Direct marketing and channel communication
So why is a pointy-headed, number crunching ‘direct guy’ talking about channel planning in the one-to-one section of Marketing?
Well, the first thing to say is that I’ve spent over 17 years in the marketing communications industry and have worked in advertising, direct marketing, digital/interactive and integrated agencies so I feel I know a little more about communications than just ‘shit that folds’ as DM is occasionally referred to. Secondly, channel planning is just as relevant to one-to-one as it is to any other discipline within the communications industry. Hopefully you’ll agree, but, if you don’t, please be open minded and spare 10 minutes to hear my argument.
First let’s ask ourselves what business we are in. Whether we make ads, answer phones, create or deliver content offline, online, above the line, below the line, through the line, are focused on the bottom line or top line or the hidden line, or love to spend time putting things on the line(!) fundamentally what we do – or should be doing – are three things:
1. we should be understanding brands and products
2. we should be understanding consumers, either existing customers or prospects, whether they are businesses or individuals, and
3. we should be developing an ongoing dialogue between the brands/products and consumers through the most appropriate media channels to deliver profit to the brand and loyalty from the consumer.
If we focus for a moment on the need to build an ongoing dialogue between brands/products and consumers through the most efficient communication media, then there are a few questions that need to be asked before we can start delivering the communications. We need to be specific about our objectives:
• Who are we, what do we represent and where do we want to go? (our brand)
• Who specifically should we be talking to? (our target)
• How should we be talking to our target? (our channel)
• When should we be talking to them? (our timing)
• What should we be saying? (our message)
• How much have we got to spend? (our investment)
• What results are we forecasting based upon our investment? (our return)
In my mind all these questions are critical to channel planning. We have to answer all these before we can contemplate working out what is the most appropriate channel or channels to build the ongoing dialogue.
So is channel planning just about mainstream media planning? Or is it about targeting in the one-to-one language? Is it just a new hype that enables everyone to do what they’ve always done but charge clients more? Or is it more strategic? It has to be, because it focuses on the entire relationship between the brands and the consumers, it measures, it evaluates and then the process starts all over again. It delivers tangible results that increase the value of customers, the amount of profits to businesses and the value of their brands.
Now’s probably the time to also throw into the mix the situation whereby the metrics of different media channels are measured in different ways. Mainstream media metrics are focused on reaching as many people as possible for the least amount of cost to deliver the right results (i.e. cost per reach) yet the one-to-one metrics are focused on reaching the least amount of people for the least cost to deliver the right results (i.e. cost per conversion). Both are right, but both are also wrong – through mainstream media there is a great potential for wastage. For example when communicating to 18- to 25-year-olds who represent 12 percent of the Australian population you’re potentially wasting more than 50 percent of your spend through TV, but the problem is you don’t know which 50 percent. Conversely, getting hold of the right data, ensuring compliance with privacy regulations etc. all takes time and add to the high cost of communicating with individuals on a one-to-one basis.
Here is a very simple example of how the different media channels can deliver different outcomes:
You’ll be pleased to hear that I do think the ‘holy grail’ is out there. It’s simply about finding the right combination of channels between traditional mainstream and one-to-one or – if you prefer the overused term – it’s about integrated thinking. But, please note, integrated thinking isn’t simply about focusing on generating a great creative idea, which can then be translated across all media channels. Starting with the big 30-second TVC then using the imagery and talent for the press and magazine ads… then taking these ads, folding them, applying some choice origami tricks to produce the direct mail piece… then taking some of the headlines and using them for the online banner ads… then unravelling all of the above to create the landing page, the pop-up, the pop-under, the mini-site, the micro-site and anything else specifically relevant to the campaign deliverables.
So what really matters? It’s all about reaching the consumers who count, rather than counting the consumers you reach. By analysing customer data, most brands will discover that not all consumers are created equal. The success of the brand is down to fewer customers delivering a disproportionately high amount of revenue or profit. Then there will be another group who deliver an average amount of revenue or profit followed by the largest group delivering a much smaller amount of profit.
Having put forward the hypothesis, what can companies do about this and how can they ensure they are maximising the value of customers through the continued dialogue? Just as importantly, how can they acquire more customers that fit into the high value category?
Who are our consumers?
Through channel planning tools available we can begin to segment our customers and prospects to determine their value (their current share of wallet) to the organisation and also their potential value to the organisation (their total size of wallet based upon their total spend in the category).
What are our objectives?
Once we have managed to segment customers and prospects by potential value and current value we can determine key objectives for each of the segments;
1. These consumers have a high spend in the category and also a high spend on our brand and therefore they are of high value to us, so retention is key.
2. These consumers have a high spend in the category, but a low spend on our brand and therefore we have the opportunity to acquire more of their business.
3. These consumers have a relatively low spend in the category, but a large proportion with us. In this segment we need to develop ways to expand their spend in the category, but maintain the share too.
What do we want our consumers to do?
Having determined the objective we should also begin to consider what is the desired response. Again without wishing to over complicate things, we want to try to get people to think about the brand (awareness) and ultimately do something about the brand as a result of the communication. It isn’t simply about thinking or feeling, we have to create action. Time for another matrix to categorise some options:
What channel is the most appropriate?
Having overlaid the desired response into our segmentation model things begin to get extremely exciting. We now know what our specific objectives are, we know how we want people to respond and we can begin to determine budgets and tangible financial outcomes. Here’s a fairly simply dashboard that’s a tool to help forecast, measure and evaluate the financials.
With the budgeting all under control we can then go back to our segmentation model, review the situation and begin to determine communication strategies and tactics to deliver our objectives, for the most appropriate segments that we wish to focus on.
We can begin to determine the most appropriate media channels that are most relevant. At this point we need to be absolutely mindful of the fact that our investment must deliver our return and results. The more effectively we can measure and evaluate, the more likely this will lead to ongoing improvement in everything we do, which can ultimately have an exponential effect on the results.
In addition, the media channel will have a significant effect on the creative message we are delivering. Different channels will have an impact on the way we communicate, the specific message being delivered, the timings of the communication and also the opportunity for consumers to respond.
Channel planning should not just simply focus on the media channel to deliver the communication. It has to be more strategic and take into account far more information and insights to really make a tangible difference to the results. It isn’t just about the channel as a mechanic to deliver the message, it is far more complex. It has to be about the brand, the target, the channel, the timing, the message, the investment and the return. It must be a continual journey that encourages more action from consumers that, in return, deliver greater results, which add value to businesses, their brands and their profits.
Thanks for spending the time to read my argument. I’d be keen to hear what you think. Please feel free to email me with comments to email@example.com.