Heart & Soul
Faced with increasing opt-outs and declining response rates, it can be easy for direct marketing professionals to lose heart. But not the team at Los Angeles-based Live Nation, a promoter of live concerts, music venues and festivals, owner of the House of Blues brand and operator of the Web’s largest concert search engine. Listening to the company’s Vice President of Direct Marketing Bob Frady speak about marketing activities, you get the distinct impression that “heart” drives everything Live Nation does.
“We’re not just spreadsheet jockeys; we love our product and are excited about what we sell,” says Frady. “We try to transfer our love of music and the concert experience to the customer.”
This unbridled enthusiasm—combined with sophisticated segmentation and practices that put the customer first—fuels a robust direct marketing program. Frady expects Live Nation to send out more than 8,000 campaigns for the whole of 2007, encompassing 500 million e-mail messages in 40 different U.S. markets. As a result of these efforts, the company has built a thriving customer database, increased revenue by 143 percent over 2006 and, importantly, learned some valuable lessons about cultivating relationships with today’s discriminating consumers.
Providing a Service
One of the most striking aspects of Live Nation’s direct marketing program also is one of its simplest: a genuine desire to provide the information customers want in a time frame that is useful to them.
Frady knows from personal experience that nothing is more frustrating to music lovers than missing an opportunity to see a favorite artist or band in concert because of inadequate communication. “My favorite band is the Smithereens,” he elaborates. “They were in town for a show put on by another promoter about a month ago, and I didn’t find out until I read about it in the newspaper the day after the show. That’s what we’re trying to prevent. We want to let fans know when their favorite artists are coming to town and then get them stoked.”
According to Frady, the most effective tool Live Nation has in its marketing arsenal to accomplish this task is the customer database. It houses more than 16 million names of individuals who have opted in to receive the company’s marketing communications. “The customer database allows us to reach fans of a band early in the ticket-buying process,” he says. “[It] is also used at the back end for filling in when shows might not be selling as aggressively as we want. It helps to put people in seats far more efficiently than traditional media.”
Most of Live Nation’s marketing campaigns are delivered via e-mail, though Frady says the company has “dipped its toe in the water” with direct mail and selectively uses online advertising. “Nothing beats e-mail in terms of cost per acquisition,” he adds.
Segmentation Is Everything
The workhorse of Live Nation’s direct marketing line-up is an e-mail newsletter called the Live Nation Set List, which is customized for 40 different U.S. markets. Distributed weekly, the e-newsletter includes a calendar of presale and on-sale events, and features artist or album photos along with links to the LiveNation.com Web site for detailed ticket sales information.
Live Nation also sends out e-mail alerts targeted to customers’ artist preferences. These communications take advantage of the wealth of information Live Nation has gathered as a result of previous purchases or customer requests to receive artist-specific information. They can take the form of presale or on-sale notifications for shows in recipients’ local areas, merchandising offers for specific artists or shows, contest promotions featuring popular artists or tours, etc.
With these types of electronic communications, Frady says it is important to get directly to the point. Live Nation uses the featured artists’ names in subject lines, which helps them stand out in recipients’ e-mail inboxes. Open rates for Live Nation’s targeted e-mail alerts are huge, he says, adding that open rates across the entire e-mail program have increased nearly 47 percent from 2006 to 2007. This success largely is due to rigorous segmentation, and it flies in the face of challenges such as image blocking that have caused many marketers’ open rates to appear diminished.
However, marketing exclusively based on past purchases does not a successful long-term business model make. “That’s sort of a slam-dunk approach,” Frady explains. “But it’s not large enough a lot of times to make scale happen. You have to go wider, and you have to go with other artists who are related potentially to that first artist.”
So, Live Nation also uses an artist look-alike function, which analyzes patterns in musical preference data and identifies complementary artists—those who customers will have a high probability of liking based on their past purchases or existing preferences. In doing so, the company is able to cast a wider net for ticket sales on any given show.
“The key lesson we’ve learned is that segmentation is everything,” Frady emphasizes. “[It] really drives response.”
Of course, Live Nation is careful not to inundate customers’ inboxes with marketing communications. Frady says individuals who have signed up to receive the company’s electronic communications without expressing an artist preference typically receive one e-mail a week—the Live Nation Set List e-newsletter customized for the recipient’s local market. Those for whom Live Nation has artist preference data on file may receive a maximum of three communications in a seven-day period.
