Business Post - John Wallinger

Good data the key to effective DM

08/12/2009

Marketers should never lose sight of the fact that high-quality, accurate data is the backbone of any direct marketing campaign, data guru John Wallinger told an An Post seminar recently

At a time when internet and email marketing are being widely touted as the future of direct marketing, it is instructive to hear how good old-fashioned direct mail, backed by superb customer intelligence, can yield massive gains.

A case in point is UK high street retailer Boots, which in recent years has put direct mail at the heart of its Advantage Club loyalty programme and seen a dramatic uplift in sales. John Wallinger, the data planning consultant who masterminded the campaign, told the Boots story at An Post’s recent Research & Results business breakfast in Dublin.

Wallinger, who runs London-based data consultancy The Marketing Planning Practice, revealed how Boots, a much-loved and respected brand name, had by 2003 lost its way in a highly competitive marketplace. “Boots didn’t stand for anything; it needed to stand for something again,” he said, sketching a scenario that could just as easily apply to any established brand that finds itself in danger of being left behind in the face of aggressive competition and cost-conscious consumers.

Along with colleagues from DM agency Craik Jones where he worked at the time, Wallinger painstakingly created a sophisticated database that acted as the platform from which Boots launched a number of highly successful, high-volume direct mail campaigns for Advantage Club. A whopping 700pc was the average return on investment to the retailer over the four years of activity.

The case study holds several lessons for direct marketers.

The first is to take care to define your target audience.

Previously, the Boots loyalty programme had focused on the top million most active Advantage Card holders and ignored the four million who were inactive. By broadening out the programme to include the non-actives, the retailer stood to make tremendous revenue gains if the campaign worked – which is exactly what happened.

Second, use a combination of relevant data sources to build an accurate picture of customers.

Once the data was collected, Boots could rate or score its customers according to various criteria, such as their value to Boots, their value to the market and – where they bought a competing brand – their willingness to switch to a Boots product. Customers with a score falling within a given range then formed the basis of the Boots DM campaigns. But none of this would have worked if the raw data had not been clean and accurate.

The final lesson? Don’t see data planning as part of the creative process

In many ways, it is the antithesis of the creative campaigns that adorn our TVs, radio ads and direct mailshots. Data planners are typically analytical, detail-driven types for whom sound methodology and process are all-important. Their role is to generate a high-quality, accurate customer relationship management (CRM) database which forms the backbone of a direct marketing campaign.

Speaking afterwards to Business Post, Wallinger repeated his message that data gleaned from market research – or ‘insight’, as it is more commonly termed within organisations these days – is a vital tool that allows marketers to build up an accurate picture of their customer base and, by extension, can help build and sustain the relationship of trust between brand and consumer.

“When you do your targeting correctly you help build up trust in the brand,” he remarked. “Don’t send people who live in blocks of flats mailings about lawnmowers – that will only make you look very silly.”

Another common mistake was to overlook legal requirements such as safeguarding customer data and creating proper opt-in/opt-out mechanisms. Such considerations were becoming increasingly important as more and more communication goes electronic, he said.

Commenting on the rise of mobile and email marketing and their impact on traditional direct mail, Wallinger said these new channels would continue to expand in the coming years as consumers became more comfortable with such technologies. At the same time, direct mail would hold an enduring appeal. It works particularly well for loyalty programmes, he noted, because not only do customers like to see a statement of points accumulated but other material such as vouchers can be included within the communication.

It is also easier to control fraud. “You can do incredible email personalisation online using HTML. The problem is that fraud levels on coupons can be horrendous. You send a coupon to somebody and they print it out a hundred times, or change the value of it.” He noted, too, that email-based loyalty messages can easily be forgotten about or accidentally deleted. Physical mail was more difficult to ignore; the recipient had to make a conscious decision to bin it.

E-marketing had also given rise to other challenges, such as that of integrating online data (from websites) with offline data (from existing customer databases).

“It’s a problem for marketers because usually the IT infrastructure doesn’t exist to make it happen,” he said. Marketers could avoid this headache by thinking about the issue of data integration before a website was launched and building in mechanisms that allowed data collected online to be integrated with existing offline data. “If you plan correctly, you won’t miss that trick,” he said.

Another pitfall is rushing headlong into adopting social media such as Twitter without fully understanding how the channel works and therefore what communication is appropriate.

“You’ve got to know how to use Twitter properly. It’s not a shop window; it’s direct one-to-one communication with consumers.”

Regardless of the channel, the biggest mistake businesses can make is to ignore direct marketing altogether. Examples of companies that were “getting it right” in DM terms, he said, include Amazon and automotive manufacturers such as Jaguar and Land Rover. But, he argued, many businesses were still not harnessing the full potential of DM. In some cases this was because customer insight programmes had been pushed down or off the corporate agenda due to a lack of board-level support. Or because businesses often built up islands of customer knowledge so that they found it difficult to form a single view of the customer, making concerted DM campaigns very difficult.

Small and medium-sized businesses, in particular, are guilty of neglecting the insight opportunity, Wallinger felt. “Many SMEs haven’t embraced it because they haven’t necessarily had to. But if you want to get a real competitive advantage, that’s what you need to do – fully understand who your customers are and what their needs are. You might have that in graphs in your research but what you need to do is get that hard data into a database.”

Golden rules of data management

Plan the customer interaction and plan how data will be collected
Put data hygiene/cleansing rules in place
Abide by the law with regard to opt-in/opt-out and data protection
Target properly: don’t mail customers with the wrong products or services – it will irritate them and damage your brand
Remember to integrate: if you collect customer data through your website make sure it’s integrated with your master data-set. Otherwise you end up with two or more information islands