6 CX Best Practices That Aid in Customer Retention

Kudos to American Airlines for delivering a small, but very meaningful American Advantage upgrade — a great customer experience (CX). CX best practices like this aid in customer retention.

Kudos to American Airlines for delivering a small, but very meaningful American Advantage upgrade — a great customer experience (CX). CX best practices like this aid in customer retention.

Recently, I’ve had the opportunity to take a number of flights to user conferences that I write about. I always request American, because it’s the primary airline at my airport and I have a lifetime membership in its Admiral’s Club, based on my travel a couple of lifetimes ago.

After months of boarding with Group Six or Seven and playing roulette with whether or not I’d be able to get my carry-on in an overhead bin, I just got bumped to the gold level. That lets me board with Group Four — assuring me I will not have to check my carry-on. Little things mean a lot.

American never asked me about how important this is to me, but it’s huge — to me. Every customer will want something different with regard to a great CX. For customer retention, it’s important to “listen intensely” to learn how you can deliver a better CX.

Here are six CX best practices that come to mind for B2C and B2B organizations:

Document Your CX Best Practices

What are you doing for different customers, different personas? How are customers responding when you go above and beyond? Are you getting the customer feedback you expect?

Start With Your CRM Database

Start with your CRM database, your master data management practices and your business process management. A great CRM is necessary for a great CX. Your customer-facing employees need to know what has taken place with this customer previously, so they can provide more personalized service.

By the way, poor CRM data quality, poor master data management and documentation of business process are consistent pain points for companies attempting to make the digital transformation that will be necessary to provide a great CX.

Emotionally Connect With Your Customers

Understand what it takes to make an emotional connection with your customers — empathy. How do you get it? By having a conversation with your customers and learning what you and your competition are doing to help make your customers’ lives simpler and easier and what else you could be doing. Management hasn’t spoken with customers? Make sure your customer-facing employees are involved in this discussion.

Create a Customer-Centric Culture

David Ogilvy used to put an empty chair in the meeting, so participants would think about how receptive the customer would be to what was being discussed. In order for this to work, there needs to be a sufficiently diverse group of people creating the culture to accurately represent the customer’s point of view.

Engage Customers Via Social Media

Listen to them, respond to them, let them know you care about what they have to say by listening and responding in a timely manner. The faster you respond, the more your customers know you care about what they have to say. After eating 3,200 burrito bowls, Chipotle responds to my tweets in less than 30 minutes — I know they’re listening and appreciate me.

Check in After You’ve Made the Sale

Did the product or service your customers spent money on solve their problem or meet their expectations? If you don’t get a response, you have an engagement issue — especially if you’re a software-as-a-service provider. Learn what’s good and what you can do to improve. CX is a never-ending process.

What other CX best practices are you following or seeing others implement?

How Marketing Operations Chooses Wisely Between Bright, Shiny Objects

This month we make a right turn on the journey and finally discuss marketing operations and technology. This is the 15th blog in the Revenue Marketing journey series, and we finally get to a discussion on technology. Hopefully that tells you something about how important people, process, data and content are, in that they all preceded this post.

Last month on our Revenue Marketing journey, we discussed how to formulate your 2018 content marketing strategy. This month we make a right turn on the journey and finally discuss marketing operations and technology. This is the 15th blog in the Revenue Marketing journey series, and we finally get to a discussion on technology. Hopefully that tells you something about how important people, process, data and content are, in that they all preceded this post.

Gartner recently released their CMO Spend Survey 2017 to 2018. In 2018 the survey suggests that marketing spending on technology will drop to 22 percent of the total budget. In addition, the technology landscape as plotted by Scott Brinker and team at Chiefmartec.com exceeded 5000 logos in 2017. So great, marketing operations has all this budget to spend on technology and more choices than we can possibly evaluate. What are we to do? Let’s start with the end in mind.

What Outcomes Do You Expect From the Technology?

We deploy technology largely because it fulfills one or more of the following criteria:

  1. To gather, analyze and disseminate information to make better business decisions
  2. To automate some previously labor-intensive processes to gain efficiencies and increase profits
  3. To enable innovation in the products and services we provide to win market share

So, the question becomes, where in 2018 will you get the highest ROI from technology investments? If you are early in your Revenue Marketing journey, you may opt to invest in a customer relationship management (CRM), a content management system (CMS) and a marketing automation platform (MAP) as these tend to be technology hubs at the center of a typical martech stack as shown below:

Revenue Marketing Architecture for Marketing Operations
Revenue Marketing Architecture

As an example, a MAP enables you to gather and analyze behavior data about your prospects and customers so you can make better decisions about how to engage with them to optimize the customer experience. A MAP can also automate responses to prospects when they perform certain actions, thereby reducing the need for human intervention. And a MAP can be configured to move individuals from one campaign to another depending on where they are in their customer journey, adapting the nature of the outreach to match the circumstances of the prospect. An example might be opting new customers into welcome campaigns automatically. So the MAP could meet all three of the criteria listed above for justifying a new technology acquisition.

