Dynamic messaging has been with us for some time (as has Strictly Come Dancing), but very few people realise the benefits preferring to simply batch it and blast it!
Dynamic messaging isn’t just another marketing buzzword. It’s a critical stage in the evolution from mass marketing to personalised, one-to-one marketing. But it goes beyond making sure that each customer and prospect receives a targeted message via his or her preferred channels.
While proper targeting techniques are critical to the process, utilising response data is equally important. This will help you to determine how, when and with what content you will next contact them.
For example, let’s say your data suggests that Patrick, Sophie and Susanna (if it was a ‘Strictly Come Dancing’ list that is) are most likely to respond to similar personalised email offers they receive at the beginning of the month. While the end result was a familiar outcome i.e. none of them took advantage of your offer – the way they got there was vastly different. Here’s how each scenario (or dance if you prefer) played out:
Patrick opens the email, clicks through to your website and spends 10 minutes browsing before leaving the site
Sophie, on the other hand, opens the email, and then discards it
Meanwhile, Susanna deletes the email without even opening it (that’s newsreaders for you!)
Now, in the past, your contact strategy might have entailed sending all three consumers variations of the same follow-up email. However, a dynamic strategy has rules in place that suggest different follow-up tactics based on differing responses. Here’s an example of how this could play out for you:
Given that Susanna didn’t even open the email, and history indicates she hasn’t opened any emails in the last six months, your follow-up with her might be via a different medium
Since Sophie showed she was receptive to email, a change in the offer or creative in the follow-up email might improve her response
Finally, given the time Patrick spent on your website, you will probably want to get in touch with him sooner than you do the others to keep his attention (given he had a short attention span during the foxtrot!)
Research indicates that leveraging segmentation and personalisation to create a dynamic contact strategy can improve email click-through rates and conversions – just read any of the DMA benchmark reports or national email surveys.
While personalising the content, creative and channel certainly plays a large role in boosting response, the dynamic aspect provides significant lift as well.
Since monitoring response and reacting to it are distinguishing elements of dynamic marketing, it’s easy to reevaluate and tweak individual messages or entire messaging funnels as the campaign continues.
This makes dynamic marketing critical when reaching customers and prospects that are especially difficult to contact and historically challenging to make convert – just like Tony Jacklin’s dancing in fact!
Our findings last month on the Obama campaign caused a lot of debate but the bare facts of our analysis still stand – had Obama’s team optimized for improved open rates, their send volumes would have dropped and their all-important donations would have followed.
Open rates remain a widely used and hugely misleading measure of performance and engagement in the email industry. At best they give you an idea of a campaign’s performance in isolation but at worst they lead email marketers to focus on optimizing the wrong strategies for their email program.
Here we discuss how to identify if maximizing open rates is holding you back and how to go about identifying the strategies that will have the biggest impact on your results.
The open rate paradox
Using EDS Analyst we examined the relationship between open rates and total unique opens for the top 200 email senders by list size in the US for 2012.
We were confident that, like the Obama campaign, there would be an inverse relationship between rates and totals – so as rates increase, totals decrease and vice versa. We call this the open rate paradox or to paraphrase a popular sports trusim: rates are for show, totals are for dough.
Each dot on the graph below represents a single sender and we picked out some well-known brands as reference points.
Sure enough, the graph shows that for most large senders, there is an inverse relationship between open rates and the total number of opens – the higher the open rate, the lower the number of total opens. Rates are for show.
It’s also no coincidence that nearly all of the brands with the biggest lists (orange dots) also have highest number of total opens because they are sending more opportunities to open.
Although opens don’t directly correlate to revenue, even the most avid fans of open rate maximization would agree that the more people that actually open your emails, the more engaged your database and the more revenue or conversions you are likely to generate. Totals are for dough.
