Should DM still be missing its mark?
By LOUELLA MILES
It's a common complaint from consumers – too much direct mail
falling through their letter boxes. But far worse than that is the
feeling that much of it is poorly targeted as well. And it's not
just consumers that think so.
Ian Thurman, vice-president of marketing and database software at
CACI, talks of a contact at the recent International Direct
Marketing Fair who suggested that, deep down, most direct marketers
are not that bothered about data quality. Thurman reckons that
marketers still think that cheap-and-cheerful blanket mailings to
customers will win through.
'The evidence is there, plain to see,' says Thurman. 'My letter box
recently included two copies of exactly the same letter from a
leading provider of TV and phone services, telling me, not once, but
twice that charges would be increased. What you'd call rubbing salt
in the wound.
'Other prospecting letters in the same week from airlines and
financial services organisations included addresses not checked
against postal address file (PAF) and no mail-sort codes, while I
had a timeshare sales call despite my number being on the telephone
preference ser-vice (TPS) list.'
Such anecdotes are enough to give an industry a bad name, but the
hard facts can be even more troubling.
Conduit Business Information compiles research into the amount that
the business direct mail sector wastes each year using data that is
out of date.
Update regularly
Its studies show that business data will decay at 37% this year, a
6% increase on last year, proving that businesses are still not
updating and cleaning their data regularly.
This means that a large chunk of marketing budgets – it posts a
figure of pounds 126m – is wasted each year, and that is without
taking into account the negative impact of such data on a brand or
customer relationship management (CRM) programme.
It is obvious that the facts behind such figures are in nobody's
best interest. Mailers should be keen to remove gone-aways and
deceased names from their mailings lists. By doing so they reduce
volumes and costs, thus improving the profitability of any mail
shot. This means that they maximise the return on investment and
maintain reputation.
Richard Roche, data development and information systems director at
Royal Mail, argues that marketers should have a clear understanding
of why data quality is important.
'It is about three things,' he says, 'getting it right for
customers, getting it right for your own business and increasing the
accuracy of decision making. Interestingly, it is not always us who
are the judges of 'the right quality', but our customers.
'Complaints about duplicate mailings, out-of-date information and
the like are tell-tale signs of a problem and having a robust
feedback mechanism in place that you act upon is an important
mechanism for monitoring and prioritising activities.'
The good news is that lists will be more accurate and relevant in
the future. They have to be, because money talks. Clients will
demand much less wastage and more accurate use of marketing budgets.
'The cleansing of data will be linked to permission marketing as
'opting in' becomes a vital ingredient in any marketing campaign,
whether via e-mail or more traditional methods,' says Roche.
'Already in the US, response rates are on average 15% ahead of
conventional mailing campaigns for mail that is targeted to
prospects or customers who have consented to receive it.'
Companies offer a variety of products to assist with data cleansing.
The REaD Group, for instance, boasts one to track people through
each stage of the home movement cycle, from when they are first
thinking of moving – 'On The Move' – to when they die – 'The
Bereavement Register (TBR)'.
The latter, says REaD Group managing director Mark Roy, provides
both industry and consumers with a means of identifying the deceased
on databases and mailing files.
'Receiving mail for someone who has died is the largest complaint
received by the Data Protection Registrar,' he says. 'The fact is,
if a company mails just one person who has died, then it will cause
distress, alienate a potential customer and, almost certainly, end
any ongoing relationship.
'In our experience, once a client has started to use TBR it will not
stop. Let's face it, if it did it would need to be making a
conscious decision to start mailing dead people again – not exactly
good business practice.'
The TBR, which is used by more than 1000 companies, can be obtained
either under licence from REaD or by using one of the 94 licensed
bureaux holding the file. These process mailing files and
simultaneously submit the mailing data against the available
suppression files so that every file is screened prior to mailing.
So how often should data be cleaned? There is a view that it's
horses for courses. 'Frequency of major cleaning projects depends on
the demands of the business and should be guided by the frequency of
communication with customers,' says Mary Mulligan, principal
consultant, head of data management at OgilvyOne.
Direct feedback
The ideal, it appears, is for a database to be cleansed continually
through a combination of direct feedback, formal updates with those
listed, and a review of the behaviour of those on the list,
according to the Institute of Direct Marketing (IDM).
