One company in the FTSE 100 boasts a marketing budget of £30 million for acquisition and just £1 million for retention. While that may reflect a business strategy based on grabbing market share, it also boasts a lot of confidence that the right kind of customers will be recruited, ie, those who will not churn in year one, will be profitable and have a positive lifetime value.
The only way to understand if that is likely is to look at any available data on prospects before targeting them. Insight and analytics teams, whether in-house or external, have grown in number in recent years precisely because of this requirement. Aligning acquisition with corporate goals for risk, churn and revenues makes a lot of sense.
So why is it that when this critical knowledge gets passed to the marketing department, the outcome is so often still a one-size-fits-all campaign? A gap is to be found between the data mining process and the marketing execution which is preventing many companies from accelerating the time to value of their new customer base.
This is a particular bugbear for Graham Sharp, newly-appointed strategic planning director at Information Arts. “There is a disconnect which anybody with the intelligence to see it, should. Yet few appear to,” he says.
The most obvious cause, he points out, is external agencies. “Their product is creative. When they get down to talking about data, it is in terms of who to send something to, not what will the data reveal,” says Sharp.
Not that the data industry escapes blame. The majority of external advisors in this sector that a client might turn to have a vested interest in selling data for campaigns. That immediately creates a conflict between
the drive towards segmented, optimised activity and their own revenue streams. Another problem identified by Sharp is the way those insight teams tend to debrief their findings. “They could have two killer insights, but they may be lost in 50 Powerpoing slides.
Some of my best buddies are analysts and they have original, useful ideas. But they think in terms of large amounts of detail. Clients are looking for something to get hold of,” he says.
This can be summed up as the “eight out of ten cats” finding – a single, simple insight that can drive clear, consistent and campaignable marketing outputs. Information Arts found one of those when working on Shell’s fuel payment card CRM programme. “One analyst said that if a customer spends 5 per cent less on fuel per month, they are likely to have lapsed within eight months,” he recalls.
From such a finding, the company was able to put in place event triggers and marketing communications to identify and react to a spending drop early on. That is what true data-driven marketing looks like.
Steven Plimsoll, vice-president, multichannel marketing services at Acxiom UK, identifies a similar issue to the one outlined by Sharp. “A lot of it is the failure in analytical teams in going far enough to understand the client’s company. Insight into the target audience is done, then the messages that are pushed out are effectively driven either by product managers and silos, or are overridden by creative agencies,” he says.
It might seem harsh to expect analysts to find coping strategies to deal with corporate politics, but the people in charge of insight teams do need to work out how to deal with creative agencies. “My favourite saying is that the biggest failing in advertising is for the creative to outshine the product. Yet the majority of creative directors want to come up with big ideas that win awards and do want to outshine the product,” says Plimsoll.
The notion of the big idea is one of the most important barriers to segmented, personalised, data-driven marketing. Most of the concepts leading campaigns are not capable of being refined for specific groups. There is also considerable resistance among creatives to the idea of writing dozens of headlines and blocks of copy to suit each segment, rather than the single killer execution.
Not that clients are without their own share of the blame. Another look at the FTSE 100 would reveal just how few have created a single view of the customer to support individual-level messaging, let alone a segmented approach to the prospect universe.
Just building SCV is in itself no guarantee of change – a cultural shift is also required. “I worked with eBay on their Unica SCV when the company was very product driven. They had silos in the business for product categories. By putting in the database and creating a unified view, they were able to get insights that hadn’t existed before. Ebay went further and created customer owners at segment level,” recalls Plimsoll.
In acquisition departments, ownership of prospects is still often thought of in terms of the stages which the company wants people to move through, such as suspect, prospect, convert. Little is done to align marketing to meaningful target groups that the prospect might be moving through, such as young adult, family group, empty nester.
Paul Moss, head of data planning at AIS, says there is a slow, but steady trend in this direction. “There are clients who are organising around segments, such as HSBC. They are shifting to customer-centric strategies with segment managers, rather than product managers. Those product managers still exist, but they have to reconcile their demands with the segment managers,” he says.
That is one of the reasons why many companies have held off becoming customercentric, even in their acquisition marketing. It requires some difficult bargaining between the goals of the product managers, tasked with increasing their market share and margin, and the people responsible for segments, who have to decide what is best for each group.
“Ultimately, that will give a better return on investmnt and more effective communications,” says Moss. “We’re talking all the time to clients about building on our learnings.”
One pitfall he does warn against is becoming too bound up with optimising marketing against data findings, especially by working through multiple potential variants. “People who get the point of testing can go to the other extreme of testing for its own sake and forgetting what they will do as a result of those tests. That said, you do need to test concepts, like champion/challenger,” he says.
If acquisition marketing has not been using these classic techniques, then it is in part due to the fact that companies have been in too much of a hurry. With new customers hard to come by, the rush to market rules out testing and the need to achieve cost-efficiencies often rules out personalised messaging.
Acquisition is also such a big beast in many organisations – as with that 30:1 split noted above – that its practitioners get to carry on as they like, rather than as they should. If the absence of segment managers is one gap, so too is the lack of any function taking an holistic view of how prospects and customers touch the business.
“”Our strategic marketing approach is to say don’t treat the two sides as separate entities, treat them as one journey,” says Colin Bradshaw, managing director of Rapp. “Have one person to take responsibility for the end-to-end journey.”
One consequence of this overview would be to speed up the whole acquisition process, which has historically tended to be a batch effort. “Once you have got a serious purchasing intention from the consumer, it is about personalising an offer on the fly. Digital channels give you a real-time opportunity to develop prospects,” says Bradshaw.
If adopted, this new model would make acquisition marketing much closer in method to retention. Having a clear lifecycle for prospects, with paths and rules at each stage, all driven by what the data is telling you, is very different from wasteful, “spray and pray” prospecting. To get adopted, marketers will need to accept that outcomes, not outputs, are what really matter.
THE SEVEN DEADLY SINS OF MARKETING
If the performance of your acquisition activity is poor, it could be due to one of the seven typical flaws identified by Paul Kennedy, head of consulting at Callcredit Marketing Solutions.
1: Focus on input volume, not output quality – the key is to measure clickthroughs and profit per additional sale, not mailed volumes.
2: Communication silos – separating online activity from customer service and marketing gives consumers a confusing experience.
3: Not exploiting content – bringing together customer data with content about products and propositions makes interactions more interesting.
4: Don’t ask, don’t tell – requesting positive data on interestes and preferences, combined with external trigger and event data, creates higher effectiveness.
5: Ignoring transactional data – information about purchases and interactions must be used to drive relevance.
6: Being anti-social – social media are central to consumers lives and should be at the core of acquisition marketing.
7: Finger off the trigger – batch mailing campaigns are no substitute for eventbased programmes and ongoing communications.