Customer engagement for bars (or, teaching granny to suck eggs)

In the olden days (pre-1995), when customers knew the name of the person serving them and vice versa, life was good. Then along came the internet. People stopped going out for a drink to socialise, catch up or find a friend. We were told then that the power had to transfer to the brand, or at least the vendor. Marketing became about how you presented your brand and how you attracted people in. All the while customers were losing focus on what was attractive and turning their attention to what met their needs best… and online met their needs pretty perfectly.

So what are the best decisions that need to be made to address this change? First ask yourself: can we compete without going online? If your answer is ‘no’ then you need to assess how best to target your customers and by what means.

Social media, used largely (at least in my own life) to work out where to go for a celebration, catch-up or a noisy bit of fun. In other words, the perfect media platform to reach customers to start / maintain relationships. It’s pretty simple to make work in fact: get to know your customers by observing their behaviour (on your website, in response to your emails and/or tweets) then make sure you use those channels to say things that they want to know or hear.

However, social media isn’t the only option available. Email – today’s postcard – cost pennies to generate and send, even in relative bulk. For this kind of approach of course you need data. You could gather this at the point of sale and add it to a centralised database – which would be as simple as an Excel spreadsheet. By offering some kind of value exchange when you visit the website - perhaps a free drink next time you visit - you will be able to further your data capture which will allow you to create targeted, timely and relevant campaigns to drive sales and support your ongoing relationships.

Where once in the golden days a bartender would know each customer by sight, today, bar owners can know the customer through digital tracking. The internet has enabled a one-step removal of customer engagement and, in turn, this means bartenders can engage with many more customers than before. As you can gain much more information through this channel than if you were to try and speak to each one on a busy evening. Twitter, Facebook and email will become your friends – and your new way to make new friends – because by being your customer’s friend you’ll take them back to the good old days, and this could be the difference between fading away and reinvigorated, transformational growth

Nudge Factor

Yet another unrepeatable offer! Bang, Flash!! 25% off today only!!! Ugh. We recently lost a pitch. Not a huge one, but the client was nice, the brand was fascinating and the task was really quite challenging. The client didn't go for us. Or rather they liked us and loved our work but were sold by another agency who offered them a whopping great discount on an email marketing campaign based on some hard-hitting promotions. Which sort of goes to show that on occasion, when you've got one chance at a sale, making the Big Offer is often the best course of action.

Being bitter of course rarely gets you where you want to go. It does make for a very excellent basis for an article which is all about what not to do if you have a marketing, rather than a selling, job to do. And you're reading this because you're in marketing, after all. You may even run email marketing campaigns. I am sincerely hoping you may actually run eCRM programmes, or even better, want to transform email marketing into eCRM and then evolve that into multichannel eCRM. Which is about more than just a series of offers - it's about building relationships around value exchanges that are mutual, and which actually lead somewhere.

Let's start at the beginning for a minute, if you'll indulge me. ECRM is about the journey you take your customers on. Segmentation allows you to create a meaningful, relevant journey for each distinct customer type. In my own business we focus on what we call 3D segmentation - who, what and why, with the "effectiveness" dimension having been beautifully articulated as far back as 1972 when 'need states' were beginning to be discussed seriously as a component of marketing. (If your agency produces personas, they're probably at about 1983, a terrible year for music.) This customer journey takes the form of a series of incremental steps from the first moment they self-identify to the moment they stop ever being a customer, prospect or advocate. Put yourself now in the customer's shoes on this journey. How many times in a row will you want, or tolerate, a 25% off offer? And how many times will you see one before you start to think that's the normal price?

Imagine you're a brand like Domestos (forgive me Unilever, I plucked it out of thin air). You can hit your potential customers with offers all day every day, and quite a lot of them will work - or at least when Joe has already decided they need a bottle of cleaner an offer might either sway them from own-brand, or reduce the margin from someone who would otherwise pay full price. But Domestos is a premium brand. Discounting is not the way to become successful. Discounting is the way that economies rebalance themselves, it's not the way companies make money because it's much more about fundamental survival. Domestos must look to other ways to engage with customers. ECRM with its customer journey and relevance and, ideally, with an understanding of what makes the customer tick, provides this opportunity.

