There are many clichés surrounding the use of targeting for CRM campaigns, most of which are misguided and born from uncertainty. For many marketers, the potential rewards of targeted campaigns are overshadowed by the:
- Fear of drowning in the seas of big data
- Added pressure upon internal resources to create abundant content
- Loss of maximum revenue that full base campaigns yield
Here we shed some light on CRM clichés and inform marketers on how to reap the rewards that smart, optimized, successful targeted campaigns can offer.
“Targeting is pointless! It only diminishes income from my marketing campaigns”
Many e-retailers are adamant about sending their campaigns to absolutely all of their customers and they are not completely mistaken. The best way to maximize income generated by a given marketing campaign is to diffuse it to as many customers as possible. Why then should we refrain from this, and where do targeted marketing campaigns fit in?
In reality, by systematically soliciting all their customers, marketers overlook several vital points:
- Long term value. Income is maximized, but only in the short term as the LTV (lifetime value) of customers is not taken into consideration, focusing only on their value at a given moment. Keep in mind the analogy of “the goose that lays the golden egg”: the desire to maximize income in the short term may end up seriously damaging our “golden asset” (i.e. our customer base) in the long run.
- The real cost of a marketing campaign. Often underestimated, these costs extend beyond those of routing (significantly low) and conception (editing and design). Indeed, these costs are the only visible ones but they are marginal in comparison to long term impact and damage: unsubscribing, fatigue and erosion of the base (saturation concerning opening and clicking rates), negative impact on the brand, reduced deliverability rate.…
- The moment marketers wish to diversify their announcements or address customers on specific subjects, they meet obstacles. Whether they are promoting niche products, expensive products or even generic products that they know will have little interest, addressing the totality of their customer base is not a logical option.
It is true that targeting customers without producing a larger number of individual campaigns is a lost cause. It is necessary to produce campaigns which are more specific, each of which will be sent to a smaller number of contacts.
“Apparently targeting allows us to multiply our communications. It’s not a good tactic for me though since I have already reached the limits of marketing pressure. If I send just one more e-mail, I will to destroy my customer base!”
Some email marketing myths die hard. The myth concerning the “absolute” threshold of marketing pressure, beyond which all campaigns are counterproductive, is one of them.
In reality, this threshold does exist, but varies according to individuals. Some customers may tolerate one (or even two) daily messages while others may find that even a weekly message is too much. This level of tolerance also varies according to the pertinence of the messages that are sent.
Even in the case of a marketer who has reached his “limits”, it is certainly possible to multiply opportunities and send additional communications, but for specific customers only and in condition that the messages sent remain relevant.
Obviously, there are certain limits that shouldn’t be surpassed. Receiving five or ten newsletters per day may irritate even the most committed customer!
“Targeting is magic! I can send a substandard campaign to the top 10% of my customer base and generate loads of sales!”
Targeting doesn’t create potential from a campaign which has none. Targeting will localize the potential of a campaign, in condition that this potential exists. If a campaign sent to the entire base generates only two sales, whatever you do, even the best targeting will not produce more than two sales. The best targeting in the world will never generate sales for a product that nobody wants.
“A target marketing must be based on behavioral criteria.”
Most e-retailers give more importance to behavioral criteria, considered to be more “authentic” than other information declared by customers. They use criteria such as “number of e-mails opened in the last 3 months”, “shopping cart abandonment”, or consultation of a product file” to create segments. For example, the promotion of a video game leads to the creation of an “attracted gamer” segment, defined as follows: “any customers having purchased a video game in the last 24 months OR those who have opened a video game e-mail OR those who have consulted a video game on the site”. These segments, based on intuition and common sense are understandable and have proved to be mildly effective, however:
These segments are generally made up of a minority of buyers (active profiles who have a good conversion rate) and a majority of individuals who have clicked on or consulted a product on the site, without having made a purchase in the last few months. These individuals do not convert very well in the end; the real intention hidden behind the click or behind the consultation of a product a few months back, being rather vague. Global performance thus proves to be rather random.
