Engagement Marketing

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2 14 Engagement Marketing

3 Introduction marketing is hardly new - over the last 10 years or more it has become one of, if not the most prevalent customer communication channel. Despite the increasing popularity of marketing its potential as a way to build customer engagement or to develop lasting relationships remains largely unrealised. It is often cited that s immediacy, interactivity, targeting capability and cost effectiveness make it the perfect channel with which to deliver a customer engagement strategy. So why is so much of the we receive in our inbox still untargeted and why aren t more organisations using customer data to make their communications more relevant? This paper will consider how to create engagement marketing, discuss the challenges that marketers face and showcase some examples of organisations that are getting it right. Over the last 10 years e-marketing has become one of, if not the most prevalent customer communication channels

4 The Future is engagement marketing is best described as a communication to deliver a message that aims to acquire, convert, retain, grow, reactivate or service a group of people via . In its broadest sense, every sent to a potential or current customer at every point in the customer lifecycle could be considered marketing. Since its conception in the 90s, marketing has developed and grown substantially. The UK market for marketing platforms and services grew by an estimated 15.5% year-on-year to a value of 388 million by the end of 2011 (according the Econsultancy Marketing Platforms Buyer s Guide 2012). While has built a prominent role in the marketing mix, there can be no doubt that it is still in its infancy in terms of engagement marketing. Sadly, many s sent are still referred to, and delivered as, blasts i.e. we ve got the address, just send the offer to everyone. The good news for marketers is that, is still seen as a channel that offers a good return on investment, with 70% of company respondents rating as excellent or good in terms of ROI in the recent econsultancy census. The future success model in marketing is Engagement; commonly touted as a shift from broadcast to highly targeted s personalised to each recipient and attuned to their stage in the customer lifecycle. This uniqueness comes either from content (customised to subscriber preferences, data or behaviour) or timing (triggered by subscriber data, a key life stage event or behaviour). So why is customer engagement so important? Lifetime value and customer engagement are intrinsically linked. An engaged customer that is accurately targeted can be influenced to buy more; resulting in increased lifetime value. What s more, consumers that share their personal data expect brands to use it when they communicate. If an organisation is not sending relevant, timely messages it is likely that the recipient will disengage. A customer study cites irrelevant communication as one of the key reasons that customers choose to unsubscribe. Organisations that continue to disengaged customers may find their s delivered to junk folders or not delivered at all. This is not uncommon. Research from Return Path shows that 1 in 13 legitimate s sent by UK marketers go missing completely.

5 ISP s are working hard to ensure that SPAM does not reach the inbox. Tools such as Intelligent Inbox by Hotmail, Gmail and Yahoo put consumers in control by enabling them to prioritise content and block that they do not wish to receive. Google Priority Inbox takes engagement one step further and prioritises automatically based on what users respond to. If recipients don t engage with a sender s s, most likely to be those poorly targeted, these s are increasingly likely to be seen as SPAM. This ultimately results in fewer messages reaching the intended recipients and increased damage to sender reputation. A focus on customer engagement requires a step change in thinking for many Organisations. marketing has long been thought of as the tool of choice for tactical offers and promotions rather than an integrated engagement tool that can deliver value at every part of the customer lifecycle. However, organisations that harness the power of customer data, create relevant content and carefully plan, integrate and automate campaign execution can dramatically improve both deliverability and customer engagement resulting in increased ROI. One in 13 legitimate s sent by UK marketers goes missing completely* Getting organisational buy-in *Source: Return Path, September 2012 One of the key challenges for many marketers is changing the perception of . A simple way to begin to change the way an organisation views the role of as part of its customer communications plan is to change the metrics by which it is evaluated. It is not uncommon for organisations to set marketing objectives that are based on little more than the size of the database and its growth. There is often little validation of how much of the database is opted-in to receive marketing or how many addresses have been inactive for months and even years! Changing the success measures can change the way an organisation thinks about the role of in achieving the wider business objectives. This process begins by overlaying customer data with customer behaviour in order to highlight key engagement insights such as: How many of the high-value segment customers are opted-in How many of them have opened an in the last 3 months How many haven t opened an in the last 12 months What is the difference in Average Order Value and Average Frequency of purchase of customers that are engaged vs. disengaged with your programme Many also monitor success by measuring open and click through rates. If you are regularly achieving a 20% open rate is that always the same 20%. Are the other 80% ignoring or even receiving your s? Please note that the open rate is based on the loading of a linked image. Many clients block images by default. Therefore it may be possible to register a false reading i.e. customers may be reading s without images and therefore are not tracked as opened. Understanding these insights will help create relevant and meaningful KPIs that highlight the true value of marketing. That s not to say that there isn t a place for measuring the size of your database and campaign open and click rates, just don t focus on campaign driven metrics in isolation.

