lateral thinking to provide a means to attribute commercial value to FMCG marketing, this peculiar art has finally come of age.

2011-05-05T16:36:00.000+01:00

I will be giving a talk at Internet World on the integration of Social Media with eCRM and customer retention programmes, using a pilot that we are running for sports brand ASICS to illustrate some of the techniques we’re using.

The talk is part of a series by the Institute of Direct Marketing, and will be held at 1.10pm on Wednesday 11th May in the Design & Build Theatre at Internet World, Earls Court.

For further information, please visit the Internet World website.

Facebook Deals and eCRM

2011-03-25T15:09:00.001Z

Facebook Deals could be revolutionary, although the idea is an old one. In fact, it's more or less exactly what the Tom Cruise film Minority Report imagined - proximity recognition. In the film, our hero's eyes get scanned and every poster he passes makes him an offer he can't refuse. Facebook Deals is slightly more elective that that, and I believe there's a huge opportunity for brands who already do eCRM well.

When you log into Facebook on your mobile, and "check in" to your current location, the account shows you a list of local places, some of which will have offers. For exmple, you can check in to your local high street and see an offer from the local Starbucks offering you a free muffin if you buy a big coffee. Simple and neat.

Redeeming the offer by clicking on it (and showing the cashier) automatically updates your status with an ad to say you've done so. As a marketer you get someone who self-identifies as a customer telling likeminded friends about your brand.

One of the issues that marketers will have to grapple with is that of acceptability: will our customer’s friends feel irritated by the fact that what’s effectively an ad (“I’ve just checked into Starbucks for a free muffin”) appears in their friend feed? This will require testing to get to the bottom of it, but given the trend towards privacy-agnosticism I suspect it will turn out to be a non-problem.

In the immediate future, combining Facebook Deals with newly-possible Social CRM attribution techniques (see www.scrm.co.uk) you will be able to track customers in your email marketing database through to purchase and back, which means you can assign influence scores to specific segments. In turn this means you can target specific location-based offers based on what you already know about your customers. It's potentially hugely powerful. Handled with sensitivity and intelligence, it will be game changing.

Social media value attribution

2011-03-18T13:55:00.001Z

Everybody’s talking about how social media is the new big thing. Yesterday it was the next big thing. According to Facebook, the next big thing is, well, unknown so who knows what tomorrow will bring. So we have a marketing world set alight by the potential of social media, queuing up to use it, setting up plans to get into social media. But there’s no real rationale. It’s being done because it looks like it is important. People live there, so our world has changed. But as for value - well, who knows? KPIs all seem to surround the number of fans and Likes, sentiment (no matter how vague this is) and hope. Accountability - attribution - is the elephant in the room.

I’ve grown up with digital. In 1994 I set up a digital agency, building communities around websites for brands like Snickers and Hewlett-Packard. We added channels as we went along - search engines, ads, interactive television and mobile. Around ten years ago we had become part of the world’s fourth biggest advertising network, and the digital world looked full of colour, sexy as hell, with big brands piling in to spend money on visitors, eyeballs and sales. Having sold out, we next built an agency around something brand new in the world of digital marketing: accountability. We wanted to prove that digital could have tangible, measurable and commercial value. So we got into eCRM big time.

Working with brands like Virgin, NSPCC and News International we started creating digitally-delivered campaigns built around individual customers. What we learned about them and from them we used to better engage them. We used insights derived from demography and behaviour to inform targeting strategies that delivered relevant content when it was most likely to work. We used segmentation principles originated by the direct mail companies and facilitated by the cheapest of media, email, to improve response rates and sales revenues. We used Recency, Frequency and Value to benchmark customer segments, applied campaigns bespoked to each segment’s needs, and measured the changes. We gave marketers what they wanted: proof that what they were doing produced specific financial returns.

Today this is what we do, still. Sure, the channels have changed. We now use mobile, SMS and email, but we also use websites. What was once called personalisation has been adapted; for McCain Foods we extended the eCRM strategy from email onto its site, so that visitors see content based on which segment they belong to and where they are in a planned nudge-based customer journey. We track individuals through their entire web experience, bringing behavioural data back into the eCRM programme so we can attribute the contribution their experience makes towards changes in their value. Taking an example, we know that by increasing engagement through the programme, one specific segment has increased its average purchase frequency by 3% a year - leading to an increase in sales of around £1million.

This level of attribution means a client can justify spending part of its valuable marketing budget on this eCRM activity. If the incremental revenue a programme generates, and in particular the incremental margin it generates, is greater than the cost of generating it, then it’s a no-brainer. Likewise, one would think that if you could prove that the incremental margin was less than the cost of generating it, you’d close down the programme very quickly indeed.

