The alarm goes off and you hear cats meowing a tune that sounds vaguely like the Bee Gees. In the bathroom, the side of your toothpaste entices you to try a new orange-malibu-jazz! flavor. Reading the morning paper, pages of coupons from your pharmacy spill out. Heading out, you step on a take-out menu from a local restaurant. Then you catch the gleam of a smile out of the corner of your eye—it’s your local news anchor, zooming by on the side of a bus.
Welcome to the modern marketing machine. Experts estimate that the average person gets beaten up by between 1,600 and 6,000 advertising messages daily, but consumers have learned to defend themselves with a simple tactic—they’re ignoring you.
In the past, marketing had one tangible constraint: the cost. “Basically, you marketed as much as you could spend,” says Andrew Hally, a vice president of product marketing and strategy at Unica, a provider of enterprise marketing management software. Budget is still a concern, but many marketers are disillusioned by the availability of low-cost channels such as email and Google’s YouTube. This media proliferation is vying for an ever-limited mindshare—and while quality is supposed to trump quantity, no one really knows.
Technology has empowered customers just as it’s enabled marketers. “At first they ignored you. Then they blocked you. Now they turn on you,” Hally says. Marketers are clever, though—like water, they seep into any available nook. Next time you watch local news, notice that commercials often air simultaneously on a split screen—rendering remote controls useless. Digital video recorders (DVRs) pose a bigger challenge. Leichtman Research Group reported last year that 20 percent of households used a DVR, up from only 2 percent in 2003. And DVR growth is projected to reach 50 percent by 2011. But customers aren’t stopping there. Bother them enough and they’ll get the law on their side. (See sidebar, “Stop! In the Name of the Law!,” at the end of this article.)
Too Much Internal Chaos
Alterian, a marketing solutions vendor, recently released a survey of 852 marketers in North America and the United Kingdom, 69 percent of whom use three or more applications to store and analyze their marketing and campaign data in their daily operations; 20 percent use seven or more. With so many disparate solutions, it’s no wonder marketers have difficulty managing excess.
Internal havoc will impact campaign effectiveness. “Oftentimes, there isn’t a clear objective of what the goal of the campaign is,” laments Michael Jennings, principal at consulting firm Bridge Strategy Group. As a result, marketers launch a variety of messages across multiple channels, waiting for anything to stick. Whether it’s brand-building or demand generation, having a clear idea of the objectives of the campaign beforehand enables marketers to define their target segment, and tailor their media channel and message to optimize return.
Online retailer Overstock.com, for example, was struggling to understand its clientele. Customers rarely took the time to update their data on the site’s “preference center,” and were therefore subjected to general email blasts three times a week, explains Paul Longhurst, Overstock’s director of data warehousing. Data was haphazardly shuffled around, copied-and-pasted as needed into offline environments. Worse, data was a day old at best, preventing any real-time decisions. The company avoided system burnout by temporarily shutting parts of the site and having employees work in the middle of the night. Email was an underperforming channel, bringing in just 5 percent to 10 percent of total revenue.
Overstock needed a clear view of its internal system before it could ever see a clear view of its customers. It took bringing every iota of information into a Teradata data warehouse before Overstock finally rose above the clutter. Now, 75 percent of employees can simultaneously and securely access data to complete day-to-day tasks. Longhurst can see where ad dollars are being spent—and where they can be spent better. He can track product clicks, purchase behavior, and online activity to provide customers with the most relevant experience. Revenue from email has quadrupled since the implementation in 2006, while the average order has increased from $103 to $120. Meanwhile, marketing spend has decreased from 11 percent of overall revenue to 7 percent.
What’s Too Much?
“Anything that isn’t working is ‘too much,’” asserts Joseph Manos, executive vice president of MindFireInc, a provider of direct-mail tracking software. To the consumer, it’s usually irrelevant messages showing up over and over again. There’s no sense of “too much” when the campaign is seen as having value. Because businesses have mostly focused on the immediate sale rather than nurturing the long-term opportunities, Richard Hren, director of product marketing at analytical-software provider SPSS, suggests restructuring the enterprise based on target segments rather than products. Segment managers at a financial services firm, for example, can then tailor their communication strategies to reach, say, tech-savvy 20-year-olds, or spend more on direct-mail campaigns for wealthy retirees. “If you can look at it from the customer perspective, you can manage the flow a whole lot better,” Hren says.
Marketers, after all, aren’t the ones struggling with too many channels. Studies have shown that campaigns valuing frequency of touch across multiple dimensions are more likely to capture attention and be remembered. (For more on this, see “Sense-sational Marketing,” Insight, May 2008.) But with more channels comes more responsibility. The key is to use them wisely, track the results, and make it relevant.
Depending on your brand, product, and target, certain channels will be more effective than others.
When online retailer Zappos.com took a step into the offline world, experimenting with billboard advertisements in New Jersey’s Giants Stadium, the company could only attribute three customers to that channel. “We realized that spending $25,000 on a customer was a bit excessive,” Tony Hsieh, the company’s chief executive officer, told a conference audience this past April. By aligning its marketing with its commitment to customer service, the retailer found that its strongest messages were user-generated. To this day, the company relies primarily on sales from repeat customers and word-of-mouth marketing. Instead of stadium billboards, the company has ads in the plastic bins at airport-security check-ins—a choice medium for shoe-scanning passengers.
