Direct Mail’s Short-term Obstacles Could provide Long-term Benefit to Marketers

Direct Mail’s Short-term Obstacles Could provide Long-term Benefit to Marketers

Originally published by AdWeek360 in September 2021.

In March 2020, when the ad industry slowed to a crawl, there were many questions about what the future held. The uncertainty of the pandemic spilled into everything, and there were questions swirling about when advertising would come back, and what it would look like. More than a year later, recovery is underway. But the changes to the ad and marketing world weren’t uniform, and some channels have felt the pain worse than others.

Direct mail in particular has felt the pull of the pandemic in various ways. TV ran into production issues, but there’s airtime to hold those ads once they are shot and edited. Direct mail marketing has fallen victim to the supply chain issues gripping countless industries, making it hard to find the very material that mailers are printed on. Those lucky enough to get their campaigns into print may then find it hard to maintain stock of the items advertised within those mailers and catalogs.

These issues may only seem temporary, but the more likely outcome is that it will require direct marketers to turn to new solutions to maintain their long-term marketing goals. Direct mail has been trending toward a more modern era for a long time, and marketers should use this current hurdle as the impetus to adopt more careful planning and begin to experiment with how they reach their audience.

Lack of paper? Get creative

The biggest short-term challenge for direct mail is the supply chain. Printers are going out of business because they can’t meet clients’ needs. Rising prices on Facebook and Google had pushed many direct marketers back to direct mail, but the inability to print catalogs is throwing a wrench in those plans.

While mailings aren’t possible as planned, that doesn’t mean they should be scrapped altogether. Postcards and mini-mailers remain in supply and are a viable alternative to full-size catalogs for the second half of the year. While postcards may be the most viable, efficient way to approach direct mail given the supply-chain issues and postage raises, many marketers may not have a deep experience with them. Quick tests will be critical to get a sense of response and engagement rates, and marketers may find that they need to more tightly target their audience and optimize their mailing lists to drive better results with postcards.

This is even more important as we get closer to the holiday season. There are major concerns that the paper shortage will continue into the late part of the year. Marketers have two options: mail earlier, or plan earlier.

Mailing earlier ensures the mailer is delivered as planned, but runs the risk of getting there before consumers are ready to spend. But planning in advance allows marketers to build in flexibility, in the event that there are paper issues, or even supply issues for the products they plan to offer.

Focus on addressable audience

Direct mail has slowly been shifting away from a volume-based strategy toward one more focused on audience granularity, and the supply chain issues should finally push marketers toward audience once and for all. Rather than blanketing consumers with mailers, it’s more important than ever to hit prospects that are most likely to be interested in a brand or offer.

This is critical for many of the industries that are now leaning heavily into direct mail right now. Insurance and Medicare are preparing for big Q3 enrollment periods, so this is primed mailing season. These two industries are likely looking at a growing audience as well, as baby boomers reach Medicare age. Marketers have an opportunity to go even deeper into their audience segmentation, in order to not only find age-appropriate prospects, but those who are likely to respond to offers.

Meanwhile, there are brands that rode the pandemic to direct mail success that will need to adjust their audience strategies. Food delivery brands are now going to see performance declines as consumers return to pre-pandemic dining habits. Where they may have previously gone really wide with their campaigns, they can now focus on smaller segments that are likely to keep taking advantage. Meanwhile, other verticals, like children’s content and crafting, seem to have caught on permanently. These brands can continue to use the insights gained during the pandemic to expand their audience pool and investment.

If necessary, look beyond mail

Direct mail is effective, but it’s not the only direct marketing option. For marketers whose plans have been altered by supply chain issues, Connected TV and email represent great opportunities for hitting some of the same audience profiles, in a granular, measurable fashion. DTC marketers are already investing more in these two channels, and other performance-based marketers should experiment as well. They may find that they’ve found a new optimal channel for their messages, even if and when the paper supply returns.