And yet, social media defies this superbly clean logic. Because you cannot cast attribution, because you can’t tell whether it’s a positive or negative ROI, the hope that it’s the next big thing and it will be worth it seems to justify investment in it. Where’s the return? I read a statistic the other day that some Facebook campaign had generated an ROI of 4:1 (actually, they said “400%!!”). I’d love to know what that means... at a guess, this company isn’t making 25% margin, and unless it’s making 25% plus, that “ROI” is actually a loss.

So this is where we found ourselves, running fantastic, highly auditable campaigns, leveraging customer data for all its worth, using email, mobile and the web, when this groundswell of social media marketing buzz started preoccupying marketing minds. So Underwired has developed a tool that allows us to make some connections. It allows us to create specific calls to action to customer segments, and watch precisely what they do in response.

By creating this tool we’ve finally addressed the elephant in the room. We’ve added the ability to score individuals according to what social actions they take in response to our engagement programmes. It means we can add an advocacy dimension to our demographic, behavioural and motivation-based segmentation, and this means we can identify people who have value to us as recruiters and word-spreaders. We can even attribute new customers to an individual’s referrals, which gives us real power to tap into social behaviour and account for the results. This is the new big thing.

Making social media pay

2011-03-09T10:09:00.000Z

There’s an apparent conflict between the pragmatic and the desirable. Marketers necessarily want to be able to justify every penny they spend on marketing - especially in a recession - so there's a strong emphasis on the accountable. And then there's social media.

Everyone’s talking about the importance of social media, including channels like Facebook, Twitter, Quora and LinkedIn. The buzz has been incredible. Clearly when movies are being made about the kids who got the movement going, making billions in just six years, that buzz becomes tantalising for brands. And of course nobody wants to play catch-up, no-one wants to be the one who gets the dregs of the success that a new and revenue-generating marketing channel brings with it. Arriving just before everyone else leaves the party is low risk but delivers a very low return.

So how can you reconcile the two things, this requirement for measurable return on marketing investment, and the need to catch the wave?

This is the thinking that led Underwired, already the UK’s leading eCRM specialist agency, to try and bridge the gap between CRM, which is utterly auditable, and social media, which isn’t. To go back to the party metaphor, eCRM is like the bit where you know exactly who you’re inviting to the party and why. Social is the bit after you’ve taken their coat and they’ve entered the room. Once they are in there, all you can do is measure the noise levels (and in fact that's what Buzz Tracking or Sentiment Analysis tools do).

The new Social CRM tool that Underwired has developed actually bridges the gap. It allows you to track an individual into, say, a Facebook environment (with standard functions including Like, Share, Comment, Upload content, watch a video) and see exactly what they do. You can tell if, responding to a call to action in an email campaign, John visits your page, Likes it, comments on it, only watched half the video but sitll shares it with his facebook friends. You can then append that data back to your database, which means that you can create sub-segments of people who respond in a certain way when presented with specific calls to action, offers, promotions or choices.

From a marketing perspective it provides you with a way to further segment your customers. You can assign advocacy scores (even types of advocacy) and use that to inform future campaigns just targeting people who share your content with their friends - real fan marketing. But more importantly, it gives you the means to extend attribution into social channels. And if you can identify precisely which routes your sales came from, without having a big grey area where you’ve temporarily lost control of your customer, it means you can improve your marketing at every single step of the customer journey. Finally, it means you can assign a real value to social media - though of course while it means you can dive in with confidence, you do still of course have to dive in.

www.head-space.com, Head New Media circa 1997

2011-02-10T10:04:00.001Z

A groundbreaking Social CRM tool from Underwired

2011-02-07T13:01:00.002Z

Until recently driving traffic to Facebook pages was the equivalent to old-style viral or word of mouth marketing, using it as a venue for people to engage with a brand. The evaluation of a campaign’s success was based on inference rather than end-to-end tracking – indicated by click-through rates, sentiment scores, mentions, ‘likes’ or Facebook transactions. However until now there has been no simple way of linking prompted Facebook activity to an individual customer’s record.

My company, Underwired, has just launched an sCRM tool which allows address-level tracking, the holy grail of social strategies. It closes the loop between the outbound customer journey and subsequent engagement, bringing relevant data back into the eCRM database. Underwired sCRM allows brands to employ social as part of a fully tracked eCRM programme that never loses sight of an engaged customer.

Underwired sCRM enables brands to capture social data, including an individual’s clicks on ‘like’ and ‘comment’ buttons, external links and video content (including how long they watch it for), photo upload, post and share with friends functions. For example, this means that customers who don’t spend much but have huge social influence can be identified and messaged appropriately, leveraging their real value. For the first time marketers can add an Advocacy dimension to their segmentation.

