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DEPARTMENT                       e d i t o r ’s l e t t e r                              BY: PATRICK O’CONNELL




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NAN FORTE
                                                 Editor in Chief
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LEADER COLUMN                                                                                                             ...
DEPARTMENT
                                                                                                    It’s no sec...
mix masters
          Analytics experts search for
           market mix optimization

                              BY DA...
A CHANGE IN THE MARKET LEADS
     TO CHANGES IN MARKETING
     Market mix optimization “is probably one of the fastest-   ...
DEPARTMENT
          mail proves it can move metal
                           Direct helps drive car buyers into action


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DEPARTMENT
                                               what do customers want?
                                        ...
cause and effect
                 How nonprofits are coping in the new era of
                       permission-based mark...
The result: “Our Alaska Campaign Kit was so powerful, on       LINKING WITH THE MEDIA
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Lowenstein Deliver Article
Lowenstein Deliver Article
Lowenstein Deliver Article
Lowenstein Deliver Article
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  1. 1. PRSRT STD US POSTAGE & FEES PAID US POSTAL SERVICE P.O. Box 149263 PERMIT NO G-10 Austin, TX 78714-9263 VOLUME 2 ISSUE 1 | MARCH 2006 IN SEARCH OF THE PERFECT a magazine for marketers MARKETING MIX CHANGE SERVICE REQUESTED page 10 DATABASE ANALYSIS AT YOUR FINGERTIPS page 22 CONVENTIONAL BUT COMMITTED: GEN Y RISES page 26 06SUPOTH227
  2. 2. DEPARTMENT e d i t o r ’s l e t t e r BY: PATRICK O’CONNELL 2 EDITOR’S LETTER 4 CONTRIBUTORS PAGE 5 FEEDBACK 6 OPINION Prospects ignoring you? Consumers not getting the message? Don’t be cruel: Put Elvis to work. (Yes, the Elvis.) And, about that national debt ... 8 AGENCY VIEWPOINT 6 If you’re looking for some instant gratification, start thinking retail — no matter what kind of marketing table of contents table of contents you do. 10 MIX MASTERS With more channels available than ever before, optimizing your marketing isn’t what it used to be. Computer modeling can help. 14 NUMBERS CRUNCH You’ll pay attention if it’s in the mail and you’re in the market for a new car. The numbers prove it. 16 ONE2ONE 10 Spelling “CRM” is the easy part. Defining the acro- nym is quite another matter. 14 18 CAUSE FOR ACTION only the right people at the right time, making sure our How are nonprofits adjusting to new opt-out rules to pitch is relevant and that our message is considered. Our reach ever-busy contributors? Just fine, thanks. audience’s engagement is leading to increased consid- eration and, ultimately, to more sales. 22 TECHNOLOGY Crooks! No, I’m not talking about some people in It used to be that sophisticated database analysis Washington, D.C., or my own opinion of a recent stint Are we the new Robin Hood? Not exactly. (OK, maybe on relied heavily on the IT department. Not anymore. as a juror. Maybe it is we, the readers of Deliver,™ Halloween.) More interesting, do you think mass media who are “criminal.” even knows the “redistribution” has only just begun? PHOTOGRAPHY BY JOHN SOBCZAK 24 CONTENT CONNECTION Robin Hood was considered a crook by the authorities On another matter, my thanks to the 186 people who What’s the smartest way to expand your online of his time. He took from the rich and gave to the poor figured out our mystery map in the last issue. Madrid, brand? If you’re WebMD, you take it into print. (“income redistribution” in economic terms). The rich Spain. Great place. Try the pulpo en su tinta. All 186 weren’t aware of the conditions of the poor, so Hood winners receive a complimentary subscription to Deliver 26 GENERATION RISES took matters into his own hands. magazine. I might even splurge and buy you a coffee Reaching the newest generation requires some new next time you are in town. But where the heck am I? thinking — about what they’re like and what they like. We’re engaged in a similar redistribution ourselves, taking from the moneyed. Bit by bit, dollar by dollar, Since I’ll never (ever!) ask for directions, help me find 31 LAST WORD we are wresting away attention and funding from myself. E-mail me at delivermag@usps.com and tell Hallmark’s Jay Dittmann talks about how the card mass media. We are armed with real knowledge and me which city you think I’m in. Your guess is FREE, so company makes its business very personal. measured results; we are implementing proven ideas. respond today! (That’s all I learned in Copywriting 101.) With these weapons, we are finding upper manage- ment support and winning money to execute our COVER ART BY JOHN DUNIVANT strategic and well-developed plans. We are targeting usps.com/deliver 2 Deliver 26
  3. 3. NAN FORTE Editor in Chief WebMD the Magazine ARTISTIC FORM OF CONSUMER EXPRESSION Nan Forte was appointed executive vice president of consumer services at WebMD (Editor’s Note: We received a number of letters supporting our use of tattoos in in July 2005. She has been responsible for programming and editorial services for our September issue and taking to task a reader who felt they were ugly. Here WebMD’s consumer portals since 1999. Previously, Forte was president of program- is one of the best.) ming and product development at MedCast, launched iVillage’s first health Web site in 1998, and has been a member of the American Medical Writers Association and Attention, people over the age of 50: Tattoos are art. the American Medical Illustrators Association. They are cool, and getting one, along with getting pierced, is what a young, cool consumer is doing these days. If corporate executives wish to alienate all consumers under the age of 45, then by all means jump up on the anti-tattoo soapbox, rant away and watch your sales take a nosedive. MARK MYLAN WELCOME to the feedback contributors Senior Vice President of Strategy portion of Deliver.