Sunday, January 6, 2013

Economic value to complaints?

I recently got caught up in a discussion about complainers. Email complainers, that is. I can't do much about your in-laws.

The question was, how do you attach an economic value to people who "complain" (i.e. - reply nastily to customer service, opt out or, dread of all dreads, hit the "this is spam" button) and shouldn't that value be deducted from the positive economic value generated by a campaign.

There are always, always, always people who complain. It's human nature.  If you have a well-run email program, complaints truly are "collateral damage" from an economic standpoint. As a result we never applied an economic value to complaints.

The interesting thing about this question is that is usually comes from someone who hates what you're doing with email, whether it's the color combination, the messaging or the volume. Or maybe they just hate YOU. Applying an economic value to complaints gives them a bomb they will lob at you when it serves them best.

Now, let's be clear. If you're making a dollar in revenue and 50% of your list is complaining, you have serious issues. Most likely that you don't know what the heck you're doing...but let's assume that you do and you follow the basics of a good program.

All that said, complaint monitoring is critical. Not because we're overly worried about the "lost revenue" from people who unsubscribe. The reason is that the complaints often point to a mechanical problem in the email ecosystem.

For example, complaints really spiked when we brought back an "old" list that hadn't been mailed in awhile, or when we mailed someone who thought they were unsubscribed (usually due to confusing unsub codes on our database.) It's a problem that pointed to a lack of internal rigor around our email marketing database. It (largely) cleared itself up as we got better control of our underlying database - the one that feed the email database. What it also taught us was that  - if we were bringing back an "old" list - or a list from another division (especially retail stores) - we really have to tread very, very carefully. We need to make sure we do it slowly and carefully. It can take more time to do it this way but trust me - it's better.

Many of our remaining complaints came around the perception that the unsub link doesn't work. Luckily, it caused us to identify a flaw in our unsub process that we quickly corrected.

Finally, some people just hated our brand and would do anything to complain. It is the internet after all. (You may have heard that people like to express strong opinions there.) You try your best to isolate, but it's hard. It comes with the territory. If you have a thin skin and don't like feedback, email may not be a long-term career choice for you. Maybe try the brand side. Or go sell ice cream and bunnies.

If you tell people that you don't attach a value but do monitor, the flip side of this question often becomes "well if you're monitoring, what's the harm in attaching a value?" While it's incredibly important to closely monitor complaints, think there's more danger (both economic and political)  than value in creating and publishing an economic value to complaints.

If you have a mechanically sound email program, the number of complaints (and unsubs) should be very, very small. As in well under 1%. Shutting down a campaign because of complaints (unless there's a gigantic mistake somewhere in the process) seems like a bit of an over-reaction to the negative response that comes along with every campaign. These aren't rare river gnats that need protecting, after all. All it does is take good money out of your pocket.

Our approach was that people unsub and complain all the time. We loved the feedback and would immediately move to suppress the person. But frankly, big deal - it truly is collateral damage. You MUST monitor - and take very seriously - complaints. But attaching an economic value is akin to giving naysayers a giant pile of fertilizer. To you, it's safe. To them, they can use it to blow up your job.

Friday, September 2, 2011

I CAN predict the future!

A colleague of mine has recently tried to convince me that (a) Lifetime Value (LTV) is a meaningless statistic and (b) applying prediction science to marketing will result in the same failures as those experienced by the stats-heavy financial industry.

While I agree on the first point (whose lifetime we talking about, anyway), I think the second is an over-reach. 

You certainly can't predict everything - especially the future with any degree of certainty. But saying that you can't predict ANYTHING seems irrational. There's a business that lives and breathes this uncertainty every day - the insurance business.

Insurance companies have no idea when a catastrophe will happen. But you can use the principle of the law of large numbers to mitigate the risk associated with an any unforeseen event. The key learning from the law of large numbers is that you can't always predict the outcome of the individual (too much variability) but - if you have enough of exposures that look alike - you can better predict the results of the group. Not always perfectly, but better. And there's value in better. Often, significant value.

It's not perfect, but it works. You can think whatever you want of your insurance company and point to the AIGs with their over-reliance on stats and mortgage securities got them into into serious trouble. But you also have others that have been doing this sort of "prediction" for more than 100 years.

