Friday, 3 December 2010

The nudge towards eCRM

ECRM is not a quick fix but requires sustained investment and patience, explains Felix Velarde, managing director at Underwired Amaze.

There are still some companies that haven’t understood the significance of eCRM (Electronic Customer Relationship Marketing). Yes, eCRM, that marketing nirvana, which comes with investment barriers that might make it impossible to buy. How could you turn down something that’s going to take a year to get right, that may cost a quarter of a million pounds but that might make you millions in new revenues?

It feels like an impossible proposition. It’s so difficult for brands to buy that many of them don’t. Those big innovators with money to burn can afford to experiment and reap the rewards, but most brands just can’t see it. Most brands have to focus on their immediate tactical requirements (sell, sell, sell!), and perhaps try social because they’ve heard they can do it for ten grand.

Most brands can’t afford to do eCRM, no matter how big the rewards, and how much it differentiates them from the rest of the market. Or can they?

Let’s go back a few years to when the first major eCRM campaigns started. In 2003 Underwired Amaze proposed to Virgin Holidays taking over an existing email newsletter campaign and building something more sophisticated.

The campaign became segmented, largely by behaviour to start with. What Customer Type 1’s preferred destination, time of year of booking, or decision making time was likely to be, informed when they’d get a special offer on a certain Florida hotel. Quite quickly the second dimension demographics came into play as well. Sending an offer for a free flight for your second child to parents of two made a big impact. The first segmented email sent generated £3million in direct holiday bookings. Virgin Holidays had taken a leap of faith and invested in a campaign that cost around £30k and justified a programme with an ROI of 100:1.

But once the initial surprise had worn off and customers got used to it, there was a long period of lots of detailed activity, lots of creative work going on, but not - it seemed - much return. It changed though, reached a critical mass after about a year, and finally the smiles started reappearing on the client’s faces. And stayed as the programme’s ROI three years later was still averaging 26:1. Fantastic.

The Virgin engagement went exactly like every other eCRM project. It started with a big bang that makes everyone very happy, and settles down. After a few months the quick wins have worn off and it starts looking like nothing is happening at all. After a long, long year though, the eCRM programme starts paying for itself again. But there’s this big, long, frustrating period of doldrums, where the project owner gets disillusioned and it all looks like very hard work for no return, and it’s this that I want to come back to. Why? Because actually it’s this period when the principles that really drive eCRM are hardest at work.

The first principle is segmentation, and if you will indulge me while I teach granny to suck eggs for minute it will set the scene for the second. Segmentation is based on a simple idea, that if you send a specific call to action (an offer, for the sake of this example) that is relevant to the right person at the right time, it’s more likely to be acted on than if you send it to the wrong person or at the wrong time. Let’s take an example. You have three hundred people, 100 are golfers, 100 football fans and 100 cricket fans. You have three offers to go see the Ryder Cup, the FA Cup and the Ashes, in an email, one after the other with a paragraph each. You send the email to everyone. 100 football fans will see the golf offer first, and a third of them will bin the email. The golf players will see golf first and be happy. The cricketers, well two thirds will bin the email before seeing the third, cricket, offer. Your maximum response rate will be 200 - because only 200 of the 300 recipients will have read the offer that appeals to them. Simple. Segmentation says, send one email with one offer to each group (yes, the right offer!), and your maximum response rate is 300 out of 300, a fifty percent improvement.

The second principle is the principle of the nudge. eCRM isn’t an advertising medium, it doesn’t work by bombarding people with messages until they buy - in fact, if you send too many emails it’s obvious what will happen: after the initial hit of increased response people stop reading, after a while they add you to their junk filter, and you never know because after too many emails they can’t even be bothered to unsubscribe.

The job of eCRM is to create relationships. So while the segmentation principle is important, it must be balanced against the need to create a relationship. What we want to do is change people’s behaviour subtly over time. Small calls to action, little asks, are what is required. I want every customer to spend a tiny little bit more every time. I want them to increase their purchase frequency by 2% over six months. I want a 0.1 percentage point increase in average transaction value. Why so little?

