Archive for the ‘Segmentation’ Category

Discipline and touch control

Wednesday, April 29th, 2009

A point raised at the IDM Emerging Digital Trends seminar the week before last, a recent conversation and an article in the April issue of Database Marketing magazine all highlighted an issue I thought worth recounting here.

Presenting on the use of web analytics, David Walmsley, Head of Web Selling at John Lewis talked about customer segmentation and tailoring communications based on behaviour and purchase history. He made the observation that by creating such segments, messaging content and frequency could be tailored appropriately to recipients, increasing relevance and effectiveness.

Separately, I was speaking to the former head of database marketing at a US Mid-Western publishing company. He recounted the tale of having finally made inroads with his marketing campaigns colleagues in persuading them to adopt a segmentation strategy. This was aimed at helping to reduce the over-touch problems they were facing, where some individuals were receiving as many as one email per day, such was their volume of activity. This of course lead to drastically falling response rates, as the blizzard of email simply went ignored. (Interestingly, even opt-out rates weren’t that high, such was the level of disengagement among recipients). “We need to improve targeting and reduce touch volume”, said my exasperated contact.
“No problem,” came the response, “we’ll just stop emailing the bottom, least valuable segment – that should cut volume by 10%!” The observation that this would make no difference to the top segment (those receiving an email a day), went unheeded…

In his piece in Database Marketing, Warwick Beresford-Jones wrote about “optimisation”, making the point that a given individual can be contacted only so many times before they become unresponsive, and that those touches should be used wisely to achieve best value. “Without optimisation, your best customers are generally over-contacted and you second and third best customers are under-contacted,” states Beresford-Jones. “There is a point in the year when you actually start to annoy your best customers and this impacts directly on campaign profitability.”

Back at the IDM seminar, David Walmsley highlighted this temptation of sending “one extra” email to the top segment when the weekly sales numbers aren’t quite reaching target. I asked him how this temptation should be avoided. “It takes discipline,” suggested Walmsley, adding that taking a short term approach ultimately leads to lost value within your customer base. How should this discipline be engendered though, and in particular how can pressure from senior management in tough trading conditions be resisted?

The answer, as Beresford-Jones amply illustrates in his article, is to have the numbers to hand to support your case. This means being able to demonstrate the return from a given piece of activity and ideally the campaign cost savings made by reducing segment sizes whilst maintaining targeting focus. Point to falling response rates (and opt-out rates where appropriate) as evidence that contact fatigue has set in.

The ease of executing online communications is such that over-touching, even with the best of intentions, is all too easy. Even the pushiest retail sales person would be unlikely to follow you around the store asking every few steps whether you wanted to buy something (certainly not at John Lewis!). Yet that’s what our customers’ inboxes can feel like at times. A little discipline never did anyone any harm and this is no exception.