Organizations Seek Target Marketing's Bull's-Eye

One in five organizations spends more than 45 percent of its entire marketing budget on target marketing, according to a new survey, "2005 Executive Report: Target Marketing Priorities Analysis." The report, underwritten by Harte-Hanks and prepared by CSO Insights, also shows that about three in four companies plan higher investments in database management this year; three in five are planning to spend more on email, Web design, and data quality initiatives; and more than one in two plans to invest in search marketing. A total of 281 companies participated in the survey, reflecting a cross-section of vertical markets that includes high-tech, manufacturing, retail, services, and other categories. A significant increase in investment levels shows that target marketing is becoming a central focus as organizations seek to optimize their customer generation and management efforts, according to the report. Furthermore, as companies attempt to ensure their messages are received, strategies are increasingly being driven by insights into unique customer segments or individuals. One of the goals of the report's authors, Jim Dickie (a CRM magazine columnist) and Barry Trailer, partners at CSO Insights, was to find out whether senior management is on the same page as marketers when it comes to key targeted marketing priorities. Ultimately, the report finds that both sides are in agreement, looking to focus on the following initiatives (in order of importance): Acquire new customers: More than 82 percent of respondents cited this as an important objective and about 50 percent listed it as the priority. Increase program response rates : "This objective focuses on front loading the funnel with more prospects while generating greater response from existing customers," and therefore fits well with the goals of customer acquisitions. Improve targeted marketing ROI: "Targeted marketing understands that generating pure quantity of leads and traffic is not enough," the authors write. "For new clients, the ultimate goal is to generate interest from prospects that have a need, are willing to immediately act on that need and are predisposed to selecting your product over alternate offerings. For existing customers, it is about creating deeper, longer-lasting relationships." Improve customer longevity: As the effort to acquire new customers continues to rise, customer loyalty and retention are important success factors for most sales executives and targeting marketing can contribute to that success. "Continually communicating with clients, reinforcing past purchase decisions, sharing the successes other customers are enjoying, and informing them of new offerings are projects that are high on the list for many firms," the report states. Increase wallet share: Effectively cross- and upselling can result in a number of positive implications for organizations, including higher revenues and margins. In some industries there is a direct, inverse correlation between the number of products and services a customer acquires from a vendor and the amount of churn in the customer base, according to the report. "Target marketing's ability to contribute to this overall business objective is directly in line with what senior management seeks to accomplish," the authors write. Reduce target marketing costs: Overall targeted marketing expenditures are on the rise, but many managers are concerned about the impact each program is having. "They want to minimize the waste in program spending while improving their ability to analyze the effectiveness of the programs so they can reinvest where there is productivity." "All are worthy goals for target marketing groups to pursue, but they leave us with a followup question: 'How are organizations planning to accomplish this?''' the authors ask. "We have yet to hear a CMO say the company's future target marketing strategy is to continue what it has been doing for the previous five years. Virtually everyone is reassigning and resetting priorities to deal with changes in their marketplace, but what is the right target marketing investment mix for the future?" Related articles Marketers Must Temper Their Behavior A forum for online advertising warns about being invasive when targeting based on consumer habits. Learning the ABCs of Marketing An educational products company uses Omniture's SiteCatalyst to build its Internet marketing campaigns.