Because really an offer on its own does not make Domestos interesting or engaging, it just makes it cheaper.

We create customer journeys on the basis of the nudge. The nudge says to a customer, because we understand something of the considerations in your life, here's something of a little value, in exchange for a few moments of your attention. If we can do this with some charm, a modicum of relevance and a dash of intelligence, we might get to engage their attention... and if we can get it really right, this may snowball into increased consideration, purchase frequency and even - gasp! - loyalty.

Imagine you're, say, a cleaning brand(!). How about singling out mums with young children. With permission to contact mum, perhaps obtained (and here I may sound a little hypocritical) through some kind of one-off promotion, we could use this demographic insight to plot some engagement. In Keystages 1 and 2 (and later) kids start to learn about hygiene. Perhaps over the course of three months we could send mum on a journey where our value exchange is all about providing her with a heads up about what her kids will be learning, followed by some materials so she can support the learning they do at school when they get home, with some fun activities (preferably not ones which increase her workload, and especially ones which involve creating a mess the kids might run away from!). Follow-the-curriculum, colouring-in activities, downloadables, uploadables, word games - I'm sure you can think of a whole string of things you can give mum which will help her help her kids keep healthy. Not to mention having a cleaner house as a bonus...

It's a series of nudges along a journey to brand loyalty. And you don't really ever need to do any selling. You don't need to say 'Domestos keeps your house safe' out loud, it's implicit in the exchanges of value and values you've transacted with your customer along the way. At some point, one of the little nudges may even involve a voucher or a promotion, just to cement the relationship. You may give them a social space they can meet other mums in too, so long as you listen to their advice to you and you respond in a manner consistent with your brand's values.

ECRM is, or at least never ever should be, about banging on about buy buy buy (I was going to say "Harpic on" but that would have been a bad pun too far). It's about nudging, gently, so your customer wants to go on your journey with you. Because if you can take customers on your journey, while the discount merchants may sacrifice margin for survival, you'll have loyalty delivering straight to the bottom line.

Making sense of the marketing maze

FMCG Magazine, issue 11 volume 13

Why is – and why should it be that – FMCG marketing feels so vague? Everyone thinks the be-all and end-all is the big TV campaign. It takes six months to write, three months to edit, a whole bunch of illustrators, animators, storyboardists and directors’ assistants, a hundred grand in production and a hundred more grand for a slot in Corrie. This elephantine effort would be fine, were it not for one tiny flaw: you know fifty per cent of it works, but you don’t know which fifty per cent. The elephant in the room is accountability, and in today’s climate marketers must, must be accountable, as must their marketing.

We’ve come out of a recession, and are wobbling around the edge of a second iteration. Consumer confidence is low, partly driven by what people see in the financial sections of the TV news and partly driven by the doom mongers in the red tops. Businesses like yours aren’t bonkers so there is close scrutiny of every budget from procurement to overheads to manufacturing to marketing. The days of the “Let’s do TV, it works for the big brands” being sufficient justification for the board are over.

There is a second driver at work here: FMCG brands don’t sell to consumers, you sell to intermediaries – Nisa, Bookers, Asda, Tesco. You might argue that they should be doing your marketing for you (in fact, perhaps you should argue; if you spent your TV budget on selling more lines into Tesco they would have a vested interest in pushing your products hard, and yet we have devised ourselves an effective if expensive pull-oriented strategy, presumably because such tactics are too much like hard work). Yet we compete for shelf-space, PoS, the (very) occasional appearance in a promotion or an ad. FMCG brands focus their marketing towards the end consumer, essentially cutting out the middle man and appealing for share of basket. Works beautifully for the supermarkets.

