The truth behind integrated direct marketing strategies vs one-off tactical campaignsby
Martin Wright unpicks how coordinated contact strategies improve marketing performance and shows how simple response analysis can mislead, over-estimating the incremental impact a tactical campaign can have.
Figure 1: A single, well targeted campaign can cause a high sales spike but generate modest incremental sales.
Figure 2: Repeated campaigns ramp up sales but usually decline over time
Figure 3: Co-ordinated contact programmes can create substantial changes in consumer behaviour and build the level of base sales
How people process information
To make communications effective marketers need to understand how people process the vast amount of information that comes their way every day. Consumers apply a ‘judgement system’ (Ross A. Wirth - http://rosswirth42.blogspot.com/2010). If information matches or enhances what is already there it is likely be added to the existing concepts and categories. If it doesn't match, the consumer must reject this new information or replace what is already there.
Integrated customer contact strategy in action
- Chris Fellows, direct marketing manager of Future Publishing helped develop a 16 month renewal cycle starting almost a year before renewal falls due. He introduced a range of different media and approaches, some focusing on softer brand messages, others were offer based.
Despite launching this new strategy in the teeth of the recession when pressures on discretionary consumer spend were greater he was able to further increase retention rates and reduce the cost per retention.
- Whilst head of customer strategy at AA, Mark Humphries introduced a contact strategy which recognised the relationship a consumer had with the organisation and used survey data to find out what they were interested in. He developed a contact strategy which pre-determined what messages were sent to which consumers, when.
This replaced a targeting approach driven purely by response and ROI which had seen some customers get little or no contact whilst others were inundated. Response rates declined and complaints and opt-outs had risen alarmingly. By introducing welcome communications, taking the time to find out more about customers and making communications more relevant, the business was able to reverse the decline in response and improve customer satisfaction.
- Similarly when Michael Fassnacht and Tod Frincke of Loyalty Matrix worked with a well known consumer goods manufacturer which had a high price specialty product, they found it was suffering with low awareness and very low conversion among potential buyers. They created a coordinated programme that included awareness and data capture followed by a series of low cost contacts at key buying moments.
The awareness campaign created an initial spike in interest and sales, then sales settled back to near pre-campaign levels. The ongoing contacts helped build baseline sales gradually over 12 months, ultimately to end at a level three times higher than at the campaign's outset.