Dialogue Marketing Proven to Increase Revenue
By Lee Thompson, Sales Director, Exact Abacus Ltd
I am a left handed mid-handicap golfer with a fast swing and penchant for ‘rescue’clubs. Am I likely to respond to an email offering an outstanding deal on a righthanded Driver designed for low handicappers?
Would you like to discuss the needs of your customers on a one-to-one basis? Imagine being able to intimately understand the whims of your customer enabling you to offer a proposition that hits home every time. It sounds utopian, and in practice requires a new take on traditional direct marketing methods which are becoming less efficient and thus less relevant today. The reason for this is that markets, sales channels and customer behaviour are changing rapidly, caused by new information technologies, market fragmentation, growing individualisation of customers and increasing information overload.
Originally developed in Scandinavia, the ‘dialogue’ marketing method creates conditions in which a ‘one-to-one’ relationship can be fostered between seller and buyer to specifically meet the multi-everything marketing challenges of the 21st century.
Dialogue in the Campaign Lifecycle
Dialogue is a key component of the ‘campaign execution’ process. It works by intensifying customer relationships through a process of data collation and personalised, scientifically sequenced cross-channel communications. Its ultimate success is measured in increased response/turnover and reduced marketing administration costs. By automating the database segmentation and campaign messaging through specialist software applications, dialogue releases high-value marketing people to concentrate more on creative and revenue-generating tasks.
Today’s Landscape
Consider that the average person is exposed to around 3,000 marketing messages per day. Thankfully the brain intuitively filters out 99.9% of these, BUT allows in the messages which are RELEVANT. Therefore the marketing challenge is to penetrate these filters; but having a outstanding proposition is not enough. The principle of ‘dialogue’ is about being ‘interested’ as well as being ‘interesting’. Understanding your customer before placing your offer is key to ‘relevancy’…..the level of relevancy is key to response.
Where do I start?
Before you start to design a dialogue, you must construct a ‘customer domain’ – a long-list of data which you either store or would like to store against your customer. Generally we would look to existing backoffice systems for basic addressing and profile data. At this stage, we are not concerned about how we retrieve the information, but whether it exists in the first place. Next you should ask what data you need to logically ‘segment’ customers for the purpose of dialogue. For example if you are selling music CDs and downloads, you would want to understand genre and artist preferences. Analysis of historical sales transactions may offer a part-profile, but remember, peoples needs do change, sometimes very quickly! You should also understand what your customers think about you – why have they bought from you in the past? Would they recommend you to others? Are you missing any tricks?
The ‘Duplication Rule’
The barrier to cost effective marketing programmes is often data. More specifically, where the data resides and how it is consolidated to create a unified 360 degree view of our customer. On the proven assumption that moving data is expensive and inefficient, the ‘golden rule’ of dialogue is that data is allowed to reside within the source system(s) e.g. a sales order processing application or data warehouse.
The Questionnaire
Once you have constructed the basic ‘customer domain’, you must then start filling in the blanks. A good tool for this purpose is the questionnaire, which could take the form of a web page, coupon or telemarketing script. Remember that people’s time is precious, and long drawn out questionnaires generally suffer from a lower take-up than snappy and easy to answer forms. Also questionnaires carrying incentives for completion are known to generate higher response rates. Consider the use of radio buttons, check boxes and drop downs on web forms to minimise keystrokes. Free text fields contribute nothing to dialogue – the entry cannot be indexed, manipulated or queried, so avoid using ‘comments’ boxes for example. Also, if you are sending an existing customer a questionnaire invitation by any channel, do not commit the cardinal sin of asking for their contact details – if they have received it, you already know them!
‘Preferences’ and ‘Self Service’
Are your customers afforded a degree of control over their own details and preferences? Keeping the customer ‘involved’ is proven to enhance brand loyalty and you may be surprised at the number of people who would take the trouble to manage their own details. Again, people’s needs change and therefore effective direct marketers will constantly present the opportunity for information such as communication preferences and interests to be updated. Do you include a discrete ‘manage my account’ link and telephone number in all email correspondence? This simple step has proven to enhance customer profiling data, providing more opportunities for dialogue flow.
Dialogue in Design
Ironically, most direct marketing companies already practice many of the individual elements of dialogue. However, it is the ‘roll up’ of all these activities into one automated workflow that contributes the real value. The method advocates the ability to create and modify a multi-channel, multi-stage process flow with data sampling, splitting and clear reporting visibility. This enables the marketing function to plan and map out what the best dialogue will be for each customer/customer group. Using ‘waterfall’ and ‘event’ triggers, the customer will then be subject to a series of messages [over time] that are relevant to them. Why try to offer great deals on right-handed clubs to a left-handed golfer?
Dialogue Software Applications
Dialogue marketing and marketing automation should not be confused with ‘CRM’. It is a distinct method, developed for the direct marketing industry. Therefore the number of specialist software vendors in this space is relatively small. On the assumption that a case for dialogue can be made, when assessing these products you should consider how easily the technology will fit into your existing IT infrastructure. Dialogue applications should not be ‘invasive’, but work in harmony with your current data structures and applications. Generally, these applications are charged by database size or communication rather than by ‘user’ as the automated nature of many tasks actually minimises the number of system users required. It is recommended that you work with any potential supplier on a ‘proof of concept’ exercise. Take a sample of customer records, for example, 10,000 lapsed multi-buyers. Create, say, 3 contrasting dialogues and offers for broadcast within a 90 day assessment period to random cells of 2,500 records. Retain a fourth ‘control group’ of customer records against which no activity will take place. The proof of concept will provide an insight into the effectiveness of dialogue and which communication and offer structures yield the greatest revenue and margin.
Is Dialogue for You?
On assessing methods and supporting technologies, it is not uncommon for businesses to look inwardly at their scale. Instead you should ask whether you are satisfied with the response rates to your current marketing strategy and whether you feel that you are extracting maximum value from your customers and prospective customers. In practice, dialogue has been successfully proven within large and small direct marketing companies on customer databases ranging from 5,000 to 10,000,000 records. The ‘fun’ element of dialogue is being able to ‘tune’ the rules by testing various communication flows and messages on different customer groups. Importantly, specialist dialogue software applications enable non-IT marketing professionals to do this tuning within easy-to-use graphical interfaces. So the challenge has been set. I am a 30 year old mid-handicap left-handed golfer. Would anyone care to listen?