CUSTOMER-CENTRIC SCHEMES

Campaigns should focus on clients’ needs and wants – Dr. Muneer Muhamed

Most small and medium enterprises that use a database to carry out direct marketing campaigns will typically plan them according to a preset campaign calendar. While many of these enterprises set the dates in advance based on holidays and festive seasons, they don’t fully account for customer needs and interests.

And they generally end up offering discounts and lucky draws.

Often, direct marketing campaigns begin with a calendar based on previous annual campaigns. Ad hoc campaigns are added on the basis of excess product stocks or cash flows.

Next, the owner or marketing manager determines which products should be part of the promotion – a choice that’s often largely made based on the type of campaign.

For example, if it is a ‘household campaign,’ then household items, linens and so on are promoted. The specifics of the offer such as price discounts also are resolved at this point.

Finally, when the details are finalised, the database marketer chooses which customers to target. Exceptions to this process may take place when there is a strategic reason to focus on a specific group of customers.

For instance, a direct marketer might decide that the corporate strategy should be to develop a more loyal customer base among upscale youth or even millennials. Customers would then be chosen for a campaign based on these attributes.

Either way, the campaign is planned first without considering whether it’s the right promotion at the right time for the right customer segment.

So what’s wrong with this approach to planning a promotion?

First, it ignores the important aspect of customer purchase cycles. The optimal time between a customer’s promoted purchases may not coincide with the promotion calendar.

Second, there aren’t enough controls over the number of times clients are a part of campaigns. Controls can be set using suppression rules (i.e. not to select customers who have been mailed in the last 45 days) but these are often arbitrary and not applied uniformly across customer segments.

Third, as a result of finding customers to fit a campaign rather than planning campaigns around them, it’s possible that many potential buyers may never be reached – and you won’t garner an adequate return on your investment in direct marketing.

Mailing costs will soar if the modus operandi is to send hard copies – and telephone followups will be wasted as well. There could be high levels of customer attrition and the company will be spending money to maintain a customer database that’s not providing as much value as it should.

How clients are segmented is also important. Most SMEs stick to the traditional route such as corporates, heavy users and more. I have always advocated the use of customer motivation as a basis for segmentation.

We can help organisations map customer scenarios to manage their moments of truth better. Customer scenario mapping is a framework that was popularised by writer Patricia Seybold a few years ago.

An alternative to planning and implementing database marketing campaigns based on a campaign-centric orientation is to move toward a customer-centric approach. This strategy, which consists of several stages, will help maximise the marketer’s return on a sizeable investment in the customer database.

SEGMENTS Client segments can be defined in any manner.

Marketers usually segment them using the RFM model (recency, frequency and monetary value), demographics or types of products purchased. A valuable approach is to incorporate promotion sensitivity into the segmentation scheme.

CALENDAR Review the cam­paign calendar with respect to your customer segments.

How many times are customer segments contacted? What is the expected amount a customer would spend? And what’s the level of marketing expenses to be allocated to customer segments over the campaign period?

This way, one can estimate the expected ROI for each customer segment.

CAMPAIGNS Adopt a different approach to planning and include interactions between campaigns. The intention is to create a promotion calendar for each customer segment that will most closely optimise profitability.

This is not based on pure science. Business requirements may limit the desirability of planning campaigns in a purely customer-centric manner so the SME’s direct marketing managers must incorporate business and production constraints into their planning.

SYSTEMS Establish a system to build the campaign that includes timing, numbers and other details of the offers to optimise profitability across campaigns, based on business and production constraints.

Use the customer segment model developed earlier as the basis for the optimisation procedure. It will lead to a direct marketing schedule for each customer segment.

The ultimate challenge while transitioning to customer-centric campaigns is amalgamating the calendars from the two approaches. Veteran marketers will always have to make choices on how to do this.

Establish a system to build the campaign