™ This is If people want to write letters venting about young Hill, Holliday your space to fill with ideas, people and tattoos, AARP Monthly is better suited. fe e d b a c k comments, suggestions and Peace! Mark Mylan has been with Hill, Holliday for more than five years and has led the opinions. Please feel free to Stuart Fingerhut charge on acquiring major new client wins. His background spans B2B and B2C audi- send us your questions and Huntington Beach, Calif. ences across acquisition, retention/usage and loyalty marketing practices. He is also thoughts about the publica- an experienced integrated marketer, having led advertising and direct marketing tion. We want to hear from KEEP UP THE GREAT WORK teams. Before joining Hill, Holliday, Mylan was the integrated team leader for the you — the good, the bad or I am really enjoying the publication. The content is rele- Sears HomeCentral account at Young and Rubicam, responsible for the advertising, the just plain ugly. vant, short and to the point. I do not have time for long direct marketing and public relations teams in New York and Chicago. t wisi enim ad minim veni articles. You do a great job with this — keep it up. TO CONTACT US, VISIT Joseph Gnorski USPS.COM/DE L I V E R Des Plaines, Ill. OR WRITE TO US AT: JAY DITTMANN GREAT STUFF Vice President, One-to-One Consumer Marketing FEEDBACK Just wanted to say how much I appreciate your Hallmark DELIVER MAGAZINE magazine. The case studies on how to P.O. BOX 2063 improve response rates and overall return Jay Dittmann, vice president of one-to-one consumer marketing at Hallmark Cards WARREN, MI 48093 on investment were exceptional. Inc., is responsible for managing research, Hallmark.com, consumer relationships, Amanda J. Ponzar Hallmark Gold Crown Card, Hallmark Gold Crown catalog and postcard programs. Dittmann has held several positions dealing with strategic marketing information j St. Louis, Mo. and business process re-engineering since joining Hallmark in 1980. Dittmann, who has master’s and doctoral degrees in industrial engineering from the University of Missouri, has published articles on leveraging retail information. hi PRINTED ON RECYCLED PAPER WITH 10% POSTCONSUMER WASTE NEIL HOWE AND WILLIAM STRAUSS Co-Founders LifeCourse Associates Neil Howe and William Strauss are the authors of the new Millennials and the Pop PHOTOGRAPHY BY MIKA MANNINEN/WORKBOOK Culture, Millennials Rising (2000) and other generational books throughout the 1990s. Their consulting firm emphasizes their theories on product development, marketing, human relations and strategic planning. Howe has degrees from Berkeley and Yale, and is a senior advisor to the Concord Coalition and a senior policy advisor to the Blackstone Group. Strauss, a graduate of Harvard Law School, co-founded Cappies, a program for high-schoolers who review each other’s plays and musicals. 4 Deliver
  4. 4. LEADER COLUMN COLUMN opinion BY: ERNEST NICASTRO EDITORIAL STAFF Editor Patrick O’Connell our Managing Editor Michael Raveane solution Contributing Editor Angela Sienko Art Director for a Laura Rogers how elvis helped Copy Editor debt-free Julie Armstrong seal the deal PHOTOGRAPHY BY LARRY HAMILL Creative Director Laura Rogers Editorial Director opinion Dan Grantham Production Manager America Lynn Sarosik PUBLISHING STAFF Capturing attention and profits with dimensional mail Publisher Jeremy Morris Heard the news? It seems that U.S. household debt reached an all-time high in late Numerous voice mails and e-mails had gotten me notes or, as in my case, dimensional mail. Used most Account Director 2005, topping out at $11 trillion, according to the Federal Reserve. Angelo Acord nowhere. After a promising meeting, my prospect was often as a B2B lead-generation tool, dimensional mail ignoring me. So I made a bold move. I put Elvis Presley can produce huge response rates — and speed up the Associate Publisher That’s a pretty astounding number and has prompted pundits everywhere to offer up Julie Preston to work for me. Now, before you start thinking that selling cycle. A couple of examples: their recommended “cures” for this “ill” — most of which demonstrate an alarming all those tabloid-reported Elvis sightings really were • A software company targeted its customers with Assistant Account Executive ignorance of economic understanding. But the one that really caught our attention Anna Lee true, let me explain. The Elvis I employed was a life- an upgrade offer. Its mailer was a miniature, remote- was the suggestion that credit card companies cut back on the number of offers size cardboard cutout, which I mailed to my prospect’s controlled race car. But in order to receive the remote Publication Coordinator they send annually through the mail. Bernadette Rodriguez office along with a letter. control unit, the recipients had to schedule a meeting, which 84 percent of them did. Never mind that, by far, the largest portion of household debt is mortgage debt (which The letter began: “Dear Tom: As you know, I’ve • A leading call center targeted 300 prospects with amounted to 10.76 percent of personal income in third-quarter 2005, according to the contacted you a number of times over the last few a series of branded mailers: a plastic sports bottle Federal Reserve Board’s Survey of Consumer Finances). Or that sending offers for Deliver™ is published six times months. And the fact that I haven’t heard back from that also served as the letter carrier, a bank bag and a yearly by Campbell-Ewald credit doesn’t compel consumers to instantly max out on their gold cards. Or even Publishing, a division of Camp- you, quite frankly, has me ‘All Shook Up.’ Come on, Tom, miniature trash can (“In case you’ve been throwing my that total household net worth is five times higher than total debt. bell-Ewald, 30400 Van Dyke, ‘Don’t Be Cruel.’ ” I then closed the letter by saying that letters in the trash ...”). Results? A 14 percent response Warren, MI 48093-2316. Tel: 586.558.5249. when Tom engaged our services, he would soon hear rate and 16 new accounts, nine of which closed within If it’s really important that fewer Americans take advantage of credit card offers, Visit Deliver at usps.com/ his prospects and customers singing “I Want You, I 90 days. deliver, or send us an e-mail then we here at Deliver have found the solution: Simply force credit card companies at delivermag@usps.com. Need You, I Love You.” to switch their spending from direct mail to TV advertising. Consider this: The typical executive reportedly gets Subscription rates for the U.S.A.: $3.95 per issue. Subscription requests should Elvis generated an immediate positive response. 175 pieces of mail a week. So a few extra dollars can be Placing offers in that far less targeted environment, where a 30-second spot will be sent to: Deliver, Subscription Center, 30400 Van Dyke, Warren, MI 48093-2316. This time Tom e-mailed me. Shortly thereafter we well worth it to ensure that your mail gets noticed, gets fall prey to nut-job price levels, fragmented audiences and digital video recorders, If you prefer not to receive Deliver, commenced a project. opened and gets read. Expertly executed dimensional please e-mail us at delivermag@usps those companies will almost certainly see their response numbers drop. And with .com. Manuscripts and photographs are mail helps achieve all three of those objectives. fewer consumers taking advantage of the offers, if you follow the logic, household submitted at the sender’s risk. Enclose a self-addressed, stamped envelope for It’s fitting that the subject line of Tom’s e-mail was debt might drop to more, ah, politically acceptable levels. return of material. Submission of mate- “You Got My Attention.” Because while it’s trendy And, as The King himself might say, that will generate a rial implies the right to edit and publish all or in part. © 2006 United States Postal these days to talk about “nonintrusive” advertis- little less conversation and a lot more action. * So, that solves that issue. What’s next? * Service. All rights reserved. ™ Trademark of the United States Postal Service. Your ing, direct marketers know that if their mail does not PHOTOGRAPHY BY ©STOCKBYTE information is protected by our privacy intrude — i.e., gain attention — it likely will fail. Ernest Nicastro (enicastro@positiveresponse.com) policies. See usps.com for details. Unless otherwise indicated, the Postal Service was born and raised in Memphis, Tenn. He is a principal PHOTOGRAPHY/GETTY does not endorse any individual or com- pany, nor any service or product not of- Techniques and tools for drawing attention to your mail with Positive Response, a marketing, advertising and fered by the Postal Service. include teaser copy, odd-shaped mailers, outer sticky sales promotion firm (www.positiveresponse.com). March 2006 7
  5. 5. DEPARTMENT It’s no secret that things seem to be moving faster along the marketing continuum: brand awareness, these days. As such, marketers are increasingly purchase consideration, actual purchase behaviors. finding themselves responding to a retail mentality: “We know who we’re targeting — the best of the best Deliver the good solution, do it yesterday — but don’t of our customers and prospects,” Mylan says. “Every sacrifice long-term strategic impact while delivering client is trying to eke out whatever cost efficiencies near-term results. it can achieve, and the beauty of direct mail is that it plays right into these budget considerations by deliver- In other words, instant gratification within the scope ing more awareness, consideration, purchasing/sales a g e n cy v i ew p o i n t of the bigger picture. for what’s spent.” “Clients are looking toward making quarterly revenue Hill, Holliday believes long lead times are no longer goals and re-shifting their budgets based on those acceptable to take a direct program to market. Compa- numbers,” says Mark Mylan, senior vice president of nies have to determine how steps can be shortened or strategy for Hill, Holliday’s relationship marketing group. run parallel with each other, what research can be done “They have to be strategic every day and manage each concurrently with creative and what production can be quarter as if it were the year itself.” front-loaded as early as possible with an eye toward numbers and speed. Agencies are responding by getting client offers to market faster and by building proactive and reactive “Direct mail must become more nimble and reactive as strategies quickly. The challenge is to analyze what a channel, and focused as much on near-term revenue will sell in today’s market. “We have to go beyond and sales delivery as it is on long-term relationship and past history because behaviors are changing so rapidly loyalty objectives,” Mylan says. today,” Mylan says. ”In order to do instant research and analysis, we take a sample size just large enough to That’s in keeping with today’s retail mentality: Be allow us to see patterns of choices customers make, strategically tactical, which means being smart at the which helps us understand what drives consumer 30,000-foot level and at 10 feet. choices without actually having to first put offers into the marketplace.” “Marketing is never a static game,” Mylan says. “The moment the stimulant goes into the market, custom- BY: LEIGH SILBER That’s the idea behind impactLab, Hill, Holliday’s propri- ers can say what they like or don’t like. Don’t wait for etary process that helps clients prioritize the variables long-term tracking, but learn what is and is not working and learn, for example, whether a dollar-off offer is for long-term purposes by constantly analyzing data to better than a premium or if a premium offer from one drive improvement, innovations and sales.” * brand is better than a dollar-off offer from