Download conversion marketing - Path to Purchase Institute

Bringing Precision to
CONVERSION
MARKETING
Connecting the dots
toward a deeper
understanding
of customers
B R I N G I N G PR EC I S I O N TO C O N V ER S I O N M A R K E T I N G
Marketers can achieve greater relevancy by
connecting the dots on all of the available data
and by working toward a deeper understanding
of their customers.
T
he quest for relevance is an age-old struggle in
marketing, but it has taken on a new urgency
in the digital age. Increasingly, the old rules
of mass marketing no longer apply. Opportunities to reach consumers through deeper insights
and with greater precision abound in this era of
data-driven marketing.
Recent trends are in the marketer’s favor. More
consumers are exploring products and shopping online, for example, leaving behind a valuable digital
footprint. Today’s digital marketing landscape is
awash in so-called “hyper-personalization” techniques, as companies seek to leverage this data trail
in order to tailor ad messages and promotional offers to increasingly smaller segments of their target audience. Meanwhile, transactional data from
sources like retailer loyalty card programs provides
a window into purchase behavior and a platform
from which to launch shopper programs that are
targeted specifically to those behaviors.
The question is: To what end? Are marketers
who employ all of these data-driven methods
getting more of their messages through to the
right recipients? Are they strengthening bonds
with customers, providing real value in the form of
more relevant offers or increasing the likelihood of
purchases?
While there are no easy answers, evidence suggests
that at least some of the efforts to target customers
on a more personal level are falling on deaf ears. For
instance, a recent global survey by Accenture found
that 42% of consumers are willing to pay for ad
blocking services that eliminate interruptions from
online ads. The alarmingly high figure was a clear
indication that “too many ads are poorly targeted,”
said one top Accenture executive upon the release
of the report. Simply put, a misplaced ad has a high
chance of being regarded by consumers as irrelevant
or a waste of time.
Such cautionary statistics have not curbed
“The technology marketers use to be
relevant is accelerating as quickly as
the technology consumers possess to
turn us off if we’re not.”
ALICIA SMESTAD, EVP, Senior Group Director and
Senior Vice President, Catapult
2
marketers’ appetite for the digital ad medium.
A recent eMarketer report, for example, cited a
Duke University study in which CMOs across
multiple industries – from healthcare, banking and
technology to retail, manufacturing and consumer
packaged goods – said they planned to increase their
digital marketing spending over the next 12 months
by anywhere from 8-22%. These same companies
plan to reduce their traditional ad budgets by as
much as 7-12%, according to the study, while upping
their overall marketing spending in a wide range:
anywhere from 1-20%.
From Personalization to Precision
Clearly, there is a widening gap between what
marketers consider to be “personalized” and what
consumers perceive as relevant. Many of us have
experienced this in our everyday lives. You may
casually browse an online retailer just once and be
bombarded for the next several days by overtures
from the company as if you were a loyal customer.
Just think about all the “exclusive for you” branded
promotional offers delivered through our e-mail
inboxes or favorite web pages that end up ignored or
discarded as if they were the equivalent of spam.
DUE DILIGENCE: The Data Audit
If you ask any marketer, “How well do you know your customers?” you’re likely to raise a few
eyebrows. The truth is, it is difficult to get an objective answer to this question. Experts in the field
have a suggestion: Start by looking at the data.
“The reality is, most CPG companies have very limited and inconsistent information about their
customers. Their databases are relatively thin,” says Mark Hertenstein, Senior Vice President of
Enterprise Solutions at Epsilon.
A food manufacturer, for example, may have captured a customer’s name and e-mail address
when he or she downloaded a recipe or signed
up for a promotion. Often times, however, that’s
where the data trail stops. A brand may have
a basic demographic profile of its user base,
thanks to first-party research from the likes of
Nielsen or IRI. But it must then work with a thirdparty vendor like Epsilon to create additional
contact points and a deeper understanding of
those consumers, Hertenstein says.
“Now you not only know where they live,
but what type of house they have, how many
kids, their hobbies and interests,” he says.