Direct mail marketing is the midst of recovery, and marketers will undoubtedly continue to see performance within the channel. However, the lingering effects of the pandemic are creating the kinds of issues that require marketers to think creatively. By maintaining flexibility and spending more time focusing on audience, mail-heavy brands may find that they develop a new media mix that translates well into the future as well.

ABOUT THE AUTHOR

Rene Hamill, VP, Client Engagement

With over 20 years of marketing and service experience, Rene inspires her team’s consultative approach to data strategy and custom solutions for every client’s unique needs. Her deep data and marketing acumen stem from positions with Reader’s Digest and Direct Media, where she delivered “out-of-the-box” strategies that increased the marketing performance and profitability of her subscription commerce clients.

 

DTC’s Challenge: Identifying Long-term Customers Amid an Unexpected Boom

DTC’s Challenge: Identifying Long-term Customers Amid an Unexpected Boom

The pandemic has brought on a great deal of uncertainty for nearly every business, especially those with direct-to-consumer business models. Early expectations were that the pandemic would crush DTC businesses’ growth. However, Alliant’s observations of clients and DataHub Members who operate DTC businesses show that the actual results have been mixed. Some brands have experienced hard times and others are booming, particularly subscription food, and children’s markets. 

Are these new customers going to become loyal long-term, or are they buying now out of convenience or necessity?

These businesses are seeing increased order volume and frequency from existing customers, as well as swelling numbers of new customers who signed on in reaction to stay-at-home orders. These brands face unique challenges, including dealing with unexpected surges in business and how to approach promotion during this period. However, the most important long-term question brands in this situation need to consider is the mind-set of their new customers: Are they long-term fans or simply filling a short-term need?

Dealing with an unexpected boom

Many food brands, including meal kits, grocery delivery, and other replenishables are struggling to keep up with demand as new customers came onboard at a rate faster than anticipated — even big-name brands like Amazon Fresh are forced to add new customers to wait lists. To better focus on demand, several of these advertisers have pulled back on acquisition campaigns, especially in the cost-heavy direct mail category, to increase focus on meeting the (happy) demands of organic growth.

Assessing lifetime value

While these brands race to fulfill new orders, the question remains: Are these new customers going to become loyal long-term, or are they buying now out of convenience or necessity? There is a distinct possibility that this surge will recede now that stay-at-home orders are lifted. DTC brands would be naïve to think that all of their new customers will remain frequent shoppers into Q3 and Q4.

While brands are certain to lose portions of their new subscribers, careful cultivation might keep many more onboard. Developing a winning strategy means assessing the propensities and the past behaviors of new customers, and their potential for higher lifetime value. Using the cooperative to conduct match-back analyses to assess new customers based on criteria important to your business can inform a more complete strategy for managing your new consumers.

Armed with a sense of which current customers segments are more likely to stay on board, you can tailor future offers and promotions to these customers. For those more likely to leave, discounts or special product offers can entice them to stay. You may also decide in advance not to devote heavy resources to stopping churn.

Waiting and appraising

The tricky thing for DTC brands – both in acquiring new customers and in dealing with uncertainty – is that there is no clear, definitive path forward right now. Many brands have adjusted their strategy several times over the past few months, and as the country re-opens, and new challenges arise, strategies will be adjusted again.

No matter the situation, DTC brands should not act hastily. While it makes sense for some to pull budget when they are unable to meet demand, others shouldn’t be too quick to stop investing. Many brands may find that the current environment requires them to pull back on certain channels but reinvest in others. This might mean focusing on social media or TV, rather than direct mail. Alliant has observed these strategies reflected in DataHub statistics, with more orders from March and April originating from internet, radio, and TV sources, and orders from direct mail down.

More than anything, every brand needs to consider what their business will look like on the other side of the crisis. Even those benefiting from the situation need to take caution in mapping out the second half of the year and should continue to analyze customer behavior before and during the pandemic, while preparing a strategy for whatever “normal” is going to be. Whether you are looking back to analyze new customers, or forward for ways to reignite growth, the Alliant team is here to support your shifting strategic needs.