another. Consumer samplings for impactLab are taken via tele- phone interviews, Internet surveys and focus groups instant gratification — all providing testing input for another proprietary tool, called the configurator. SVP OF STRATEGY, The configurator runs marketplace simulations, which RELATIONSHIP Companies push to know marketing results right now help determine the relative value of offers and exactly MARKETING GROUP ANTINE/PICTUREQUEST MARK MYLAN what to put into market as quickly as possible. “We used it most recently to power a direct mail program HEADQUARTERS BOSTON for one of our clients,” Mylan says. ”The result was to generate incremental revenues that propelled them to ANNUAL REVENUE $800 MILLION ANY CONST end their quarter as a leader in their category.” ESTABLISHED A Direct is key to Hill, Holliday’s solutions for technology, 1968 PHOTOGRAPHY BY T manufacturing, retail and other clients at all points March 2006 9
  6. 6. mix masters Analytics experts search for market mix optimization BY DAN GRANTHAM It used to be so easy. You made your ads, bought some time on television and sold your product. You knew where to find your consumers and how to talk to them. Not anymore. Today, marketing channels are more fragmented than ever before, consumers want messages on their terms only and competitors can come out of nowhere to take away your market share. Faced with this new environment, marketers are chang- ing the game, too. They are turning to sophisticated com- TION/PICTUREQUEST puter modeling programs that allow them to optimize their marketing mix and fine-tune their marketing by running what-if scenarios until they identify the one that produces the best results. TIONS BY: SPOTS ILLUSTRA And what are marketers finding as some of the ways to reach consumers? These models are showing that direct — whether online or offline — is becoming a dominant force. ILLUSTRA 10 Deliver March 2006 11
  7. 7. A CHANGE IN THE MARKET LEADS TO CHANGES IN MARKETING Market mix optimization “is probably one of the fastest- ingly vital role that direct marketing has to play in this moving functions in corporate America today,” says John new marketing environment. Shomaker, group vice president of MarketBridge, an ana- “I would say we’re climbing the ladder quickly away from lytics-based sales and marketing professional services firm mass marketing and toward CRM marketing, and I think it headquartered in Bethesda, Md. will be dominant,” says Kirk. As marketing has shifted from the mass approach that Shomaker agrees. “Search and interactive have been explo- dominated the 1970s and 1980s to the highly fragmented sive, yet direct mail and e-mail continue to be critical elements online-offline, customer-centric model today, the number of the relationship marketing portfolio,” he says. of decisions that a marketing manager needs to control Customers are increasingly less responsive to interrup- has gotten increasingly complex. tion-based marketing and are seeking information that Optimizing the old decision-making model was fairly engages them on a personal level. Direct is one of the best straightforward, says Sunil “Sunny” Garga, president of mediums for delivering that experience. the global services group at Information Resources Inc. K irk says, “If you focus your messages on things (IRI) in Chicago: “Let me buy as much direct mail as I they’re interested in and try to be helpful, they’re very, can, and let me buy as much media as I can.” “The key is very much the idea of bringing proactivity all its product lines and across the entire spectrum of very responsive.” Today, though, managers must grapple with dozens of back to bear,” he says. Instead of launching a new product consumers, says Shomaker. “There’s just too many vari- In addition, says Shomaker, mix optimization has shown channels, each with a different cost of transaction and a or campaign and hoping it takes off, marketers can use ables, too many markets, too many products to say there’s marketers that share of wallet can be a highly profitable different level of efficiency, thanks to empowered consum- their model to ensure the launch will be successful. a model that can do this.” segment, as well as acquisition and retention. Typically, ers who feel free to screen out marketing messages by using Shomaker agrees. “Getting past a causality approach to Instead, he says, most larger corporations use optimiza- that type of loyalty and cross sell is done best through digital video recorders and e-mail spam filters. a predictive one — to me, that is the end state of market tion within a segment or for a particular campaign, hop- direct mail and online channels. “There is a tsunami of information about channels and mix optimization,” he says. ing to get better results in pockets rather than across the “We’re continuing to see huge shifts toward direct mar- efficiency, and to make any sense out of it, you need market- To get there, Kirk says, the models tend to analyze three entire dynamic of their products and services. keting to manage and enhance customer relationships,” ing analytics and econometrics,” says Garga. separate segments of information: how much to allocate to And, as with other data-based functions, this type of Shomaker says. So, corporations are increasingly turning to the num- each marketing channel, the variances for each product or modeling is only as good as the numbers you have to As a channel, direct is one of the easiest to track and meas- bers, creating computer models that use the customer data brand within the company and the differences generated work with. ure. That helps when corporations are increasingly seeking they’ve long collected in hopes of being able to forecast by geographies, such as West Coast vs. East Coast. “Ninety percent of corporate America still struggles with predictive information to help them make decisions. where they should spend their money and how, in order That’s not to say that even the most sophisticated models how they put that information together,” says