All Marketing Is Direct Marketing
Zain Raj, Epsilon Agency Services
We live in exciting times. The marketing world is going through significant changes: advertising as we knew it doesn't exist, categories are commoditized and homogenized, and digital and mobile technologies have changed how consumers relate to brands and with categories. Additionally, marketers now have access to a huge amount of data that has the ability to help them bridge the dissonance between what consumers say and what they do. But unless marketers use this data and related marketing technologies to deliver personal, relevant, and empathetic solutions to consumers at times and places they deem appropriate, their efforts might as well be whispered into the woods.
The challenge begins at the top. CMOs are judged by their ability to drive the top line. They have to do more and deliver more for a lot, lot less. And, they have to do this by leveraging capabilities and skills that are foreign to most of them. We all know how difficult it is to find great data and digital talent.
A consumer electronics retailer I work with clearly understands this new ecosystem, but finds himself in a conundrum: Do I spend millions to update an old database, install the needed technology infrastructure, and develop “future-focused” capabilities or do I use the same money on “proven” mass market programs to drive sales today? With average CMO tenure still in the 23- to 24-month range, most CMOs tend to vote for short-term sales impact versus longer-term investments. Is this the right approach?
The easy answer is no. However, there are no easy answers in today's marketing eco-system. We have to evolve from the traditional mass-reach approach to a more focused and targeted approach. It is not an either-or. It is the imperative for today and into the future. A number of companies are setting the pace. Companies like United, Hilton, Caesars, Tesco, Bank of America, and Macy's are using the principles that were attributable to what was understood as direct marketing to build and execute their entire marketing programs. They're using data and analytics to gain insights into their customers and prospects, leveraging technologies to deliver content to the most relevant touchpoints, planning their media agnostically based on measured returns, and constantly testing and optimizing all of their programs. They're becoming the leaders in what I believe is the Cambrian Era of marketing—fulfilling the specific needs of their customers in a way that feels personal, relevant, and unique. They're using the discipline of direct marketing as the discipline of future marketing.
I do believe the next three to five years will be exciting and fun. Here are some guiding principles you can use to begin the journey:
1. Know your best customers and what drives them. The Pareto principle is well established in almost every business. In most businesses, about 80% of revenue and 100% of profit comes from about 20% of the customer base. Understanding these core customers and delivering on their needs should be priority number one.
United Airlines has developed a compelling approach to service its Global Services members. They have separate check-in desks, priority boarding, personalized meal selection, access to the United Club, etc. Every action says, “We understand you and will make your travel experience comfortable.”
2. Build innovation around best customers. Traditional marketing organizations have always created innovations to help attract new customers. Future marketers do it differently: They develop new products and services to grow the value of their existing customers and use these same innovations to attract new customers. Allstate is a company that used this approach to better compete against low-price providers like Geico and Progressive. It created the Good Hands guarantee. Rather than irking core customers by increasing their premiums after one minor fender bender, Allstate instated accident forgiveness. For every period you don't make a claim, Allstate lowers your deducible. For every six months of accident-free driving, they offer a Safe Driving Bonus, and if a new car gets totaled in the first three model years, they pay for a new car. The core customers are staying and this innovation actually drives new acquisitions.
3. Think focus. Traditional marketing casts a broad net to see who they catch. Future marketers find prospects with the highest propensity to use their product or service. So, instead of sinking millions into mass marketing programs, pursue cohorts through a targeted approach in a way that you can spend the right amount per customer. This allows marketers to offer customers something unique that will make them become part of their franchise. Peapod does this well. It takes its core customer data and use it to attract new customers that look like them.
4. Leverage the idea of scarcity. It's human nature. People want something more when it's harder to get. Make your product feel special for your core customers and only available to them for a limited time. American Express does a great job of this with its Platinum Card members by providing them access to exclusive events and experiences that are not available to others. This creates a value bond beyond the transactional relationship and increases spend levels.
5. Be personally relevant. Relevancy is an overused word, but if the message from the brand I have a relationship with doesn't treat me as a distinct person, that brand doesn't stay long on my consideration set. This is where many brands fail. Our inboxes have so many transactional offers that are generic that we now don't respond to 99.7% of them. I just took my family on a cruise. About two weeks after we returned, I had offers from six different cruise companies. But I've had enough of water. All I want to do now is to head out on a road trip.
Today's marketing has come full circle from where it started: a means to understand consumer needs to create differentiated products or services. Marketers can recapture those treasured connections by creating communication that allows their customers to interact, engage and respond on a true one-to-one basis.