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Shooting at Lighthouses - A Lesson for Marketers

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Jun 28 2010

A colleague of mine has two chidren - ages 8 and 5 – with no plans to increase the size of her brood.  So you can imagine her surprise when she received a box from a leading baby food manufacturer that contained five samples and a letter, which welcomed her to their loyalty program and indicated that she would be receiving additional samples and offers in the coming months. And, then they came – direct mail pieces with diaper samples, coupons and other goodies - at least eight in total.

Talk about an expensive “mistake” for the manufacturer. Who knows how my colleague ended up on this particular marketing list, which was obviously geared towards a particular demographic (i.e., women with babies), but I'm pretty sure she wasn’t the only one who ended up on the list erroneously.

Which leads me to the topic of this blog post – how do companies avoid these marketing blunders, which can be costly in terms of both reputation and hard dollars?  The answer will be revealed in the video clip below.

Marketers must stop shooting at lighthouses.  In a recent webinar hosted by 1to1 Media and Quaero, Forrester analyst David Frankland used the video as a metaphor to illustrate just how ineffective marketers today still are.  Most, he said, still “shoot at lighthouses” when they market to their customers and prospects.  And as the video clip so humorously communicated, that’s a pretty bad idea.  Now, no marketer is going to physically run aground, but we know the irreparable harm poor marketing can cause:  lost revenue, decline in customer satisfaction, brand damage, etc.

We've been talking about the answer for a while now...many years in fact.  The answer lies in the customer data or "intelligence," to be more specific. 

Customer intelligence, as defined by Forrester,  is the management and analysis of customer data from all sources used to drive marketing performance and business strategy.  Translation - customer intelligence should guide the decisions marketers make about who they target, the types of communications they send and the channels through which they send them.  I get it: It’s easy to say, but hard to do … especially because most companies are drowning in data.

But that's not to say it can't be done.  During the Webinar, Dave presented three case studies – ESPN (a Quaero client), Farmers Insurance and Fresh Direct. All three are using intelligence to evolve the customer experience, adapt to customer needs and maximize customer value. And all three appear to be doing it well.  So what do they have in common?  Well, here are a few of takeways from Dave's presentation coupled with some Quaero thinking:

  1. Turn data into intelligence.  ESPN created a fan value model that ranks its fans from high to low based on the value they deliver to ESPN.com.  The model includes variables such as time spent on the site and premium product revenue.  Using this intelligence, the marketing team now focuses on maximizing fan value, which leads me to point #2…
  2. Differentially invest.  Not all customers are created equal (Dave says, think balance sheet – assets and liabilities) and some could be costing you more than you think.  The presentation featured a great quote by Larry Selden from Columbia University: "The bottom 20% of customers can drain profits by at least 80%...while the top 20% can generate 150% of a company's profit."  Customer Lifetime Value (CLTV) is a great measure because it correlates directly to a company’s revenue and profits.  Companies like Farmers Insurance use CLTV to help them improve marketing, inform sales and drive better customer experiences.
  3. Laserlike focus on the customer.  Dave related a story about Fresh Direct, an online grocer that prides itself on delivering the freshest food to its customers.  Fresh Direct uses customer surveys to help them better understand their customers’ needs and ultimately drive business decisions.  Their unwavering commitment to listening, adapting and improving has helped the company not only change how people shop for groceries, but more importantly, increase the value of their customers.

I’ll share one more anecdote:  about a year ago, an office supply firm received a call from an irate customer.  The company had sent not one but two very expensive mailings targeting business-to-business buyers to the woman’s six-month old child.  Now the young girl was not in a position to spell office supplies, let alone buy them - $5 gift card or not.  And the mother felt violated, knowing that her child’s contact information ended up on some supplier’s list.  Ultimately the issue was resolved, but not without consequences:  I think twice before heading to this particular office supply store.  The company shot at a lighthouse and lost.

If you found this post intriguing, you can catch the replay of the Webinar, "Know Thy Customer: Using Customer Intelligence as a Strategic Weapon" by visiting 1to1Media.com.    If you attended the Webinar and want to share your thoughts or relate any lighthouse stories of your own, please feel free to comment away.

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