As direct marketers search for new technologies and techniques to develop more cost-effective and efficient direct marketing solutions, the use of analytics based on consumer behavior is playing an increasingly important role and contributing to a fundamental shift in the way direct marketing campaigns are planned and measured.
Data Drives Options for Marketers
For some time now, the process of compiling and analyzing consumer data has not really changed dramatically. What has changed is the astounding amount of readily available information that can be collected and segmented for use in a campaign. The amount of data available has increased five-fold during the last five years, and that has created a wide variety of options for marketers to more finely tune their campaigns by utilizing new targeting options. Campaigns that were formerly driven by sheer volume of pieces are now driven by the fact that creative and effective use of consumer data can deliver significant ROI increases.
Access to analytics tools has also increased. A January 2007 white paper issued by The Winterberry Group titled, "What's In the Mailbox? The Impact of One-to-One Marketing on Consumer Response," found that "analytics tools and customer relationship management (CRM) databases, once the province of statisticians and a small corps of large, technology-focused companies, have become accessible to marketers of virtually all sizes and industries." The Winterberry Group also noted the three key factors that influence consumer buying decisions as a response to direct mail: timing, personalization and relevance. The study concludes that to be successful, marketers should employ any available tools that will drive targeting advantages in those three areas, thus, helping to "deliver an offer at the point of maximum consumer interest."
Keys to Success
With these tools at their disposal, how do marketers develop lists of the most likely respondents to a given campaign? How do they identify targets and create messaging that will be most effective in driving consumers to take action?
A successful direct marketing (DM) campaign today is dependent on the effective development and use of constantly changing analytics technology to drill deeper and develop ever-more finite and sophisticated segments determined by demographic, geographic, psychographic and behavioral variables.
For example, with advanced data mining software, a marketer can now locate working moms who might respond favorably to a direct marketing piece about time management products. Through analysis of past consumer behavior and campaign performance, direct marketers can also evaluate purchasing patterns that provide essential business indicators and help pinpoint a potential target's receptiveness to a particular campaign.
Analytics has also opened the door for the development of more DM campaigns that are time-sensitive, including the increasing use of trigger mailings as effective tools for achieving desired results. Trigger mailings are set against consumer "life events" or milestones and revolve around what we call a "3D" marketing solutions model data, decisions and delivery. The use of highly targeted behavioral data, extreme analytical decision models and just-in-time delivery has made it easier to create more personalized marketing pieces triggered by events in consumers' lives, delivering timely messaging that generates higher response rates.
A critical factor in the success of trigger mailings, as with any highly personalized DM piece, is targeting in-home delivery dates. For example, an offer related to moving one's household and targeted to new homeowners would be based on data mined from moving company websites, mortgage applications, realtor data, etc. The key is to get this type of piece into the moving family's hands at precisely the right time to trigger action on the offer.
In addition to getting the timing right, marketers should also make use of analytics strategically from a demographic and behavioral standpoint. Too often, they rely on analytics simply to find clones of current customers. While this can be a useful technique, the analytics technology available today can do much more. With a wide array of consumer modeling, geographic mapping and segmentation and other tools at their disposal, marketers today should view analytics as an opportunity to test new segments and expand their client bases in new directions.
As triggers and segmentation strategies become more sophisticated, so, too, do the channels through which messages are delivered to consumers. Through consumer activity, marketers can determine preferences for offline or online marketing and use the appropriate channels or a combination of them for promotion. A more recent trend is to use email as a channel to complement traditional mail, with the email schedule to arrive shortly after the direct mail to reinforce the message and prompt action. In any case, the key to successful cross-media marketing is true integration. A digital asset management system is critical to ensure that offers, messages, graphics and other "look and feel" elements are consistent across all channels.
Despite its performance and promise, analytics-based mailing is not without its roadblocks. Where the sheer volume of a traditional campaign formerly resulted in optimal postage discounts from the USPS, today's DM campaigns require more creative, technology-driven approaches to achieving postal cost savings. Trigger mailings also present production challenges to direct marketers because smaller, more segmented runs can prove more costly and difficult to manage than the traditional large-volume mailing.
But there are solutions to the challenges posed by increased mailing complexities and costs. Some direct marketing services providers, for example, are working closely with the USPS to provide marketers the benefits of the latest "intelligent mail" technologies. These automated or web-based systems help the USPS process mail more efficiently and can result in significant cost savings. Other such cost-savings initiatives include Postal One! (a USPS electronic interface system), Seamless Acceptance (an electronic postage statement system for business mail customers) and Intelligent Barcoding (which enables commercial customers to track the flow of their mail at any given point within the system).
Even with advances in analytics becoming mainstream, measurement continues to be one of the more elusive factors, not only in DM but in overall marketing campaigns today. According to the newsletter Marketing Today:
"A recent study by the CMO Council that found that less than 20% of top technology marketers surveyed had developed 'meaningful, comprehensive measures and metrics for their marketing organizations.' The last major study on marketing ROI found that 68% of marketers were unable to determine the ROI of their initiatives."
As more direct marketers continue to work with more complex data and campaigns become increasingly multi-channel, demand for metrics will continue to rise. In fact, marketing accountability ranks among the top two concerns of senior marketing executives, according to a survey of more than 100 senior marketers conducted by the Association of National Advertisers (ANA). The study's respondents indicated "integrated marketing communications" and "marketing accountability" as the top two issues that directly impact their marketing decisions and plans.
The good news is that more precise and meaningful measurement will become easier with the increased use of analytics. As the latest tools become better understood and implemented more, marketers will increasingly have the ability to cut through the clutter to deliver actionable messages of value to consumers. In turn, this will enable clients to meet their profit objectives by achieving the response rates necessary to maximize their investments.
Effectively using analytics in DM campaigns will remain vital for direct marketers hoping to deliver optimal ROI. And as more personalized, well-timed messages become the norm, there is potential for a dramatic leap in campaign effectiveness, which will fuel continued growth in all forms of direct marketing.
Chris Ryan is COO of Direct Group (www.directgroup.net), a fully integrated direct marketing solutions. He oversees the company's 800-plus employee production facility in