Relevant offers improve retention

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Dick Shaver
Dick Shaver

The 2008 Aberdeen Report on Green Marketing: Leveraging Customer Data to Reduce Direct Mail Waste left no doubt whatsoever about the profit impact of elimi­nating irrelevant mail. Eighty-five percent of best-in-class marketers improved customer retention substantially and 77% improved cross-sell/up-sell effectiveness.

These leaders have barely scratched the surface. They still are targeting customer mailings based on data inferences instead of customer-supplied facts identifying what each different customer wants. Each irrelevant offer creates customer disbelief in the sender's public statements about “doing everything possible” to reduce direct mail waste.

Since it's clear that maximizing customer satisfaction also maximizes lifecycle prof­itability, shouldn't every direct marketer's ultimate goal be to accurately identify the differing needs and wants of each different customer? The answer is clearly yes, and that means going totally green by eliminating all irrelevant mail.

This is not as hard to do as many direct marketers think, and many DMorganiza­tions have already successfully eliminated all irrelevant mail. Two in particular have set multibillion-dollar, multiyear records for sales and profits.

In the pharmaceutical industry, an early adopter of database-loading research received a better than 90% response from more than 800,000 customers, each of whom identified their individual needs and wants. The com­pany then sent customer-specific solutions to customers grouped by needs and wants. When the pharma's patent expired, instead of losing 70% of its customers (as pharmas typically have after patent expiration, despite billions of dollars spent on mass advertising), this company retained its entire base. This represents a new level of customer satisfac­tion worth billions in never before realized sales and profits.

Similarly, an early adopter of this totally customer-centric approach in the telecom market set a similarly overwhelming new record when it applied database-loading research to not only acquire 6 million new customers, but also reduce attrition to less than 4% when more than 40% new customer attrition was the telecom industry norm.

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