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The Relevancy Requirement for Sustainable Marketing
How precision marketing eliminates "message overload."
Posted Apr 6, 2010
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Sustainability is a commendable goal, in both our personal and professional lives. Yet, far too often we fail to clearly define the business case for sustainability, basing our strategies to "go-green" on more emotional triggers. Sustainable marketing makes sound business sense. It pushes marketers to consider that more timely, targeted and meaningful messages will reduce waste and more closely align with what consumers themselves are demanding- that the messaging they receive be more relevant.

Consider that the kinds of mailings consumers call "junk mail" accounts for more than 100 million pieces of mail each year, and that 44 percent of this unsolicited outreach ends up in a landfill unopened. Migrating more customer communications to electronic means may seem like a simple, cost-effective solution, but that's not necessarily what our customers are seeking.

A recent survey found that 51 percent of consumers prefer traditional mail over other means of communication. What's more, a study by the Printing Industry Center at the Rochester Institute of Technology (RIT), found that consumers enjoyed receiving traditional mail from companies they patronized. In fact, 82 percent of the survey respondents liked receiving catalogs and 67 percent liked receiving information about new products from stores they frequent.

The challenge lies in making effective use of direct marketing, targeting fewer individuals with more meaningful communications and generating less waste. And it's not just about reacting to calls for greener practices. Customers themselves are at risk. A recent CMO Council study revealed that 63 percent of consumers have abandoned or are considering abandoning a brand altogether because of irrelevant emails and junk mail.

The overwhelming majority of customers state that, regardless of channel, relevancy is what they valued, if not required, in maintaining a brand relationship. With precision marketing -- a data-driven, content rich approach -- marketers can extract strategies to employ today, using tools and data they already have.

Precision marketing begins by deciding what problem, or pain point, to address, such as reactivating dormant customers or achieving a greater response rate to a particular promotion. Next, marketers need to evaluate and then leverage the data and campaigns currently in place. In many cases, existing household files are sufficient to develop targeted segments for use in a test campaign. Begin small by establishing a customer segment with the desired level of engagement and then identify customers whose prior behaviors and engagement history most closely match this first group.

The next step is to synchronize campaigns and determine the best message for the channel. Best Western International, the world's largest hotel chain, examined active reward members and identified 100,000 who were similar in their Best Western relationship to the most high-value customers with the propensity to either apply for a cobranded MasterCard and/or engage in the summer promotion of "More Rewards, Faster." We then targeted half of the group with personalized messaging through monthly loyalty statements, leveraging the statement as a promotional document to inform loyalty program members of how much faster they could accumulate points during the promotional period.

Once a test campaign has been launched, the next step is to measure the results based on a wide range of criteria and most importantly, bottom-line measures. In less than eight weeks, Best Western enjoyed target group gains including a 39 percent increase in number of stays, a 30 percent increase in revenue and doubled ROI (278 percent v. 178 percent) over the control group. Additionally, replacing promotional inserts with messaging directly on the statement resulted in a 40 percent decrease in paper consumption.

After the initial test, it's time to refine and repeat the above steps to produce the same or different results and to understand why the results are what they are. Working with another large hotel chain, we analyzed customer data from their loyalty program to understand how more active customers respond to offers. Based on that insight, we identified a segment of dormant loyalty program members who had a high propensity to re-engage with the hotel.

We reached out to those dormant customers with a series of offers that normally only active customers would receive on their loyalty statements. In less than eight weeks, the company realized an ROI of 1,090 percent by tapping this new, previously inactive, customer segment.

Monthly transactional communications are often overlooked as a message medium but continue to be one of the most paper-driven of all customer communications and they are most often opened. A 2008 study by the Print Industries Market Information and Research Organization found that 50 percent of respondents currently receive all of their bills and statements in paper format. The CMO Council research found that consumers consider these documents must-read. When asked to define must-read communications, consumers overwhelmingly pointed to personally relevant communications like monthly billing and bank statements. In fact, 92 percent of respondents will always open a monthly bill, and 72 percent will always open a statement sent via email.

By leveraging Precision Marketing methods, the companies reaped significant rewards while making more cost-effective use of a common communication vehicle - the monthly statement. For these companies, Precision Marketing delivered the ‘triple bottom line' required for sustainability with economic, environmental and social benefits. The pilot results illustrate that personalized and targeted communications not only increase ROI and offset ‘junk mail' stigma, but that replacing paper inserts with ‘onserts' also reduces environmental impact.

Consumers want companies they patronize to market smarter and be environmentally conscious. Migrating onto a more precise marketing platform leverages vehicles consumers insist upon receiving by traditional mail in ways that make sound business sense and service environmental ideals.

About the Author

Sandra Zoratti is the vice president of global marketing solutions at InfoPrint Solutions, a joint venture between Ricoh and IBM. Zoratti is a pioneering force behind the adoption of precision marketing techniques to drive growth, engagement, and loyalty with customers (www.profitwithloyalty.com). To continue the conversation, Sandra can be reached at sandra.zoratti@infoprint.com.  

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For the rest of the April 2010 issue of CRM magazine please click here.

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