The Most Important CRM Metric You Might Be Missing

Virtually every organization we have worked with in the past year is working on managing, improving or optimizing their relationships with customers. This work falls under the umbrella term “Customer Relationship Management” or “CRM.” It is, of course, the oldest “new thing” that marketers have focused on, en masse, for a long while.

CRM keyVirtually every organization we have worked with in the past year is working on managing, improving or optimizing their relationships with customers. This work falls under the umbrella term “Customer Relationship Management” or “CRM.” It is, of course, the oldest “new thing” that marketers have focused on, en masse, for a long while.

“CRM,” as it is, is a term that means many things to many different organizations and to different individuals in those organizations. This has created some confusion and leads to missed expectations in organizations.

Through meetings and executive interviews with brands, we have found that the majority of marketers will eventually describe the primary purpose of “CRM” initiatives as growing the value of customers who do business with them. We say “eventually,” because the initial responses to the question “what is the objective of your CRM initiative” gets quite a few answers including:

  • Know our customer better
  • Improve communications with our customer
  • Grow customer relationships (the most common response, and also the least actionable)
  • Decrease the usage of promotion
  • Reduce the volume of emails sent

These are just a few of the ways the organizations we work with begin to define their CRM initiatives; but to really make a difference in the business, CRM needs a clearly defined vision:

Intelligently managed customer relationships grow customer value. It drives incremental profit by either reducing the cost of promotion or driving incremental profitable revenue. CRM requires ongoing testing and learning, which can strategically inform customer acquisition and, in turn, increases the quality of the business.

“Intelligently managed customer relationships grow customer value. It drives incremental profit by either reducing the cost of promotion, or driving incremental profitable revenue.”

Can You Really Grow the Value of Your Customers?
Given the continuing trend of technology and data-driven CRM, it often comes as a surprise that few organizations have a heavy concentration of high-value customers. In fact, it’s the norm.

In a study Kaplan and Anderson published in the Harvard Business Review, the following was found across all industries:

  • 10 to 25 percent of customers drive 100 percent of profits
  • 50 to 60 percent deliver no profit at all
  • 10 to 25 percent deliver negative profitability

Some may find the magnitude of these facts surprising, perhaps even alarming. Not surprisingly, these profitability metrics correlate entirely to our experience across many dozens of organizations in working with their customer databases. What is sometimes an “uncomfortably large” percentage of revenue and profit is driven by a small group of the most valuable customers. In the luxury segment, where some brands have created an “accessible luxury” segment, the results grow even more staggering.

One example where we’ve seen this is among premium luxury brands that have grown “more inclusive” in their customer base. The concentration of customer value in the organizations is often almost exclusively in the top 10 to 15 percent of customers. When we have revealed this insight and evidence, the very business model may need to be rethought. To be sure, across all segments, customer value is a very big deal to all organizations — and, therefore, CRM.

Do Brands Have ‘Bad’ Customers?
This is a topic that is also hard to engage on. Often, marketers dedicate many hours and PowerPoint slides to focusing on the successes, and how good our customers are for our business. That’s an entirely intuitive point. These great customers also have an inverse; that is, customers whose value isn’t quite so great.

Some of these organizations have a material number of what might be called “bad customers,” altogether. But given that customers are the key element to realizing value in every business, how then can they be “bad”?

Let’s be clear, “bad” may carry a visceral sense of judgment. That’s not the point here, at all. The point is to meaningfully differentiate between customer groups or segments that naturally exist today in your database. “Good” or “bad” for the data-driven marketer really means how profitable the group is, or if it’s profitable at all. Simply put, a “bad” customer” must exist if a “good” or “great” customer does. Perhaps more “PC” — all customers have value, yet the value they hold for an organization is very, very different.

“All Customers have value, yet the value they hold for an organization is very, very different.”

You may even have a term for a segment of your customer base that you can’t afford to service well as “cost-control” customers. This happens in financial services, for example, where cost control may mean higher fees and online self service only. While that specific model does not necessarily apply to every business, all businesses have various segments of customers by value — both realized, and potential.

An Example: The Luxury and Accessible Luxury Categories
In the luxury category, brands sometimes become “more inclusive” (for example, in 2008 and at the depths of the Great Recession), which often means either markdowns or a product line for the “accessible luxury” category. As a result of this, customer value inevitably declines. In our experience, that decline was driven by decisions years earlier to scale at the cost of customer quality.

In these scenarios, if you were managing a CRM initiative, you’d have what’s known as a “dual-universe” problem — you can’t manage the value of these very different customers the same way. They may require a different P&L to account for them, and understand their value to the business.

A simple starting point in understanding a “dual universe” goes like this: Segment out your customers into the two groups — those who buy your true premium product, and those who have bought everything else. Analytics can then be leveraged independently across those groups.

The key to understanding if you have good and bad customers is, of course, the speed and dexterity you have to analyze customer data and your ability to measure and monitor changes in customer value by cohort. That’s a tall order for a lot of organizations today. Most are still focused on revenue through acquisition, rather than a strategic view where customer value is crafted first through the unique kind of customer acquired.

