Intelligent use of data earns consumer trust
Share
As the lines between marketing and service blur, brands must use both behavioural and volunteered data to deliver communications that meet consumer demands.
The campaigning frenzy of door-to-door leafleting, interactive spoofing and high-street canvassing that reached a crescendo in the run-up to the general election has thrust the direct marketing industry to the forefront of consumers’ minds.
But while the industry may appear in rude health - just 5% of marketers think the economic climate has had a “very bad” effect on the industry, according to Marketing Week’s Direct Mail Attitudes research study - this abundance of DM has highlighted errors still being made by organisations, especially with regards to the handling of consumer data.
The Labour Party came under fire in April amid allegations that it had used confidential government data in a campaign attacking Tory policies on cancer care. Although companies are beginning to think about whether they should implement innovative techniques such as volunteered personal information (VPI) - where people declare their interest in certain services and companies tender for their business - it seems that many brands are still failing to use basic DM data correctly.
The Direct Marketing Association’s (DMA) Robert Keitch warns that organisations that fail to treat consumer data with the respect and sensitivity that it deserves risk negative media coverage, losing customers, damage to their brand and significant fines imposed by regulators.
Large-scale government data losses over the last couple of years, together with the threat of identity fraud, have focused attention on the need to protect personal details more effectively. According to the fast.MAP/DMA Marketing-GAP Tracking Study, consumers are increasingly unwilling to agree to third-party contact and a quarter now opt out of existing-relationship company contact.
However, data used in the right way by companies to target consumers with timely and relevant direct marketing can be an invaluable tool. According to research on consumer attitudes to marketing by Experian, 83% of those surveyed express a preference for “companies that treat me as an individual and try to understand my needs”.
The key to getting consumer data right is to ensure a fair exchange between brand and customers, says Richard Madden, planning director at agency Kitcatt Nohr Alexander Shaw. “Rather than just asking customers for their personal information, companies must explain exactly how they’re going to use it and, if possible, give customers direct benefit back,” he advises.
Madden predicts that it will soon become an element of best practice for companies to talk about the security proportions around any data they use, with assurances to consumers that their data will never leave the UK or be shared with another organisation.
Getting consumers to trust and engage with your brand is no easy task, but for those that achieve it, the rewards are high. Madden cites Marks & Spencer and John Lewis as two of the best in the field.
Waitrose, part of the John Lewis Partnership, is also praised for its consumer-centric approach to data use, with the top 1% of its customers invited to engage in a dialogue with the managing director. These customers also have the opportunity to give their views on new product selections and talk about the service in their local branch.
“When you’re part of the programme, it makes you feel like you’re a non-executive director and that to me is a really good manifestation of whenmarketing stops being perceived as ’marketing’ and starts being perceived as ’service’,” says Madden.
Newspaper group The Financial Times also aims to run DM campaigns that are considered genuinely useful because they contain targeted content. Peter Simpson, head of circulation marketing at the FT, explains: “We’re at the start of an evolutionary shift from regular campaigns to applying some more intelligence to our DM, looking at people’s propensity to subscribe before we email them.”
Virgin Media too highlights the need for brands to have DM conversations with consumers, rather than simply communicating to them. Chris Bibby, direct marketing and CRM director at Virgin Media, says that conducting a dialogue with consumers to ensure data is used to its best advantage is tricky but vital.
“We’ve invited our top advocating customers into an online community where we talk to them about our new products and services. We get them to give their views and share ideas that we might want to take into product development,” he says. “We hope that they will then go out and talk about Virgin Media in the wider market.”
So while brands might be struggling with the basics, can using VPI really start a new phase of direct marketing? Madden says: “I think that using a combination of behavioural data and volunteered data can help deliver marketing that is indistinguishable from service.”
But the right approach is crucial, he warns: “You don’t just ask for VPI, just like you don’t just ask for people’s inside leg measurements. You observe what they’re doing with your brand, how they’re interacting with it and you introduce a piece of VPI gathering content at a relevant point.”
The softly, softly approach is equally prudent when it comes to behavioural data warns Virgin Media’s Bibby. He says that coming across as too like Big Brother will not be popular, so whenever new data services are introduced, it must be obvious to customers that this adds value for them rather than just the business.
Aside from using new methods like VPI, brands can also make sure they use data in a more effective way by carrying out better segmentation. Paul Kennedy, head of consulting at Callcredit Information Group, says that brands should be looking to overlay multiple data sources when approaching customers with marketing, including their preferences, behaviours, credit and risk profiles.
By sending someone an email, for example, and monitoring what time of the day someone opens it, you might deduce that this may be a good time to send other direct communication, or maybe even phone that person because you know that they’re at their desk or back home from work.
