Data is the First Step to Marketing Automation

I have implemented many marketing automation solutions over the past decade and one of the perplexing findings is how organizations put the cart before the horse when they are installing their solutions.  I like to say marketing automation solutions are "dumb".  Not the kind of dumb as in "this is stupid, why are we implementing these solutions, why not do something else".  They are "dumb" in the essence of they need help from something else to be successful.  They cannot work on their own.

Marketing automation tools are a slave to the underlying data.  All marketing automation tools do is query data and create metadata that is used to create content and messaging for your customers.  Now I am minimizing the importance of the marketing automation tools in that sentence, but from a high level, it works.  

Since the underlying data is what drives the marketing automation tool, that data is the first step in implementing the tool.  Without the proper data, your implantation will fail.  Getting the data into the proper format for consumption from the automation tool is the most important step of marketing automation.  

Understand the problems to be solved

Write out all the different types of campaigns or communications to be run with the automation tool.  This step is vital to understand if there is a gap in your data collection strategy.  Also, this identifies if the data is structured properly to even run these types of campaigns.  This step comes before buying a marketing automation tool.

For example, I want to send a reminder email to all customers who bought a television that specific cables will enhance the performance of their new purchase by 50%.  For this, the data will have to be structured to understand which customer bought a television set, along with cables because you don't want to sound like you don't know your customers, within X amount of time, their email, mailing or app device ID, and the channel they prefer to be communicated with.  Now the data team can make sure they have the proper structure for just this one use case. If the data can't be structured accordingly, then the marketing automation tool will not be able to deliver this campaign.

Define success for the campaigns

This can be a simple sentence in each case.  What this determines is how the analysis of the campaigns performance will be achieved.  Analysis is also part of the marketing automation tool implantation, because I guarantee you that the executives will want to know the impact of this large investment, so the data needs to be prepared to answer these questions.

For example, I want to see the redemption rate and revenue generated, along with the expenses for delivering and cost of goods for the customers who returned to the store and purchased upgraded cables for their televisions.  For this the data will have to meld together the ID for the offer, in this case the cable, along with the purchase item along with the expense data from the marketing automation tool and the sales system.  These tasks aren't easy, but they will pay dividends if this legwork is done upfront.  There is nothing worse than flying blind with your marketing automation..  

 The expectations for campaign execution times

This is one that almost always gets missed.  I have heard of campaigns that run almost all day because the data is not organized in a fashion that is not optimized for the marketers.  That kind of performance may be acceptable if the campaigns are run once a month, but for most businesses that is not the speed of digital marketing.  

For example, I want to be able to run the campaign for the television purchasers every day.  This includes time to run the automation, send out proofs for the collateral and have the deliveries out to the customer by 10AM.  This allows the data team to be able to optimize the data structures to make sure the data can be pulled fast and efficiently for all your automation campaigns.  

This by no means is an exhaustive list, but it is a start to having a successful marketing automation implementation.  No matter how many bells and whistles the marketing automation tools have, if the data does not support the wants and needs of the marketer, it doesn't matter because the tool is "dumb".  It needs the data to perform magic.     

The True Purpose of a Loyalty Card Program

Loyalty card programs are now a way of life.  So many businesses in every vertical has a loyalty program based on dollars spent.  The programs range from miles in airlines, to how many stamps does a customer have on their stamp card before they get a free yogurt.  The belief is these programs will drive loyalty and incremental purchases because of the benefits offered for the spend.  But do they really drive incremental spend?  Or should the true purpose of the program not focus on the incremental spend, but something entirely different?

Airlines are the standard bearer for loyalty programs.  Frequent travelers swear by the loyalty programs and can tell you how many miles they have in their account.  With so many travelers being able to quote their miles, this must work correct?  In reality very few of the people traveling through the air really care about the loyalty programs.  Most will actually look for price or non-stops when making a decision on who to fly with.  So who are these travelers who care about the program?  They are the 2% that drive most of the revenue.  Well that's a good thing right?  The funny part about this model is most of these travelers are not actually paying for their flights.  They are frequent business travelers who are not paying out of their own pocket, their work or customers are paying for it.  The irony of these loyal customers is they would never spend that kind of money with the airline if it was their own.  They are loyal to the program because they would like the free travel when they want to go somewhere on personal time, with the family.  

So what happens with the remainder of the travelers?  Is the program enough to drive loyalty?  The answer is no.  But that is ok.  They shouldn't be designed to drive loyalty from these customers.  If they actually did, they would more than likely be too rich of a program.  So what happens to the 98%?  Should companies just not push their loyalty cards on the rest of this market?  

Loyalty program should only be rich enough for customers to want to be tracked.  Now this means many different things for each industry.  For airlines it might mean a free amenity if the customer is a member of the loyalty program.  For a yogurt shop it could be a free topping for a member.  For a casino it is the ability to receive a comp.  Grocery stores are masters, you don't get the sale price unless you are a member.  Of course I want to join for that $10 off of my grocery bill.  

Loyalty programs are an opt-in for tracking behavior.  For the majority of your customers, the loyalty rewards in your program will either be out of reach or not worth any incremental spend.  But, what you are getting is behavioral data.  How often is the customer engaging, how much is the customer spending, what are the customers patterns.  Do they only come for sales?  Do they come only when they have an incentive?  Do they come a certain day of the week?

