Thursday, May 28, 2009

Want a Good Response Rate? Better Get Personal

The fundamentals of “trans-promotional marketing” – a new killer app in digital publishing

By Hakan Akbas

Today, most direct marketing takes the form of push marketing. It pushes email or print collateral out to the mailboxes of prospects who have not requested it. Rather than giving prospects a chance to reach out for a product or service that meets their needs, it is based on guesses about what customers want. It's no wonder over 95 percent of junk mail and email ends up in the wastebasket. Wouldn't it make more sense to invest in marketing campaigns that focus on actual expectations and requirements?

Push marketing has response rates of one or two percent at best because most people view unsolicited mail and email as intrusive. Just about everyone ignores junk mail and spam, even when it comes from their own financial institution. In short, over 95 percent of the effort, money, time and labor that go into such materials are wasted. Worse, it actually drives prospects away. Think of it as collateral damage.

What exactly is the problem with push marketing? It is based on the assumption that all customers have the same attributes and therefore will have the same banking needs. In today's market, nothing could be further from the truth.

So how can marketing be targeted better to address the consumer as an individual rather than part of an amorphous entity? A step in the right direction is to add the recipient's name to a direct mail piece. That alone can increase response rates by over 40 percent. But an even more effective way to target marketing communications is to base them on transactional data and personal customer information stored in the bank's database. This increases response rates by over 500 percent, even in a traditional direct mail campaign.

Consider the following personalized marketing communications tools as a way to increase response rates, boost sales and encourage customers to act.

Monthly or quarterly account statements may be regulatory requirements, but they can also double as a strategic communications vehicle to engage and connect with customers. Marketing that takes the form of in-context messaging in conjunction with traditional statements has several benefits. It saves money because the mailing serves a dual purpose. Also, customers usually open and read their statements. Moreover, marketing messages included with statements are based on factual information on the recipient's requirements and preferences as evident from the statement. Marketing monologues become conversations.

Similarly, billing and other notifications specific to customers can double as marketing vehicles. New loyalty programs and even partners' cross-selling offers are less likely to be discarded when they are personalized rather than sent out en masse to everyone. More progressive banks are even considering dynamic pricing, which can now be enabled by "the last mile" in personalized customer communication as a new source of revenue.

A few progressive organizations have already created personalized web portals for customers. These portals capture and store the customer's profile and are linked to a document publishing solution, allowing customers to request information on new products and services at the click of a button. Whether content includes travel offers, high net worth programs or financial planning tools, financial institutions can send the requested information as customized pieces based on the parameters established through the portal.

Some financial institutions have linked customer analytics and event management systems to create a personalized customer communication tool. Targeted communications are triggered by events such as account activity alerts, the customer's purchase of a home or life stage events.

A prerequisite for the success of such programs is an integrated customer communications technology platform that can do it all, from database management to the design of engaging paper documents and e-mail, to web publishing, to the creation of dynamic, personalized content for marketing messages.

One of the world's largest diversified financial services firms, with operations in more than 100 countries worldwide, avoids "collateral damage" by using technology for customer communications management. The company is using e-mail to distribute correspondence that cannot be realistically sent in paper format, such as alerts or reminders about e-statement availability. In addition, it uses e-mail to drive customers to the company's website for additional service needs to decrease the need for calls to the customer service center. It generates real-time email (delivered within 30 seconds) and just-in-time email (delivered within 15 minutes) for correspondence such as confirmation email or follow-up servicing correspondence related to customer service calls. Extensive use of email has helped increase the number of customer touch points and reduced customer service costs while monthly volumes went up from 40,000 print-only letters to more than 11 million letters for distribution via print and email. The company saved more than $20 million, reducing cost per correspondence by more than 95 percent.

Personalized marketing communications not only increase response rates, they build better customer relationships. It typically costs about $300 for a bank to acquire a new customer and attrition rates range from 10 to 40 percent. Since it takes about three years to recover the cost of acquiring a new customer, keeping customers through cross-selling and up-selling of more profitable and "sticky" products is critical. Personalized customer communications open the door for further communication and establish strong relationships with customers, making these approaches far more effective than anonymous push marketing. For example, 35-40 percent of all customer attrition is related to life stage events. By sending event-triggered communications, financial services organizations can leverage these changes in customers' lives.

In addition to a flexible technology infrastructure that drives personalized customer communications, there are other prerequisites for effective customer onboarding. The most successful loyalty building marketing programs are:

Relevant. They are founded upon a clear understanding of the targeted customer segment's demographics, attributes and past relationship with the bank, if any. Never assume all customers are the same. Pinpoint a relevant message that really meets their requirements.

Consistent. It's not just about acquiring customers, but also managing them through relationship building throughout the customer lifecycle. Keep messages consistent and consider the customer's satisfaction throughout the relationship, particularly with regard to life stages that might cause a switch in institutions.

Cost-effective. The challenge for marketing departments is to keep campaigns cost-effective and show ROI. Customer communications management platforms, tools and infrastructure are a worthwhile investment because they drive more effective, personalized messages to individual customers.

Push marketing drives customers away. Personalized, customized marketing pulls them in with products and services that meet their needs. Individually targeted messages sent with statements, notifications and other regular communications are less likely to join junk mail in the virtual or real wastebasket.

1 comment:

NeitzscheInkBlot said...

I think that there really is no better person to be running the company than Burns herself. She has been there for countless years and I believe that she will take the company to a whole new level. There are countless people from outside the company that could have been given the position, but there is also a greater chance that even if they make changes for the better, they will take longer to occur and become effective.

Xerox 8500 ink