Why Retailers are Embracing New School Marketing

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With marketing activities becoming increasingly online based, what are the new power channels of marketing? Simon O’Day, Founder and Director, EservicesResponsys, discusses how to transition smoothly from old school marketing to new school marketing.

It may sound old school to use the expression, but old school marketing is fading.

Consumers have changed. They fast forward through TV commercials. They’ve put down the newspaper. The old power channels, TV, radio and print, which deliver one-way communication, while still powerful, are decreasing in their relevance and effectiveness.

Today, consumers have more options. They can choose which marketing messages they receive, when, where, and from whom. They expect, even demand, interactive communication.

The new power channels are the consumers’ channels — email, mobile, social and the web.

Leading retailers who understand this change are now carefully moving digital interactivity toward the centre of their marketing strategies. They are automating and coordinating their activities to engage their consumers throughout the customer lifecycle, and driving real-time interactions with consumers to drive them to the desired action – a sale. And the subsequent sale.

We call these companies New School Marketers.

New School Marketing increases the number of potential contacts between brands and customers. The increased volume of communications may at first seem like increased workload, but the right solution allows marketers to automate large portions of their customer touches.

Retailers engaged in New School Marketing are benefitting from a significant increase in ROI and increased revenue per customer. By engaging directly with their customers interactively, the efficiency of their marketing programs has increased significantly, in some cases by over 1000%.

Consider the traditional marketing model. A customer acquisition program using the old power channels typically generates a 1-3% response rate. These customers make their purchase and, while hopefully some goodwill remains, they are forgotten and the process begins again.

Now consider the new school model. Begin with the same acquisition program, but in the purchase process capture permission from the customer to stay in touch. Even better, get permission for multiple channels (email, mobile, social) and get an understanding of their preferences and interests.

All of sudden you now have access to that customer at any time. No need to run expensive tv ad campaigns. Just send them an email, text or tweet at the right time, with the right message. At a tiny fraction of the cost.

The link between New School and better returns

Going new school involves changes, but it doesn’t mean ditching everything and starting again. In fact, one of the principles of new school marketing is to have a plan, but always test the assumptions in that plan and to evolve in iterations.

Each step along the path to new school marketing delivers a step change in ROI for relatively minor additions or amendments to the program. No marketer should feel that because they can’t do it all, there is no point doing anything.

The diagram below illustrates the benefits each level of progression can deliver.

How to go New School

In the never-ending search for efficiency, email was the first new power channel to emerge. Highly affordable, highly targetable, email delivered high performance at low cost. It is little surprise there are very few retailers now not using email marketing in one form or another.

However retail marketers’ use of these new power channels vary in the level of sophistication. Typically marketers start by doing broadcast campaigns which are unsophisticated and untargeted, but a great starting point.

There are endless ways to move towards new school marketing, and each company will need to evaluate its own path taking into account the available resources to implement the change, the most relevant channels for its customers and the relevant lifecycle.

However, these steps are a handy guide:

Step 1: Capture permission.

Having permission to communicate directly with customers is the centrepiece of New School Marketing. Retailers around the world are allocating marketing dollars to permission acquisition, rather than customer acquisition programs.

Embed the permission capture into all relevant activities – email sign ups on the website and in Facebook fan pages, opt-ins during the online-checkout process, SMS sign ups in store.

Also consider incentivising sign up – a special offer for Facebook Fans, competition entry for email subscribers.

Step 2: Improve segmentation

Identify groups of subscribers to receive more targeted messages and segment emails or cross-channel messages based on consumer behavior and preferences.

With modern marketing platforms it is relatively easy to identify relevant segments for particular merchandise or promotions and to send different versions of your messages to different segments.

Segmented campaigns generally outperform unsegmented by between 300 and 500%.

Step 3 – Map & automate email interactions across lifecycle

Retailers can map out their customer lifecycle and automate as many campaigns as possible, so the bulk of the resource goes into the strategy up front, rather than the ongoing implementation.

Consider the following events and test relevant messages, promotions or offers that are appropriate:

– Welcome: when someone subscribes to an email or mobile program

– Transactional: when a purchase is made

– Repurchase: after a certain time send a reminder to repurchase, or relevant cross-sell or up-sell offers

– Stickiness: alerts or reviews, an opportunity to engage outside of the immediate purchase cycle

– Win-back: re-engage lapsed customers

Step 4 – Drive cross-channel coordination and campaigns

The ultimate step in becoming a new school marketer is the coordination and automation of a cross-channel lifecycle marketing program, where the right message is sent to the right customer at the right time via the right channel.

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