A clean database, it says, is not one that is simply accurate. You
could have an accurate list of one million customers, but if they
are not buying your product or service that is of no value. Better,
it argues, to focus on profitable customers and increase the volume
of data on them than go for a huge mass of people who represent a
marketing expense rather than a profitable return on direct and
database marketing spend.
Graham Page, managing partner of MindShare, reinforces the view that
size is no indication of quality when it comes to databases. 'Some
of the cleanest and most efficiently used ones are small in size,
although vast in terms of information. A number of small but niche
mail-order companies have databases that have been built and cleaned
as they grow.
'Although the quantity may not reach the 100,000 mark, the data is
rich in maintaining successful one-to-one relationships with its
customers, with a continuing dialogue of relevant offers and
services.
'Larger companies may be able to afford to maintain an up-to-date
database, but they don't always do so. At times, each division may
maintain separate data, so lots of smaller databases exist.
Combining these would cost, but it would lead to a much larger
prospect pool that would be priceless to any company, while the ROI
would soon appear.'
One of the companies that looks to keep its database as up to date
as possible is Thomson Directories. It continually analyses and
profiles its customer base and then uses its own CD-Rom product,
Business Search PRO – containing data on more than two million
business listings – to identify the 6000 weekly prospect target
companies, which it mails.
Dedicated account managers who talk to customers about who they want
to target, and try and persuade them that the CD-ROM has something
to offer, then follow these up. It is these customers that they can
regularly gain feedback from and conduct research into how to
further improve its own products and services.
Lists, it appears, are only as good as the way in which they are
used, but there are those who would argue against their purchase,
particularly when dealing with electronic campaigns. At new media
production house Graphico, for example, sales director Graham
Darracott is convinced that there are no instances when the company
would recommend buying data.
'It's simply not worth it,' he says, 'and a campaign immediately
loses credibility. There are always alternative means of collecting
customer information, such as partnering with an established
campaign or other product/service company to ask their customers if
they want to receive information about a related product or service.
Likewise, we don't recommend selling data on.'
It is important, suggests Darracott, to develop a set of clear
principles for your company to follow that will ensure sound
electronic customer relationship management (ECRM ) database
management. His 'how to' guide includes: gain the customer's
permission to send them more information; always use appropriate
tools to manage and filter the information on an ongoing basis; keep
un-subscribe options obvious and simple for customers to activate;
use consistent data-capture fields in all on- and offline campaigns,
and, finally, protect the data.
However, as most e-mail users would testify, there are all too many
companies out there that have no scruples about sending unsolicited
missives hawking their wares, known as 'spamming'. What is less well
known is that, in addition to spamming being in breach of the Data
Protection Act, it can also fall foul of other Acts.
'It can be considered a civil wrong under the Interference with
Goods Act 1977,' says Joanne Ashley of specialist e-commerce
solicitors Sprecher Grier Halberstam, 'and damages may be awarded
against you for it. In certain circumstances, the Computer Misuse
Act 1990, which carries criminal sanctions, may also apply.
'It is not always easy to ascertain the location of a person to whom
you send bulk e-mail and, if you send it to a person in a country
such as the US which does have anti-spamming laws, you may face
prosecution.'
Responsible clients are keen to send e-mail to the right addresses
but are also aware that they risk sending to accounts set up purely
for the purpose of receiving junk e-mail. New research from Jupiter,
meanwhile, indicates that internet service providers will soon
introduce different tiers of promotional e-mail delivery.
'At the moment, however, the only way of checking whether an e-mail
address is real (rather than being used as a filter for spam) is to
buy into a permission database like ours where the consumer actually
wants to receive e-mail,' says David Brosse, marketing director for
MyPoints Europe.
'In a permission e-mail database, the consumers have registered
their e-mail addresses because they want to receive advertising
e-mails and, if it is an offer that they are interested in, respond
and earn some MyPoints in the process. In other words, there has to
be some advantage for the consumer in receiving and reading the
e-mails for you to know that they are valid, useful addresses. This
process has also been termed 'advertising on demand'.'
But what happens when a struggling dotcom, despite a promise on its
web site that customers' personal details will not be passed on to a
third party 'for any reason, at any time, ever', sells its database
on? What price privacy then?
