FROM ACQUISITION TO ADVOCACY

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1 FROM ACQUISITION TO ADVOCACY Discovering The Value Of Lifecycle Marketing Written by David Daniels The Relevancy Group, LLC May, 2013

2 From Acquisition to Advocacy Discovering The Value Of Lifecycle Marketing Written by David Daniels, The Relevancy Group, LLC Yes Lifecycle Marketing Executive Summary Marketing organizations remain dysfunctional, as organizational silos inhibit the customer experience. Just 43 percent of enterprise marketers state that their marketing departments share common goals across channels and only a third state that there is central ownership of marketing across channels. This is driving omnichannel challenges for marketers, as most cite difficulties in frequency management, coordination and measurement as issues. Just 37 percent of the enterprise marketers state that they have a centralized repository for client data, which inhibits the ability for marketers to implement segmentation strategies. Most marketers integrate just two data sources or systems to their marketing solution, driving marketers to miss segmentation opportunities, as just half are using one type of data to drive segmentation and customer relevancy. The ease of implementing social marketing is driving more marketers to utilize rudimentary social tactics such as sharing, as compared to more rigorous tactics such as channel attribution placing value on social advocates and leveraging social listening competitive intelligence tools. Marketers aspire to utilize analytics, data and segmentation to improve content relevancy. In fact, these tactics top marketer priorities for Forty-six of enterprise marketers state that utilizing a greater use of analytics to optimize mailings is their top priority for Signaling a strong need for outside help, marketing services adoption is nearing critical mass with as much as 36 percent of marketers stating that they plan to implement both digital marketing and multichannel strategic services in the next 12 months. Marketers have a tremendous opportunity to advance multichannel lifecycle marketing sophistication. When implementing the Lifecycle Sophistication Ladder marketers can improve acquisition and drive subscribers to engaged customers to advocates. The study finds that marketers that implement just three of the five steps can improve revenue and profit by 4 to 5 times, as compared to marketers that do not implement these tactics. For more information on The Relevancy Group s services, visit call (877) , or on Reproduction by any method or unauthorized circulation is strictly prohibited. The Relevancy Group s reports are intended for the sole use of clients. For press citations, please adhere to The Relevancy Group citation policy at All opinions and projections are based on The Relevancy Group s judgment at the time of the publication and are subject to change. Page 1

3 Marketing Continues to be the Most Widely Utilized Marketing Channel An October survey of 305 marketing executives conducted by The Relevancy Group finds that marketing remains the most widely used marketing channel by organizations. Seventythree percent of enterprise marketer s state they utilize 63 percent of their midmarket peers (See Figure 1). This is in part because marketing is the most cost effective marketing channel. Marketers also continue to leverage online display ads, print, social and mobile marketing channels, which when not properly coordinated can impact the customer experience and exacerbate measurement challenges. Figure 1 - Marketing Channels Actively Utilized 2014 Question Asked: Which marketing channels do you actively market in? (select all) Source: The Relevancy Group, LLC/Executive Marketer Survey n=274 Mid-Market n=137, Enterprise n=137, 10/14 US Only The Marketing Organization Remains Siloed Driving Integration and Measurement Challenges The Relevancy Group survey finds that marketing enterprises have organizational challenges that can often impede moving customers across lifecycle from acquisition to advocacy. The Relevancy Group finds that just 43 percent of enterprises and 39 percent of midmarket organizations that their marketing department shares common goals (see Figure 2). This drives competition and confusion across divisions and marketing channels and the customer is the one who suffers. For example, overall approximately 40 percent of companies state they manage contact frequency to ensure customers get a limited set of messages across all channels. Marketing organizations need to better centralize goals, measurement and contact frequency across channels, as few marketers state they share common personal incentives. Page 2

4 Figure 2 Marketing Department Organizational Structure 2014 Question Asked: From the following list, please select the statement or statements that best represent how your marketing organization operates? (select all). Source: The Relevancy Group, LLC/Executive Marketer Survey n=274 Mid-Market n=137, Enterprise n=137, 10/14 US Only Coordination, Measurement and Staff Challenge Multichannel Campaign Deployment The aforementioned organizational dysfunction is manifesting in multichannel campaign challenges. When asked about their top challenges marketers clearly are troubled when managing offers across multiple campaigns, departments, brands and channels. This is in part due to the multiple systems that organizations use to deploy and measure their marketing efforts. Marketers cite challenges with having adequate staff and IT support, as well analyzing campaign results. These challenges are also due to the lack of common technology utilized across channels (see figure 3). Top challenges cited include: Twenty-nine percent of enterprise marketers cite challenges in managing offers across multiple campaigns. Twenty-eight percent of enterprise marketers cite coordinating marketing across departments and brands as a challenge Adequate staffing levels stifle progress, as twenty-eight percent of enterprise marketers cite this as their third most significant challenge to developing multichannel campaigns. Page 3