Keep it simple – focus on just three strategies
If your goal is only to improve open rates, then your strategy is simple: halve your list by suppressing your less active subscribers and watch those rates soar… and those total opens plummet! But if your goal is to increase total opens, then the bell curve in the graph above helps define three clear strategies:
Has the biggest impact on totals and can be improved independently of the other two.
Increase send volume: Significantly increases total opens for relatively little effort (low effort to gain ratio).
Optimize for rates
Increases total opens but requires the biggest effort (high effort to gain ratio).
Most brands are clustered towards the lower middle of the curve because it’s the easy place to be. By and large, they all put a similar amount of effort into their program and use the same undefined strategies.
The outliers, however, go above and beyond in one of three ways – those to the right have very high open rates, those to the left have high send volumes and those at the top are combining high send frequency with very big lists to produce massive send volumes.
In effect, this is the three different strategies implemented to their extremes.
Of course, there are limits to the effectiveness of each strategy and these are defined in the graph above by the orange line to the left (frequency cap) and green line to the right (optimization cap).
These boundaries exist because for any given list size there is point at which diminishing returns kick in for both frequency and open rate. And, as the big empty space to the right of the green optimization cap shows, it’s very hard to send a large volume of email while still achieving a high open rate.
So the basis of a successful email program is to continually grow your list while finding a balance between increasing send volume and maximizing open rates with better offers, targeting, subject lines, etc.
And you find that balance by ignoring your open rates…
Define your strategy by ignoring open rates
To illustrate the effect these strategies have on an email program, we have created a simple optimization chart, below. The green curves represent the impact of send volume on total opens and the brown lines represent the impact of open rate on total opens.
Each intersection represents a hypothetical 10-hour unit of resource, as a means of comparing the effort required to implement each strategy. As you get closer to each cap, the effort required to improve your totals with your chosen strategy increases exponentially.
Imagine your brand is the star in the middle of the curve and you want to take on your leading competitor, the lightning bolt.
If you use open rates to define your strategy, then you focus your resource on maximizing those, route A. Your open rate may now be much better than your competitor’s but they are out-mailing you, so they are still creating twice as many opportunities to buy or convert.
If you choose to increase your send volume, ‘route B’, then your open rate drops but your total opens more than double. However, as you approach the frequency cap, the impact of your strategy diminishes and you still trail your competitor.
If you use totals to define your strategy, then you take ‘route C’, which balances resource between increasing send volume and maximizing open rates. Your open rate drops but you are finally creating more opportunities to buy than your competitor.
Smart email marketing is not just a case of increasing send volume indiscriminately or of only focusing on ever tighter targeting. There is a balance that exists for each brand, you just have to find your own sweet spot.
Total opens the key to optimizing your program?
In this instance, we have highlighted the open rate paradox using total opens because that was the data available. However, we’re confident you will find the same inverse relationship in your own campaigns with total clicks and, more importantly, revenue. And in the end that’s the only metric that matters!
As a consumer, I am always in favour of legislation which seeks to protect individual freedoms, and reduce ambiguity in what organisations can and cannot do with my personal information. As a marketer too, it is important that the availability and use of a consumer’s personal information be governed by clear guidelines, and ends in a mutually beneficial result – at the bare bones of it; providing a customer with timely, relevant communications based on the data they have provided, at the same time as (hopefully) making a profit for the organisation I am working for.
The real worry is that the current draft of the European Union Data Protection Regulation, does the opposite by introducing more complexity and ambiguity than already exists, and potentially creates further issues which would not have surfaced if the status quo were maintained.
The verbatim definition of consent within the Regulation is as follows:
“…’the data subject’s consent’ means any freely given specific, informed and explicit indication of his or her wishes by which the data subject, either by a statement or by a clear affirmative action, signifies agreement to personal data relating to them being processed…”
[http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2012:0011:FIN:EN:PDF Article 4 (8)]
Furthermore, the “Conditions for Consent” are laid out as follows:
1. “The controller shall bear the burden of proof for the data subject’s consent to the processing of their personal data for specified purposes.
