Posts filed under Research

You Have To Know Who Your Customers Are to Find New Ones

Knowing Your Customers

During a casual business lunch with a CMO friend, he began to go over his marketing plans with me.

"We have hundreds of restaurants nationwide with a well recognized brand. But some stores are not doing well at all. So we need help in developing a distressed store program to improve their sales.

We know most of the store managers are doing a good job. We also know the competition for most of our stores have similarities. 

I say direct mail, because we are active in social media and promote special sales by email to participating customers. But our lists are pretty small."

I then asked him if the email list contained customer names and addresses. It did not. Did he know who his customers were? He answered: "Why of course. We know they have families of X size with incomes of X ..."

But my question wasn't whether he had a customer profile, but whether he knew his customers? Does he know their names, addresses, how often they came to his restaurant? How much they spent? When did they come last? Without these answers, the CMO cannot target either his existing customers or qualified prospects.

Why is that so? His organization does not maintain a transaction database

Direct marketers use the database to identify the best customers by matching them to external mailing lists. This creates a high quality prospect file by finding people who look like the best customers. This process also shows customer concentration by geography. We can then promote to the prospects in areas with the deepest customer penetrations.

A customer database would also allow the CMO to determine why some of his stores are in distress.

Perhaps some restaurants have too few customers. Or their one time buyers who convert to repeat buyers are lower than successful stores.

Some distressed stores may not have enough qualified prospects within their trade area. This means a relocation is in order and spending more money on marketing makes no sense.

When a direct marketer asks if you know who your customers are, he wants to know what your database contains. Does it have the needed information for prospect targeting and marketing program evaluation.

 

Posted on May 16, 2016 and filed under Mailing List, Research, Direct Mail.

Sales Effectiveness Drives Creativity, Not the Poet's Muse

There's a lot to like in this fascinating 1947 resignation letter from Bill Bernbach. Some of his statements, however, expose much of what is wrong with the advertising industry even to this day.

I am reacting to general agency creative people who think that making money for their clients is wonderful but not essential. Worse yet, they live under the illusion that aesthetics and good taste attract sales like bees to honey.

Years of controlled direct marketing testing contradict this perception. Direct marketers know that entertaining advertising and visually stunning graphics (except for product photos, of course) often decrease sales by diverting the prospect's attention from the product's benefits.

Great creative should not attract attention to itself.

Here's the unedited letter.


May 15, 1947

Dear ______.

Our agency is getting big. That's something to be happy about. But it's something to worry about, too, and I don't mind telling you I'm damned worried. I'm worried that we're going to fall into the trap of bigness, that we're going to worship techniques instead of substance, that we're going to follow history instead of making it, that we're going to be drowned by superficialities instead of buoyed up by solid fundamentals. I'm worried lest hardening of the creative arteries begin to set in. There are a lot of great technicians in advertising. And unfortunately they talk the best game. They know all the rules. They can tell you that people in an ad will get you greater readership. they can tell you that a sentence should be this sort or that long. They can tell you that body copy should be broken up for easier reading. They can give you fact, after fact, after fact. They are the scientists of advertising. But there's one little rub. Advertising is fundamentally persuasion and persuasion happens to be not a science, but an art.

It's that creative spark that I'm so jealous of for our agency and that I am so desperately fearful of losing. I don't want academicians. I don't want scientists. I don't want people who do the right things. I want people who do inspiring things.

In the past year I must have interviewed about 80 people — writers and artists. Many of them were from the so-called giants of the agency field. It was appalling to see how few of these people were genuinely creative. Sure, they had advertising know-how. Yes, they were up on advertising technique.

But look beneath the technique and what did you find? A sameness, a mental weariness, a mediocrity of ideas. But they could defend every ad on the basis that it obeyed the rules of advertising. It was like worshiping a ritual instead of the God.

All this is not to say that technique is unimportant. Superior technical skill will make a good man better. But the danger is a "preoccupation” with technical skill or the mistaking of technical skill for creative ability.

The danger lies in the temptation to buy routinized men who have a formula for advertising. The danger lies in the natural tendency to go after tried-and-true talent that will not make us stand out in competition but rather make us look like all the others.

If we are to advance we must emerge as a distinctive personality. We must develop our own philosophy and not have the advertising philosophy of others imposed on us.

Let us blaze new trails. Let us prove to the world that good taste, good art and good writing can be good selling.

Respectfully, Bill Bernbach

One problem revolves around who the star is in this conversation. The letter's message appears to worship at the altar of the agency rather than the client's products. At the end it finally makes mention of the writer's and artist's primary mission: "good art and good writing can be good selling." I would have said that good art and good writing must be good selling.

He implies that great creative comes primarily from inspiration rather than proven selling methods. So often this means avoiding proven selling words like free, new, two for one, guarantee, introducing, and other such words because they lack originality.

Test after test in the real world prove that originality can actually decrease sales results. Creative people who focus on the aesthetics rather than the selling have a passion for their craft -- often at the client's expense. In fact, creative teams in the advertising industry tend to think of themselves as fine artists rather than moneymakers for clients.

Client's get tired of spending and spending without accountability. We should retain our passion for excellence without forgetting why we do what we do. It can't just be about finesse, taste or even originality. It's about achieving superior sales results.

Agency "creative driven" people often do not understand that true creativity moves prospects or customers to respond. David Ogilvy believed that his writers should work in direct response to hone their craft because he was aware of their temptation to forget that their primary creative goal is to sell, not win awards.