5 Figure 3 Multichannel Campaign Challenges 2014 Question Asked: What are your greatest challenges when developing multichannel campaigns? (select all) (Selected top 12 challenges) Source: The Relevancy Group, LLC/Executive Marketer Survey n=274 Mid-Market n=137, Enterprise n=137, 10/14 US Only Few Marketers Have Centralized Marketing Data, Many Data Management Opportunities Exist When asked how they manage their customer data, just 37 percent of enterprise organizations and 29 percent of midmarket companies state they have a centralized data repository for our client data. Even fewer companies centralize customer data into a single record across channels. Improving marketing results requires marketers to utilize customer data intelligently. This begins with ensuring that the data is clean and de-duplicated, householding multiple customer records, as well as understanding what it costs to acquire customers. The Relevancy Group research finds that less than 25 percent of companies across market segments practice these basic and required data management techniques (see Figure 4). Marketers must first get their data together before beginning any marketing optimization. Page 4

6 Figure 4 Marketing Data Management 2014 Question Asked: From the following list, please select the statement or statements that best describe how you manage your customer data? (select all) Source: The Relevancy Group, LLC/Executive Marketer Survey n=274 Mid-Market n=137, Enterprise n=137, 10/14 US Only Marketers Are Missing Many Segmentation Opportunities The majority of marketers do not perform any segmentation. In fact, when asked which data attributes marketers use to segment their audience for marketing campaigns within the last six months only 54 percent of enterprise marketers reported using demographic data and 49 percent use geographic and far fewer utilize proven techniques segmenting by marketing click data (see figure 5). There are many opportunities for marketers to leverage data including spending data, customer profitability and data such as social influence rate. A great challenge for marketers is that their systems and data sources are not integrated to their marketing system. Thirty-one percent of enterprise marketers have two systems that are integrated and 19 percent state they have three systems that are integrated. Fewer than 11 percent have more than four data sources integrated to their marketing system. Page 5

7 Figure 5 Data Used for Marketing Segmentation Question Asked: Which of the following customer data attributes has your company used to segment audiences for marketing campaigns within the last six months? (Select all) Source: The Relevancy Group, LLC/Executive Marketer Survey n=274 Mid-Market n=137, Enterprise n=137, 10/14 US Only Marketers Aspire to Utilize Analytics, Data and Segmentation to Improve Content Relevancy Marketers are aware of the tactics they need to improve their marketing programs. When asked about their top five priorities for improving the ROI of your marketing programs in 2015, the top response was greater use of analytics in order to optimize our communications. While there is a greater need for analytics, companies also desire to improve targeting, centralize customer data, utilize real-time data and increase relevancy (see Figure 6). Marketer priorities for 2015 are well aligned to optimize the customer lifecycle across channels. Page 6

8 Figure 6 Top Five Priorities for Improving ROI Question Asked: What are your top five priorities for improving the ROI of your marketing programs in 2015? (select top five) Source: The Relevancy Group, LLC/Executive Marketer Survey n=274 Mid-Market n=137, Enterprise n=137, 10/14 US Only Marketers Evolving to Utilize More Services Strategic and Integration Services to Grow in the Next 12 Months Marketers are correctly leveraging services for marketing, including analytical services, creative and strategic services (see Figure 7). Marketers must utilize services to mitigate challenges that arise from coordinating marketing across the cross channel lifecycle. Marketers that are struggling to centralize and analyze their data must leverage services to improve marketer results and relevancy. Marketers are also increasingly utilizing strategic services for social marketing, digital marketing and multichannel strategies. This is appropriate given the increased complexity of marketing across channels and the need to unify the customer experience and optimize the customer lifecycle. In 2015 more than an third of marketers expect to utilize services for digital marketing and multichannel strategic services (see Figure 8). For those that do not plan to utilize services most lack the budget (27%) or believe that they know their industry and clients than an outside provider (26%). Page 7

