Consider the state of customer engagement today. Estimates indicate that the typical American consumer is bombarded with nearly 600 marketing messages in an average day. There are more than 200 billion email messages sent each day, yet 97 percent of all email sent is actually spam, according to an April 2009 Microsoft report. In fact, beyond the online world, the kinds of mailings consumers call "junk mail" accounts for more than 100 million pieces of mail each year, and 44 percent of this unsolicited outreach ends up in a landfill -- unopened.
The bottom line is that it isn't just the channel that customers are rejecting -- it is the message. Or simply, customers are rejecting irrelevant messages and are swift to reject the brands they associate with them. A 2009 CMO Council study revealed that 63 percent of consumers have or are considering abandoning a brand altogether because of irrelevant emails and junk mail.
To understand what messages and communications channels are most valued by today's customer, we partnered with the CMO Council to capture the voice of the average North American consumer. Through our research, customers overwhelmingly stated that, regardless of channel, relevancy is what they valued -- if not required -- in order to maintain a brand relationship.
The research also found that consumers have become promotion-weary. Promotional offers are increasingly ignored; only 41 percent of consumers open promotional emails, with a slightly higher margin opting to open promotional offers sent via traditional mail. What's more, email fatigue seems to be setting in as opt-in mailings, like e-newsletters, appear to be losing value. In fact, more than 90 percent of consumers are actively unsubscribing today in an attempt to restore order to their inbox. Just 40 percent consider these communications to be "must-read" emails, even though they've asked to receive them.
Consumers are keenly aware that they have the power to disconnect, often taking the opportunity to opt-out, even when they might have originally opted-in. In fact, 54 percent of consumers indicated that a relationship defined by spam, irrelevance, and low value would result in their total disconnection from a program.
The precision marketing process
Step 1. Consumers want precision marketing. On the brand side, this process must begin by first deciding what problem, or pain point, you are seeking to address. For example, are you trying to reactivate dormant customers or achieve a greater response rate to a particular promotion?
Step 2. Next, marketers need to evaluate and then leverage the data and campaigns currently in place. In many cases, your existing household or subscriber files are sufficient to develop targeted segments for use in a test campaign. Begin small by establishing a customer segment with the desired level of engagement and then identify customers whose prior behaviors and engagement history most closely match this first group. This new customer segment can then be divided into a target group and a control group.
Step 3. The next step is to synchronize your campaigns and determine the best message for the channel. In a test case with Best Western International Inc., the world's largest hotel chain, we examined active reward members and identified 100,000 who were similar in their Best Western relationship to the most high-value customers -- meaning those with the propensity to either apply for a cobranded MasterCard and/or engage in the "More Rewards, Faster" summer promotion. We then targeted half of the group with personalized messaging through monthly loyalty statements. We leveraged the statement as a promotional document to tell loyalty program members how much faster they could accumulate points during the promotional period.
Step 4. Once a test campaign has been launched, the next step is to measure the results based on a wide range of criteria and, most importantly, bottom-line measures. In less than eight weeks, Best Western enjoyed notable target group gains, including a 39 percent increase in number of stays and a 30 percent increase in revenue over the control group.
Step 5. After the initial test, it's time to refine and repeat the above steps to produce the same or different results. Most importantly, you need to understand why the results are what they are. Working with another large hotel chain, we analyzed customer data from the company's loyalty program to understand how more-active customers respond to offers. Based on that insight, we identified a segment of dormant loyalty program members who had a high propensity to re-engage with the hotel.
We reached out to those dormant customers with a series of offers (via email and regular mail) that normally only active customers would receive on their loyalty statements. Again, in less than eight weeks, the company realized an ROI of 1,090 percent by tapping this new, previously inactive customer segment
Through the strategic use of personalization and targeted promotional messaging, the organization created a highly measurable communications channel. In an environment where few marketers are realizing the full revenue potential of existing customers, strategies and solutions that help create deeper relationships with customers and increase return and response are critical.
Consumers agree that the era of mass messaging simply does not resonate, especially not in today's on-demand world. Today's consumer wants relevant, timely messages. They want engagements that are tailored around their history with the companies they choose to do business with. They want companies to peek -- not intrude -- just below the surface of name, address, and phone number. To personalize a greeting is simply not enough. Marketers must take that next step toward precision marketing and leverage whatever insights are available to deliver meaningful promotions and timely content to willing customers. Loyalty customers want to be recognized as more than a number. They're asking you to truly know them.
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