The following article appeared as part of a sponsored supplement in Strategy DirectResponse:
‘Modern direct marketing is much more a strategy than a tactic,’ according to Robert Clarkson. As the vice president and general manager of Carlson Marketing Group, he is in the position to know, and he’s got some definite ideas about what it takes for client companies to reach their target customers.
Clarkson doesn’t support methods employed by most direct marketing firms today. With response rates for traditional techniques hovering around the ten percent mark, he’s quick to point out that you’ve missed your mark nine out of ten times. That’s a considerable waste of time and resources. ‘You have to be more effective spending the client’s money,’ which means taking a step back to better evaluate the way you think about reaching your customers.
Carlson Marketing employs a different system than most other firms. ‘Our approach is to use information to drive our communications strategy, so that there’s responses of thirty percent, forty percent, or even higher. If you look at most companies, they still see through the eyes of a direct marketing agency or ad agency, which is cost per thousand. That really has nothing to do with how effective a program is. We try to look at the return on investment.’ The real measure of how successful a marketing strategy is can only be found in the way it affects the bottom line.
As a result of the recent recession, most Canadian companies have had to downsize, becoming leaner, more efficient teams who operate with little or no waste. The market isn’t getting any bigger, and so the company who’s looking for income security is only going to find it in one of three ways: by acquiring customers from the competition, by making higher sales to the customers they have now, or more realistically, by guaranteeing their current customers return time and time again.
Carlson Marketing has become the world’s leader in customer loyalty programs, helping client companies keep their profitable patrons coming back. ‘It’s too expensive to go out there and try to acquire new customers while you’re losing them out the other side,’ says Clarkson. ‘Research has shown that it’s nine or ten times the cost to acquire a new customer than it is to keep a current customer happy. From the fifties right up to the eighties, when the market was growing so rapidly, everybody was into acquisitions and retention wasn’t an issue.’
Now it is. To be successful, you have to find out who your customers are, and find ways to keep them satisfied. What does that mean in terms of a marketing plan? Clarkson summarizes it easily: ‘Our approach to direct marketing involves getting as much information as we can about the customer, so we can make the client’s investment that much more profitable.’ Knowledge – raw data – is what drives the successful company in the information age. You have to know your customers, their history and their spending patterns, so that you can be in a position to sell when they’re ready to buy.
Clarkson’s summary is a giant simplification of a monumental task. Keeping tabs on historical sales patterns is not a job most marketing companies are prepared to undertake. Carlson Marketing has established themselves as leaders in the field of customer loyalty because they’re also a pioneer in database marketing, using the power of modern computers to track correlations and find opportunities in the market. ‘Every business can benefit by knowing who their best customers are. There’s a lot of things that database marketing companies like ours really bring to the table that traditional marketing companies don’t have. They still use gut instinct to make decisions, and that’s the expensive way.’ It’s much more cost effective to hit that part of the market which will respond positively to your offer. By concentrating your efforts, it’s possible to reach the higher response rates Carlson Marketing aims for.
Database marketing is much more than just numbers and fields of raw data, however. Building a program around a database means you really have to treat each separate group of your client’s customers like a distinct market unto themselves. That precludes taking the ‘shotgun’ approach to marketing, and forces you to specifically target different layers of your group, from the occasional buyer right up to the dedicated patron. ‘You have to really understand that no customer group is homogenous. Each customer is an individual, and has a set of triggers which will generate a certain response.’ Some companies think data manipulation means sorting your customers by postal code, but that will only tell part of the story. ‘Sure, that’s valid, but at the end of the day, how similar are you to your neighbour?’ A neighbour with a young family has different needs to one with children attending university. To get a real sense of the market, you have to track purchases, and create programs which will generate feedback from your customers as individuals, allowing them to feel like they’re really part of the system. Whether that means creating a procedure to send letters of apology and frequent flyer points to British Airways’ passengers who may have had a flight delayed because of weather, or by setting up customer call centres where the operators are empowered to do more than just listen to complaints. Customers are enthusiastic when companies pay attention to them, because they want their needs met. Taking the time to specifically find out what each customer group wants will improve the likelihood of them thinking of you when it comes time for their next purchase.
Database marketing is a system which will work for any company. Clarkson offers Via Rail, both a crown corporation and a client company, as an example. Railroads have existed for longer than Canada has been a country, but they still had a big opportunity when it came to marketing. ‘They had millions of customers, but they really didn’t know who they were.’ Developing a program to track their consumers was a priority. ‘If you don’t know your customers today, you’re in real trouble.’ The team at Carlson Marketing created a program to collect the data they needed based on sales, customer surveys, and historical indicators, and then went to work pinpointing areas of the market that would yield some profit if explored. Surprisingly, it also suggested that Via Rail would benefit from greater reliance on the Internet. Via now offers a whole range of services to their customers on-line, from scheduling information to allowing them the opportunity to buy tickets from the comfort of their own home.
The truth of the matter is, most companies have more information on their hands than they can realistically handle, or have the experience to understand. That seems to run contrary to what most people would expect. It’s there, but it’s hard to get at, and almost impossible to turn into marketing designs. It’s locked up in shipping manifolds and inventory logs, inaccessible to anyone who doesn’t have the expertise to get at it.
The real ingenuity comes in refining that mound of raw information into a workable marketing strategy. It’s easy for anyone without experience to get lost in blind alleys, or think they see phantom correlations in the data. It can be just as expensive to put your faith in badly interpreted information as it can be to not rely on it at all. ‘The challenge of database marketing is to look at the data and not to make too many assumptions. We have really strong statistical analysis people here who are skeptical. They go through the data, always trying to find out why it doesn’t necessarily correlate.’
Database marketing is really about ‘building a defensive strategy to keep your customers loyal’, as Clarkson puts it, ‘and then using the information to acquire new customers.’ For Carlson Marketing, sometimes that means building partnerships with companies who target similar goals. Forging links with partner companies increases visibility and reduces costs, something every company wants to do. It’s one of the many tools that a marketing firm can turn to in order to meet their client’s needs.
The most obvious strength of the Carlson Marketing Group is their ability to find alternative channels to reach the client’s customers. As Clarkson suggests from the very beginning, it’s about building an all-encompassing strategy of promotion and growth. A solid plan ensures the prosperity of any company, good creative makes it appealing, and accurate data makes sure it hits the mark. After sixty years in the business, Carlson Marketing has the experience to combine a strong team, the newest technology, and a solid strategy into a winning formula for any company.