2. If the data subject’s consent is to be given in the context of a written declaration which also concerns another matter, the requirement to give consent must be presented distinguishable in its appearance from this other matter.
3. The data subject shall have the right to withdraw his or her consent at any time. The withdrawal of consent shall not affect the lawfulness of processing based on consent before its withdrawal.
4. Consent shall not provide a legal basis for the processing, where there is a significant imbalance between the position of the data subject and the controller.”
In the above, I have highlighted the key elements here – the Regulation is essentially saying that organisations need to obtain a clear and explicit statement/action by which a data subject provides consent. From an email permission-marketing best practice perspective, this is fine – however the Regulation does not address whether or not this would need to be retrospective for existing databases, and whether or not organisations would be able to contact customers with whom they have had previous interactions (as is currently permissible under the existing Privacy and Electronic Communications Directive – and, the majority of the time, expected by consumers).
This is completely disregarding whether or not those consumers actually want to be contacted, and if the “burden of proof” detailed above is an enforceable requirement (in a worse-case scenario) – then the Regulation is effectively saying organisations must delete said data if they cannot prove consent has been given explicitly! Then there’s the possibility of dispute over the meaning of “informed & explicit”… well, you can see where this is heading to – more ambiguity and less clarity.
Furthermore, there is an argument out there that this Regulation does not take into consideration the low risk use of Business-To-Business (B2B) data for marketing purposes – where, more often than not, a organisation would hold and process information on another organisation or group of members of staff, with perhaps multiple key decision makers – not an individual.
In summary, the intention is good but the detail is lacking – I strongly urge the legislators in Brussels to revise and alter the Regulation so that it can sit with the existing Privacy and Electronic Communications Directive They also need to focus on what the effect of the changes in the draft Regulation will be for both consumers and organisations.
To find out more about the consequences of this legislation passing unaltered, and the potential impact on your own business, take a look at http://dma.org.uk/eu-data-protection This site also provides information on how to take immediate action, by lobbying your regional MEPs.
I just got this email from LinkedIn Subject Line “A change to your DMA: Direct Marketing Association (UK) Limited digests” – the 3rd such email I have had this week about a group I belong to.
In it they tell me that they are going to ignore my mailing preferences and unsubscribe me from the group digests of which I get 1 a week a frequency selected by ME! I have now been forced to go and re-subscribe to the weekly digests of groups that I want to hear from 3 times this week. Do LinkedIn really think that is a good use of my time?
Just in case anyone was wondering, while I am not really a FB kind of person I definitely am an UBER LinkedIn user.
- I am a paid subscriber and highly active – I post, place jobs, recommend stay in touch connect etc.
- I have several thousand connections
- I check my page multiple times a day and use it as my primary vehicle for maintaining my business network. I have my preferences set exactly the way I want them for some groups – no email, others weekly and some daily
- I get 10 or more emails a day from linked in and open about 1 in 3 on my desktop and 80% of them on my mobile
- I click on at least one a day and some days 3 or more
- I save all my emails I currently have 2900 in my Linked in folder of which less than half 1427 are “unread”
- I regularly search for old messages or invites and click on them
So how on earth can a bunch of engineers and/or too clever by half marketers come to the conclusion that they know what I want better than me?
The irony is by stopping the DMA group weekly digest, they are going to reduce the chances of me ever visiting again! I wonder how the DMA and other group managers feel about that.
I can’t understand why having gone to the trouble of asking me to set my preferences LinkedIn should choose to expressly ignore the stated preference from a highly engaged – dare I say knowledgeable – paying subscriber. Surely that is as bad as spamming after all what is so different about these 2 scenarios?
1) I use LI preference centre choose to receive 1 email a week – after 3 months LI decide to unsubscribe me for not visiting the group.