6 Collecting the right data drives success Once you have analysed your activity and set your programme objectives you can evaluate your programme registration to ensure that it best supports your plans. Registration is the key driver of data collection upon which your programme is built; sadly its importance is often overlooked. Getting the basics right will ensure that you collect quality data, and capture those essential pieces of information that allow you to derive maximum customer insight and predict likely behaviour. For example, if your customer analysis and profiling shows that size of family is a key driver of value, then number of children in household may be a key variable to collect at point of registration. Your registration process also provides the opportunity for you to communicate your intentions - how frequently will you contact your customer or prospect and what can they expect to receive from you. Whether your registration is a stand-alone process or part of the sales sign-up it sets the scene for all future contact so you need to get it right. Small changes can have a big impact on opt-in levels and therefore the effectiveness of your programme. Some simple checks include: Is it quick, simple and straightforward? Don t try to do too much at once as a lengthy process may impact on your opt-in rate Do you need to capture address, only, name, DOB, preferences, desired frequency to get what you need If you require a lot of information it may be better to provide a 2 stage sign-up process. Potentially restrict stage 1 to just name and thereby ensuring that you don t lost the vital contact information by making your process too onerous Use data validation to ensure you collect quality data What fields need to be mandatory and why? If you don t use it and you can t easily justify it then don t make it mandatory why does my pizza takeaway need my date of birth? Registration is the key driver of data collection upon which your programme is built; sadly its importance is often overlooked.

7 Be clear and explain what your customers can expect What is the customer signing up to? What can they expect to receive from you and how often will you communicate? This is important as it will optimise frequency levels based on customer expectations Have you collected explicit consent for everything that you intend to send? Don t state that you will only contact customers about their contract only later to them with unrelated products and services Make it compelling Why are they signing up what s in it for your customer? What will the customer miss out on if they don t receiveyour s? Can you provide exclusive content or offers for registered customers? Streamlining your registration process will ensure that you are maximising the opportunity to grow your database, and setting customer expectations of how you intend to use the data so there are no surprises.

8 Use data to drive long term value Data quality is the single most important barrier to effective marketing. Data not only influences targeting and segmentation, it can also determine your content (by using dynamic images and copy), optimises your frequency, triggers campaign timings and impacts on your deliverability making it the constant that influences and underpins five of the top ten barriers cited in the 2012 EConsultancy Census. A key way that data can be used to drive regular and engaging (i.e. non blast) s is to segment communications. Understanding customer behaviour and segmenting your engagement programme improves targeting strategy and will of course bring better results, often producing high two- or three-digit increases in key metrics. For example, segmentation based on past purchases led to a more than fivefold increase in revenue per campaign for one UK Retailer Whittard of Chelsea (see case study on page 13). Ideally your segmentation should use both transactional data to understand the recency, frequency and value of purchase and engagement data to understand the recency and frequency of customer engagement, website activity and social media interaction. The combination of the two will provide a fully rounded view of your customer s behaviour and will help inform your data planning strategy. For example, if you know that a customer who hasn t purchased in 24 months is actively viewing your s and visiting your website you may wish to continue ing them as they have the potential to buy again in the future. Using transactional RFV insight in isolation would most probably have resulted in you no longer marketing to this lapsed segment. Identifying disengaged and highly engaged individuals, and using this insight together with buying behaviour can also help to predict and influence future behaviour. For example tracking engagement enables customers at risk of becoming disengaged to be targeted with re-engagement strategies before they defect. Not only does data inform your targeting strategy and identify who to , with what and when, it can also dynamically deliver the content enabling complex segmentations to be easily implemented. Dynamically driven content both within an and on the web page that the customer is sent to can significantly enhance response rates. Content can be tailored based on previous customer behaviour such as purchase history, spend, pages visited etc. Using this engagement data dramatically increases relevance.