Mr Bernbach goes on to say: "Advertising is fundamentally persuasion and persuasion happens to be not a science, but an art." That is partially true. But persuasion comes out of the abundance of the science. Direct marketing testing relies on this principle.

Sales effectiveness drives creativity, not the poet's muse.

Clearly Mr. Bernbach does not believe that science has no place in effective creative. But he sees art as the primary leader in the process. Underneath the surface, he appears to bemoan the idea that science somehow corrupts the purity of his work.

He laments the lack of the creative spark in the 80 creative people he had recently interviewed for creative positions. He reinforces his point by saying: "If we are to advance we must emerge as a distinctive personality."

Why? His job is to leverage the client's investment into ever greater returns, That should be the agency's "distinctive personality." His true role is that of a client's salesman in disguise.

No wonder creative people have a reputation as Prima Donnas! Some wouldn't be caught dead selling anything!

In defense of his letter, we do not know the reality of his environment. It is likely that some of his internal "technicians" were basing their research on flawed interpretations of subjective research rather than actual sales results. In that case, his plea makes more sense.

In direct marketing, our science looks at actual behavior rather than what people say. In that respect, I would have to agree with him. In the absence of accurate knowledge, all you have left is gut feeling and intuition. That trap was created by agencies who reduced their role to building awareness and demand with little understanding or regard to their advertising's real impact on sales. Direct marketers continue to fight this self-induced limitation with better tracking and reliance on transactional databases.

This lack of discipline is no longer accepted by clients. And I believe they never should have. There were always ways to evaluate the sales impact of advertising if properly structured.

Instead of results, general advertisers focused on aesthetic purity and originality. Such philosophies deserve a painful death. Clients have a right and obligation to know what their advertising programs contribute to their growth and profitability.

The bottom line --we need to combine our knowledge of what prospects respond to with superior creativity to make money for our clients. But remember, the final vote does not come from the creative team, the agency or even the client. The decision maker is the customer's vote to buy or not.

Posted on January 19, 2016 and filed under Research, Direct Response Creative.

Market Research Fails the Relevancy Test

Every time a client asks our consultancy to handle a research project for them, we jump at the opportunity. But to make the research actionable, it is our job to help the client express what he intends to do with the research once it is completed.

The consultant, in cooperation with the client, must clearly define the project's scope. Otherwise, all the research will do is frustrate the participants with several hundred pages of data devoid of any useful executive summary or marketing recommendations.

Forrester Research addresses this frustration with its January 7. 2009 report entitled "Role Insights: Market Researchers Struggle For Strategic Relevance." 

Here are a few quotes made in the report that show what is happening with research from the researchers' perspective.

"Market research leaders report finding themselves sidelined because they are often viewed more as service bureaus focused on tactical, not strategic, questions and research... Only six of the 40 market researchers (or 15%) we surveyed classified their market research group as having a definite strategic role within their organization. When asked if their market research team was viewed as a critical strategic partner, only 12.5% of the surveyed market researchers report that this statement is highly descriptive of their group."

The report goes on to explain why this is happening.

"Distributing research effectively internally is the biggest challenge... Can internal customers digest and make sense of the data and analysis from the market research group? Probably not."

Forrester reports that researchers have failed to make their research relevant to the marketers who must act on the information. 

In my opinion, researchers leave the impression that their job is done once the analysis is provided on spreadsheets and charts without the critical INTERPRETATION of what it all means from a marketing perspective.

In a sense, researchers allow the project to launch without a crystal clear understanding of what the marketer is looking for. So is it any wonder that the researcher cannot communicate the information the marketer seeks in the form of a relevant synopsis with specific action items?

Having completed a number of research projects for clients, here is my take on what is needed to make research more strategic and actionable.

To keep this post to a manageable size, I would like to talk about large research and data aggregator organizations in the direct marketing BtoC space such as Experian, PRIZM, and Acxiom Corporation.

These data aggregators match their master file with the client's customer or response data appending the enhanced data to come up with customer profiles. These profiles include such things as full customer demographics, home ownership, credit rating, media reading habits, response propensities and other behavior information depending upon the supplier's data portfolio.

The usefulness of the findings depend upon what the client intends to do with the information.

If the client wants to target prospects based on the types of customers the company presently attracts, then the targeting capability offered by such analyses proves quite useful.

Starting with the targeting capability of direct mail, such data can easily reduce circulation by 20-30% with little reduction in sales and a substantial increase in profits depending upon what targeting was used prior to the research.

Another major application of this type of research is store location planning

Why locate in geographic areas that have little representation of the types of customers the company attracts? It is most cost effective to locate stores in areas that have deep representation of the company's typical or best customers.

But most clients need more than media targeting or store location tools. They want to understand how their offerings motivate or demotivate their existing and potential future customers. Such customer profiles yield limited information of this nature.

This is where primary research or survey research comes into play.

Properly planned and implemented primary research reveals the customer psyche and gets into the why they buy a client's products rather than those from competitors. This research often uncovers weaknesses in the client's present offerings giving the direct marketers the information they need to develop more compelling offers. Primary research findings may transform loosing products into winners.

Relevant market research revolves around answering the client's questions about their customers. 

-Who are my best customers? 

-What do they look like? 

-What is their lifestyle? Do they look different from my competitors' customers? If so, how?

-Why are they buying our products?

The list of questions goes on.

In summary: The most important question researchers, clients and consultants sometimes forget to ask is this. How do you intend to apply the findings from this research?

Posted on February 7, 2009 and filed under Direct Marketing Strategy, Research.