2011 Report on Best Practices

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1 2011 Report on Best Practices Richard J. Scholl May 19, 2011

2 KEY FINDINGS FROM MARKETING BENCHMARK REPORT Once again for the fifth consecutive year this is an attempt to distill key findings from the MarketingSherpa Marketing Benchmark Report. Here are the implications I see as noteworthy or significant: is still very viable. And it seems to have unlimited potential when it is used as part of an Integrated Marketing Campaign, especially when involving emerging marketing channels including social media. Now that is maturing, improvements are typically measured incrementally rather than in big leaps. Performance is best accelerated when multiple best practices are combined. As marketing matures in an organization, marketers are more likely to employ tactics that are fast and easy rather than the most effective. Yet executives perception of ROI often determines the investment they ll make in marketing. The most mature marketers those in the strategic phase are twice as likely to increase budgets to maintain continuous marketing improvement. Challenges continue and evolve. Marketers continue to grapple with the need to develop highly relevant content to targeted audiences. To remain relevant, they must develop more and more content, which is time-intensive. Many organizations lack the resources to develop more and relevant content. Here are the most significant challenges by consumer channel: Targeting recipients with highly relevant content 66% Getting people to opt in to lists 46% Improving deliverability 39% Quantifying marketing ROI 37% Legitimate perceived as spam 35% Lack of an effective marketing strategy 33% SCHOLL NOTE: It is difficult at best to achieve success without an effective strategy, yet fully one third of marketers lack one. In trying to deliver relevance, marketers ironically use segmenting based on behavior more often than ing based on triggers, which is more effective and less difficult. 2

3 In trying to improve deliverability, marketers have found that the most effective tactic is to remove non-participating subscribers. Which metrics matter most? Marketers continue to track delivery, open and click through, but there is still no consensus on the formula that should be used to calculate each metric. Moreover, marketers are now paying increased attention to downstream metrics including post-click conversions and revenue per , which are needed to track ROI and justify budgets needed for continuous improvement in results. metrics by percentage of organizations tracking them: Click through 92% Open rate 90% Delivery rate 81% Clicks per link in 51% Clicks per 51% Post-click conversion 44% Response by list segment 36% Revenue per 33% Social sharing rate 18% The open rate, once the predominant metric of marketing, has been surpassed by the slightly more definitive click through rate; the open rate is now considered a tentative metric at best. What are your objectives? Not long ago, increasing sales revenue was the most important challenge; now it s the most important objective. Here is how marketers rate marketing objectives: VERY IMPORTANT SOMEWHAT IMPORTANT Increasing sales revenue 78% 16% Improving customer relations/retention 72% 23% Increasing lead generation 67% 25% Increasing web site traffic 61% 33% Building brand awareness 60% 32% Increasing size of opt-in lists 50% 41% Supporting offline marketing 31% 44% Engaging social media audiences 31% 45% 3

4 How effective are marketers in achieving these objectives? VERY EFFECTIVE SOMEWHAT EFFECTIVE Increasing web site traffic 39% 51% Building brand awareness 37% 56% Increasing sales revenue 33% 56% Increasing lead generation 32% 53% Improving customer relations/retention 28% 61% Supporting offline marketing 26% 65% Increasing size of opt-in lists 16% 47% Engaging social media audiences 9% 45% More than one third 37% indicated that they are not effective in increasing size of opt-ins. And nearly half 46% are not effective in engaging social media audiences. Not surprisingly, marketers with the most experience in integrating and social media are having the most success. ROI and budgets. When planned and executed strategically, marketing often produces the highest ROI of any marketing medium. And ROI plays an increasingly important role in executive decision-making about how much budget they re willing to invest in . Specifically here are the perspectives: marketing will eventually produce ROI. Let s increase budget conservatively. 42% is producing ROI. Let s increase budget liberally for continuous improvement. 26% marketing is basically free. Let s keep it that way. 24% marketing is unlikely to produce ROI. Why invest more? 8% The irony is that only 41% of organizations reported that they have a method for quantifying ROI. Changes in budget allocations. When asked how marketing spend would change from 2010 to 2011, here is how marketers responded. 4