2) I use LI preference centre and choose to receive 1 email a week – after 3 months LI decide to send me daily digests or 3rd party emails from partners they think I should hear from
LinkedIn are insulting their members’ intelligence one would think that someone like me would know how to both unsubscribe or hit the spam button. So if I haven’t done either of those things, it’s probably because…I DON’T WANT TO!
Last Tuesday the DMA Email Marketing Council held their third breakfast seminar in the popular four-part Customer Lifecycle series. The key topics were engagement and retention, with over 80 delegates the seminar programme hosted keynotes from sponsors Epsilon and case studies from Opodo and Hilton, as well as ‘How to’ presentations from Kath Pay and Riaz Kanani.
Loyalty – In the ‘Anywhere Economy’, Phil Singh, Vice President of Sales, Epsilon
Phil’s presentation defined loyalty, the challenges facing marketers and data strategies to help drive loyalty. Research from Forrester shows 57% of adults buy online with a 9% increase YOY. This figure looks set to grow in Europe with online buyers spending 8% more YOY which in turn increases online sales by 18%. This proves it’s time for marketers to harness the power of loyalty in the customer lifecycle.
Top 3 takeaways:
1. Listen to the customer throughout the lifecycle, identify the individual and build an institutional memory of the customer
2. Engage the customer by knowing what to say – messaging varies by individual so this is where data becomes critical
3. Measure, learn and repeat because ROI matters!
How to Session- Newsletters, Kath Pay, Plan to Engage
Kath looked into the importance of newsletters and what to get right when planning your newsletter campaigns. The first step is to define key goals and objectives. Then focus on contact and list growth strategies, design and writing skills and finally how you can use segmentation and triggered messages to ensure your newsletter is delivered at the right time with the right message. Kath also reminded delegates about the importance of testing as JupiterResearch reports 68% increase in ROI is achieved by testers vs. non-testers.
“Email newsletters are probably the single highest action to improve online presence” Jakob Nielsen
Top 3 takeaways:
1. Have a strategy for your newsletter programme
2. Little tweaks can make a big difference to your objectives
3. Measure the appropriate metric and continue learning and optimising.
How to session – Creating Loyalty Programmes, Riaz Kanani, Marketing Director, Alchemy Worx
Riaz set the scene with some interesting statistics from IGD such as; 60+% of consumers think that they will be worse off in the next 12 months and 71% of marketing directors understand the importance of loyalty schemes since the credit crisis started. Now is the time to engage consumers and the choices are endless. From weekly newsletters or milestone triggers such as birthday, renewals, points total to behaviour triggered messages such as purchase, reviews, and website/store visit emails.
‘The only way you create true loyalty is by your behaviour over time – do you in a transparent, reliable way, create benefits for people?’ Sir Terry Leahy, former Chief-Executive of Tesco plc .
Top 3 takeaways:
1. Clearly identify programme benefits and key pieces of (accurate) data and email touch points
2. Track your key success metrics and use market research
3. Leverage all channels to both drive interaction and engagement but also to learn more and improve.
Opodo Ltd Newsletter Case study, Oliver Beckett, Web Editor
Oliver Beckett talked about Opodo’s strategy, how they test, what works and what doesn’t. At Opodo their strategy is simple. Their aim is to make content relevant, timely and increase number of engaged subscribers. From a welcome email, to pre-departure, birthday, lapsed subscriber, or the weekly newsletter email they are in constant contact with their customers and are sending relevant content.
Top 3 takeaways:
1. Testing: Test 5 different subject lines and allow plenty of time before checking results
2. Personalisation: Address the customer by name and include other details such as flight information. Taking personalisation too far can be too much effort for a small audience.
3. Re engaged: Lapsed subscribers can be re-engaged, ask how what they want to hear from you and listen to what they want. By sending fewer emails that are more interesting you can help to re–engage your customers.
