Archive for April 30, 2010

The “Down Sell”

BNET posted an article by Jeremy Quittner suggesting a new strategy. We are very familiar with “up-selling”, the practice of giving a product premium characteristics and a premium price too. There are success stories of luxury brands that began as basics all over the place. Think of what Starbucks has done to the 50-cent cup of coffee.

In this economy, down-selling might be a worthy strategy. Consumers may be spending again, but they’re doing so cautiously and with a newfound resolve to stick to a budget. If they’re giving up the bells and whistles in favor of more basic and affordable products, why not follow suit and take the “premium” out of your premium products?

It’s a much trickier proposition — that’s why. If you go too cheap, you risk, among other dangers, killing your profit margins and diluting your brand.

Ways to try this strategy:

Give Customers Something New
You could simplify an existing product by stripping it down to its essentials, or invent a completely new, cheaper product. Go to your customers for clues about what they’re looking for and what they’re willing to buy. Just make sure you don’t give them exactly what they say they want — your customers probably only know what’s already out there. It’s your job to figure out what’s new.

Pitch the Value
Marketing non-premium products in a down economy requires a different kind of sales pitch. Convey that they are still getting a valuable product, but it’s priced for this economy, and the value may not last. That way, customers get the message that you are looking out for their needs and you are still providing the high quality that they associate with your brand.

Know Your Brand
Down-selling customers won’t work for every company, particularly if your image depends on an air of high-end exclusivity to differentiate it from your competitors. Don’t cannibalize your core (business, products, brands or customer base) to stimulate sales in the short term without thinking long term and strategically.

When you are ready to introduce your new ideas, direct mail is a great way to test messages, approaches and innovations.

Cameron and Jobs: Passionate Leadership

To celebrate the release of Avatar on DVD we thought we would share some similarities offered by BNET of two innovative leaders by looking at traits which produce incredible innovation. In fact, following any of these styles could get you fired — unless you have the inspiration genius that can deliver results like Cameron and Jobs.

Bonding Through Innovation

Cameron. “Breaking new ground is Cameron’s raison d’être — nothing interests this man unless it’s hard to do,” wrote Rebecca Keegan on “But innovation has also become a way of bonding his teams… For Cameron, a sense of exploration isn’t just personally enriching, it’s a crucial tool for motivating and uniting his teams.”

Jobs. When Jobs created the original Macintosh team in the early 1980s, he moved the group to a remote building on the Apple campus, raised a pirate flag above the roof, and moved in a popcorn machine to give his people a sense of esprit de corps. Today, management experts prefer you unite your groups rather than pitting them against each other, but they also love the idea of inspiring your team with sense of purpose they can rally around.

More Perfection, Please

Cameron. On Avatar, Keegan reports, “Hours were spent on the smallest details, like getting alien sap to drip precisely right…. It’s hard to argue with Cameron’s nitpicky style, however, when audiences thrill to immerse themselves in the richly detailed worlds he creates.”

Jobs: Just weeks before launch of the original iPhone, Apple decided to replace the plastic touch screen with optical-quality glass. The change not only delayed the introduction, but caused its screen vendor, Balda, to reconfigure parts of its assembly line “causing a material impact on financials,” according to AppleInsider. For Jobs, however, the aesthetic of the product would have been ruined by an inferior screen.

Inspiration Through Fear

Again, not a great trait you’d teach to MBAs, but both Cameron and Jobs are stern taskmasters who demand the most of their employees, and occasionally cross the line to get it.

Cameron. “Many Cameron alumni will share a story from their first film with him, a day they were sure they were going to be fired, almost hoped for it. But Cameron rarely fires people. ‘Firing is too merciful,’ he says. Instead he tests their endurance for long hours, hard tasks, and harsh criticism. Survivors tend to surprise themselves by turning in the best work of their careers, and signing on for Cameron’s next project.”

Jobs. “”It was probably the best work I ever did,” former Apple designer Corsdell Ratzlaff told Inside Steve’s Brain author Leander Kahaney. “It was exhilratating. It was exciting. Sometimes it was difficult, but he had the ability to pull the best out of people.”

If these men, both brilliant in their own fields, managed by the book, they may not have been nearly as successful. What they share is passion for the work, and their management styles both demand and instill passion in the people that work around them.

How can we help you be passionate and innovative with your marketing?

Courting a Wary Customer

Deliver Magazine and Sid Liebenson suggest three ways to build and maintain loyal relationships when customers are running scared.

