About six months ago I returned a call to a customer who asked to speak with me.  This customer works for a small agency that typically buys various types of data from AccuData.  The call went something like this:

Customer:  “I’d like to keep working with AccuData but a competitor is offering a loyalty program if I go with them.”

Me:  “I certainly would like to keep serving your company, tell me about the program.”

Customer:  “It’s a points program and I can cash in points for things I want or that my company needs.”

Me:  “Can you please give me an example?”

Customer:  “They have a cookie of the month club…”

Buying direct marketing services = cookies? 

It struck me then that as far as loyalty programs go, the bar had been set fairly low in the direct marketing services business.  This was the spark that kindled the eventual development of AccuPortal, a set of services and benefits we’ve just launched to help our reseller customers.

Click here to read the press release.

We wanted to build something that would materially help our reseller customers thrive as well as reward them for their business.  AccuPortal offers our customers proven sales and marketing tools and data cards – all of which can be customized and private labeled.  The system offers professional sales training as good as anything offered by any of the well known sales training consultants out there.

Beyond this, we’ve introduced the industry’s first Money-Back Data Guarantee and AccuCash, our own loyalty program.  But AccuCash pays just that – cash, not cookies.

I’ll report back on progress we’re having enrolling members and maybe we’ll be able to get a customer or two to offer up a case study or two to demonstrate how this tool increased their business.

A client recently asked AccuData to develop a predictive model to help target a large national direct mail and email campaign. Notice the request was to develop “a” predictive model - we actually wound up building ten, and despite the incremental cost of building ten vs. one, they drove sky-high ROI for the campaign.

Why did we do this and why did it deliver economically?

Predictive models built for a national prospect universe assume that individuals or households with similar characteristics behave the same way in each MSA. They don’t. Many marketers approach this problem by asking their analytics team to include a geographic factor, essentially asking their team to make sure the predictive model includes a factor for geography. But this is often a mistake.

First, in many cases the geographic factor is weak compared to other key elements (e.g., demos, lifestyle factors). In this case the geographic factor falls out of the model. Alternatively the geographic factor could be so strong that other important variables fall out of the model.

What works?

In our experience the best way to address the challenge is to build distinct models for each key market. In this way a weak, but potentially important geographic factor, is incorporated into your targeting. At the same time a strong geographic factor is incorporated because you will develop models at the MSA level (or some other geo level).

If you are a large marketer you must fight for every 1/100th of a percent of response. In our experience, building localized models for key markets delivers critical competitive advantage.

I’ve written about see-through envelopes and a general deterioration in the level of effort many companies are putting into their direct mail efforts.  But not all companies are letting their direct mail languish - and they are still generating very strong results despite today’s poor economic conditions.

How are they doing it?  Sharp targeting and (increasingly) variable digital printing. 

Regarding the latter, I received a mail piece a few weeks ago that illustrates the level of customization some direct marketers are now achieving in their direct mail.  The piece offered an extended warranty for my vehicle.  I’ve been receiving a number of these lately but this one was different. 

Beyond the usual “Dear Mr. Goff”  the piece included a list of the top 5 repairs I could expect over the next 36 months with their corresponding costs (for my vehicle) and a map showing the location of three nearby garages that not only accepted the warranty company’s coverage, but also waived the deductable.  Impressive.

The information was important because it gave me specific information that I could weigh in my decision making process.  In fact, I even visited one of the listed garages to get a reference on the warranty company.

Out of curiosity I tracked down the direct marketing manager for the warranty company and she was quite open about their approach.  The company had been sending out increasingly less expensive pieces with generic offers and (yes!) see-through envelops.  After some internal debate and experimentation with prospect email, the company decided to double-down on direct mail and address the fundamental issues that had been limiting their response - the lack of “monetization,” that is the lack of data that enabled a consumer to weigh the cost of the warranty against the cost of repairs and the lack of specifics around garages that accepted the coverage.

After building the databases powering the cost and garage data and fully taking advantage of variable digital printing (and upgrading their paper stock), response rates had almost doubled and direct mail became the companies second most effective channel…(can anyone guess what was always and still is their most effective direct response channel?).

The truth is, this example doesn’t come close to illustrating the amazing things possible with variable digital printing, but it does illustrate how a company with a common product can use data very surgically to drive very impressive direct mail results and economics - and it was not all that hard to do.

Last time I talked about Direct Mail, a passion of mine and a marketing tactic some think is dying. 

Despite record postage and the state of the economy, direct mail is still extremely effective.   How do I know?  Hundreds of AccuData customers as well as the direct mail I personally recieve tell me so.  If you are reading this and thinking, “not mine” then it’s time to think hard about how your company funds, develops and executes your direct mail.  It’s time to look inward, not outward at the economy or the USPS.

I recently received a direct mail piece from one of the nation’s largest insurance companies.  To my amazement, I could see through the outer envelope, could see the offer through the paper.  I wondered at the time if this was intentional, after all this company is a large, sophisticated marketer.  Surely every aspect of their direct mail must be tested thoroughly.  Well maybe this was, but I don’t think so.  This was an attempt to shave a fraction of a cent from each mail piece.  Paper is expensive right?  Let’s save some money by reducing paper weight! 

“Boss, maybe we should move our budget to pay per click, direct mail isn’t working anymore!”  As my good English friend and marketing guru Doug Bewsher might say “Bollock”!

First things first - what is the purpose of an outer envelope?  To convince the recipient to open it of course!  Now I have received mailers that were designed to be see-through and a few of them were fantastic.  Not this piece.  This was just lazy.  If I can see through the outer envelope to the content within, if I can see the offer then I don’t have to open the package.  I won’t read the letter, won’t read the brochure,  won’t give the company a chance - particularly if the offer is just so-so.

Large insurance company - you know who you are.  Put on some weight please.  I like em’ heavy!

As a follow-up to the “Odd Couple” post, here I’ll talk about Channel Switching as a way to effectively marry direct mail and email in a multi-channel campaign.

First recall the key point of the “Odd Couple” post.  Multi-channel marketing, particularly simultaneous direct mail and email, can reduce campaign ROI because the incremental channel, often the email channel, doesn’t always result in enough incremental response to recoup its cost.

Channel Switching  can solve this problem by effectively utilizing both channels.  Here is how it works:  The idea is to run a multi-channel campaign, email and direct mail in this case, in stages beginning with the most cost-effective channel (email) and then SWITCHING to the less effective channel (mail).

First, use email to generate as much low cost response as possible.  Since Email is typically less expensive than direct mail the ROI on this first round is attractive.  However since email response rates are often poor it’s important to use direct mail as a follow-up to increase the total response to your campaign (or you may not hit your overall response target).

Second, follow-up the email drop with a direct mail drop to the email non-responders, preferably using a predictive response model to maximize your response rate.  It’s often the case that prospects tend to respond to different channels and so you may find that your direct mail response rate is unaffected by the previous email drop.  In fact you may find that the email helps to increase your direct mail response rate although this is not always the case.

The combination of the two drops increases overall sales while reducing the cost per sale since the cost of the email generated response is less on a unit basis.