Shomaker. to get the best return. are just plug-and-play. There’s still a need for human inter- Typically, he says, his firm finds that a company has only WHERE IS ALL THIS HEADED? Typically, econometric models such as these take into action to analyze what the models are producing and to about 50 percent to 75 percent of the data needed for an As market mix optimization has evolved, the emphasis account a wide range of variables, including internal fac- devise a strategy for a successful marketing campaign. effective model. So, the first issue is to begin capturing has been on providing information faster. Whereas most tors the company can control and external forces, such as One important thing this type of modeling does, says or calculating the missing pieces so that the model can models used to be a 12- to 18-month process of defining weather or consumer confidence, that they do not. Kevin Richardson, vice president at Marketing Analytics be most effective. a mix and watching it work, most can now be created and While relatively new to marketing, this level of detailed in Evanston, Ill., is free up humans to think more about Often, it’s not so much a matter of capturing data as yielding insights within 14 to 18 weeks. modeling has been used in academic circles and in some long-term strategy. “The beauty of analytics is you take tech- finding out who in the company has that information, says The industry is moving to even faster models that might industries for decades. For example, it’s how the airline indus- nology and data and let technology do the heavy lifting — go the IRI’s Garga. Many times, he adds, different depart- provide real-time data, giving marketers up-to-the minute try figures out how much each seat on a plane is worth. through all the data to find and measure the relevant busi- ments within a company have customer information that analysis of what’s working and how well. These models can help marketers answer their what-if ness drivers,” Richardson says. “Then marketers can focus isn’t shared with the rest of the company. Breaking down The other major initiative has been a push for more questions: What happens if we cut back on our media buy? more on applying the learning in strategic ways. those silos of information is key to getting an effective information on how customers think. Going beyond the What happens if we increase the price of our product? “It isn’t true that the model is the solution to every- model, he adds. sales initiatives, analytics professionals are looking for What happens to sales at grocery stores if we lower prices thing. But it forces you to think the problem through ... The time and resources needed to carry out an effec- ways to measure how a product gets on the customer’s at convenience stores? to think about your assumptions and what you might be tive econometrics program mean that this type of mea- shopping list in the first place. By running different scenarios with their models, mar- leaving out.” surement is still available only to the largest corporations Incorporating that information into a working model could keters can anticipate the effect of adjusting the mix or — those on the Fortune 500 list. There’s no off-the-shelf help companies become more efficient in their marketing. changing their prices before they make adjustments. That STILL A STRUGGLE TO GET THE RIGHT DATA program for midsize companies yet. With information like that, marketing executives might helps them make better decisions. So, is market mix modeling the ultimate secret weapon have the final piece in the puzzle that would allow them to Ultimately, says Todd Kirk, senior vice president at IRI, for a successful campaign? DIRECT MARKETING TAKES ON create models that could tell them exactly what to spend the goal is to help corporations minimize the risk in their Not really, say the experts. A LARGER ROLE IN THE MIX and how much. marketing operations. By analyzing their historical results, For one, it’s still too hard to build a model that can One thing that has become even more apparent with But for now, they’ll still have to earn their money by they can plan better. optimize a large corporation’s marketing program across market mix optimization, say the analysts, is the increas- making the decisions themselves. * 12 Deliver March 2006 13
  8. 8. DEPARTMENT mail proves it can move metal Direct helps drive car buyers into action Here’s some good news for auto industry execs and numbers crunch their marketing partners: Consumers respond aggres- sively to direct mail when they’re in a car-buying mood. AGE MATTERS 52% of direct mail readers planning to buy a new A consumer’s age is also a factor in how they respond to car read automotive direct mail. But more important, 73 the automotive marketing they receive in the mail: percent of those readers surveyed respond to those mailings by turning to other media and/or heading Of the younger baby boomers (born between 1956 and to dealership showrooms, according to research by 1964) surveyed who read automotive direct mail, Vertis, a Baltimore-based marketing services firm. 46% said they visited a dealership; 38% of Gener- SHOPPERS VISIT WEB, DEALERSHIPS ation Y (born between 1977 and 1994) took the trip. 35% of adults who have responded to automotive direct mail by visiting a company’s Web site are planning 32% of Generation Y readers of automotive to purchase a new vehicle within the next 12 months; mail and 24% of Gen X (born between 1965 and 26% of those who plan to make a purchase visited 1976) respondents visited a sender’s Web site. a dealership in person. “Automotive marketers who use direct mail notice 14% of Generation Y and 7% of younger baby BY: CHUCK YEAGER results when targeting the right audience at oppor- boomers who read the direct mail replied to the offer- tune times,” says Jim Litwin, vice president of market ings from an auto company via mail. insights for Vertis. “The numbers show that a targeted medium like direct Vertis’ Customer Focus® 2005 Automotive Direct mail is an effective way to talk to car buyers,” says Marketing study revealed the following findings for Scott Marden, Vertis director of marketing research. those who had read automotive direct mail: “Direct mail plays a key part in closing purchases by driving consumers to dealerships.” 37% of men and PHOTOGRAPHY BY BURKE/TRIOLO PRODUCTIONS/PICTUREQUEST 39% of women visited a dealership; 23% of men and 13% of women were driven to a sender’s Web site. 14 Deliver
