What a waste: some mailers just don’t get it when it comes to using consumer data to hit the right targets
Written by Andy Wood
We’ve worked with a lot of mail order businesses in the last 14 years and the aim has pretty much been the same in every case: use consumer data to hone the targeting, cut waste and boost return on investment (ROI). The idea is to get catalogues and other mailings to the right people and avoid spewing out huge numbers of expensively produced items that are irrelevant to the people getting them through their mail slots.
This has increased ROI and reduced wastage significantly. It is a lesson that has been widely accepted by exemplars of best practice: precise targeting not only eliminates wide-of-the-mark mailers that eat into mail order firms’ margins but it prevents them from annoying customers with carpet-bombing campaigns that only serve to get the senders lumped in with ‘junk mailers’ – rather than being seen as valued sellers that address customer needs with worthwhile offers.
So why, oh why are some businesses still mailing everyone with a pulse every two weeks like clockwork!? I find it staggering. The answer tends to be the same: that’s what we’ve always done and it works. But does it really work all that well? The overall ROI will no doubt be positive, but there will be some home truths in there – i.e. you are simply throwing away investment in some areas and costing yourself a better return.
You need to break down what the ROI is according to segment or customer journey. If you are not selecting and planning your communications in this way, this is your first mistake. Different groups of people respond in different ways, have different spend patterns and should have different objectives. If this isn’t the case with your business, then you are definitely missing a trick.
You’ll even find that certain customer segments will have a negative ROI. This may be acceptable for specific campaigns, but it needs to be done for strategic reasons – for instance, mailing no-spenders will likely generate a negative ROI but, over a year, if it brings back a positive one (as you have reactivated certain customers), then it’s a worthwhile investment. However, mailing every no spender – even if they haven’t spent in three years – especially every two weeks or each month is, to be honest, insane.
Today, you just can’t just mail indiscriminately based on the assumption that what once worked will always work. It is absolutely critical to understand that the consumer landscape is in a constant state of flux in the digital age and, while well-targeted mail can be extremely effective and dove-tail perfectly with concurrent online activities, you really need to be testing continually – seeing what works and doesn’t in terms of formats, offers and personalisation.
Modern consumers still want mail in their communications mix, but their demands and expectations are changing constantly as they receive information through a range of media. So mail has to be used more astutely than ever to really pay off.
Some companies get the fact that they are wasting a big part of their mailing budget but too many try to remedy the situation by looking for a shortcut that doesn’t involve investment in data-based analysis – and in the process make a whopper of a bad decision. If companies do try to take the easy route from mailing everyone to being more selective, the landmine they tend to step on is pulling back on the very best customers rather than the very worst. Big mistake.
The logic seems impeccable: if they’re spending with us regularly, we don’t need to talk to them. Wrong! Invariably , it should be the other way around: you cut from the worst performing first and continue to build on the most loyal, working to not just retain them but boost their spending, increase their purchasing frequency and move them to higher margin products and services. You neglect your best customers at your peril. Make them feel like you don’t value their business – in favour of those that spend less and are more likely to turn to competitors – and they will make you regret that decision.
So, in summary, the lessons are:
- target people sensibly, using customer data to inform your marketing
- use segmentation and customer journeys to do so (come to one of our free seminars to find out what that really means)
- always look to forecast by segment for each campaign to justify your investment
- don’t take short cuts based on untested assumptions rather than facts
- test and adjust to improve results and then continually repeat the process
Don’t be afraid of this approach. It is data driven marketing and it has proven to work for just about any business, so embrace it and win plaudits for really cutting waste and improving ROI. There is no point in sticking with what has been done in the past just to play it safe – especially if it simply perpetuates inefficiency and eats away at the company’s profits.