Data Driven: Ignore the Org Chart
Circulation planning used to be a print-channel-only exercise, independent of Web and/or storefront marketing initiatives. Likewise, Web traffic management was purely the function of the Web marketing team. It was the exception to the rule that the different marketing teams would coordinate on any kind of a common approach. However, to survive our new economy and the way customers make decisions today requires a new way of thinking and an updated approach to how you contact them.
This two-part column series explores how a coordinated multichannel approach can lower the cost to obtain a customer, while increasing sales, retention rates and profit margins. This month's column explores this concept from a customer acquisition perspective, while November's column will define contact planning as related to customer retention.
One question being asked is —with the explosion of e-commerce—is traditional direct mail even necessary anymore? Recent and upcoming USPS actions certainly beg the question. Decreased response rates combined with increases in postage, paper and printing costs have magnified the cost of acquiring a customer and the time needed for a customer to become profitable. But looking at direct mail from a customer acquisition standpoint, the answer remains yes.
The Best of All Acquisition Worlds
Using industry averages from comScores's 2007 multichannel Direct Mail Study and The Direct Marketing Association's 2010 Response Rate Trend Report, the average cost of acquiring a new customer is more than twice as expensive through paid search than direct mail. In addition, other studies have found that the retention rates of customers acquired through direct mail are higher than those acquired online. A mailed piece in the mailbox compels a prospect to react, even if the decision is to simply throw it away. But it's a conscious decision that e-mails cannot replicate. Twenty percent of e-mails never reach the intended prospect.
When you combine a higher average order value, greater conversion of one-time customers to two-time customers, and a historically stronger lifetime value of direct mail customers, the easy answer is that mailers would be foolish not to have some direct mail acquisition efforts as part of their overall prospecting mix.
One of the great obstacles to acquiring new customers through direct mail, but converting them online, is measuring success. How do you separate online visitors who come in through mail efforts from regular website visitors? Did the direct mail piece drive the online conversion? Simply including a website address is not sufficient.
Creating personalized urls (PURLs) or personalized landing pages is one method that allows the Web analytics team to determine if the customer was originally acquired through print or online. In addition, enabling prospects to share offers from PURLs through social media and/or e-mail has frequently increased overall response rates.
Online customer acquisition should never be substituted for a single print acquisition approach. The immediacy of online marketing generates responses now from prospects that print acquisition efforts could take months to reach. The breadth of services or products online cannot be completely reflected in print. And the sheer volume of potential prospects (including international) is unmatched through any other marketing approach.
It's critical for overall customer satisfaction to create a one-brand, multichannel approach. Common promotions, creative strategy and pricing benefit the overall brand. The days when the print marketing team and the Web marketing team did not even know each other's names, let alone each other's contact plans, promotions and pricing strategies, is not the approach of an integrated marketing solution. No matter what the org chart shows, given the benefits of both online and print customer acquisition, it is reckless not to coordinate a multichannel contact strategy process.
Put It to the Test
One financial institution came up with an approach for this type of internal integration. Recognizing the need for a coordinated marketing strategy, an internal process was designed to allow each marketing team input from the budget planning stage through the post-marketing campaign analysis. In order to alleviate internal conflict, a director was hired from outside the institution whose only job function was to manage the process, reporting directly to the marketing vice president.
The first step came during the annual budget process. Rather than each marketing department producing a bottom-up initial budget, the new marketing process director initiated weekly meetings with each marketing manager to produce a coordinated and integrated initial marketing budget.
The first week's assignment was to design a full-year contact strategy for print, supplemented by targeted e-mail campaigns and paid and organic search campaigns. Social marketing informational pieces would be placed to increase the response curve of the mailed pieces and search campaigns. Subsequent meetings produced an integrated creative, promotions and pricing plan.
In order to secure buy-in from each individual department, the bonus incentives for each marketing manager were switched from internal department success to overall institution marketing productivity.
The marketing process director was responsible for all integrated marketing forecasts and budget plan revisions as actual results from the integrated campaigns were analyzed. While the department marketing managers did not report to the marketing process director, this individual did have the authority to change any marketing team's contact, pricing or promotions strategy to fit the integrated marketing plan.
The results spoke for themselves: A year-over-year increase of 16 percent for new customers acquired and an 8 percent increase in the average order per new customer, coupled with a decrease in advertising spending of 6 percent.
Integrated Does Not Mean Automatic
On an annual basis, re-examine prospecting strategies and tactics. An outside specialist experienced in cross-channel integrated marketing can be used to successfully initiate the process.
The question that should be asked is, can anyone afford not to have an integrated multichannel marketing plan?