Managing Customer Loyalty

You know the old saying, "It costs five-times more to get a new customer than to keep an existing customer." Well, it's true! And, it's relevant to whatever business that you're in. The multiplier may change but it is definitely much more profitable to keep and grow your customers than to continually lose them.

The telecommunications industry is very familiar with this issue. They call this type of customer loss "churn." In the 1990s, it was common to hear customer churn rates of almost 100%. In other words, telecommunications firms were losing an equal amount of customers that they gained. I think we can all agree that this was quite the frightening trend. Consumers and businesses became very price focused, and the telecom providers would come out with one promotion after another to "win-back" their customer's business -- totally based upon price. It was definitely war! I know -- I was there. I worked at AT&T during that time and it was brutal.

Here's what I saw to be the problem -- we didn't have the marketing tools to properly care for our customers. Once the salesperson won the customer back, the customer would get lost. Not only would they not get an offer of a better calling plan as their usage increased, if the plan they were on "expired," they'd automatically receive the most expensive pricing plan as a default and their bill would triple. And this was the thanks that they received for being a loyal customer. Nutty!

The problem still exists today -- and not just in telecommunications but in many industries. However, with Cable and traditional telecommunications companies going head-to-head for all services -- including internet and television -- it's happening again. It's a somewhat new set of competitors (some old, some new, some just under a new name), however, the business problem is exactly the same. It's even worsened because with all of the mergers and acquisitions in telecommunications, each firm has inherited a multitude of customer data warehouses, billing information, etc. This really makes it difficult to manage customer relationships without the right technology.

In a recent article from TMCnet, Arthur Middleton Hughes discusses the new "Triple Play" that these companies are competing with today to get the bulk of broadband, phone service and TV services from consumers and businesses. And the competition is, once again, fierce. Hughes argues that telecommunications firms can combat high churn rates simply by practicing sound database marketing strategy. Hughes states: "Using database marketing, it is possible to build a relationship with customers that will keep them from leaving. The secret? Personalized communications. If you can develop a dialog with your customers, they will rarely leave. "

We agree. Hughes also provides these 11 steps that a company can take to ensure that they don't lose their customers. We think that these are great suggestions that translate well across industries.

1. Review their price plans. Study each customer individually, and develop price plans for each of them that recognize their value and reward them. Don't make this a public announcement. Make it a personal message from you to each customer.
2. Use analytics to predict defection. With a modern database it is possible to identify potential churners with an accuracy of better than 90%. Once you know who is thinking of leaving, create a message with an offer that will head them off at the pass.
3. Cross Sell: Sell them a second product. This is why the Triple Play is important. Bundle the pricing of the second product with their current plan so that they end up better off. Make it expensive to switch back.
4. Thank them for their business. You can send a simple letter: "You have been a Verizon customer for five years on June 24th, Mr. Williams. We just wanted to thank you and to let you know how much we value your business. '
5. Don't rely on statement stuffers to communicate. Everyone knows that advertisements can be put into the envelope with the monthly bill. The postage is free. How wonderful! But don't fool yourself into thinking that this is a communication. Most people chuck out the junk that comes with the monthly statement. You must communicate with your customers to keep their loyalty, but this is not the best way. If you think it is, compare the response rate to statement stuffers with that of a personalized direct mail or email piece. Typically, a well-crafted personalized direct mail or email piece will generate several times the level of response and conversion of a statement stuffer. To be effective, however, the message must be personal: 'Dear Mr. Hughes.' And it must be offering the Next Best Product for Arthur Hughes determined by analytics, not the 'Product of the Month' that is sent to everyone.
6. Develop a customer contact strategy. Some companies have a policy of six touches per year, remembering that a bill is not a touch. Every one of these six touches should be personal, and as far as you can determine, of interest to the subscriber. Finally, they should promote one, and only one, product: shift to digital, or upgrade, or a better price plan. Don't give them a menu of choices. Give them a single specific offer. Study after study confirms that choice kills response.
7. Review each customer's situation on a daily basis in real time. Once a month is far too slow in this fast moving Telecom world. Modern databases can be updated several times a day. The updates are used to score all customers by their LTV and churn potential. The matrix can then be used to review each customer on a nightly basis, and develop automatic communications before it is too late.
8. Let customers manage their services themselves. As customers invest more of their time to managing their accounts they feel more committed to the relationship. Churn goes down.
9. Get customers to become advocates. Referred customers typically have a lower churn rate than the average customer. So set up a program to reward your customers for providing you with referrals that sign up for your service. Advocates have lower churn rates as well. So you will be getting double mileage out of a referral program.
10. Study the calendar. Churn typically happens mainly in certain months, or certain periods of time after the customer first signs up. When you know which are the most active churning months for each customer, mount an aggressive proactive campaign to head them off at the pass.
11. Study Usage. When usage suddenly drops or declines, you know that churn is coming.

While these 11 steps may seem a bit overwhelming at first, utilizing the correct marketing database tools can automate most or all of this for you. By taking the time to really understand what your needs are and the appropriate technology to fit those needs, you can not only stem your churn problem, but you can bury your competitors by keeping your customers loyal to your product/service.

Good luck in keeping all of your valuable customer relationships! Also, if you're interested in our white paper on effective data management, we'd be happy to share it with you.

Automotive Direct Marketing Growth

Direct marketers need some good news right now.

We were happy to read this bit of news from Direct Magazine.

"Automotive manufacturers are projected to invest $9.8 billion in direct marketing to generate $108 billion in sales by 2012, according to report findings released by the Direct Marketing Association."

Talk about a nice return on investment. Even better that we're talking billions, as in "B".

So, what is the deal with automotive marketing?

"Automotive retailers generated greater than a $33 return for every dollar invested in direct marketing in 2007, which represents the highest ROI of 52 industries tracked by the DMA."

What makes direct marketing such an effective channel for the automotive industry? Here's our opinion: auto retailers typically include these three important direct marketing success components:

1. The local nature of car shopping. In other words, you buy your car from the dealership in your area, and an intrinsic aspect of direct marketing (as opposed to branding, for example) is that you can focus specifically on sending your message only to those consumers who live close enough to visit the dealership.
2. The ability to target your prospect exactly when they'll need and want to buy from you. Did you know that you can actually use credit data to understand when an individual's auto loan/lease is ready to expire? This is, of course, the perfect time to present that perfect offer.
3. The 'cool' factor. If a creative piece can capture the imagination of the reader--you know, make them really imagine themselves as being better off (more hip, more in-the-know) if they own your product (think i-Phone), they'll definitely be more open to your message. Automotive marketers have the ability to cause their prospects to imagine themselves behind the wheel of your (fast, sleek, green, luxury, cute) vehicle. That's pretty compelling.

Can you think of other reasons why automotive marketers are able to maximize the direct marketing channel? We'd love to hear your input!

Case Study Monday: Using Dynamic Content to Generate E-Mail Marketing Campaigns

Welcome to another Case Study Monday!

This week, we are featuring a very compelling -- and thorough -- success story that was done as a collaboration between Listrak (a leading provider of hosted email marketing software, that "allows permission-based marketers to manage, send, track and grow their email marketing investment"), and DiscountBeautyCenter.com (an online retailer who offers the "nation’s largest selection of brand name cosmetics, fragrances, and professional beauty supplies at everyday savings of up to 70% and more").