Consumers are retrenching, economizing and just plain scared. But as the saying goes, the pessimist sees difficulty in every opportunity, and the optimist sees opportunity in every difficulty.

The recession presents the perfect opportunity to finetune your marketing efforts that will build loyalty among your current customers. It also is the prime time to go into acquisition mode and attract competitors’ customers to your brand. Here are three ways to do it:

1. Get personal. Consumers are vulnerable in a down market: They’re rethinking their brand loyalties as they look to economize and reconsider what they value in a brand. Keeping your customers means personalizing like you’ve never personalized before.

Mine your data to let your customers know you understand what’s important to them. For example, you might send a message on a catalog overwrap saying, “In the spring, you bought this lightweight cotton sweater from us. Now that it’s fall, here’s what people who bought that sweater are buying now.” This shows you care about what they are thinking, and there’s some logic to what you’re recommending — you’re not selling them something just to sell it.

Your marketing messages need to be not only personalized, but frequent. In a tough economy, it’s common for consumers to question where every penny is going. When they do that, suddenly every relationship is a little at risk. Their question becomes “Am I really getting value from this relationship, or is there something that will satisfy my needs equally for less money?”

2. Don’t make cuts. Now is not the time to scale back on marketing spending. If you don’t stay in touch with your best customers — while they’re continuously exposed to messages from your competitors — the idea of buying your brand gets further from their mind. This is especially true when consumers are already reconsidering their brand loyalty.

In several categories, competitors aren’t marketing as much or they’re reducing campaign frequency. With these cutbacks, some marketing media have become cheaper. If you’re not afraid to spend some money on acquisition, chances are your media costs can be a little more efficient.

3. Show them you care. Empathize with customers to demonstrate you understand what they’re going through during the recession. Health care, for example, is a big concern for consumers right now.

You should always practice good marketing — personalization, appropriate messages, frequent touches — but focus on these things even more to keep your customers with you through the economic crisis. When times are better, you’ll have your core group of customers — and then some.

Restore Old Customers

Traditional customer re-activation strategies are struggling to deliver the results they once did. This has been fueled by cuts in consumer spending and communication channel fragmentation, forcing marketers to develop new approaches. A Target Marketing Magazine article told the stories of innovators who are leveraging customer data, analytical tools and new customer touchpoints to fuel their remarketing efforts with results.

Start With the Basics
The fundamentals haven’t changed. Identify your best customers and the attributes that make them the best. Analyze purchasing trends, patronage patterns and channel usage to bring to light key behavioral characteristics of the ideal candidates.

Don’t stop there. Demographics, wealth data, transactional information and other lists can be used to enrich the customer profile. This information is useful for assessing the value of former customers who had sparse purchase histories but may still be good candidates.

Last, match these reactivation profiles against dormant customer files to “pop” the segments most likely to yield a profitable level of response.

Reactivation efforts most often are targeted at customers who have not shopped or purchased in the last year or more. While these consumers may not be shopping with you, they are buying from someone.

Reactivation Rundown
Reactivation is a form of advanced prospecting. By applying predictive scores to dormant customer files before fielding a reactivation campaign, resources can be prioritized toward those households with the greatest likelihood of response.

A good reactivation strategy encompasses not only who to target, but how to target them. In today’s multichannel environment, opportunities to blend print and other media into an optimum delivery stream for each target segment exist. For example, leads might be generated via a print mail campaign. These leads might then be further qualified using lead scoring and either prioritized for rapid follow-up by phone for high potentials or routed to another channel for less qualified candidates. This blended approach can yield more profitable results. Marketers should choose the medium that optimizes reach and response, according to budget.

Using Predictive Scoring
Aim for a clear view of your best customers. While it is possible, and sometimes economical, to target all former customers, it’s more often the case that a campaign targeting high-value or niche segments produces the best financial results. Focus on predicting who will respond, and then determine the best channel and sequence for the message.

Build New Relationships
A reactivation strategy should include follow-up plans and next steps as well as an outline with how often customers would like to receive communication. Lastly, update files with new customer information and data to ensure future campaigns maximize the information available.

Competitive Forces That Shape Strategy

This is classic business strategy information. We thought you would appreciate an opportunity to think about competition and profitability in different ways.

The Harvard Business Review is selling an article by Michael E. Porter that updates a 1979 article.