“Do that across your database, and then you
have something to segment. Are they budget
strapped? Health conscious? The deeper you
go, the more meaningful the segments you can
create.”
Have marketers done their data audit? Here are five key questions to ask:
1. Do you have a sense of who your shoppers/consumers are or could be?
2. Have you appended that basic profile with third-party data to complete
the view of the consumer?
3. Are you distinguishing data for insights and data for action?
4. Are you connecting your message to the transaction?
5. Is your messaging driving the consumer towards a purchase?
3
B R I N G I N G PR EC I S I O N TO C O N V ER S I O N M A R K E T I N G
So where are marketers going wrong?
“Marketers are not using all of the available data
to get a better picture of who their customers are
or what might be useful or relevant to them,” says
Alicia Smestad, EVP, Senior Group Director at
Catapult. “The same types of marketing, messaging
and targeting get repeated because the brand or
retailer hasn’t tied back to the fact that what they’ve
sent their customers before hasn’t worked and is not
relevant. They’re not doing anything significant to
learn how to change the approach or close the loop
on a purchase.”
Despite the widespread availability of data from
a variety of independent sources, Smestad says that
very few marketers have taken the necessary steps to
access complete information about their customers’
demographic profiles and lifestyle interests. Even
those who have, she argues, often do not connect the
dots between this type of research and transactional
data or online search behaviors to generate a more
holistic view of how brands fit into their customers’
lives. (See “The Data Audit” on page 3.)
Smestad believes the intent of personalization
is a good one; however, she says the process needs
to be directed at understanding what motivates a
customer toward a purchase or brand loyalty versus
tailoring specific messages to a particular audience.
“Pushing different messages versus pulling is the
goal of much of the industry right now,” she says.
“Personalization is focused on a custom message for
each person throughout channels, or on different
messages for different user groups. This is progress,
4
but it is still too focused on delivery improvement
and optimization, versus relevance.”
Over the past two years, Catapult has been
refining its chief marketing model, known as
conversion marketing, adding depth and precision
through enhanced segmentation techniques.
Its new approach centers on developing ways to
communicate with real people versus activating
against vague consumer targets.
“We’re having a deeper conversation on how we
help and execute marketing that identifies, reaches
and messages to a specific customer or customer segment,” says Peter Cloutier, Chief Marketing Officer
at Catapult. “We do this in service of building a brand
connection and get someone to do something – click,
share, download, post and ultimately buy. This is the
core of conversion marketing.”
In the updated segmentation approach, a
marketer’s first step is to conduct a deep data analysis
in order to build a clearer portrait of its customer base
and to identify segments that make the most sense
to target based on who they are and how they shop.
The scope of this analysis, including the number and
nature of the segments, will vary depending upon the
brand’s marketing objectives.
This process, in turn, enables a brand or retailer
to conduct its marketing more efficiently because it
can work simultaneously to optimize its message and
audience – i.e., to craft a message that is most likely
to resonate with a carefully identified group. By
contrast, traditional mass marketing loosely defines
its customer base with broader segments using
demographic indexing. Too often, it tries to tailor a
one-size-fits-all message to groups that may or may
not represent a company’s most valuable customers.
“Adding this new layer of precision to conversion marketing helps minimize waste because we’re
delivering the right message to the right people at
the right time,” says Brian Cohen, Executive Vice
President/Group Director and Head of Digital
Integration at Catapult. “It will get us closer to the
point where we stop thinking about reach, frequency and impressions. We need to focus on sales and
other key performance indicators that marketers
are increasingly judged on for their success.”
A 10-step action plan can be found on page 6. In
the following sections, we examine how marketers
can merge shopper/consumer insights, improve
the segmentation process, strengthen messaging
and enrich measurement techniques – the four
key pillars of a more precise conversion-marketing
strategy.
PILLAR ONE:
Insights
Bring shopper to the forefront of
consumer insights
As marketers work to refine their methods, they must
also confront certain organizational challenges. One
imperative is to forge greater collaboration between
consumer insights and shopper insights groups. Most
marketing departments tend to view these as entirely
separate functions, often placing far greater emphasis
on the former than on the latter. “Most companies
have not established shopper insights teams in a
robust way, either because they don’t see the value
of it or they think it’s covered by consumer insights,”
Smestad says. “Generally speaking, shopper insights
are seen as an afterthought.”