What the big innovator brands realised a while ago is that little nudges add up. If I suggest you double your turnover in two years you’d think it impossible. Yet if I suggest you increase it by 3% this coming month you might feel it’s much more realistic. And what happens if you increase your turnover by 3% a month for the next two years? The laws of compound interest say you’ve doubled your turnover. That’s why eCRM is, really, so compelling. Yes there’s a quick win, and yes, there’s a long dull patch, but patience pays off.

Monday, 15 November 2010

Javari’s wasted birthright

Disappointment is... when I buy something from an online store that’s got brilliant products and brilliant service, a fantastic website and a sign-up form that asks me loads of questions - but which then sends me generic emails I have no interest in whatsoever. I mean, I bought some Merrell trainers from this place, Javari, and now they bombard me with stuff about how kitten heels are the next big thing.

Javari is owned by Amazon, world leaders in relevant recoomendations. But Amazon has clearly kept Javari on a very tight budget. The email marketing programme is so, like, yesterday - I couldn’t believe it when such high regard generated by the shopping experience have been so let down by the customer retention programme.

So what should they be doing? Well, for a start, I’m a bloke, buying (what I hope are) cool walking shoes, and I looked at every single Merrell shoe on the site before making my choice. That must tell them something. At least it tells them to relegate the kitten heels to emails I get at weekends or to second place in the content in case I’m the sort who of man who buys shoes for his partner (either way). I wear the same size shoes as I always have, so that might inform tactical sales of remaindered stock and so on. Perhaps they should be sending me news of every new Merrell shoe they get in – Merrell does.

The days of blanket emails to Mr/Mrs AB Sample surely have gone the way of the door drop. Javari ticked all the boxes – indeed, I was looking forward to the emails when I opted in, wondering which agency was doing them. I am so, so disappointed. And that means that although by some miracle I might remember they were cheap and go back if I’m actively shopping, there won’t be any mid-cycle visits to their site, nor serendipitous nudge-driven sneaky sneaker purchases.

Yet we know from long experience that just by maintaining relevant contact using segmented emails, and observing how each segment responds, we can increase ROI by between 25% and 90% straight away and average purchase frequency by 7% in the first year. So why, Javari, why have you ignored your genetic birthright of great customer engagement, and prompted a critique like this? The first you’ve heard of it you say? That’s because you can’t: you’re not listening.

Monday, 27 September 2010

Parlaying custom into advocacy – why brands should be more pushy with their social media

It’s very rare that I get excited about a brand I become a customer of. I’m one of those people who really doesn’t engage with marketing. I’m probably not alone. And yet this is my territory, my metier – I work very hard to create engagement strategies for clients that can be demonstrated to work. I am, as it were, my own worst enemy!

So how do you, as a brand, engage me, as a disengaged person with what I’d consider to be better things to do with my social time than talk about your brand? I’ve been thinking about this in the context of two recent occasions where I have actually felt like praising a brand in public. The first occasion: on the way to a meeting I spilled coffee on my shirt. I was in the city, and I spotted a TM Lewin. I went in, bought a shirt, explained my predicament, and the manager arranged for the shirt to be pressed, in the shop, there and then. I went for a walk for five minutes and hey presto, new, unwrinkled shirt.

I tweeted about it when I got back from my meeting. TM Lewin’s tweetie person followed me and retweeted (quite rightly) my happiness with their service. Fab. The second occasion, this morning, my wife asked me if these were the shoes I normally wear with my suits. I told her they were from Loake, and that I can wak for miles in them – the very first pair of truly comfortable work shoes I’ve had. It crossed my mind to tweet that I love my Loakes, then I remembered I’m not that kind of person (so I wrote this instead).

Both are brands I’d of course love to work with. Both are brands that have built solid reputations for service and product quality. Did Loake sell me these shoes? I think actually I got them from Next, so which of those companies should be the one to do the customer engagement? And why?

One of the striking things about the TM Lewin experience is that very clearly several people from TM Lewin now follow me on Twitter (no idea what they get out of it, but feel free –, but nobody’s ever been in touch. I am clearly, or at least I was once, a brand advocate. I spread the word, in a credible, completely unprompted way. But no-one has since asked me if I’d like to join a loyalty club, or corresponded with me on Twitter or otherwise to find out how to make sure I continue to be an advocate. It’s unpushy, which is nice, but it misses an opportunity. TM Lewin’s social media strategy needs a tweak or two.