The article suggests that to sustain long-term profitability you must respond strategically to competition. Naturally you keep tabs on your established rivals. But as you scan the competitive arena, are you also looking beyond your direct competitors? Four additional competitive forces can hurt your prospective profits.

  • Savvy customers can force down prices by playing you and your rivals against one another.
  • Powerful suppliers may constrain your profits if they charge higher prices.
  • Aspiring entrants, armed with new capacity and hungry for market share, can ratchet up the investment required for you to stay in the game.
  • Substitute offerings can lure customers away.

Commercial aviation is one of the least profitable industries because all of the about forces are strong. Established rivals compete intensely on price. Customers are fickle, searching for the best deal regardless of carrier. Suppliers—plane and engine manufacturers, along with unionized labor forces—bargain away the lion’s share of airlines’ profits. New players enter the industry in a constant stream. And substitutes are readily available—such as train or car travel.

By analyzing these competitive forces, you can gain a picture of what’s influencing profitability in your industry. You identify game-changing trends early, so you can swiftly exploit them. And you spot ways to work around constraints on profitability—or even reshape the forces in your favor.

By understanding how these competitive forces influence profitability in your industry, you can develop a strategy for enhancing your company’s long-term profits. Porter suggests the following:

Position Your Company Where the Forces Are Weakest

Example: In the heavy-truck industry, many buyers operate large fleets and are highly motivated to drive down truck prices. Trucks are built to regulated standards and offer similar features, so price competition is stiff; unions exercise considerable supplier power; and buyers can use substitutes such as cargo delivery by rail. To create and sustain long-term profitability within this industry, heavy-truck maker Paccar chose to focus on one customer group where competitive forces are weakest: individual drivers who own their trucks and contract directly with suppliers. These operators have limited clout as buyers and are less price sensitive because of their emotional ties to and economic dependence on their own trucks. For these customers, Paccar has developed such features as luxurious sleeper cabins, plush leather seats, and sleek exterior styling. Buyers can select from thousands of options to put their personal signature on these built-to-order trucks. Customers pay Paccar a 10% premium, and the company has been profitable for 68 straight years and earned a long-run return on equity above 20%.

Exploit Changes in the Forces

Example: With the advent of the Internet and digital distribution of music, unauthorized downloading created an illegal but potent substitute for record companies’ services. The record companies tried to develop technical platforms for digital distribution themselves, but major labels didn’t want to sell their music through a platform owned by a rival. Into this vacuum stepped Apple, with its iTunes music store supporting its iPod music player. The birth of this powerful new gatekeeper has whittled down the number of major labels from six in 1997 to four today.

Reshape the Forces in Your Favor

Use tactics designed specifically to reduce the share of profits leaking to other players. For example:

  • To neutralize supplier power, standardize specifications for parts so your company can switch more easily among vendors.
  • To counter customer power, expand your services so it’s harder for customers to leave you for a rival.
  • To temper price wars initiated by established rivals, invest more heavily in products that differ significantly from competitors’ offerings.
  • To scare off new entrants, elevate the fixed costs of competing; for instance, by escalating your R&D expenditures.
  • To limit the threat of substitutes, offer better value through wider product accessibility.

Soft-drink producers did this by introducing vending machines and convenience store channels, which dramatically improved the availability of soft drinks relative to other beverages.

Does this information inspire you to craft a new marketing message? Can we help you reach some customers with Direct Mail?

Low Cost Publicity Tips & Ideas

You want to stretch every marketing dollar right now! If you decide to promote your own company here are ten ideas and tactics to get you started. We saved the traditional ideas for last.