This is the gold that comes from the loyalty program.  Mining that gold has unlimited opportunity.  Loyalty programs have 3 major flaws.

1. They are not targeted
2. They are not proactive
3. They are easily copied

Loyalty programs treat customers differently based on 1 metric, a total amount of something.  Whether that's miles flown, purchases made or points that equate to dollars spent, the one metric is dollars spent.  Well that is a good start for measuring a customer, but what if a Customer A spent $500 3 times and Customer B spent $10 150 times?  They will both be in the same loyalty tier because they spent a total of $1,500, but they are entirely different customers.  If the company can get Customer A to spend 1 more time, it is worth a lot more than if they can get Customer B to spend 1 more time.  So the loyalty program doesn't incentivize customers equally.

Loyalty programs rely on customers to want to interact.  They are reactive mechanisms, waiting for customers to spend enough to get whatever reward the customer may be wanting.  Of course good database marketers can send out reminders that someone is close to a reward or they might move up a tier, but the reward has to be enough of a carrot for that customer to change their behavior.  

All the great innovations a company can make in their program can be copied by anyone, because it is a documented program.  If the strategy is to own loyalty by having the best program, any competitor could easily come over the top and have a richer program.  This leads a race to the bottom mentality.  The company could always come back over the top, but the programs start becoming too rich, remember only be rich enough to track behavior.  If a competitor can negate your best selling points (loyalty program), then the program can never be a competitive advantage, nor do you want it to be.

This all leads to the true reason to have a loyalty program, tracking behavior.  With targeted direct marketing, companies can inventive the behavior they are looking for.  A company can give Customer A a much different communication and offer because they know that the customer will spend $500 the next time they can get the customer to engage.  The direct marketing can be proactive.  Direct marketing can take a customer from someone that rarely comes in, to someone that engages with the business on a regular basis.  Last, but certainly not least, companies can innovate without being copied. Because direct marketing is not a published benefit, there can be many different tactics for a range of different customers and the competition is blind to the strategies.  

There is so much more opportunity in direct marketing compared to the loyalty program.  By keeping expenses as small as possible in the loyalty program, it leaves much more money for direct marketing to drive the business.  When allowed to drive the business, direct marketing can target customers in many different ways, based on the customers individual behaviors, with incentives that will truly drive that particular customer.  A loyalty program will never be able to do that as effectively. 

Google Tabs happened, now marketers must step up their game

Marketing is always most effective when it is delivered with something else of value. If you open your postal mailbox and its nothing but ads, you tend to throw the whole bunch away. But, if one offer comes along with other interesting pieces of mail or if it includes something valuable like a gift card or a coupon, you tend to give it more attention.

Very profound statement.  It is not worth delivering a piece of mail or email without an offer.  The offer doesn't have to be something that cheapens your brand, but it has to deliver value to the customer receiving it, or else you will become junk mail or unsubscribed.

The new Gmail tabs obviously create an interesting challenge.  Even though they are being viewed less, it may provide customers a better way to interact with brands.  When all email is together, emails can get skipped or just ignored as they scan through.  However with the tabs, a customer has to be going and looking for a promotion.  Isn;t that what digital marketing is all about?  Engage with the customer when they want to be engaged, instead of the bombarding of their email feeds?

We asked nearly 5,000 consumers their attitudes toward the switch to Gmail Tabs inbox view. About 40 percent of respondents say they now spend less time with promotional messages from their favorite brand, while only 7 percent of users say they spend more time with promotions. This large percentage of respondents revealing they don’t spend as much time with their favorite brands shows that marketers must up their game.

Marketers should always be stepping up their game.  I get so many emails from companies on a daily basis, maybe this will make them stop and think about the "spam" strategy that seems to be the norm in this channel.  When emails are targeted and offers are valuable and thought out, customers will engage with your brand no matter what tab they are on.  Continue to over communicate and your brand will never make it out of the promotions tab.

How A ZIP Code Can Tell A Marketer Exactly Who You Are

Yep. 

Marketing Automation with Neolane

Building a capture program is something that usually is untouchable with most marketing automation tools.  We built ours in 3 days with Neolane.  Very complex offers built dynamically based on previous behavior of redemption or no redemption.  Yet another tool I am becoming quite a big fan of.

Marketers, Go Back to Basics

"There's so much that's sexy in social media and in mobile right now," he said. "Anyone who's bought a smartphone in the last 18 months is doing some things they hadn't imagined yet." When they read about a big company launching a cutting-edge initiative, they want in — but the economics usually only make sense for large companies that have experimental budgets. Instead, he says it often pays to focus on bread-and-butter marketing (like direct mail) or even on technical innovations of the past few years that are effective, but less novel (like mobile websites).

In the gaming industry, direct mail is still king.  In fact, it's not really close with a response rate of over 4X then email alone.  Yet, many marketers get caught up in the sexy new marketing trends.  Social gets more attention than direct marketing, even though direct marketing brings much more profit.  Likes are revered, yet direct mail is boring and so yesterday.  Sometimes whats worked in the past is what will work in the future.