And the fact the brand doesn’t have an eCRM programme is quite surprising – all of its customers are repeat customers, we have to buy similar products regularly, we have preferences... TM Lewin could take a leaf out of Pink’s book and keep our sizes on a database, offer us things they already know we want. And so on. The opportunity to create an engaging, relevant and pretty much self-managed eCRM programme should be too good to pass up. And by creating engagement they’ll be parlaying an initial positive first impression into serious loyalty and further opportunities for advocacy.

Someone like me, who doesn’t actively engage, who almost never spontaneously advocates a brand to his friends and acquaintances, might be driven to do so more often. Certainly, I could become a very loyal customer. Since my experience I’ve bought shirts from TM Lewin, though I also buy from Pink, Hackett and others. I could be engaged more, to their exclusion. The next time I think about shoes, I will probably be thinking about buying some Loakes, though because I’m not in their eCRM programme either I have no idea where to start. Perhaps I’ll start with Next. I really can’t remember if it was Next - if not then Loake might lose the sale while I’m wending my (possibly easily distracted) way to their brand – so again, here’s an opportunity.

Brands must – must! – engage with their customers. The best brands, the ones that provide fantastic service, or fantastic products, are the ones that must do so even more – they have an opoprtunity to cement their customers after the first great experience in a way that only becomes more dilute as time goes by. It’s an opportunity that must not be missed.

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Friday, 6 August 2010

The premature announcement of the death of the web

Wired, The Wall and the Huffington Post have all pronounced the web on its last legs. Wired appears to believe that because there's a popular new way of interfacing with the internet – apps – the web has had its last hurrah. Huff's Josh Silver bases his pronouncement on the news that Google and Verizon have done a deal that may make it possible to have a privileged access scheme for content providers disseminating video to customers.

This latter is the one I think has least relevance. Why? Well, although this time round it is different inasmuch as the faster access is paid for by the content provider rather than the content consumer, there's little difference in practical terms between the tiered access dictated by bandwidth, ISP quality and client technology and the tiered access posited by the new deal. Silver's argument that Google's universal access volte-face signals some kind of tipping point, one that will see content delivered only to the wealthier subscriber, to me seems no different to the gradient we've always suffered. My first forays onto the internet were hampered by the fact that no-one made modem software for Macs at the time. Did it destroy the web or limit its potential for democratised information? Clearly not.

Perhaps we won't see the web become a public access TV channel after all as a result. But then, to the extent that it could it already has. YouTube is gargantuan. Will Hollywood or Bollywood stop making feature films for free distribution on the web? Did anyone really expect them ever to really do that? The web is a medium, a set of protocols, and people all over the world will use it freely to do what they always wanted to do with it. Capitalists will find ways to make money from it. Anti-capitalists will use it to subvert. People will continue to use it to grow this unfettered global conversation

And coming back to apps, they are simply an abbreviated interface to the internet, just as the web is. Perhaps one day there will be a better interface that comes along that is so revolutionary that the whole idea of HTML and hyperlinks is relegated to history, as happened to the revolutionary precursor protocols that saw us Gophering before the web took off (though Gopher's demise was hastened when its owner started charging for it, something that no-one is suggesting can or will ever happen to the web). Apps are cute, cool, capitalist by design, and ephemeral.

Actually the best apps seem to be built in HTML. The web is alive and well and only just coming of age. Long live the web.

Thursday, 5 August 2010

That ol’ email technology

Email marketing is awesome. It’s one of those things that has relied on a confluence of circumstances, shifts in attitudes, and technology to flower, but now it has. Just in time, in fact, for brands like Ben & Jerry’s to declare it dead and hop on to social media.

Some years ago a few people in the digital marketing world decided to see if by applying brand marketing principles to email, we might have the medium for proving that online had real, measurable commercial value. Spammers clearly thought the same, and could demonstrate it worked. But around ten years ago spam started being effectively controlled by technology solutions built into our email applications. Brands that wanted to send email to their customers had to get emails white-listed. Branded emails became credible.

At the same time consumer use of email became pretty much universal. As an elective medium it genuinely had power – it’s only there when you open your email programme. But if you’d given your favourite brands, or simply the place you bought your stuff from, permission to say hello, it had legitimacy. The email newsletter suddenly had currency.