Good Customers — The Heart of Your Business
Good customers typically have longevity. Good customers purchase frequently, they have higher order sizes, or monetary value to your organization, they tell their friends about you, and while they appreciate a product they like on sale, they can also pay full price to get what they want.

Most importantly, while great customers generally cost more to acquire, and are harder to come by — good customers are quite profitable.

When a customer is considered good in most situations, they sometimes have the potential to become great ones. And therefore the mission of the CRM practitioner becomes, in simple terms, to ID the similarities and differences between them, make communication more relevant, and shape the value of each sale systematically. Growing customer value for your “good customers” can fill several of these columns, and we’ll put a series on migrating the good customers to great ones. (leave me a comment, or email me if you’d like to see those in the next couple of months).

Great Customers, or ‘Gold Customers’ — The Backbone of Your Business
The challenge for these “great customers” is they are often few and far between. If you’re in a business, where you have many great customers, you are either very, very fortunate, or you have not created a meaningful stratification of customers by value! This is one of the reasons that an intelligent segmentation of customers by value is an eye-opening engagement for most marketers and CRM practitioners.

Great customers, in most cases, are not only few in number but — counter to what may be one’s “gut feeling” — they quite literally carry the business. If you were to assume the contribution of customers to your bottom line followed a normal distribution, (think the bell curve, with a big fat middle), you would be quite surprised by what it most likely looks like. That contribution is stacked heavily to the top standard deviation, or way to the right side of the curve.

The insights we glean over time and across industries on organizations’ “Gold Customers” is the genesis and the reason CRM as a practice exists today.

“The Insights we have gleaned over time and across industries on organizations’ ‘Gold Customers’ is the genesis for and the reason that CRM as a practice exists today.”

The Best Way To Influence your CRM and Customer Value — Smarter Acquisition
This comes as a curveball to many CRM practitioners, especially those early in their CRM careers and experience. Nothing but nothing will change the performance of your database more meaningfully than adding more customers with higher potential value.

Put another way, great — or “Gold Customers” — are the backbone of a business, in that they are primary drivers of profitability, and they are the reason we’re engaging in CRM. So it’s imperative that we not only treat them differently and market to them wisely — but very simple math suggests we must also be acquiring more of them to increase the value of our database, our customer base and our business.

The Most Important Metric of Your CRM Strategy: Potential Value
There are many ways to measure your customers, their behaviors and their value. Concurrently, the most strategic way to grow your business and the value of your CRM initiatives is to collaborate with and inform your customer acquisition; that is to say, you can sculpt potential value through who you market to in the first place.

Customers who can’t afford you, don’t have the habits, beliefs, credit or lifestyles that your great (most valuable) customers do simply won’t or can’t buy like those who do. Those who do are your MVCs (Most Valuable Customers) and those who are ever further from this ideal are your least valuable.

Therefore, there is nothing we can do as marketers and as CRM practitioners that will improve the value of customers now and over time more so than acquiring more of the right ones. The strategy to how we do that is covered in another important article I’ve published as part of the body of work in this column on, “How to Scale-up Customer Acquisition Smarter.”

When you take a holistic view of your marketing, and place the appropriate value on the role of customer intelligence from CRM into your customer acquisition approaches, you can have an ever greater impact on the No. 1 metric we discuss herein — the potential value.

A high-potential value in the customer database then can be translated into ever-greater revenue and profitability, in a scalable and methodical fashion. While potential value is unlocked through all of the strategies and tactics we engage with through CRM — it all starts the most important “inputs” to your CRM — the customers themselves; moreover, acquiring the right ones.

My Account Was Hacked! A Lesson in Customer Service

If you’ve read my blog before, you know I love Starbucks. When taking a road trip, I use Google maps to find the closest location when I need a little pick-me-up. When flying, I seek them out in airports. And while recently strolling down the street in Lima, Peru, I spied that familiar green logo and my husband immediately knew I’d have to stop in for my favorite latté.

If you’ve read my blog before, you know I love Starbucks. When taking a road trip, I use Google maps to find the closest location when I need a little pick-me-up. When flying, I seek them out in airports. And while recently strolling down the street in Lima, Peru, I spied that familiar green logo and my husband immediately knew I’d have to stop in for my favorite latté.

Several years ago I signed up for their loyalty program, tied my Starbucks card into one of my credit cards and now proudly carry my own personal Starbucks Gold Card that is always “filled” with enough financial credit to ensure I can support my addiction.

I was sitting at my desk last week responding to emails when suddenly an automated email from Starbucks popped up thanking me for “reloading” my Gold Card. I thought it a bit odd, as I hadn’t visited a Starbucks in over a week and usually, as soon as I hit my pre-determined minimum, it reloads on the spot.

A minute later I received another automated email telling me they had “reloaded” my card. “Hmmm …” I thought, “There’s a glitch in their email system because I got that email twice.”

A minute after that, I received another email confirming my Starbucks Card Balance Transfer of $XXX from my Gold Card to a different Starbucks card number.

Wait … What?!?

I looked back at the first reload email and compared it to the second reload email and realized there were two different transaction numbers … And now it all made sense.