5 INCREASE DECREASE Web site 64% 2% Search (SEO/PPC) 62% 5% Social media 53% 4% 42% 2% Online display ads 41% 14% Telemarketing 30% 14% Public relations 30% 7% Direct mail 25% 22% Broadcast ads 29% 15% Print ads 37% 11% SCHOLL NOTE: The shift in spending from traditional to new media continues, but more marketers are increasing budgets for traditional media than are decreasing. This could be because traditional media often play a key role in Integrated Marketing Campaigns in which synergy across channels and media produces optimal results. Incidentally, 55% of organizations do not include staffing costs in their marketing budgets. Budgeting for online marketing. Overall average share for online marketing is 42% of total marketing budget. Within the online budget, average share allocated to is 19% (only 12% for B2C organizations). budgets rising. Here are the numbers: Budget increase/decrease % of organizations Increase more than 30% 10% Increase 10%-30% 31% Increase less than 10% 23% 2011 same as % Decrease less than 10% 2% Decrease 10%-30% 1% Decrease more than 30% 1% is earning increased investment simply because it is one of the most effective marketing media. 5

6 What are marketers doing to enhance relevance? Here are the numbers for B2C organizations: Automatically send based on triggers 60% Segmented campaigns based on behavior 59% Allow subscribers to specify preferences 55% Segmented campaigns based on sales cycle 50% Dynamically personalized content 36% How much time/effort required? That is, how difficult is each tactic? VERY SOMEWHAT EASY DIFFICULT DIFFICULT Allow subscribers to specify preferences 8% 34% 58% Dynamically personalized content 21% 30% 49% Segmented campaigns based on sales cycle 20% 44% 36% Automatically send based on triggers 15% 49% 36% Segmented campaigns based on behavior 26% 53% 21% How effective are the tactics? VERY EFFECTIVE SOMEWHAT EFFECTIVE Automatically send based on triggers 55% 45% Segmented campaigns based on behavior 49% 50% Segmented campaigns based on sales cycle 35% 64% Dynamically personalized content 34% 63% Allow subscribers to specify preferences 32% 63% Which tactics rated very effective for B2C specifically? Automatically send based on triggers 70% Segmented campaigns based on behavior 55% Dynamically personalized content 46% Segmented campaigns based on sales cycle 44% Allow subscribers to specify preferences 38% 6

7 Data collected. Quality and types of data are generally considered essential in satisfying recipients. COLLECT/USE COLLECT/DON T USE DON T COLLECT Tracked behavior/activity (purchases/views) 46% 16% 30% Volunteered format preferences (html vs. text) 37% 8% 48% Volunteered content preferences (topics/news vs. promos) 35% 8% 50% Volunteered delivery preferences (frequency/day) 18% 5% 65% Data collected and used specifically by B2C marketers. Tracked behavior/activity (purchases/views) 54% Volunteered content preferences (topics/news vs. promos) 37% Volunteered format preferences (html vs. text) 22% Volunteered delivery preferences (frequency/day) 15% Data collected for personalization specifically by B2C marketers. Personal name 77% Source of lead 50% Demographics 26% Address 23% Phone 10% Company name 11% 7

8 Personalization tactics can be highly effective in increasing conversions. For example, a health and wellness retailer generated a dramatic increase in sales from product recommendations in personalized order confirmation s. How do you increase list size? Delivering relevant content depends on marketers ability to identify their customer s communications preferences. Here are the tactics they use to drive list growth (B2C marketers): newsletter subscriptions 78% Online events/webinars 67% Social sharing buttons in s 63% forward-to-a-friend 61% Registration during purchase 46% Offline events/trade shows 42% Paid search 26% Registration for downloads, etc. 20% Co-registration programs 15% Mobile capture 13% Tactics like co-registration, paid search and trade shows are deemed difficult. Whereas adding buttons to communications for forwarding or social sharing are easy and effective. How effective are list growth tactics? Here is how B2C marketers rate the effectiveness of each tactic: Registration during purchase 71% Registration for downloads, etc. 54% Offline events/trade shows 35% Mobile capture 33% Paid search 31% newsletter subscriptions 31% Online events/webinars 25% Co-registration programs 22% 8