In 2003 a few people decided to see if there was room to apply Direct Marketing principles to email. I was so keen I went on a three month hunt for an email bureau that could run segmented campaigns. Finding none (or at least none I could afford) my agency built its own system. To be honest, it was great in theory, but we could never quite get it to work properly. Live re-segmentation based on recipient behaviour was laudable as an aim, but every time we fixed a bug in the technology we tickled another and everything fell over.

Slowly along came fantastic, robust technology providers - the kind that love to fix broadcast problems at two o’clock in the morning - and we were saved. Email marketing became eCRM, everything got segmented, and we started to play with behaviour-based targeting. Fantastic. So fantastic in fact that last year The Sun’s Dream Team Fantasy Football saw a 93% rise in revenues from digital - in three months!

What we’ve learned from all this emailing is that you can track people from start to finish. You can find out how their attitudes change over time, both through inference based on observing their behaviour, and through outbound validation using email and online surveys. We can, as we did with FMCG giant McCain Foods, cross-validate against the real world, benchmarking brand consideration and watching how it changed over six months of precision emailing (up 11% as it happens).

Then a brand like Ben & Jerry’s (whose product I love but at my age can no longer scoff until it’s empty) goes and abandons email for social. I’m sure social is another link in the customer tracking that needs to be incorporated into the strategy. And in fact until recently that was the one thing you couldn’t do. Yes, buzz tracking posited sentiment, but you couldn’t keep your eye on a person, or a segment.

Well, technology is changing. Now there’s the desire to complete the journey outside of email and into social, following people around their digital lifestyle as it were, we finally have the technological capability to do so. We’re incorporating social into eCRM strategies, and we can audit the journey from first contact to sales revenue. It’s a hit. ECRM is no longer confined to email, SMS and landing pages. Technology has set us free.

Thursday, 29 July 2010

Ad:tech seminars in September


I’m going to be speaking at Ad:tech again this year. The first session is at 10.30–11am on Tuesday 21st September:

How to create a profitable eCRM programme
With brand consideration up 11%, eCRM has revolutionised marketing for FMCG giant McCain Foods. As a result, sales to customers within the brand's database went up 38%. This talk will show you clearly and concisely how an eCRM programme to sharply increase brand engagement, brand consideration and sales revenues.

The second will be at 11.50–12.20 in the IDM Academy:

ECRM strategy made simple

  • Using FMCG and retail case studies to show the practical steps to a successful eCRM campaign
  • Ten Top Tips for successful revenue generation
You can plan your visit to this fantastic event here. I hope to see you there.

Tuesday, 20 July 2010

Why my love of Ben & Jerry's isn't over just yet

Over the past couple of weeks there's been quite a bit of buzz about Ben & Jerry's dropping email in favour of social media. It stemmed from an email sent by their UK people to email subscribers, letting them know the monthly moosletter was being canned and asking recipients to fan them on Facebook. It's not quite switching off email (they'll use it still for special promotions) but it's pretty close. According to the quite rightly other-side-of-the-story article, Ben & Jerry's in Vermont isn't following this particular herd, and will carry on regardless.

I commented on the story as originally reported when it broke. My view is that a move to drop an entire marketing channel seems insane for a brand that appeals to people who like ice cream - kids, hippies, adults, old folk, squares alike. We all love Ben & Jerry's. Almost everyone out of their teens uses email. Indeed some kids and teens still use it (though the XML channels r00l increasingly). For instantaneous interaction between a brand and an audience there's nothing quite like social media. For longer-term, planned engagement based on deep understanding of behaviour/demographic/motivation-based segmentation, there's nothing (yet) quite like email.

Where email, and its grown-up cousin eCRM, comes in at its best is in shifting brand perception. A well-paced, well-segmented eCRM campaign over eight months can be persuasive in a way that an ad campaign cannot. You can make a case through demonstrating an experience and involving people in a journey that you cannot do by being interactive or sociable. I think social media channels are brilliant for maintaining and reinforcing a brand's positioning, adding a layer of openness for instance. And I think eCRM is exceptional for changing behaviours through understanding motivation and basing communications on that understanding. Email, SMS and the web can be segmented in a way that is invisible to users. The same cannot yet be said of the Facebook experience.