  1. Network! Join groups and talk to people.
  2. Start a newsletter. This implies you have a mailing list. If you don’t have one, start building it now. In your newsletter always make sure you include news your readers can use – there has to be at least one part that will benefit your readers directly.
  3. Ask for testimonials. If your clients were happy with your services, ask them for a testimonial to use in your marketing. If they don’t time to write one, write it yourself and ask them to approve it.
  4. Blog about it. Don’t have a blog? Get one! If you’re worried about the cost, you can sign up for a free account. When writing your posts, take considerable time in writing your headline. Make sure to include keywords that relate to your post. Also comment on blogs. Compile a list of blogs that complement your service/company or relate to your industry and comment on their posts. Consider guest blogging too. Offering to guest blog on someone else’s blog can be a great way to introduce yourself or service to others. Research a list of relevant blogs and contact the blogger. You’ll be surprised at how easy it is and how willing bloggers will be to talk to you.
  5. Profile your company in Wikipedia. Check out how other companies profile themselves and use the same format. Be sure to include links to your site so people can find you.
  6. Leverage Social Media. Social networking sites can be a great way to market your company and/or offering. Make a list of groups on each that are relevant to you, join them, network with other members, and promote yourself and your service.
  7. Add E-Mail Signature Lines. You are probably constantly e-mailing vendors, clients, partners, etc. Did you know you can also market your new services in them? Add a signature line at the end of your e-mail with a link to your site that promotes your new service or blog post. It’s easy to do.
  8. Start a contest. Everybody loves to win something and a great way to market your company is to start a contest. Make one of your offerings for free as the prize. Use this opportunity to add to your mailing list.
  9. Write an interesting article. Writing articles is a great way to establish credibility. The key is to make sure your article ends up benefiting the person reading it. Send us an email and we will share lists of topic ideas. Your headline should draw people in make it short, funny, thought provoking and/or engaging. Sometimes writing it last works best. Your byline should give readers a brief background of yourself and your company. Be sure to include contact information.
  10. Submit a Press Release. Write a noteworthy press release in third person and submit it yourself at free online sites. You can also send the press release to the local media around your area. To gain a better chance of getting it picked up, include a cover letter that showcases how the information in your release benefits your local community. It may prove worthwhile to pay for one PR service if you have truly newsworthy information.

Do You Need All That Data?

Just in case we get lost in over-analyzing everything, including customer data, Ron Ashkenas suggested that we step back and think about what is really useful in a post for the Harvard Business Review.

Organizations love data: numbers, reports, trend lines, graphs, spreadsheets — the more the better. And, as a result, many organizations have a substantial internal factory that churns out data on a regular basis, as well as external resources on call that produce data for onetime studies and questions. But what’s the evidence that all of this data is worth the cost and indeed leads to better business decisions? Is some amount of data collection unnecessary, perhaps even damaging by creating complexity and confusion?

For many years the CEO of a premier consumer products company insisted on a monthly business review process that was highly data-intensive. At its core was a “book” that contained cost and sales data for every product sold in the company, broken down by business unit, channel, geography, and consumer segment. This book (available electronically but always printed by the executive team) was several inches thick. It was produced each month by many hundreds of finance, product management, and information technology people who spent thousands of hours collecting, assessing, analyzing, reconciling, and sorting the data.

Since this was the CEO’s way of running the business, no one really questioned whether all of this activity really was worth it, although many complained about the time required. When a new CEO came on the scene a he decided that the business would do just fine with quarterly reviews and exception-only reporting. Suddenly the entire data-production industry of this company was reduced substantially — and the company didn’t miss a beat.

Obviously different CEO’s have different needs for data. Some want their decisions to be based on as much hard data as possible; others want just enough data to either reinforce or challenge their intuition; and still others may prefer a combination of hard, analytical data with anecdotal and qualitative input. These preferences at the top of the company often influence the “data culture” that is created. In all cases, though, managers would do well to ask themselves four questions about their data process as a way of improving the return on what is often a substantial (but not always visible) investment:

  1. Are we asking the right questions? Many companies collect the data that is available, rather than the data that is needed to help make decisions and run the business. So the starting point for simplifying and improving data processes is to be clear about a limited number of key questions that you want the data to help you answer — and then focus the data collection around those rather than everything else that is possible.
  2. Does our data tell a story? Most data comes in fragments. To be useful, these individual bits of information need to be put together into a coherent explanation of the business situation, which means integrating data into a “story”. While “enterprise data systems” have been useful in driving consistent data definitions so that things can be added and compared, they don’t automatically create the story. Instead, managers should consider in advance what data is needed to convey the story that they will be required to tell.
  3. Does our data help us look ahead rather than behind? Most of the data that is collected in companies tells managers how they performed in a past period — but is less effective in predicting future performance. Therefore it is important to ask what data, at what time frames, will help us get ahead of the curve instead of just reacting.
  4. Do we have a good mix of quantitative and qualitative data? Neither quantitative nor qualitative data tells the whole story. For example, to make good product and pricing decisions, we need to know not only what is being sold to whom, but also why some products are selling more than others.

