Wednesday, May 27, 2009

Multichannel Marketing Class May 26th: Multichannel Retailing

We covered multichannel retailing using a webinar case study from Exact Target on Johnston and Murphy. Johnston and Murphy is an upscale shoe retailer, primarily men's shoes, with three fullfillment channels, store, catalog and internet (I am assuming that they also have a dial-in call center for fulfillment but it was not mentioned). J&M contacts its customers via direct mail and email, in-store promotions and its web site. It did not seem that the company used brand advertising. I would think that the economics of its business is such that direct communication is more cost effective.

The company has 700,000 customers on its database and knows who they are and can contact them directly so direct and interactive marketing make sense. J&M started by segmenting its current business into eight key buying segments with different characteristics. By capturing 60% of customer email addresses at point of purchase it can then use purchase data to determine which segment a customer belongs in and tailor offers to them. All interaction is captured in the customer database; the company uses match back on address, phone number, email, etc. to put all possible information in one place. Three emails are sent to new customers within 40 days and current customers also get a three email cycle, offer, discount 1, discount 2. "Lost" customers are those who have not ordered in two years and they also receive email treatment.

The program has been successful for J&M. The email program is set up and then adjusted every six months or so so the communiation is automated. Data collected from transactions is modelled to determine the best combination of communications to elicit the maximum response. Students in class presentations talked about other retailers doing the same type of marketing effort by building a database, capturing transactions, segmenting and targeting. Student also reinforced the research mentioned in class that multichannel shoppers are typically more profitable shoppers.

This webinar is a good transition to the next two sections of our class. Email and Direct Mail are channels that are 'push' channels and are acquisition oriented. We use military language like 'target' and 'capture' to describe our efforts and the marketer is still somewhat in control. As we began to disucss last night, with the internet as a channel, control shifts to the consumer and we will hear more about that next week with our discussions on internet and social media. Next week we will also learn more about data analytics, which will aid understanding of the modelling efforts J&Q mentioned.

Thursday, May 21, 2009

Multichannel Marketing Class May 20th: Multiple and Electronic Media

There were a number of alternative ways that Newport News could use to obtain information about customers who had recieved a catalog but then not put in a key code when they entered their order or those who had just come in through the internet. We discussed asking a brief survey after the order (making sure that the survey did not increase shopping card abandonment) as well as using a 'matchback' process. Matchback involves sending purchase transaction history and catalog mailing data to a company that can essentially do a mail/merge and identify orders that came from those who had recently received a catalog; the firm sends the file back flagging potential matches and Newport News could use this file then to calculate ROI on its catalog mailings.

We had a presentation from Mike Malley from Con Agra on the multichannel media launch that was used to introduce the new Healthy Choice shelf stable meals. We could see the integration between the internet and more traditional media such as PR, Advertising and in-store promotion. Mike talked about using an email blast to loyal, opt-in healthy choice users, which was a good tie-in with out discussions on email marketing. We discussed that the CAN-SPAM act requires a valid reply to address, an opt-out provision, a street address and that the subject line be clearly labelled as promotional. Companies like Exact Target make it easy to be CAN-SPAM compliant. We evaluated some email offers to see if they were CAN-SPAM compliant and also evaluated the offer and the design based on the principles we had learned the prior evening.

We also talked about other electronic media channels, such as television and radio, which still have a place in today's media mix. Radio listeners don't switch channels as much but it is hard to use radio for direct response because people are often driving and can't always write down a number or dial the phone. Television advertising reinforces the brand message and Direct TV is a less expensive way of eliciting response, and is trackable and measurable, which we direct and interactive marketers really like. Health and fitness and products to make people look good are good targets for infomercials. Telphone is interesting because it can be both a media or promotional channel as well as a response channel. Inbound calling and B2B outbound are currently popular uses of the telephone by marketers because of the restrictions of the Do-Not-Call legislation.

Wednesday, May 20, 2009

Multichannel Marketing Class May 19: Direct Mail and Print

This class on direct mail offers is always one of my favorites to teach. It is intriguing to go over different direct mail offers and see why and how they were constructed the way they were. An offer should always ask for a specific action, have a specific deadline and tell me what I am going to get if I respond by that deadline. As direct marketers we are direct RESPONSE markters. We use a database to identify and track our customers, communicate with them in a way that asks for a specific action and we measure the results so we can expand the communications program if it is successful. We looked at two direct mailers that I had received, one from Travellers insurance which made an offer to lower my costs for auto insurance. We thought the package was reasonable (it had a letter with an offer restated several times, a P.S., a lift slip and a response card) but maybe not personalized enough because it did not express how much I could personally save. Our guest Cyndi Greenglass from Diamond Marketing Solutions reinforced that we use "you" language in persuasive communication because it does involve the readers and get them closer to taking the desired action. The mailing from Mazda was attractive but the offer was buried and we were given a choice, which can be a death knell for offers. People start thinking and then they stop buying. Both our guests talked about the importance of mathematics in modelling. Michelle from Abbott Labs demonstrated how Abbott isolates the results of various media through response modelling. Cyndi Greenglass from Diamond talked about testing principles for direct mailings, including establishing a control and testing one variable at a time to improve on the results of the control. She gave an example from Pitney Bowes where they kept testing to try to improve the control package. I asked students at the end to think about the problem in the Newport News case in the text. With 40% of orders coming from the web, Newport News was having a hard time isolating the effects of their marketing because they could not use the 'keycodes' associated with catalogues to track response. What should Newport News do to handle this problem?

Multichannel Marketing Class May 18 Intro

The first night we covered what it means to be a direct versus interactive marketer and all the different channels that marketers are faced with managing today. We made the distinction between a media channel and a fulfillment or distribution channel. There are many media channels today and some of them are quite new, such as social media, facebook, linkedin, twitter, etc. One trend is that consumers are in charge and want to define the brand, such as the web site created by consumers that revolves around Philadelphia Cream Cheese. Who knew consumers were so passionate about the brands they use? Marketers are dealing with how to integrate these new media channels into their plans. At the same time it is becoming more difficult to isolate the effects of one media channel veruss another on purchase behavior. Online influenced retail sales are growing rapidly and consumers will go online to hear more about informaion they have received in print or in a radio or TV commercial. Our guest speaker Michelle Blechman from Abbott Labs said how difficult it is to isolate the effects of various media in the pharmeceutical industry and that top executives have to be educated; even if the highest ROI is from the web, eliminating TV advertising won't necessarily increase ROI because without the TV spend, the brand awareness dips and people stop going to the web. Michelle really stressed the importance of integrated marketing communications. She also reinforced what I said about the pressure on marketers to measure and report ROI and justify their existence. I was recently interviewed on social media usage in marketing. Here is a link to that article.
http://www.cob.niu.edu/highlights/NIU_CHI_0509.pdf