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.

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.

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.

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.

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.

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.