Consumer insights seek to uncover people’s wants
and needs: their usage or attitudes towards a brand
or product. Shopper insights delve into behavioral
factors such as barriers to purchase in an attempt to
position a brand within a unique shopping solution.
By thinking of these as two unrelated sets of data,
marketers often fail to gain a complete picture of
the shopper’s decision-making process.
“Because today’s shopping journey is so fragmented and there are so many digital behaviors involved,
you cannot isolate the consumer from the shopper,”
says Mark Hertenstein, Senior Vice President of
Enterprise Solutions at Epsilon. “We have to challenge our usual definitions of consumer insights and
frame them more around the shopper. We need to
start asking deeper questions in order to figure out
how we should engage and talk to our customers
along their digital and physical journeys.”
Knowing which questions to ask is part of the
learning process as brands go deeper into segmentation.
Normally, a brand conducts segmentation by grouping
people in a one-dimensional demographic index (for
example, by region or household income level), while a
retailer may construct its segments around a particular
shopping behavior (such as people who only buy a
certain category on sale).
Catapult’s new approach goes much further. It
combines more detailed demographic and lifestyle
information with transactional data to create multilayered segments, and then builds an entire marketing
plan around each of those segments. “What’s really
“The shopper journey has spark points:
It could be a billboard, banner ad,
seeing a sign inside a venue or even
talking to your friends on social media.”
BRIAN COHEN, EVP/Group Director and
Head of Digital Integration, Catapult
5
B R I N G I N G PR EC I S I O N TO C O N V ER S I O N M A R K E T I N G
new is the idea of connecting the segments to each
pillar of your marketing strategy, so that everything
is working together,” Hertenstein says.
So how does this work? Consider the following
scenario:
Let’s say that a major eyewear retailer wants
to grow its customer base by expanding one of its
top-selling product lines. As part of the initiative, it is
looking to add new styles of frames and conduct various promotional activities. How should this retailer
build and execute its customer acquisition strategy?
Answer: It should start by learning more about
the customers it already has.
“Think about all the people who have glasses or
who need glasses; what motivates them to buy; what
types of brands, styles and price you need to have
for certain groups of people in different stores –
these are all consumer insights,” Smestad says.
As it compares this information with behavioral data and purchase transactions, the retailer may
discover a value segment of suburban shoppers
who buy glasses once every three years; that could
ACTION PLAN
1.Build a deeper view of your existing
consumers:
• What they buy: purchase data and
behaviors
• Who they are: demographic data
• What they do: shopping, media, interests
2.Build current user “clusters” and nonuser clusters.
3.Develop strategies for growth based
on testing these clusters.
A sample strategy might work as follows:
Assume that there are 100 types of consumers that use your brand today based
on the modeling of attributes across the
deeper data sources outlined in the following sections. Now take those 100 dif-
ferent groups and get to know them
through testing scalable segments.
4.Who buys your brand a lot? Can you find
others who look like them? What would
you say/message/offer them?
5.Who buys your brand infrequently? What
might help them think of your brand more
or in a different way?
6.Who do you think is your next “white
space” to reinvent your brand to a new
segment/cluster? How would you propose
to be relevant to that group?
7.Reset what you “know” to what data
you can connect together to “learn.”
8.Work with partners to enhance
the data you have and the data
you don’t. This will be an ongoing
endeavor.
9.Measurement of sales impact is the
only way to validate your relevance.
Focus on bringing that key data set
in as table stakes.
10.Get results that amplify your
strategies to continue year-over-year
growth versus simply looking for
“what’s next.”
6
be one component of its strategy. Another group
might be a sub-segment of urban Millennials, who
are less sensitive about price but want to feel like
they’re keeping up with the latest trends in eyewear.
“This segment would have a very different reason
for coming into the store,” Smestad says. “You have
to build your assortment and messaging to each of
these segments very differently.”
