Multichannel Marketing Class June 11: Final Case and Wrap Up

We had a great last class with several guest evalulators from industry and Dr. Geoff Gordon from NIU. Students presented the final case which was to put together a multichannel media strategy for an insurance company. The additional challenge was to work through the agent network. The students did a fabulous job. They recognized the importance of the database as a central respository of information across channels. Several groups suggested interesting segmentation strategies. I was impressed with their creative suggestions for using social media, although with the age of the insurance agents it might be difficult to get them on board. Also, Rob Jackson pointed out with all the regulation in the insurance industry and privacy regulation and concerns it might be difficult for agents to really participate in such an open media. We learned in four weeks about all the major media channels, direct mail, email, search, internet, etc., and about databases, analytics and measurement related to multichannel marketing. I think media channels will become more and more fragmented and marketers will face more challenges in the future. Thanks again to NIU's Marketing 660 CE1 MBA Class, Special Topic: Multichannel Marketing, for a great four weeks!

Multichannel Marketing Class June 10: Measuring across channels and PPC

We talked about a number of different ways to measure responses across channels. I likened the search for the ability to measure across channels and attribute response to specific media actions to the search for the Holy Grail. There are so many new media and it is difficult to know if the response came from the last sales contact, banner ad, or search stream. Approaches vary from surveying consumers to field experiments (treating one group differently from the control to see if there is a change in sales or response rates) to building sophisticated models to simulate and measure response. I shared some research from Don Schultz at Northwestern where he has used survey data from an online panel to then determine media influence. In the example Don gave us, Auto Makers were spending too much money on television advertising and not enough on the internet, in terms of perceived influence. Industry data is useful as a starting point but many marketers want to see what the effect is on response in their particular company situation. The search will continue for the best models.

We also looked at Pay Per Click in Google and saw how expensive some keywords can be and discussed bidding strategies. It can be a good strategy to go for the third or fourth spot to save money and still be 'above the fold.'

Multichannel Marketing Class June 8: Trends in Multichannel and SEO

Bob Arkema from Johnson & Quin led us in a lively discussion of how the direct and interactive industry is changing in a post financial-meltdown world. For the first time since data has been kept, direct mail spending decreased last year. Search and social media spending are predicted to grow but most other media are flat or declining. Companies are taking a good, hard look at what they mail and how much they mail. Mail is seen increasingly as a companion to other channels, such as online or email, which is consistent with the multichannel theme of our class. I have heard similar comments from other direct mail providers. Specialty houses that can do smaller print runs using variable digital printing for highly personalized communication so far seem to be holding their own, although there has been a lot of industry consolidation. It is my impression that we are living through an unprecedented change in the industry. Much of this change was driven by the collapse of our financial institutions, many of whom were heavy direct mailers.

The DMA (Direct Marketing Association) in New York itself has gone through several rounds of layoffs. I recently was nominated for a position on the board of CADM (Chicago Association of Direct Marketing) so I will get to help guide this organization through these troubled waters. In times of downturn, it always seems to me that basic marketing principles are key. Best Buy survives because it has a clear differentiation strategy and by the way makes great use of its customer data. Circuit City tried to play catch up but just could not distinguish itself in the marketplace.

Catching up from last week, we also talked about SEM (Search Engine Marketing) and SEO (Search Engine Optimization). Search is divided into paid versus organic search. Keywords are the terms users employ when searching for something. Organic search is free. Search engines use algorithms to determine page rank. Web spiders or 'crawlers' search the web and analyze pages to determine page rank. In natural search, these programs are looking to see that the blue title onthe top matches web site content, that the content of the web site matches the keywords used in search and to some extent the keywords in the HTML code, and that there are sites linked to the site and that the site links to others. These crawlers cannot read pictures so it is important to 'tag' pictures with descriptions that match the keywords the company wishes to identify with the site.

We also talked about the importance of good writing in business communication. I will spot each group three and only three poorly constructed sentences, typos and/or grammar mistakes in deference to our short-class format. After that, it is a point taken for each problem noted by me. We talked about the proper use of demonstrative pronouns. Except in rare cases, pronouns such as this and they in formal writing need to be substituted for a proper noun or have some kind of additional noun used with them. Instead of saying "This is important in multichannel marketing,' for example, substitute "This trend" or "This concern." Avoid addressing the audience as 'you' except in persuasive communication.

Multichannel Marketing Class June 2: The Multichannel Database Continued

Joe Stanhope from Alterian built upon what Joe Decosmo from Allant said last night about the importance and also the difficulty of developing a database that incorporates data across functional areas and across customer touchpoints. Joe talked a little bit about Alterian, which leverages its partner relationships to help companies put all the data together and then run analytical software, campaign management software, email marketing software and web content software all using the same customer database. Joe gave an amusing example of his customer contact experiences with American Airlines. In spite of the fact that Joe is an Elite status flier and American knows a lot about him, the company still fails to make relevant offers to him using his personalized information. He has received thirty emails from the company in the last few months but offers are to where he does not fly or for benefits he does not wish to receive.

