Press release – F Hinds appoints Underwired

F Hinds, Britain’s leading independent family jewellers with over 100 high street shops, has appointed specialist digital strategy agency Underwired to build its online customer engagement programme. The retailer, which was established in 1856, serves around 2 million customers every year.

Underwired will develop the brand’s digital marketing strategy and will work closely with the board of the brand.

F Hinds’ Andrew Hinds said of the appointment, “We have a close relationship with many of the customers who use our shops and we want to be able to extend that to provide the same quality of service to them online. Our outlook is long term and hard sell is an anathema, so we only want to be in touch if we have something relevant to offer our customers as individuals. We chose Underwired because their approach mirrors ours and because they are straightforward and focussed on the simple things which matter the most.”

Underwired’s Marketing Strategies Head Matt Button commented, “We’re very excited to be working with such a well established retail business. We will build a long term strategy using our experience and expertise from working with other retailers that remains true to the values and ethos of F. Hinds.” Button was previously Head of CRM at retailers Waterstones and HMV, where he led award-winning customer engagement and loyalty programmes.

Underwired’s clients include Sony, ASICS and Bupa.

http://www.fhinds.co.uk
http://www.underwired.com

How to measure ROI for email campaigns

ROI isn’t just about measuring. In times like these, to be brutally honest, it’s about winning. 

ROI (Return on [Marketing] Investment) really needs to be measured in financial terms to make the sort of sense your Financial Director wants to hear, although if you look at ‘value’ as the output, value can be defined in a number of ways. You could for example define value by how likely a customer is to speak highly of you, though it’s almost impossible to establish a financial value to this. Some of the wilder social media agencies will tell you a Facebook “Like” equals £10, which is every bit as useful as a Tweet being the same as a gumboot!

For simple - monetary - ROI, there are two approaches. You can either track your customer all the way to a completed online sale, or track changes in behaviour against a benchmarked control.

You can add a time dimension to this too by looking at the long-term value of a customer - the Customer Lifetime Value (CLTV) - which may be very different to their short-term value. If you’ve ever subscribed to TM Lewin or Richer Sounds emails, where there’s a constant barrage of sales until you capitulate, you’ll know all about balancing an increase in short-term spend against burn-out. In other words, milking the customer too hard usually increases churn... I may buy three times in quick succession but then you’ll lose me forever.

A customer must, by law, have opted in to your email communications, so you know who they are and, provided your email service provider has half-decent tracking and you can tie their purchases to emailed call to action, then you can see the ROI immediately - you spent X on the campaign, which drove Y sales. Presuming you spent less than the extra profit you generated, it’s probably worth doing again. Over time you can then see curves of drop-off in response and optimise your communications accordingly.

Tracking against a control (or baseline) requires a scientific approach and segmentation (perhaps low, medium and high spenders, defined by behaviour, demographics and motivation). This kind of approach will give you the means to track changes in purchase behaviour and attitude towards your brand over time – powerful stuff, In practical terms, if you have a benchmark (for example Tesco data) then you can compare your audience with Tesco’s and factor out TV campaigns and see the actual effect your email campaign is having.

You’ll probably be able to ascribe certain characteristics to a set of customer segments, for example average purchase frequency, average transaction value and CLTV. (For what it’s worth, you’ll nail 80% of everything you need to achieve with segmentation in around six or seven key segments.) If there’s a clear difference between the reactions of two segments to your campaign, for instance if one segment responds by spending twice as much every month, then you can probably guess which segment to spend the most money on.

This approach also tells you where to spend your advertising budget, because obviously you want more people like them... and conversely you can stop spending money on acquiring more people into the lowest performing segments.

Taken only at its face value, ROI is about working out what you got in return for what you spent. But it’s so much more: it leads you from email marketing to eCRM, and that’s a transformational shift. ROI is about gaining an understanding so you can spend less on low profit customers and more on high profit customers. When you do that, you start winning.

Web Designer Magazine – Career Path Series

An interview with Felix Velarde, Managing Director, Underwired and Jason Holland, Creative Director, Underwired

WD: What is the key advice that you would give to a designer that is thinking about starting his or her own studio?

JH: Be creative but relevant - for each pitch or portfolio item, have a business case for why or how your creativity will increase the clients return on investment and not just look great.

FV: And concentrate on doing the best work you can do. If you are the lead creative, be the lead creative – don’t get bogged down in production work. Your time is more valuable even if given free if you’re producing work that inspires clients.

WD: What prompted you to set up your own agency?

JH: The feeling that I not only knew where I could take my own career, but where I could take the industry. It was at a time of my life that I could 'risk all' and put everything into a new venture, with Felix Velarde as the Entrepreneurial skill and my creative vision.

FV: I've done this four times successfully now, the last two with Jason (our previous agency became the digital arm of Lowe). The key driver was having a vision of how we felt design for marketing could and should be - and really wanting the freedom to realise that vision. Doing it for ourselves meant we could concentrate on high quality without the baggage of projects we didn't want but working for someone else would have inherited.

WD: Do you think the current business climate is conducive with setting up a new digital design agency?

JH: Yes - but there are far more small companies (as a percentage of the whole) than large agencies than there have been, so clarity for what you do is very important.

FV: If you get it right - yes. There are very few overheads for a small company, you can be lean and focused, and operating in a recession will give you skills that will stand your in good stead once it's over.

WD: Should new digital agencies specialise or offer a full service?