9 Which social sharing sites are B2C marketers linking to with buttons in s to grow their lists? Facebook 95% Twitter 87% LinkedIn 25% Digg 16% Delicious 13% MySpace 11% As marketers learn the unique advantages of each social media application, they should become more effective in matching content with the appropriate social media bookmark. Most marketers are experiencing list growth: Somewhat positive our list is growing slowly 51% Very positive our list is growing rapidly 22% Neutral 22% Somewhat negative list is slowly shrinking 4% Very negative list is shrinking rapidly 1% A good list growth campaign should be tied to a welcome message or series of messages that capitalize on new subscriber/customer interest. Example: a state tourism agency provided an incentive offer for new subscribers and a welcome series to get them to interact with the site. Result: opt in increased 2,000% and conversion from welcome series averaged 31.4%. Prior to rollout of national ad campaign, they conducted testing. They bundled their magazine with the e-newsletter subscription and added an interstitial overlay screen on their home page to present the newsletter/guidebook offer to first time site visitors. They also used a two-part welcome series for new subscribers; one was sent within 24 hours of registration and the second within 7 days. Twice as many organizations used an advanced instead of basic web-based solution to execute campaigns. Comprehensive features are needed to fulfill increasingly complex tactical marketing requirements. 9

10 B2C marketers use the following to enhance deliverability: Remove inactive subscribers 71% Monitor and lower complaint rates 50% Use dedicated IP address 42% Employ delivery monitoring system 37% Utilize modified template 35% Use accreditation or reputation service 35% Work with deliverability/isp consultant 30% Which delivery tactics are most effective among B2C marketers? Dedicated IP address 50% Remove inactive subscribers 47% Accreditation or reputation service 35% Modified template 35% Deliverability/ISP consultant 33% Delivery monitoring system 29% Monitor and lower complaint rates 29% The more complicated your primary marketing channel, the more effective and valuable a professional service like accreditation, reputation and deliverability consultants will be to your organization. Metrics have improved. MEASURABLY DECREASED MEASURABLY INCREASED Delivery rates 14% 22% Open rates 20% 24% Click through rates 14% 31% Post-click conversion rates 13% 21% 10

11 Response rates that track subscriber actions from an to subsequent pipeline stages are improving. This progress comes at a time when many have predicted the decline of as social media continue to grow in importance. But social media need because it is the dominant permission-based messaging channel. Conversely, needs social media because social sharing is a rapidly rising list growth tactic. Define click through rate. Organizations calculate click through rates in more ways than one: Clicks divided by s opened 42% Clicks divided by s delivered 38% Clicks divided by s sent 20% Define post-click conversions. Again, organizations calculate differently. Here is how B2C marketers do it: Purchased a product/service online 57% Completed a registration form 19% Purchased a product/service offline 9% Downloaded information online 4% Called for more information 3% subscribers can now be easily tracked from initial opt-in through decision behavior and purchase history to ROI. The ability measure ROI is largely the result of advances in post-click conversion tracking understanding what actions the customer took after clicking the link. How do non-newsletter s perform for B2C marketers? Delivery rate 91% Open rate 24% Click through 14% These s are often more personalized than newsletters and give perception of one-to-one communication. They re often offer-oriented with a specific call to action. They may also be notifications automatically sent after transactions, registrations or other triggers. Unlike newsletters, they are typically perceived as more promotional than informational. 11

12 The continued absence of testing, even for B2C marketers. A remarkable 61% of all marketers and 55% of B2C marketers do not utilize testing in their campaigns. Yet improving performance depends principally upon testing. To optimize performance, smart B2C marketers test the following: Subject lines 94% Messages 67% Calls to action 63% Layout/images 61% Personalization 45% Day of week sent 42% Time of day 41% Landing pages 34% From line 30% 12

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