Great Moments In Database Marketing #5: Free Friday

If you are a database marketer, one who specializes on answering questions using SPSS/SAS/SQL, you've met up face-to-face with the concept of the "time crunch".

You begin your work day with a clear vision of what you want to accomplish. By 8:43am, your day has gone sideways. Elsie in Customer Service wants you to query the customer records of an individual who is upset that she no longer receives e-mail campaigns. The angry VP down the hall wants you to count how many customers responded to his promotion using a specific discount code last Wednesday. The earnest search marketer wants you to calculate how many customers visiting your site with a specific keyword place subsequent orders.

Before you know it, you spend your entire day writing queries for folks who do not have the skills necessary to query a database. If you go down this path, you lose your identify. You are no longer a valuable employee --- instead, you become a hybridized version of software.

Worse, you spend almost no time working on strategic issues. Everything you do is calibrated toward answering random "point in time" questions.

How do you fix this problem?

You don't!

But you can do something to mitigate the problem. I called it "Free Friday".

The idea isn't a new one. In 1996 at Eddie Bauer, I was stuck in a rut similar to the one I mentioned earlier. So I declared Friday to be "Free Friday". I would not answer any business question on Friday ... ANY Friday! Friday was "my time", time to research strategic issues and obtuse problems others didn't find important.

There was a price to pay for this freedom. I had to work forty hours a week Monday - Thursday to meet the needs of my co-workers. But then Friday was all mine.

Almost every key strategy that we employed in catalog marketing in 1998 - 2000 came from the "Free Friday" days of 1996 - 1997. Multichannel Forensics are almost entirely the result of "Free Friday". Our new store scoring algorithm and cannibalization metrics were the result of "Free Friday". Understanding online cannibalization was the result of "Free Friday". Interestingly, none of these topics were requested by co-workers or Sr. Management. They came from having the time to think clearly, to research ideas, to freely explore concepts.

Consider the concept of "Free Friday" in your work environment.

Great Moments In Database Marketing #10: The 3/2/1 Rule

During the next two weeks, we'll explore some of the unique things teams I've worked with have learned during the past twenty years about customer behavior.

#10 is the "3/2/1" rule. I once worked with a large retailer that did a spectacular job of linking website visitation data with store visit survey information and purchase data across all channels. The retailer learned that multichannel customers visit the e-commerce website three times a month, shop the store two times a month, then purchase once a month (with 85% of the purchases occurring in-store, 15% online).

How does your view of customer behavior change when you know this fact? It should cause your head to pop with possibilities!!!

First of all, you realize that your Web Analytics information is largely incomplete. Who cares if the visit-specific conversion rate is 3.04838290%? Within this project, we realized that conversion, when measured on a monthly basis (counting e-commerce and store purchases) was utterly staggering. Staggering!! More than ten times the visit-specific conversion rate.

All of a sudden, that cross-channel inventory system sounds like a good idea!

The web analytics corner of the world doesn't have enough data to tell you about the true power of your e-commerce website. You need your Business Intelligence team (and they better know SAS or SPSS, not just basic tools like Business Objects or MicroStrategy) to lead you down this path. And most important ... you need your BI team to mentor your Web Analytics team, you need them to teach the Web Analytics folks how customer behavior works across and between channels.

The true power of your e-commerce website is measured in a monthly or yearly conversion rate, combining conversions from all channels. You'll never view your website (or your analytics team) the same way, once you identify your version of the 3/2/1 rule!

E-Mail Productivity Is Waning ... Or Is It?

Has your e-mail campaign productivity dropped significantly over the past three years?

For all of the glitz and vendorspeak surrounding e-mail, many companies tell me that e-mail campaign performance declined by between ten and forty percent over the past three years.

Often, the folks who analyze e-mail campaigns do not have the tools necessary to decompose the performance of an individual campaign. Often, these folks don't talk to the SAS programmers or Catalog circulation experts sitting down the hall from them, folks who could really help them out!

You've got to remember, these Catalog/SAS folks have seen every productivity problem under the sun. E-mail marketers often have much less business experience to draw upon. So why not get yourself some help???

