Marketing Up (and Down and Across) in a Down Economy
In recent months, I sometimes feel as if every marketing message I hear is about how to react to the down economy. A Google search on “marketing in a down economy” returns over 22 million hits-—articles, whitepapers, and complete websites devoted to the topic of how to change your tactics in light of the current financial crunch.
But does a changing economy really call for a change in how we do business? Well, not exactly. Assuming that we’re already following best-practice marketing approaches, we’re already part of a lean, ROI-oriented, targeted awareness, and demand-generation marketing machine.
So, while we don’t recommend changing your tactics because of financial belt-tightening, the current climate does magnify how important these best-practice approaches are-—particularly in relationship to growing your contact database.
Expanding your footprint
Your contact database is, by its very nature, a fluid thing. If your universe of known contacts never changed, you wouldn’t have to worry about new lead generation, cold calls, rental lists, or database cleansing and appends. But the fact is, your contact database is a living thing-—contact data changes, contacts become invalid, and new contacts are created as the result of succession planning, downsizing, and other career moves.
Because of this ongoing change, the best measure of database quality is not just the decision-making contacts you have today, but also the number and quality of contacts that ensure your account relationships in the future.
Of course, in recessions, turnover tends to increase. This simple fact means that contact databases become outdated at an even more rapid pace than usual. If your customer contact leaves his or her employer, you need to make sure that your relationship doesn’t leave with that person. There are few situations as frustrating as investing time, energy, and money into building a relationship with a customer contact, only to find one day that your contact is gone, and your door to the account has been closed.
So how do you ensure that your relationship with your customer is greater than just a relationship with a contact? Look beyond the typical decision makers, and focus efforts on expanding your footprint of contacts at your client and prospect accounts-—up, across, down, and out.
- Expanding up
Building a relationship above your primary buyer is always a good strategic move. Establishing value with higher-level executives helps them to see your product or service as a value to their organization-—not just an expense item on a budget sheet. In addition, if management is familiar with your company name and sees you as the market leader, they are likely to communicate this to anyone new who is taking over the initiative with which you’re associated.
- Going wide
Widening your contact base at an account also helps solidify a long-term relationship with that customer. Communicating across an organization -—to other divisions or departments-—has the added benefit of uncovering new opportunities in other areas of the account. Especially in larger companies, where reorganization often accompanies turnover, a wider footprint can mean both retaining and growing business if yours is the preferred product or service. Finally, lateral contacts are often much more likely than upper management or lower level contacts to give you information about changes in the organization if your primary contact is displaced.
- Shifting down
At the same time, lower-level employees have the opportunity to expand into new roles and responsibilities when vacancies occur above them. For the marketer, making an impression on these contacts-—before their roles change-—is crucial. Not only does it give you a leg up on your competitors, but contacts in a new role, eager to prove themselves, are likely to reach out to you if they feel that you can increase their perceived value to management. For this reason, expanding your reach to contacts below your typical buying authority can lead to unexpected gains in a volatile market.
- Moving out
It is also important to consider how structure changes can actually have a positive impact on previously non-buying contacts. Turnover can often be positive for those involved-—both for the displaced and for the employees who remain. Displaced workers, who may not have had the authority or budget to buy your product or service in the past, often find the situation has changed when they are hired by a new employer.
Expanding your reach: understanding your audience
While expanding your reach does mean widening the criteria you use to define valuable contacts, it doesn’t necessarily mean unconditionally widening it. To be effective, you still need a fairly tight definition of the demographics of your target contacts.
It’s helpful to think of your contacts as falling more or less into three categories:
- Buyer/decision makers
- End users
If you are a provider of engineering software, for example, your end user might be an engineer; your buyer decision maker might have an IT title; and your influencer might be the CFO. Generally, for each of these three buckets, you have multiple titles and roles.
It’s also important to know the demographics of your target accounts. For existing customers, this list is probably a list of account names. For prospects, you might know specific account names, or you might just have a list of demographics, such as size, industry, or sales revenue. In a depressed market, it’s particularly important to focus both on customers and prospects for the best opportunity to capture all available leads.