Making address-level tracking a reality solves an epic challenge for digital marketers, allowing them to pinpoint exactly who is doing what in their brand’s social channels and identify – and properly target – their most active brand advocates.

Social behavioural insight will be critical for marketers in 2011. By building Underwired sCRM into Underwired’s four week audit process, we can now include Facebook as an intrinsic part of a brand’s eCRM and email marketing campaigns. It means we can remove the final remaining blind spots in tracking ROI for online campaigns.

For further information, please visit www.scrm.co.uk

The nudge towards eCRM

2010-12-03T12:33:00.000Z

ECRM is not a quick fix but requires sustained investment and patience, explains Felix Velarde, managing director at Underwired Amaze.

There are still some companies that haven’t understood the significance of eCRM (Electronic Customer Relationship Marketing). Yes, eCRM, that marketing nirvana, which comes with investment barriers that might make it impossible to buy. How could you turn down something that’s going to take a year to get right, that may cost a quarter of a million pounds but that might make you millions in new revenues?

It feels like an impossible proposition. It’s so difficult for brands to buy that many of them don’t. Those big innovators with money to burn can afford to experiment and reap the rewards, but most brands just can’t see it. Most brands have to focus on their immediate tactical requirements (sell, sell, sell!), and perhaps try social because they’ve heard they can do it for ten grand.

Most brands can’t afford to do eCRM, no matter how big the rewards, and how much it differentiates them from the rest of the market. Or can they?

Let’s go back a few years to when the first major eCRM campaigns started. In 2003 Underwired Amaze proposed to Virgin Holidays taking over an existing email newsletter campaign and building something more sophisticated.

The campaign became segmented, largely by behaviour to start with. What Customer Type 1’s preferred destination, time of year of booking, or decision making time was likely to be, informed when they’d get a special offer on a certain Florida hotel. Quite quickly the second dimension demographics came into play as well. Sending an offer for a free flight for your second child to parents of two made a big impact. The first segmented email sent generated £3million in direct holiday bookings. Virgin Holidays had taken a leap of faith and invested in a campaign that cost around £30k and justified a programme with an ROI of 100:1.

But once the initial surprise had worn off and customers got used to it, there was a long period of lots of detailed activity, lots of creative work going on, but not - it seemed - much return. It changed though, reached a critical mass after about a year, and finally the smiles started reappearing on the client’s faces. And stayed as the programme’s ROI three years later was still averaging 26:1. Fantastic.

The Virgin engagement went exactly like every other eCRM project. It started with a big bang that makes everyone very happy, and settles down. After a few months the quick wins have worn off and it starts looking like nothing is happening at all. After a long, long year though, the eCRM programme starts paying for itself again. But there’s this big, long, frustrating period of doldrums, where the project owner gets disillusioned and it all looks like very hard work for no return, and it’s this that I want to come back to. Why? Because actually it’s this period when the principles that really drive eCRM are hardest at work.

The first principle is segmentation, and if you will indulge me while I teach granny to suck eggs for minute it will set the scene for the second. Segmentation is based on a simple idea, that if you send a specific call to action (an offer, for the sake of this example) that is relevant to the right person at the right time, it’s more likely to be acted on than if you send it to the wrong person or at the wrong time. Let’s take an example. You have three hundred people, 100 are golfers, 100 football fans and 100 cricket fans. You have three offers to go see the Ryder Cup, the FA Cup and the Ashes, in an email, one after the other with a paragraph each. You send the email to everyone. 100 football fans will see the golf offer first, and a third of them will bin the email. The golf players will see golf first and be happy. The cricketers, well two thirds will bin the email before seeing the third, cricket, offer. Your maximum response rate will be 200 - because only 200 of the 300 recipients will have read the offer that appeals to them. Simple. Segmentation says, send one email with one offer to each group (yes, the right offer!), and your maximum response rate is 300 out of 300, a fifty percent improvement.

The second principle is the principle of the nudge. eCRM isn’t an advertising medium, it doesn’t work by bombarding people with messages until they buy - in fact, if you send too many emails it’s obvious what will happen: after the initial hit of increased response people stop reading, after a while they add you to their junk filter, and you never know because after too many emails they can’t even be bothered to unsubscribe.

The job of eCRM is to create relationships. So while the segmentation principle is important, it must be balanced against the need to create a relationship. What we want to do is change people’s behaviour subtly over time. Small calls to action, little asks, are what is required. I want every customer to spend a tiny little bit more every time. I want them to increase their purchase frequency by 2% over six months. I want a 0.1 percentage point increase in average transaction value. Why so little?

