These are the times of great gnashing of teeth and rending of garments. For many, the wolf is huffing and puffing at the door. The question of the moment is, "How do we increase sales and lower our cost today?" The answer is to look to your two greatest levers: database and accountability.
In my experience, this is not what marketers want to hear. They want to heroically save the day and swing for the fences. Killer creative and irresistible offers, videos that go viral spring from your thigh. But really, the chances of hitting a home run when you have to are small. The ability to make incremental gains through database and accountability is much greater.
Here's what I mean:
I view the world through direct marketing glasses, and I know that nothing contributes more to your eventual success than database. It is not a warehouse or storage space—it's the aggregated intelligence that lets you allocate your precious resources in the most efficient manner. The old saw is that you can have a great product, offer it to the wrong people and fail…or have a mediocre product, offer it to the right people and succeed.
I would suggest that we are absolutely awash in data of all kinds—good, bad and indifferent—and we are drunk. We have more data than we know what to do with, which breeds overconfidence, which in turn yields waste and inefficiency.
For instance, I asked an executive I know from an extremely well-respected database company to pull my record. I'm very active in media and respond to all sorts of things that interest me, both as a consumer and as a marketer. I am confident that there’s a ton of information out there about me in the cloud. The result? My name was wrong and the e-mail on record was one my youngest daughter had four years ago.
Is this grandmother survey statistically projectable? No. Does it cause all sorts of bells to go off in my head? Yup. Go try this yourself with your record and find out if your emperor is wearing any clothes.
1. Pare down your database focus to a handful of actionable fields—data that leads to immediate action. I think these fields should contain all contact information, basic demographics (such as age, sex, ethnicity, areas of interest and business drivers) and a short purchase history.
2. Make sure the data in each of these fields comes from an unimpeachable source and that it is no more than 30 days old. Given the astonishingly high attrition rate of data, this alone will provide an immediate boost to your marketing efforts. My guess: at least 10%.
3. Use the brief purchase history, or work that you have already done, to overlay a very basic view of customer lifetime value. And then apply a very basic rule of thumb: invest more in your best customers, because the return is likely to be higher. Continue prospecting, but turn down the flame.
Accountability simply means measuring what happened. Not by inference but by the number of beans that are in the jar. It will show you the money that’s being squandered, or just left on the table. For instance, Franklin Covey's Public Programs Group was really pleased with the performance of their Website in generating seminar registrations. Revenue was growing steadily. But when they analyzed the metrics, they found 50% of customers who put a seminar into the shopping cart dropped out before completing the transaction. That's a sizeable hole in the bottom of the jar.
1. Code and measure the outcome of each significant decision a customer has to make. The emphasis here is on the word "significant." You simply can't read and respond to all the metrics and reporting that is possible. Eyes cross and avoidance behavior sets in. For instance, if it were an e-mail campaign, I'd look at the volume going out and the bad addresses that came back. How many got to the Web page and how many bought, and average order. If these metrics are off, I can always look deeper to things like open rate and click through.
2. Set a high bar—each of these indices has to be 10% or higher. Test database variables, like segment, until you reach double-digits.
3. What did you spend and what did you make? What's the ratio? If it's in the 10% range, do more of it. If it's 25% or over, move on.
Like I said, the suggestion of database and accountability usually meets with great resistance. I hear immediate assurances that database is the best it can be and that everything possible is being done to account for every penny spent. In my experience, most companies have only dusted off the surface.
The bottom line: This roadmap may not be the most glamorous, but it will get you where you need to go.
Scott Hornstein is the co-author of Opt-In Marketing and president of Hornstein Associates in Redding, Conn.