9 With all the obvious benefits of a data driven engagement approach why are so many companies not harnessing the valuable data they hold? The most common challenge for marketers is the difficulty in bringing together disparate sources of data such as website data, , mobile, offline, CRM, social etc. to create a joined up view of the customer. Building a single customer view enables true multichannel marketing to be implemented and connects the dots between an individual and their behaviours and engagement. In the recent EConsultancy Marketing Census 2012 almost half of companies surveyed cited disconnected systems/technologies as the single biggest barrier to effective integration. Whilst a single customer view is often the desired CRM vision, marketers shouldn t put engagement marketing on hold waiting for large scale technology change. Much can be achieved working with an organisations existing systems and data structures. For example it is usually possible to identify the key data sources that are most likely to drive value and create a simple aggregated data view for marketing purposes in a relatively short timeframe. Although neither real time nor fully integrated it does enable low cost, joined up marketing and is vastly preferable to siloed channel activity. Automating engagement As the data we collate on our customers continues to grow at a rapid rate many marketers are finding that the most effective way to make use of this data is to automate their campaign activity. Organisations that automate engagement typically deliver better customer experiences and improved conversion rates. Automated campaigns are often referred to as triggered campaigns as many are driven by customer behaviour. A trigger can be a customer action or response; an event like a birthday, a website visit, or an online purchase. When certain criteria are met in the data, s are automatically triggered to the qualifying individuals. Data insight not only drives targeting and content but it can also drive timing. For example, send times can be customised for each subscriber based on when they opened previous s or when s are triggered by basket abandonment, website visit or subscriber birthday. A triggered campaign may feature generic content (like a welcome message) but is still highly targeted. Organisations that automate engagement typically deliver better customer experiences and improved conversion rates

10 An example of a triggered welcome programme might include: A welcome is sent when an individual purchases and signs up to the loyalty scheme A benefits reminder is sent when the customer activates their loyalty card An incentive is sent to customers that have not placed a 2nd purchase after 6 weeks A customer satisfaction survey is sent to those who ve shopped within the last week. Creative is driven by the spend category and value An incentive, the type and value of which is determined by first purchase value segment, is sent to those who ve not engaged with in a given time (timeframe determined by segment) After 12 weeks if they don t engage, they receive an option to remove themselves from the mailing list or update their preferences to ensure content is relevant All of these communications can be automated so that no manual intervention is required to action any stage of the programme. This is often referred to as lights out marketing automation. The real benefit of this style of campaign is that it creates a path that is relevant to any individual as the content and timing of each communication are completely driven by the customer s actions. The volume sent out each time could be as low as one if that is the only customer meeting selected criteria that day. One thing to bear in mind here is that while automation, and triggered campaigns save time, create engagement and require less manual input, it is important to monitor frequency and volume of s sent. The most effective programme will include a fine balance of tactical and triggered activity to maximise customer value.

11 Determine the communication frequency There are no set rules on how much is too much when it comes to frequency, every brand is different. Acceptable frequency thresholds are more likely to be related to the value delivered in the the relevance of the communication and the strength of the wider relationship between sender and recipient. A clearly defined opt-in registration process will help to set customer expectations and the basic parameters for your programme. The ongoing measurement of engagement levels will provide an indicator of how committed customers are to your brand; the more committed a customer is the more likely it is that they will be happy to accept a higher frequency level. As previously mentioned it is important that levels are aligned to the customer value segmentation. Reducing frequency because someone hasn t opened or clicked recently may not be the right course of action if they are, for example, still purchasing regularly. Segmentation and targeting will also raise the value of the s to the recipient, in turn lifting the acceptable frequency threshold. Measurement There are many measures that can be used to evaluate the success of your engagement programme. Most campaign tools provide an array of web based realtime charts and graphs that enable you to monitor performance 24 hours a day. The benefit of this is that anything that doesn t work can be altered and modified as soon as possible. By tracking open and click-through rates by segment or individual if needed, we can see very easily what is working and what is not. Content can be altered very quickly to change a test or drop out an offer that is getting no traction. However most tools focus on campaign metrics such as open rates, click-throughs, unsubscribes etc. Although these metrics are valuable it is important not to solely focus on campaign process metrics as an improvement in these will not automatically impact the bottom line i.e. improved open rate does not always equate to improved revenue. Thus the most important metrics are those that are aligned to the business objectives. Typical measures include: Value and Conversion metrics such as the cost of acquisition, average order size, value and number of orders or campaign ROI CRM Metrics which typically measure the number and growth of optedin customers and level of unsubscribes Engagement metrics such as conversion by value segment, growth in average number of s an individual opens and clicks, number of social shares and recommendations Deliverability measures such as bounce rate and spam complaints