It’s All in the Results
Marketing values creativity, but it must be driven by results. “The biggest reason marketers continue to throw a lot of media out there is because they haven’t done a deep dive to quantify which media is working best for them,” Manos says. Luckily, there’s technology to do all the heavy lifting. Your ability to track, monitor, measure, analyze, and report will speak to your degree of customer understanding. In a study by Nucleus Research, 94 percent of customers using SPSS’ predictive analytics software saw a positive return on investment after an average deployment time of 10.7 months—a testament to the power of analytics. “Just keep feeding the technology and keep learning,” Hren says.
Analytics also resolves discrepancies between what customers say and what they want. “Sometimes they really don’t know,” Hren says—so actions speak louder than words. That doesn’t mean it’s OK to sneak in a seemingly innocuous message after a customer explicitly declines. You risk infringing on customer trust—and devaluing your brand. Ironically, Scott Townsend, marketing director of Oklahoma-based United Linen and Uniform Services, says that the best way to get them back is through general campaigns: Let them know you’re there, but let them come back when they want to.
While it’s difficult to gauge exactly when to stick or when to quit, Manos suggests looking for indicative results within six months. A younger company may need a bit more time, but even then, each day should be a learning experience. What’s done in the first month should fundamentally change what’s done in the second—with marketers re-evaluating what Manos describes as the three core elements of campaign success: a highly focused database; a personal, relevant offer; and a strong creative.
Trusting your gut is a thing of the past, Hren says. “If you had no other alternative, the gut’s not so bad—but there is another alternative, and that’s fact.” As positive results trickle in, he says, success turns addictive. The marketer gets motivation to keep tuning the engine; executives get validation for money well spent. Any improvement, however minimal, is convincing—especially when money’s on the line. “You’re not anecdotally speaking,” Manos says. “You can quantify why you’re doing better—and that’s huge.”
For young companies, the batch-and-blast technique seems to make the most sense. From its inception in 2000, online ticket merchant StubHub ran general marketing, focusing primarily on building awareness. For years, email accuracy far outweighed relevancy. But even as a start-up, StubHub knew the value of opt-ins, requesting email information at registration, during purchases, and at sign-up modules throughout the site. StubHub’s email campaigns followed a single template, and summarized the biggest events nationwide.
After six years, StubHub took a stab at targeting by segmenting regionally—and clickthrough rates jumped 30 percent. Incorporating more customer data led to incredible growth in the email channel: This year, the company saw a 79 percent year-over-year increase in ticket sales despite having sent fewer emails.
United Linen’s Townsend recalls a friend who experienced a unique flavor of “too much”—overmarketing by means of customer service. Inundated with feedback surveys, junk mail, and phone calls after purchasing a Honda automobile, the friend found it all an unnecessary burden. Honda’s offense wasn’t in sending out surveys; it was in not ensuring that the customer wanted to be surveyed.
This friend eventually returned a survey emblazoned with an opt-out message written in magic marker. Yet the surveys kept coming, reinforcing his belief that customer input was ignored. “His thinking was, ‘I vote with my feet and my dollars,’” Townsend explains. After more phone calls and emails, the friend eventually told the dealership, “If we had known about all this crap we’d receive, questioning us about our opinions, we most certainly would have bought a different brand of car.” Post-transaction customer interaction requires as much nuance as the shopping and purchase processes before it. “If you’re not going to reach me the way I want to be reached,” Townsend says, “it’s just as bad as if the price were too high or the sales experience were bad.”
Vigilance is key. At ad-network provider The Rubicon Project, Kara Weber, the vice president of marketing, realized that monthly mailings were too much—the company wasn’t gleaning enough new information. Fearing customer backlash, Weber slowed to quarterly mailings.
The Sound of Silence
If companies don’t heed explicit requests, it’s hard to believe they’ll listen to customer silences. Facebook got in trouble for this when members weren’t given a chance to opt out of the Beacon feature that automatically made public any offsite purchases. Sue Aldrich, senior vice president at consulting firm the Patricia Seybold Group, recalls a similar situation when ordering plane tickets through online travel merchant Orbitz. Presented with an offer for traveler’s insurance, Aldrich clicked “Continue” instead of “No, thank you.” The site then proceeded to bill her for the protection. The only way to cancel the insurance and get her money back was to call Orbitz and speak to a customer service agent. “How’s that for a streamlined process?” she asks.
Typically, the customer response to “too much” is to turn off. As one marketer put it, “The easiest way to know you’re doing too much is often the most painful”—opt-outs and a drop in customer retention. To prevent a formal opt-out, listen for the deafening thud of silence: Track unopened emails and unreturned direct-mail pieces, not to mention mail that’s simply undeliverable-as-addressed (UAA). When campaigns are irrelevant, it’s not just annoying to the customer, it’s a waste for you. The UAA Clearinghouse reports that marketers waste $6 billion annually on the 43 million Americans who relocate each year.
