I am sure you have tested offers, retested, A/B tested, retested, hit your entire customer base, implemented ad buys touting your excellent offers, reviewed competitor direct mail, print and email promotions – (oh maybe that last one is just me) only to say, “well that didn’t work.”

So the question in my mind today is how do you structure a promotional program that is both relevant to your target audience, yet profitable? Good question. Here is where I throw up the CAUTION sign.  

In my opinion, having data at your fingertips is the answer. Don’t get into a debate with your executive staff or peers about what works or doesn’t unless you have tested it and the data is telling you something. My team’s golden rule is as follows: “Don’t put an offer out until you have outlined how you are going to track its success or failure.” You learn a great deal of information from both. This takes work and a lot of it. I am lucky enough to have an employee dedicated to running everything from usage rates to the gross profit margin. But even at a minimum, review your results to determine how many people used the offer, what they ordered, how much they ordered and, here is the biggie… drum roll…..did you show an uptake in business from said offer(s).

This year, when structuring your promotional strategy, consider these three words: relevancy, relevancy, relevancy. So, when someone comes to you to present an idea for a new offer, ask yourself the following: “Why would the recipient care; how does it benefit them; how easy is it for them to get to the place to cash in?” These elements should be considered when designing direct mail and email creative. That’s a great topic we’ll have to cover in future posts.

Let’s focus on the first step. My question to you is, “How are you rewarding current customers?” Remember my blog post titled, “Marketing Tips for 2009?” I highlighted a short excerpt from an article featured on eMarketer titled, “US Social Network Ad Spending Growth Lowered.”  The excerpt included this statement:

“In a difficult economy it is usually easier to market to an existing customer than to acquire a new one.”

- eMarketer senior analyst Debra Aho Williamson

What a strong statement for all of us. We can’t put offers on the table to hit our entire customer and prospect pool and expect those promos to have relevance to the entire group. Instead, take a look at your current customers, the entire set.

You remember, I have this really intelligent guy, Luis Paez, on my team. He’s one of our bloggers as well. He ran across some interesting articles on this very topic. One is featured on the Target Marketing Web site titled, “Practical CRM.”  Go to page 2 of the article and review the steps highlighted under the sub-head, “Tools for Customer Value Analysis.”

Another valuable set of information he provided to me included looking at the RFM (Recency, Frequency and Monetary Value) of your customer base outlined in this article,  “How to Create a Best Customer Profile.”

RFM analysis works because:

1. Customers who have purchased recently are more likely to buy again versus customers who have not purchased in a while
2. Customers who purchase frequently are more likely to buy again versus customers who have made just one or two purchases
3. Customers who have spent the most money in total were more likely to buy again. The most valuable customers tend to continue to become even more valuable over time.

I know what you are thinking, and yes it is a lot to take in for any marketer, but I am beginning to see the true value in taking time to evaluate an approach…no the RELEVANT approach.

Until next week,

Jamie