Listrak offers this Case Study along with several others in the resource area of their website. For all of us who utilize e-mail marketing in our direct marketing strategy, this is some very interesting reading. We hope you enjoy it as much as we did!

Overview
In response to several customer inquiries regarding practical uses for dynamic content, Listrak’s marketing and professional services departments teamed up to help DiscountBeautyCenter.com, an online supplier of brand name cosmetics, fragrances, and professional beauty supplies, set up and test the viability of using dynamic content to generate their email campaigns.

Specifically, DiscountBeautyCenter.com and Listrak wanted to determine the differences in:

• The time it takes to create dynamic content emails verses regular batch and blast HTML emails
• The overall click through rates generated by both types of campaigns
• The number and amount of sales produced by both types of campaigns
• The ROI each type of campaign received

Listrak selected DiscountBeautyCenter.com for the study because it offers over 30,000 products across 339 different brands. The products are categorized into seven categories – hair products, cosmetics, appliances, skin care, nail care, fragrances, and bath products.

DiscountBeautyCenter.com has used Listrak to send out email newsletters and promotional
material since 2001, and it has always achieved good results from each email send. However, even though it has a lot of valuable customer data, DiscountBeautyCenter.com was not segmenting its list or building targeted email messages. This made it a prime candidate for Listrak’s dynamic content case study.

At first, DiscountBeautyCenter.com was not convinced that dynamic content would increase response, but Listrak felt that relevant messages targeted to specific customers would sell more products and, therefore, increase the overall ROI of the email campaigns. DiscountBeautyCenter.com agreed, and Listrak began the project.

The Creative Process
Listrak started the creative process by holding an internal meeting between its marketing team, professional services team, and DiscountBeautyCenter.com’s account manager in order to determine the correct course of action. First, they looked closely at DiscountBeautyCenter.com’s email campaign strategy and found that it was already sending re-engagement campaigns offering $5 off a $25 purchase to customers that have not made a purchase in over three months. For companies that are new to dynamic content, a re-engagement campaign is a good place to start.

However, DiscountBeautyCenter.com was not using dynamic content to generate the emails. Instead, it used simple profiling to segment its list of more than 42,500 names. These emails generated the highest conversion rates for DiscountBeautyCenter.com, so Listrak made the decision to use the same offer but to expand the emails to cross-sell each customer based on their purchase history.

The first major challenge in doing this was the sheer number of products DiscountBeautyCenter.com sells. Listrak wanted to have the email campaign ready to send out within a matter of weeks and it did not have time to create 30,000 dynamic content containers for each of DiscountBeautyCenter.com’s products. It had to come up with a way to target a broader audience while still presenting relevant product offers. One possible solution that the teams discussed was to pick the top selling products across DiscountBeautyCenter.com’s categories and send targeted email messages to the customers that purchased those products. For example, if someone recently bought a hair dryer, the customer would receive information on other appliances, such as diffusers, dryer stands, or flat irons.

Another possible solution was to cross-sell across the top four selling brands. For example, customers that previously purchased OPI nail care would receive information on new OPI
products, and customers that previously purchased Aveda hair care would receive information on Aveda products. A third possible solution was discussed that would combine the two approaches.

Instead of just using one dynamic content container for the brand or category level, Listrak would design an email that had two dynamic content containers for each item. This way, the emails would present information on each customer’s brand and product preferences while giving DiscountBeautyCenter.com the space to highlight the top selling products in each category.The teams felt like this was the best approach but they knew they could not make a decision without any data to support their theories, so the account manager was asked to gather customer data to see if this was a viable option. Because DiscountBeautyCenter.com had all of the data readily available, it took less than two hours for the product manager to mine the information from the database.

For many companies getting started with dynamic content, this step presents a challenge as the companies have not collected enough data or the data is stored in different locations and it takes a lot of time and effort to pull it all together. (For more information on the type and amount of data to collect, read Listrak’s white paper “Creating Relevant Email Campaigns with Dynamic Content.”)

Using DiscountBeautyCenter.com’s customer data, Listrak found that the top four selling brands were Aquage, OPI, Helen of Troy, and Kenra, and it also found the top selling products in the hair care, skin care, cosmetics, nail care, appliance, and fragrance categories. Knowing what the top brands and products were, Listrak was able to design the layout of the campaign. The new campaign featured one template with a common logo header, category navigation buttons that mimic DiscountBeautyCenter.com’s website, a large dynamic content container for the four different brands across the top of the email, and another dynamic content container for the top selling products in each of the six categories. The template also included an offer and call to action as well as the legal disclaimer at the bottom of the message.

With this many dynamic content containers, it meant there were 24 possible versions of the email that would be sent to DiscountBeautyCenter.com’s customers as each of the four brand containers could be matched with six possible category containers. Customers would receive the version based first on their brand preference, or the brand they bought the most, and then on their product preference, or the products they purchased the most. This way, the emails would fulfill the purpose of cross-selling each customer with targeted products based on their purchase history. If the contact did not fit into one of the brands or categories, he or she received the default versions. Listrak selected the Aquage brand as the default brand and hair care as the default category as these had the most number of sales in 2007 and would, therefore, appeal to the broadest audience.

Putting it All Together
It took about 10 hours for the graphic designer on Listrak’s professional services team to create the HTML template for the dynamic content email campaign as well as the 10 dynamic
content containers. He built the HTML template using a combination of Photoshop and Dreamweaver. He imported the content using Listrak’s HTML editor and he used Listrak’s Media and Content Libraries to build the dynamic content containers. The Media Library is a feature of Listrak’s email marketing solution that allows users to upload images for online storage, ensuring that the links remain valid and the images render correctly.

Listrak’s designer simply copied the images from DiscountBeautyCenter.com’s website, pasted them into Photoshop, saved them, and then uploaded them to Listrak’s Media Library. Then, as he designed the message, he simply inserted the graphics from the Media Library into the message.

Similarly, the Content Library allows users to create and store blocks of plain-text and HTML content for use in the dynamic content containers. Then the user simply has to add the dynamic
content containers to the body of the email and define the profiling filters so the system knows which content block to use for each individual email.

After the emails were created, Listrak worked closely with DiscountBeautyCenter.com to ensure it reviewed each content block carefully, along with the other sections of the message. Because this was DiscountBeautyCenter.com’s first experience with dynamic content, Listrak wanted to explain in detail the profiling filters, content blocks, and dynamic content containers that would lead to the 24 different versions of the message. The total development time for Listrak’s version, including the data mining and the time to create the content containers, was 10 hours. However, as this was the first dynamic content email for DiscountBeautyCenter.com, many items had to be generated from scratch. Future campaigns will take much less development time now that some of the key items are in place.

In contrast, the previous DiscountBeautyCenter.com newsletters only took about four to six hours to create, as the CEO would simply select products to promote without any research into purchase history or segmentation. With the differences in creation time, Listrak knew that it needed to increase the amount of sales in order to match the ROI generated from the regular email campaigns. But it still felt that the targeted approach would deliver higher response rates and conversions.

