Internet Special Report - Re-Learning the Basics of Marketing (
by Dev Bhata
In 1993, before Web marketing even existed, Don Peppers and Martha Rogers published the most important book on the subject of marketing to an audience of one: "The One To One Future."
The authors described the importance of knowing and marketing to individual customers and establishing one-to-one relationships with them. They said the fax machine and fax bulletin boards as harbingers of the new dialogues were possible, if only marketers would take the time to get to know their customers.
It took the Web to make Peppers and Rogers' ideas come alive. Newly minted Web marketers took the book as their mantra by the time it went into paperback in 1997. Its teachings framed the basis for every Web marketing theory and practice. For some, however, the message obscured other basic lessons from prior decades of direct marketing experience. Of the many direct marketing disciplines, only customer relationship management (CRM) flourished in Web marketing circles, largely because it was most akin to Peppers and Rogers' instruction. The rest—basics such as split-testing and sophisticated data analysis—were tough to understand and tougher to implement, and therefore, often ignored.
Now, after five years of Web marketing, the cost of this ignorance is apparent. Web marketing has proven to be more expensive and less profitable than we all first expected. It's now time to take another look at the basics of direct marketing, and rebuild Web marketing from the ground up on the basis of a broader understanding of the challenges and opportunities.
Instead of simply focusing on building consumer profiles, and then marketing and re-marketing to them, it's increasingly important to:
* understand the basics of our product offerings;
* learn through each and every sale what about them drives consumer response; and
* evolve in real-time the marketing of our products and services to take advantage of new understandings. Instead of learning more about single individuals, we must learn how to sell better to all consumers. In essence, Web marketers must learn (or re-learn) the basics of marketing.
The Law of Big Numbers
The weakness of relying solely on one-to-one marketing principles is that it limits our focus to individual knowledge, while ignoring the Law of Big Numbers. All traditional direct marketers know the Law of Big Numbers. It states that the more interactions we have with many consumers (note: not many interactions with the same consumer), the more we learn from patterns in the data.
These patterns speak louder than any one consumer. They tell us what specific marketing levers are stronger than others, and what we can do to influence consumer behavior to drive greater results. In essence, the consumers themselves will tell us how to succeed in our marketing efforts, if only we'd listen and act on what we learn. This isn't simply a function of telling visitors to your online bookstore that those customers who bought one book also bought, say, "Relationship Marketing." More is required.
Take a look at the basic Web commerce destination sites. How many of the major toy e-tailers know what Web site color-combination drives more results on their Web pages? How many have figured this out by constant testing and re-testing? Probably not many. But you can bet that traditional direct marketers know what color envelopes work best for them, and when, and with what group.
Large online investing Web sites often offer premiums such as free stock reports or a month of free trades. Can these companies quickly decide which offers pull the most response for the lowest cost per acquisition? How about on a Tuesday afternoon as opposed to a Friday morning?
Do the big Internet booksellers know whether putting 100 links on a page dedicated to selling a single book is cost-effective? How would it affect sales if they put less, or even more?
These are the tough questions. Not only must Web marketers learn the answers to questions like these, but they also must act on this knowledge—and acting on knowledge often is tougher than it may appear. If you spent $700,000 on a colorful new site overhaul, and another $350,000 on software to learn from consumers, would you be willing to throw out the site if consumer response data suggested that plain black text on a white background outperformed?
Further, would you be able to act right now, and then change again if you learned something else tomorrow? Would you be able to learn—and apply your learning—in real-time and to every new consumer? Each time a consumer transacts (or doesn't transact) with you, there's something to be learned, and if you can't use that knowledge to your advantage in real-time, you lose a tremendous opportunity.
For the companies with which we work, testing is mantra. Consumers tell through their actions what combination of offer and creative motivates them to respond, and we take that knowledge to improve every subsequent interaction with future consumers.
This means, for example, that the scroll length of a Web page that serves to generate mortgage refinance leads for a major financial institution will change during the course of a few days. It also means that the free gift we offer on a Web site dedicated to selling a magazine subscription for a major publisher will be different on the weekends than on weekdays.
Using dynamic serving tied to real-time feedback and analysis, we've improved conversion rates by 200 percent to 300 percent on average, and in some cases by as much as 800 percent.
The News: Good & Bad
The bad news is that if you're a Web marketer, you'll have to be prepared to change. The good news is that it's not too late.
The Web offers excellent tools to both understand patterns in data, and to implement changes to your offer and creative in real-time. Copy can be tested one consumer at a time, across as many segments as you can track, and then updated on the spot. Test by daypart, by source or by landing-page copy. Adjust basic elements of your entire consumer interaction process—from banner to Web site to transaction and beyond—while you learn. Every consumer interaction should be a chance for you to learn, for example, if blue backgrounds work better, and if not, to make the changes that will help you close the next sale.
Web marketers are blessed with a medium that's better suited to testing and adaptation than any that has come before it. Testing in direct mail or in telemarketing is relatively tough and time-consuming by comparison. Once we gain control of the direct marketing basics and fuse them with better analytics and dynamic technology, we'll drive successes that are stronger than any we've seen before. The next chapter in Web marketing is about to be written.
Dev Bhatia, president and CEO of HotSocket, has been involved in the Web since its early days as a commerce medium. At Yoyodyne, he led teams that developed some of the Web's biggest promotions. After the company's sale to Yahoo! in 1998, Bhatia founded HotSocket to create and lead the synthesis of Direct Marketing and Web commerce. He can be reached at firstname.lastname@example.org.
Static: Most Web sites are served without any dynamic capability and little input of either resource or consumer data. These sites typically are used for one-way information dissemination.
Resource-enabled: These Web sites offer input from internal resources or rule-sets, such as inventory or news feeds. Sites such as CNN or Amazon use resource-enabled tailoring of content.
Profile-enabled: Sites and services that personalize content based on a consumer's individual profile; most adhere to the 1-to-1 concept. Lifeminders and MyPoints do this well.
Analytic: By going beyond either session-specific resource data or consumer-specific profile data, analytic sites take advantage of patterns in large data sets to deliver optimal value to both marketers and consumers.
Source: Dev Bhatia, HotSocket