It seems someone had hacked into my account, transferred $XXX from my credit card to my Gold Card, did it again, and then transferred the entire amount to their own Starbucks card! I was flabbergasted.

I immediately called Starbucks customer service and the guy on the other end of the phone could not have handled the situation any better if he tried.

A-Plus: Marketing Students Try Their Hand at Technology

It’s nearly graduation time with a new legion of graduates about to enter the marketplace. In my previous post, I noted how many are seeking careers in data, and we’re glad to have them in the marketing field. We need them by the thousands.

It’s nearly graduation time with a new legion of graduates about to enter the marketplace. In my previous post, I noted how many are seeking careers in data, and we’re glad to have them in the marketing field. We need them by the thousands.

One prerequisite to a career in marketing (or just about anywhere) is having a demonstrated comfort level in technology. Universities are spending a mint designing and delivering digital labs in their technology builds—but in the world of advertising and marketing, there’s not much measured in ad tech investments that I can find. Providing students with rewarding internships is one great way to give prospective marketing practitioners invaluable exposure to tech, working alongside professionals using these tools.

Some universities also have student-run ad agencies, providing real work for real clients. Perhaps the next opportunity is to arm these students with campaign management platforms and other advertising technologies that reflect what’s really going on in the workplace today.

The University of Akron is doing just that, in its Taylor Institute of Direct Marketing. Three years back, during a Direct Marketing Association Conference, Professor William Baker initiated a conversation with Michael Hall, vice president of business development, V12 Group. “Michael was intrigued from the start,” Professor Baker told me. “He explained V12 Group’s Launchpad Marketing Cloud and we began to brainstorm ways that we could employ it in an educational setting. [We were looking for] Data, data and data, as well as the ability to apply the key concepts associated with Direct Interactive Marketing. As Confucius said, ‘I hear and I forget. I see and I remember. I do and I understand.’ Our goal was to find a way that we could enable our students to turn key a database digital interactive campaign as a part of their educational experience.”

Students are using V12’s LaunchPad to devise and execute targeted campaigns for student agency clients, he explained. “The attraction to V12 Group is student’s ability to learn it quickly and marry data to the launching of email, display advertising, social media and print from one desktop system,” Professor Baker said.

To date, “Approximately 200 students have gone through [the tech] training,” said Vanja Djuric, University of Akron’s Director of Analytics. “I would estimate that in the future we should have anywhere between 200-300 students per semester—depending on the projects and class enrollment.” In few instances, the clients—often local businesses and organizations in the Akron area—have their own customer data, in which the technology acts as a customer relationship management tool, Djuric said. Most often, V12 Group-sourced data is used to identify, select and contact intended targets.

What matters most, of course, is the impact such tech use has on students. “I definitely think that using a professional tool … has enriched my education,” said Sarah Wright, who recently was graduated with an Integrated Marketing Communications degree, and is currently a Business Analytics MBA Candidate. “Having knowledge of and experience with a standard automated marketing tool sets me apart from the rest of the pool of candidates. Before, I could understand the theory behind automated marketing campaigns, but learning how to create and launch the campaign has given me the full picture. It is the type of practical, real world experience that companies are looking for in marketing candidates in today’s business world where companies compete on the quality of their data and their skills in leveraging that data.”

Students crave these real-world experiences. And we’re all better off in our marketing organizations when it comes time to put these graduates to work. Anybody hiring?

Thank you to the University of Akron and V12 Group for offering one great example of an education-private sector partnership in our field.

5 Types of Google AdWords Conversion Tracking

When I first started using Google AdWords in 2006, conversion tracking was in its infancy. There was only one type of conversion pixel code and there was no option to customize anything. Oh boy, have the times changed

When I first started using Google AdWords in 2006, conversion tracking was in its infancy. There was only one type of conversion pixel code and there was no option to customize anything.

Oh boy, have the times changed. AdWords now gives advertisers five different conversion types, along with options to customize exactly how conversions are tracking in your account. For example, you can now track all conversions or you can track only unique conversions to exclude the instances when prospects complete multiple forms on your website.

In this article, I’m going to bring you up to speed on all five different conversion types:

  1. Webform Submissions
  2. Online Sales with Revenue
  3. Calls from Website
  4. Calls from Ads [Call Extensions]
  5. Offline Sales [Import]

1. Webform Submissions:
Again, this was the only option for me back in 2006. Webform submissions like quote requests, demo requests, or any other key action on your website should be tracked as a conversion in your AdWords campaign. This can be easily set up by adding the conversion code to the “thank you” page of all your webforms.

2. Online Sales with Revenue:
Eventually, Google introduced the ability to assign a value to your conversions, which revolutionized campaign management. If your business sells anything online, then you absolutely must set up revenue tracking for your shopping cart. Once set up, you’ll start to see revenue data in AdWords so you can calculate your profit per keyword, placement or ad.

3. Calls from Website:
Just last year website call tracking was launched so that advertisers can see how many phone calls are generated from the AdWords ads. This code is fairly technical so I recommend assigning this task to your webmaster to get set up. Once installed you’ll start to see conversions in your AdWords account any time a prospect calls after clicking on one of your ads.

