ADOTAS – After years of dreaming and taking incremental steps, the technology and infrastructure are finally in place to help marketers treat their customers as individuals, just as Marshall Field did in his department store 125 years ago.
Without the modern conveniences marketers use today (email, electronic media, and telemarketing), Field simply told his sales force to “give the lady what she wants.” History has shown this to be a highly effective sales strategy, though it can only be implemented when marketers have some idea of what customers’ needs and preferences are.
Understanding what the lady wanted was relatively easy when buyers and sellers dealt directly with one another, often on a first-name basis. But 20th century mass production and mass marketing gradually eroded direct, 1:1 marketing. Products grew increasingly undifferentiated and customers became “eyeballs.” For much of the last half of the 20th century the best efforts of direct marketers failed to re-capture the 1:1 relationship merchants like Marshall Field had thrived on.
The evolution of marketing
The first direct marketers had no mechanism for measuring customer attitudes. Their attempts to re-connect with customers often did not go well. The post office helped direct marketers flood mailboxes with massively inefficient “spray and pray” messages. However antiquated, “spray and pray” techniques survive today, though rising mailing costs will eventually end the practice.
Improvements in computer technology allowed marketers to address messages to the prospects by name. Customers were also divided into groups based on characteristics they shared (fishermen, camping enthusiasts, etc.) and messages were targeted to the similarities members of those segments shared. Marketing moved forward in small steps. But true 1:1 marketing remained elusive – beyond a marketer’s grasp.
New software, new algorithms, new machines
The first, important advances of the 21st century were the algorithms that could predict which products or services a customer was likely to buy — either selling them something they had already bought (up-sell) or taking their market basket into new territory, and selling them items never before purchased (cross-sell).
New Variable Data Publishing (VDP) technology let marketing communication pieces be addressed to individual customers and include their personal preferences. New email techniques made it possible to incorporate the variable information that customer analytics generated (for example, individualized offers).
Some call this new process individualized marketing, primarily because it goes beyond simple personalization and segmentation. It is unique in its ability to analyze the needs of each customer in a database. Customer analytics engines can now produce files with one record per customer that includes their preferences. The customer record that is sent to a print shop, ESP, or telemarketer will include individualized product offers for each customer. Printers, telemarketers, ESP’s can now send marketing offers that are unique to each customer. The ability to “give the lady what she wants” has returned, electronically.
A marketing profile for every customer!
Individualized marketing generates handsome returns. There will still be marketers who shy from innovation and will simply send the same message to everyone. The good news for those who aren’t content with yesterday’s solutions is that new technology shoulders much of the work that goes with individualization. The added value of individualized marketing is impressive; in effect it creates a marketing profile for each customer, and then makes different offers based on what’s known about the customer’s past behavior.
The one prerequisite for 1:1 marketing is accurate customer analytics showing which products or services a customer is likely to buy. It’s the product information that makes the communication relevant, and it’s the relevance that breaks through the advertising clutter and captures the customer’s attention.
The light at the end of the individual marketing tunnel is vastly improved response rates and more revenue per message delivered.
The state of the individualized art
Today, print shops are embracing VDP as the way to escape commoditization, but the technology is still new, which often leads to differences in prices. To print and mail a 5” x 8” postcard with more than ten slots for variable information, marketers today should expect to pay about $0.50 per piece, including postage. Unlike traditional offset printing, there are only small discounts for higher volume.
Email is cheaper, closer to $0.01 per piece. However, not all email service providers support the individualization needed for true 1:1. Just as with the VDP’s, interfacing your variable information to suppliers’ import specification can involve many steps. A practical, efficient and effective marketing program needs to be automated to turn the transaction data into actionable metrics. You also need to automate formatting for the delivery platform you’ll be using.
Where we stand
Marketing is at something of a cross-road. Most of the revenue in most companies comes from their existing customers. The most effective and efficient way to reach those customers is to abandon half-measures like “spray and pray” and re-discover 1:1 marketing. Unfortunately these customers, whether B2B or B2C, are flooded with so much marketing communications they have neither the time nor patience for any but the most relevant messages. As mailing costs rise and response rates decline companies must increase their efforts to produce great messages and relevant collateral to break through the clutter and re-establish 1:1 relationships with their customers. Giving the lady what she wants is more complicated than it once was. But the rewards are infinitely greater.