As I speak with many of our clients and prospective clients, it is clear that they are increasingly challenged to be more productive with their marketing budget. Many of them have focused their efforts on improving response rates. 

To improve response rates they have:

1. Developed “look-alike” models that statistically profile likely responders

2. De-crafted their creative to be more targeted

3. Improved their offers to include free MP3 players, guides, books, etc.

The end result: a higher response rate - but no improvement in revenue.  In fact in some cases the acquisition cost has increased due to the effect of the offers that drive response rate.

A few very sophisticated organizations have always focused on response and lifetime value rather than simply response. This approach has enabled those organizations to efficiently maximize revenue.  They have learned that in many cases prospective customers that may not have the highest likelihood to respond actually do have a higher probability of purchasing and also making subsequent purchases.  Had these organizations focused solely on response, they would not have marketed to these potentially very valuable prospective customers.

In response to the growing need for improved productivity of the Marketing budget, we have developed an approach that enhances the techniques of the very sophisticated organizations - the Value-adjusted Optimization Model. Click here to read more about this please download our free White Paper, “An Unwanted Surprise.“

An avatar represents the chosen alternative personna of an individual. It is important because it can be an indication of a behavior and/or lifestyle of individuals in your target market. Although it is not (yet) possible to link an avatar with a real person, it is important to recognize that through an avatar, individuals are offering up additional lifestyle and behavior information about themselves.

So why are avatars important? Avatars often do not represent a pure demographic. Rather, they represent lifestyles and behaviors. When translating this to marketing, it is clear that demographics alone do not define a market segment. Lifestyles and behaviors capture the true essence of an individual. Therefore these factors must be included in your market segmentation strategy.

It strikes me that many marketers continue to focus only on response rate.  However if you think about it, although it has some relevance, it does not necessarily lead to revenue generation- and revenue generation is THE role of marketing management.  Hence, we need to begin shifting our focus further downstream.  We need to shift the primary focus from response rates and on to revenue generation.

I’ve been getting a good amount of email asking for tricks to improve response rates for email and direct mail. 

I’m going to give-up one of my favorite tricks in this post, but before I do I hope you have read Andrew Russo’s post “A new era of predictive analtyics.”  He reminds us that response rate isn’t really the important metric - it’s about “adjusted response,” ultimately the EBITDA generated by a campaign.

Here goes:  I’m about to turn 43 and I can tell you that my ability to read the small type typically used in emails and some direct mail pieces is quickly eroding.  The truth is I don’t often put on my reading glasses just for your email or direct mail and it goes in the bin - I’m just not that into you!

So what to do?  It’s simple really.  Append age to your list or pull it from your house file.  Simply increase the font size a bit for those over 40.  Simple to do, and you will see results if you are dealing with customers or prospects over 40 or so.

Now some of you know that in the case of direct mail there might be an impact to printing costs.  This is just something you have to watch, perhaps adjust your copy to ensure that the increased font size doesn’t result in incremental production costs.

Marketers are overly focused on building predictive response models and AccuData’s current focus is to help move our clients beyond them.

Most direct marketers build predictive response models, but how about ROI?  After building literally hundreds of models for clients we’ve realized that optimizing response and optimizing ROI is not always the same thing.  In fact we often see that the ROI associated with the top performing response decile is LESS than the ROI of mid-deciles. The trick is to look beyond the initial sale and consider factors such as returns, margins and the post-campaign behavior of the responder.

AccuData has developed a proprietary methodology to address this question – The AccuData Value-Adjusted Optimization Model. The model is comprised of two submodels:  1) a response optimization model and 2) a revenue maximization model.  The first model is more of the traditional approach of marketers – maximize response rate.  The second model seeks to maximize near-term value (NTV).  NTV is a subset of customer lifetime value.  However, rather than projecting value over a customer’s product-buying lifetime, NTV projects out over 24 – 36 months.  This approach lends itself to reliability and stability.

I’m in the process of writing a white paper on this topic and I’ll address this topic again once it’s released.

Amazon.com made a smart move several years ago when Steve Shure (my former boss at Amazon.com) was hired from Time Inc. to lead Amazon Prime, and then again when Steve was subsequently asked to assume global responsibilities for driving traffic to Amazon’s web properties (some might call this marketing).  Steve had been with Time Inc. for over 20 years overseeing consumer marketing for People, Sports Illustrated, Popular Science and other top publications.  He was (is) a world-class direct marketing expert among other things.

In hiring Steve, Amazon made an explicit choice to bank on Steve’s classic direct marketing skills and not his online marketing experience per se.  I  believe that Steve would be the first to tell you that there were candidates with more impressive online credentials than he had at the time.

Coming from an extensive web background (peoplefirst.com, capitaloneautofinance.com, attwireless.com, amazon.com) I get as excited as the next guy about web 2.0 (hence Letters@!), cool new web technologies and jazzy online advertising advancements.  But the more I talk to our ecommerce clients and help them think about their next set of opportunities, I’ve realized that the industry needs to go back — call it “web 0.5″ — and think about the classic issues of segmenation, good copy writing and creative, disciplined testing.  Has anyone designed a good online version of a Johnson Box?

Of course we’re all going to move forward.  I have no doubt we’ll be talking about web 3.0 and 4.0, and so on, in no time. But at the same time AccuData helps our clients move forward with innovative new strategies, we’re also going to spend a lot of time helping them go back to basics.

By the way, where is Bill Toohey?

What a time for marketers, huh? Most would say, this is a gloom and doom time for us—budgets are slashed, responses are down, and what are we going to do but ride out the wave?

Absolutely not. I see a lot of editorial and industry advertising out there urging marketers to spend more during this downturn to take advantage of weaker competitors – and I agree. I see literally thousands of unique customer transactions per month and I’m seeing three distinct groups.

One group is in the process of throwing in the towel. They are getting beaten by their competitors. Another group is hunkering down, perhaps emphasizing “core” businesses at the expense of new ventures, but keeping their marketing alive. Another group is “leaning-in” and marketing more, by getting more mail in the stream, increasing email activity, and putting more advertising out there – but they are doing it smarter with sharper targeting, the application of predictive models and good offers. “Doing more with less” is no longer a platitude. It’s now survival.

AccuData is in the third camp. We are leaning-in. Last week AccuData launched our new B2B campaign and blog to dedicate and memorialize to our clients and colleagues the great opportunity we see. I’m excited about 2009.

Welcome to AccuData’s – and quite possibly the database marketing industry’s first actionable blog – Letters@, where you’ll have the opportunity to hear and learn from AccuData’s executive leadership and experts and tap into their experience and expertise. There will also be posts from our data, marketing analytics and database marketing experts.

More than a blog, our goal is to create a conduit of shared information, a platform for discussing best practices in customer acquisition, development and retention. More importantly, we see this as an opportunity for all of you – clients and industry players alike – to collaborate and learn from AccuData’s 20 years of experience helping clients accurately target qualified buyers and increase ROI.

Our goal: To create a forum that will deliver insightful tools, tips, tricks and discussions to simplify and improve the decision making process for those seeking to enhance their database and direct marketing efforts.

Coming soon: A series of 10 slightly shocking but strikingly powerful marketing insights to include:

• The New Era of Predictive Analytics
• The Atrophy of Direct Mail
• Get back to the future with Web 0.5

So, be sure to come back and come back often. Bookmark us. Subscribe to our RSS feed.

Until then…