The Promise of Multichannel Marketing. Geoff Wolf & Al Bessin Partners, LENSER
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1 The Promise of Multichannel Marketing Geoff Wolf & Al Bessin Partners, LENSER
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4 It s not a choice, it s a reality The majority of direct-to-consumer sales are coming in via the internet 30% of most former catalog company s web sales are not catalog driven Most customer acquisition is being generated through search marketing Channel of Order Catalog 45% Internet 55% 4
5 Key Elements: Multi-channel behavior = stronger brand loyalty Balance of trade between channels not equal Use of customer data is key to success Multichannel success and failure examples
6 Store Retail $1.0 $1.5 trillion Direct to Consumer Catalog $100 billion+ Direct to Consumer Internet $100 billion+
7 Higher average customer purchases Value of a Multi-Channel Buyer Dover Saddlery 3X value JC Penney 5X value Eddie Bauer 6X value $700 $600 $500 $400 $300 $200 $100 $0 One Channel Two Channels Three Channels
8 Principles: Remove barriers that lead to single channel marketing Encourage customers to interact with their channel of preference Result: Increased multi-channel activity Stronger brand loyalty Lower marketing costs Higher profit margins
9 Old, Silo Structure New, Integrated Structure
10 65% of Shoppers Cross Channels Balance of trade between channels is not equal 22% 16% 21%
11 Discount Factor Divide by Number of Initial Customers = Customer Lifetime Value Net present value of profits coming from customers and their sales in the last 12 months $ $ Prospects Customers $ Retained Customers $ $ Retained Customers Retained Customers $ $ $ $
12 Life Time Value By Source $80 Not all channels are equal $70 $60 $50 $40 $30 $20 $10 $0 Phone Mail Internet Key Word Store
13 Targeted marketing drives results Catalog mailings Direct mail Post cards marketing Capture name & address at POS Targeted media Store Locator on website
14 RFM+C housefile segmentation Recency, frequency, monetary + channel Prospecting with cooperative database models Mail a catalog every four to six weeks Most effective, targeted marketing media
15 Top six critical initiatives Fast site Robust product search Quick & easy check-out sign-up Easy to find store locator Prominent 800 ordering number
16 Catalog Internet Promote broader internet selection Internet Catalog Solicit catalog requests Promote 800 ordering number Catalog Store Deeper store trade area mailings Inkjet nearest store on back cover Store Catalog Collect name and address Internet Store Feature store locator Order online pick up at store
17 % of respondents Website Demand is Increasing at the Expense of the Call-Center Identifies & allocates orders to contacts Improves marketing resource allocation 70% 60% 50% 40% 30% Change in holiday purchasing from last year 61% Spent More Spent the Same 45% Spent Less 36% 32% 32% 29% 30% 25% 20% 10% 9% 0% Retail Store Catalog (Call- Center) Website
18 80% profits from 20% of customers Leverage your best customers 120% 100% 80% 60% 40% 20% 0% Seg 1 Seg 2 Seg 3 Seg 4 Seg 5 Seg 6 Seg 7 Seg 8 Seg 9 Seg 10 Revenue Contribution
19 Customer Value Customer Value Customer Value Customer Value 100 Assumption: Customer value falls off after purchase Break even Time Reality: Value increases again with each purchase Break even Time
20 Company wide sharing of customer data Comprehensive segmentation strategy Contact management engine Multi-channel customer life cycle management tool Catalog Requests Store Buyers Store Sign-ups Catalog Buyers Central Database Product Warranty Internet Buyers Sign-up Sweeps Entries Loyalty Members
21 Unified voice and appearance Concept and design The dreaded disconnect Voice or copy Photography Illustration Offer strategies Unified purpose throughout each and every communication
22 Integrated marketing Leverages brand across all media Creates unity of message Links multiple channels Better response Lead-generation Customers visit more frequently Customers increase purchases Better customer relationships Better lifetime value
23 Started as catalog Grew to retail ecommerce added Effectively integrates marketing channels in support of brand
24 Store front features catalog covers Product descriptions from catalog Store customers receive catalog
25 Catalog sets quality tone Cover featured in store window & internet home page Nearest store inkjetted on back cover Catalog is doing two jobs Selling product direct Driving customers to store
26 Features catalog cover Includes ordering 800# Provides store locator Includes value added content
27 Identify your target customer WHO are you trying to reach? WHERE are they? HOW much can you spend? Brand your company Focus on customer wants How you can satisfy needs What is unique Sell the benefits 27
28 Catalog Direct Mail Internet Site SEM CSE s Affiliate Marketing Space Advertising Public Relations 28