I am sad that ben & Jerry's has decided to focus entirely on the ephemeral in the UK, at the cost of a long-term brand engagement strategy. It's all gone a bit tactical. And when Facebook fades they'll have to jump on the next big thing. I think it's shortsighted. Customers are, or at least should be, forever. I'll be a Ben & Jerry's customer for as long as I remember its well-meaning roots. But as I'll never be a fan on Facebook it's going to be tricky for them to keep reminding me why I love their brand.

Wednesday, 12 May 2010

Email unbound

Everyone thinks of email as being more or less a broadcast medium. Email agencies and bureaux send millions of emails as newsletters every month to addresses lodged in databases. Some send them daily. Noone expects a reply.

But email has a richer use. With apologies for the reminder, but email was the way you had a conversation without picking up the phone. You send a message to your mate, and when they’re ready to answer they do. You can have conversations in real time, or with a delay for timezones, research or holidays. Email involves your counterpart in the decisions about how the conversation is paced, where it leads to, when it changes venue, when you meet up.

We appear to have lost sight of the dialogue. It’s easy to do so: if you’ve got 20,000 address on your database or 800,000, managing dialogue can be a daunting prospect. And notice I said addresses, not customers. More often than not the email broadcasts marketers manage go blind to everyone they can reach. So email gets a bad reputation, and newsletters have dwindling response rates. Where once it thrashed Direct Mail, now response rates are in the lowest single figures.

We all know what the solution is though. Segmentation makes response rates leap.

Imagine you’re sending an email to ten thousand people with three unbeatable holiday offers in it, one for families at the top, one for retired people in the middle, and one for singles at the bottom. And let’s assume that everyone reads the first offer, two thirds read down to the second and a third scroll down to the third. If the audience is equally split between the three target groups, the maximum possible response rate is 6,666.

If we could divide the audience into three segments, and send one email with one offer to each, the maximum possible response rate is ten thousand. That’s a huge difference in effectiveness. If you started with this three-part email, and it really is an unbeatable offer, just by segmenting it you increase your sales by 50%.

So that’s segmentation. Segmentation is a science – one which we practice and improve all the time. It can be really simple like the example above, or it can get very complex. We can segment by, for example, behaviour (what media they consume, do they request a brochure before making a decision, which wines do they prefer), or by demographics (where they live, how many there are in the family, what they earn), or by motivation (whether they are interested in their kids’ health, or the environment, or what their neighbours think). When we start working with a client this is what we address first, by looking at what data is available either in the client’s hands or commercially, because this will give us insights into what messaging might work to drive increased response.

Segmented email marketing is incredibly powerful, but it’s nothing to do with technology, and the technology vendors will always work with specialist eCRM partners with long experience in segmentation strategy to devise the campaigns they deliver for you.

ECRM adds something really special to all this. ECRM is channel-agnostic, in other words it’s concerned with reaching the customer wherever they are - email, SMS, social media or websites. A great eCRM strategy uses every touchpoint available to deliver the right messages for the right moment in the decision-making cycle to the right person. ECRM leverages segmentation through email, but creates a relationship through observing how customers behave and what they find most motivating by  tracking across every digital venue, mobile to landing pages to social media, and that’s when email marketing becomes something different, something which transforms businesses through radical changes in revenue.

Tuesday, 20 April 2010

Acronymtastic – SCRM, ECRM, CRM and the death of DM

I work for an agency that’s made some sort of name for itself in eCRM. That’s Electronic Customer Relationship Marketing. It’s not CRM, which is Customer Relationship Management if you’re into sales management software, or ...Marketing if you’re a DM agency. If you’re a DM agency (that’s Direct Marketing), thanks for all the principles, but your industry’s buggered.

Why? Because the principles of segmentation, so beautifully applied to awesome effect in eCRM, which now generates millions through digital channels, are starting to reach social. And social media is about engagement in real time. Which is what the digital agency world has been practising for its entire history – I started an interactive agency in 1994, which makes me positively historical. Without digital provenance, when Social channels (gaggle shopping, live feedback and peer advice) meet eCRM and forms SCRM (yes I know), the DM world that gave us so much in discipline finds itself detached from usefulness.