The Results
Listrak’s dynamic content email campaign generated more sales for DiscountBeautyCenter.com than the "End of Summer Sale" email campaign it sent out in August, making this email send its greatest performing email campaign to date. Listrak found that there was a noticeable lift in both open and read rates for the dynamic content emails when it specified brand preference in the subject line. Open rates rose from 13.2 percent for non-preferential segments to 15.5 percent when it had brand preference stated in the subject line – an overall 15 percent increase in lift.

Concurrently, read rates, which Listrak tracks as a message opened for five seconds or more, rose from 9.1 percent for non-preferential segments to 12.4 percent when it had brand preference stated in the subject line – a 27 percent lift.

Listrak also found that the click through rate increased 41 percent - from 3.4 percent to 5.8 percent - when brand preference as well as category preference was dynamically inserted into the email messages. It is important to note that the average click through rate for all of DiscountBeautyCenters.com’s email campaigns in 2007 is 3.68 percent. The preference-based segmented campaigns represent a significant milestone by going above and beyond what has been previously possible. It is also significant that Listrak was able to increase response without heavy discounting which was one of the goals set forth by DiscountBeautyCenter.com’s management team.

Improving the Results
While the results were good, Listrak expected them to be better. So . . . the teams gathered again to look more closely into the campaign send and the response rates. The first thing that Listrak noticed was that only 13,000 of DiscountBeautyCenter.com’s customers fit into one of the targeted brands, which meant that nearly 30,000 customers received the default, un-targeted version of the email. Listrak should have chosen more brands to segment as the top four only represented one-third of DiscountBeautyCenter.com’s customers. Being able to target “long tail” preference appears to be the pathway to improved response. Going forward, Listrak will code each recipient email address on file with brand preference and category to be used in the subject line.

Listrak also found that the $5 off coupon was not used in 27 percent of the sales. This stresses the importance of following email design best practices even in targeted and segmented
messages. Listrak presented the brand preference at the top of the email and the product preference in the middle. However, the offer was at the bottom of the page below the fold, which means that many customers did not see it.

The power of segmentation and the power of the offer should not be isolated. Both features need to be used together to create an email that is irresistible to your customers. Overall, Listrak and DiscountBeautyCenter.com were happy with the exercise they went through in order to gain the firsthand knowledge and experience of generating a dynamic content email campaign. Both companies learned valuable lessons that they will carry forward to ensure that future campaigns
capture an even bigger audience with more relevant messages.

I'm sure you'll agree that this is an excellent case study! If you'd like to view the companion webinar that went with this success story, click here.

Some Interesting Links

Let's kick off this Friday's list of links by being totally self-promoting! Nancy and I have created a new website (and we have lofty aspirations for this one!). Check out: AskDirectMarketers.com. It's a site where people can go and ask their burning direct marketing questions. Then, the answers are also summarized quite nicely, here. Our goal is to make this Q&A site a hub for direct marketers, and, again, we'll be adding some more fun content soon.

Another new site worth checking out--Jurie Pieterse (ING Direct) has started a new banking blog, called Banker with balls (gotta love that title). His most recent post is on Wachovia's new saving plan called Way2Save. I can tell that this blog will be a good one! If you dabble in financial services marketing (as we do), I'm sure we'll learn a few things here.

Speaking of financial services, I enjoyed this post from Red Clay Media that talks about how President Bush' $150 billion stimulus may impact families (how much a typical family will receive), but also the impact on mortgage lenders. I don't know a direct marketing company (RRW included) that hasn't been negatively impacted by the sub-prime debacle and the current housing situation. Red Clay Media usually has an interesting spin on the situation, and this post is no different.

And on to another popular Direct Marketing blog--Bob Bly started an interesting discussion this week about marketing in a recession. Lots of good discussion on pricing strategy.

Skinning a similar cat (in regards to how to best spend your marketing budget) was Mack Collier's post: Is $3 Million better spent on top-down, or bottom-up? Here he imagines how to best spend the $3 million that some Super Bowl advertisers are spending for a 30 minute ad. Mack brings his experience and thoughts on using the funds (but not nearly all of them) primarily on social marketing--a very interesting perspective.

Hope you enjoy these links like we did! Have wonderful weekends!

The Shift in Direct Marketing is Happening NOW!

As time goes on, all of the excitement around social media, viral and online marketing seems to be changing our world. Even the folks that have been around the block a time or two are referencing this change. Check out this post from our friend, Dean Rieck, on his Direct Creative Blog. He recently interviewed copywriter extraordinaire, Bob Bly, and asked him what he thought the future holds for traditional direct marketing -- i.e., direct mail and print advertising. Talk about a loaded question!

Anyway, here's what Bob said: "I do not think print will disappear, but right now, all the focus and excitement is about online marketing. I am not a futurist so I don’t make predictions, but many feel that online marketing is fundamentally changing the way marketing is done … specifically, giving the customer a greater voice and moving away from advertiser-generated copy and content."

Dean then questioned Bob about what effect the internet will have on direct marketing over the next few decades. Dean asks some tough questions! How Bob answered this question is the whole point of today's post. Here's what Bob said: "The web is moving marketing from an advertiser-to-prospect model, where the advertiser sends promotions out to prospects, to a customer-centric model, where customers instead of marketers do a lot of the selling. Examples include viral videos where prospects pass your video on to other prospects, and Web 2.0 sites (e.g., Amazon.com) where customer-generated content (reviews) is more influential than marketer-generated content."

Hence my initial comment about how our direct marketing world is shifting. We love this shift. The idea of customers selling on behalf of marketers is an idea whose time has come. Think of all of the time we spend trying to isolate that perfect consumer or business that may be willing to hear our message. Think about the hours of sleep lost over whether the DM campaign that's hitting mailboxes in the next week will reap us a .5% or a 1.5% response rate -- and the repercussions of either. With this shift, it's all about the customers preferring our product, and preferring it so much that they discuss why they prefer it. What a concept!

Therefore, we really like the direction that our industry is heading in -- and we agree with Bob Bly and his comments. We've already started to encourage our clients to integrate these concepts into their marketing strategies now -- to be proactive as opposed to reactive. The shift has already begun -- and it will be interesting to be a part of this, and to create success around it for our business and those with whom we consult. It'll be a fun ride!

If you'd like to share what you're doing within your business or with your clients to integrate social, viral or online marketing into your marketing plan, we'd love to hear your story.

Use of Customer Data to Set Service Strategies

I was pleased to see this round-table discussion on the newly revamped DM News website: Use data to handle the disgruntled

The article presents 4 slightly different takes on how to use customer information and customer preferences to maximize the customer experience. From prioritizing calls to customer service based on customer value, to knowing when (and when not) to offer price discounts as an incentive, the article provides good insight into the use of customer data to make service decisions.

The takeaways from the 4 authors:

1. Use your CRM system to prioritize your customers according to their value.
2. Freebies and discounts can backfire with customers willing to pay a premium.
3. Data can help marketers turn unhappy customers into supporters.
4. Empowered customers with communication choices are happy customers.

As a database marketer, I absolutely believe in using the power of the database to determine customer treatment. Just one word of caution--don't piss off your customers too much!

Remember a few months ago when Sprint 'fired' some of their most irritating customers? Remember the bad press that abounded? Looking back, I firmly believe that this 'firing' incident was just a bad idea, in terms of negative PR and harm to the Sprint brand.