Here's a really dumb example. If I punch any one of you in the face, I have no idea what the outcome will be. In fact, if I punch one of you and nothing happens, I may conclude that there are no repercussions to the act. But if I punch ALL of you in the face (and live to tell about it - my readers scare me) I can come up with a range of possible outcomes and "predict" an overall impact to my well being if I find another group of similar people and punch THEM all in the face.

Here's another, more relevant, example - Hurricane Irene. Models and prediction tend to break down the more finite the number of observations. So while you can say things like "there are 1.5 hurricanes per year on average", you can't predict when Irene will come. Or where it will go when it will gets here. But you can "predict" that Atlantic coastal states have a significantly higher chance of a hurricane than Colorado. You can also "predict" what happens when six feet of water come rushing down your street. You can also "predict" that houses closer to low-lying areas are more likely to flood than ones high on a hill. So why you didn't know that Irene was coming, you could defend against the event better than if you hadn't examined and learned from the past. And there's value in better.

In business (and especially email marketing) we are more concerned with the behaviors of the group more than of any one individual. So why do we do this? Simple...scale. We're not mom and pop marketers. We have a lot of large numbers from where we can draw conclusions. When we try to capture data about a person, it's so we can better associate them to a group (a cluster - hooray for clustering!) whose behavior - driven by the law of large numbers ' we can better predict.

It's certainly not perfect. But it's not value-less.  There's a huge aspect of time-frame management that needs to be considered in terms of setting accurate probabilities. You can learn a lot from watching and mining the behaviors of your customers. You can apply that learning to prospects. You can use the law of large numbers to drive better, more efficient value from your marketing efforts.  Really, that's all email marketers do. We're not here to shape the future direction of the business - we're here to make money while there's money to be made.

So while I agree that LTV is a bit like finding Noah's Ark, to say that prediction is a losing proposition swings the pendulum too far to the other side. It's not the prediction that's the problem - it's the incorrect use of the tool.

Saturday, June 11, 2011

Real-time marketing hype machine

Someone recently asked me what I thought about "real time" marketing in the email space - the ability to hyper personalize marketing offers based upon relevant, "immediately captured" data. 

"Real-time" e-mail marketing seems like vision that is easily "sold" but not really reflective of what technology can attain and sociology can support. After all, it's a super-compelling idea that any idiot should easily see (my old CMO would have loved it...then again, he wasn't just ANY idiot.)

Here's what I sounds dangerously like referring to garbage men as "Sanitation Engineers." It might make the garbage man feel better, but it's both an overstatement of a garbage-man's job and an insult to true sanitation engineers who do a lot more than toss trash. (Full disclosure - I used to be a garbage man...we stink every day - Sanitation Engineers don't.) 

Seems like the hype machine has spit out a new buzzphrase. Buzzphrases - like may things that buzz (bees, alarm clocks, your post-concussion head) - are not always good. Sometimes, linking a good thing to a buzzphrase causes more confusion than it is worth.

For example, let's take two related yet slightly different concepts - hyper-personalization of email  based upon known things (browser type, geography, content preferences, etc.) and tag-based optimization of email. They both theoretically offer improvement and should be tested. It sounds like they might offer more than marginal improvement over a well segmented and executed campaign. Which is awesome. But calling them real-time smacks of trying to capitalize on buzz to the exclusion of the true potential of these approaches. Sure, real-time is easier to explain to the non-technologists who sometimes make decisions. But it builds a set of expectations that these approaches don't (and shouldn't) meet.

Here's a huge barrier to real-time success - it's not enough to have "relevant/real-time/blah blah" - your organization needs to be able to act on the available data. For example, tell any airline in the world that I'm 6'2" and like more legroom...or that - since I'm an American Platinum member - I'd like elite status for any airline that wants my business. Guess what - it won't matter, because there's nothing any airline can or will do anything about that. Businesses are usually not built to serve the customer - they're built to serve the business. 

How about we master the tools that we have before trying to let technology hyper-drive things we don't fully understand? Can you update your customer service product recommendation model fast enough (what's that, you don't use one?) Can you make sure that your ESP delivers content in a timely and reasonable fashion?  Have you run optimization efforts against your email? Your landing page? Your web site? Do you have rock-solid measurement tools in place to measure your marketing results? Do you have a robust preference center that lets people get what they want? Are your sales people compensated based upon serving your customer as opposed to serving your next quarter's results? Have you solved the attribution question? Etc, etc, etc. if you haven't mastered these basics, why jump to the next hype machine?