  9. 9. DEPARTMENT what do customers want? Finding a new way to define CRM One of the leading authorities on CRM, Michael Lowen- Deliver: What role can direct mail and direct marketing stein has written several books on the topic, including play in a successful CRM program? his most recent, One Customer, Divisible. Lowenstein, Lowenstein: Direct response can be an effective com- managing director of Customer/Staff Loyalty Research ponent of an overall customer communication and rela- Associates in Collingwood, N.J., sat with Deliver re- tionship program. For instance, companies can tightly cently to talk about the state of the CRM landscape. target and microsegment messages, newsletters and offers using customization or variable digital printing, Deliver: There is a perception that many CRM pro- positively impacting the perception of tangible (func- one2one grams are unsuccessful. Would you say that is true? tional) and intangible (relationship/emotional) value. Lowenstein: If you look at study findings by organizations like Gartner and Forrester, they conclude that a very Deliver: Why do so many CRM programs fail? high percentage of CRM programs have failed to meet Lowenstein: When these giant programs fail or do not objectives. Put simply, they haven’t yielded the results or meet their objectives, typically nobody wants to take achieved expectations of the companies that implemented responsibility. The supplier will say the client failed to them. I see the same problems in my own analysis, but I define the goals, while the client will say the supplier also prefer to use a somewhat simpler definition of CRM. didn’t properly involve the firm. It goes on ad infinitum. Because no one takes sufficient ownership, the CRM Deliver: How do you define CRM? programs are left very vulnerable. Companies often try Lowenstein: “Customer” refers to all sorts of internal to overautomate and overcomplicate the messaging and external constituencies — staff, consumers, the process. What customers consistently want is personal general public and the financial community. “Relation- value — they don’t care how good the database is. ship” means all kinds of contact at every touchpoint. “Management” refers to finite, scarce financial resources Deliver: Do you have to be a giant company to put an but also management of employees, culture and data. excellent CRM program in place? Lowenstein: Not at all. Though companies like Royal BY: AARON DALTON The most appropriate definition of CRM I have seen is Bank of Canada, Harrah’s and Tesco (a U.K.-based that it represents a single, integrated view of custom- supermarket chain) are all outstanding CRM examples, ers across the entire enterprise: Everyone from the in upstate New York, there is a single high-end super- janitor to the CEO knows the same thing about the market called Green Hills Farms. It’s a family-owned firm’s customers on as microsegmented and real-time business, but one of the family members happens to a basis as possible. be a database expert; he manages the customer life cycle so effectively with that database, it would make Deliver: How important is a good CRM program? most supermarket chains quite envious. It means that Lowenstein: When companies like Forrester ask exec- companies of any size, and in any industry, can do this utives about CRM programs, something like 92 percent with great success. say CRM is critical or very important. But when you ask whether they are doing CRM, only 2 percent say they The bottom line to creating customer advocacy have fully executed CRM programs, with perhaps another through CRM is really about the data, the culture, the 10 percent saying they have partially done such programs. level of commitment and — this is critically important PHOTOGRAPHY BY © MARK HOOPER — staff loyalty. Even in B2B, the staff can influence For most companies, CRM is a brass ring at a carnival what goes on among customers and the community ride on a carousel — it is a golden objective. When com- at large. There is a direct connection, and much of what panies do CRM and do it well, they have tremendous happens with customers is influenced by interactions leverage with their customers in providing value, and as with employees. All companies would do well to keep a result, customers get more benefit from the supplier. focused on this vital linkage. * March 2006 17
  10. 10. cause and effect How nonprofits are coping in the new era of permission-based marketing BY LEIGH SILBER When the latest push began in 2005 to drill for oil in the virgin wilds of Alaska, The Wilderness Society was ready to make its own push. Building off news reports about the drilling, the organization mailed a packet to prospective members with a letter outlining the benefits of being a Wilderness Society member, a “Keep Alaska Wild” bumper sticker and, of course, a contribution form. PHOTOGRAPHY BY SUPERSTOCK/PICTUREQUEST 18 Deliver March 2006 19