4. Calls from Ads:
Most people do not call directly from the phone number listed in an ad, but some do. In AdWords you can track these calls by using a Call Extension, which is one of the many Ad Extensions available in AdWords. When you set up your Call Extension, make sure to click on the advanced options and check the box to track phone calls using a Google forwarding number.

5. Offline Sales [Import]:
Up to this point all the conversion tracking options sound great, but they don’t solve the major problem for non-eCommerce businesses, which is tracking sales generated off of the internet.Luckily Google recognized this problem and introduce the Offline Sales Import conversion option. This is the most technical of them all, but it’s well worth the effort to have your webmaster set this up. Here’s how it works:

  • Your webmaster will have to edit all the forms on your website to add a hidden field called “GCLID” (stands for “Google Click ID”)
  • Your webmaster will set the value of this hidden field using the URL parameter called “gclid”. For example, when someone clicks on one of your ads, Google automatically ads the “gclid” URL parameter, which looks like this 123ABC567DEF. This is the unique tracking code you’ll use to track sales back to your ads.
  • You’ll need to send the GCLID code to your sales team and/or your customer relationship management (CRM) tool like Salesforce.
  • On a monthly basis, you’ll need to find all the sales that have a corresponding GCLID code and import those codes, along with the sales revenue, into Google AdWords.
  • AdWords will automatically match the GCLID codes to the keywords, placements and ads that the customers originally clicked on before ultimately making a purchase off of the internet.

If that didn’t make sense, then just send your webmaster this page and he or she will be able to help. Trust me, it sounds more complicated than it is.

Go through the 5 conversion types again and make sure you have them all set up in your AdWord campaign. These are all critical to maximize the performance of your campaigns.

Want more free Google AdWords tips? Click here to get my Google AdWords checklist.

What Does a Data Marketer Look Like?

The currency of nearly all marketing today is data. Ten years ago, we might have said much the same of digital marketing, and all the email, display, social, search, and mobile that’s came forward from it.

The currency of nearly all marketing today is data.

Ten years ago, we might have said much the same of digital marketing, and all the email, display, social, search, and mobile that’s came forward from it.

Twenty years ago, we could have said the same of database marketing and customer relationship management.

And wind back—measurability and accountability, the hallmarks of direct marketing—always have relied on data. We may have called it lists back in the day—but data are what lists have become. The inherent value of data is to know the shared attributes among the data elements and to use that knowledge.

Without a doubt, the “marketing of data” has evolved and transformed as much as marketing itself. Every day in our world, it’s not enough to have contact details on people, or any number of the hundreds of demographic, psychographic, contextual, social and behavioral overlays that may be available, we also need analytics power.

Recent research from The Winterberry Group underscores this point: data is now an $11 billion business in America, and that includes analytics services revenue. I recall an unofficial guestimate of a $2 billion data market back in the early 1990s, when that meant a North American directory of 30,000 plus response and compiled lists available for rental and exchanges.

Next month, the Data Innovators Group will host its annual Data Innovator of the Year Award dinner in New York. This year’s honoree is Auren Hoffman, CEO of LiveRamp (now owned by Acxiom), who says his mission “to connect data to every marketing application.” And so it shall be… Soon.

But who is going to all make it work? Let’s welcome the data marketer and the data scientists and strategists they employ.

Still, too many brands keep customer data in siloes. And while responsibly using offline data with online data is fast coming down the pike, marketing organizations need people in place who can help clients navigate the brave new world of data management platforms, data quality strategies, programmatic media exchanges, big data and small data, and all the algorithms that drive this important “stuff” often in real time. A list sale exists largely no more. Instead data is a pathway to opportunity, a challenge overcome, by way of a data-to-insights-to-strategy recommendation, and a discipline for testing and data quality that leads brands (and their agencies and data marketer partners) to succeed.

It’s more difficult than ever to be a successful data marketer, but our field is producing the partners that businesses, brands and chief marketing officers need. Now if we could just go find a few.

Thank you to the Hudson Valley Direct Marketing Association for enabling my participation at its recent “Meet the Masters” event. Ryan Lake (Lake Group Media), Mark Rickard (Rickard Squared) and Rob Sanchez (Merit Direct) are three CEOs of data marketing organizations who have a few suggestions on where we can all go to look.

Golden Nuggets: Advertising’s ‘Data’ Wave Has Arrived

When I look at the world of advertising, by way of my career path through the Direct Marketing Association and Harte Hanks and now with the Digital Advertising Alliance—I confess I’ve been a “direct response” snob by training. (As a PR guy, I tend to enjoy Kool-Aid.)

When I look at the world of advertising, by way of my career path through the Direct Marketing Association and Harte Hanks and now with the Digital Advertising Alliance—I confess I’ve been a “direct response” snob by training. (As a PR guy, I tend to enjoy Kool-Aid.)