So, two drivers: bypassing the supermarkets to get straight to influencing the consumer, and a terrible lack of clarity about whether this consumer focus can become more focused. Oh, and a third factor: the supermarkets sneakily deciding to launch their own brands (as distinct from own-brand) competing directly with yours. Anyone would think you were in trouble.

Over the past sixteen years – in fact ever since the Snickers® MegaBite online community was created for the brand’s Euro96 sponsorship – digital has become a valid and very useful channel for reaching and engaging consumers. Multi-brand FMCG companies have created websites, communities, games, multimedia, email and mobile campaigns very successfully, if success is measured in awards, media exposure and word of mouth. Over the past ten years, online channels have become properly measurable. The rise of analytics, and analytics specialists, has allowed marketers to track users’ online behaviour in great detail. Marketers are familiar with terms like UX (User Experience), IA (Information Architecture) and User Journeys (a term we appropriated from the supermarkets as it happens). We can drive people to websites, deliver appropriate experiences that support the brand architecture (brand onion, pyramid, pretzel... your ad agency will have its own version), and increase dwell time (the amount of time a consumer spends wandering around, through engagement or confusion, your website).

Digital can track absolutely everything. So it’s slightly surprising that most FMCG brands have not, because they believe they cannot, tracked the value they get from it. In the days when nobody knows which fifty per cent of the advertising works, you would think that having such an auditable medium would be a lifeline.

Digital means a consumer’s activity can be tracked all the way through to a sale. For example, if you sell a tin of beans on your website, we can track a visitor from before they get to the site (their first click on a Google Adword or a banner) through the site, around the site, to the basket and to a successfully concluded sale. We can attribute sales value to visits, which in turn means we can optimise campaigns, spend more on the sources which produce the highest sales, and generally be pleased that you know which fifty per cent is which. We can distinguish good from bad and make commercial decisions based on evidence. And evidence-based marketing is what your board wants.

FMCG doesn’t trust digital in the same way. It’s why, for example, most brand campaigns have a limited shelf-life online, and why websites get replaced with alarming frequency. You’re marketing to the end consumer, but you’re selling indirectly. This perception is common among FMCG marketers: indirect means indistinct. Decision making is therefore down to gut instinct – and how many awards the campaign wins. For me, that makes online marketing for FMCG brands a hopeless case. I want to know how to attribute value, no matter how indirect the sale is.

So let’s discuss a method which means that indirect doesn’t necessarily make it quite so hopeless. We’ve used it over the last four years for McCain Foods.

We started with a database of customers, acquired from a number of sources: bought lists, competition entries, newsletter opt-ins; in fact anywhere we could find data. We cleaned it up, got rid of the stale, unidentifiable, lapsed and suspect data, and created a robust base of legally opted-in people. We put together an email programme. This was pretty simple, consisting of product descriptions, recipe ideas, offers and simple calls to action. This gave us a backbone we could measure, and measure we did.

You will be familiar with the normal email marketing metrics: Open Rates, Click Through Rates and dwell time. We benchmarked the programme, making sure we had some consistency to start off with, so we could run some experiments. The first experiment: when should we send these emails? We sent the same email every couple of hours to a different section of the database to establish which time of day got the best open rates. At this best time of day we sent an email every day of the week to see which day of the week got the best open rates. Inside eight days we had the optimum send time.

The second experiment involved benchmarking against the real world. The assumption was that anyone in the database would be more engaged with the McCain brand than the general population (for obvious reasons: these people have opted in to regular emails, and they are getting regular brand exposure). What we wanted to do was to see if we could affect behaviour over time. Working alongside the brand tracking studies already being performed by Hall & Partners, Underwired created a comparable set of questions to mirror the study, in effect asking the same questions of the database so we could compare database versus general population at start, then after six months.

The results at the start were entirely predictable: 61% of people in the base loved the brand versus 20% in the general population. By the end, after the email marketing programme had been in action for six months, that score had risen to 64%, and in fact the gap had widened to 11%. The programme was clearly driving changes in perceptions of the brand, against a general fall in the advertising-only scores. But still, indirect and indistinct. How do we change this?

