Economic uncertainty will undoubtedly threaten marketing budgets and increase pressure in terms of greater accountability with marketing spend.
To effectively weather the storm and look at this cycle as an opportunity, smart Digital Marketers are making the connection between various marketing disciplines and how they converge in Online space to maximize effectiveness. With the right approach, Digital stands to jump up in the queue and increase upon its reputation as a measurable and reliable medium to produce results and thus gain more share of the marketing budget.
This is the second part in a series looking at the discipline of Direct and Database Marketing and its relationship to the Digital world. Part 1 covered the strategy of collecting data. In Part 2, we look at the Digital connection with Segmentation.
Why Segmenting Matters
So you have collected some data. Now what? The primary purpose is to use data in smart ways. And, the application of sound segmentation principles is a great starting point.
Aggregate data is our gateway. Segmentation is how we begin to make sense of things. Avinash Kaushik, Analytics Evangelist at Google and author of Web Analytics – An Hour A Day, terms the analysis of data in aggregate form “a crime against humanity”. He is right. It is all about how we segment, how we slice and dice information and produce sophisticated knowledge about our businesses and our customers.
The notion is to learn about patterns and create a better map of what is going on, helping to uncover subsets of customer information and the stories they tell. It is like removing a blindfold, taking away a layer of guesswork.
As a database grows patterns emerge. Patterns exist on many levels (financial, transactional, operational etc), but we are primarily concerned here with drilling into customer & prospect level data and the degree to which we can identify pockets of behaviour. As information exists in both in-house databases as well as from online sources (via web analytics, email marketing campaigns, online advertising etc), Digital has the unique ability to map actual behaviours back to the customer level which builds a deeper foundation of marketing intelligence. (Note: It is critical to ensure compliance with all areas governing privacy of personal information.)
But there needs to be a purpose with segmentation. The process must be designed with business outcomes in mind. The real power is to analyze data and reveal opportunities to drive incremental revenue, improve service, or perhaps spark product innovation. The process acts a bit like an R&D. It is an on-going real-time research lab for data oriented to improve results and grow business in new ways.
The more it is done right, the more there is to gain in terms of bettering our ability to predict future results. The better we are able to predict, the closer we get to deliver the right offer to the right person at the right time – the holy grail of targeting.
Segmentation is a process to be baked into the marketing framework and plays a large part of the overall business strategy – a strategy driven by marketing.
The Direct And Digital Connection
At its core, Direct Marketing is an information-driven discipline requiring intimate knowledge of channels. And, Direct Marketers know the power of data mining and analysis and deem it worthwhile when it is used to deliver actionable insights and serves to improve the effectiveness with our campaign execution. Given that Digital is one huge channel ripe with data for marketers to use, the application of Direct Marketing within Digital makes perfect sense.
The business case is simple: Segmentation has been a mainstay of cost-sensitive direct marketing efforts for decades with a great deal of success. Channel-based campaigns (i.e. mail, telephone, DRTV) are quite costly but are inherently measurable. The business imperative in direct marketing is to increase response while lowering overall costs. Segmentation ensures focused attention to increase conversion through better targeting. And, it is applied across a wide range of business-to-business and business-to-consumer programs.
Since the Internet is now a primary touch point for consumers, creating a better online experience using data is a huge opportunity (and likely the low hanging fruit). Digital marketers have the perfect playground for rapid cycle testing, learning and improving results with an immediate way measure effectiveness and deliver ROI sooner.
This is especially important in today’s economic and business climate when budgets are being scrutinized and CFO’s begin to ask where they can make cuts without harming revenue and profit. Quantifiable results, proving that a dollar invested will result in three dollars earned, grants you a pass.
Finding Signal In Data Noise
Don’t go looking for all the answers in your data. Instead, use your data analysis and segments to help you begin to ask the right questions.
Data can tell us a lot, usually too much. It is often more noise than signal. To avoid the “analysis paralysis” syndrome, use segmentation as a means to narrow things down and hone in on opportunities for further investigation and testing.
So, after identifying patterns in your data the next step is to put together a plan to do something with the new found insights. The best approach is to begin to formulate a hypothesis to prove/disprove. This is where segmentation starts to make sense and has a direct output for direct campaigns applications, especially in digital. Be it on-site personalization, email campaigns or another avenue, the possibilities are far from limited.
Get Creative With Your Data
Last point is that the segmentation process can be a creative one. Parts of the data world include modeling, probability ranking, regression analysis, and other statistical practices that can leave marketers wondering if they are back in math class. But that is where data analysts and statisticians come in. You can’t do it all your own.
Remember that data is your friend and it can enable creative thinking and problem solving. Making assumptions about your customers provides an opportunity to get out there and test your hypothesis in a variety of ways. Data can be the spark that lights the creative fuse by way of experimentation and adaptation with our current efforts.
The power of segmentation allows us to get right down to an audience of one. Remember Peppers and Rogers, One-to-One Marketing? It still works. Segmentation is the tool within the Direct Marketing mix that helps deliver this and when applied to Digital Marketing it puts you on the path to better conversion.
Don’t forget conversion is still king, even more so in today’s economy. Segmentation within the Digital world is not a case of reinventing; it is simply adapting and evolving.