Monthly Archives: January 2008

Messaging for the Apathetic

Recall from the Messaging for Engagement post we generally have 3 states of customer in the database:

  • Engaged – highly positive on company, very willing to interact – Highest Potential Value
  • Apathetic – don’t really care one way or the other, will interact when prompted – Medium Potential Value
  • Detached – not really interested, don’t think they need product or service anymore – Lowest Potential Value

Combine this messaging approach with a classic behavioral analysis, (the longer it has been since someone purchased, clicked, opened, visited etc., the less likely they are to engage in that activity again) and you get different messaging for each group, what I call Kiss, Date, and Bribe.  Click image to enlarge if you want…

Kiss Date Bribe

Please note “Months Since Last Contact” means the customer showing interest / taking action and contacting you in some way (purchase, click) not the fact that you have “contacted” them by blasting out e-mails.  Behavioral analysis is about customer behavior, not yours.

We’ve already gone over an example of Kiss Messaging, so lets provide an example of Messaging for the Apathetic. 

Recall the tactical background with Apathetics:

Apathetic – Date Messaging: We’re not real clear where we stand with you, so we’re going to be exploratory, test different ideas and see where the relationship stands.  Perhaps we can get you to be Engaged again?  In terms of ROI, this group has the highest incremental potential.  Example: this is where loyalty programs derive the most payback.

The most consistently successful (meaning profitable) messaging for this group generally looks at what their past behavior is and tries to drive it just a bit higher with a carrot / stick combo. 

In commerce, if you were looking at a behavioral segment such as “No Purchase in 180 days” (month 6 on chart above), you find their average purchase price and then discount for purchasing over that average price threshold.  So, for example, if a segment (or individual customer, if you can go that far) has an average purchase price of $80, you do a promotion like $10 off any Purchase over $100.  This approach tends to preserve margin on the customer while driving new activity, thus setting up the customer to become re-Engaged on a longer-term basis. 

Why re-Engaged?  A new purchase moves them to the 1 month column in the chart above, so they have a much higher “natural” likelihood to purchase again.  They are now Engaged again, and their messaging should change to Kiss, if you want to really leverage their state.

The values I have chosen above are not a “formula”, you have to test and optimize the thresholds and discounts for your business.  For example, sometimes people don’t trade up to just over the threshold, they’ll respond to a $10 off purchase over $50 discount by generating an average purchase price of $125.  Now you’re talking some severe latitude on your margins and you can try for incremental response with a higher discount or try to drive margin with a higher threshold.

The trick with Apathetics is this: unlike the Engaged, they probably need some incentive to act on.  But unlike the Detatched, they still have some Potential Value you would like to unlock – you don’t want to just all out bribe them because you’ll lose some of that Value. 

After all, in an always-on sales environment like the web, some people are going to purchase anyway – without an incentive – no matter what segment they are in.  For this 180 day case (chart above) a healthy portion of the 7% are “buy anyway” kind of folks.  The more Recent the action, the more likely it is to repeat.  That’s why you give ’em a threshold – to ensure you don’t give away more margin in discounts than you are making from the rest of the promotion. 

Does this “threshold approach” depress response?  Sure.  But are you trying to drive response (gross demand) or profit?  Those of you whose success is judged by ROAS don’t need to answer; profit doesn’t matter in your world.  You’ve never used a control group.

If you were working on my business, I’d want you driving profit.

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Listen Up! (IVR Optimization)

Speaking of the role Marketing should play in Operations, here’s the first article I have ever seen in a Marketing context about optimizing a VRU / IVR.  This challenge is really very similar to optimizing a web site.  You have path, and traffic down branches of path.  You have bounce rates and exits.  You have the same “choices with correct context” issue that is the heart of designing good navigation and inline link text.  You have usability.

Fact is, a VRU / IVR is a technical interface to humans, just like a web site is.  And just like many web sites, it was probably built and programmed by some engineers without a lot of direction from Marketing or Customer Service.  There’s really no reason at all why the folks optimizing the web site should not also optimize the phone system too – especially if they do a good job with the web site!

I optimized my first VRU in 1991 at HSN.  This was very new technology back then, and our customers were kind of shocked by it.  Nobody used it.  When I finally found an engineer who could print out a “path map” and I went through all the branches, I understood why nobody used it – confusing choices, unclear language.  Sound familiar?  Only 2% of customer orders were being processed through the VRU.  And besides, customers like talking to live reps.

A real Marketing through Operations problem.

First we worked with the engineers to redo the branching and change the language so the VRU was smooth and easy to use.  We pushed high frequency paths to the top of the stucture and sunk the low frequency stuff, eliminating steps for most transactions.  Sound familar?  I also felt the close on the transaction was ambiguous, so we built in a clear “confirmation” the order had been placed correctly.  Sound familiar?  How long did it take online carts to include a confirmation e-mail?

But then the Marketing problem.  Lots of people had used the VRU and thought it sucked.  How do we get them to give the new unit a chance?  How do we get them to actually like using it?

Next, we gave the VRU more personality.  We named it Tootie and had it toot a horn at the end of the order placing process – just like the hosts did (back then) on the live TV show.  An “audio confirmation” if you will.  So now the VRU does something the live reps can’t do – give customers a “Toot”.  That helps address the “liking to use” issue.

But we still have the problem of trial – how do we get people to try the revamped interface out?

Fashion programming is what the core customer eventually migrated to; we knew this from previous hard analysis (not surveys or gut feel).  If we could get these high order frequency customers to use the VRU, we’d get a significant jump in usage.  Fashion shows were very high velocity and because sizes and colors are frequently involved, certain SKU’s can sell out quickly.  So we had the hosts in those shows talk on air about how if customers used the VRU they would beat out everybody else ordering through a live rep.

In other words, “If you really want this product, you better use Tootie” – the “persona” we created for the VRU.  Hard customer benefit.

Within a very short time, we had 20% of customer orders coming through the VRU, on it’s way to 80%.  Saved the company an absolute boatload of money – and made customers happy in the process!

How did we know they were happy?  Hard analysis (% best customers using VRU, % of their orders placed by VRU) and surveys of course, but we had a better indicator than these metrics – the number of Christmas Cards Tootie received each year.

That’s right, customers sent holiday greetings to the VRU.

How many greeting cards did your VRU / IVR receive last year?

Seriously though – what other customer-facing, technology-driven business processes can you optimize?  You already know how to do this from the web site experience.  Let’s create a list.

And here’s another link to that article – Listen Up!

 

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