ABOUT THE AUTHOR

Rene Hamill, VP of Client Engagement

With over 20 years of marketing and service experience, Rene inspires her team’s consultative approach to data strategy and custom solutions for every client’s unique needs. Her deep data and marketing acumen stem from positions with Reader’s Digest and Direct Media, where she delivered “out-of-the-box” strategies that increased the marketing performance and profitability of her subscription commerce clients.
What to Expect When Optimizing for Lifetime Value

What to Expect When Optimizing for Lifetime Value

Lifetime value is an important but sometimes mysterious metric that many marketers strive to measure and meet. The diversity of DataHub Members has provided Alliant’s team with a wide range of use cases regarding the do’s and don’ts of LTV optimization. We offer this short “bootcamp” to help you prime the pump for your own efforts.

“Go back to the basics and consider what is at the core of acquiring customers with high Lifetime Value”

Managing marketing operations to focus on acquiring customers with optimal LTV takes patience, persistence, and dedication. It impacts strategy in multiple areas, including creative, media and especially, data and analytics. Along the way, Alliant’s experience has resulted in a few basic tenets you can use to focus — or refocus — your strategy, and ultimately build a high-LTV customer base.

LTV Basic #1

Understand your costs, your profit, and your goals.

Lifetime value is the sum of many behaviors observed throughout a customer’s lifecycle. The first step is to define what LTV means to you — and what metrics you will use to measure it.

Begin by reviewing how much customers cost to acquire. Some channels are more expensive than others, and some customers take multiple efforts. Here, and with all customer lifecycle stages, time is money, so assign a meaningful timeline to your definition of LTV.

After acquisition, look at indicators like number of purchases, shipments, product mix, or total dollar amount spent – all are worthwhile measures of value. Quantify the costs of fulfillment, product, returns and other common customer behaviors— each is tied to a myriad of costs, and to truly define what lifetime value is to your business, you must be aware of all the little things that add or subtract from value.

All of this information will let you calculate and understand your historical LTV based on actual data from the criteria above.

LTV Basic #2

Make sure you have the right data to manage LTV.

Once you have identified the relevant costs, they need to be correlated to time-stamped consumer behaviors captured in your CRM. These performance-driving behaviors include: orders, payments, selection of deferred payment options, returns, canceled orders and declined credit cards. If you’re running a subscription business, be sure to flag other relevant behaviors, such as pauses and re-subscribes, in addition to cancels.

Clean data is the foundation of effective LTV management. Capturing these metrics is imperative to helping you understand the lifecycle performance of each customer. Monitoring performance can help you identify and respond to changes in customer behavior over time. You will easily be able to identify the “intro-only” customers who cancel after a discounted introduction offer compared to those who are repeat or reactivated customers.

Capturing data at this level will become even more valuable when you begin working a data scientist. He or she will be able to help you identify one or more dependent variables that define lifetime value. For example your historical LTV may have identified one simple behavior as the key indicator for lifetime value, for instance, number of shipments. Therefore, you’ll need to collect and aggregate shipment data in order to know when a customer has hit that mark.

LTV Basic #3

A solid behavioral model is a joy to behold.

The final step to creating your LTV toolkit is to create a behavioral model that will drive your marketing and customer management decisions in the future. Models let you project the future value of new prospects — or new-to-file customers — over time. Armed with this insight you can make better decisions about when to invest marketing in a given segment of consumers, or to pass them by for more profitable prospects.

It is beyond the scope of this article to dive deep into the available model types, but given the right data you should have many options. Options include simple response models or a more complex multi-behavioral model that can optimize for consumers likely to exhibit several behaviors, like three shipments and payments. This type of model can also take into account other behaviors such as pause or returns. Your data scientist can help you consider your modeling strategy, the channels you should be modeling, and how to apply a model at the promotion stage or on receiving an order. 