When reaching out to influencers and end users, it’s important to understand that you’re not necessarily expecting a response from them, and to adjust your metric goals accordingly. You might even consider segmenting and tailoring your marketing messages based on contact type. Considering the engineering software provider example, you might want to offer a free trial of the software to your users, a webcast about a critical business issue to your buyer/decision makers, and an ROI study to your executive/influencers.
Even when sending marketing messages to buyer/decision makers, it’s best to set a reasonable benchmark for responses that is below that of your current internal database. Some of the prospects you’ll acquire will be “pre-pipeline”-—in other words, at a very early stage in the sales cycle. Your first contact with them represents the beginning of a targeted awareness process-—a marketing relationship that should give you a competitive advantage and help you move the contact towards identifying a clear need.
A staged approach to marketing relationships
Once you have added these prospects to your internal database, you can then implement multi-stage “prospect nurturing” campaigns through your lead-automation platform. Prospect nurturing refers to the process of generating interest, converting this interest into an inquiry, and moving the prospect into the sales opportunity process. This can be accomplished with a timed, integrated flow of thought assets (such as whitepapers, case studies and webcasts), which build brand awareness and warm the prospect. The result is typically a spike in both the volume and quality of leads entering the front-end of the sales pipeline.
On the other hand, in contrast to the longer sales cycle just described, some of the net-new prospects reached through new data acquisition may be in a much later stage of the sales cycle. This latter category of prospects represents quick wins, as they may be already at the buying stage in the sales process and simply unaware of your company as a potential vendor.
Acquiring new buyer/influencer contacts at existing accounts can mean new revenue from current accounts-—in the form of sales of new products, services, or upgrades to existing contacts; or in the form of an expanded footprint of sales for your products and services with new departments, divisions, or functions.
With these potential opportunities in mind, it might be tempting to try to cast as wide a net as possible-—reaching contacts regardless of title and company profile. However, defining your target account type is still crucial. Reaching the “right contact” at the “wrong company” is generally not a good use of your marketing spend.
Even in a volatile economy, with increased contact mobility, contacts are likely to make lateral moves, and tend to seek out new employers that closely match their previous experiences. By keeping your account criteria specific, you ensure that you’re focusing on buyers, influencers, and end users that are most likely to build a valuable relationship with you.
Where are the contacts?: the challenging state of third-party data sources
With your contact criteria defined, you need a source for new data. Ideally, you want a source that will reach only contacts with the right titles, at the named accounts or defined account types that you’ve identified. Your best bet is generally third-party data sources-—contact data that is gathered, maintained, and managed by a third party such as a publication or research firm.
Unfortunately, identifying customer and prospect contacts who meet specific criteria is difficult. Third-party list segmentation, therefore, is often flawed or unavailable. Nearly every list order contains some percentage of undesirable contacts. Even if you find a highly targeted list source, it is unlikely that the entire subscriber base meets every criterion. And “highly targeted” generally means small; applying segmentation filters often reduces the list below the required minimum orders.
When dealing with larger, more general databases, it is not uncommon to find that the filters you need most-—company size, industry, or geography-—are not even available. This combination of minimum orders and unavailable filters means marketers feel unable to isolate qualified records, and are forced to buy data that does not fully meet their needs.
What is the cost of poor third-party list segmentation? It’s easy to rationalize gathering unqualified contacts into your marketing database-—as long as it means adding qualified contacts, as well. After all, most organizations now rely heavily on email marketing, and marketing to unqualified contacts as part of your regular marketing efforts seems like a cost-neutral side effect. But buying, importing, and managing bad records can have a larger impact on your marketing time, costs, and resources.
Only magnified by economic downswing, the commercial, third-party data landscape has changed dramatically over the past few years. Along with major consolidation among existing vendors, there are many new entrants trying to capitalize on the growing demand for sales and marketing data.
As the market becomes saturated with vendors, a majority of these new providers have tried to differentiate themselves by offering a more complete prospect record, including postal information, phone numbers, and email addresses. While these firms provide sales and marketing executives with instant access to information, their data collection and transfer processes often present accuracy, privacy, and legal compliance concerns.Here, we’ll look at the issues and opportunities surrounding lists for both email and postal/telemarketing (typically these contacts are bundled).
Permission-based email: third-party list rental
There are myriad sources of email lists on the market today-—of varying quality and legitimacy. For this reason, the majority of marketers familiar with permission-based email rentals rely on lists derived from and managed by controlled-circulation trade publications.
