Non-Traditional Customer Acquisition At The MeritDirect Co-Op

On Friday at the Merit Direct Co-Op, I will give a presentation on Non-Traditional Customer Acquisition.

In traditional direct marketing, we rented or exchanged lists, with the goal being to identify new audiences that are receptive to our message. We paid an intermediary (Millard, MeritDirect, Abacus) a sum of money for the opportunity to push a message.

In traditional online marketing, we pay for clicks. We pay an intermediary (Google, Yahoo!, MSN) a sum of money for the opportunity to allow the customer to pull content from us.

Financially, the two models are nearly the same.

Paid Search
Clicks		10,000
Conversion Rate		1.5%
Buyers		150
AOV		$100.00
Demand		$15,000
Net Sales	80.0%	$12,000
Gross Margin	55.0%	$6,600
Less Ad Cost	$0.52	$5,200
Less Pick/Pack/Ship	11.5%	$1,380
Variable Profit		$20
% of Net Sales		0.2%
Ad to Sales Ratio		43.3%
Dollar per Click		$1.50
List Rental/Exchange
Households		10,000
Response Rate		1.5%
Buyers		150
AOV		$100.00
Demand		$15,000
Net Sales	80.0%	$12,000
Gross Margin	55.0%	$6,600
Less Ad Cost	$0.52	$5,200
Less Pick/Pack/Ship	11.5%	$1,380
Variable Profit		$20
% of Net Sales		0.2%
Ad to Sales Ratio		43.3%
Dollar Per Book		$1.50

These days, innumerable pundits tell us that both models are irrelevant in a social media world. Of course, the pundits cannot even identify what form of social media is relevant (2005 = Blogs, 2006 = Facebook, 2007 = Twitter, 2008 = Friendfeed & Plurk), they just tell us we're dodo birds headed for extinction. Still other pundits say that print-based marketing is harmful to the environment, demanding that consumers be in control of how they are marketed to (as a proxy for protecting the environment).

My talk will go in a different direction, not leaning toward social media pap, not focusing on traditional direct mail or pay-per-click marketing or multichannel approaches to success or putting the customer in charge.

My talk will focus on how we can derive intelligence from our online marketing activities, transforming that intelligence into the fuel needed to find new customers at almost zero cost.

Oh Oh, Multichannel Customers May Not Be So Great ... Or Plentiful?

Online, catalog and retail trade journals (as well as industry conference speakers, vendors, and assorted industry leaders) have been telling us for nearly a decade that we must be "multichannel" retailers, or risk extinction.

So the folks who chose to listen to this advice must be thrilled to learn that research from 1,090 survey respondents indicate that multichannel customers are not necessarily the most loyal or profitable customers. I found the article via the Shop.org Smartbrief, a free and interesting daily e-mail summarizing news in the online marketing world.

Wonderful!

And then Experian tells us that only 10% of customers are true multichannel customers.

Wonderful!

I've become Frustrated. Exasperated. Agitated. Irritated. Irked. Miffed. Why wasn't the research conducted prior to the series of decade-long lectures from industry leaders suggesting that we all "had to be multichannel"?

My Social Media Failures

You've probably observed this in your field of expertise.

• Individual executes a marketing strategy.
• Marketing strategy succeeds.
• Individual is lauded as a visionary.

What if the strategy succeeded because of luck, or fate, or timing? Is the person still a genius?

Since late 2004, I've started three different blogs, and one podcast series --- four social media experiments in total.

Only The MineThatData Blog gained traction. The other two blogs averaged between six and twelve visitors a day. The podcast series averaged twenty-five downloads per episode.

Am I a visionary, or is the law of large numbers working in my favor?

In one of my blogs, I employed every strategy I employed for this blog. I ended up with two folks linking to the blog after writing three hundred blog posts over two years. The target audience for that blog was much larger, and more rabid than this blog. And yet, the effort was a gigantic failure.

Social Media pundits are going to tell you what you should do. They're going to refer back to their successes, telling you that it worked for them, so it will work for you. There are thousands of bloggers who go down this path every day, filled with authority. They tried one blog, and it worked, so they are an expert.

The reality is that every activity has a probability of success. If you are willing to try, to fail, you'll come across the occasional success.

In my case, I have a 25% success rate, good enough to make a living, lousy enough to show that I'm human and that "this stuff doesn't always work." Be wary of those folks who tell you they have the formula for success --- they may not have tried enough strategies to fail.

Jim Fulton, Principal, Customer Metrics on "Geeks"

Jim Fulton was a long-time Lands' End guru, and is now one of the preeminent thought leaders in the field of customer understanding and Multichannel Forensics. Like me, he uses sophisticated programming code to derive consumer insights that most web analytics and business intelligence tools fail to identify.

Mr. Fulton also understands the importance of the foot soldier, the computer geek, the individual who harvests the insights that help increase bonus levels for the multichannel executive.

Though this article was written several years ago, it is still relevant today. Why not give "Thoughts on the Selection, Care, and Feeding of Direct Marketing Geeks" a try, a presentation Mr. Fulton once gave to the Seattle Direct Marketing Association.



Hillstrom's Multichannel Forensics and Hillstrom's Database Marketing are both available at For Better Books or Amazon.com.

Hillstrom's Multichannel Secrets is available at Lulu.com!

Stimulus Checks

Seems like the impact of the stimulus checks from the government is winding down.

Inquiries for projects took a dive right about the time that the stimulus checks went in the mail. Now, things have significantly picked up.

What impact did you see from the stimulus checks? Are you stripping out the impact of the stimulus checks from your 2009 forecasts, and if so, how?

Crutchfield Community

Crutchfield does an interesting job of blending together blog posts and forums in the Community Section of their website.

It is nice to be able to see how many folks viewed each blog post --- when you see a thousand or three thousand people viewing each post, you start to think that maybe folks find the content interesting.

Here's a link to the Crutchfield Community RSS Feed, if you're interested in subscribing.

This Is What I Want To See From The Web Analytics Community!

Amen!

http://www.kaushik.net/avinash/2008/07/tracking-offline-conversions-hope-seven-best-practices-bonus-tips.html