9 Figure 7 Planned and Utilized Marketing Services Question Asked: For each of the following types of marketing services, please indicate if you currently utilize them, if you plan to utilize them or have no plans to utilize them? Source: The Relevancy Group, LLC/Executive Marketer Survey n=305 Overall Survey Respondents, 10/14 US Only Figure 8 Planned and Utilized Marketing Services Omnichannel Question Asked: For each of the following types of marketing services, please indicate if you currently utilize them, if you plan to utilize them or have no plans to utilize them? Source: The Relevancy Group, LLC/Executive Marketer Survey n=305 Overall Survey Respondents, 10/14 US Only Page 8

10 Marketers Must Climb The Lifecycle Marketing Sophistication Ladder Moving customers from acquisition to engagement to advocacy requires implementing a lifecycle marketing strategy. This is a multi-step process where each rung on the sophisticated ladder requires marketers to make progress across multiple strategies and tactics. Marketers implementing a combination of these strategies can improve revenue by 4 to 5 times those that do not enlist these strategies. There are five steps to the Lifecycle Marketing Sophistication Ladder: 1. Data Including: Integration, Hygiene, Householding, Value, Enrichment 2. Segment Including: Traditional, RFM Purchase, Past Behavior, Event Driven, Lookalikes 3. Content Including: Personalized, Dynamic, Responsive, Context, Managed 4. Coordinate Including: Organization, Goal-Based, Frequency, Lifecycle, Automation 5. Measure Including: Testing, Dashboard, Alerts, Attribution, Intelligence Figure 9 The Lifecycle Marketing Sophistication Ladder Source: The Relevancy Group, LLC 10/14 Note: Cost and Revenue Lines are Illustrative Page 9

11 Getting Data Ready for Lifecycle Marketing - Integration: Marketers must implement an integration strategy to centralize data via the utilization of vendors that have the latest integration techniques. Marketers must seek integration from a disparate set of databases to drive marketing optimization. However, it is integration _NOT_ replication that remains the key word for success. The notion of dated old APIs (Application Programming Interface) and the tired flat file FTP drop are omnipresent in ESP solutions. However, the vendors that will win the marketer s business are those that demonstrate elegant, scalable, efficient and effective capabilities to integrate with multiple data sources from a technical perspective. Marketers and suppliers alike must build new integration capabilities based on the best on Restful integration remedies that demonstrate the ability to leverage big data in a way that does not require an S/FTP drop and SQL queries, as this flat file drop hardly scales for most. - Hygiene: Less than one quarter of marketers are practicing data hygiene. Effective practices include: validating s at the time of entry, as well as using providers to check, correct and standardize postal addresses for client records. These automated processes can clean, match, merge and de-duplicate client data. This is imperative when dealing with multiple data sources of customers across channels as marketers can only effectively target customers that are real and exist. This automated process can detail what records are rejected or being excluded because of hygiene purposes. - Householding: This entails taking multiple clients, such as spouses and grouping them at the household level so that the marketer can recognize the spending at the household level. Another use of this tactic is to household separate addresses to one individual on an list. This allows the marketer to identify the spending and behavior of the customer within one record. This approach requires that marketers work with outside data strategy specialists to ensure that the customer records are being correctly rolled up. - Value: Less than a third of marketers know the value of their subscribers or addresses and just slightly more measure the lifetime customer value. and customer value information exists, but it doesn t present itself; it must be determined. The value of the customer address is the currency for marketers to win higher budgets and increased respect within the broader marketing organization. This is an area in particular where marketers must work with their ESP s strategic services team to understand value, which will ultimately result in greater investment in the overall marketing program. - Enrichment: Marketers must leverage the treasure trove of data that is available from thirdparty providers. This data can further enrich customer data and enhance segmentation strategies by overlaying psychographics, areas of interest and potentially even behaviors. Marketers must budget for this additional store of third-party data. Page 10

