Retail marketers should react to an untapped audience twice the size of television
By Keith Wardell
Which consumer is more valuable: one that is sitting at home watching television and may not know you exist, or one that visits your web site, calls you or walks into your store? Really, choose one.
In one day in the U.S. there are approximately 2 billion web visits, 200 million inbound calls and 600 million store visits, according to data compiled from comScore Networks Inc., the National Retail Federation, the Advertising Research Foundation and other sources, as presented in my book “Marketing Out of Control.” This adds up to a combined 2.8 billion times a day consumers are taking the initiative to contact businesses, and retailers are the target of a majority of these initiatives, according to the data. This is approximately twice the number of 30-minute television sessions viewed in a day.
Spending on television advertising is more than $200 million a day, according to industry sources. But how much is spent reacting to consumers who are taking the initiative to contact your business on the web? How many web visits, calls and store visits per day does your company receive?
Marketers are missing a major opportunity to connect with their online clients and prospects. The marketing process is changing and companies need to react. The combination of unlimited choice and the ability to find anything and everything quickly on the web has shifted the power from manufacturers and retailers to their customers.
As Jim Nail, chief strategy officer at market analysis company Cymfony puts it: “The next great marketers will see the real benefits brands can gain in this consumer-controlled world: deriving superior consumer insight to drive sustainable competitive advantage. They will shape the experience consumers have with the brand to the desires and needs that consumers now spontaneously and directly express.”
Proactive and reactive
Companies need to be more aware of initiatives their customers are taking. This means modifying a predominantly proactive campaign approach by adding a reactive component. Most marketing plans today employ proactive campaigns delivered through traditional channels to reach prospective buyers. TV, radio, newspaper and magazines represent as much as 80% to 90% of marketing budgets, according to Advertising Age. As consumers take control and the initiative for contacting companies, marketers need to deploy reactive campaigns to build relationships with them.
It is critical for marketers to identify all initiatives current and prospective customers might take. Marketers must be able to track initiatives and attribute them to a specific customer. Marketers can identify customer initiatives through transaction data; browse, search or shopping behavior data; and stage-of-relationship analysis. Some examples follow.
Purchase. The first customer initiative deserving a reactive campaign is a customer’s first or most recent purchase. The first purchase should receive a “Thank you” and a reminder of all the reasons to buy from your company. In addition, the communication should contain items related to the one the customer purchased.
Replenishment. If your company sells products that have a limited and definable life expectancy, a replenishment campaign would be valuable. Such products range from food to cleaning products to apparel. When developing a replenishment campaign, it is important to explain why the customer is getting the reactive marketing message. The personalized message should reference her past initiatives in contacting the retailer.
Trend data. Drilling down to the next level, companies can look for trends in the data on consumers’ past initiatives, which might identify a likely current need of an individual customer. When designing a reactive campaign based on prior customer initiatives, a marketer should say specifically why it’s contacting a customer (i.e., “Customers like you who have purchased X also like Y”) and refer to the customer’s individual purchases or behaviors. For example: “There is a new portable Ryobi router available that uses the same rechargeable batteries as your Ryobi portable drill,” or, “Women like you who purchased the peach color top last year are buying either mauve or cinnamon this year.”
Cart abandonment. If a customer abandons items in a cart, there is an opportunity to use that information to create campaigns to try to complete a transaction. To be effective, these campaigns should contain the items abandoned together with related choices. Marketers should consider the use of numerous channels, including e-mail, print, call center and the web. Cart abandonment is one of the more powerful ways for customers to communicate intent.
Search. A significant indicator of interest and valuable customer initiative is the use of a search term to reach the web site, as well as the use of site search to indicate interest. The terms used in search are direct indicators of interest. Like transaction and browsing data, an aggregate analysis of search data can relate search terms to resulting behavior. Once relationships have been determined, the appropriate campaign can be designed and implemented when a customer takes the initiative.
Shopping. Beyond the web site, customer shopping habits recorded through call centers and retail locations can signal key customer initiatives. Few companies have invested the resources to collect individual information at retail stores. More have found they can gain insight from inquiries to a call center. However, new kiosk technology and the value derived from subsequent reactive campaigns should justify the expense of collecting information in store.
New prospect. Once a customer registers with your web site or is qualified for a direct mail or telemarketing list, she is a prospect. Customers at this stage are primary targets for pre-filter campaigns asking about their interests. They break the ice and move you from knowing nothing to knowing something about the prospect.
New buyer. The development of a thank-you campaign for new buyers delivers a message together with items related to the one they purchased. This should not be just one campaign, but a series designed to assure satisfaction with the first purchase and begin to identify next potential purchases.
Repeat buyer. Campaigns designed to react to a customer’s second or third purchase will follow a similar pattern to the series developed for new buyers. These campaigns should reinforce that the marketer is aware of the value the individual customer has provided as a repeat buyer.
Lapsed customer. It is important to be able to identify when your customer relationships are failing and address them through a series of reactive campaigns. These campaigns may be based upon a certain time since a customer’s last purchase or a drop in the value of the purchases she was making. A marketer should design these campaigns as a series that will prompt the customer initiatives necessary to bring the customer back on track.
Driving up conversions
As customers continue to take the initiative through e-mail, web sites, search and other rapidly growing channels, the percentage of customers and prospects qualifying for a reactive campaign will increase. Since reactive campaigns should deliver a higher response and conversion, overall revenue should increase. As total revenue increases, marketers will be able to reduce less profitable marketing efforts, resulting in a more profitable and customer-friendly program.
As a simplified example (see table, page 76), let’s say a retailer has a customer and prospect file of 1 million consumers. The retailer contacts this file once a week and generates $100 per thousand contacts through traditional proactive mailings. Now let’s argue that reactive campaigns could achieve a conservative revenue level of $300 per thousand. If the retailer can qualify just 5% of its file to a reactive campaign instead of a proactive campaign, it will see a 10% increase in total revenue. At the other extreme, if it can qualify 20% of its file for one of several reactive campaigns instead of a proactive campaign, this could produce a 40% lift in total revenue.
The table on this page demonstrates the potential growth in sales as a company qualifies a higher percentage of its customers for an increasing number of reactive campaigns. Though this is a simplified example, it makes the point about marketing efficiencies. In fact, when you consider there are additional improvements available by selecting the right channels for the right campaigns, the opportunity may be greater.
The challenge in reaching this audience of customers initiating contact every day is to identify them in a timely fashion. For web visitors, it is necessary to match them back to an e-mail or other customer ID; for call centers a phone number match should be sufficient. Tracking customers’ web visits is a vastly improving technology, and call centers are doing a great job of capturing who’s calling, when and why. It’s difficult, though, to identify when consumers are shopping in bricks-and-mortar stores.
These bricks-and-mortar shoppers pose the greatest challenge. Retailers often can match in-store buyers with information provided during the transaction. Identifying non-buyers requires an incentive to get them to provide necessary information like an e-mail address for follow-up marketing.
The ability to identify offline shoppers is a key component of any multi-channel strategy. Improvements in kiosks, which are becoming cheaper and easier to deploy, combined with customer incentives may offer the answer to engaging in-store visitors. Many smart marketers will begin driving retail customers to a kiosk in store.
Tapping the market of customers taking the initiative will require some resources. But for a market that’s highly qualified and twice the size of the television audience, the return will be significant.
Keith Wardell is CEO of marketing services firm Marketing 1by1 LLC. He can be reached at keith@marketing1by1.com.
