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My Latest Research: Marketing Beyond The Status Quo April 23, 2008

Posted by Elana Anderson in Customer Analytics, Customer Experience, Database Marketing, Integrated Marketing, Marketing, Marketing Technology, Online Marketing.
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I am very excited to announce the launch of my latest research, “Marketing Beyond The Status Quo.” The research, sponsored by my friends at Responsys, seeks to help marketing organizations assess and address the barriers that prevent them from being more customer-focused, relevant, and integrated. The report unveils the Marketing Status Quo (MSQ) Model – backed by a diagnostic self-test and step-by-step program guide – to help marketers determine their relevance maturity and develop a realistic action plan to become more customer-focused.

The MSQ Model assesses the fundamental competencies required for marketing relevance:

  • Strategic: How customer-focused are your marketing efforts?
  • Analytical:How strategic and actionable is your customer insight?
  • Technical: How well-suited is your infrastructure to support customer-focused marketing?
  • Process: How collaborative, efficient and error-free are your marketing operations?

MSQ Model

Each competency is equally weighted and combined to yield an overall Relevance Maturity Score, which defines a MSQ Level ranging from 1 (broadcast) to 5 (integrated). Marketers can leverage the model in conjunction with the MSQ Self-Test to assess their status quo, as well as identify the steps they must take in order to successfully move to the next level. 

For a free copy of the full report, visit www.responsys.com/beyond. I hope that you will find the research interesting and the tools useful. If you have any feedback, please don’t hesitate to comment here or contact me directly.

See you in LA next week? April 1, 2008

Posted by Elana Anderson in Customer Analytics, Customer Experience, Database Marketing, Integrated Marketing, Marketing, Marketing Measurement, Marketing Strategy, Marketing Technology, Online Marketing.
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Busy, busy, busy! That’s the month of April for me. Sorry I haven’t been posting the last couple of weeks, but I have a ton of balls in the air at the moment. One of the major things I’ve been working on is a minor treatise aimed to help marketers systematically improve the relevance of their customer communications. My work on this whitepaper, “Marketing Beyond The Status Quo,” is sponsored by the good people at Responsys and we’re planning to unveil it together next week at Forrester’s Marketing Forum in Los Angeles.  Our session is Tuesday, April 8th at 2:25pm. I’ll be presenting along with Scott Olrich (Responsys’ CMO) and Randy Cuff (Director of CRM Development at Intrawest). Here’s the abstract for the session:

Few interactive marketers are ecstatic about their ability to deliver meaningful and timely marketing messages. In fact, most agree that more relevant and timely marketing communications will be better received by customers and increase response rates. However, when time is scarce, budgets are tight, and single channel campaign management solutions are already integrated and delivering ROI, marketers are hard pressed to change the status quo. In this thought-provoking session, Elana Anderson, former Vice President and Research Director leading Forrester’s marketing practice, and Scott Olrich, CMO of Responsys will unveil the findings from a first-ever study identifying the drivers of the “status quo” paradigm, and reveal the strategies and marketing technologies smart marketers are using to deliver superior marketing performance and ROI across channels.  

If you are attending the forum, please stop by our session. I’ll be there for the full two days, so drop me an email if you want to connect at some point during the event. Hope to see you there!

CPM Pricing Is To Blame For Bad eMail Marketing March 4, 2008

Posted by Elana Anderson in Customer Analytics, Database Marketing, Marketing Technology, Online Marketing.
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One of the issues I am currently working on is to understand what it takes email marketers to move beyond “fire and forget” (or “batch n’blast”, whatevah) marketing. I find that while marketers intellectually agree that more targeted, timely, and relevant email communications will be better received by customers and increase response, basic economics is a major barrier to progress in that direction. Why? Because email marketing is so darn cheap that every campaign delivers ROI – even if the campaign is totally untargeted (You ever wonder why spammers still spam? They make money doing it).

Relevance Isn’t Free

I’ve spoken with a few dozen email marketing leads from large companies and strong brands in recent months. Their hearts and minds are in the right place. Broadly speaking, they:

  • Are concerned about opt-outs, unsubscribes, and long-term engagement with their email programs.
  • View email as a tool to develop customer relationships.
  • Are working hard to employ tactics – like multi-layer targeting, segmentation, and event triggers – to improve the relevance of their communications.

Unfortunately, as these marketers strive to improve their email communications, they inevitably run into a series of challenges including:

  • Availability of timely, high quality data
  • Access to skills that know how to turn data into actionable information
  • Operational knowhow to automate data-driven processes

Wait… I’ve heard these problems before! In the 1990’s, when I worked with catalogers, financial services firms, and telcos to build some of the first big database marketing environments. Interactive marketers today sound just like big direct mail marketers did then.

Unfortunately, for the interactive marketing folks, the similarities stop there… Even though the highest percentage of upside from a marketing database typically derives from new streams of revenue, direct mail is so expensive that the mailers can justify a marketing database and a top-notch analytics team to help manage costs. Unfortunately, since email marketing is so cheap, interactive marketers can’t make the same argument.

Email Marketing Grew Up Out Of Advertising, Not Direct Marketing  

Email CPM (cost per message) pricing was borne out of mass advertising which has historically focused on how many eyeballs see a message. Take a huge list, send the same message to everyone, and pay volume pricing – the more you send, the cheaper it is. OK – perhaps this made sense in 1997 when email marketing was a novelty but, let’s be honest, this pricing model is totally out of whack with how marketers want, and need, to leverage email today.