- It’s about retargeting, deferred in time perhaps, but retargeting none the less. We target individuals who have already shown interest but we miss out on all the potential customers who haven’t yet shown interest in a product. Those customers who, for a whole variety of reasons, constitute potential buyers. The reality is that potential buyers for a specific product are not limited to individuals who have recently shown interest in this product.
- It is true that such a method helps to identify customers who are receptive to the recurrent purchasing of a product (video game, film, train ticket, etc.). However, it is much less efficient when it comes to promoting products that are bought less frequently (kitchen aid, laptop or an exotic holiday). Ultimately, there is a better strategy for buying a sofa than to target all individuals who have bought a sofa in the last 3 months…
“Targeting is great because it allows us to multiply announcements. But creating new marketing campaigns is costly, timely and in the end, doesn’t lead to much!”
The creation of a successful marketing campaign takes time. Creating an email, designing a template, editing its contents, choosing the products, selecting the channel that will be most relevant, extracting the list of contacts…
All this preliminary work may seem disproportionate in comparison to the potential income that you hope to gain. This is certainly the case if the production work is 100% small scale and if each campaign needs to be created from scratch. Yet if your processes are more streamlined, if you have templates already built, a calendar of products to sell and a tool to determine which contacts to target, you can decrease the production time from a few days to a couple of hours. A bit of planning and targeted campaigns can become simpler than full-base, and your ROI is a whole different story!
“If the rate at which my customers’ unsubscribe remains low, it’s because they love the newsletters they receive!”
Yes, the rate at which customers unsubscribe allows you to see the disengagement of your customer base. However, this represents only a part of the global negative impact of the campaign. Indeed, clicking on the unsubscribe link is, in reality, the final act of the progressive process of a customer’s “emotional disengagement” of a brand. This disengagement can be really quick (the customers unsubscribe as soon as they receive the first e-mail) or very long (the customers unsubscribe after a few weeks or even a few months).
A relatively weak rate of unsubscribes may sometimes represent the tree which hides the forest. The forest comprising the totality of unopened emails or the mechanical deleting of messages. Hence messages sent are not meaningless and none are without “consequences”. The erosion of opening rates and clicks in the long term is more difficult to discern than the rate of unsubscribing for a given campaign, but represents the real “harm” that the unsubscribing rate alone doesn’t allow us to perceive.
“Big data is great, but it doesn’t help me much in the line of targeting!”
There are so many solutions to choose from which are supposedly based on a “big data” approach, that it is difficult to separate the good plants from the weeds. Yet it has been demonstrated that machine-learning allows us to reveal the real power of big data and its huge impact on the performance of targeted marketing.
Indeed, to optimally target your marketing campaigns, efficient targeting should be:
- Subtle, via automatic learning of past purchases, product by product. We should not just be using common sense, relying on clichés or manual categorization. For example, when we see that football video game players are divided into two separate clans according to whether they play Pro Evolution Soccer or Fifa, or we see the difference between gamers who play Grand Theft Auto or Halo (considered as rather “hard-core”) and Candy Crush (“casual gamers”), is it reasonable to consider that there is only one, unique segment for video games?
- Exhaustive, via the use of a multitude of available criteria and data, even those which are unintelligible for humans. Why limit ourselves to one kind of data when we can take all of them into account? Socio-demographic data, purchasing records, navigation records, clicking records, etc. Each table and each column in a table is potentially exploitable and should be exploited!
- Objective, via the detection of tiny clues and indirect causalities. Does the fact that your pseudonym is “first name. surname@” instead of “killer_1988@” mean that you will be more inclined to buy a lawnmower for $1000, or this kind of novel or those kind of trainers? If you clicked on a newsletter for summer dresses last month, is there a higher or lower probability of you buying a pair of trainers? And what about an Android digital tablet?
- Automatically updated via the continuous readjustment of targets according to the evolution of behavior, trends and latest events. Machine-learning is the lever which allows us to make sense of “big data”, and we are in an era where automatized learning gives powerful momentum to daily marketing actions, without resorting to fastidious manual work.
Clichés aside, targeted marketing is about enhancing the customer experience, improving brand perception and generating incremental revenue. Despite misguided information, the proof of targeting success sits with leading companies who are already implementing and benefiting from incorporating targeted messages into their marketing strategy.