Which is a shame. There are some amazing people and minds working in the industry. And while brands continue to send out three million mailing packs, it will survive. But slowly, those mailing packs that cost £1 each are being replaced by digital nudges, creating continuous contact even with the thinnest segments in the long tail. One day mail will be used for that special something. And SCRM and eCRM will have truly blossomed.

Wednesday, 7 April 2010

What’s our story?

We’ve been doing a brand vision exercise within the wider plc my company belongs to. Someone asked me if I could contribute something that would tell the Underwired story. This, I think, illustrates what we do quite well.

McCain Foods asked us to tell them if digital can engage customers with a brand as well as TV can. We told them we’d prove it one way or the other.

We took over their eCRM programme. We optimised their segmentation, and created a comms strategy to engage brand resistors and deepen the relationship with brand engagers. We devised creative for a monthly, segmented email campaign. Finally, we created a regular survey to match the brand tracking being done by Hall & Partners on TV audiences.

In the first ten months, engagement with brand resistors went from 14% to 63%.

Brand consideration rose 11% compared with the Hall & Partners benchmark.

In six months, average transaction value went up 3%. The core segment grew 29% in volume. And sales revenue went up by a whopping 38%.

Focus has switched from proof to growth. Underwired’s now building a web-based eCRM hub to replace the brand’s website. We’re running highly targeted acquisition campaigns to build the most valuable segments. And our client, too, is thoroughly engaged.

This is what we do. I just thought I’d share it with you.

Tuesday, 16 March 2010

The DMA and overcapacity of Direct Mail

Not often I take issue with something someone has written about direct marketing (you, stop laughing at the back!), but the Direct Marketing Association’s outgoing Robert Keitch, in responding to an observation by a colleague, has set me off.

Charles Grant-Salmon, the chair of 4DM Group observed (in this article) that financial firms may be easing off on using direct mail, and that this may have been a factor in the demise of the (very) short-lived Blackburns DMS. Keitch, until today chief of membership and brand for the DMA, added that he felt that overcapacity wasn’t limited to the direct mail industry – indeed in a tweet by the DMA earlier today they implied that the web had a worse overcapacity problem.

What they ignore, in their entirely sunny, happy way, is that while overcapacity may well be a feature of each, one does not equate to the other. Overcapacity in the direct mail market is down to production cost, waste, time-to-market, and broadcast cost, not to mention inability to reach outlying segments for the same reasons.

Overcapacity in digital is down to exactly the opposite – its abundance is down to its miraculously low cost (imagine sending a million mailing packs, call it £500,000. That’s £1,000 in emails). It’s down to its demonstrable and comprehensively auditable effectiveness, and the number of players diving in with innovative ideas to service the rapidly growing market. It is categorically not down to a lack of marketers desperate to get to grips with it.

Direct mail’s in decline (though it has its brilliant uses – Mercedes has used DM beautifully). The dodos are dying - yet there’s an abundance of bue sky. Don’t fall into the trap of relating the two.

Monday, 15 February 2010

Last minute places for the IDM eCRM course

I'm teaching the new one day "ECRM for Marketers" course at the Institute of Direct Marketing on the 26th of February – there are still a few places left at a £200 discount if you're free and you want a comprehensive 'how to' on planning, creating and managing eCRM programmes. We'll also be running the same course on June 10th, though it'll be slightly over double the price!

The Efficiency Begets Effectiveness Cycle

We've just gone past a fork in the road. You know the one, a year of very reduced budgets, and a dawning realisation that a year without brand awareness is a dangerous place to be. Marketers are approaching the idea of restarting major spending with some trepidation, because the board is peering closely at ROI.

So brands are starting to spend again, though with huge - and proper - circumspection. While it's tempting to go all out and get brand awreness back by focusing on telly or online with virals and sexy, award-winning branded acquisition campaigns, true effectiveness requires that marketers begin at home, with the customers they already have. ECRM (Electronic Customer Relationship Marketing), with its focus on retention, is auditable in ways an ephemeral viral campaign cannot be.