29 Use each channel to increase sales in other channels Leverage all creative & promotional efforts across all channels Optimize marketing mix across all media Catalog Multi-channel Marketing Sample Calendar November Wk1 06 Wk1 05 Wk2 06 Wk2 05 Wk3 06 Wk3 05 Wk4 06 Wk4 05 In-home 7-Nov-06 6-Nov-05 Circ (000) 1, ,320.0 Page Count Promotions Free Ship Free Ship Bounce Back Holiday 2 $10 off gift card PIPs Home Décorators Collection Art.com Internet Hm Pg Feature Carved Art Front Door Carved Art Front Door Promotion Events Direct Mail Forcing- all stores Ltd Edition Ornament Ltd Edition Ornament Tabletop Setting the Table Carved Rooster Web Only Sale Web Only Sale 15% Everything Book Signing 11, 76, 214 Front Door Holiday Entertainin g Web Only Sale 15% Everything Tree Trimming Web Only Sale 20% off Forcing Mantel Garland & Wreathes Garland & Wreathes In-home 10/31/06 24-Nov Nov-05 Circ (000) Ltd Top 25 gift Top 20 gift Feature Editions post card ideas solo mailer ideas solo mailer Advertising Feature Publications Carved Rooster House & Garden Real Simple Shop NYT Spring Trunk Public RelationsShow House & Garden, Martha Stewart Spring Trunk Show 29
30 Marketing is not an exact science The market is constantly in flux Competitors rise and fall Consumer tastes evolve Costs change What worked yesterday may not work tomorrow Marketing that isn t improving is failing 30
31 Results in higher conversion rate & average order value Leverage existing customer preferences Matchback identifies catalog customers going to site Drive customers from print to the internet Show more of the same type of product 31
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34 One clean customer database All transactions Promotional history Survey information Results by marketing effort that do not double count sales High level standard reports on based on customer behavior Drill-down query environment to evaluate trends SEO/ SEM Catalog Advtsg DATABASE Affiliate CSE Customer Centric Marketing 34
35 Social Media Different roles for different customer segments Catalog Search Customer Market- Place 35
36 Competing reporting schemes More demand used to justify marketing expense than total demand for the enterprise Total Demand CSE Affiliate Paid Search Print
37 Collect Data Resolve Conflicts Validate 37
38 Collect Data Resolve Conflicts Validate Customer Records Push Campaign Data Pull Campaign Data Apply Promotional Channel/Media Data
39 Back end systems Website Web analytics program 3rd party service provider Collect Data Resolve Conflicts Validate
40 Paul Robert Robert Paul Merge accounts Aggregate purchases Combine promotional history Bob Paul Collect Data Resolve Conflicts Validate
41 Source-Coded Orders Dependent on channel Probably not representative Significant false assignment Promotional Files Can overstate Challenging with lots of contacts Collect Data Resolve Conflicts Validate
42 Last Click Easy to collect Indicative of recent preference Not weight prior influence may be merely most convenient Other Highly intangible Survey Data Often not representative Online subject to inaccuracy Reading the Public Mind, HBR Oct Collect Data Resolve Conflicts Validate
43 Collect Data Resolve Conflicts Validate Model to normalize response data
44 Source Code Collection Matchbacks to Mailings Last Touch Reporting On-line Media Vendor Reporting Last Touch Plus Push Reporting Attribution Collect Data Resolve Conflicts Validate
45 Worked well when orders were mailed or called in Works poorly today, overall Web shoppers don t report Call centers tend to guess Collect Data Resolve Conflicts Validate
46 Matching promotional files (mail files) to orders Assumes campaign is the driver Result Overstates response Shift response towards last campaign in a season Collect Data Resolve Conflicts Validate
47 Easy to collect Really only indicates method of reaching you Not what drove the decision Collect Data Resolve Conflicts Validate
48 Can capture touches over a period of time Typically, open a window and collect touches Result is self-serving for vendor If I ever saw you, you re mine! Collect Data Resolve Conflicts Validate
49 Relatively simple Model can be adjusted Great first start Next step Fractional Allocation Collect Data Resolve Conflicts Validate
50 Extremely complex Expensive undertaking Consideration Purchase Engagement Loyalty Captures a holistic view of the customer relationship Perils of cumulative errors Collect Data Resolve Conflicts Validate
51 On Push Campaign List? Waterfall model Provide allocation windows for Push Campaigns Collect referring source for transactions Branded Search? Competitive Search? Affiliate? Social? Marketplace? CSE? Collect Data Resolve Conflicts Validate 51
52 Collect Data Resolve Conflicts Validate 52
53 Collect Data Resolve Conflicts Validate Test to validate model results
54 Hold groups of contacts out from or catalog mailing Run through a season Compare to control group Mail Mail Mail Call Collect Data Resolve Conflicts Validate 54
55 Aim for segment size that will yield 100 responses Challenge for Base success on click-through if responses are not statistically significant Avoid using $ when segment sizes are small Retest to validate Collect Data Resolve Conflicts Validate 55
56 Example: Branded search term opportunity What is driving brand? Consider three search term segments: Proprietary Brands Competitive Brands Generic Brands Use different attribution windows Collect Data Resolve Conflicts Validate 56
57 Example: Mailing Can have long term impact Branded search is heavily influenced Making the call regarding attribution windows Look at the response curve based on collected source codes Test using holdouts Collect Data Resolve Conflicts Validate 57
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