Marketing Productivity Blog

Just wanted to add a quick piece about the results of Optimizing the Bands (see Band Model) - this is the Marketing Productivity Blog after all!  Thanks Moe for the reminder. 

As we Optimized, there were changes in budget allocation by Band, and as a result there was an increase in Net Customer Value - the goal of the Optimization program in the first place.  For those of you not following the whole story, the budget remained constant, we simply allocated it to the highest and best use through testing.

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In the Band 5 Optimization for HSN, we looked for high ROMI special situations in the database.  This is really classic database marketing stuff, you’re looking for segments, and you’re looking for ways to Optimize those segments.  You could spend the rest of a career doing this kind of thing; there are always new segments like FIPS being revealed if you have an active analytical staff.

There were other programs in Band 5 based primarily on product-related transition phases in the LifeCycle; I won’t go into these here.  If you are interested in these ideas, I wrote one detailed example, which combines Customer Experience Management / Band 3 - Customer Comment Analysis / Math / Product / Marketing right here.

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Optimizing Individual Communications

Where the Band 4 Optimization optimizes general communications like newsletters, the Band 5 Optimization is all about hyper-targeted communications to individuals.  We’re talking mostly about special circumstance stuff here, more exotic ideas that may actually fall outside what you might traditionally think of as “Marketing”. 

If Band 4 is the “Air Cover“, Band 5 is Special Ops (see Band Model).

In Band 5, you basically have algorithms of various kinds that are ”sniffing” the databases looking for special situations that have exceedingly high ROMI.  Often, these ideas deal in one way or another with high value customers that appear to be dis-Engaging; many of these scenarios related to Marketing, Service, or Product in one way or another.

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In the Band 3 Optimization, we’re concerned about the Interface, the moment of truth when people who have Awareness, Interest, and Desire generated in Bands 1 and 2 are ready to take Action.  If we are successful at Optimizing the Interface, people take Action and become Customers, entering Band 4 of the model.

At HSN, we looked at customer communication this way: as soon as a customer makes their first purchase, they begin the defection (dis-Engagement) process.  I’ve referred to this idea before as “customers naturally fall down through the bands“.  The approach assumes every customer interaction we have after the first purchase directly affects how long this new customer will remain a customer.

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After the lessons we learned in the Band 1 and 2 Optimizations (see Band diagram) for HSN, we were able to reallocate that budget to invest in Band 3 - Optimizing the Interface.  We realized during the previous Optimizations we were already getting a tremendous amount of traffic through channel surfer / clickers, but this traffic was not “converting”.  In other words, we really needed to Optimize the “Landing Page” for this existing audience - the TV show itself.

Don’t suppose the above scenario sounds at all familiar to the web analytics folks out there - you know, “more traffic, any traffic” is the answer?  Oops, maybe not, what about higher conversion?

I won’t bother providing the Band 3 example for the web; you all know what Optimizing Landing pages / web sites is about, or can certainly find that info elsewhere.  However, you might find the Optimization of a TV shopping channel interesting…

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Now that we’ve had some discussion on the ideas behind these charts, let’s dig deeper into the Marketing Bands chart and review details at each level (click for a larger image in a new window):

What we have here is a chart of the optimized interactive Marketing Bands system we developed at HSN, with an overlay of comparable online Tactics in red (Band numbers in Blue).

After nearly a decade of testing, we arrived at the place where each dollar of marketing spend - at each level - yielded the highest profitability to the company.  Many of the examples here pertain directly to web marketing, and I promise I’ll be specific on that.

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So, we had some good ”translation” discussions on the HSN Marketing process document, and the idea that there are a couple of ways to look at “Segments”. 

It’s my belief that if you start with Communication Segments (an idea we finally arrived at with the HSN Optimization in 1993) and then move to Visitor or Customer Segments, you will end up with a clearer, more actionable picture in the end. 

If each Band has a single Objective, and you Optimize to this single Objective, you will end up Optimizing the entire system because Visitors / Customers naturally flow down through the Bands as they pass through the LifeCycle.

There’s really no concrete benefit, on either side, to send the same message to all the folks in these different Bands.  That approach is inefficient at the least and irritating to the customer at the most!

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Not sure if all the web analytics folks out there will appreciate this post, but I’m pretty sure at least some of you are interested in how all the things we talk about in the Web Analytics / Database Marketing world fit into the larger world of Marketing.  So following on a question from Judah on depth of segmentation, and a post you should read from Gary on joining behavioral and demo / psycho segments, I thought I would offer this example.

One of the challenges people seem to have with behavioral segmentation is finding a way to organize it in their mind.  It just seems too overwhelming to think of Marketing to individuals at the “right time” based on behavior as opposed to some “calendar” idea where you communicate to everybody at once. 

If you want to create a “structure” or “process” to hang behavioral communications on, try this one.

Below is a chart I created in 1993 to explain what Marketing looked like at HSN (you can click for a larger image in a new window):

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