The One-to-One Marketing Gap

CREATOR: gd-jpeg v1.0 (using IJG JPEG v80), quality = 100

CREATOR: gd-jpeg v1.0 (using IJG JPEG v80), quality = 100

The mantra of one-to-one marketers is “right offer, right person, right time.”

But a great many marketers who think they’re fielding one-to-one campaigns are deluding themselves.  In reality they’re sending many customers the same communication under the mistaken assumption that those customers’ needs are identical to others getting that communication.

Segmentation like that is a bogus attempt at one-to-one that doesn’t come close to getting the powerful results that true individualized marketing can deliver.  The relevance in true one-to-one campaigns drives significantly higher response rates and revenues. That’s why it’s important to understand what true one-to-one looks like and how to get it.

Proof of a gap between what’s possible and what actually happens can be found in the file sent to the printer or ESP: If there are a million records in that file for a million different customers, is each record unique beyond the contact information? If they are not, and the offers are not specific to each individual, the campaign is not truly “one-to-one.”

Is the right person an individual or a group?

Certainly getting your message to the right person is critical. Unfortunately the right person often ends up being the ‘right group of persons.’

If the medium is email, which today is essentially free, most companies email to everyone. If the channel cost is higher (catalog, telemarketing) companies get more selective.

But customer analytics can go a lot further to help target the right person.  Do you want to campaign to the customers who have purchased recently, or to those who have not purchased for some specified time? Are you targeting customers whose risk score (the probability of not making another purchase before becoming inactive) is high or low or has suddenly deteriorated?  Are the customers in your cross hairs the ones who buy a lot from you or those where your share of wallet is low?  There are many ways to zero in on the ‘right person.’

Individualized offers are key

A relevant offer is the biggest opportunity to individualize marketing messages.  Unfortunately, product-centric companies see the “right” product offer as something they want to sell today. Most customers, on the other hand, think the right offer is something they need or want.

The only way to make the right offer is to calculate purchase propensities at the individual buyer level. Not knowing what individual customers want is the primary reason for the abysmal (less than 1 percent) response rates in cross-sell campaigns.

Companies with a large number of SKUs find that customer analytics can predict product purchase propensities for individual product/customer combinations with good accuracy.  Software can then automatically translate these predictions into individualized offers, unique to each customer. For direct mail or email you will need a vendor with variable data capabilities, but many printers and ESPs now offer those services.

Today, making the right offer is finally achievable.

Can the right time be individualized?

For many companies, the right time is either “now” or immediately after a customer has just made a large purchase. You’ve just come back from a week’s vacation at that fancy resort and they want you back again next month? Come on, give me a break.

Different customers have always bought on different purchasing cycles.  Not paying attention to these cycles wastes marketing funds and turns sellers from valued resources into email nags. One answer is to calculate a likely buyer score that predicts the likelihood of purchase by the customer in the next 30 or 60 days, and then campaign to customers ready to buy.

For customers without recent transactions, another tactic is to use state-based triggers. Communications are driven by analytics that show a customer has fallen off their usual purchasing pattern or that their risk score has jumped due to inactivity.  The right time can absolutely be individualized, though most marketing campaigns don’t reflect this capability.

Messaging is hard

Failing to somehow tailor the message to the recipient is also a big mistake.  However, doing this for a large customer population is exceedingly difficult. Product offers can be individualized because you have 20,000 SKUs, but creating 20,000 or even 100 different messages is a formidable challenge.

Here is where segmentation can help. It’s possible to divide the customer population into segments and create a message for each one (One segment might get a $10 discount while another gets just a ‘thank you’ message.).  It’s not complicated to do this at scale, but it falls short of true individualization.

What’s the incremental effort?

Too many companies back away from individualized marketing because they mistakenly believe that the incremental effort to deploy a campaign that is truer to the one-to-one goal is beyond their personnel, time, or knowledge resources. That was once a valid excuse, but no longer.

Marketing automation software today can do the analytics and generate the necessary files. True one-to-one is almost possible, limited in direct marketing only by the messaging requirements.  In call centers and where sales personnel are used, even that limitation can be overcome.  To realize the proven benefits of one-to-one marketing, what companies need to do is close the individualization gap between what they’re doing now and what is now possible.

Piece originally featured in 1:1 Media.

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