And there's a second fork ahead, though I don't think it has much impact on the decision about marketing strategy. We're either approaching the end of the recession, or we've chanced upon the middle of one that's W-shaped. If it's the former, then there are already a number of brands that have taken on the salutory lesson and switched focus to low-cost, high-impact programmes delivered by cheap, responsive and trackable channels like email, web, social media and SMS. We've already seen remarkable results that show traditional media-led brand consideration declining sharply while eCRM bases rise against the tide. Those brands will prosper with high margins, where marketing spend is described by what's left over after overheads and profit. More marketing effectiveness means higher market share. TV advertising brands not only haven't been able to afford it recently, but when they return to it they'll be shouting louder at diminishing audiences with waning response.

If we're appoaching the middle peak of a W, this problem will only get worse. Brand advertising works when there's continuous stimulation, something that traditional media strategies cannot provide at trickling budgets. ECRM and retention-oriented programmes, which seek to provide continuous engagement through cutting out anything that is not relevant to a specific user's customer journey, can provide not only stimulation for cross-sell and up-sell during times when high street spending is necessarily low, but also data. And this data actually can be used for acquisition, perhaps counter-intuitively.

The major learning is centred around which segments work and which do not. Essentially customers are segmented by propensity to buy, then value (frequency of purchase, lifetime value and so on), with some information about advocacy thrown in for good measure. Taking these very basic measures, and running campaigns based on what you think will most effectively motivate increased engagement (relevant content, added value) and returns (cross selling through relevant promotions, upselling via added functionality), quickly points out which segments are most easily promoted from low value/low loyalty to higher value. This is invaluable knowledge. It tells you in the most direct terms what types of customers are easiest to get more from. It tells you who to target through acquisition campaigns. It writes your media plan for you - and it's one with little or no wastage. Following this path is a marekter's dream: efficiency leads to greater efficiency.

Whichever way the V or the W goes once all the receipts from the government's response to the american mortgage crisis are tallied up, eCRM-oriented strategies for retaining customer loyalty and building engagement are critical, because the days of the brand delivered glibly in 30 seconds are over.

Monday, 1 February 2010

Making eCRM Work For Charities

The age of eCRM is upon us. Well, to be fair, the age of eCRM is upon the commercial world. Companies like The Sun’s fantasy football league, the world’s biggest, are doubling their revenue from digital by engaging with their existing customers in a structured, highly commercial way. They love it (who wouldn’t love a 93% increase in digital sales in three months?). ECRM’s a hot subject in News International towers – in fact it’s a hot topic for all sorts of brands from Nickelodeon to McCain Foods to Virgin. You would imagine that, given the commercial successes and incremental profits it drives, it would be a straight port to charity. But it isn’t. In my view, eCRM isn’t a universal fit, and it needs a slightly different approach when it comes to applying its highly tested principles to fundraising and donor engagement.

Let me take a step back and explain the general principles behind eCRM and then how I believe it can and should work for the third sector.

ECRM starts with data. This data comes from, in essence, existing customers. The data consists of things like when a product was bought, what its value was, whether it was bought following a sequence of events, or driven by a promotion, or facilitated by a third party. That kind of observed behavioural and motivational data can be layered with information about the customer herself – family size, age, location, whether others they know are also customers, whether they belong to this, that or the other social group. Integrating and analysing this data often shows up connections and trends. We may find for example that a customer is likely to spend more if they’ve seen a TV ad within hours of being emailed a voucher on a Tuesday, or that if they’ve got young children they’ll respond better to new offers on mornings when they have childcare. We derive series of insights, and we create a plan that segments audiences by value, frequency, recency, and motivation. We come up with a creative hook, attach email, SMS, web touchpoints, and off we go testing and optimising campaigns to see which work most effectively. It’s pretty logical, and it’s entirely oriented towards increasing a customer’s value.

In theory, you could apply the same highly commercial approach to charity eCRM. In fact, Direct Marketing and Direct Response Television (DRTV) do exactly that, and in general it works extremely effectively, at least for a short while. It relies on continuous volume being fed into a funnel, because using these kinds of methods you can burn through huge numbers quite quickly. And it is of course very single-minded. It allows little for the emotional attachments people have with causes that actually very often span lifetimes and generations. It’s mechanical, in essence. Commercial eCRM creates an equation that takes customers and uses data and psychological techniques to maximise the revenue that can be gained during their lifetime as a customer. That’s business, and it’s not personal. I think that charitable giving, on the other hand, is personal. Charity is not, or should not, be a machine (stick charity on top of problem here, turn handle, problem solved) because I think charity is about solving problems unaddressed by the machine of society.

