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Marketing budgets are shrinking. Expectations are rising. Your only way out is up. A budget cut doesn’t have to spell the end for your marketing program. Apply customer-centric thinking to your decision about what to axe where, and you’ll cut costs where you have to without letting customer attrition make shaky economic times even tougher. Data pays its own way. By doing so, The Bombay Company conjured lifelike profiles of its best customers, revealing purchase preferences, attitudes and behaviors. This led to retention strategies that boosted response rates and reduced costs by targeting mailings to most-profitable customers. In effect, The Bombay Company reduced its mail quantities by up to a third without adversely affecting sales revenue. Acquisition efforts saw a similar response boost and cost savings, because those same best-customer profiles allowed The Bombay Company to find the right customers from the start. A hearty database can also pay off by helping your company to:
Recognition spurs more ROI. One Canadian department store took this to heart and tested a thank-you note mailed to its best customers. No offer was included; the note simply thanked best customers for being loyal shoppers and invited them to visit again soon. Those customers responded by giving the store a 20 percent lift in sales over the control group. Creative contact stretches cash.
Relevance sets big precedents. Direct mail benefits from personalization, too. The International School of Management reports that the response rate of a fully personalized direct marketing campaign is nearly three times that of its generic counterpart.
Inclusion works wonders. Washington-based Espresso Connection slashed its annual marketing budget from $100,000 to $30,000 by bulking up on employee training. The java boutique knew that to boost retention and sales, employees had to “get it.” So the company focused on teaching employees to impress customers, not just serve them. Since launching its customer-centric training program, Espresso Connection has increased daily sales revenue from about $800 to as much as $1,550 per store, hiking annual revenue by a whopping $3.1 million. Likewise, health and beauty emporium Boots The Chemist understood the importance of intense associate involvement. That’s why all 60,000 associates were enrolled as members of the Boots loyalty program prior to the program launch. This strategy produced associates who not only sell the program to customers with heightened enthusiasm, but also routinely spend more than the average customer. Measuring pays off. But to prove it, you’ve got to measure it. Set milestones to help everyone involved manage expectations and keep you focused on your long-term goals. Continue to measure over time to see trends brewing; then use that information to evolve your program. STRATESCAPES and STRATESCAPES SUPPLEMENTS are published by Customer Communications Group, Inc., a full-service agency specializing in relationship marketing and customer communications. Our comprehensive, turnkey services include data analysis, customer segmentation, strategic consulting, account management, creative execution, print production and multimedia solutions. Copyright 2002 Customer Communications Group, Inc. For more information, call 1.800.525.0313. Or visit us online at:
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It’s profoundly obvious: The more you know about your customers, the more direct-hit your marketing will be. Take The Bombay Company. For years it had been collecting copious amounts of data on its customers, but knew that a composite view masked striking distinctions between them. So the company focused its attentions and resources on beefing up its database — first by appending self-reported, household-based psychodemographic data. 
Unfortunately, many of today’s customers have been trained to expect discounts in exchange for their patronage. It’s no surprise that more than 60 percent of customers cited hard benefits, such as discounts and savings, as the #1 reason for joining a loyalty program. What is surprising: Soft benefits — such as feeling appreciated and receiving advance notice of sales — are not only cheaper to provide but also more successful than hard benefits at changing customer behavior. 
Point-of-sale messaging can also slash the USPS bill. Customer-facing screens (POS, ATM, message ticker, touchscreen) can acknowledge a best customer and deliver program status, information or a targeted offer, as Einstein Bros Bagels is now setting up to do. Employee-facing screens can also alert associates to the customer’s “best” status or prompt a cross-sell or upsell script. Of course, you can always pare postage costs by marrying your message to mailings already being sent to customers. Think order fulfillment: While many packages are already congested, customers who’ve just made a purchase are highly motivated buyers. And consider statement inserting too. Yes, response is generally lower than with a separately mailed piece; but the savings may salvage another communication you don’t want to sacrifice.
Too good to be true? Witness Sam Goody, which found that targeted “infotainment” communications achieved response rates averaging 16 to 18 percent; non-targeted postcard mailings averaged 5 to 7 percent response. The report also suggested that long-term, customized marketing programs save time and cut costs while pulling higher response rates.