LTV Basic #4

Play the long game and expect other metrics to take a short-term hit.

Once you build a model solution, you should test a small audience and be prepared to invest the appropriate timeline you established in your historical LTV to prove the predictive accuracy of the model. If you identified that LTV takes eight months with four shipments, grab some popcorn and watch the test segment with rapt attention. As you observe this group, you may notice that other metrics, perhaps your former key drivers of success, may suffer. For instance, response rates may be lower since a model tuned for LTV may exclude the money losing “intro-only” consumers.

If short-term metrics begin to decline, a natural reaction is to make decisions that interfere with the test. Stick to your guns and let the campaign run its course, as abandoning it could undermine your analytic investment. Remember, the model was designed to avoid responsive, but low-spending buyers. Remain patient and lean in on the upfront work that was done to manage expectations of internal stakeholders.

Optimizing for lifetime value is truly a milestone achievement for a marketer, requiring preparation, a workshop of experts, and time. Set expectations and goals within your organization early, invest in establishing what LTV means to you, gather the right data, commit to testing a predictive model, and develop your strategy around the facts.

If you haven’t yet talked to your Account Executive about building a predictive LTV solution for your business, 2020 might be your year. To learn more about using predictive modeling and data to optimize for lifetime value, contact the data scientists at Alliant!

ABOUT THE AUTHOR

Rene Hamill, VP of Client Engagement

With over 20 years of marketing and service experience, Rene inspires her team’s consultative approach to data strategy and custom solutions for every client’s unique needs. Her deep data and marketing acumen stem from positions with Reader’s Digest and Direct Media, where she delivered “out-of-the-box” strategies that increased the marketing performance and profitability of her subscription commerce clients.
Member Spotlight: Kiplinger

Member Spotlight: Kiplinger

As told to Rene Hamill

Kiplinger is a nearly 100-year-old publishing company based in Washington D.C. that provides business forecasts and personal finance advice in print and online. Kiplinger has been an Alliant partner and DataHub Member for more than 12 years. In early 2019 Kiplinger was acquired by London-based Dennis Publishing Ltd., which also owns the New York based magazine and fellow Alliant DataHub Member, The Week.  We spoke with Kiplinger CEO, Denise Elliot, about the merger and how it has impacted strategy. Denise has been with Kiplinger for more than 14 years and has 20 years of experience working for subscription-based information providers.

Rene Hamill: Kiplinger and The Week recently went through a merger with Dennis Publishing. Can you explain Kiplinger’s business strategy prior to the merger and how it related to your partnership with Alliant?

Denise Elliot: Our focus has always been on our subscribers and providing them with valuable business and financial advice and guidance. In fact, three of our five titles rely solely on subscriber revenue. We maximize subscriber revenue through a robust cross-sell business, so each new subscriber we acquire represents the potential for two, three or more subscriptions. Alliant has been an excellent partner in helping us target the most qualified prospects for the Kiplinger magazine and newsletters.

RH: Since the merger, how has Kiplinger’s strategy changed and how are you now partnering with The Week? Are you able to leverage each other’s customer files?

DE: Kiplinger and The Week are more focused than ever on our subscribers. We’ve begun using and modeling each other’s files, exchanging marketing strategies, and helping each other sell advertising. We have found it easy to cooperate and collaborate, as we both acquire subscribers the same way.

RH: How has Alliant been able to assist with the transition?

DE: Kiplinger acquired the DTP portion of the active subscriber file from Money magazine when it was shuttered. Alliant is helping us onboard those names, scoring and ranking them based on how closely they resemble subscribers to both Kiplinger and The Week. Alliant is also helping us mine and monetize the Money file, which is particularly valuable at a time when we’re transitioning away from agent-sourced subscribers in favor of DTP sources. And finally, Alliant built custom prospect and optimization models for Kiplinger to further leverage the Money file.