The next step for the campaign was to find a value benchmark. This consisted of two distinct phases: first find the comparison data, and second find a way to accurately measure any changes wrought by the digital activity. By using email only, the customer journey was kept very simple, and there was a built-in mechanism for running surveys so we could establish consumers’ shopping behaviour.

First we sourced a chunk of useful data. This came by way of Dunnhumby providing real-world shopper behaviour from Tesco customers; we sought out product choice, average purchase value and purchase frequency.

We continued this stage of the journey into attribution by refining the segmentation of the McCain database. The segmentation was fairly simple: brand engagers, brand resistors, category resistors, neutrals. This was also split demographically. The segmentation was tweaked to exactly match the Tesco shopper profiles so we could accurately compare one with the other.

So what have we found? We have discovered that when we put a person into the eCRM programme, in the first six months their purchase frequency goes up by 3%. Knowing what we know about average purchase value (in £s) and frequency for each segment, we can therefore easily find out not only how much the change is worth within the base, but also how much we should invest in acquiring more people into the database in order to drive ever-increasing incremental profit.

So what does this mean? Well, for one it means we know precisely which segments are worth investing in, how much to invest, and what the sales volumes we drive will be. This makes TV seem vague indeed – we do, now, know how to attribute value even when we’re marketing directly yet selling indirectly. We can justify every penny of the digital marketing budget (or at least that portion that’s spent on auditable campaigns) and, in a recession or in a post-recession world, that means we can be certain that what is being done is being done right.

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.

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.

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.

Making eCRM Sizzle

ECRM is king. So why isn’t everyone doing it? OK, perhaps the rhetorical excuse for a diatribe about how everyone really must start doing it properly is a bit transparent. Actually there might be a perfectly rational explanation, no matter how much I might, as a passionate advocate of eCRM, be wary of it. The answer is very, very mundane.

We’ve recently been involved in two quite big pitches, for brands everyone’s heard of and almost everyone uses, both in transport. We’ve been drafted in as a wildcard – the brief’s been about making email marketing deliver revenues. We’ve come in and talked about strategy and how relationships, customer journey cycles and touchpoints affect frequency of purchase and average transaction values. We’ve talked at length about the processes involved in mining data, creating simple customer segmentation then rich, layered segmentation (starting with sponge cake and aiming for gateau, I suppose). We’ve described processes for selecting email providers, deliverability consultants, analytics. And we’ve talked about the results – millions in demonstrable incremental revenues, customer lifetime values that go up by 3% (read: millions of pounds), over the first couple of years.

Looking back over these two pitches, which we didn’t win (our normal win rate is around 75%), it’s clear why. These two clients wanted to improve their email marketing. Simple as that. What we should have talked about was how we improve email campaigns so they drive results. We should leave the data stuff as a functional but implicit element, same as usability, or build standards, or testing. We’ve been guilty of trying to explain the thinking, not the practice. In old speak, we’ve been trying to sell the sausage, not the sizzle. Sure, eCRM is infinitely more complex than just email marketing... there are plenty of big projects that integrate segment-driven microsites, emails, SMS and e-commerce, all in aid of making the customer the centre of a brand’s universe. But actually from some clients’ points of view they may simply want to take the next step in improving what they do already, and that may be taking a newsletter and making it more relevant through simple segmentation.

And if we do take this approach to those pitches where the brief really is for improving email marketing, then perhaps we can take these clients and move them on to eCRM by stealth. If we can start with quick wins – the kind that generate sudden revenues – then we can go on to justify spending time and money on strategic thinking, segmentation and online touchpoints. In retrospect, we’ve been guilty of a lack of patience, and it’s a trait endemic to the leading edges of the digital industry. So with (probably the vast majority of) clients new to eCRM, we need to start on ground that’s already familiar, in order to help transform the mundane into something that ensures that it’s the customer who’s king.