By creating more informed segments in this way,
the retailer will know exactly which customers it
is going after and how best to communicate with
them. It can then use this framework to create a
resonant message for each group.
PILLAR TWO:
Messaging
Creative must be an integral part of
the strategy: Make the message fit the
audience.
In today’s non-egalitarian marketing world, a
handful of powerful brands can afford to run
outrageously expensive ad campaigns that may grab
attention without saying anything that might make
a particular group of people want to buy the product.
(A certain chatty green lizard comes to mind.) For all
other marketers, it is far more economical to tailor a
creative strategy to the needs of a specific audience.
And that will require a better understanding of the
people the marketer is trying to reach.
Along this vein, one of the critical decisions in the
above analysis is how many segments to create, and
how many different customer profile and behavioral
attributes to assign to each segment. “Part of this is
you’re learning how to segment as you go along,”
Smestad says. “There are an unlimited number of
possible segments, but it’s a good idea to start with
less because you can always add more as you get
better at the process.”
A CPG manufacturer, for example, might start with
a segment of value-seeking Hispanic shoppers who
live in the southwestern U.S. and then assign lifestyle
attributes to further distinguish consumers within that
segment, such as “pragmatists” or “dreamers.” Next,
it might cross-populate the segment with “Mom”
pragmatists or “Mom” dreamers who live in another
part of the country, or with Boomer pragmatists and
Boomer dreamers who live in the Southwest.
Any number of additional behavioral variables
could be added to further illuminate the identities
and motivations of these segments, such as attitudes
towards shopping (e.g., pleasure versus chore) and a
low, medium or high level of coupon usage. Each
permutation creates a potentially valuable new
segment and the need for a dedicated messaging
strategy. For example, this particular CPG brand
would not want to speak to its pragmatic consumers
in the same way it does to dreamers, even if both
groups share the other traits of being value-seeking
shoppers with kids living at home.
Among brick-and-mortar retailers, Kroger has
taken this process to the extreme, using powerful
computer algorithms and granular data from its
7
B R I N G I N G PR EC I S I O N TO C O N V ER S I O N M A R K E T I N G
example, let’s say a marketer has identified four
segments of moms for its brand of baby food:
organic, natural, mainstream and value. The core
creative may remain the same for each group, but
individual segments may receive a slightly different
message based on different visuals contained within
the ads.
Programmatic creative may also be applied to
search marketing. Fandango can send an e-mail to
a customer that says, “Save $2 on your next movie,”
and if that customer opens the email within 100
yards of a given movie theater, the content/message
(i.e., movies/ads) will be the same as the ones nearby.
“This is not easy to do,” Cloutier says, “but it can
increase relevance to the customer by ten-fold.”
loyalty card program to segment down to the
individual customer level. Even in this case, however,
the retailer’s marketing and communications strategy
is still tethered to only one facet of its customer base
– i.e., their purchasing patterns. Similarly, Amazon is
a master at cross-selling products to customers based
on their browsing histories, but doesn’t necessarily
bundle or promote offers in a way that suggests a
deep knowledge of those customers.
“Shopper data from retailers is purely transactional:
It tells you who is buying the brand or category, but it
doesn’t tell you anything about who those people are
or what is motivating their purchases,” Hertenstein
says. “You have to layer in attitudinal behaviors and
lifestyle behaviors. These are all very different types
of data, and you must use them in combination in or-
der to create a 360-degree view of the consumer.”
The previous scenario provides insights into how
messaging is derived from the segmentation. When
communicating with style-conscious Millennials,
for example, the eyewear retailer might dispense
with a standard one-size-fits-all offer (e.g., “Get
$100 off a pair of glasses with your next eye exam”)
and try to create a more individualized message. For
instance, it might shift from the pragmatic “It’s time
to replace your glasses” to the more aspirational
“Check out the latest frames we have in store.”
There are a variety of ways to scale messaging that
is tailored to the unique needs of each group. One
method is to overlay the notion of programmatic
advertising (which currently focuses on the delivery
and placement of ads) onto the creative itself. For
“Everyone seems to be measuring with
a short-term sales lift mentality. We
should be measuring with the intent of
learning.”