To their credit, leading email marketing service providers (EMSPs like Responsys, e-Dialog, Epsilon, and Cheetahmail) have been actively working on the applications that they provide to deliver:

  • Access to a richer dataset.
  • Tools that support data slicing/dicing and more granular targeting.
  • Improved campaign design and management functionality like event detection, rule- based dynamic content and dialog campaigns, and improved campaign automation.

But, as these vendors work diligently to provide their clients with the tools that they need to deliver targeted, timely, and relevant communications, they consistently struggle with downward pressure on CPM rates (which, today, are fractions of a penny per message). Last week I spoke with the CEO of a leading EMSP who told me that no matter what pricing elements they propose, prospects consistently turn the pricing into a CPM calculation to compare competitive vendors.

The Cost Of Relevance

While I am all for generating healthy competition amongst vendors, companies need to understand that boosting the relevance and sophistication of their email programs comes at a cost. What are the major cost components?

  • Analytic data mart: A “data sandbox” that provides an area to explore data, profile subscribers, analyze behavior, and identify key pieces of data that can be leveraged to increase the success of your email programs.
  • Analytics team: You have a sandbox, you need people that know how to play in it, develop business hypotheses, predict results, etc.
  • Marketing database: Different from the analytic sandbox, this operational marketing database is a simplified data structure and only incorporates the data required to define, execute, manage, and measure current email programs.
  • Campaign management and automation tools: These tools sit atop the marketing database. Marketing users (or service provider staff) leverage the tools to define, automate, and execute campaigns.

Recognize that all of the things I note above can vary dramatically in cost and scope and can be achieved in different ways:

  • In partnership with an email service provider.
  • In partnership with other providers (e.g., database marketing services providers like Merkle or Epsilon).
  • If you have the in house skills, internally in your own shop with support from your IT group.
  • A combination of the above.

Which way to proceed depends on a number of factors that I will be happy to address in future posts. But, the key point is… If you don’t do these things somewhere, you will not be able to improve the relevance and sophistication of your email programs.

Is eMail Doomed As A High Quality Relationship Marketing Channel?

Ultimately, I am trying to help email marketers build a business that will help them increase the revenues and longevity of the email channel. That case requires investment in improved data capture, data integration and management, and data analysis capabilities – all of which cost money. Email marketing specialists with deep knowledge of the channel are in a great position to offer these capabilities, but these vendors are stymied by CPM pricing. What will it take to truly move email marketing beyond its position as just another “mass advertising” channel?

Demonstrating The Brand Value Of Email January 29, 2008

Posted by Elana Anderson in Customer Analytics, Database Marketing, Marketing Measurement, Marketing Strategy, Online Marketing.
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I had the opportunity to catch up with Robert Raines, VP of Product Management & Creative Services at E-LOAN last week. I first met Robert several years ago when he was getting the company’s email programs off the ground. Robert shared with me some of the things that he’s accomplished since we last spoke and, as always, he had some great insights.

E-LOAN wanted to evaluate the impact of its email program 

Robert is a firm believer in testing and, more specifically, using control groups to measure the impact of email marketing activities. To determine the long-term benefit of its email program, the E-LOAN team created a randomly selected universal control group. While the control group still received transactional email communications (e.g., “We have received your application”), it received no email marketing treatment whatsoever for a period of 18 months.

To ensure that individuals selected into the control group were excluded from all email marketing efforts, the team created an exclusion table in its marketing database and automatically excluded the control group from any database extracts that were sent to its email service provider (Responsys).

What E-LOAN learned

What was E-LOAN looking for? The company wanted to evaluate the application rate of the mailed population vs. that of the unmailed population (the control group) over an 18-month period. As you might expect, at the beginning of the test there was very little difference in the application rate of the two groups. But, over time, the emailed population had a significantly higher application rate. So much higher that, according to Robert, the difference alone is enough to justify the total annual cost of the company’s email program.

Robert is also quick to point out that it’s not just about being in the inbox that matters. The E-LOAN team works hard to ensure that its email program is relevant and it uses a mixed strategy that includes broadcast messages (e.g., “The Fed has lowered interest rates”) and highly targeted, event-triggered communications.

Recommendations

Email marketers often complain that they don’t have enough staff and struggle to manage what’s already on their plate given the staff that they have. I believe that this complaint becomes a self-fulfilling prophecy… Email is cheap, just blast it out, and we’ll keep the bare bones operation going… To break through this cycle, email marketing managers should:

  • Devote 6-8 hours of the team’s time to implementing a test and measurement strategy. As a manager myself, I know that it’s possible to squeeze some amount of extra time out of the week. If you are really committed to making email marketing more strategic in your company, find 15-20% of someone’s time and focus it on test and measurement as Robert has done at E-LOAN. Sure, the E-LOAN test that I’ve shared here took 18 months, so start with something smaller. For instance, test the difference between a broadcast newsletter and a newsletter with dynamically targeted content.
  • Trend results over time. A quick test to show that targeted content generates higher open and click rates is indeed interesting. But, it’s more interesting to trend this information over time to evaluate the sustained value of a targeted vs. untargeted program.
  • Document a business case. If your goal is to improve the internal stature of your email efforts, get more budget, and grow your team, then it’s imperative to document your case. Avoid doing this at an individual campaign level and comparing metrics — like opens and clicks — against industry averages. Focus on the bigger picture and build a case that exposes the real business value of your efforts. What is the ROI of targeted vs. broadcast communications? Or, as in the E-LOAN example, do your customers buy more if they receive email marketing communications from you? This is the kind of case that your bosses need to free up more resources.