What the big innovator brands realised a while ago is that little nudges add up. If I suggest you double your turnover in two years you’d think it impossible. Yet if I suggest you increase it by 3% this coming month you might feel it’s much more realistic. And what happens if you increase your turnover by 3% a month for the next two years? The laws of compound interest say you’ve doubled your turnover. That’s why eCRM is, really, so compelling. Yes there’s a quick win, and yes, there’s a long dull patch, but patience pays off.

Javari’s wasted birthright

2010-11-15T12:19:00.003Z

Disappointment is... when I buy something from an online store that’s got brilliant products and brilliant service, a fantastic website and a sign-up form that asks me loads of questions - but which then sends me generic emails I have no interest in whatsoever. I mean, I bought some Merrell trainers from this place, Javari, and now they bombard me with stuff about how kitten heels are the next big thing.

Javari is owned by Amazon, world leaders in relevant recoomendations. But Amazon has clearly kept Javari on a very tight budget. The email marketing programme is so, like, yesterday - I couldn’t believe it when such high regard generated by the shopping experience have been so let down by the customer retention programme.

So what should they be doing? Well, for a start, I’m a bloke, buying (what I hope are) cool walking shoes, and I looked at every single Merrell shoe on the site before making my choice. That must tell them something. At least it tells them to relegate the kitten heels to emails I get at weekends or to second place in the content in case I’m the sort who of man who buys shoes for his partner (either way). I wear the same size shoes as I always have, so that might inform tactical sales of remaindered stock and so on. Perhaps they should be sending me news of every new Merrell shoe they get in – Merrell does.

The days of blanket emails to Mr/Mrs AB Sample surely have gone the way of the door drop. Javari ticked all the boxes – indeed, I was looking forward to the emails when I opted in, wondering which agency was doing them. I am so, so disappointed. And that means that although by some miracle I might remember they were cheap and go back if I’m actively shopping, there won’t be any mid-cycle visits to their site, nor serendipitous nudge-driven sneaky sneaker purchases.

Yet we know from long experience that just by maintaining relevant contact using segmented emails, and observing how each segment responds, we can increase ROI by between 25% and 90% straight away and average purchase frequency by 7% in the first year. So why, Javari, why have you ignored your genetic birthright of great customer engagement, and prompted a critique like this? The first you’ve heard of it you say? That’s because you can’t: you’re not listening.

Parlaying custom into advocacy – why brands should be more pushy with their social media

2010-09-27T13:08:00.001+01:00

It’s very rare that I get excited about a brand I become a customer of. I’m one of those people who really doesn’t engage with marketing. I’m probably not alone. And yet this is my territory, my metier – I work very hard to create engagement strategies for clients that can be demonstrated to work. I am, as it were, my own worst enemy!

So how do you, as a brand, engage me, as a disengaged person with what I’d consider to be better things to do with my social time than talk about your brand? I’ve been thinking about this in the context of two recent occasions where I have actually felt like praising a brand in public. The first occasion: on the way to a meeting I spilled coffee on my shirt. I was in the city, and I spotted a TM Lewin. I went in, bought a shirt, explained my predicament, and the manager arranged for the shirt to be pressed, in the shop, there and then. I went for a walk for five minutes and hey presto, new, unwrinkled shirt.

I tweeted about it when I got back from my meeting. TM Lewin’s tweetie person followed me and retweeted (quite rightly) my happiness with their service. Fab. The second occasion, this morning, my wife asked me if these were the shoes I normally wear with my suits. I told her they were from Loake, and that I can wak for miles in them – the very first pair of truly comfortable work shoes I’ve had. It crossed my mind to tweet that I love my Loakes, then I remembered I’m not that kind of person (so I wrote this instead).

Both are brands I’d of course love to work with. Both are brands that have built solid reputations for service and product quality. Did Loake sell me these shoes? I think actually I got them from Next, so which of those companies should be the one to do the customer engagement? And why?

One of the striking things about the TM Lewin experience is that very clearly several people from TM Lewin now follow me on Twitter (no idea what they get out of it, but feel free – twitter.com/felixvelarde), but nobody’s ever been in touch. I am clearly, or at least I was once, a brand advocate. I spread the word, in a credible, completely unprompted way. But no-one has since asked me if I’d like to join a loyalty club, or corresponded with me on Twitter or otherwise to find out how to make sure I continue to be an advocate. It’s unpushy, which is nice, but it misses an opportunity. TM Lewin’s social media strategy needs a tweak or two.

And the fact the brand doesn’t have an eCRM programme is quite surprising – all of its customers are repeat customers, we have to buy similar products regularly, we have preferences... TM Lewin could take a leaf out of Pink’s book and keep our sizes on a database, offer us things they already know we want. And so on. The opportunity to create an engaging, relevant and pretty much self-managed eCRM programme should be too good to pass up. And by creating engagement they’ll be parlaying an initial positive first impression into serious loyalty and further opportunities for advocacy.

