Multichannel Prospecting: Changing Channels
Whether you want to grow your business or maintain your database size as customers age out, prospecting is a challenge every successful cross-channel retailer needs to master. For some, buying lists and using paid search are the beginning and end of their prospecting efforts. But many eventually realize that to grow their businesses — and combat limited list universes and increasingly competitive paid search pricing — they need to look at expanding further into multichannel prospecting.
How do you determine which direction to go? With so many choices offline — inserts, space ads, solo mailings, DRTV, radio, etc. — and online — web ads, Amazon.com and eBay, affiliates, retargeting, etc. — it's easy to be overwhelmed. By focusing first on identifying goals before selecting media and tactics, you'll make better choices and avoid mismatches between your brand and specific options. "If you don't know where you're going, any road will get you there," is as true of customer prospecting as it is of Lewis Carroll's Alice finding Wonderland.
= Risk Reduction
Multichannel prospecting reduces risks through diversification. Financial managers reduce investment risk by diversifying a portfolio with stocks in different sectors. The same concept applies to customer acquisition: If you only rent lists, you're highly vulnerable to postal increases, deterioration of list rental universes, etc.
Adding paid search gives you one hedge against those risks. The more numerous and varied your prospecting techniques, the less external environments will impact you because you have options. Your prospecting business is able to weather the storms that hit any one media.
Diverse prospecting also leaves you less vulnerable to competitors because it puts more acquisition arrows in your prospecting quiver. But don't ignore competitors' efforts — study your competitors as well as related businesses trying to reach the same audience. Which media types do they use repeatedly? Repeat ads in the same medium by one or more competitors means you should consider that medium as well.
Expanding to different types of media can allow you to reach different target groups. For example, you can capture prospects that are inefficient to reach via mail through media where prospects "raise their hands," like print ads, TV and radio. Sometimes due to privacy issues, competitors or other issues, there are no lists available for one of your target markets. Running ads on TV, radio, in print or on the web in the appropriate outlets can put you in front of prospects who can't be found on lists.
Multichannel prospecting also allows you to test offers and copy with media that may be better suited for that purpose. Consider the ease of testing with paid search or web ads, or the simplicity of making black-plate changes to test different prices on a postcard vs. the challenge of testing offers in your catalog.
Know Your Brand Audience
When crafting your multichannel prospecting strategy and selecting its tactics, a key to success is addressing the unique characteristics of your brand and audience. What magazines does your target audience read? What TV shows do they watch? What radio shows do they listen to? Which websites do they frequent? (Besides yours, of course!) Is your target market tuned in to Facebook? Are they active on Twitter? Don't blindly test new media opportunities just because they're new and grabbing attention; test new media opportunities only when you're likely to find prospective buyers there.
When identifying unique characteristics of your target audience, remember Pareto's 80/20 rule and identify the 20 percent who contribute most of your profits. Identify their unique facts and behaviors with surveys and analysis of characteristics (e.g., home values, ZIP codes, pet ownership, children, etc.). Then find others who look like your gold customers.
Internal company factors are also a definite consideration. Does your firm have the patience for six months of planning for a test? Or do you have a mandate to expand prospecting pronto? This impacts your media selection. And consider your resources — budget, staff and systems — to track everything. Remember to plan for both creative/fixed costs of new acquisition media and ongoing production/media expenses. DRTV may make the most sense to reach your audience, but if you don't have enough budget to create a two-minute spot and money for revisions and tweaks after your initial test (no one hits it out of the park on the first attempt), it could be a huge waste of time and resources. Focus on media where you have sufficient funds to not only execute an initial test, but also make the second round of revisions and tests that are often needed to succeed in any new medium.
When beginning your media selection, ask these questions to determine which media to consider and which you can pass by:
1. Do you have a "hero" product that can stand on its own? A hero product will allow you to sell directly from a DRTV or print ad, enabling you to avoid the long timetable and cash flow crunch of taking online or catalog requests. With a really strong hero product, you can consider options such as a 30-minute infomercial or magalog.
2. How much selling space/time does your brand/product/offer need? Is the offer you plan to make free (for lead generation)? Is it low-priced and impulsive? A higher-priced, considered purchase? The answer will direct decisions like whether to use a postcard, envelope or magalog solo mailing.
3. Are your prospective customers active or passive responders? Are they sitting on the couch watching TV or actively searching online? Every medium has different levels of involvement; tailor your selection appropriately.
4. Can your brand/product benefit from demonstration? DRTV is the best place to demonstrate a product in use or show before-and-after product use examples. If your product is easy to visualize without being seen, however, radio could offer a distinct opportunity at a reasonable price. And don't discount the spillover benefit of mass media like TV, radio and print. These mass media have reinforcement benefits for web and retail sales beyond direct responses. While response rates for mass media tend to be much lower than targeted media like direct mail lists, so are their costs.
Multichannel acquisition marketing delivers significant benefits to your business over the long haul–. Who wouldn't want to bulletproof their efforts against potential cost increases, competitors and other negative environmental factors? But multichannel prospecting can be challenging to execute because there are so many options and you'll often be required to consider different offers or ways of selling. However, gaining the skills and experience to succeed at prospecting in multiple channels is exactly what makes you harder for competitors to beat ... and ultimately bulletproof. ROI
Shari Altman is president of Altman Dedicated Direct (saltman@ altmandedicateddirect.com).