But Frady stresses that frequent communication with customers is a priority for Live Nation. It promotes brand recognition and trust, in addition to helping the company maintain accurate and up-to-date customer information. “E-mail addresses change over time,” he explains. “We want to ensure deliverability of our database, so we e-mail it weekly.”
And Live Nation has the numbers to back up this philosophy. According to Frady, working with e-mail services provider Zustek, the company has achieved a deliverability rate in excess of 98 percent and an inbox (as opposed to junk folder) rate of more than 97 percent.
Listen and Learn
As one might expect from a company in the entertainment business, intensive consumer research is vital to Live Nation’s long-term strategic planning. But listening to what customers have to say isn’t merely an exercise in product development. Frady says Live Nation’s strong commitment to research also generates important findings pertaining to the company’s marketing.
For example, a recent survey found that customers wanted to proactively tell Live Nation which bands and geographic areas they want to receive communications about. This prompted the company to build an online preference center, which was unveiled in November.
“Now you can go and type in the bands that you want to see or pick different areas of the country that you want to get information for,” Frady says. “Let’s say you travel to San Francisco a lot and you live in Dallas, but you want to get the San Francisco calendar. You can sign up for that.”
When constructing its preference center, Live Nation took into consideration trends in music media consumption and tapped into the latest technologies to make the resource as easy for customers to use as possible.
“You can bring in data from your iPod,” Frady explains. “Your iTunes has a library file, which is a list of the artists that are in your iPod. [Our preference center] scans it and matches it to our database to find out which of your favorite artists are already in our database. You then have the option of including them or excluding them.”
In addition, the new preference center gives customers more options for managing their Live Nation e-marketing subscriptions. For the first time, customers can opt out of specific communications as opposed to having to opt out of everything to reduce contact frequency or type, something Frady views as a normal—even an acceptable—part of the direct marketing game.
“We’re OK with churn,” he says. “[It] is part of the landscape. Just because someone gets off your e-mail list doesn’t mean they won’t go to a show.”
Still, Live Nation takes every precaution to encourage individuals not to opt out. Frady says building trust through regular e-mail communications, establishing good relationships with Internet service providers and producing communications that are highly targeted and relevant to recipients’ interests are all essential to reducing database churn.
“Our opt-out rates are, we think, impressively low,” says Frady, another improvement stemming from the tighter targeting of e-mail content to customers’ interests and the contact frequency cap. With the launch of Live Nation’s online preference center, he anticipates an even greater ability to keep the churn rate under control.
The ‘Holy Grail’ of Database Marketing
Frady recommends marketers seeking to sing from the same songbook as Live Nation consider behavioral data as a way to refine their targeting. He believes that knowing something as simple as an individual’s musical tastes is an ideal way to understand what really makes customers tick.
“Behavioral data is sort of the holy grail of database marketing—to know what motivates somebody or what interests somebody is a real key indicator to telling how well your product is going to do,” he says. “So if you know that somebody is interested in rock music, that’s different than if they’re interested in classical music … And if you add a demographic layer on top of that, you get a pretty good indication of the life stage and lifestyle of a customer.”
Data from Live Nation’s customer file is available for list rental through Irvine, Calif.-based list and data firm Carney Direct Marketing. Postal addresses for Live Nation customers can be rented, though e-mail addresses cannot.
Peter Carney, Carney Direct Marketing’s founder and CEO, describes the Live Nation file as a dynamic “transactional database” enhanced with demographic information. It includes—among other things—data about purchase frequency, purchase amounts and the categories of events and/or musical genres customers’ past purchases have encapsulated.
Carney says the file provides marketers with a great opportunity to make traditional direct mail work for online buyers. “The trick to this file, I believe, is approaching them offline and directing them online,” he advises.
In addition, Carney says the sheer quantity of 30-day hotline names available on the file is remarkable. “In a world of diminishing hotlines … it’s a growing hotline—one of the biggest that I’ve seen of online buyers.” Hotline names exceed a half million a month, representing some 1.5 million transactions.
This allows marketers to segment into the list to find the most responsive names for their offer and still generate adequate numbers for mailing, says Carney.
According to Frady, Live Nation’s customer database is an “untapped file,” largely because list rental is just a small part of what his department does. Highly targeted and service-oriented direct marketing is the real heart and soul of the business. And Frady is committed to keeping it that way.
“I cannot emphasize it enough. If we got [wind] of our customers complaining about [third-party marketing], we would pull the file,” he says. “I wouldn’t risk the relationship with the consumer.”
Amy Syracuse is a London-based freelance writer, who wrote the cover story on the Jewish National Fund’s viral marketing efforts for the August 2007 issue.