12 Developing a Segmentation Strategy for Lifecycle Marketing - Traditional: The most basic form of segmentation is based upon demographics such as gender, age, income and geographic location. While most marketers do not move beyond this level of sophistication, it is valuable particularly for retailers, financial service providers and even consumer packaged goods companies. Demographics can be segmented into several markets allowing marketers to target its consumers more accurately. With this type of segmentation, an organization can categorize the needs of consumers. This is a basic necessity to understand the make-up of clients. - RFM Purchase: Marketers must leverage customer spending across all channels when possible. Marketers should be scoring customers by monetary factors (revenue), the frequency of their ordering and the recency of that spending. This approach leverages time to understand how many recency and frequency of customer purchases and what they purchasing in the last 6 months, 10 months or 12 months. - Past Behavior: This attribute is often overlooked by marketers, as only a third of marketers utilize click behavior and approximately a quarter utilize web click stream for developing segmentation. While web analytics is more advanced, marketers must begin to leverage click behavior to ensure that clients remain engaged. Behavior is a necessary tool to use to determine if a customer is lapsed or is demonstrating lapsed behavior. - Event Driven: Marketers must begin targeting and segmenting customers on the fly based on system and other events. Leveraging triggered mailings, marketers must seek to use customer generated events (i.e. downloaded a whitepaper), system events (i.e. order transaction) and organic events such as weather or information on sporting events. Weather can be a powerful event to use to segment an audience and target them with appropriate content. - Look-alikes: A proven segmentation strategy is to identify the best performing group or most profitable clients and match their traits to external third-party data to ensure potential target clients to acquire. This approach can be used to analyze lapsed customers and compare their profiles to active customers in order to determine if these customers are beginning to demonstrate similar behavioral patterns. Readying Content for Lifecycle Marketing - Personalized: A hallmark of direct and digital marketing is utilizing very basic personalized content such as first name, or location from data that already exists. While this level of personalization in the subject line has been shown to drive open and click-through rates, very basic personalized data in marketing are table stakes for and print marketing offers using mail merge. - Dynamic: Marketers must do a better job at personalizing the content of the mailing based on known customer preferences or segmentation schemes such as past behavior. Currently Page 11

13 just 31 percent of enterprise marketers utilize dynamic content and even fewer midmarket senders do the same (18 percent). Clearly the majority of consumers are receiving the same offer, all treated alike despite the customers level of engagement or advocacy. Swamping out static content with dynamic content can be the most effective way to drive response rates and revenue. This improves message relevancy and is necessary for marketers that market multiple products across different geographical areas. For example, retailers should not be advertising ride-on lawn mowers to subscribers that live in cities. - Responsive: Given the rise of mobile , marketers must work with their providers and creative agencies to develop responsive design creative for and websites so that they render appropriately on mobile devices. Marketers must work with capable providers that leverage technology to render the appropriate content on the appropriate device. - Context: Marketers must work with their partners to explore utilizing technology that allows them to change content based up the interaction and context of that subscriber s location. This works well for travel and retail applications where offers can literally change based on the subscribers interaction, location or other external factors such as time. - Managed: With the number of different content assets and formats that are required for each of the various marketing channels, marketers need a better tool for organizing and managing their content. The Relevancy Group finds this is particularly necessary when there are multiple stakeholders in the content development and production process. Such a workflow tool allows for mark up and approvals and the content management aspects allow for easy sorting, searching and organization. Coordination Is Necessary for Success in Lifecycle Marketing - Organization: As mentioned previously, most marketing organizations are dysfunctional and do not collaborate across marketing channels. Enterprises must coordinate marketing channels and build buy-in with each of the disparate marketing channels. While it is difficult for an external vendor to assist, this issue underscores the need to select a vendor that has a strong strategic services team. - Goal Based: Marketers have to develop desired goals for each one of the customer lifecycles that they develop. These goals must be measurable, such as 40 percent of client conversion by X date in X time; or Y percent growth in revenue. This will allow marketers to measure against defined benchmarks and optimize these specific lifecycle goals. - Frequency: Developing a frequency cap plan is necessary to manage lifecycle marketing. Marketers must develop a certain number of messages that customers receive across channels each day or week. However, this also requires marketers to work with a solution that can easily prioritize mailings or a marketing event to supersede these pre-set frequency rules. - Lifecycle: Marketers must take time to work with their provider to develop lifecycles. These lifecycles should start with a basic string of welcome campaign messages. Each lifecycle should have a goal and provide a mechanism to optimize the customer experience Page 12

