Sense And Respond Marketing

Ron Shevlin of database marketing powerhouse Epsilon thinks a new core competency requirement for marketers is the “ability move customers through the buying cycle with a sense-and-respond capability”.  This is something I often talk to people about, it’s really a subset of the “I have the data, now what do I do?” problem.  Marketers are more familiar with creating campaigns based on nameless, faceless GRP’s than the behavior of real people.  And that’s the problem. 

I think part of the problem is in segmentation, they simply don’t understand how powerful behavioral segmentation is, how different it is than using demographics – and they lack the ability to ask for / get this information in a format that drives action-oriented thinking.  The granularity of “people” as opposed to GRP’s throws them off.  With Sense And Respond Marketing, or what I would call Relationship Marketing, you use the Customer LifeCycle to influence messaging which is meaningful to people based on behavior, not demographics.  The behavior is the message, not the age, income, make of car, or whatever.  Using behavior makes so much more sense when you see an 80 year old on a Harley.

Here’s an example.  One thing that happens with interactivity is people tend to “gorge” themselves on something, get tired of it, and move on to the next experience (video games, Friendster).  So you have to work very hard to hold on to them.  At HSN, we used to listen very carefully to what customers said on the air and reviewed comment trends in customer service every single day.  One thing we started hearing was “I’ve only got 10 fingers” which is the customer saying “you are selling too much jewelry”.  At the same time, we were looking at the LifeCycle of best customers and found that most of them were fashion buyers who started buying in jewelry – regardless of how old they were or what their incomes were.

So we have customers telling us we sell too much jewelry, and we end up losing a lot of them because they get bored.  But at the same time, best customers are created when someone starts buying jewelry and moves into fashion.  We have a natural transition from new customer / jewelry to best customer / fashion that some customers found their way to and others did not.  Knowing this behavior exists and that it’s very profitable for HSN, can we influence it?  Can we get more people to make the jewelry to fashion transition with a marketing campaign of some kind?

Well, the first thing is timing.  When to drop the campaign?  You can’t drop it on a “date” to all customers, you have new customers coming on each day and they are going through a LifeCycle.  However, the data said if the customer did not start buying fashion by the 120th day of their LifeCycle, they would probably never buy fashion.  So somewhere in that 90 – 120th day after becoming a new customer, we need to hit them with a “buy fashion” message.

OK, so what is the message?  Well, we know from customer comments (and remote selling in general) that people are reluctant to buy fashion remotely because they are worried about fit.  So what would be the easiest fashion item to sell a remote customer?  How about something like a running suit, you know, Small-Med-Large-XLarge?

So we put together these special fashion shows geared to “no brainer fit” fashions and had them run at very specific times on the network that we could promote to the customer in advance.  We dropped a very simple piece that said, “We’d really like you to try our fashions, here is $10 off, here is when to watch” kind of thing.  And we dropped it somewhere in the 90 – 120 day window after the customer’s first purchase.  Understand, these pieces went out every week but they went to very specific people with specific behavior who were entering “the zone” of 90 – 120 days after first purchase of jewelry.

And we literally printed money from that point on with this program.  For every $1 in cost, we generated $25 in incremental (versus control) profit in the first year of the customer life, every day, day in and day out, as a higher percentage of new customers converted into long-term, highly profitable fashion buyers.

Was that a hard program to design?  Not to me, seems completely logical.  You have behavior, you know the customer, you have timing points, copy is simple and direct.  I think Ron probably had something a little more sophisticated in mind when he wrote Sense And Respond Marketing, but the basic concept is the same (and after all, we were dealing with mainframes and snail mail at HSN in 1994, so cut me some slack!).

So why is it again that people have this “I have the data, now what do I do” problem?  I suspect it’s because they may have the data, but it’s not in any kind of actionable report format that generates ideas.  GRP Marketers simply don’t know how to ask for the data / can’t get the data in a format that lends itself to creating effective campaigns.  And that’s a shame, because it’s pretty simple to have someone do it for you or you can do it yourself.

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4 thoughts on “Sense And Respond Marketing

  1. Well put, Jim. Your HSN example is a great example of the kind of capability more marketers need to develop.

    The only “problem” or “danger” with calling this “relationship marketing” is that that term means so many things to so many people (which is why I tried to give it a name that set it apart). But you’re right on — it IS all about having a dialogue and developing a relationship. It’s about LISTENING and processing.

    For better or worse, however, most of the marketers I talk to (who are mostly from large organizations) are stuck in the campaign mud. If something isn’t part of a “campaign”, it’s foreign to their way of thinking.

  2. Yes, isn’t it funny how over the years people twist and turn terms like “Relationship Marketing” and “Loyalty Program” into whatever suits their purpose? Some of the efforts called “Loyalty Program” now include simply collecting customer comments, which magically creates Loyalty, I guess.

    That said, your point is well taken and fighting the “naming convention” fight is probably not worth it. I believe Forrester is going with “LifeCycle Marketing” but I think “Sense and Respond” is just as good if not better because it sounds like something is actually getting done!

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