Clearly business data and its analysis are critical for organizations to succeed — which is underscored by the fact that companies like IBM are investing billions of dollars in acquisitions in the business intelligence and analytics space. But even the best automated tools won’t be effective unless managers are clear about the questions raised above.

What’s your assessment of data in your company? Is there anything we can do to help you make sense of what you have?

Scrubbing Data

Deliver Magazine reported that despite the ROI potential from data hygiene, many companies still haven’t cleaned up their lists.

Data management is still a hot topic for many companies these days. Marketers too often focus on how best to use the data rather than spending enough time wondering whether the data itself is clean. Good data hygiene can have a significant impact on your company’s ROI, minimizing waste and building trust with consumers by contacting them at the correct address.

Rod Ford, founder and chief executive officer of CognitiveDATA, a data-quality management company discusses a few of the misconceptions about data hygiene with Deliver.

Deliver: Why aren’t companies today putting enough resources into data quality?

Ford: Data hygiene is typically grossly under-budgeted. Many direct marketers spend less than 1 percent of their overall direct marketing budget on data quality.

Deliver: Why do companies say that they value data quality but not fund it properly?

Ford: Many organizations live under the misconception that their data is already highly accurate. This is because they are passing this data through vintage tools a few times a year and not finding incorrect addresses or other problems with the data.

Deliver: What should marketers be doing to improve data quality?

Ford: Several issues are forcing marketers to be more efficient in their mailings. The green movement and the push toward less waste in the mail stream is one. Then there’s the fact that response rates have declined because, during the recession, the consumer has less discretionary income than in the past. Finally, direct mailers are facing rising costs in almost every area of mail production. These issues already were forcing marketers to take a closer look at data hygiene before the recession hit. What the macroeconomic environment has done is accelerate the adoption of data-hygiene technology.

Deliver: Do you think that marketers will go back to ignoring data hygiene once the economy recovers?

Ford: Right now, direct mailers are learning important lessons about the impact of more accurate data. When you reduce the number of undeliverable pieces of mail in a campaign, this increases the overall response rate, for example. These lessons will transcend whatever is happening in the economy.

Another Reason for List Hygiene

Deliver Magazine told of a valid reason to regularly scrub mailing lists. Sure, mailings sent to the deceased get responses — but they’re usually from distressed family members commenting on how disrespectful and downright rude the company is for sending it in the first place.

“Not only is this a waste of a company’s time and money, it also can be extremely damaging to a brand, resulting in customers lost rather than gained,” says Kirk Schuh, vice president of marketing delivery services at ARGI, a database marketing company. “Regularly cleansing files must become part of a marketer’s regular list hygiene routine”, Schuh says. “Deceased suppression is a delicate issue,” he adds. “No matter how vigilant marketers are, their lists always can benefit from routine maintenance and enhancement.”

Customer Data Best Practices

The Aberdeen Group published a report in December, 2009 that explored customer database practices to reveal how organizations are capturing, storing, analyzing and acting on customer data.

The Best Performing Organizations:

  • Currently achieve 163% mean class Return on Marketing Investment (ROMI); 9% average year over year growth in ROMI
  • 51% year over year mean class growth in revenue

The best performing firms shared several common characteristics, including:

  • 46% access a full view of customers across all departments and functions in the organization (versus 14% among laggards)
  • 52% improve or enhance customer data through regular marketing and IT collaboration (versus 21% of laggards)

The study recommended that companies wishing to become more like a best performing organization:

  • Develop a formal data hygiene (cleansing, enrichment, de-duplication and regular updates) strategy. A lack of formal data hygiene can prevent organizations from using customer data in more personalized engagement.
  • Enhance existing records with periodic augmentation and enrichment. Only 32% of all respondents actively augmented customer data for accuracy. But, 48% plan to incorporate database enrichment services in their 2010 budget for improving the customer database.

What can you do to maintain and enrich your customer information?

  1. Even if you don’t want to send mail to your customers right now, process your list through the National Change of Address database. This is a simple service that will provide move information for individuals, families, and businesses. Learn more about your current and previous customers by obtaining their current addresses. Our reports will identify undeliverable and incomplete addresses. You will know that some of your valuable customers have had changes in their lives and organizations.
  2. Think about enriching your customer list with more information. For consumers we can add income, demographic and home characteristic information to your existing data file. For businesses we can add “firmographic” data including number of years in business, number of employees, industry classification and estimated annual revenue.

If you are not sure what information would be best for your business, we are great at asking the right questions to get you started.