“Many organisations have this kind of data, but fail to pull it from the different silos into one place”, adds Kennedy. “Every interaction gives off data and that can be used to figure out when is the best time to get back to that person with a different communication.”
Similarly, companies are developing their data capture techniques. Brand engagement specialist Kyp has developed a webkey, which works like a USB key and allows individual user behaviour to be tracked and provide market data. While it acts as a data stick, Kyp says it cannot store personal data or pass on viruses, so consumers can see it as safe use of their details.
The British Music Experience museum at The O2 entertainment complex in London recently ran an interactive exhibition that implanted a webkey into its guides, allowing people to plug it in at home and replay recorded experiences of the exhibition.
Kevan Lawton, chief marketing officer at Kyp, claims a 53% response rate for this initiative, but warns that getting the basics of DM right is of paramount importance. “Marketing is very important in all of these technologies. If you don’t get the call to action right, or you’re talking to the wrong people, then you’ve got a problem,” he says.
Virgin Media’s Bibby sums up: “Data is the critical component of any profitable CRM or direct marketing campaign and you can only be successful, targeted and personalised if you have a really rich source of data to do that with.”
This means that for brands to get that data, their customers must trust them. With more new techniques than ever now promising numerous ways to reach people with marketing, DM specialists must prioritise good data management principles to create truly innovative, consumer-centric campaigns. l In association with
FACT FOCUS
What is direct marketing (DM)?
Direct marketing is any contact a brand makes directly with existing or potential customers, in order to generate sales or raise awareness for a product or service. Unlike other forms of marketing, which may be carried out simply for the purposes of building a brand, DM calls for a response from those targeted.
How is DM carried out?
Direct marketing works across multiple media channels, encompassing telemarketing, email marketing, door-to-door, direct mail, leafleting, direct response television marketing and direct selling - in each and every combination.
IN THE MARKET
10 suppliers you need to know
1 EHS 4D Group
An international integrated agency that offers direct methods. Clients include Virgin Atlantic, Shell and American Express. www.ehs4dgroup.com
2 GyroHSR
Clients include Virgin Atlantic, Shell and American Express. www.gyrohsr.com
3 Millennium
Claims to be the only agency in the UK that specialises in targeting the over-50s market. It is part of The Direct Marketing Group. www.millenniumdirect.co.uk
4 Kitcatt Nohr Alexander Shaw
The agency’s clients include John Lewis, Waitrose, Lexus and Toyota. www.kitcattnohr.com
5 Indicia
A marriage of two businesses - Entire, a direct and digital marketing agency, and Marketing Databasics, a marketing services provider. www.indicia.com
6 Snowball
It specialises in luxury brands and clients include Dunhill and Bang & Olufsen. www.snowball.co.uk
7 JPMH
Full-service integrated agency established in 2002, it employs 60 people in offices in London and New Zealand. www.jpmh.co.uk
8 Kyp
Develops products and services including webkey technologies. Clients include O2, Procter & Gamble and Sony. www.kyp.com
9 Callcredit Information Group
Provides services including consumer targeting, database building and hosting. www.callcreditmarketing.com
10 Partners Andrews Aldridge
Part of the Engine group, its clients include brands such as the BBC and Vodafone. www.partnersandrewsaldridge.com
FIGURE FOCUS
DM in numbers
- As an industry, direct marketing generates about 9% of UK consumer sales, according to the 2009 fast.MAP/DMA Marketing-GAP Tracking Study.
- The direct marketing industry supports 3.4% of all employment in the UK, according to the same DMA report.
- 56% of marketers believe that direct mail carries weight with the board and top executives at their organisation, according to Marketing Week’s Direct Mail Attitudes research study.
- The same things motivate people to open/read DM now as five years ago: material coming from a known company, personalisation and vouchers. Marketers continue to overrate the power of aesthetics, according to the 2009 fast. MAP/DMA Marketing-GAP Tracking Study.
- 39% of people say they would end a relationship with a company that sent them irrelevant or untimely marketing, according to a 2010 Experian report on consumer attitudes to DM.
Viewpoint
Dan Brooksbank
Media insight manager, MMC
In today’s competitive landscape, companies simply cannot afford to ignore the basics for any given campaign, direct marketing included.
Yet our own independent insight (see www.mmc.co.uk) shows that more than a third of respondents rate their data quality as poor at best. Just 4% rate it as excellent.
It would be a very poor marketer that doesn’t give this due attention, especially when considering that 50% of adults would not even open a piece of mail if it was addressed to “the occupier”. And 33% wouldn’t open it if their name was spelt incorrectly (TGI figures, 2010, Q1).