  11. 11. The result: “Our Alaska Campaign Kit was so powerful, on LINKING WITH THE MEDIA point and right now that the response rate was double what Lobbying and campaigning by a nonprofit can generate we had previously seen,” says Bruce Leathwood, membership news coverage. Once their cause becomes news, smart PHOTOGRAPHY BY PHOTOGAL ENTERPRISES director of The Wilderness Society. The industry response nonprofits tie their fundraising to that newsworthy issue, rate averages 3.95 percent, according to the Direct Marketing eliminating the need to create awareness — the media Save the Children mailed a money box Association (DMA) 2005 Response Rate report. (and politicians) take care of that — and then seek mem- bership and contributions while the issue is top of mind. to children as part of the agency’s AT STAKE: A BILLION-DOLLAR MARKET Sometimes organizations can also drive news cover- successful outreach to kids who wanted While advertising agencies might view it as a pro bono age. During the past 18 months, for example, Save the to support tsunami relief efforts. industry, the nonprofit category is big business. Overall Children has conducted a number of audio news confer- giving grew 5 percent to $248.52 billion in 2004, and indi- ences for U.S. reporters and editorial writers on issues vidual contributions increased 4.1 percent, according to such as girls’ education, child marriage, ethnic violence the Giving USA Foundation, which tracks charitable giving. in Sudan and the growing needs of children affected by By comparison, overall giving grew 2.8 percent in 2003, to wars and disasters. Reporters who dial into the news con- $240 billion — the highest growth rate since 2000. The ferences can interview experts on these topics, including Make-A-Wish is using a double opt-in system for its lands issues they support — and the organization can col- largest share of those donations — $187 billion — came members of Congress who have introduced legislation e-mail campaigns, asking anyone who has opted in to lect information it needs to reach them more efficiently. from individuals, according to the foundation, which also to address these issues. Save the Children also has devel- receive its electronic newsletter to confirm that via a “One approach is to invite potential members to our reports that between 70 percent and 80 percent of all U.S. oped a network of more than 30,000 supporters who can follow-up e-mail. Web site,” says Leathwood. “We build subscriptions to households contribute some money to charitable causes. be mobilized to contact the White House and Congress “We have found that those given a ‘two touch’ chance online newsletters and do warm prospecting to those who Direct response marketing has been a mainstay for and tell them their views on important global issues that to opt in are genuinely committed to us and more like- have already demonstrated interest by signing up and tak- nonprofit organizations that have found themselves affect children in need worldwide, leading to additional ly to remain on our list,” says Zachary Stahmer, direct ing action through Internet offers to help public lands.” increasingly challenged as they fight for consumers’ news coverage. response manager — online, at Make-A-Wish. Combining online and offline communications into an attention in an increasingly competitive marketplace. Also important is what’s in the packet sent to the integrated stream not only helps donors stay current on They spent $14.6 billion in 2004 to get the word out TARGET THE RIGHT AUDIENCE prospective donor. Make-A-Wish, which grants wishes causes they care about, but allows the organizations to and raise funds. Nonprofits, which are exempt from the “The opt-out era has changed rules for a lot of people, but for children with life-threatening medical conditions, maintain their support — while respecting opt-out requests Federal Trade Commission’s do-not-call rule, spent the we were already doing the right thing,” says The Wilderness recently doubled its response rate with a new direct from donors who don’t want to receive marketing. biggest chunk ($5.9 billion) on telephone, with direct Society’s Leathwood. “It was never cost-effective to kick off rela- mail package. Among the contents was a “time to make The Asian tsunami, for example, prompted an innova- mail a close second at $4.7 billion — up from $4.3 bil- tionships by annoying potential donors by calling at dinner.” wishes come true” letter, a personalized notepad for tive fundraising approach. Save the Children sent mail- lion in 2003, according to the DMA’s Economic Impact Instead, what has happened within the charitable world the prospective donor, personalized address labels and, ings to the more than 26,000 children who contributed report. Spending on direct mail outpaced third-place is a new approach to fundraising and member communi- of course, the opportunity to donate. In addition to to tsunami relief efforts. Included in the mailing, which television, which trailed at $1 billion. cations, one that relies on making each touch count. providing a nice incentive, the notepad and labels did thanked the children for their donation, was a Save the Nonprofits, however, face the double challenge of fighting “We’ve always practiced good principles, so this opt-out era double duty by stimulating additional word of mouth, Children Money Box, a colorful cylinder of three card- “donor fatigue” — created by regulatory issues such as privacy isn’t seriously impacting us,” says Heather Rudinsky, director Rudinsky says. board money boxes labeled “save,” “spend” and “share” to laws and the new opt-in preferences of consumers, the strong of direct response for the Make-A-Wish Foundation. “It was a premium-based package that included things encourage the children to continue their fundraising. push for relief efforts following the Indian Ocean tsunami in Many organizations are changing their thinking about donors can use,” she says. “It was friendly, nice and kept us Save the Children’s mail campaign, coupled with a tele- late 2004 and the hurricanes that devastated the Gulf Coast which mailing lists they use and when they use them. Rudinsky in front of them,” she says. marketing effort, also helped drive donors to its Web site in 2005. More than 70 percent of those surveyed by a coalition says her organization studies which of its lists are working, — key to most of its fundraising activities. The agency, of consultants for nonprofits said they believe disaster giving rents files similar in profile and immediately suppresses names INTEGRATING THE WEB WITH THE MAIL which raised $12 million on its Web site