Test, Target, Retain

Despite reduced budgets, a focus on fundamentals yields positive results

By George Linkletter

If you read just the headlines, the news is bleak: USPS volume and revenues are down, marketing budgets are migrating to the Web, and print/mail finishing shops are suffering. 

But if you take a few minutes to look beyond the headlines, you’ll find some encouragement: Several applications, techniques and vertical markets are succeeding, even flourishing, in this difficult economic environment.

Which suggests an age-old truism: Working smarter is always better than just working harder.

A case in point is Compu-Mail, a 40-year-old targeted direct marketing and transaction-based print/mail finishing shop based in Niagara Falls, NY. Like most in the industry, Compu-Mail’s overall volume is down from the more than 50 million mail pieces it processed last year. But the remaining core volume is steady, profitable and growing modestly. And more importantly, the firm is delivering positive results that are helping its clients survive and prosper.

Adapt and grow

Key to the firm’s current success is a three-part emphasis. First, it is focusing more on serving those vertical markets that remain strong despite the downturn. Second, it is helping its clients retain and grow business from existing customers rather than attempting to acquire new ones.  And third, it is offering consumers a choice in how they want to receive messages: postal mail, e-mail, or SMS (text messaging).

Just about everyone agrees that holding on to an existing customer is easier than attracting a new one, and that selling additional products and services to an existing customer is cheaper than selling those same items to a new one. So, in the face of the worst business downturn in a quarter of a century, Compu-Mail is doing just that.

“We’ve found that certain vertical segments are holding up well, such as pharmaceuticals, personal and health care, and automobile servicing,” says Michael Vitch, a 25-year industry veteran who runs the firm. “Consumers might want to cut back in other areas, but they can’t ignore their health, their appearance or their mobility, especially their ability to commute to work.”

Just as significant, Vitch is introducing his clients in these key verticals to loyalty and ‘frequent buyer’ concepts to help them build stronger customer relationships. The goal is to help the businesses migrate away from a passive reliance on sporadic and anonymous transactions to a more proactively managed and secure long-term relationship. It is accomplished via a series of pertinent contacts that continues over time and helps to create a trusted relationship between the business and the customer.

Corralling anonymous consumers

One example that stands out involves automobile repair and service. Countless consumers are deferring the purchase of a new car as a way to save money in the recession. That also means they need to increase the amount they spend to service their existing vehicle. But in the absence of a repair, how do these consumers decide which type of service is needed? And where and when do they go for the service?

Vitch is helping one of his service/repair clients shepherd those consumers via a highly targeted outbound messaging effort that alerts customers to impending service needs, such as an oil change, tire rotation, or state safety inspection. There are also friendly or informal messages interspersed as well, such as announcements when a new manager is appointed or a new capability is added to the shop.

Key to the program is accurate data capture at the point of initial service, along with the ongoing analysis and targeting and testing of recipient demographics, range of offers, and frequency of contact, especially follow-up contact.

“We’ve developed a very comprehensive program and can deliver as many as 50 different messages per month,” he said. “We launch the messages depending on the specific characteristics and profiles of the various customer segments.”

Using this highly targeted rifle-shot approach, vs. a one-size-fits-all shotgun approach, yields an enviable ROI. While there will be always some disparity among results, because some variables can never be fully anticipated, Vitch reports the return on the program regularly reaches into the high double digits – which is eminently reasonable if, for example, a customer returns to purchase a set of four new tires as a result of receiving a post card reminder.

Channel of choice

Also key to the effort’s success is the concept of choice. Customers may select from among three messaging channels – postal mail, e-mail or SMS – to receive their reminders and special offers.  As might be expected, delivering messages via the customer’s channel of choice heightens the likelihood the messages will be read and acted on upon arrival.

Interestingly, Vitch says that the offers delivered via postal mail consistently generate a higher response rate than those delivered via the other two channels. He’s not exactly sure why.  “It may be that e-mail boxes are too crowded and that consumers quickly delete useful information along with the irrelevant. Or it might be that the decline in postal mail means that pertinent offers now stands out more, since there is less clutter in the mailbox. I also think that printed mail has a longer shelf life in the home because consumers often use them as reminders – which is exactly what we hope will happen.” 

Vitch also sees the beginnings of an encouraging trend: some businesses, such as investment advisors, are slowly returning to postal mail. “There is so much ‘get rich quick’ propaganda on the Internet, and such a lingering fear among consumers related to the Bernie Madoff scandal, that responsible investment professionals need to stand apart from all the confusing clutter.”

Vitch is aiding them via a two-pronged effort. First, Vitch is helping create professional looking web sites, and especially blogs, so the investment advisors can share their investment views and performance records -- and start to generate some sorely needed acceptance and trust. 

And second, Vitch is delivering a series of coordinated messages via postal mail – to help build credibility among existing clients and unlock referrals. “Right now, the environment is very difficult for investment professionals. The key for them is to forego the idea of a quick sale.  They need to strengthen their credibility with existing clients, to garner additional business and use those long-term relationships to generate referrals to new clients.”

Comments? Contact georgelinkletter@charter.net.