Creating Loyalty Programmes Hilton Hotels Case study, Phil Singh, Vice President of Sales, Epsilon
Phil presented an Epsilon client case study to show how Hilton Hotels benefited from a strong loyalty programme. It’s important to understand the members and their preferences to deliver direct and personalised communications by creating a 360° automated communications platform. The results were impressive, driving individual brand experiences to 25 million Honours members globally. New member activation communication open rates averaged over 34% vs. the promotional average of 22%
$8.5 billion in incremental revenue over 12 years.
Top 3 takeaways:
1. Consumer experience map, target, connect, engage and bond with the customer
2. Focus on new member activation
3. Automatically sense customer needs and respond to them with automated messaging.
The day concluded with a panel discussion where delegates were given the chance to ask the speakers more in-depth questions. Richard Gibson, Chair of the Email Marketing Council concluded the event. The DMA hopes that everyone who attended found the seminar invaluable and if you were unable to attend, don’t forget to register for the Email Customer Lifecycle: Win Back seminar on 22nd November 2011. It’s set to be a sell out!
@katebarrett Listen, recognise, engage individually with targeting, interact consistently, measure, learn &repeat. Do it on the customers terms. #dmaemc
No matter how successful an email program, how engaging, relevant and timely you think your communications are, over time all email programs will have consumers who no longer want to interact with your brand. Some research suggests that up to 60% of the average consumer list will become inactive after 6 months. What you do about this is a matter of quite hot debate within the email community.
Do you stop sending to the truly disengaged? From one perspective having inactive on your list distorts engagement figures and can have negative impact on the impression of success within an organisation and potential deliverability problems but on the other hand there is a branding effect that is seen when even supposedly disengaged customers have greater engagement with the brand because they see the email in their inbox
The reasons that consumers churn according to Marketing Sherpa range from lack of relevance & too much email at the top through to change of circumstances. The varying reasons will require slightly different tactics to deal with. So here are some top tips in creating a successful reactivation program
1. The first issue to deal with is who to actually reactivate. There is no black and white definition of lapsed customers, however by undertaking some basic recency-frequency (RF) analysis you should be able to see a pretty clear drop off in opens and clicks and put a stake in the ground around what is lapsed for your particular population.
2. As a more advanced tactic I would recommend adding, where possible the monetary element. Logic would dictate that if someone used to not only be engaged with your communication program but was also one of your highest spenders then it worth more effort to get them to re-engage.
3. Also remember that you should always split out those that have never engaged vs those that are truly lapsed since the methods of reactivation and indeed the value to your organisation will be very different
4. Stop sending regular mailing to the reactivation segment. In this way it will be clear that if these people do start to respond it is due to re-engagement activity
5. Unfortunately there is also no hard and fast rules for getting a particular population to re-engage to it will require you to test various techniques to see what works for you. Promotion / giveaways, increased value exchange, garnering feedback are all valid and useful techniques.
6. Testing a variety of offers as well as approaches is also recommended. 2 for 1 offer / or X % discount / additional gift with purchase) have all been successful for a published client because within the target reactivation groups there was quite a wide variety of different profiles
7. The reactivation process should be built around highly interactive experiences – Sun Microsystems for example drove their inactives to a highly interactive and personalised preference centre (see my previous DMA blog article on tips for developing a preference centre) other clients to exclusive online content. It is a chance to renew the value exchange promise with the customer.
8. In thinking about goals and measurement. Firstly ensure that you have a control cell so that you can accurately measure any incremental lift from the campaign. From an expectation perspective it is should be considered incremental rather than step change. In our experience 5% reactivation should be seen as a good result
9. Email lists need a holiday – temporary suspension or resting – can sometimes offer excellent results as shown across a number of clients. One client for example suppressed a group of non clickers for 4 weeks and then when that group received an anniversary sale email they outperformed the control cell by over 5%
Email addresses are a very valuable asset that you spent lots of money collecting, permissioning and building engagement. Not withstanding the long held belief that it costs 5-10x to acquire new customers as to retain existing customers can you afford not to focus on reactivation?