Database Marketing On Track For Improved Response
Multichannel marketing strategies, such as online ordering supported by in-store returns or e-mails sent before and after a direct mail drop, are proving to be powerful ways to encourage customers to interact with marketers in any way that best fits their needs.
But successful multichannel marketing requires a thorough understanding of where your sales or leads originate so you can better allocate marketing resources. According to a March 2004 study by J.C. Williams Group (commissioned by DoubleClick and Abacus), some of the top challenges faced by multichannel marketers are measuring cross-channel influence and ensuring the integrity of integrated customer data.
"Tracking response to a particular customer or household has been a perennial goal for direct marketers, even when there was only a single channel to deal with. With today's multichannel alternatives and consumers' heightened privacy concerns, this challenge becomes more complex," says Lissa Napolillo, executive vice president, Database Services at MBS, a provider of database marketing and CRM solutions in Central Islip, N.Y.
The solutions to improved response allocation and measurement of cross-channel influence range from simple promotion tactics to software implementation to organizational restructuring.
Improve Your Capture Rate
The online channel is where the most difficulty in tracking response occurs, says Gina Valentino, vice president and general manger of J. Schmid & Associates, a catalog consulting firm in Shawnee Mission, Kan. Many Web sites have been developed by IT professionals who are not marketing-oriented, so the order-taking process is not set up to solicit source codes. Valentino adds that customers also can't be expected to key in their mailing codes.
Napolillo notes that brick and mortar retail sites also pose challenges to multichannel marketers trying to ascertain what might have spurred the store visit.
To get at this detail, marketers can employ promotional offers that require the input of the promotion code (which becomes the source code) for the respondent to receive a discount or free gift, says Valentino.
An example of this tactic, offers Napolillo, is taking $1 off on Web orders in exchange for the source code.
Retail operations can create loyalty programs that use membership cards to track behavior to an individual; Napolillo finds the key-chain size cards to be particularly effective for encouraging customer use.
In addition to customer-facing incentives, direct marketers can adopt methods that improve the overall tracking process.
One such solution is the use of separate item numbers in print promotions versus those on the Web site, says Valentino. When a buyer inputs the desired item number for a product from a direct mail piece, this code links to a separate item number for the product used just for the Web display; thus, many different print promotion item numbers can be associated with one product, helping companies properly credit print promotions that drive Web orders.
Another option is to partner with a technology provider that can integrate your mail tapes with your order processing operations. This is not a precise measurement tool, but it can help you logically match online sales during a given period back to a mail drop that occurred around the same time.
Of course, the most complicated cross-channel influence to measure is that of indirect channels, states Steve Briley, vice president of Analytical Services at Merkle Direct Marketing, a Lanham, Md.-based provider of database marketing solutions. "Indirect marketing creates a more diffused stimulus (e.g., TV) that's generated toward a very general audience. It then tries to measure responses that may or may not tie back directly to the stimulus."
Briley explains that the "joint impact of direct and indirect marketing is measurable through in-market test designs that can effectively tease out the independent contributions to response, although the joint impact may need to be measured at aggregate units of analysis (e.g, several months for individuals or a single point in time for segments)."
Allocate the Rest
Despite a marketer's best efforts, it's impossible to source every single order. The average percentage of orders without source varies by company and by channel, but Napolillo estimates around 20 percent of Web orders, 10 percent of phone orders, and 40 percent to 60 percent of retail purchases do not get sourced to any particular promotional activity.
These orders need to be allocated to a budget investment. One of the ways marketers do this, Valentino reports, is by applying a weighted average across all campaigns and channels.
Another option, she adds, is to roll all orders, sourced and unallocated, into one group, and then analyze the dollars generated per customer, creating a sort of mini P&L statement for each customer. In reality, Valentino notes, all companies need to conduct this procedure to get a global picture of their marketing investment and determine which marketing activities are working on more of a macro scale.
Goal: Cultivating Multichannel Customers
In addition to more effective marketing spending, improved response tracking helps marketers identify their multichannel customers.
"Recognizing multichannel customers is essential. Multichannel customers are worth investing in and modeling to find look-alikes, because their lifetime value is so much greater than [that of] single-channel customers," says Napolillo. "Understanding these customers' channel of preference for marketing communications and channel of preference for purchases can be used to strengthen individual customer relationships."
The way to identify multichannel customers and address their marketing and response preferences is with a relational database, says Briley. To create this powerful marketing tool, he says, you have to eliminate the "channel silos" within your organization. Either your company needs to realign its structure across individual brands, or the online and offline divisions must share dataand customers.
Otherwise, says Napolillo, "you may make the mistake of eliminating valuable customers who prefer to receive offers in one channel but like to buy via another."
And don't forget the impact multichannel activity has on list rental revenue. Valentino has found that people who prefer making purchases on the Internet tend to buy more frequently than the average postal mail respondent and with lower average order values. If these customers are merged in with all other buyers on a marketer's list file, it can make the property look less attractive to rent. Smart companies are segmenting their housefiles by online and off-line channels to give other marketers the opportunity to match their promotional strategies to each type of buyer.
With more aggressive tracking and measurement processes, Briley asserts, you can base your future promotional activities not on last year's results, but on more quantitative methods that help you make the most of your budget.
Channel Tracking Tools
The following are some technological solutions to help you manage and measure the multichannel environment:
Boomerang Relationship ProA campaign management solution that allows users to schedule, manage and track online and offline promotions via a single enterprise calendar. Sending rules establish corporate-wide contact priorities, and an online dashboard provides tracking metrics. To learn more: www.boomerang.com/services-proseries-relp.shtml.
CustomerSat Enterprise 7A solution that provides multi-channel support for surveying customers and gathering feedback; channels covered include speech-enabled Interactive Voice Response (IVR) and Web, phone, mail, and mobile devices such as PDAs and cell phones. To learn more: www.customersat.com/ Solutions/enterprise.asp.
Experian TrueTouchA predictive targeting technology used to optimize contact strategy by offering insight on customers' attitudes, channel preferences and purchase motivators. To learn more: www.experian.com/truetouch/index_ind.html.
PeopleSoft EnterpriseOne Multichannel Interaction ManagerA software module that supports customer interface via phone, fax, e-mail and Web; intelligent routing prioritizes and matches contact to the appropriate agent level and transmits customer data promptly. To learn more: www.peoplesoft.com.
RightNow ServiceAn integrated customer service solution that manages inquiries and response across the Web, e-mail, chat and phone. A shared knowledgebase allows all customer service reps to learn from prior customer interactions, regardless of channel. To learn more: www.rightnow.com/products/multi-channel.html.
SAS Interaction ManagementA solution that tracks customer behavior in multiple channels in real time; pairs analytical processes to tailor promotions on the fly; sets triggers for time-, event- and behavior-based instances; and personalizes contacts based on individual behavior patterns. To learn more: www.sas.com.