Multichannel Marketing Planning 2010: Take two mostly difficult years, add in more channels

By John Lenser

Web-Exclusive: Level the Playing Field

Silos will persist, print and ecommerce programs will compete, and marketing budgets will be irrational until an information and analytics program is implemented that provides the basis for informed decisions. With adequate information and analysis, competing marketing programs can be evaluated based on the cost of customer acquisition and the lifetime value of customer. Without such metrics, it is impossible to determine if resources should be devoted to more SEM or increased catalog circulation.

While acquiring a customer via SEM might appear to be a much lower cost than mailing a prospect catalog, without understanding the longer term value of the customer, the opposite could be true. An email with a link to a virtual catalog may appear to have lower response rates than a print catalog, but may have a higher ROI when costs are considered.

A relational database is required to capture not only transactional information but promotional histories, promotional costs, and customer origination from matchbacks between order files and mail files. Sophisticated reporting and analytic tools such as Alterian are required to explore the relationships between diverse customer attributes and drive automated customer centric marketing programs. Until recently the cost of such databases has been prohibitive except for larger companies, but today such databases are becoming much more affordable. —JL

For most multichannel retailers, developing marketing plans and budgets for 2010 is a daunting task. After two years of tough economic climates that meant sales reductions and downsizing for many, now’s the time to build a plan for another — perhaps better, yet uncertain — year.

Should search engine marketing (SEM) budgets grow?
Should you jump on the bandwagon of social media?
Should you expand your catalog circulation?
If you’re a store retailer, how can you drive traffic?

Irrespective of how you forecast next year’s economy, the past two years have accelerated the evolution of multichannel marketing. Your plan for 2010 should adopt cutting-edge strategies and new techniques that provide the highest return on investment and let you master today’s new marketing realities.

Get Rid of the Silos
The customer’s experience today crosses channels, thus requiring a marketing strategy that integrates e-commerce, print and stores. Unfortunately, most multichannel companies aren’t organized to support integrated cross-channel marketing programs; their catalog and e-commerce teams continue to work in organizational silos. This division is reinforced by an industry whose conferences are also specialized.

To avoid a dysfunctional marketing strategy, you need a strong chief marketing officer who manages all marketing channels and insists all teams work together to develop a synergistic plan. If you have one vice president over catalog and another over e-commerce, fire one of them.

Customer-Centric Program
Regardless of how customers and prospects ultimately prefer to place orders, more of them experience every one of your channels. You’re judged by them on all fronts, so provide a cohesive customer experience. Product introductions, pricing, customer service policies, creative presentation and copy voice — all the things that create your brand — need to communicate the same message. Those managing each of your channels need to march to the same drummer.

Twenty years ago, I walked into a client’s office and observed a life-size cutout of a customer’s picture. She was a slightly overweight, 45-year-old woman wearing a rather unfashionable outfit. The marketing team nicknamed her “Sally Shopper.” I was told that Sally was there to remind staff of this company’s typical customer. Today, you know there’s huge diversity within your customer base. To be effective, your marketing program must be customer-centric, aimed at individual customers based on their unique characteristics.

Your customer contact strategy for 2010 needs to be far more sophisticated as to the frequency of customer contact, method of contact and customer-specific promotional offers. If you come out of the catalog space, rather than thinking in terms of “circ planning,” which implies a plan for postal mailings, think of “contact planning” to drive all means of customer contact, including catalog mailings, direct mail, email, virtual catalogs and even outbound calling.

To determine appropriate contacts, customer segmentation should be far more granular, based not only on RFM (recency, frequency and monetary value of past purchases), but also other predictors such as customer origination (store, catalog mailings, search engine optimization, SEM, eBay, Amazon.com, affiliates or comparative shopping sites); channel of orders (store, web or phone); response to emails, blogs, Facebook or Twitter; method of payment (check, credit card or online payment service); purchase in store; type of promotional offer; and product category purchased.

A customer who originated on the internet and pays via PayPal may prove far more responsive to email or a virtual catalog than a mailed catalog. In contrast, a customer who originated from a catalog mailing and orders via the phone using an American Express card may well justify the expense of repeated catalog contacts.

Savvy marketers are implementing cost-effective data warehouses where assorted transactional information can be brought together to drive much finer customer segmentation and individualized
marketing offers.

The internet provides highly cost-effective customer-centric programs. If you haven’t already implemented e-commerce applications that
deliver real-time product recommendations reflecting a customer’s past purchases and in-session clicks, this should be a high priority.

Your email program — campaign and triggered — also should contain product recommendations driven by the same program. Such programs will even deliver product recommendations to your call-center customer service reps that they can present as they speak to specific customers. You also can easily implement a program of customized landing pages that reflect offers and promotions designed to maximize sales for each customer.

As for triggered emails, I continue to be appalled that most companies don’t maximize the use of triggered emails following every customer action. These emails are by far the most effective you can send. Make such an “automated” marketing program your highest priority.

Creating an Integrated Plan
When I recently decided to order a Dell computer for my daughter, a Dell catalog caught my eye that offered a substantial discount on a really nice laptop. As instructed, I logged on to Dell’s website using the catalog-specific URL. I landed on a page that reflected the same look and feel and promotion of the catalog. I put in the promotion code for the laptop I’d chosen. Again, I was taken to a page customized to the catalog’s offer for my laptop.

But then I was taken to the cleaners in the most sophisticated upsell ever. I was led through choice after choice to add this or that, from the color of the case to the size of the hard disk. By the end of the process, my $895 computer had become a $1,945 com-puter! I’d experienced a catalog and website working in perfect harmony.

Another example of effective integration comes from warehouse club Costco’s catalog. Besides enjoyable editorial content, it’s filled with ads for new product that’s arriving in the store that month. However, many pages contained items available only on the internet, thereby requiring me to log on. The catalog wasn’t only an effective store driver, it was also an internet driver.

New Things to Test
Marketing plans for 2010 should include testing a variety of mailed formats intended to drive internet sales. For specific clusters of customers, catalog alternatives or smaller catalogs will have higher ROI than traditional, larger format catalogs.

E-commerce marketers who haven’t used targeted mailings should test postal in the coming year. Eventually, the ROI on SEM, as with all prospecting methods, will hit a wall and provide unacceptable returns. Continued growth for pure plays will require a multichannel strategy.

My mother used to go shopping — defined as hours of browsing through retail stores just to have fun. But today, such entertainment is becoming a thing of the past. Just as most visits to websites are purpose-driven, visits to retail stores and malls are now targeted to specific purchases. Store retailers’ 2010 plans should include tests of highly targeted postal mailings and email offers aimed to drive store traffic.

As you plan your marketing program for 2010, challenge yourself and your staff to take “Sally Shopper” to the back closet. In reality, you have no one typical customer, and your marketing program shouldn’t treat everyone the same. Take advantage of cutting-edge print and e-commerce technology to drive customer-centric marketing programs. Cleverly integrate the customer’s experience though all your channels. Build the data tools necessary to explore the nuances of your customers’ attributes and properly evaluate the ROI of all your marketing programs. The successful multichannel retailer will burn its silos and plan a cohesive program that embraces the new marketing reality.

John Lenser is president of multichannel consulting firm LENSER (John@Lenser.com.)