CHARLEY CIRESI, Vice President of Client Services,
Catapult/Nsight Connect.
8
PILLAR THREE:
Media
Shift the focus from media buying to
media delivery
Of the four pillars discussed here, media perhaps
has the most direct correlation with the concept of
precision. Traditionally, media is purchased with
the goal of reaching a broad demographic audience.
Instead, the goal should be to reframe the conversation about delivering the right message to the right
audience in a way that’s non-intrusive and relevant.
“The question becomes: Can you be more impactful with a precise buy than a mass market spend to
KEY CONCEPT: Shopper Journeys
For years, marketers have tried any number of ways to describe and capture the consumer’s path
to purchase. “Nobody shops in the same way,” says Brian Cohen, EVP/Group Director and Head
of Digital Integration at Catapult. “But as marketers, we all tend to plan in the same ways and like
to think we know exactly what the user experience looks like.”
That user experience is becoming more complex as new technologies provide digitally savvy
shoppers with an increasing array of options. There are multiple decisions to make at every step
along today’s shopper journey.
To account for these trends, Cohen uses
a mapping model that he describes as a
sophisticated decision tree. “The shopper
journey is like a highway with off-ramps,
and each exit has a number of turns where
any number of decisions can be made,”
he explains. “These are what I call spark
points: It could be a billboard, banner ad,
seeing a sign inside a venue or even talking
to your friends on social media.”
At each of these spark points, he inserts
a conversion mechanism – a key performance indicator that provides a measure
of the consumer response. In the case of a
banner ad, “Do you ignore it, click on it, or
keep in the back of your head?” he asks.
“There’s always a next step. We want to
know what the conversion mechanism will be at each of those steps.”
Cohen sees this process as moving consumers along the highway. “We can’t force someone to
buy something,” he says. “Marketers can’t change behavior, but we can enable behavior. When
consumers do decide to make a purchase, we can make sure that we’re in the right place at the
right time – with something that works for them.”
9
B R I N G I N G PR EC I S I O N TO C O N V ER S I O N M A R K E T I N G
“We have to challenge our usual
definitions of consumer insights and
frame them more around the shopper.”
MARK HERTENSTEIN, Senior Vice President of
Enterprise Solutions, Epsilon
reach a certain number of eyeballs, and can you produce the same result for a lot less money?” Smestad
says. It’s a laser versus a shotgun approach.
In the short term, brands may still want to rely
on the broad reach of national media, particularly
if they have the general sales results to show for it.
But going forward, marketers will start to think of
media less in terms of reach against an audience and
more in terms of intersecting with their segments
– whether measuring against acquisition (new
household prospects) or frequency (current household KPIs). The next section includes more on this
evolving approach to media and measurement.
Marketers, of course, are already coming to terms
with a drastic shift in how media gets bought and
sold in today’s fragmented advertising landscape.
The increasing role of digital ad platforms like the
Facebook Exchange and streaming services like
those of Netflix and Pandora mean that almost any
company can be in the business of buying media.
Major marketers including Procter & Gamble are
bringing more of their programmatic ad buying
in-house, and the responsibility for ad placement is
increasingly being divvied up between the traditional
media buying houses, integrated agencies (including
shopper marketing agencies) and third-party vendors.
Given these dramatic changes in the media marketplace, it is particularly important for shopper
marketers to remain focused on their specific client
objectives, says Charley Ciresi, Vice President of
Client Services at Catapult/Nsight Connect.
“If your goal is to build brand equity or brand
awareness over the longer term, you may still want
to think of media in terms of reach and frequency,”
says Ciresi. “In shopper marketing, we have to think
about what’s converting the shopper to a buyer, so
our results metrics are going to be very different in
10
the shorter term. This is where precision marketing
can play a critical role. It can help you better define
your audience and eliminate inefficiencies as you
work to balance the brand’s priorities and objectives.”