Someone like me, who doesn’t actively engage, who almost never spontaneously advocates a brand to his friends and acquaintances, might be driven to do so more often. Certainly, I could become a very loyal customer. Since my experience I’ve bought shirts from TM Lewin, though I also buy from Pink, Hackett and others. I could be engaged more, to their exclusion. The next time I think about shoes, I will probably be thinking about buying some Loakes, though because I’m not in their eCRM programme either I have no idea where to start. Perhaps I’ll start with Next. I really can’t remember if it was Next - if not then Loake might lose the sale while I’m wending my (possibly easily distracted) way to their brand – so again, here’s an opportunity.

Brands must – must! – engage with their customers. The best brands, the ones that provide fantastic service, or fantastic products, are the ones that must do so even more – they have an opoprtunity to cement their customers after the first great experience in a way that only becomes more dilute as time goes by. It’s an opportunity that must not be missed.

Follow me on Twitter: twitter.com/felixvelarde

The premature announcement of the death of the web

2010-08-06T12:48:00.002+01:00

Wired, The Wall and the Huffington Post have all pronounced the web on its last legs. Wired appears to believe that because there's a popular new way of interfacing with the internet – apps – the web has had its last hurrah. Huff's Josh Silver bases his pronouncement on the news that Google and Verizon have done a deal that may make it possible to have a privileged access scheme for content providers disseminating video to customers.

This latter is the one I think has least relevance. Why? Well, although this time round it is different inasmuch as the faster access is paid for by the content provider rather than the content consumer, there's little difference in practical terms between the tiered access dictated by bandwidth, ISP quality and client technology and the tiered access posited by the new deal. Silver's argument that Google's universal access volte-face signals some kind of tipping point, one that will see content delivered only to the wealthier subscriber, to me seems no different to the gradient we've always suffered. My first forays onto the internet were hampered by the fact that no-one made modem software for Macs at the time. Did it destroy the web or limit its potential for democratised information? Clearly not.

Perhaps we won't see the web become a public access TV channel after all as a result. But then, to the extent that it could it already has. YouTube is gargantuan. Will Hollywood or Bollywood stop making feature films for free distribution on the web? Did anyone really expect them ever to really do that? The web is a medium, a set of protocols, and people all over the world will use it freely to do what they always wanted to do with it. Capitalists will find ways to make money from it. Anti-capitalists will use it to subvert. People will continue to use it to grow this unfettered global conversation

And coming back to apps, they are simply an abbreviated interface to the internet, just as the web is. Perhaps one day there will be a better interface that comes along that is so revolutionary that the whole idea of HTML and hyperlinks is relegated to history, as happened to the revolutionary precursor protocols that saw us Gophering before the web took off (though Gopher's demise was hastened when its owner started charging for it, something that no-one is suggesting can or will ever happen to the web). Apps are cute, cool, capitalist by design, and ephemeral.

Actually the best apps seem to be built in HTML. The web is alive and well and only just coming of age. Long live the web.

That ol’ email technology

2010-08-05T19:52:00.001+01:00

Email marketing is awesome. It’s one of those things that has relied on a confluence of circumstances, shifts in attitudes, and technology to flower, but now it has. Just in time, in fact, for brands like Ben & Jerry’s to declare it dead and hop on to social media.

Some years ago a few people in the digital marketing world decided to see if by applying brand marketing principles to email, we might have the medium for proving that online had real, measurable commercial value. Spammers clearly thought the same, and could demonstrate it worked. But around ten years ago spam started being effectively controlled by technology solutions built into our email applications. Brands that wanted to send email to their customers had to get emails white-listed. Branded emails became credible.

At the same time consumer use of email became pretty much universal. As an elective medium it genuinely had power – it’s only there when you open your email programme. But if you’d given your favourite brands, or simply the place you bought your stuff from, permission to say hello, it had legitimacy. The email newsletter suddenly had currency.

In 2003 a few people decided to see if there was room to apply Direct Marketing principles to email. I was so keen I went on a three month hunt for an email bureau that could run segmented campaigns. Finding none (or at least none I could afford) my agency built its own system. To be honest, it was great in theory, but we could never quite get it to work properly. Live re-segmentation based on recipient behaviour was laudable as an aim, but every time we fixed a bug in the technology we tickled another and everything fell over.