for tsunami relief, has reduced contributions to other causes. A national survey of those who have asked not to be contacted. Charitable organizations are also finding new ways to minimized complaints to one in several thousand during of 509 donors and members of staffs at nonprofits and foun- “We haven’t even neared the saturation point with integrate their mail and online campaigns. For example, a recent campaign by honoring donor opt-out requests. dations — by CommUlinks of Colorado, M.L. Hanson Con- tried-and-true nonprofit mailing lists,” she says. Make-A-Wish is testing a direct mail program that solicits Those requests amount to fewer than 1 percent of dona- sulting, PhilanthropyNow and Whole Brain Technologies The Wilderness Society takes a similar approach, striving a donation but gives potential donors the option of send- tions made through the Web site. — also found that 56.6 percent of nonprofit organizations to better target a receptive audience for its marketing. ing a check with a reply slip or making their donation And, in the end, that’s a nonprofit’s ultimate goal. reported decreasing results from campaigns in 2005. “Direct mail is a huge part of our marketing program,” through a secure Web site while paying bills online. Although many pressures have forced nonprofits to modify One way they are making connections with consumers Leathwood says. “Our members provide tremendous support Much of The Wilderness Society’s message is built their fundraising methods and messages, they have adapted is to tie in their marketing efforts with newsworthy issues, for our work, so we use only qualified mailing and online lists around driving prospective members to its Web site, where to connect successfully with today’s ever-busy consumers such as oil drilling in the Alaskan wilderness. we exchange and rent from other similar organizations.” they can sign up for newsletters and e-mail alerts on public — which is, of course, mission-critical for their causes. * 20 Deliver March 2006 21
  12. 12. DEPARTMENT information on demand Marketers find dynamic support with Web-based programs Accessing, analyzing and interpreting marketing data For one direct mail campaign, he used used to require the help of IT and analytics people. No the application to print addresses on t e c h n o l o g y / p ro d u c t s more. Marketers can now use Web-based interfaces postcards, scan returns back into the (WBI) to tap into sophisticated analyses. system to measure campaign effective- ness and manage follow-ups. Perona The most sophisticated WBIs offer a complex secure also uses the software to assess link to corporate computers and databases. Marketing his company’s vital signs in real professionals are using WBIs to gather detailed informa- time. Thrilled at the minute level of tion essential to tailor campaigns and fine-tune strategy. detail now available, Perona says: “We used to have to hire a lot of people to do that Marketers who use these tools can get real-time stuff. Now I have a machine, and it’s cheap. portrayals of information on sales orders, Web site hits, I can get 200 people on the system marketing-campaign return on investment and more. for what it’d cost me to hire one IT WBIs deliver the data conveniently from a user’s desk- engineer for a year.” top — and quickly, resulting in faster decision making. Laura Smith, vice president and direc- Cliff Perona is using WBIs to help avoid costs of unpro- tor of list management for RMI Direct ductive marketing initiatives for his company, which Marketing in Danbury, Conn., depends on provides on-demand telephony solutions to small busi- her system for speedy database analysis nesses. However, Perona, co-founder and director of so she can better serve her clients with direct Hosted Business Services Inc. (HBSI) of San Ramon, Calif., marketing information. She uses ListDaxcess® still needs to know whether he is hitting his market and if by Direct Access, a marketing database and list sales models are matching marketing objectives. management program, on behalf of her mailing list management clients. Smith can customize BY: CHRISTINE HANSEN Perona uses NetSuite’s Web-based software to the program to each client’s specific needs so manage and track marketing campaigns, as well as run she can manage multiple functions. his business. This comprehensive business manage- ment application offers graphic-rich interpretations of “In the past, this has been done, and there was no data personalized for each employee’s needs and job way for us to get exact counts on anything outside functions, including Perona’s own. the report parameters,” she says. “There are many sources that companies can use to generate new Perona especially appreciates NetSuite’s Real Time Dash- customers — direct mail, television, radio, the Internet. board colorized bar graphs, visuals of a company’s key Direct mail, with the help of a good analytical tool, gives performance indicators, and line graphs of performance companies clear advantages over other sources: We and trends. “It’s very visual,” says Perona. “I can take a quick know who we’re talking to, what motivates consum- look at it and see where I am.” If an indicator begins moving ers to buy and how to turn those people into long-term out of the green zone into the red zone, Perona knows it’s repeat customers. time to take action. At a glance, he can check his cash PHOTOGRAPHY BY BURKE/TRIOLO financial position, as well as track and compare today’s “When we get an order for specific database selec- sales figures with those of yesterday and last week, and tions, this program allows us to do what-ifs, and we preview what’s in the pipeline for future sales. The HBSI go in and find additional segments relevant to them. It staff uses individually customized versions of the soft- allows us to upsell.” Smith estimates that business has ware according to each employee’s role and function. increased by about 5 percent as a result. * 22 Deliver
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