On the surface, your e-mail campaign performance might look like this, over the years:

• 2004 $/E-Mail = $0.29.
• 2005 $/E-Mail = $0.26.
• 2006 $/E-Mail = $0.24.
• 2007 $/E-Mail = $0.23.

Things don't look too promising. Time to fire the e-mail director.

Here's where you go talk to that SAS programmer down the hall. Ask this person to segment your e-mail subscriber file into two groups:

• Group 1 = Customers who clicked-through an e-mail to the website at least two times in the year prior to receiving the current e-mail campaign. Call these folks "engaged" customers.
  
• Group 2 = All other Customers.

Within each group, measure $ per e-mail.

Many times, you'll see this kind of trend:

2004	Engaged Customers	10,000	$2.00
	All Other Customers	90,000	$0.10
	E-Mail Totals	100,000	$0.29
2005	Engaged Customers	11,000	$2.10
	All Other Customers	108,000	$0.07
	E-Mail Totals	119,000	$0.26
2006	Engaged Customers	12,100	$2.15
	All Other Customers	129,600	$0.06
	E-Mail Totals	141,700	$0.24
2007	Engaged Customers	13,310	$2.17
	All Other Customers	155,520	$0.06
	E-Mail Totals	168,830	$0.23

This is important! E-Mail campaign productivity is not decreasing. Instead, you have what catalogers call a "file mix issue".

Catalogers have known for a century the importance of "file mix", of having a healthy file of great customers. Catalogers seldom talk about the performance of the entire file when sharing results.

In this case, the file might actually be healthy. "Engaged" customers, those who click-through at least two e-mail campaigns per year are increasing in size, and productivity per e-mail campaign is increasing.

What is happening is that there is a significant portion of the e-mail file that is completely disinterested. This part of the file is increasing at a faster rate than the engaged portion of the file, and productivity per e-mail among this audience is decreasing.

The "file mix" is driving productivity down.

When the engaged audience is decreasing in size, or the engaged audience is spending less per e-mail campaign, you have a problem.

The good folks in the e-mail campaign management tribe can get some answers by simply talking to the folks in the SAS tribe, or the folks in the Catalog circulation tribe.

By simply segmenting the e-mail list into these two groups, one can quickly determine if there is a performance problem, or a file mix problem.

Around The Horn

Random thoughts:

• The Web Analytics folks are missing a major opportunity to understand customer behavior across visits, over time. I completed a Multichannel Forensics project for a website with numerous merchandise divisions. The visual representation of customer behavior was breathtaking ... this website is literally a visual representation of our Solar System. One merchandise line was like the sun --- it represented the gravity that kept the whole customer system in place. At least two other merchandise lines were like planets, with their own moons rotating around them. A few of the merchandise lines were not part of the gravitational pull of the whole system(website). When communicated properly, an Executive team can finally understand how customers interact with a website, over time. Web analysts and clickstream vendors have a huge opportunity to grow, to change, to understand customer behavior over time. Conversely, you SAS and SPSS folks who have always analyzed catalog and retail customer behavior --- this is your brief moment in time to make a difference. Do something with your data now, before the web analytics folks figure this out.
  

• Corporate America has an opportunity to allow employees to do more work from home. We really struggled with this during my time at Nordstrom. My employees could honestly do 60% or more of their work from home. Broadband internet access changes everything. Of course, you worry about people not doing their job while working at home. A manager could measure employees on productivity, and if the employee were productive, who cares where the employee produces work? I woke up at 6:00am today, was working at 6:45am, and wrapped things up by 2:45pm. This allowed me to re-wire a pond pump and lighting system, visit a hardware store, pick up prescriptions, clean outdoor furniture, pull weeds, all before 5:00pm. I did all of this with the cell phone right next to me, just in case somebody needed something. I didn't spend two hours in a car, traveling to work at 14mph, listening to the "morning zoo" on the radio. How much more productive would our employees be if we gave them a little bit of work/life flexibility? How much happier would employees be? I'll tell you, I was one happy worker today, with 72 degree temperatures and blue skies amplifying my experience.

• Multichannel Forensics in action in the music industry: Consumers have changed their behavior in a post-iPod world --- this music industry insider believes marketers and musicians/artists must change as well. Catalog industry executives need to monitor what is happening in other industries that are being flattened by the internet. Music is one of those industries.