Tuesday, June 3, 2008

The Beginning of a Customer-Lead Generation Marketing

If we accept, as a premise, your marketing database is central to your marketing we can better understand the evolution of leads to customers. In his book, "Database Marketing, The Ultimate Marketing Tool, Edward Nash refers to 'The Relationship Ladder". This represents five evolutionary stages an individual (or business) progresses ultimately becoming an "advocate" for your brand. The 5 "Relationships" are:
  • Suspect-this applies to a name that has some strong capability of being interested in your product or service and becoming a customer. The example his book gave, if you are selling white wine, someone playing tennis or golf might be interested due to similar socio-demographics.
  • Prospect-the next stage describes someone who is "reasonably certain to buy your product, or a competitor's, in the near future". Examples are people (or businesses) who have purchased similar product in your category or expressed some interest in purchasing your product via a questionnaire.
  • User-This is someone who has actually purchased your product at least once.
  • Customer-is someone who has purchased your product more than once. In other words, if they purchased at least 2 times, they can be considered a customer because they are thinking of your brand before selecting any other.
  • Advocate is the ultimate customer. They are satisfied loyal customers who unofficially sell your product on your behalf. They refer new customers to you because they are satisfied customers of your product.
My discussion refers to the first two "relationships" defined above. A lead is the starting point that a customer begins their journey through nurturing (marketing). Sources of "suspect" leads abound. They come from:
  • CO-OP direct mail (i.e. Val Pak)
  • Online Registration
  • Card Decks (industry or consumer specific)
  • Package Insert Programs-inserting advertisements into packages being mailed to other company's clients that ordered something from them through the mail.
  • Billing statement-(credit card, cable bill etc)
  • Mailing lists rented from competitors-to be used for telemarketing or direct mail
  • Bind-in response cards in magazines
  • Free Standing Inserts (FSI)
Your selected media has to match the profile of your product or service. In a future post, I will discuss how "data mining" your marketing database provides direction for media selection. For our discussion here some examples:
  • SEM/SEO -in the online world, your key words and/or your site is optimized in alignment with your content. In addition your key words, but meta tags, page titles, alt tags and descriptions would all align with the content of each page and the overall site. The end result are highly qualified suspects since they searched for key words relevant to your site.
  • CO-OP direct mail-this is a little more difficult on a local level since Val Pack engages in saturation mailings into specific regions. However, as a local company, you would select the geographic areas most closely aligned with the majority of your customer base. If you are a national marketing organization, things are a little easier because Val Pack can offer demographic targeting. You can select specific areas based on the demographic profile of your customer base. There are and have been other co-op mail programs that catered to specific demographic groups (i.e. young parents, new births to name two).
  • Card Decks are similar to CO-OP's because both share the same outer envelope, mailing list and postage. Card decks are usually mailed in a clear square envelope and have certain set size advertising pieces. However, the mechanics of selection relative to your business is the same. You have to understand the demographic (consumer) or firmagraphic (business) profile of the audience they reach and select accordingly.
  • Billing Statements-these have been around for quite a while. Companies insert their advertisement in the same envelope in which the company's billing statement. Since these are always mailed first class, you are marketing via optimum mail delivery. Like any other medium, this channel should be assessed if the audience is a "suspect" for your product or service.
  • Mailing Lists-target business or consumers. They are compiled (telephone directories) or response generated (TV, direct mail, questionnaire etc). Mailing lists are "RENTED" not "SOLD". For those not in the direct marketing industry, this is a somewhat confusing statement. Mailing lists belong to the company that went to the trouble of compiling the names into its finished form. Therefore, think of them in a similar fashion to an apartment. The landlord allows you to stay in the apartment so long as you pay a monthly fee. But, you do not own the apartment. Similarly, lists are rented for a ONE TIME use. If you want to use them more, you have to ask permission to the list owner. If granted, there is an additional charge.
  • Bind-In Cards-Many times you will see a post card attached to the spine of a magazine. This marketing vehicle is leveraging the magazine's circulation. To get a profile of that magazine's audience, ask their sales representative for their audited statement. Many magazines have their circulation audited by an outside company. This is your assurance that the statements being made by the magazine are true and accurate. Some times, and it depends on the magazine, you can "selectively" bind in the cards to specific audience profile. As with any direct response program, quality, not quantity rules. If you can narrow your audience by selecting those subscribers more closely aligned with your profile, you can improve your response. Ask the sales representative if they provide this capability.
  • FSI-as the name implies, these are advertisement that, (unlike bind in cards that are attached to the spine of a magazine), are loosely inserted between pages of a circular or magazine. You can tell they are a FSI by simply holding the vehicle with the pages pointing downward. If any advertisement falls out, that is an FSI. They are similar in concept to a bind-in card because you are riding along with the magazine or circular to reach that audience. The major advantage to FSI's and bind-ins is cost. They are significantly less expensive than sending a direct mail piece.
  • On line registrations-companies like "Lending Tree" generate qualified leads and then sell them for a price. You are purchasing these leads because they have been pre-qualified in your product or service.
Media ROI
  • Regardless of the media you use, basic direct response analysis rules are in order. The decision which media to use is NOT based on a comparison of the the initial media outlay.
  • A short real life story will explain my point. While running a direct marketing department, I had one of my staff prepare a media plan. This individual staff member was brand new to direct marketing. Upon presentation, I asked him which lists he thought we should use in our next mailing. He pointed to two or three. When I asked why he selected them, he responded they cost less than other magazine lists he researched. I asked him to conduct an analysis to measure the response rates and profitability of each list based on previous campaigns. He found out that the ROI was greater on some lists that had a higher media outlay, BUT greater profitability due to their performance.
  • The moral of this is you evaluate media based on their ROI. For people not familiar with this metric it is a very simple equation. It is: (Gross Sales-Cost)/Cost. Please note, this is the formula you use for each individual media. Once you know the ROI, you can rank each media based on its ROI. You can also use this formula for our overall campaign to measure its ROI. However, you need to know the ROI for each component of your campaign.
  • Please also note. If you make multiple selects within the same media, EACH selection MUST be analyzed individually. You accomplish this by identifying each media and each selection of a particular media with a "KEY CODE". This code becomes part of the promotional piece. When the recipient responds, the key code is captured thereby assigning the response to the specific media of a particular campaign.
Capturing the Information With Your Marketing Database
  • As stated in my earlier post, your campaign can not be considered direct marketing unless the responses are captured and stored in your database.
  • It is imperative all responses are captured. Relevant information includes Key Code, Contact Name & Address, what they requested (if a lead generation program) or purchased, (complete order information).
Future Marketing
  • The evolutionary journey continues now that the prospect responded to your lead or inquiry program. Now that you have their contact and response information, you are in a position to analyze the campaign's effectiveness to improve campaign effectiveness in the future.
  • Secondly, you can now market to the leads to convert a percentage on them via direct response channels: direct mail, email marketing, outbound telemarketing (compliant with the FTC's Do Not Call Laws).
Thank you
I noticed that my posts are being read in Europe. I want to thank everyone who has found my blog and taken the time to spend your valuable time here. I hope everyone finds the information useful.

While I am unable to provide specific reference to direct mail delivery outside of the United States, my posts discusses direct and relationship marketing concepts that are universal. To those visitors in Europe, thank you for visiting and hope you (and everyone else) profits from this information.

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