True confessions — the conversion of a non-believer
These days I’m a fervent advocate of individualized marketing, where each customer gets a unique message*. We know it works, because week in and week out our customers run individualized campaigns that far outperform their previous ‘spray and pray’ campaigns and even their more sophisticated segmented marketing campaigns.
Yet only a few years ago, while I was vocally riding the ‘1 to 1’ bandwagon, while I was contributing to the Peppers and Rogers Group’s 1to1 Media, while I was mouthing off about ‘right offer to the right customer at the right time’, I didn’t believe that true 1 to 1, true individualized marketing was really feasible.
Make a million marketing plans, one for each of your million customers? No way! What I thought was best practice was dividing the customer population into several segments based on customer behavior, and coming up with a plan for each segment.
To get some sense of how dumb this belief was, you need to recognize that I’m the CEO of the company that developed and owns the Longbow Analytic Engine. That’s the software that swallows transaction records from millions of customers and even millions of SKUs and spits out the purchase probabilities and propensities of each customer. Overnight! I even helped build the very first models for that engine.
So what changed? What happened to make me a believer in true individualized marketing? Two things happened.
First, Variable Data Publishing (VDP) happened. Email Service Providers (ESP’s) like Silverpop, SubscriberMail, and ExactTarget developed the ability to serve up emails with variable content. Printers with digital presses could do the same for paper and postal. These capabilities are collectively called VDP.
Second (and this is the ‘Duh’ moment), we realized that the purchase probabilities and propensities coming out of our Analytic Engine were exactly the data needed by those VDP systems to produce individualized emails and postcards.
We didn’t need a million different marketing plans for those million different customers. What we needed were a million relevant offers, precisely the output of our Analytic Engine.
The process is simple to describe: Identify the likely buyers, use analytics to determine what each is likely to buy, use VDP to send individualized, relevant communications. Relevance raises response rates. The more customers you have, the easier it is to do the calculations and the better it works in the marketplace.
There you have my confession. The marriage of VDP and customer analytics was made in marketing heaven, and it’s made me a true believer. Individualized marketing is here. This time, for real.
*Ways to target
- Target everyone – send the same message to all. It’s called ‘spray-and-pray’ marketing
- Zero relevance. Average returns.
- Target segments – group possible buyers and send the same offer to all members of a segment
- Better relevance. Better than average returns.
- Target individuals – analyze each customer. Calculate the probability that each individual customer will buy each individual item. Create offers for each individual based on individual need/preference.
- 100% relevance. Highest potential returns.