RH: Looking ahead to 2020, what strategies will Kiplinger pursue related to product, channel and cross promotion?

DE: Kiplinger does not plan to get out of direct mail any time soon. It’s still profitable for us. We also rely on digital channels, and we’re looking to ramp up marketing efforts on social media, specifically targeting the Facebook audience. We’re always on the lookout for new channels and marketing techniques. Kiplinger and The Week are advertising in each other’s publications, as well.

RH: Great! I know the team and I are looking forward to testing Facebook Audiences with you in 2020 and supporting your growth strategies. Thank you for taking the time.

Interested in testing a new channel in 2020 like Kiplinger? Or have a partner company you would like to bring into the fold to help maximize your audiences? Reach out today!

ABOUT THE AUTHOR

Rene Hamill, VP of Client Engagement

With over 20 years of marketing and service experience, Rene inspires her team’s consultative approach to data strategy and custom solutions for every client’s unique needs. Her deep data and marketing acumen stem from positions with Reader’s Digest and Direct Media, where she delivered “out-of-the-box” strategies that increased the marketing performance and profitability of her subscription commerce clients.
Proven Data Mining Techniques to Increase your Acquisition Universe

Proven Data Mining Techniques to Increase your Acquisition Universe

Whenever Alliant holds strategic reviews with DataHub Members, one comment seems to come up again and again: “Finding new or additional sources of unique and qualified names for acquisition efforts is one of our key marketing challenges”.

Given the structural and compliance changes in the audience ecosystem, this is likely to remain a persistent dilemma — especially for marketers that rely on direct mail as a cornerstone of their acquisition efforts. Luckily, for most Alliant DataHub Members, there’s a readily-available resource.

Your Most Under-Leveraged Marketing Asset

DataHub Members rely on Alliant custom models to generate qualified audiences, or optimize campaign files by suppressing low-performing prospects. What many Members don’t realize is that those same performance models are an under-leveraged resource that  can be used to deep-mine internal and external sources — making them more profitable than ever.

Think of your Alliant performance model as a secret acquisition weapon

Think of your Alliant performance model as a secret acquisition weapon that can be redeployed to find incremental, highly-qualified names in critical marketing assets like:

  • Continuation sources: Expand segment selections in already high-performing audiences
  • Cooperatives: Mine for productive pockets in lower score groups and coop fails
  • Aggregated prospect sources: Find productive pockets in compiled databases
  • Marginal test files: Revive audiences from borderline tests or fatigued audiences
  • House-files: Mine older segments of expired or inactive customers
  • List level models: Mine for productive pockets in lower score groups

Audience Mining Made Easy

Audience mining is a straightforward process. Essentially, it means using your existing Alliant performance model to re-score marginally productive segments. Your Alliant model lets you take a second look at these borderline segments — and cherry-pick the top performers for your final campaign.

Audience Mining delivers a larger audience to select from and the chance to select only who will be most profitable.

There are different ways to leverage Audience Mining in your campaign planning. Some prefer list-level scoring, others like to score everything at once and assemble the final campaign based on the optimization results.

Either way, added scoring costs are more than offset by the increased profitability of the campaign. And with Alliant’s high-performance systems turn-around time is never an issue.

Audience mining is an extremely effective strategy for increasing campaign volume — and net profit. If you aren’t already using this solution, be sure to invest a bit of time with your Alliant Account Executive to plan a test strategy — there’s nothing more satisfying than finding more profitable names in familiar sources! 

Take a Deeper Dive — Look for more on effective Audience Mining strategies in the next InsightHub

ABOUT THE AUTHOR

Rene Hamill, VP Client Engagement

With over 20 years of marketing and service experience, Rene inspires her team’s consultative approach to data strategy and custom solutions for every client’s unique needs. Her deep data and marketing acumen stem from positions with Reader’s Digest and Direct Media, where she delivered “out-of-the-box” strategies that increased the marketing performance and profitability of her subscription commerce clients.