Yet, from a database marketing perspective, AND according to today's article, Sprint did the right thing. They used customer value to determine customer service levels. In Sprint's case, they were unwilling to expend ANY effort on service to a few pesky customers and chose to fire them, instead of serving them at all. And, it backfired on them...

I guess the lesson learned--while it's very smart to vary treatment and service levels based on overall customer value, you need to remember not to go too far. Common sense needs to prevail so that your well-conceived strategies that look great on paper also work in the real world.

The Age-Old Conundrum: Getting Marketing Involved in the Sales Process

The beauty of blogs is that you can post on those items that you run across in your day-to-day journey that either make you want to dance and sing . . . along with those that make you want to scream! As bloggers, we have that going for us!

Hence the topic of today's blog (screaming not dancing): How can we (the brains and brawn of direct marketing) force our way into the world of sales (with them kicking and screaming) in order to assist them in creating revenue? It's an age-old problem -- and as evidenced by this article from destinationCRM, one that many of us are faced with every day. Here's a snippet from the article:

Who is in charge of revenue at your company? In most B2B companies, the sales department owns the revenue pipeline -- and therefore, the most political power. In contrast, the marketing department too often gets left out of the revenue process. There are companies where sales holds weekly revenue calls, and nobody from marketing is part of the conversations. The executive leaders of these companies think of marketing as a cost center, not a strategic asset that drives growth. As one marketer lamented in a recent CMO Council report, "My group is perceived by upper management as the people who do color brochures." Marketing is suffering from a crisis of credibility. So what can marketers do in order to be seen as part of a machine that drives revenue and profits, not just the people who throw parties and buy swag?

This article, written by Phil Fernando, President and CEO of Marketo, then provides some excellent pointers as to how to accomplish this change of perception. From our perspective, as direct marketers, we possess the tools that can measure and track the success of every single campaign that we create. The beauty of direct marketing is that every little thing can be measured and stripped down to figure out which elements of each program were the most successful . . . and which weren't.

Why then does it continue to be a struggle to prove to sales that they need to include direct marketers as part of the solution to generating more revenue, ROI and sales success?

It beats me.

Don't get me wrong, there are those who do get it . . . but it seems that they are few and far between. And if they do get it, they probably used to be marketers prior to leading sales teams.

However, don't give up on this. We need to continue fighting the good fight. Continue to drive home the fact that you can partner with the sales team to make them more successful. Find the successful sales people and bribe, cajole, and convince them to give you their ear for a few minutes. Explain to them how you are honing in on the perfect prospect for them. Show them how you've come to that conclusion -- or better yet, enlist them as advisor prior to creating a campaign (who knows the customer better than the sales person?), and get their input on their idea of the dream customer. By getting their buy-in on the front-end, they may be more willing to work with you as you launch the campaign and really need for them to begin working the leads you have so carefully crafted just for them.

Then, and most importantly, keep them involved in the measurement process. Help them understand how successful the leads have been. Don't quote response rates and other direct marketing mumbo-jumbo. Sales doesn't care about response rates -- sales cares about closed sales. Make your results speak to them in their terms. Point out the number of sales that the campaign brought in, and again, bring sales in to tell the story of how they closed that sale, why the prospect was the perfect one, and how marketing really nailed it that time (i.e., got sales the leads that were most likely going to close).

Don't stop there . . . next, enlist their support for future campaigns. Determine what went right in the prior campaign and what, if different, would have resulted in more closed sales. Maybe there was an industry out there who -- hands down -- just wasn't open to a sales visit. Or maybe there was a customer segment who refused to be interested in the product or service. Sales can tell you this. Listen with an open mind, get past the whining and on to the actual golden nuggets that you can act upon.

Remember, you are the genius of direct marketing. You enable the sales force to create revenues. What you do can make or break their efforts. Therefore, you have to wriggle your way into those meetings where they talk about projecting revenues and number of closed sales for the month or quarter. Build your story to present to the sales leadership team of how you can -- and will -- impact those numbers.

You need to stand up for your right to direct market! And, sales needs to listen. Guess what? All you need to do is create some success and they will listen. Get that sales superhero on your side and start talking!

Case Study Monday: Acquisition Direct Mail

At RRW, we spend more than 50% of our time helping our clients acquire new customers. The rest of the time is spent in working on customer marketing (retention, segmentation, etc) and other direct marketing activities for our clients. Of course we spend time running the business (yikes--accounting!) and writing this blog :)

My point--over the years, we've become pretty good at figuring out how to acquire profitable new customers. So, we thought we'd share one of our own success stories today.

Situation Overview
Our client, a leading mortgage lender with aggressive new customer acquisition goals was faced with the following list targeting challenges:

• They needed to maintain their historic high response rates to their ongoing direct mail campaigns, but at the same time,
• Dramatically improve their approval rates. Over time, in a saturated refinance market, responsive applicants were increasingly failing to meet credit criteria, or they did not have the right equity requirements.

Solution Review
RRW Consulting recommended a data-centric, analytically based approach that leveraged available realty data as well as custom modeling services. We brought a new science to list selection that allowed this lender to achieve its response goals and yet dramatically improve conversion of loan applicants to customers.

We designed a three-prong data selection approach:

• We utilized industry-leading sources of homeowner and realty data to ensure that the appropriate equity was available for each prospective homeowner. Specifically, we relied on the “Available Equity” and “Loan to Value” list selections offered by those data compilers that specialize in the compilation of first and second trust deeds, integrated with county tax assessor data. This initial pre-select was the first “cut” in determining that the prospect would ultimately qualify for the loan.
• We built a Response Model that capitalized on prior prospect performance to predict future response performance. Essentially, we cloned prior responders to this lenders’ campaigns. We built a scorecard based on their demographic and psychographic characteristics that ranked the overall homeowner prospect universe from the most likely to respond to the least likely to respond.
• Finally, we developed an Approval Model that isolated traits of homeowners likely to be approved for the refinance loan. Since we were not extending a firm offer of credit, we could not utilize individual level credit data, making the task of predicting loan approval especially difficult. However, the model was able to successfully rank order prospects in terms of their likelihood to be approved for the loan. The models’ success can be attributed to the wealth of demographics included in the model, and in particular the inclusion of credit data aggregated to the ZIP+4 level.

Implementation Overview
As can be imagined, the list selection approach quickly became fairly complex, due to the number of realty selections employed combined with the set of response and approval models. We developed a data selection and testing matrix that allowed us to be very responsive to changes in the clients’ goals and fluctuations in the marketplace. For example, if the CEO needed more applications flowing to the call centers, we relied heavier on the response model and less on the approval model. Conversely, if the applicant quality was being questioned, we’d select and mail those applicants more likely to be approved. Finally, we also considered frequency of prospect mailings. We managed the campaigns to reach qualified prospects more frequently than those less likely to respond, or to be approved.

The scientific data selection approach resulted in success. Our client was able to retain their high response levels and also dramatically improved loan approval rates.

Links of the Week!

Here's this weeks collection of our favorite posts of the week!

1) Bhupendra Khanal's Business Analytics Blog: Bhupendra's post "Management Consulting May Not Be the Right Answer," is a thought-provoking post on why business ventures most often fail. Bhupendra discusses how you must integrate smart analytics, market research and management consulting to make successful strategic business decisions. He also makes the point that customers need to be treated as humans, and unless you utilize all three of these areas in your business venture, the emotional piece (that appeals to human beings) is lost.


