Keeping Up With the Web’s New Rules

As marketing campaigns increasingly go online, they will build on proven database marketing methods while adopting new Web-based strategies.

Though the Web has been around as a commercial marketplace since the mid-1990s, it is still very much a new frontier for companies trying to figure out how to market online offerings. One of the pioneers is financial services, with offerings ranging from online banking to online trading to credit cards with Web-only embedded security and privacy features.

Given their experience, you might think financial services companies have evolved the marketing of online products into a science that others could learn. What this experience does suggest is that the science is still a work in progress. We seem to be in a transition phase of channel optimization. There is a mix between the new and the traditional – in techniques, in data sources and in terms of the customers the industry is trying to attract.

We are moving rapidly toward a time when a pure Internet marketing channel is a viable option for industrial-strength marketing – but that time is not here. (Currently, 15 percent to 30 percent of campaigns are conducted online.) For now, most campaigns will build on proven best database marketing practices while taking advantage of new Web opportunities where those exist.

What’s an online offer? This is probably the most basic question marketers need to answer in the new marketplace. When they say “online offer,” do they mean an online product or a product that is merely offered online? People who shop online are typically better candidates for products they can use online. That’s useful modeling information.

But marketers need to be careful. An association between channel preference and product preference suggests that the best way to reach hot prospects is to use lists of online shoppers and lists of people who have opted in to being prospected via e-mail. It also suggests that the online channel of choice with which to reach these people is e-mail. But the best marketers of online products do not market those products online nearly as much as they market them through traditional channels – using traditional data and data mining techniques.

Whether it is an Internet bank, an online broker or the Web version of a credit card, marketing campaigns roll out in much the way as they always have. The sources of these records will be the usual providers, including the major credit bureaus and compiled data.

The selection criteria would be similar – say, homeowners with good credit. Even the vehicle used to make the offer will be the same – direct mail via the U.S. Postal Service and telemarketing.

So why not rely on e-mail prospect databases or e-mail as a primary delivery, lower-cost vehicle?As yet, e-mail prospect databases – where they even exist – are too small and unreliable to support anything near the kind of high-volume campaigns most institutions require. That’s not to say marketers do not take advantage of that information where they can. They will add in names from their own customer database, as appropriate, or names from brokered lists of Web shoppers.

In some rare cases, they also can run statistical models against this add-in data in order to pull the most promising records from mainstream sources. As for the choice of delivery vehicle, marketers have found that the tried-and-true U.S. mail and telemarketing still work best, at least when making a good first impression. Follow-up e-mail contacts to respondents who provide e-mail addresses is an obvious next move.

Exploiting the power of the Web. Handling first-wave responses is where the Web can supply some of the greatest traction to any campaign, regardless of whether the objective is to sell an online product. Most effective campaigns give recipients several channels with which to respond, including mail, telephone and the Web. Among other advantages, this allows marketers to model respondents by channel preference, giving them an idea of which ones are more susceptible to hi-tech messages and channels in future contacts.

Another advantage of the Web specifically is an ability to present a personalized environment in which to greet the new potential customer. This can be accomplished through a PIN the user types in from the mailing. The system recognizes the PIN, pulls relevant data off the database and builds the personalized Web page. The user is spared the necessity of entering a lot of personal data. This saves time but also makes the interaction seem less intrusive.

The Web also can provide online help when the respondent gets stuck – something that’s much harder to do on the phone. It also allows the marketer to present content that is more geared to this specific respondent (say, for example, if the respondent supports a charitable organization and the marketer has agreed to make a donation on behalf of the new customer).

Finally, pulling respondents to the Web site means pulling them into the store. All the products are there to see, questions can get answered and purchases can be made.

Caught in the cross currents. Most online marketers are caught between two conflicting trends. On one side, there’s a greater mixing of online and traditional offerings in all campaigns. On the other, marketers are continuing to refine their tools and data sets in order to target the online customer specifically.

To some extent this conflict reflects the differences among Web users themselves – i.e., the difference between those who self-identify as Web users and those for whom the Web is just another media, like newspapers or television. But it also reflects the transitions of learning to adapt to a new media. For as long as these transitions are under way, marketers will face a harder time staying tuned in to their customers.

Steve G. Scruton is senior vice president of sales and marketing at MITI Prospecting Solutions, Andover, MA.

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