Slowly along came fantastic, robust technology providers - the kind that love to fix broadcast problems at two o’clock in the morning - and we were saved. Email marketing became eCRM, everything got segmented, and we started to play with behaviour-based targeting. Fantastic. So fantastic in fact that last year The Sun’s Dream Team Fantasy Football saw a 93% rise in revenues from digital - in three months!

What we’ve learned from all this emailing is that you can track people from start to finish. You can find out how their attitudes change over time, both through inference based on observing their behaviour, and through outbound validation using email and online surveys. We can, as we did with FMCG giant McCain Foods, cross-validate against the real world, benchmarking brand consideration and watching how it changed over six months of precision emailing (up 11% as it happens).

Then a brand like Ben & Jerry’s (whose product I love but at my age can no longer scoff until it’s empty) goes and abandons email for social. I’m sure social is another link in the customer tracking that needs to be incorporated into the strategy. And in fact until recently that was the one thing you couldn’t do. Yes, buzz tracking posited sentiment, but you couldn’t keep your eye on a person, or a segment.

Well, technology is changing. Now there’s the desire to complete the journey outside of email and into social, following people around their digital lifestyle as it were, we finally have the technological capability to do so. We’re incorporating social into eCRM strategies, and we can audit the journey from first contact to sales revenue. It’s a hit. ECRM is no longer confined to email, SMS and landing pages. Technology has set us free.

Ad:tech seminars in September

2010-07-29T10:56:00.005+01:00

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I’m going to be speaking at Ad:tech again this year. The first session is at 10.30–11am on Tuesday 21st September:

How to create a profitable eCRM programme
With brand consideration up 11%, eCRM has revolutionised marketing for FMCG giant McCain Foods. As a result, sales to customers within the brand's database went up 38%. This talk will show you clearly and concisely how an eCRM programme to sharply increase brand engagement, brand consideration and sales revenues.

The second will be at 11.50–12.20 in the IDM Academy:

ECRM strategy made simple

Using FMCG and retail case studies to show the practical steps to a successful eCRM campaign
Ten Top Tips for successful revenue generation

You can plan your visit to this fantastic event here. I hope to see you there.

Why my love of Ben & Jerry's isn't over just yet

2010-07-20T15:02:00.002+01:00

Over the past couple of weeks there's been quite a bit of buzz about Ben & Jerry's dropping email in favour of social media. It stemmed from an email sent by their UK people to email subscribers, letting them know the monthly moosletter was being canned and asking recipients to fan them on Facebook. It's not quite switching off email (they'll use it still for special promotions) but it's pretty close. According to the quite rightly other-side-of-the-story article, Ben & Jerry's in Vermont isn't following this particular herd, and will carry on regardless.

I commented on the story as originally reported when it broke. My view is that a move to drop an entire marketing channel seems insane for a brand that appeals to people who like ice cream - kids, hippies, adults, old folk, squares alike. We all love Ben & Jerry's. Almost everyone out of their teens uses email. Indeed some kids and teens still use it (though the XML channels r00l increasingly). For instantaneous interaction between a brand and an audience there's nothing quite like social media. For longer-term, planned engagement based on deep understanding of behaviour/demographic/motivation-based segmentation, there's nothing (yet) quite like email.

Where email, and its grown-up cousin eCRM, comes in at its best is in shifting brand perception. A well-paced, well-segmented eCRM campaign over eight months can be persuasive in a way that an ad campaign cannot. You can make a case through demonstrating an experience and involving people in a journey that you cannot do by being interactive or sociable. I think social media channels are brilliant for maintaining and reinforcing a brand's positioning, adding a layer of openness for instance. And I think eCRM is exceptional for changing behaviours through understanding motivation and basing communications on that understanding. Email, SMS and the web can be segmented in a way that is invisible to users. The same cannot yet be said of the Facebook experience.

I am sad that ben & Jerry's has decided to focus entirely on the ephemeral in the UK, at the cost of a long-term brand engagement strategy. It's all gone a bit tactical. And when Facebook fades they'll have to jump on the next big thing. I think it's shortsighted. Customers are, or at least should be, forever. I'll be a Ben & Jerry's customer for as long as I remember its well-meaning roots. But as I'll never be a fan on Facebook it's going to be tricky for them to keep reminding me why I love their brand.

Email unbound

2010-05-12T18:20:00.000+01:00

Everyone thinks of email as being more or less a broadcast medium. Email agencies and bureaux send millions of emails as newsletters every month to addresses lodged in databases. Some send them daily. Noone expects a reply.

But email has a richer use. With apologies for the reminder, but email was the way you had a conversation without picking up the phone. You send a message to your mate, and when they’re ready to answer they do. You can have conversations in real time, or with a delay for timezones, research or holidays. Email involves your counterpart in the decisions about how the conversation is paced, where it leads to, when it changes venue, when you meet up.