2) Bob Sullivan's Sales and Marketing Effectiveness Blog: Bob's post "B2B Marketers Plan 2008 Budget Increases," gives us some excellent news to end our week -- particularly after the DM employment outlook news that we reported on yesterday! Bob reports on a recent survey that found that B2B marketers are going to be increasing their budgets in 2008 -- and mostly in the areas of online, events and . . . drumroll please . . . direct marketing! We think that DM'ers are going to need to strategically plan to really get the most out of their B2B marketing budgets, and put in place solid measurement systems to prove each campaign's success. In this sluggish economy, this will help us to create a better economic outlook for direct marketing professionals as we continue to prove that our efforts pay off -- in terms of increased ROI to the businesses we support.

3) Ted Grigg's Reflections About Direct Marketing Blog: Ted's post "Four Secrets for your Acquisition List Testing Success," provides great insight about renting lists to fuel your acquisition campaigns. Ted gives us some pointers on working with list managers and brokers and then creating sound list testing strategies. He also highlights the importance of selecting a knowledgeable list broker and how these professionals can help you plan successful list tests -- and consult with you all the way through to a successful campaign roll-out.

We hope you enjoy these posts as much as we did!

TGIF!

Direct Marketing Employment News

I always look forward to seeing results of the quarterly direct marketing employment surveys run by Bernhart and Associates. This quarter (Q1 2008), the news isn't so great. Here's part of their press-release.

Job Market Tightens for Direct Marketers

Direct marketers can expect more hiring freezes and increased layoffs this quarter, according to the latest employment survey by Bernhart Associates.

"All of our hiring indicators are turning more negative," said Jerry Bernhart, President of Bernhart Associates Executive Search, LLC. "This weakness comes as no surprise given the recent news of layoffs and the current overall economic climate."

According to the survey, 58% of the companies responding said they plan to add to staff during the first quarter of 2008, down 2% from the previous survey in October. Direct marketers are also planning more layoffs with 12% indicating they plan to reduce payroll, up from 9% last quarter.

Bernhart said the biggest increase came in the percentage of companies that have imposed a hiring freeze for the first quarter, which jumped from 9% to 13%. When asked when they plan to lift their hiring freezes, Bernhart said most said they were unsure if they would be lifted by Spring.

When asked about the degree of difficulty they are having attracting qualified talent, 19% of the companies responding said they were having a "very difficult" time. The remainder indicated it was only somewhat difficult or not difficult at all. Bernhart said those numbers represent a change from recent quarters when employers indicated they were having a more difficult time finding qualified candidates. "The pendulum is beginning to shift from a candidate-driven job market to more of an employer-driven market", said Bernhart. "That's good news for employers who are hiring, but it could mean more competition for job seekers."

Sounds like it's time to tighten those belts and make best use of every minute of the day. It also might be a good time to make sure that your accomplishments and successes are well-publicized within your organization.

I still contend that the beauty of direct marketing is that our efforts generate measurable results (new sales, leads, etc.). If I were a CMO cutting marketing budgets, I'd definitely start with those efforts where results cannot be quantified and proven.

Direct marketing programs (if successful) would be the last to go. Of course, I'm biased :)

Spotlight On: Epsilon

Welcome to another edition of our "Spotlight On" series, where each month we focus on an industry-leading provider to the direct marketing industry. Additionally, we highlight those companies who not only bring us great DM solutions, but also perform exceptionally in the customer service arena. We hope that these monthly posts are helping you, our faithful readers, when you go about the business of choosing partners and vendors to work with.

Today, our spotlight is on Epsilon. We’re especially pleased with this month's Spotlight because it gave us the opportunity to chat with Ron Shevlin, Epsilon’s Vice President of Client Solutions. You may also recognize Ron as a fellow blogger, whose fascinating Marketing Whims blog we follow religiously.

In our conversation with him, Ron shared some great information about his company and, in addition, his vision for the future of the database industry.

First off, here’s a bit of background on Epsilon. We know Epsilon through our database consulting work (where we help clients choose the right technologies and database partners). Epsilon is always included on the short-list of database suppliers. But, they don’t only dabble in database. Here’s a list of other capabilities, from their website:

• Unique, original data sources
• Custom database solutions
• Leading loyalty solutions
• Data hygiene and integration
• Multi-channel campaign distribution & management
• Targeted email and direct marketing
• Award-winning creative & strategic consulting

We asked Ron what he believed was the primary differentiator between Epsilon and its competitors. Ron stated that Epsilon is an expert in driving efficiencies and reducing cycle time. He cited an example of this with the work that they’re doing for the a top five bank here in the US. They’ve built an analytic data warehouse that integrates customer data and analytics across all of the firm’s business units. This data warehouse allows them to execute campaigns in a timely fashion. More importantly, it enables response analysis which allows the bank to apply learnings to subsequent campaigns. And, what’s most important of all is that all of this happens quickly—the true differentiator.

Another example Ron cited was their technology product, called SONAR. SONAR enables multi-channel and cross-channel marketing, by providing middleware that ties customer touchpoints together. For example, websites and call centers are tied into the customer database so that, for example, in real-time, the most pertinent offer can be presented to that customer. This technology, which facilitates cross-channel integration is being used successfully today by high profile firms such as Schwab and Hilton.

Ron talked about how historically Epsilon has specialized in building customer databases. Now, the firm is focusing on operationalizing the database. Their focus is on allowing firms the ability to “use data at the point of customer interaction.”

They’re also serious about high-quality company acquisitions. They make it a point to only acquire “best-in-class” firms. This commitment to quality is demonstrated by their recent acquisitions of Big Foot (interactive marketing), CPC Associates (new movers and other data), Abacus (the leading catalog co-op database firm) and Alliance Data Systems (specializing in retail marketing services).

In regards to their client mix, Ron does not see Epsilon moving away from their focus on large organizations, where their mix of technology, analytics expertise and database marketing knowledge is especially important. Epsilon has a strong foot-hold in the financial services sector, but with recent acquisitions (namely Abacus and Alliance), they’re industry leaders in the retail and catalog spaces, too.

Competitive Threats

Our discussion then branched off to some of the looming trends in the database marketing industry. Ron told us that in regards to competitive threats, he’s not worried as much about traditional database competitors such as Acxiom and Experian. Instead, the trend that worries him more is that more firms that are taking their database “in-house, using consultants such as IBM and Accenture.” He qualified this by stating that these firms may be well-versed in technology, but that they don’t necessarily provide long-term operational support. As we all know, this can quickly spell disaster when a company is left with technology that they may not be able to use or fully operationalize.

Another trend Ron sees for our future is offshore work—outsourcing programming, analytics and other technical functions to lower cost alternatives in India and China. One way to combat this threat, Ron believes, is to focus on Epsilon’s strengths—and that is their top-notch customer service. Ron gave us an example of Epsilon’s commitment to the customer—for large database sales, the team that comes into a firm and makes the sale is the same team that executes. Therefore, the client can rest-assured that they’ll get the support and commitment that they deserve from the Epsilon people that best understand their business needs and challenges.