12 Conclusion

13 First Principles in Action Whittard of Chelsea: Challenge Plan and execute a series of campaigns to maximise sales during the Christmas shopping period Encourage and develop beneficial behaviours Solution Analysed customer sales data RFV segmentation Identified potential for three multiwave campaigns; encouraging cross category participation, a stretch in spend and re-activation of disengaged customers Set messages, designed and built s and built bespoke reports to enable campaign measurement Results Open rates increased by 192% Average order value grew by 16% Sales forecasts were exceeded by over 200% Through analysis of our transactional data Response One identified specific customer groups and propositions to test with communications. We were really happy with the results...overall, the campaign beat our agreed sales objectives by over 200%! Response One were able to deliver this within the tight timescales and pressures of the busiest time of year. Helen Smith, Whittard of Chelsea

14 PruHealth Challenge PruHealth were experiencing large volumes of consumers going online who never went on to purchase. These hot leads were being lost, with no means by which to follow them up Solution Building a multi-channel integrated solution Response One set up an solution which triggers follow up personalised messages and enables the recipient to book a call-back Using insight to prioritise leads Response One use the available data to prioritise enquirers based on their potential to convert and provide this in a daily, automated feed to the call centre enabling their advisors to prioritise the hottest leads. Results Engagement from the programme in excess of 40% Conversion uplift of 54% compared to those who did not receive an Your pro-activity on this project shows once again your professional approach to business and the true impact you have with us as business partners. Chrissy Fice: PruHealth

15 Staples Challenge To use data segmentation and engagement insights to deliver relevant and timely communications Solution Behavioural segmentation was used to identify key strategies and create business rules , SMS, and Digital Direct Mail automatically triggered at key stages in the customer lifecycle and based on individuals engagement and propensity to act Results Trigger driven broadcasts are outperform standard broadcasts by up to 38% in terms of open, click & CTO rate

16 AMANDA HARRIS Deputy Managing Director Response One Amanda Harris is Deputy Managing Director of Response One, the strategic data driven marketing solutions arm of the St Ives Group. With over a decade of specialist experience in marketing and sales, Amanda honed her skills with market leading organisations including RAC, Mail Marketing, EHS Brann and The Database Group. During her time as Client Services Director at The Database Group, she worked with a range of clients, successfully revitalising their data-driven marketing strategies. Amanda holds a key role on Response One s executive board, overseeing the Direct Solutions division which provides a range of data driven solutions. Amanda s specialisms include Database Management, Customer Engagement, Business Intelligence and Digital Marketing. Her focus is on delivering real solutions that are accountable, scalable and deliver measurable results, helping clients such as Staples, Sue Ryder Care, National Trust and PruHealth extract real value from their data. About St Ives Group St Ives Group supports the businesses they work with to assess, understand and influence consumer behaviour across a range of sectors including publishing, retail and financial services. As experts in innovation and execution, we are the marketing solutions business for an industry that is evolving to satisfy consumers whose attitudes towards marketing communications are shifting. We have invested heavily in data and insight businesses to complement our expertise in cross-media execution solutions and will continue with this expansion programme. From unrivalled consumer insight and analytics to expert multi-channel execution and with sector-leading clients including Sainsbury s, HSBC, Jaguar Land Rover and Heinz to prove it St Ives Group allows our clients to identify, communicate with and engage their consumers.

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