B-to-B insights: 57 Channels (And Nothin On?)
This 1992 Bruce Springsteen song (sans the question mark) referred to the boom in cable TV back in the day. But at the rate marketing channels are popping up, it soon may apply to direct selling.
You've heard that when you engage customers through multiple channels, you incrementally increase their loyalty and sales. Intuitively this makes sense, but measuring it's a different matter.
When one CEO added an outbound phone sales staff, he eagerly watched the stats for each sales rep rise month over month. His new team was hitting its targets, but sales weren't growing as fast as the reps' bonuses. He didn't know whether he really was increasing sales beyond normal growth patterns or just paying more for those sales.
In a test, he sought to determine the effect of the outbound effort. As he hoped, some of the phone reps increased sales by solid double digits and more than paid their way. Unfortunately, other reps actually decreased sales. Overall, the addition of the outbound team was positive, but not nearly as good as the growth charts on the call-center wall had indicated.
Marketers are good at micro testing — measuring the effects of lists, offers and copy within the confines of one promotional stream. Apply those skills to macro testing to test the incremental lift of entire channels.
There's no foolproof testing method that allows us to determine the incremental lift of every promotional channel — especially for social media and search engine optimization. There are, however, techniques to test the lift of push promotions like catalogs, outbound phone calls, emails and even pay-per-click campaigns. To do this you must control promotional activity to a specific customer segment over a given period of time.
Though most marketers have unified databases, they often don't use the same segmentation across channels.
For example, your outbound sales team may be organized geographically or by type of industry, and sales reps often intuitively manage their own contact strategies for their customers. Your catalog manager probably uses a more traditional segmentation, either a response model or an RFM variation. Your email team may have access to the same segmentation as your catalog marketing manager, but limit its criteria to promoting by product purchase, segmenting buyer vs. nonbuyer, or just blasting every name that hasn't opted out.
Allowing various teams to use different segmentation strategies can work. But for the test, separate your file into statistically similar segments for your control and test panels, and use those segments companywide.
In addition, every sales channel must use the same offers for the testing period. A rogue free-shipping offer in one channel will siphon orders and nullify the purpose of the test, which is to establish a baseline lift for a given promotional channel.
If you have a large housefile, you can simultaneously test multiple marketing channels during the same season. But if your file is smaller — say 20,000 buyers — you'll likely have to limit your test to evaluating the effect of only one channel.
If you experience a significant spike in sales with every catalog drop, you can use that promotional activity as the basis for your test and determine the incremental lift for another activity, such as phone efforts. Your control panel receives only the catalog, and your test panel receives both the catalog and phone calls. Regardless of channel, you can measure the lift in response from your phone effort, determine its return on investment and strategically budget for the program.
But if you have an aggressive outbound phone program, you can test the relative effectiveness of your catalog by not mailing it to one panel. Instead of referring customers to the catalog, your sales team tests the effectiveness of driving those customers online.
One B-to-B marketer that supported independent sales reps with catalog mailings discovered that it received a lift in sales when mailing the reps' segments, but not in contribution. Essentially, the additional sales only covered the additional costs, which allowed those catalogs to be redirected to more profitable segments.
When you introduce a new promotional channel, give it time to get established. Until you test its incremental lift, you don't know how effective it is. The test alone could give you insight into improving that effort. Customers and prospects are channel surfing. When they tune in to you, make sure there's something on.
George Hague is principal of consulting firm HAGUEdirect (firstname.lastname@example.org).