Our take on Epsilon—while they are an established database provider to the direct marketing industry, they are forward thinking with their emphasis on real-time integration of multi-channels. They remain technology leaders and are committed to the customer. What more can we ask in a vendor partner?

Ten Database Security Tips

As a direct marketer, I hear about database breaches and immediately think "BIG BUSINESS". I envision large financial institutions that collect data on millions of customers and imagine a scenario where stolen data results in large-scale lawsuits and identity theft mayhem. But, honestly, it's just as important (and perhaps even more important) for smaller businesses to ensure that their customer data is secure.

This article brings that point home: 10 Database Security Tips For Smaller Businesses

While storing sensitive or regulated information puts any company at risk, smaller businesses may have more to lose. "For small businesses, the impact of data loss is much higher, because they have less infrastructure," says Mark Kraynak, senior director of strategic marketing for Imperva. "They probably don't have backups, and they don't have the organizational wherewithal or response teams to handle a big public breach, or getting sued."

The article then proceeds to share ten solid tips that smaller businesses can follow to help keep their customer data secure.

I urge you to read the whole article, but I thought the following tips were especially solid.

Tip 5: Restrict Database Access -- both to the production database, as well as underlying hardware -- on a need-to-know basis.

Tip 6: Prohibit Wholesale Database Copying. A production database typically has a designated owner or gatekeeper. Yet who watches a database after it's been copied?

We see copies made and distributed all the time in the world of direct marketing. Someone requests a copy of the customer base to be used, for example, as a suppression file for an upcoming prospect mailing. The customer list is sent to an external data processing firm, perhaps. The campaign is implemented and no one ever thinks about that customer list again. Typically, nothing bad happens, but it takes only one instance of data theft.

We urge you to make sure that you have appropriate non-disclosure agreements in place with anyone who touches your data. Make sure that they specifically talk about how the processor must keep the data secure. That way, if something does happen, the fault will be on your processing vendor, and not on you.

Tip 7: Inventory Existing Databases: Locking down databases out of the box and prohibiting wholesale duplication may sound fine, but what about securing databases and copies that already are at large?

Companies must regularly find and inventory all existing databases. Know that one production database may hide many copies. "Typically, in a lot of businesses, you have the production database, but guess what, that database usually has a lot of copies -- developers have copies, for example -- and many databases correspond and make calls to each other," says Bowker.

Knowing where your data exists is a good thing for many reasons. Namely, if a data breach does occur, you'll be very well-positioned to find out where the theft happened in the first place. You'll also be well-prepared for any subsequent lawsuit showing that your firm has stringent practices in place to prevent data theft. A simple inventory of data assets goes a long way in showing that you do put a value on customer data and that you're serious about protecting it.

Overall, it may be time for firms, small and large alike, to put some serious thought into your database practices. News about a data breach is definitely the type of news we'd like to avoid in 2008!

Case Study Monday: Bringing Direct Marketing In-House

Welcome to another edition of Case Study Monday!

Today's case study is from Detica Information Intelligence, a specialty business and technology consultancy based in the United Kingdom. We think that this case study is an excellent example of how you can utilize an outside perspective to help you bring direct marketing functions back in-house. And, as this story illustrates, Detica helped their client do this while also contributing significantly to their bottom line. Read on for more insight into how Detica created a true win-win situation for their client.

Client name: A major international mobile phone service provider

Business challenge: Mobile phone service providers are facing increasingly tough competition in the UK. As one of the industry's global leaders, our client was therefore keen to adopt more flexible, cost effective ways of exploiting its customer intelligence and targeting its millions of UK subscribers with successful direct marketing campaigns. A key requirement was to develop a 'closed loop' system that could look intelligently at the success of past and current marketing initiatives, then feed this information into future plans to make them more effective. This would enable our client to target customers through a variety of channels, capture their responses, measure the outcome and 'close the loop' by incorporating the new intelligence into future promotional and communications programmes.

Detica Solution: Detica was engaged to manage the implementation of Chordiant Marketing Director™ software, assembling a team of data intelligence and business process analysts, plus project administration specialists, supported by product experts from Chordiant. This enabled us to transfer Marketing Director operations from an outside bureau to our client's UK in-house division - generating cost savings amounting to more than £5 million over 10 years. Once installed, we also integrated the software with a new customer database and a state-of-the-art suite of contact centre applications. Having successfully implemented the software, we continued to work with our client's UK marketing, customer service and IT teams to bring the entire 'closed loop' system into full operation. Detica also provided consultancy to help re-engineer its direct marketing business processes and to identify best practice for campaign managers.

Results: The end result has been an intelligent, integrated in-house solution that enables our client to plan, measure and execute direct marketing campaigns across multiple channels - whilst also generating cost savings in excess of £500,000 a year. This has increased its responsiveness to business opportunities and allows it to generate multi-media campaigns in shorter time frames. In addition, contact centre agents can now deliver direct marketing messages to help drive smart cross-selling, while still providing a core customer service function.

As a result, our client is operating its most efficient and measurable direct communications programmes to date - with plenty of scope to improve operations still further in the future. It also has a solid, intelligent information base that allows it to put together tighter and even more relevant promotions for its UK subscribers.

Congratulations to Detica for assisting their client in building more profitable customer relationships! This is something that we are truly passionate about and this is a great demonstration of one way to accomplish this desired outcome. The results gained were quite impressive and this story is something to keep in mind as you look at what to outsource and what to bring in-house in your own businesses.

Have a great week!

Love these Links

This week was a great week for bloggers. Perhaps bloggers are finally settling into 2008, because we saw lots of creativity.

This post, from the Big Idea Blog is an inspiration to all entrepreneurs, or wanna-be entrepreneurs. It provides the story of how one woman (Lesley Mattos) turned an experience in her personal life into an idea for a new business. I won't spoil the story for you--you'll have to take a look at the blog post to find out what her idea was. All I can say is that this reminded me to keep my eyes open for that next great idea, no matter what I'm up to.

And, we enjoyed this post by Phil Bernstein (my Portland neighbor), Direct Mail By the Pound. It's actually kinda scary how much direct mail is sent over the holiday season. His post brings this home.

Another post that generated lots of discussion on direct marketing ethics is Robert Rosenthal's IQ Derma and the Grand Illusion. I have to tell you, this really got me thinking about just how far some direct marketers go to make the sale--even if it means misleading their customer...

Since we're always an advocate for the customer, this post from the Customer World blog resonates: NYSE CEO Report 2008 - Focus on the customer. Let's all hope that there will be some major mind-shifts in 2008 and that customer focus, is indeed, pushed down from the very highest levels within an organization. This mindshift, by the way, ALWAYS bodes well for database marketers. In order to best serve your customers, you better understand what they want and need, right? Time to mine that database!

Along those same lines, check out this post from the 1 to 1 Media blog: Wall Street Should Take Cue from Amazon. It talks about how Amazon has maintained their solid growth primarily due to focusing on the customer experience. Yes, those customers are, indeed, pretty important...

That's it for today! Have a wonderful weekend, and don't forget to wish Nancy Arter (my partner in crime and fellow blog-author) a Happy Birthday!

Event Triggering, Data Mining, Multi-Channel Marketing -- Oh My!

We've often cited the tremendous impact that event-triggers can provide to direct marketers. In fact, we've worked with several clients to design event-triggering programs that have resulted in response rates of up to 2.1% -- much higher than utilizing traditional data sources to fuel acquisition programs.