And as the nation goes green, marketers are only adding insult to injury. “I look up and down my street at the Verizon phonebooks scattered along the walk and think, ‘Well, there go four trees,’” Aldrich says. Even if there isn’t a high monetary cost in email, a Unica study found that marketers have approximately 12 chances to reach a customer before being shut out forever.
Offering to gauge a customer’s “digital body language,” some vendors are pitching a systematic process for approaching and nurturing each lead. Tools like lead-scoring algorithms help to automate measuring the “worth” of a lead. The people, for example, who come up to your trade-show booth just to score the stuffed animal you’re giving away hold the least priority. Those who engage in a 15-minute product demonstration, however, are more likely to take the relationship further.
Take a Break
Sometimes, additional product marketing just doesn’t make sense. All it takes to identify these periods is a basic understanding of your product. Stefan Pollard, director of consulting services at email-marketing solution provider EmailLabs, emphasizes the significance of honoring “rest periods” in a purchase cycle.
Pollard describes how, one week after his new Dell computer arrived on his doorstep, he received an email from the computer manufacturer inviting him to purchase a new computer. What Dell should have done, he says, was focus on other products that would enhance the experience of his new computer, such as a compatible printer or digital camera.
During the rest period, marketing should focus less on the “sell tactic” and more on informational or service-oriented offerings, Pollard says. The key is to stay top-of-mind so that when it comes time for the consumer to make another purchase—perhaps a year later—it’s clear that you’ve been there the whole time. This strategy is particularly applicable in the financial services and wireless phone service industries. After a consumer signs up, you don’t want to cannibalize your product by offering a better discount the next day. Instead, when E-Loan, for example, funds a mortgage, it can periodically send customers tips on how to pay off the loan or offer home-improvement advice.
As marketers perfect their art, campaigns will get more targeted and more relevant to the consumer. At first glance, this seems to be the making of the perfect relationship. But Hren, of SPSS, predicts that “it’s going to get a lot worse before it gets better.” Today, consumers can blindly ignore 5,000 of the 6,000 messages they receive—and of the 1,000 that might be a fit, 700 of them aren’t immediate concerns.
Eventually, it comes down to a handful that a consumer really focuses her attention on. What happens, then, when the balance of 5 percent relevant, 95 percent noise becomes 40 percent relevant, 60 percent noise?
Realistically, there’s a lot of ground to cover before marketers get that sophisticated. Nevertheless, Aldrich argues that we have a fixed attention threshold for marketing messages, whether that limit is 100 or 10,000. Despite the growing complexities of consumers’ expectations, she doesn’t believe their tolerance will change. When marketing becomes more relevant, consumers will have more time to focus on the messages, rather than waste time sorting through the clutter.
“There’s no big Holy Grail,” Hren says. Marketing thrives on efficiency and relevance: Give the customers what they want to buy; communicate across the channel they want to use; and talk to them when they are ready to talk to you. Hren admits that, while delivering effective and efficient marketing has never been easy, “it’s doable now.” He adds, “There’s no reason to be negative or skittish; everyone else is in the same boat. Get over it and get working.”
SIDEBAR: Stop! In the Name of the Law!
Customers are actively blocking out advertisements, making it more difficult for marketers to randomly blast out campaigns. Below are laws that have been passed and issues that are being considered.
CAN-SPAM Act (Controlling the Assault of Non-Solicited Pornography and Marketing Act; www.ftc.gov/spam/)
The offense: False or misleading subject titles and headers; no opt-out function; failure to self-identify as an advertisement or to provide a valid postal address.
The penalty: Fines of up to $11,000 per violation; entered on Internet blacklists and blocked from all inboxes; filtered directly into spam folders.
National Do Not Call Registry (www.donotcall.gov/)
The offense: Unsolicited or fraudulent telemarketing.
The penalty: Civil penalties of up to $11,000 per violation. Currently over 157 million phone numbers are on the National Do Not Call Registry.
Do Not Mail Registry
The offense: Unwanted solicitations through direct mail.
The update: Several states have submitted bills this year in favor of creating Do Not Mail registries, making it illegal to send junk mail. The movement began with proposals in 2007; since then, some bills have already been rejected or dropped.
Do Not Track
The offense: Tracking and targeting consumers based on online activity.
The update: In April, the Consumer Federation of America and the Consumers Union petitioned the Federal Trade Commission (FTC) to create a Do Not Track list of consumers. If approved, this would require explicit consumer consent, prevent the tracking of consumers under 18, and ban the tracking of health and other sensitive information.
Mapping the Mobile Marketplace
The offense: Unwanted solicitation through mobile devices.
The update: The FTC met in early May to discuss consumer protection in the face of expanding mobile commerce (e.g., location-based services, coupons, and ringtones). Topics included: fraud, privacy, targeting of children and adolescents, and customer control.
Contact Assistant Editor Jessica Tsai at jtsai@destinationCRM.com.
Every month, CRM magazine covers the customer relationship management industry and beyond. To subscribe, please visit http://www.destinationcrm.com/subscribe/.