There are many advantages to publication-based lists-—for example, the publishing industry has implemented stringent protocols to ensure that their email list products comply with both CAN-SPAM laws and the Direct Marketing Association’s best practices. Because the rental list represents subscribers, without which the publication would not exist, publishers are especially sensitive to privacy-related issues.
Also, most publishers insert a mandatory header and footer within the marketer’s email message, which clearly identifies either the publisher or the specific publication to which the recipient is subscribed. Recent analysis indicates that the insertion of the header actually improves email performance, because it quickly distinguishes the email from SPAM. In some situations, the identifying header also provides the perception of a “soft endorsement” of the renter, which correlates to higher open and click-through rates.
As most marketers would agree, the email marketing channel’s strongest benefit is its immediacy. Email, unlike direct mail and telemarketing, generates the majority of responses within 24 hours-—enabling faster sales follow-up.
The rental cost for a quality, permission-based B-to-B email list ranges between $0.35 and $0.45 per delivered email. This cost includes the service bureau fee for the actual transmission of the email.
While postal lists tend to have a less expensive per-name cost (averaging $0.15 - $0.28), printing, data processing, and postage costs can increase total investment by more than a dollar per contact. Thus, in comparison to other mediums, email is relatively inexpensive and presents marketers with a powerful demand-creation tool.
It may seem surprising, then, that third-party email rental is actually losing share of the marketing budget compared to other marketing tactics, but the channel does present significant shortcomings:
- Difficulty segmenting databases
Database size and variations in the detail collected on qualification cards mean you might be required to spend money on contacts that do not meet your criteria.
- Heavy population with webmail domains
Personal email addresses typically represent a large percentage of contacts and result in less-valuable sales leads.
- Blind process
Due to privacy laws, marketers must accept on faith that contacts are being segmented and emails being deployed as specified.
- Inability to suppress duplicates across multiple list rentals
Because publishers typically don’t communicate with each other, there is no way to suppress duplicate contacts when renting multiple lists, which tends to correlate to higher opt-out rates.
- Too many unqualified leads
Marketers must rely on the honesty of contacts to accurately portray their demographics-—which are often misrepresented to get free subscriptions.
- Minimum order requirements
Most publications require a 5,000 contact rental- —which makes specialized segmentation difficult.
Of this list, the number-one challenge cited by email marketers is the generation of unqualified leads. For example, a client targeting prospect companies with more than 500 employees asks that the rental list excludes smaller organizations. The campaign deploys, the respondents come in, and the client is forced to disqualify 20 to 25 percent of these new contacts because they do not meet the minimum company-size criterion. As a result, the client perceives poor value from the investment.
How is this scenario possible? The explanation is fairly simple and is directly related to the data-collection methodology. The business demographic information on most lists is self-reported by the subscriber, who provides bad information (unintentionally or intentionally)-—inflating company size, choosing the wrong company industry, or claiming purchasing power for products and services over which they actually have no influence. To date, publishers have not provided a solution to this deficiency.
This inability to refine lists to accurately match target-audience specifications leads to lower response rates and less attractive return on investment. In addition, email marketers must take on faith that the intended segment is even attempted. Because privacy laws limit direct access to prospect data, only a publisher’s designated service bureau has visibility into whether the correct segmentation has been applied.
Telemarketing and postal: third-party list rental
Similar to email list rental, telemarketing and postal data rental also presents significant inefficiencies. The primary complaint about postal list rental is limited segmentation. Limited, pre-defined filters (established by the data owner) mean that the client’s target audience cannot be effectively isolated. The result is a list containing a large percentage of unqualified contacts, and wasted marketing costs (in the form of printing, postage, etc.), if these contacts are not weeded out before the campaign is deployed.
Direct mail, once highly respected, has experienced the largest drop-off in the past three years. Industry experts cite rising paper, printing, and postage costs as the major culprit. These increased costs have narrowed the margin of error and have placed postal list quality under greater scrutiny. If a prospect mailing includes 20 to 30 percent non-targeted records, post-campaign measurement will likely prove the channel is not economically feasible. As a result, direct mail has been branded antiquated, and the newer crop of marketers possesses little, if any, knowledge of the direct mail process.
