Spring into action. 6 to-do’s to build direct marketing effectiveness

Six must dos for direct marketers happy easterIt’s Springtime. If year-end was in March, it’s the start of a new fiscal year with all new targets. Oh, and Happy Easter too. The focus of this post is on growth. So here are six tactics to bump your direct marketing efforts over the remainder of the year. Grow away.

1. Assess acquisitions for long term value

Growth needs acquisition. But acquisition is notoriously expensive. I can’t comment on whether you got to get customers on value or on price or on emotion. That’s your business. But I’ve known campaigns get nixed because acquisition is based on short-term revenues. That is understating the impact of the campaign. Measure acquisition returns based on the long-term valuation (up to 3 years) of the customers who register or purchase off the promo you ran.

Tip: Here’s a worksheet to help you calculate long term value

2. Wean customers off discounts

The problem with having promotions all the time is that customers start expecting the discount every other week/month. Use discounts selectively and strategically. After a 3 year dormancy REI got me back in the fold on a 20% off deal (which led to this timely purchase🙂 .

This varies from business to business but marketing around needs is usually more powerful than discounts. In one example I worked with a retailer who scrapped their annual discount catalog for division-specific promotional catalogs. The circulation was lower to keep the production costs flat. The sales were only about 5% higher but margins were over 20% higher year over year.

Tip: Here’s a review of tactics for segmenting customers on wants, needs, messaging strategies and more.

3. Harvest the social networks

You may have a great number of followers on social media but it is critical to map them against your active customer base. Without this mapping you cannot be sure if and how your allow access to user profile for marketinginvestment in social media is helping the business.The key to this is a facebook app. This grants you access to your followers’ email address and interests. If you are not sure how to integrate social into your direct marketing strategy, drop me a note at my_first_name@infernotions.com or connect to me via LinkedIn’s OpenLink network.

4. Hold out a test sample

I’m as guilty of this as anyone else. Sometimes some idea or promotion is so dear to the heart, one invests more time or energy into this than it’s worth. Our product-suite has a couple of goose eggs in there :-(. But when marketing budgets are tight, management’s appetite for risk is low. The least we can do is be analytical about our campaigns. For direct marketing, a “hold out” sample is critical. This is a small group of customers, no more than 2-5% of your customer base, that is kept back from mailings or promotions. The returns on your campaigns are assessed relative to the performance of this hold out. So if your target population of 10,000 customers produced $100k and your holdout of 100 produced $1K in revenues over the same period, the campaign was a dud. Time to get back to the drawing board.

5. Measure incremental impact of campaigns

Campaign returns cannot be measured purely by revenues on the launched promotions. The true incremental impact must be measured relative to revenues that would have accrued had there been no promotion. You can do this comparing campaign performance relative to the “hold out” specified in #4 above, or by comparing the results against the Do-not-contact list.

Tip: Here’s a post on how to calculate the incremental impact of direct marketing campaigns

6. Test. Test. Test. And then Test some more.

I learned this fairly early in my career. The Pareto principle is nice (i.e. 30% of the customerswhy pareto makes for bad CRM delivering 70% of revenues), but it cannot be the  underpinning of the CRM strategy. It’s like a snake eating its tail and a losing strategy. You got to try out new tactics to rejuvenate your customer base and keep them engaged. There’s no such thing as a bad customer. That example from REI is relevant. I had not shopped there in over 3 years but got this big ticket item on their 20% off promotion and now am a fan of their private-label gear.

BTW the tactics above are straightforward but you will need active participation from IT and database analysts. Here’s another option. Look up Polytab marketing intelligence automation. It’s a canned solution that’s way faster and 10x cheaper to deploy than building it up in-house. If that is interesting, register for a free, no obligations info-session using the button below.

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Best wishes for Spring to you.

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