I completed our database marketing module by talking about how databases are put together. Companies typically take internal information such as customer transaction data and name and address and purchase external information, a process known as data enhancement. From this information, companies create modelled data such as RFM scores (Recency, Frequency and Monetary Value) which are usually computed in the form of deciles (ten groups), or quintiles (five groups). Customers are placed into one of the groups and marketed to accordingly. There are other ways to create modelled data and assign group scores. We talked about an alternative to RFM used by Marriott Vacation Clubs called CAP, but companies also engage in more sophisticated modelling techniques. Thus, the three types of data, modelled, internal and external, make up the basic parts of all customer databases. Types of external data might be lifestyle or psychographic data such as Claritas, PRIZM (You are where you live) which we examined in class. We also talked about how companies like Acxiom, Experian and others take data from different sources and then append that data to outside customer records to add value. These firms also use these different data sources to create their own clustering and segmentation models. Typically, a company will give an outside vendor their file to be cleaned (merge/purge, de-dup) and then records will be matched using a match code and data appended accordingly. There is a great deal of work to be done internally also to keep data clean, such as getting rid of bad records, including change of addresses, and general quality maintenance. Good data quality is a constant process. I talked a little about my research on data quality and the presentation I will make at the Marketing Science INFORMS conference on the relationship between organizational factors like a stated strategy and good teamwork and vision around customer data quality and ultimate data quality. Marketers are worried today about social media and other new marketing tools and using all channels that will be effective should be a priority for markters. However, data quality is a discipline that can reap many benefits as customer data is used across all channels.

Multichannel Marketing Class June 1: Database Marketing and the Multichannel Challenge

Joe DeCosmo, EVP from The Allant Group in Naperville, addressed us on the difficulties of developing and maintaining customer databases to support multichannel marketing. Companies want to address the customer individually with an offer that is relevant and timely, but often don't have the data structure to support that effort. Ryan underlined these problems in his presentation, where he said that his own company has a customer database but does not really use the information to market across channels or just to mine the exisitng data in stand-alone marketing campaigns. Joe outlined a mapping process that we have talked about in class whereby customers are increasingly using a multiple channel approach to purchasing and how companies can get started developing databases that integrates across all customer interactions. Joe suggested that we use the term interactions instead of classical CRM. This terminology would be consistent with our approach in this class, where we have emphasized the importance of interactive marketing from the first day. Joe also stated that the ROI on multichannel marketing is anywhere from $4-8 for every dollar spent.

We talked in my portion of the class about The Loyalty Effect and the Net Promoter score as developed by Frederick Reichheld and the eighty/twenty rule and moving customers up a value pyramid as outlined by Arthur Hughes. We then had a discussion on data privacy and security. Privacy law has been evolving in this country and the internet has made everyone more concerned about data privacy in particular. The European Union has a stricter policy and an explicit right to data privacy. In the U.S., we focus on self-regulation and guidelines, such as the FTC Guidelines, but we still have legislation in the area, such as CAN-SPAM and the Do-Not-Call legislation. Privacy is an emotional issue. Consumers are concerned about privacy but don't really want to go through the effort to select the exact offers they would receive from all their vendors. We talked about a privacy policy as a way to help consumers feel more comfortable about doing business with a company, as well as using privacy seals from a trusted organization on the web site. We also looked into what the future might hold as technology allows marketers to target ads during our private conversations and as we are entering stores and shopping malls.

Multichannel Marketing Class May 27th: Social Media

We had a great introduction to social media from expert Dana VanDen Heuvel. Dana spoke of the crisis in mass marketing as people lose trust in mass advertising and are interested in blocking advertising. He also said that advertising impact is difficult to measure but the same could be said for social media at this stage of the game. Nonetheless, the internet and digital marketing has put the customer in charge and marketers need to monitor what is going on with blogs, social networking sites, customer reviews and the like. Dana said some companies are now using these types of digital media to supplement or even replace traditional marketing research, although I think marketing research will always have a role to play. The problem with monitoring what is being said on the web is that a marketer can't know the demographics of those that are participating and only one percent of those on the web contribute to blogs, reviews, etc. The results of only monitoring web buzz can be biased.

However, there are great benefits and marketers cannot ignore what is going on in blogs and social media. Comcast Cable has a mechanism to track what is going on in Twitter for example and to respond to and fix customer problems before things get out of hand (they responded after a famous YouTube video in which a technician was photographed having fallen asleep waiting for his own company to respond to a customer service call).

The bottom line is that marketers can't afford to ignore these new forms of media. Dana also emphasized the importance of collecting and analyzing data regarding conversations about a particular brand on the web and about particular customers. We talked about using data contextually in advertising to deliver more relevant messages so the material was a nice tie-in to what we will be discussing this week: Creating databases to implement multichannel campaigns and to analyzes the responses.