Change your approach to third-party marketing
There is no doubt that marketing is becoming more and more competitive; and, as a result, more and more challenging. Yet third-party data sources are not improving in response to these challenges. If anything, their quality, responsiveness, and accessibility have reached a plateau.
Because data sources are not changing, it is the marketers themselves who must change their approach to third-party data to find new value. In an unstable global environment, marketers must innovate-—and marketing service providers need to seek new approaches to maximize their clients’ return on investment. Effectively tapping into third-party list sources, reaching new contacts, and sustaining existing relationships can make all the difference in a down economy.
Five Steps to Expanding Your Reach
With myriad third-party data sources and data challenges, it’s no wonder that today’s marketer finds navigating through the sea of options a time-consuming and frustrating process. Still, the benefit of effectively leveraging third-party data sources-—particularly when every lead is important-—is worth the extra effort.
The following steps will help you more effectively leverage available data sources to reach end users, influencers/executives, and buyer/decision makers at your best accounts.
Step 1: Target account definition
The first step in expanding your reach is to create a list of target accounts. This often requires some collaboration with your sales group. If you don’t have a set list of accounts, define ideal prospects based on a combination of business demographics, such as employee size, revenue, industry and geography, or other business intelligence data. Using these criteria, you should be able to create a target account profile and create a list of companies meeting that profile.
Then, think about your end users, influencers/executives, and buyers/decision makers. For each of these categories, define as many titles as possible. Understand that, using third-party data sources, some very specific titles are much harder to identify than others. It will be much easier to find “manager-level IT professionals,” for example, than it will be to find “technical writers.”
Step 2: Company database design
Once you create your list of target accounts, you should develop this set into a record of information about companies (called a domain database). This can be done either manually, or through a standard process of comparing your list of account names to a commercially available corporate information database.
Why is this step so important? Because of the inaccuracy of self-identified selection criteria, drilling down to actual company domains is the most reliable way to identify qualified accounts in third-party data sources. As part of this process, you also have the opportunity to append specific company demographics to each account record. This information can be carried over when new contacts are acquired, and can even populate your CRM system with important sales information.
Step 3: List strategy design
It is important to identify a set of proven, high-quality, consistent data sources to serve as primary lists. Best-in-class data providers should be able to qualify their selections with historical metrics on list performance. This information allows you to compare lists from various sources and establish a benchmark for a successful response. Unfortunately, few vendors are willing to divulge list statistics directly, so you may need to engage a partner for this capability.
Whether you know the response metrics or not, you should also research and evaluate a wide variety of secondary lists from smaller-circulation publications, associations, and research-based databases. Score these data products based on available segmentation, historical performance, and overall data. Many experts tend to prioritize data-driven products, but it’s sometimes worthwhile to consider additional lead-generation vehicles-—such as e-newsletter sponsorship, banner placement, co-registration forms, whitepaper hosting, and co-branded webinars-—to maximize reach.
Step 4: Prospect pool construction
Once the criteria and data sources have been defined, the next step is pulling the list. Typically, each third-party data source does this independently, sending each list to a separate vendor for additional processing and deployment. However, a third-party list strategy partner—one that has a strong relationship with list vendors-—can arrange to have all of the lists delivered to a single secure, third-party data processing facility.
This ensures that merge-purge processes remove duplicates and other undesirable records across all lists. For email lists, this saves on costs, as list vendors charge for each contact mailed, even if the contact appears on multiple lists. It also greatly minimizes the likelihood that a single prospect receives multiple contacts and opts out of future communications. Postal and telemarketing lists should undergo the additional process of job title scrubbing-—manual quality checks of the data file to ensure that it matches your criteria.
Step 5: Campaign execution
With the list plan and budgets finalized, the final step of the process is the execution of the marketing campaign. Once the marketing message is deployed and responses are received, you need to generate reports about key metrics-—including response rates, click-through rates, and open rates.
This reporting supports list strategy recalibration, the elimination of underperforming lists, segment adjustments, list expansion, and the development of additional testing strategies. The post-campaign analysis establishes a statistically significant baseline of response for the marketer, which provides actionable goals for follow-up marketing campaigns. You can achieve continued success through a combination of creative strategy, measurement, and ongoing best-in-class program management.
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