Spotlight conversation: Measuring every response

Peppers & Rogers Group’ Rogers says there’s no such thing as no response

Q: What challenges do you think face direct marketers today?

A: Executives are really wrestling with key issues in CRM, trust, social net­working and innovation. I think a great marketing executive needs to balance those pieces and aspects to a business all at once. My goal is to ask: “What do empowered customers, network employees, innovation, culture and trust mean to the future of a business?” I think that that’s going to be the chal­lenge going forward — holding all of this information in our heads. Consumer trust and experience can have tremen­dous influence on companies’ success. Marketing executives cannot rely on experience from even 10 years ago to guide their marketing strategy for today.

Q: Why, in this day and age, is a cus­tomer focus so important?

A: One important insight is that customers are scarce, and this point is antithetical to the way we tend to think of customers. In the US especially, we always thought of them as limitless, but the fact is that even if there are a lot, there is still a finite number. If I come up with a great idea and show a venture capital company or bank how this great idea can make money, I could probably get some financing. But I can’t borrow paying customers. For most companies right now, what passes as acquiring new customers is really trading customers with their competitors. So what we’re talking about is every time you get a new customer you should have two: one you shouldn’t lose and one you’ve just acquired.

Q: What advice do have for others in the marketing industry?

A: Make sure that the way you make money is supportive of what’s best for customer building. That may sound obvious, but right now there are a lot of companies that are using up customers to make money from a few customers and that’s expensive. Don’t kill more customer equity than you are building in revenue.

Q: How do marketers lose customer equity while building revenue?

A: Direct marketers cost themselves a lot in customer value doing what they learned to do in the 1900s. For example, a 1% response rate, on a $1 million campaign, sent to 1 million cus­tomers who spend an average of $125, would yield a net profit of $250,000. In the 1900s, that was great. But by now, marketers should understand that there’s never been anything other than 100% response rate — the other 99% responds, but we just don’t know what they’re saying. If you do your home­work, you might find that a number of those people liked the message but just didn’t respond for any number of reasons. If a group of customers who had heard of the products picks up the piece and says, “I’ve heard about this, let me check it out,” but then throws it away because it wasn’t particularly relevant, they may never open anything from us again. We can lose all future business from these customers because the one thing they saw was not relevant.

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