We appear to have lost sight of the dialogue. It’s easy to do so: if you’ve got 20,000 address on your database or 800,000, managing dialogue can be a daunting prospect. And notice I said addresses, not customers. More often than not the email broadcasts marketers manage go blind to everyone they can reach. So email gets a bad reputation, and newsletters have dwindling response rates. Where once it thrashed Direct Mail, now response rates are in the lowest single figures.

We all know what the solution is though. Segmentation makes response rates leap.

Imagine you’re sending an email to ten thousand people with three unbeatable holiday offers in it, one for families at the top, one for retired people in the middle, and one for singles at the bottom. And let’s assume that everyone reads the first offer, two thirds read down to the second and a third scroll down to the third. If the audience is equally split between the three target groups, the maximum possible response rate is 6,666.

If we could divide the audience into three segments, and send one email with one offer to each, the maximum possible response rate is ten thousand. That’s a huge difference in effectiveness. If you started with this three-part email, and it really is an unbeatable offer, just by segmenting it you increase your sales by 50%.

So that’s segmentation. Segmentation is a science – one which we practice and improve all the time. It can be really simple like the example above, or it can get very complex. We can segment by, for example, behaviour (what media they consume, do they request a brochure before making a decision, which wines do they prefer), or by demographics (where they live, how many there are in the family, what they earn), or by motivation (whether they are interested in their kids’ health, or the environment, or what their neighbours think). When we start working with a client this is what we address first, by looking at what data is available either in the client’s hands or commercially, because this will give us insights into what messaging might work to drive increased response.

Segmented email marketing is incredibly powerful, but it’s nothing to do with technology, and the technology vendors will always work with specialist eCRM partners with long experience in segmentation strategy to devise the campaigns they deliver for you.

ECRM adds something really special to all this. ECRM is channel-agnostic, in other words it’s concerned with reaching the customer wherever they are - email, SMS, social media or websites. A great eCRM strategy uses every touchpoint available to deliver the right messages for the right moment in the decision-making cycle to the right person. ECRM leverages segmentation through email, but creates a relationship through observing how customers behave and what they find most motivating by tracking across every digital venue, mobile to landing pages to social media, and that’s when email marketing becomes something different, something which transforms businesses through radical changes in revenue.

Acronymtastic – SCRM, ECRM, CRM and the death of DM

2010-04-20T12:52:00.000+01:00

I work for an agency that’s made some sort of name for itself in eCRM. That’s Electronic Customer Relationship Marketing. It’s not CRM, which is Customer Relationship Management if you’re into sales management software, or ...Marketing if you’re a DM agency. If you’re a DM agency (that’s Direct Marketing), thanks for all the principles, but your industry’s buggered.

Why? Because the principles of segmentation, so beautifully applied to awesome effect in eCRM, which now generates millions through digital channels, are starting to reach social. And social media is about engagement in real time. Which is what the digital agency world has been practising for its entire history – I started an interactive agency in 1994, which makes me positively historical. Without digital provenance, when Social channels (gaggle shopping, live feedback and peer advice) meet eCRM and forms SCRM (yes I know), the DM world that gave us so much in discipline finds itself detached from usefulness.

Which is a shame. There are some amazing people and minds working in the industry. And while brands continue to send out three million mailing packs, it will survive. But slowly, those mailing packs that cost £1 each are being replaced by digital nudges, creating continuous contact even with the thinnest segments in the long tail. One day mail will be used for that special something. And SCRM and eCRM will have truly blossomed.

What’s our story?

2010-04-07T17:54:00.001+01:00

We’ve been doing a brand vision exercise within the wider plc my company belongs to. Someone asked me if I could contribute something that would tell the Underwired story. This, I think, illustrates what we do quite well.

McCain Foods asked us to tell them if digital can engage customers with a brand as well as TV can. We told them we’d prove it one way or the other.

We took over their eCRM programme. We optimised their segmentation, and created a comms strategy to engage brand resistors and deepen the relationship with brand engagers. We devised creative for a monthly, segmented email campaign. Finally, we created a regular survey to match the brand tracking being done by Hall & Partners on TV audiences.

In the first ten months, engagement with brand resistors went from 14% to 63%.

Brand consideration rose 11% compared with the Hall & Partners benchmark.

In six months, average transaction value went up 3%. The core segment grew 29% in volume. And sales revenue went up by a whopping 38%.

Focus has switched from proof to growth. Underwired’s now building a web-based eCRM hub to replace the brand’s website. We’re running highly targeted acquisition campaigns to build the most valuable segments. And our client, too, is thoroughly engaged.

This is what we do. I just thought I’d share it with you.