Deficient data quality will massively impair a company’s ability to ever fully realise the potential return on investment available. Companies are not even measuring this; our insight shows that 63% of respondents report their organisation has made no attempt to calculate the cost to the business of errors in data that arose from poor data quality.
On the MMC website, there are more than 205 pieces of content relating to data and yet these fundamental failings continue. The MMC website also offers access to specialist data consultants who can advise on the tools needed to obtain data, maintain its accuracy and build a picture of customers as they communicate with you.
Here are three golden rules to follow if you are to get the most from your customer data:
1. Keep it clean - always capture any changes your customer provides;
2. Build a picture - every purchase and communication your customers make gives you an opportunity to learn more about them and therefore service them in the best way possible; and
3. Get it right - ensure you capture the correct permissions to use the data you’ve collected.
On a closing note, the strand of data that is becoming really powerful for marketers is consumer insight. It’s not only important to understand the individual you want to reach but engage them and evoke a reaction.
Visit www.mmc.co.uk/infobank for more free information on reaching customers.
TOP TRENDS
2010 predictions
Adrian Gregory
Chair of the IDM Data Council and chief executive of DQM Group
Companies will put an increasing amount of emphasis on data governance. That will be driven by a regulatory requirement, with potential ICO fines of up to £500,000, and the recognition that they need to build trust with their customers, which requires honesty and a willingness to give the consumer what they want.
Mark Roy
Chair of the DMA Data Council
The general election result will have the biggest impact on DM over the next year. There are going to be massive cuts in public sector spending and people are going to have to work a great deal harder. What we’ve got now is the new norm. I think the slightly more targeted, frugal way of doing business is much better. We’ll see a need for major brands to understand that working more closely with consumers is where the future lies.
Paul Kennedy
Head of consulting at Callcredit Information Group
We’re going to see a maturing of social initiatives, with organisations considering how to properly integrate them into the business - a kind of coming of age for social media. We’re seeing the continued rise of mobile platforms, such as Android and marketers are exploring how those can be used as integrated techniques.
Sam Jordan
Managing director, Baber Smith
Truly personalised marketing is an achievable goal; there are more channels through which we can communicate directly with customers and our ability to interact with them has improved massively.
However, matching the possibilities and the practice is always the tricky bit. The mistakes that digital made a decade ago are being replicated in mobile and social media, most notably too greater focus on the technological possibilities and not enough on the consumer.
Email is still being under-used while simultaneously being over-used. Last year’s marketing budget cuts meant lots more email but it’s not a cheaper alternative to direct mail or a genuine CRM programme. It’s a channel that needs its own approach, which is integrated into the whole customer experience.
Richard Madden
Planning director at Kitcatt Nohr Alexander Shaw
The next step forward is going to be towards simple data display and interpretation, rather than more analysis. It will involve visualising what the data is telling us in a way that will be compelling to board-level marketers. The “data people” tend to be quite obsessed with detail. If you’re a board-level marketer, you have to do it with one picture on one chart. I think software and talent that enables you to reduce enormous amounts of data into simple, largely visual displays will be a very valuable commodity in the months and years ahead.
Alex Walsh
Associate director at the DMA
Some people think that with the recession and the economic climate, the environmental issue has been put on the back burner but nothing I have heard suggests that that is the case. A lot of what we’ll have to do is governed by Brussels, in terms of European Union directives. The pressure is still going to be there and if the industry wants to be sustainable, then it’s going to have to make sure that it addresses those government and public concerns that it’s being wasteful.
Steven Plimsoll
Vice-president for multichannel marketing services Europe at Acxiom
Direct mail will never be replaced, but the way it is used is evolving. Before any material is posted out, marketers must now think about the value of the customer, timing and the value of the product itself.
Direct mail is very much a complementary channel to other means of communication such as email. The challenge is moving from ad-hoc mailing to being part of a more integrated, real-time campaign. Marketers can now target direct mail to respond to an individual’s past interaction with a brand, as a triggered response. In this way they can alter the content, tone and the offer itself of any direct mailer, which supports successful long-running campaigns. DM can then fit around customer preferences so that printing and postage costs aren’t wasted.
IN PRACTICE
Top tips you need to know
- Failing to safeguard consumer data leads to negative media coverage, brand damage and regulatory fines.
- Use a combination of behavioural data and volunteered data to deliver marketing that is indistinguishable from service.
- Don’t just ask for volunteered personal information; observe how consumers interact with your brand and introduce VPI gathering content at a relevant point.
- Monitor how people are moving through your website as individuals and link that data back to other things the customer is doing with your brand.
Readers' comments (1)
Anonymous | Tue, 25 May 2010 7:46 pm
You failed to mention a newer webkey on the market... the USB Insert (www.webkey.com)
Unsuitable or offensive? Report this comment