PILLAR FOUR:
Measurement
Transition from soft to hard metrics;
understand what needs to be measured
and why
Going forward, marketers will need to embrace
a shift in priorities with regard to measurement.
Marketers today remain largely focused on “soft”
metrics – such as engagement rates, clicks and impressions – versus looking at hard data that would
indicate a more direct impact on purchases. After
all, it’s one thing for a brand to know whether or for
how long consumers watched its video-enabled ad,
and another to determine if the views caused those
consumers to take any action with their wallets.
Even as marketers have become increasingly accountable for showing sales results, they are not necessarily clear on what needs to be measured, or why,
says Ciresi. “Everyone seems to be measuring with
a short-term sales lift mentality,” he says. “Instead,
we should be measuring with the intent of learning,
so we can continually optimize our campaigns and
programs as we go.”
In the previous eyewear scenario, for example, the
retailer is likely to use total store volume to assess the
success of its customer acquisition strategy. However, that single metric does not allow it to dig further
– i.e., to know which parts of the program worked
with different segments. “They don’t know who’s
coming into which stores or what brought them in,”
Smestad says. “They’re measuring, but they’re not
measuring enough and they’re not learning how to
improve the program with each successive try.”
With so much clutter in the marketplace, it is
difficult for any marketer to know which tactics or
circumstances in any given campaign or program led
directly to a sale. By setting up a test versus control
measurement system, however, a brand or retailer has
a statistically relevant sample in which it can connect
household data to stores to markets in order to isolate
the factors or components that worked best.
For example, the eyewear retailer could test stores
within two major metro markets: one that received
the $100 off promotion, and the other that did not. “It
would require matching samples with sufficient scale;
the stores in the two markets have to be similar in
terms of brand development, distribution and so forth,”
Smestad says. “There’s a lot of planning in this system,
but it allows you to eliminate all the other variables outside of what you’re testing that contributed to a sale.”
The chart below illustrates one type of hard-data
measurement model using four distinct data categories
(increasing in predictive power from right to left).
Within each section are steps to add precision to
a conversion marketing strategy through four key
pillars: insights, messaging, media and measurement.
HARD MEASURES:
With all of these tools in hand, marketers can begin
to build a strategy that – regardless of the specific
tactics or brands – is guided by the core principle
of creating value for customers through relevance.
Thus, marketers can reframe the conversation from
concerns about privacy, ad blockers and the myriad
ways in which consumers can tune out messages, to
an opportunity to become (at the very least) a more
welcome intrusion into their lives.
“The technology that we as marketers use in
order to be relevant is accelerating as quickly as the
technology the consumer possesses to turn us off if
we are not,” Smestad says. “Relevance is the currency
of value. And if you’ve achieved that, you will have
earned the right to talk to your customers.”
n
About the Author: Michael Applebaum is a freelance
writer and editor who specializes in developing features
that address all aspects of marketing. He trained in the
New York City publishing industry and held seniorlevel editorships at Brandweek, Photo District News
and Spy magazine. He has covered marketing since
2000 and now produces various independent research,
copywriting and editing projects for businesses and
agencies. His marketing journalism work has been
regularly featured in Adweek and Shopper Marketing
magazine. He is based in Chicago.
Primary Methods
TEST VS. CONTROL
PRE VS. POST
SURVEY
REGRESSION/MIX
•Household tagged and
purchase data available
for “exposed” vs.
“unexposed” matching
•Sales data read for
trends 4 weeks prior
compared to during
and post-event sales
•Stores matched and
store level sales data
available for test vs.
control groups of stores
•Sales data read for
year-over-year results
•Shopper intercepts
or online surveys to
capture purchase intent
changes or brand
perception changes
of those exposed vs.
unexposed or pre vs.
post event
•Significant gathering
of inputs across all
spending to build
models to isolate the
impact of specific
stimuli
•Markets matched and
sales data available for
test vs. control groups
Planned before
execution for
feasibility & cost
•Cannot separate
impact of overlapping
support and cannot
isolate other market
factors (competition,
seasonality, pricing)
Requires enough
scale to see a
difference
Reported data vs.
actual data
Reads only
“big stuff”
11