The DMA and overcapacity of Direct Mail

2010-03-16T13:00:00.002Z

Not often I take issue with something someone has written about direct marketing (you, stop laughing at the back!), but the Direct Marketing Association’s outgoing Robert Keitch, in responding to an observation by a colleague, has set me off.

Charles Grant-Salmon, the chair of 4DM Group observed (in this article) that financial firms may be easing off on using direct mail, and that this may have been a factor in the demise of the (very) short-lived Blackburns DMS. Keitch, until today chief of membership and brand for the DMA, added that he felt that overcapacity wasn’t limited to the direct mail industry – indeed in a tweet by the DMA earlier today they implied that the web had a worse overcapacity problem.

What they ignore, in their entirely sunny, happy way, is that while overcapacity may well be a feature of each, one does not equate to the other. Overcapacity in the direct mail market is down to production cost, waste, time-to-market, and broadcast cost, not to mention inability to reach outlying segments for the same reasons.

Overcapacity in digital is down to exactly the opposite – its abundance is down to its miraculously low cost (imagine sending a million mailing packs, call it £500,000. That’s £1,000 in emails). It’s down to its demonstrable and comprehensively auditable effectiveness, and the number of players diving in with innovative ideas to service the rapidly growing market. It is categorically not down to a lack of marketers desperate to get to grips with it.

Direct mail’s in decline (though it has its brilliant uses – Mercedes has used DM beautifully). The dodos are dying - yet there’s an abundance of bue sky. Don’t fall into the trap of relating the two.

Last minute places for the IDM eCRM course

2010-02-15T13:49:00.000Z

I'm teaching the new one day "ECRM for Marketers" course at the Institute of Direct Marketing on the 26th of February – there are still a few places left at a £200 discount if you're free and you want a comprehensive 'how to' on planning, creating and managing eCRM programmes. We'll also be running the same course on June 10th, though it'll be slightly over double the price!

The Efficiency Begets Effectiveness Cycle

2010-02-15T13:12:00.003Z

We've just gone past a fork in the road. You know the one, a year of very reduced budgets, and a dawning realisation that a year without brand awareness is a dangerous place to be. Marketers are approaching the idea of restarting major spending with some trepidation, because the board is peering closely at ROI.

So brands are starting to spend again, though with huge - and proper - circumspection. While it's tempting to go all out and get brand awreness back by focusing on telly or online with virals and sexy, award-winning branded acquisition campaigns, true effectiveness requires that marketers begin at home, with the customers they already have. ECRM (Electronic Customer Relationship Marketing), with its focus on retention, is auditable in ways an ephemeral viral campaign cannot be.

And there's a second fork ahead, though I don't think it has much impact on the decision about marketing strategy. We're either approaching the end of the recession, or we've chanced upon the middle of one that's W-shaped. If it's the former, then there are already a number of brands that have taken on the salutory lesson and switched focus to low-cost, high-impact programmes delivered by cheap, responsive and trackable channels like email, web, social media and SMS. We've already seen remarkable results that show traditional media-led brand consideration declining sharply while eCRM bases rise against the tide. Those brands will prosper with high margins, where marketing spend is described by what's left over after overheads and profit. More marketing effectiveness means higher market share. TV advertising brands not only haven't been able to afford it recently, but when they return to it they'll be shouting louder at diminishing audiences with waning response.

If we're appoaching the middle peak of a W, this problem will only get worse. Brand advertising works when there's continuous stimulation, something that traditional media strategies cannot provide at trickling budgets. ECRM and retention-oriented programmes, which seek to provide continuous engagement through cutting out anything that is not relevant to a specific user's customer journey, can provide not only stimulation for cross-sell and up-sell during times when high street spending is necessarily low, but also data. And this data actually can be used for acquisition, perhaps counter-intuitively.

The major learning is centred around which segments work and which do not. Essentially customers are segmented by propensity to buy, then value (frequency of purchase, lifetime value and so on), with some information about advocacy thrown in for good measure. Taking these very basic measures, and running campaigns based on what you think will most effectively motivate increased engagement (relevant content, added value) and returns (cross selling through relevant promotions, upselling via added functionality), quickly points out which segments are most easily promoted from low value/low loyalty to higher value. This is invaluable knowledge. It tells you in the most direct terms what types of customers are easiest to get more from. It tells you who to target through acquisition campaigns. It writes your media plan for you - and it's one with little or no wastage. Following this path is a marekter's dream: efficiency leads to greater efficiency.

Whichever way the V or the W goes once all the receipts from the government's response to the american mortgage crisis are tallied up, eCRM-oriented strategies for retaining customer loyalty and building engagement are critical, because the days of the brand delivered glibly in 30 seconds are over.