14 across the lifecycle. An example of this would be to send the subscriber push messages through an app, should they not be interacting with marketing or vice versa. Mapping out lifecycles is key and can take weeks to a month to complete. - Automation: Each lifecycle must have an automation component so that marketers can set and forget these lifecycles. Marketers must work with vendors that allow for automated testing across the lifecycle. These automated lifecycles will create efficiency for marketers particularly as marketing campaigns can flow across channels without marketer intervention. Measuring Lifecycle Marketing - Testing: Testing must occur upstream of the measurement phase, as discussed in the lifecycle and content phases. However analysis of testing is necessary to optimize customer lifecycles. Marketers should ensure that in their standard reports and/or dashboard that there is analysis of an element that is being tested in each mailing. - Dashboard: Marketers must select solutions that allow for custom dashboards for each different type of user. This will allow the user be it the CMO versus or the manager of production to see the measurements that are important to their specific role. - Alerts: Given the number of metrics that marketers track and the potential for things to go wrong, marketers must set up performance based alerts to inform team members if key metrics such as deliverability, clicks or conversion are off by historical measures. These alerts should come in the form of SMS messages or alerts to the vendor s mobile app, so that the client marketer is aware of any potential performance problems. - Attribution: Attribution can be a complex measure of success. This is yet another reason to seek a vendor that has strong analytic and strategic services. There are several methods of implementing an attribution plan, such as last click, first interaction or last interaction. Marketers should not go this route alone and instead should work with external partners that are well versed in developing attribution models. - Intelligence: Marketers must seek to better implement a view of their competitors. Improving lifecycle marketing requires understanding competitive intelligence across channels. Marketers can utilize competitive intelligence and adapt their customer lifecycles or marketing campaigns to react to competitive learnings. These social competitive intelligence tools are particularly useful when they can be applied to the competitive set across all of the digital channels online display, social, web and . Marketers that Embrace Lifecycle Marketing Techniques Deliver 4 to 5 Times the Revenue and Profit Compared to Those That Do Not Marketers that leverage just some of the lifecycle marketing tactics across channels -- namely, data hygiene, house-holding, centralized data, segmentation, targeting, automation, dynamic content and measurement attributions -- performed much better than those that do not. We found that marketers utilizing at least three tactics from the lifecycle sophistication ladder can Page 13

15 deliver four to five times the amount of revenue and profit on a monthly basis. Here we compared their actual performance metrics from these two groups and normalized their monthly volume (2.9 million message a month) for the purpose of comparison, as well as their common average order value (AOV) of $98.00 (see Figure 10). The Relevancy Group model finds that marketers that implement just three of the five steps from the lifecycle sophistication ladder can improve revenue and profit by 4 to 5 times, as compared to marketers that do not implement these tactics. Figure 10 Lifecycle Marketing Revenue and Profit Model Source: The Relevancy Group, LLC/Executive Marketer Survey n=305 11/14, Performance Data US Only, Mid-Market & Enterprise Respondents; The Relevancy Group, LLC Lifecycle Sophistication Revenue and Profit Model: Assumes 2.9 million messages a month, $98 dollar AOV, performance metrics as reported from survey respondents, those that perform elements of Lifecycle Marketing versus those that do not. Page 14

16 About Yes Lifecycle Marketing (877) Yes Lifecycle Marketing is an innovative, holistic approach to lifecycle marketing. It was formed to integrate what has been traditionally delivered in a disparate, un-integrated fashion data, technology, analytics and insights, communication strategies and creative. Through the combination of three supporting disciplines, Agency Services, Yesmail Interactive, and Data and Technology, Yes Lifecycle Marketing gives today s marketer a single service and technology solution provider delivered in a unified, complete services model. About The Relevancy Group, LLC (877) The Relevancy Group provides market research, survey design and consulting. We assist marketers (buyers) connect with vendors (sellers) and manage the vendor selection process, each year we represent tens of billions of messages that are out for bid for new solution providers. We provide educational and advisory resources to advance our clients and the markets understanding of relevance in order to deepen their customer relationships. The Relevancy Group is dedicated to educating the market on the imperative tactics needed to foster trust with consumers and improve an organization s relevance within the broader online economy. Working with the leading brands, vendors and associations that comprise our economy, The Relevancy Group acts as an educator and trusted advisor in the aim of optimizing omnichannel connected marketing strategy and tactics. The Relevancy Group publishes research, educational resources and consults with businesses on vendor selection, mergers/acquisitions and other strategic imperatives. About The Author David Daniels CEO and Co-Founder, The Relevancy Group, LLC On For over a quarter of a century, David has been a marketing industry proponent. Currently as CEO of The Relevancy Group, David directs market research and consulting essential to digital marketing. Direct Magazine said David is one of the most influential experts in marketing, if not the most influential. David is also the Founder, President and Publisher of The Marketer Quarterly, a digital magazine for marketers. Co-author of the book Marketing An Hour A Day, David has held senior level positions at Forrester and JupiterResearch, Apple, Anthropologie, MacWarehouse, Proteam and the earliest online retailers on CompuServe. David advises many industry associations including the Online Trust Alliance (OTA), the Direct Marketing Association (DMA) and the experience council (eec). David wrote a syndicated column for ClickZ for ten years and is a contributor to the Weekend Today Show on NBC. Page 15

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