Is your bucket still leaking? Given the turbulence in the markets, it is easy to believe that your normal bucket of customers has been kicked over and is empty. But not all relationships get ended so quickly – some purchases are repeated by necessity, such as premiums, installments or even those that result from inertia.
With the right levels of care and attention, those remaining customers can be nurtured and their value extracted. Yet at the same time, the bucket is still leaky – customers defect to competitors, move out of the market or even die. So despite what you may have heard, acquisition is still an important focus for marketing.
Trying to balance the requirements of acquisition and retention is one of the key themes of presentations at this year’s Data Marketing Show. On the one hand, you can hear how Sky and American Express are adapting their prospecting activities to current market conditions. On the other, you can discover how Nectar deals with competing demands for its cardholders’ attention, or how the COI is tracking behavioural change among users of its services.
American Express is typical of many major blue chips in the way its own marketing has evolved. “We have a prospect database with the whole UK population on it,” says Richard Harris, vice-president of acquisition at the card issuer. “Usage of that historically has been direct mail focused, rather than having leverage across other channels.”
The company is now dealing with the challenge of how to use the in-depth knowledge built up on individuals offline in contacts made online. This reflects a common culture shift in marketing and something that Harris will be addressing in his presentation, “Developing insight to inform channel and communication strategies” on Wednesday, 1st July at 12 noon.
While the the method of communicating with prospects may be changing, the facilitators have not. “Data is still an asset. The thing about how you look at it and use it across different channels is that nobody has really cracked it,” says Harris.
He points the finger equally at media owners, data owners and external services providers for this fragmentation and for trying to protect traditional, volume-based business models. For anybody tired by a day touring the exhibition booths at the show, Harris’s presentation will provide a real livener from somebody at the very sharp end of how prospecting can now be carried out.
It is perhaps understandable that media and data owners are trying to hold onto this volume, even as their market contracts. But to do so is an act of denial not just about current market conditions, but especially about structural changes to markets.
Even before the recession kicked in, a lot of consumer buying behaviour was migrating online. In doing so it has become harder to own for media and data companies and therefore more challenging to sell to marketers.
Yet for some companies, their business targets have remained untouched by the downturn. At Sky, for example, the stated objective is still to reach 10 million customers by 2010. That is a very stiff target which has implications both for acquisition, in order to fill up the bucket, and for retention, to stop it leaking.
“We have got fantastic offers for prospects, so we need to ensure the right people are getting the right promotions at the right time,” says Simon Kaffel, head of data at Sky. “We have also got to reduce churn in existing customers, which is a challenge in this economic climate.”
In the middle of all of this, his department has been undergoing a restructuring that is building on its previous success while aligning it with the company’s marketing requirements. Kaffel will be talking about “Designing a marketing data department” on Tuesday, 30th June, 12 noon.
One element of the evolution in the role of data at Sky has been the relationship with Experian. Kaffel will be talking about their contribution, which has been a positive experience and has led to a contract renewal, as well as the way in which call centre software solution provider Chordiant has supported Next Best Action prompts during conversations with customers.
Kaffel says that an important dimension of the way his department now works is that “everything is looped. It is no longer good enough just to churn out data files – there needs to be an added value element.” That means analysts also have to provide extra support and keep an eye on the bigger business picture.
The reverse is also true – the business keeps an eye on what the data department is up to. “I present directly to the CEO who is eager to know about the relationship with Experian, the applications we’ve developed. He is the former CFO, so he is very interested in return on investment,” says Kaffel.
Loyalty schemes continue to be an effective way to deal with churn (and acquisition) even when consumer spend is down. That is one reason why brand owners are keen to engage with members to get the uplift in purchase which typically results from contact by the scheme operator.
At Nectar, this has led to what Jan-Pieter Lips, managing director, calls “The Balancing Act” (Tuesday, 30th June, 2pm). With 15 million cardholders receiving 7 million variable communications, yet only a limited number of spaces for offers in each, the data modelling and business rules involved are highly sophisticated.
It is an unfortunate fact that during a recession, demand for government services increases. “If anything, the COI is busier,” says Marc Michaels, direct and relationship marketing director. “People need more information and support – that is what we do.”
Ensuring the right people are receiving the correct information and go to appropriate services has been at the heart of the Artemis model developed by COI. Michaels will be explaining the marketing planning and tracking tool on Wednesday, 1st July at 2pm.
“Our models have proven to be roubust. People are going through a more extended journey and one of our challenges is to fit stages of that journey into a hierarchy,” he says. Among the insights Michaels will be giving is the relative values of a website hit compared to a service centre visit, for example.
“We have to think more about the journey we send people on and where we touch people. If somebody has a good or a bad experience will determine whether they take up a service or fall out,” he says. Since its launch, Artemis has become more holistic to understand the impact each medium has on the others as a result.
If the recession has made business planning more difficult, it has also made marketing more complex. The lessons from leaders who have started to resolve these challenges could prove to be invaluable.