Always a victim of brand czars and image advertising, the world of direct response long has been relegated to “below the line” and ironically “unmeasured media”—even though direct-response marketers (no matter what the medium) always had the secret sauce in sight: relentless testing, true measurability and accountability, all to figure out which advertising messages and campaigns actually produced. The result might be a sale, a lead, traffic—always a defined objective, with a return on investment obsession. What’s not sexy about advertising that works?

It seems like for 20-plus years—with the rise of database marketing, customer relationship management, inbound marketing, agency holding companies gobbling up digital and direct agencies, marketing automation, customer centricity, brand interaction, personas and analytics—we might be able to say to ourselves, data-driven advertising has arrived! All marketing is now integrated! We are now welcomed in the C-suite!

That does not take anything away from brilliant creative—we all love brilliant creative—but if the offer, the strategy, the audience are not on target, what good is brilliant creative?

Recently at the Direct Marketing Club of New York January luncheon, Bruce Biegel, senior managing director, The Winterberry Group, presented his annual media roundup of the prior year with projections for 2015. As Targeting Marketing reported, it’s a data lover’s dream. Every trend behind follow-the-money seems to point to responsible data collection, data sharing and data use at its core.

Bruce didn’t hold back. Direct and digital spending is forecast to grow 7.3 percent this year—compared to 1.5 percent growth for measured media (image advertising) categories. The former will feed GDP growth, he forecasts, while the latter will lag.

This is not a rub-your-face-in-it post (I’ve been on the other side a few times, too). It’s simply a recognition that whatever our biases and opinions about what’s hot and what’s not on Madison Avenue, Silicon Valley and data centers everywhere, it’s that advertising technology, the data sharing that fuels such technology, and the strategic insights and marketing executions made possible by analytics, are now a top priority for most every Chief Marketing Officer. DMA and even The White House previously have documented these trends.

We’re in the limelight—as much as digital and now data disruption has been uncomfortable for many, and with so many data silos still to break through and smart people yet to hire to make sense of it all. Ladies and gentleman, the glow feels good.

Happy Data Innovation Day this week (January 22).

Cheat Sheet: Is Your Database Marketing Ready?

Many data-related projects end up as big disappointments. And, in many cases, it is because they did not have any design philosophy behind them. Because many folks are more familiar with buildings and cars than geeky databases, allow me to use them as examples here.

Many data-related projects end up as big disappointments. And, in many cases, it is because they did not have any design philosophy behind them. Because many folks are more familiar with buildings and cars than geeky databases, allow me to use them as examples here.

Imagine someone started constructing a building without a clear purpose. What is it going to be? An office building or a residence? If residential, for how many people? For a family, or for 200 college kids? Are they going to just eat and sleep in there, or are they going to engage in other activities in it? What is the budget for development and ongoing maintenance?

If someone starts building a house without answering these basic questions, well, it is safe to say that the guy who commissioned such a project is not in the right state of mind. Then again, he may be a filthy rich rock star with some crazy ideas. But let us just say that is an exceptional case. Nonetheless, surprisingly, a great many database projects start out exactly this way.

Just like a house is not just a sum of bricks, mortar and metal, a database is not just a sum of data, and there has to be design philosophy behind it. And yet, many companies think that putting all available data in one place is just good enough. Call it a movie without a director or a building without an architect; you know and I know that such a project cannot end well.

Even when a professional database designer gets involved, too often the project goes out of control—as the business requirement document ends up being a summary of
everyone’s wish lists, without any prioritization or filtering. It is a case of a movie without a director. The goal becomes something like “a database that stores all conceivable marketing, accounting and payment activities, handling both prospecting and customer relationship management through all conceivable channels, including face-to-face sales and lead management for big accounts. And it should include both domestic and international activities, and the update has to be done in real time.”

Really. Someone in that organization must have attended a database marketing conference recently to get all that listed. It might be simpler and cheaper building a 2-ton truck that flies. But before we commission something like this from the get-go, shall we discuss why the truck has to fly, too? For one, if you want real-time updates, do you have a business case for it? (As in, someone in the field must make real-time decisions with real-time data.) Or do you just fancy a large object, moving really fast?

Companies that primarily sell database tools often do not help the matter, either. Some promise that the tool sets will categorize all kinds of input data, based on some auto-generated meta-tables. (Really?) The tool will clean the data automatically. (Is it a self-cleaning oven?) The tool will establish key links (by what?), build models on its own (with what target data?), deploy campaigns (every Monday?), and conduct result analysis (with responses from all channels?).

All these capabilities sound really wonderful, but does that system set long- and short-term marketing goals for you, too? Does it understand the subtle nuances in human behaviors and intentions?

Sorry for being a skeptic here. But in such cases, I think someone watched “Star Trek” too much. I have never seen a company that does not regret spending seven figures on a tool set that was supposed to do everything. Do you wonder why? It is not because such activities cannot be automated, but because:

  1. Machines do not think for us (not quite yet); and
  2. Such a system is often very expensive, as it needs to cover all contingencies (the opposite of “goal-oriented” cheaper options).