All in all, the term "real time" in the marketing space simply seems like hype. The Google Wave. The Gripple. Call me a cynic...I'd love to be proven wrong...but sometimes the hype machine wins...after all, email is dead. The hype machine said so.

Thursday, May 26, 2011

No Open, No Value

I read Chad White's MediaPost article about "Bad Advice from email marketers." While all of the points were good, his "No open, no value" bullet strikes a huge nerve with me...of course, this is just a dumb assertion that Chad nails quite well. It's the epitome of email myopia.

Back when I ran email, we consistently saw that about 8% of purchasers - who we regularly sent email to - never opened emails we sent to them. Several industry pundits recommended that I stop mailing these people as they were "not engaged."

Just because people don't do what you want when you want, it doesn't mean they're not engaged. It just means that they're engaged in a way that either you don't expect or you can't measure.

For example, some people just don't trust the email channel. Maybe it's one too many attempts at transferring millions from secret overseas accounts but there are some folks who just will not execute via your email. Even if it were the best email in the whole wide world. They simply won't. What they will often do is either go directly to your site (usually prompted by your subject line) or search based their idea of what your email is trying to get across.

So do you abandon those folks in the name of efficiency? You could...but it turns out the email still has value - just not the value you think. Will they purchase even if you don't send them email? Why take the risk? So the real issue here isn't the email, it's the fact that your measurement systems are myopic. Or that you're stuck with a punitive and counter-productive CPM agreement with your ESP.

I'm really beginning to become wary of "email experts" who are anything other than deliverability specialists. Email is simply an arrow in the marketing quiver. In some quivers it's a huge arrow. In some, it's nothing more than a sharp toothpick. Before you go changing arrows, make sure your measurement systems are up to par.

Tuesday, February 2, 2010

Direct Marketing Is A Pain In The...

I was chatting with a buddy of mine recently about the intricacies of successfully executing a direct marketing campaign. It was one of the more interesting conversations I've had ...

I love direct marketing. I think it's awesome. But I've continually been frustrated by the inability of organizations to see the value that DM can bring. I used to think it was because people were scared of numbers (sometimes), or bad at pivot tables (which I still think), or just downright morons (always a possibility, but highly unlikely)...but my friend's comment made it much simpler to recognize the inherent problem with direct marketing -including both online and offline.

Here's his hypothesis, in a nutshell...

Creating a marketing plan is a pain in the ass.

Creating a direct marketing plan is a pain in someone else's ass.

In order to successfully execute a direct marketing campaign, we need cooperation. We need for the web team to provide landing pages and measurement. We need for sales to provide lead source and close data. We need for customer service to answer any emails that are generated from our activity. We need a content management system that can turn our genius into reality. We need for legal/compliance to go over every rule you can think of - for each creative version we create - to make sure we're not violating some nebulous law. We need for senior management to understand this "different" way of thinking. We need for IT to track everything and tie it all together. We need all these things, yet we control almost none of it.

In most organizations, DM is not central to the business. There are lots of ways that business is generated - the organization is not necessarily "sold out" to the power of DM. As a result, direct marketing campaigns and "stuff" is extra. The people you need for cooperation did not ask for you to give them work. They have enough to do. They usually don't have insight to your marketing genius. To them, it's just more work. Aka - a pain in the ass. Their ass. Your idea, their pain.

This is a burden that "traditional" marketers don't face. Making a TV commercial or print ad doesn't tax internal resources, because it's almost always created by an external agency. In fact, it's very exciting for senior execs to go "on set" and see the magic happen. It's even more exciting to see the product on TV - way more exciting than seeing your text link appear on Google. The only pain you'll feel is in the wallet but you'll happily pay it if the pictures are pretty.

If there's one failure that we've faced as direct marketers, it's impressing upon our management that we are, in fact, a pain to some people in the organization. Our senior management NEEDS to recognize this, so that they can provide the muscle that will eventually be needed to clear up the car crash that our "extra" work can cause. Showing a clear and concise value to DM (something we sometimes struggle with) is critical in forcing the cooperation we need.

Yes, DM is a pain. If your running from that fact, you're probably struggling with properly valuing your efforts.