Martha Stewart - Extending the Brand
Based on analysis/research, how does the value of a customer who has a Kmart transaction in her/his purchasing history compare to those who haven't? Because Kmart sales can't be directly captured and stored in the Martha Stewart Omnimedia customer database, sampling and projections must be done, which isn't a core activity of many direct marketing efforts. One also might look at the revenue potential of a customer who has purchased through Martha Stewart by Mail, and has subscribed to Martha Stewart Living. How does this customer's revenue potential compare to that of one who has both of these transactions, but also has made a purchase from Bluelight.com?
• What customer actions best drive value in the enterprise? Traditional direct marketing maximizes transactional value (response rate and average order) for each promotion/offer. A holistic view serves better here. If a subscriber to Martha Stewart Living delivered more value over time to the franchise, wouldn't you want to aggressively market subscriptions to Martha Stewart Living, even if the "transaction" has a lower immediate value than a $100 purchase online?
• What customer action would best strengthen the brand-customer relationship? Example: Martha Stewart executives would analyze their data to understand key trigger activities, after which a deeper relationship with the customer is realized.
For example, a customer need should be recognized when an address change is registered with Martha Stewart Living. Given the organization's range of offerings, this would be the time to draw on the content and merchandise most relevant to the consumer during this important life event—moving—to cement a long-lasting customer relationship.
• What company action is most likely to lead to the desired customer action? Response testing is the tool to deploy. Given the customer's trigger activities and the desired activities that add value to the enterprise, contact, content, offer and vehicle are tested to learn what drives the optimal business result. Using the earlier example, if a Martha Stewart Living subscriber drives the most value in the enterprise, and the trigger event is his/her registering on the Web site, should an outbound call be made, a subscription offer be mailed, an e-mail be sent, or a copy of the catalog with a subscription blow-in card be mailed? Should a promotion be offered to increase conversion rates? Does the conversion rate increase pay for the cost of promotion?
Scott Davis is managing partner of the Chicago office of Prophet and Cathy Halligan is a director with its San Francisco office. Prophet is a strategic professional services firm specializing in brand leadership and brand-driven growth. For more information, visit www.prophet.com.