This continues to be the case -- not only here in the US, but also in other countries. In fact, The Wise Marketer has just reported on the results of some research conducted by UK marketing firm CDMS. The firm looked at using event-triggers with an existing customer base -- and the findings were quite interesting. The first finding was a no-brainer -- that "customer marketing -- as opposed to prospect marketing -- generates a significantly higher response." I think we've all seen this -- I mean the customers that already buy from you are definitely going to be more open to reading and responding to your messaging than those cold prospects who you are trying to acquire.

More interestingly, CDMS reported (in this survey of UK-based senior marketers) that event-triggered customer marketing produced an average of 35% more responses. Now, this is something that we can all chew on! So, how did these savvy UK marketers accomplish this? "Rather than simply processing regular customer marketing campaigns in batches, some marketers have begun to use their database marketing systems to target offers based on specific, defined customer behaviour patterns."

So, with the use of data-mining, and utilizing the information that you collect on your customers, you can create highly-responsive, event-triggered direct marketing programs for your customer base. Here are some examples of the events that were utilized:

• A customer service call
  
• A type of transaction
  
• Passing preset spending levels in a particular time period
  
• A customer's birthday

In addition to utilizing these event-triggers, the survey also examined the use of integrating this concept with a multi-channel approach to further increase response rates. This also proved to be quite interesting:

Direct mail with response via post and a freephone number was gauged as producing a 20.8% uplift. Direct mail with response via post and e-mail was gauged at 20.2%, while direct mail with response via post and a personalised web link was 18.9%. Direct mail with response via post and a web site stood at 14.3%, while direct mail with response via post and telephone scored 14.1%, and direct mail with response via post and SMS (text message) scored 12.4%. In all cases, the addition of extra response media was felt to produce a significant uplift.

For us, this is some compelling data -- the kind of stuff that makes us excited! When you use intelligent direct marketing techniques hand-in-hand, the results that you can expect are truly phenomenal! As this research suggests, you can increase sales with your existing customers just by capturing some pertinent data from them as you communicate with them, then employing some very simple data-mining techniques to build a triggering program. In addition, you can build on that success -- significantly -- by using a multi-channel marketing strategy in conjunction with the triggering. The up-ticks in response are very impressive when you utilize these tools in conjunction with one another.

Just imagine what you could accomplish if you made a point of capturing your customer's communications preferences in that marketing database, and then added some slick segmentation schemes to really target the creative by segment. Wow!

This study demonstrates once again that if you really think through your marketing strategy, and then use all of the tools available, you can increase the effectiveness of every single marketing campaign.

If you have a case study that illustrates your intelligent direct marketing, please share it with us. We'd love to highlight your success and share it with all of our readers.

DMA's New Mail Preference Service

It's always bugged me that the Direct Marketing Association charged consumers to put themselves on a Do Not Mail suppression file, used by the industry to scrub lists of people who really don't want to receive direct mail. Yes, the fee was only one small dollar, but this fee rankled consumers who are sick of junk mail. I can't tell you how many articles I've read complaining about it.

And, believe me, direct marketers don't need more bad press...

Well, the DMA announced today that they've not only gotten rid of the $1 fee, but that they've enhanced the service.

DMA Unveils Free Online Service; Enhances DMAChoice to Meet Consumers' Needs for Choice in Catalog Mailings

In a nutshell, along with the elimination of the $1 fee, consumers can now opt-out of mailing lists by individual brand and ask not to receive specific catalogs.

“DMA’s Mail Preference Service, part of DMAChoice, is now the most effective and secure way for consumers to only receive the mail they want and to express their preferences for mailings they do not want — it’s all about relevance,” said DMA President & CEO John A. Greco, Jr."

What do we think of this? It's about time that our industry gives consumers a way to record their choices and preferences in terms of the types of direct mail they want to receive (or the type they really DON'T want). Now, marketers just need to listen and abide by these wishes.

RRW is all about respecting consumers' wishes, and we applaud the DMA for introducing this new service.

Direct Marketers Viewpoint

With all of the focus on the upcoming Presidential election, there has been an unprecedented number of pundits out there predicting all sorts of things for 2008. Couple that with the continuing struggles in the housing market, and the naming of 2007 as the Year of "Subprime," and you have an interesting forecast -- to say the least!

BtoBOnline has reported on how all of this impacts the viewpoint of direct marketers. In the article, Amy Syracuse reports on those items foremost on our minds. Not surprisingly, the economy heads off this list. Between the mortgage crisis and the state of consumer spending (or lack thereof), it behooves us all to keep a wary eye on the economy. More than ever, diversification across industries is key. Also, if you think that your marketing strategy is set -- think again. We respectfully submit that with this existing climate, we all need to test, analyze, learn -- then adjust accordingly.

Also on this list of what keeps us up at night are the concepts of Green and Social Marketing. You know how we feel about social media and marketing -- we've driven that point home over the last six months or so. Regarding environmental concerns over direct mail, the article reports that in addition to increasing federal government scrutiny, the "DMA will ramp up its green initiatives this year. The group will unveil target goals in June to reduce members’ environmental impact through paper procurement and use; mail design and production; packaging; recycling and pollution reduction; and list hygiene and data management."

In addition to what our association and government are doing, we strongly believe that by using a solid targeting and analytical approach, you can more effectively implement direct mail campaigns -- this will both provide you with better response rates and help to save precious environmental resources.

Finally, in terms of what the role of direct marketing will take in 2008, the article quotes our good buddy, Bob Frady, of LiveNation.com. Bob (pictured above -- and you were wondering who that handsome devil was, right?) is the VP of Direct Marketing at LiveNation, and an incredibly savvy direct marketer. Here are his thoughts: "Marketers might also reconsider their metrics. [Today] a consumer will see a promotion, then, rather than follow the neat path we’ve laid out for them, they’ll go searching for in-depth levels of information about what we’re offering. Many times we’ll lose the tracking we’ve put in place. … Traditional direct marketing measurements need to be tweaked to capture how customers are actually behaving.”

This is great insight, and it goes hand in hand with not only marketing smarter when developing your direct marketing strategy but also closing the loop to ensure that your efforts are worthwhile by tracking the effectiveness of each marketing program. Frady also pulls in the customer behavior piece which becomes more complex as responders utilize all of the different channels available to them today to spend their dollars with you.

Overall, these are some great viewpoints that provide a roadmap of what to manage for -- and to -- in 2008. It's also going to be fun to see how the role of politics -- and each Presidential candidate -- plays into all of this as November gets closer.

Case Study Monday: Social Marketing to Market Niches

We'd thought we'd present a case study today on one of the growing trends of 2008 and beyond, and that is the prediction that social media growth in 2008 will emerge from more targeted offerings that attract users based on interest.

So, in addition to the massive Facebook and MySpace sites that attract millions of users, new niche social sites are popping up on a daily basis.

As direct marketers, we couldn't be happier with this trend.

We were pleased to see this case study about Loop'd Network, a site that features action sports and appeals to a young, adventure-seeking crowd. The site is relatively new (just launched in November) and already boasts 240,000 members. Even more important, Loop'd "has been able to lure advertising from some of the biggest brands in action sports, including Oakley, retailer PacSun and Monster Energy drink."