JH: I believe in specialists, even if it's just what is seen from the view of a possible client. Start small within your client's organisation and prove your worth - then you can offer your wider set of services. For example, we are famous for our eCRM expertise, but this encompasses lots of disciplines like email, websites and social. The platform of real strategic insight into customers has opened all sorts of doors for us.

FV: Full service comes with scalable processes, and that makes it almost impossible for a small agency to compete with an established operation. I agree with Jason - if you specialise everyone knows what you do, and if a client needs that, they know who to turn to.

WD: What skills do you wish you had when you started your studio?

JH: Delegation - I'm still working on it 16 years later!

FV: I wish I'd understood Gross Margin Percent - it would have made life an awful lot easier in the beginning.

WD: What would you have done differently when you set up your agency?

JH: Nothing - even the big mistakes have shaped what I do and how I do it today.

FV: I'd have sought out a mentor sooner. Having an experienced hand to give you advice and steer you towards opportunity and away from catastrophe, even if it costs a few grand a year, is well worth it. 

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.

Derek Holder, co-founder of the Institute of Direct & Digital Marketing

The death of Derek Holder is sad news for the direct marketing industry. His vision, drive, persuasiveness and determination helped bring the direct marketing industry into the light. What the IDM did in terms of education, standards and career development for innumerable people at the forefront of measured marketing cannot be overstated. The IDM, tucked away in Teddington, trained most of the people who practice the disciplines of customer engagement, imparting rigour and best practice.

I met Derek a dozen years ago. I had already spent half a dozen years building digital agencies with very bright people, and I wanted to start proving that digital had a genuine place in the marketing mix. I was invited to be a guest presenter on an IDM course. What I learned while I was there led to a fascination with measurability and accountability, and this in turn led to me founding the first eCRM agency, Underwired. Derek encouraged my thinking, and gave me the freedom to teach at the IDM, running one day courses (including the current Practical eCRM masterclasses). I owe Derek a lot.

I once went on a speaking tour of various cities in the north of England. Derek presided, and along with Joanna King we set off in Derek's green Jaguar. That tour was marked by two things: awful weather and flooded towns, and Derek's tirelessness - undercut by a propensity to fall asleep at the most inopportune moments. We had a great time, spreading the word about how to do direct and digital to the very highest standards, driven by Derek's passion for the industry. We'll all miss him.

Identifying and prioritising quick wins in email marketing and eCRM

In a recession the pressure on marketers can be intense - more bang is needed for less buck, and every penny has to be justified. Boards and Finance Directors are constrained by a natural conservatism, based on the desire in the uncertain financial climate to de-risk as much of the business as possible.

On the other hand, there's an imperative towards cheaper, more auditable marketing channels. In theory, digital presents the greatest opportunity. For example, if your company traditionally uses direct mail to communicate with your customers, there are instant savings to be made simply by switching from post to email: if you're sending 100,000 mailers out, with each costing 50p in print and postage, then the switch to email will save you an instant £40,000, and probably £45,000 the second time you do it.

But, and it's a big but, if you don't know where to start, then making this kind of switch can be fraught with costly mistakes and a fair amount of fumbling. Making decisions about what to do requires intelligence, experience and a clear view of what the expected returns are likely to be, and that's difficult for most marketers new to channels like eCRM (Email Customer Relationship Marketing). Whilst the conversion from postal to digital seems like a no-brainer, in practice, your brand and your customers may not be suited to email at all, and you may have a major flop on your hands if you make the switch without some testing. ECRM, which provides marketers with - in theory - total tracking from customer to email sent, response behaviour and eventual value, lends itself perfectly to testing and experimentation.

If you want to find out the answer to a yes/no question and you want to test it before you make a decision based on the answer, then you will need a minimum of 383 people in order to get an answer you can be 95% confident, with plus or minus 5% accuracy, reflects your entire database. So if you want to test whether you'll get the same response rate to an email version of your campaign versus your DM campaign, send the email version to 383 people in your database selected at random. If you run segmented campaigns, do the comparison between 383 people in each segment and your control. Only once you've got the answer should you roll out the change across the whole customer base... but by then you will have numbers you can show to the budget holders, which justify the change based on cost savings and minimised risk.

There are of course a number of different things you can tweak to great effect. For example, you could spend money on:

• Improving segmentation
• Improving open rates
• Improving the effectiveness of calls to action
• Switching people from call centre sales to web sales
• Expanding your database.

All of these are potentially valid ways to increase the value you get from your eCRM activities. In some instances the value can be enormous. Say you're sending a million emails a month, and getting 2,142 orders worth £50 each. Increasing your open rate from 15% to 16.5% and your click-through rate from 15% to 18.75% will take your annual revenue from nearly £1.3 million to nearly £1.8 million - an increase of around 38%. That half a million in incremental revenue is enormous - provided it costs less than the profit margin on it to make the changes required. Again, it really comes down to how you decide what to focus your energies and investment on.

In my experience, working with brands like Tesco Kitchens, Harveys, Laithwaites Wines and Sony, there are always a number of different changes you can effect. As you can probably tell, I'm a stickler for the numbers; I always want to know what levers I can pull, and what effects that will have on the revenue. Given a variety of possible improvements, all of which will come at some cost, then you clearly need to know what to focus on first. Once we have identified what these opportunities are for a given company, we will always try and attach some numbers to them, and I believe that when you are planning what you do during 2012, when your focus should be on lowering risk and increasing the returns you get from marketing, this is a critical first step.

And in uncertain, recessionary times like these, having confidence in your marketing plan is what differentiates you from your competition.

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.