In May, Etour.com sold its database of 2.2 million newsletter
subscribers to AskJeeves, the web search site, a move that had
online privacy campaigners up in arms. AskJeeves' defence is that
Federal Trade Commission regulations allow the transfer of customer
lists to 'qualified buyers', and it promises to contact each
customer, alerting them to the change of ownership and offering them
the chance to opt out of the list.
No matter what assurances the company offers, however, it is not
likely to foster confidence among consumers already chary about
revealing personal details. Some dotcoms are future proofing by
changing their privacy policies and alerting customers that personal
data might be shared if the group was bought out or merged with
another.
'Opt-in' appear to be the two golden words here. For as Chris
Morgan, managing director of Data Liberation admits, from a
data-cleaning perspective, e-mail can be very hard to handle.
Managing e-mail
'One person may have many e-mail addresses, and with no additional
information on the individual it is impossible to de-dupe this data
effectively,' he says. 'The only way to manage communications via
e-mail is to use an opt-in system. This way, the respondent is
helping to maintain the data and has a vested interest in keeping it
as up to date as possible. The client is also likely to get a much
better response rate as the respondent has shown their
predis-position to receiving communications in this manner.'
The overall view, therefore, is that clients and suppliers are
facing a difficult task: to retain the trust of their customers
while maintaining cost-effective and targeted communications with
them – both on and offline.
What does the future hold? According to the experts, life can only
get tougher.
It's predicted that companies will be required to hold less
information on an individual and, simultaneously, to maintain that
data to a very high standard. This will force companies to maintain
a closer relationship with, potentially, a smaller core of the most
profitable customers. In Morgan's eyes, this will reinforce the
concept of a marketing social underclass.
The other side of the coin is that more information is likely to be
maintained online, as Microsoft has shown with its Hailstorm
initiative – www.microsoft.com/net/hailstorm.asp. This is a service
that will hold all your personal information online, in one place,
allowing access to portions of that information to you, companies
and individuals, whenever you wish.
Watch out, Big Brother …
RATE OF CHANGE WITHIN THE UK'S TOP 10,000 COMPANIES (%)
July 1999- July 1998- July
1997-
July 2000 July 1999 July 1998
Human resource decision-maker changes 15 11.2
21.6
IT decision maker changes 20.4 31.3
28.1
Marketing decision maker changes 23 34.8
28.2
Finance director changes 24.4 13.9
17.3
Managing director changes 25.4 24.3
29.9
Business address changes 16 9.2
8.6
Source: Conduit Business Information
BRITISH AIRWAYS
Any club works best if those operating it possess up-to-date contact
details and information on members. British Airways – and its
successful ten-year-old, 2.5 million-member Executive Club – is no
exception.
This spring it commissioned Carlson to help it obtain e-mail
addresses and profile data from members. It's one of the first times
that BA has integrated both off- and online activity in the same
campaign as part of its ongoing CRM strategy in communications to
Executive Club members.
Its aim was to develop the internet as a regular channel of
communication with members.
The first step was to design a direct mail piece, microsite and
e-mails for the campaign, which incentivised members to update their
contact details and answer some personal profile questions.
For BA, the benefits of such schemes are clear. It is cheaper to
incentivise consumers to update their own data than to employ people
for the purpose, and microsites are an ideal mechanic to do this. It
also places the onus on members to keep their details up to date.
The campaign involved members filling in an online questionnaire,
but as a reward they were then given a list of destinations from
which to choose as entry for a free prize draw, with over 500
business-class flights to be won.
The more imaginative their choice of destination, the greater chance
they had of winning, with a pair of business-class flights given
away on each BA flight departing from all London airports on
November 3. Fifty Air Miles were also guaranteed for each completed
questionnaire.
The direct mail piece was sent out to all BA Executive Club members
explaining the mechanics of the offer. Members were directed to go
online to the microsite and enter the draw.
Launch e-mails were also sent out to support the direct mail piece,
each containing a hyper link, which took members straight to the
microsite.
Reminder e-mails were also sent out two days before the closing
date, once again containing a hyperlink.
The campaign exceeded all targets in its early stages with interim
results showing that the first tranche of the mailing gained a 17%
response rate.
The final tally was higher, confirming BA's strategy to seek greater
customer insight.
Copyright 2001 Marketing.
Source: World Reporter (Trade Mark) – FT McCarthy.