All of which is a little grandiose. ECRM for charity does automate inasmuch as it allows organisations to use techniques and principles to increase engagement between a cause and its supporters. If by using eCRM we can provide genuine value and fulfilling engagement then as a consequence support will deepen and charities will be able to operate more effectively. The essential truths of eCRM do apply: eCRM is about delivering information to a supporter that is timely and relevant, that doesn’t confuse, that increases the bond rather than distracts from it or irritates. Data is still at its heart. Understanding what your audiences are motivated by, where they live, what their attitudes are, what they are prepared to do on your behalf, all of these are critical. But while commercial eCRM is about facilitating a value transaction (I give you entertainment, you increase your purchase frequency), not-for-profit eCRM is about building and delivering trust, and allowing an opportunity for this to be returned. ECRM for causes works most effectively when it provides a call to understand rather than a call to action. The same methodology applies – we still analyse all the data we can lay our hands on, we understand what motivates people, we work out what people are likely to want to do, and we segment them accordingly. But the strategy is much longer in view. Building relationships over long periods of time builds trust and cut-through. It gives something back to the supporter, and in turn this means when we do have something we need to say, if it’s delivered in an appropriate manner to the right person at an appropriate time, it is listened to. VSO learned this early on in its forays into eCRM, when at a certain point it found it needed to recruit a large number of primary school teachers – using email and a microsite to engage it found over 6,000 new, qualified contacts all through referral, because of the relationships it had created.

ECRM, that is to say properly researched and segmented long-term contact strategies delivered digitally, is a means not to an end, as it is in the commercial world, but to a beginning. Worked well it delivers relationships that last not just lifecycles but lifetimes.

Friday, 29 January 2010

High ground for brands in a W-shaped recession

This is my first blog post for a few weeks, because I've been busy. I've actually been busier with pitches than I've been for more than a year. And quite evidently I am not alone. There's something in the water I think.

It's generally at this time of year that the pitches for the new year are well out of the way. We used to win our big accounts either just before Christmas or just before the other financial year starts in April. This year is different for us, and we've seen a surge in pitch work for eCRM actually happening in January. We think there's a logical explanation for this, and it comes down to the great typographical recession debate that's been going on for the past few months: is this a U, V or W-shaped recession?

If you are a marketer, then the past year of austerity has probably been quite trying. Selection for auditable marketing – eCRM and DM while a no brainer for some, has been held up by (respectively) lack of experience and expense. ECRM is cheap and responsive, works beautifully for retail and FMCG, and generates monetary returns, but very few companies have done it so in times of restriction and risk aversion new forays were rare. DM is proven and runs on the same principles as eCRM, but it's extremely expensive and lumberingly slow (not to mention impossible to port directly to digital because it requires native digital community experience). The most logical path for marketers has therefore been difficult to take.

But a year without engaging consumers with either big budget media or small budget retention marketing is dangerous. Smaller nimbler brands can operate with startup mentality and gain a disproportionate step up. A year after budgets stopped, a year during which eCRM has proven itself with spectacular achievements for foresightful adopters, marketing budget holders are facing a situation where we're either in recovery having reached the other side of the V or U, or at the very least on a temporary island in the middle of the W.

It's time to re-engage with customers and at the very least reinvigorate relationships with them. If it's the W then there's a window of opportunity. If we're out of recession (and personally I find it difficult to believe there won't be a backwash from the debt that's been stacked up to facilitate quantitative easing – let alone the poke in the eye that repairing the country's potholes is about to deliver), then it's time to spend. And clients are doing just that. Cautiously to be sure, and only on things that can be proven to work.

Marketers have been dabbling in eCRM. It's now time to take the plunge. The worst that can happen is that it does turn out to be W-shaped, but brands will have reconnected with customers at a critical time to ensure they stay brand loyal during the next leg of hardship. The best that can happen is that the process of spinning up extraordinary loyalty early means a spectacular resurgence in sales.