So it becomes nearly impossible to justify the cost with incremental improvements in marketing efficiency. Even if the response rates double, all related marketing costs go down by a quarter, and revenue jumps up by 200 percent, there are not many companies that can easily justify that kind of spending.

Worse yet, imagine that you just paid 10 times more for some factory-made suit than you would have paid for a custom-made Italian suit. Since when is an automated, cookie-cutter answer more desirable than custom-tailored ones? Ever since computing and storage costs started to go down significantly, and more so in this age of Big Data that has an “everything, all the time” mentality.

But let me ask you again: Do you really have a marketing database?

Let us just say that I am a car designer. A potential customer who has been doing a lot of research on the technology front presents me with a spec for a vehicle that is as big as a tractor-trailer and as quick as a passenger car. I guess that someone really needs to move lots of stuff, really fast. Now, let us assume that it will cost about $8 million or more to build a car like that, and that estimate is without the rocket booster (ah, my heart breaks). If my business model is to take a percentage out of that budget, I would say, “Yeah sure, we can build a car like that for you. When can we start?”

But let us stop for a moment and ask why the client would “need” (not “want”) a car like that in the first place. After some user interviews and prioritization, we may collectively conclude that a fleet of full-size vans can satisfy 98 percent of the business needs, saving about $7 million. If that client absolutely and positively has to get to that extra 2 percent to satisfy every possible contingency in his business and spend that money, well, that is his prerogative, is it not? But I have to ask the business questions first before initiating that inevitable long and winding journey without a roadmap.

Knowing exactly what the database is supposed to be doing must be the starting point. Not “let’s just gather everything in one place and hope to God that some user will figure something out eventually.” Also, let’s not forget that constantly adding new goals in any phase of the project will inevitably complicate the matter and increase the cost.

Conversely, repurposing a database designed for some other goal will cause lots of troubles down the line. Yeah, sure. Is it not possible to move 100 people from A to B with a 2-seater sports car, if you are willing to make lots of quick trips and get some speeding tickets along the way? Yes, but that would not be my first recommendation. Instead, here are some real possibilities.

Databases support many different types of activities. So let us name a few:

  • Order fulfillment
  • Inventory management and accounting
  • Contact management for sales
  • Dashboard and report generation
  • Queries and selections
  • Campaign management
  • Response analysis
  • Trend analysis
  • Predictive modeling and scoring
  • Etc., etc.

The list goes on, and some of the databases may be doing fine jobs in many areas already. But can we safely call them “marketing” databases? Or are marketers simply tapping into the central data depository somehow, just making do with lots of blood, sweat and tears?

As an exercise, let me ask a few questions to see if your organization has a functioning marketing database for CRM purposes:

  • What is the average order size per year for customers with tenure of more than one year? —You may have all the transaction data, but maybe not on an individual level in order to know the average.
  • What is the number of active and dormant customers based on the last transaction date? —You will be surprised to find out that many companies do not know exactly how many customers they really have. Beep! 1 million-“ish” is not a good answer.
  • What is the average number of days between activities for each channel for each customer? —With basic transaction data summarized “properly,” this is not a difficult question to answer. But it’s very difficult if there are divisional “channel-centric” databases scattered all over.
  • What is the average number of touches through all channels that you employ before your customer reaches the projected value potential? —This is a hard one. Without all the transaction and contact history by all channels in a “closed-loop” structure, one cannot even begin to formulate an answer for this one. And the “value potential” is a result of statistical modeling, is it not?
  • What are typical gateway products, and how are they correlated to other product purchases? —This may sound like a product question, but without knowing each customer’s purchase history lined up properly with fully standardized product categories, it may take a while to figure this one out.
  • Are basic RFM data—such as dollars, transactions, dates and intervals—routinely being used in predictive models? —The answer is a firm “no,” if the statisticians are spending the majority of their time fixing the data; and “not even close,” if you are still just using RFM data for rudimentary filtering.

Now, if your answer is “Well, with some data summarization and inner/outer joins here and there—though we don’t have all transaction records from last year, and if we can get all the campaign histories from all seven vendors who managed our marketing campaigns, except for emails—maybe?”, then I am sorry to inform you that you do not have a marketing database. Even if you can eventually get to the answer if some programmer takes two weeks to draw a 7-page flow chart.

Often, I get extra comments like “But we have a relational database!” Or, “We stored every transaction for the past 10 years in Hadoop and we can retrieve any one of them in less than a second!” To these comments, I would say “Congratulations, your car has four wheels, right?”

To answer the important marketing questions, the database should be organized in a “buyer-centric” format. Going back to the database philosophy question, the fundamental design of the database changes based on its main purpose, much like the way a sports sedan and an SUV that share the same wheel base and engine end up shaped differently.

Marketing is about people. And, at the center of the marketing database, there have to be people. Every data element in the base should be “describing” those people.

Unfortunately, most relational databases are transaction-, channel- or product-centric, describing events and transactions—but not the people. Unstructured databases that are tuned primarily for massive storage and rapid retrieval may just have pieces of data all over the place, necessitating serious rearrangement to answer some of the most basic business questions.