It sounds like they're building the site the right way. For example, they're counting on user-generated content to help build momentum. "With the help of Loop'd, Oakley is inviting amateurs to submit videos of themselves doing their best tricks in six different action sports, including skateboarding, snowboarding and motocross. In the past month, about 1,500 users have submitted videos of themselves that have been judged by other users and Oakley employees as a way to reward emerging talent and foster good will among action-sports enthusiasts." Sounds fun to me!

Believe me, social marketing is big business--and niche social marketing is seeing some significant growth. "According to eMarketer, which tracks online media, companies will spend $1.6 billion this year – a 69 percent increase over 2007 – to advertise on social networking sites."

Although the bulk of those ad dollars will go to the social networking behemoths, smaller sites such as Loop'd are projected to account for 10% of the spend in 2008. Hmmm. Let's see, 10% of 1.6 billion is a heck of a lot of money!

Direct marketers cannot ignore the power of social media sites, especially now that so many targeted sites are popping up, and growing in popularity. What a fun and creative way to reach our target markets!

Links we Like!

TGIF--and you know what that means--it's time for RRW's round-up of blog posts and articles we especially enjoyed this week! Since it's still so close to the New Year, we start with two reports of 2008 trends.

1st up: This article from ClickZ: Seven Top Online Marketing Trends for 2008. Some points from the article that we completely agree with: "Social media growth in 2008 will emerge from more targeted offerings that attract users based on interest." "Behavioral targeting will become more widespread and will provide improved customer experiences, offering customers more relevant information to consumers and better targeted ads to marketers."

And, from Channel Web Network, here's their reporting on Data Loss Prevention Trends to Watch in 2008. Privacy and data security are important topics to direct marketers. This is an excellent resource (and kinda scary, too).

I was pleased to come across Mind and Media's Inspire Action Blog, and in particular, this post, Tackling the Demand for Gov't Transparency. It talks about a new bill that will give the media and general public greater access to governmental goings on. Since we appreciate transparency from people we do business with, I like the thought that we may get similar treatment from our own leaders (seems ironic that it's not the other way around).

And, from Todd Ebert's Bad Marketing Blog, we found some practical tips in his B2B New Years Resolutions post. Good stuff!

Finally take a look at these three separate blog discussions on the role of the CMO, all from some of our favorite authors. Ted Grigg wrote "Do Companies Really Want the Ideal Chief Marketing Officer?" Elana Anderson posed a similar question: "What Does (Should) a CMO Do?". And, Ron Shevlin put in his two cents with his "Knuckle-Draggin' CMOs" post.

Have wonderful weekends, all!

Direct Marketing to Students: A New Code of Conduct

In a post in October, we discussed student marketing and the issue of the use of misleading advertising to get students to apply for student loans. In this post, we talked about the issue of trust in marketing and how New York State Attorney General Andrew Cuomo was taking marketers to task for "misleading marketing practices through direct mail, teleservices, television, radio, and online channels." Cuomo's office cited very specific examples that "included some companies who are accused of mailing commercial offers designed to look like official letters from the US Department of Education that warn students to protect their rights by calling the lender." Other inquiries went out from the attorney general's office that asked about other practices such as offering gift cards for applying for student loans and utilizing sweepstakes that encouraged students to take out loans.

As a result of this, and as reported in DM News, Cuomo has created a Code of Conduct for student loan marketers. This Code makes it easier for students to compare the terms of loans offered to them, and some in the student loan marketing industry are rapidly signing on. “We were an early signer of the code of conduct,” says Tom Kelly, SVP at Chase. “We think it makes sense to have all lenders operate under same rules and it makes sense to treat students honestly because we hope to have a long term relationship with them.”

What is involved in Cuomo's Code of Conduct? As the article states, "Under the new agreement, companies have to sign a uniform disclosure statement requiring them to list an annual percentage rate and provide students with an estimate of what their monthly payment would be and the amount they would pay for the life of the loan. Lenders cannot use false insignia or other devices that appear to be part of the federal government. They also are barred from using checks, deceptive rebate offers or other gimmicks to entice students."

Another feature of the Code is around prohibited use of gift cards, sweepstakes, contests, or prizes to entice students to sign up for loans. Here's the most interesting point . . . under this code of conduct, lenders are "required to tell students that they can get the best deal through federal loans." Wow -- this is one tough Code. As a marketer, this seems to go against the very core of marketing principles. However, is this a case where desperate times call for desperate measures? Hmmmm.

So, does this new Code go too far? Well, Chase SVP Kelly doesn't think so. In fact, Kelly says, “I think it will create a level playing field,” he says. “The biggest impact on the market is the reduction in the federal subsidy for student loans, which will make them more expensive and continually grow the gap between the cost of education and a family's ability to pay for it out of pocket.” And, this comes from one of the top student lenders in the country (Chase is ranked in the top 8).

We'd love to hear your thoughts on this one. Does Cuomo's Code of Conduct get in the way of effective marketing? Or, do you think it's good to have this stringent type of policy in place for student loan marketers? Finally, do you think that such a Code should apply only to certain industries (i.e., student lending) or should similar principles be applied across industries (i.e., mortgage lending, telecommunications)?

Customer Preference a Hot Topic for 2008

Happy 2008!

Now that the holidays are officially behind us and we're all raring to dive headlong into a fresh New Year, it's time to take a look at what will be important to us as we begin to implement our direct marketing strategies.

One hot topic that has gained a lot of attention in the past few weeks is around customer preference. We really believe that if you communicate with your customers in the ways in which they want to be communicated, you are going to see big returns -- in sales, in ROI, and in customer satisfaction. Customer preference is more important than ever because of the multitude of channels available for us to utilize when spreading our marketing messages. On the one hand, we can increase the times that our message is viewed or heard. On the other hand, you don't want to annoy potential customers by hitting them too many times with your messages -- and particularly not with the marketing channel that they least prefer. The good news is that there are many different ways to easily capture your customer's communications preferences -- and smart companies have made understanding this a top priority.

Recently, the DMA has become involved in this, particularly around direct mail in the catalog industry. In a recent DM News article, author Chantal Tode discusses how the DMA "has strengthened its arsenal against proposed do-not-mail legislation by beefing up its Mailing Preference Ser­vice (MPS), offering consumers more choice in how and when they receive direct mail." While this move is definitely due to the afore-mentioned pending legislation (the article reports that the number of states with proposed do-not-mail registries grew from 3 to 15 in 2007, as is expected to increase to 25 this year), it's a move whose time has come. The DMA is trying to demonstrate to legislators that we can self-regulate as an industry. In other words, we don't need for politicians to increase the amount of marketing legislation that clogs up our political system and makes it a lot harder to effectively use direct marketing.

And, as discussed above, if a consumer doesn't want to be communicated with via direct mail -- I'd honestly rather know that. I'd rather spend my time and effort on those who want to hear from me through this channel.

We'll definitely keep our eyes on how this entire issue unfolds. Since we are now officially in an election year (I know -- it seems like we've already been in an election year), I'll bet that this issue will get lots of airtime as we hear from the various candidates from all parties.

Meanwhile, find out about your customer preferences. It may take a little work, but we firmly believe that it will pay off in huge dividends -- setting you up for a great 2008!