So, the question still stands. Is your database marketing ready? Because if it is, you would have taken no time to answer my questions listed above and say: “Yeah, I got this. Anything else?”

Now, imagine the difference between marketers who get to the answers with a few clicks vs. the ones who have no clue where to begin, even when sitting on mounds of data. The difference between the two is not the size of the investment, but the design philosophy.

I just hope that you did not buy a sports car when you needed a truck.

8 Recommendations Before Hiring New Digital Direct Marketing Talent

If you’re an employer that recognizes you need new digital direct marketing approaches, you may be apprehensive about hiring new talent. Here is an eight-step plan to install the right digital marketing groundwork before hiring that new employee to make sure you are both successful.

If you’re an employer that recognizes you need new digital direct marketing approaches, you may be apprehensive about hiring new talent. When you hire new people, you risk a cultural misfit between the style and approach of a traditional direct marketer and a digital direct marketer. If it doesn’t work out between the employer and employee after a few months, there is a lot of lose-lose for all parties concerned.

The employer has made a costly mistake with the hire. The employee has possibly given up a good position and relocated. The employer gives up on digital direct marketing, declaring that it’s conceptually not a fit with traditional direct marketing, when it may actually have only been company cultural barriers, skills of the employee, or a lack of commitment to fund digital initiatives by the employer.

Consider, too, that there is the high demand these days for digital talent. Target Marketing’s recent article, 5 Trends in Direct Marketing Job-Hunting and Hiring, by Executive Recruiter Jerry Bernhart, raised excellent points about the state of human resource recruitment for direct marketing companies.

It’s clear, based on Bernhart’s experience, that candidates are getting multiple offers, suggesting that those individuals who are trained in digital marketing, or those who have reinvented themselves, are the folks getting not only offers, but competitive offers with higher pay.

But what if you’re among those “… tens of thousands of companies out there that have little more than a rudimentary Web presence,” referenced in the article? How do you, if you’re faced with the need to reinvent your marketing approaches, recognize the right talent for a new digital direct marketing position and process that’s unproven inside your organization?

Here are eight recommendations, with complete acknowledgement this is a biased perspective coming from my personal experience of having started new departments to lay the groundwork before hiring a new employee.

  1. Retain a Consultant First
    Bring on an independent consultant to work with your organization a few hours or days a week to create your new department, or your new digital direct marketing infrastructure. This individual should be expected to work with you for several months and be made responsible for several initiatives outlined in the following points.
  2. Create a Digital Direct Marketing Plan
    Your consultant should be versed in more than basic websites and email marketing. The plan probably includes development of a content marketing strategy, using multiple cross-channel media, that is designed to bring in leads. Perhaps the role includes the introduction of customer relationship management (CRM) software. The plan might also include acquisition of a marketing automation system that enables sophisticated nurture marketing programs to integrate direct mail, email, personalized microsites, social, mobile, content marketing and more.
  3. Fund It
    You must be ready to invest the money it will require to see results. Be prepared for this transition to take anywhere from six to 12 months of refinement before it’s clear how this can work for you. This can be challenging if your company is seeing slowly declining sales, but the alternative isn’t so rosy. If you wait too long, you won’t need to worry about funding it as your company slowly disappears into non-existence.
  4. Empower
    As a business owner or senior manager, obviously you’re going to want to have input in the digital marketing plan and how your company’s money is invested. But you must accept that to be successful you’ll need to empower people to make decisions on your behalf. Of course, with empowerment comes accountability on the part of the consultant and your staff.
  5. Your Company Culture May Be Stressed
    Chances are that if you’ve brought on a consultant (or fulltime new hire) to make change, your staff will feel threatened. Budget dollars that went to fund existing traditional direct marketing initiatives are likely diverted to new initiatives. That will create anxiety and stress from current long-time staff. And it’s human nature for people to become hostile, passive-aggressive, and even work to discreetly sabotage new efforts.
  6. The Org Chart May Change
    The consultant you contract with should be able to objectively evaluate individual staff’s strengths so they are placed in a role where your current employees come out winners. The organizational chart will probably evolve during this process.
  7. Be Flexible and Agile
    The future belongs to companies that are flexible and agile. If your culture is slow and overly methodical, ask yourself if you’re willing to leave your comfort zone. If not, reread the last sentence in No. 3 above.
  8. Your Plan to Transition From Consultant to Full-Time Staff
    The consultant’s responsibility will be to create a transition plan to hand off the keys to new initiatives and processes that have been created (and proven) for your new fulltime hire. Often, the consultant works with an executive recruiter to identify a replacement, and stays on for a few weeks after the new hire starts to ensure a smooth transition. Sometimes, a consultant is asked to stay on fulltime, but consider that a consultant is most likely energized by “the chase,” so to speak, and will want to move on to help reinvent the next company.

Following these eight steps will set up better odds for a win-win for employer and employee. By the time a new-hire is on board, the organization has had time to absorb and accept cultural change. Assuming the outcome is successful, this process gives confidence to not only the employer, but the new hire and the entire staff. Most importantly, you have broadened your approaches to reach your market through digital channels that are capturing more of their time and attention