Direct marketers turn to RR Donnelley for a complete range of innovative solutions. The goal of the RR Donnelley Direct Marketing Tip of the Day Blog is to provide strategic direction to marketers on trends and techniques that are currently working for a wide range of direct marketers.


Building Customer Loyalty

Shopping 2Marketers understand that slight variations in creative or copy – such as different headlines, graphics, or offers – can consistently improve response rates anywhere from 10% to 50% … or more.   For organizations with high customer lifetime values (CLV), lifts from new creative could translate into millions in incremental revenue.   In fact, according to Bain & Company, increasing retention rates by just 5% can increase profits by 25% to 95%.

Improving customer retention can benefit a company’s profit in many ways:

  • It eliminates the expensive cost of acquiring a new customer replacement
  • Long standing customers are easier to service, and at lower costs on average
  • Loyal customers tend to be price-insensitive, spend more, and will do so for a longer period of time

So what if you could improve customer retention?   How much could you spend to do that?

Start by understanding how to calculate CLV.   There are numerous methods, designed for retail, financial, non-profits, B2C, B2B.   They are focused on net earnings, or on revenues.   If you need support or have questions, let us know and we can help you calculate.

Now, segment your customers by length of relationship, and calculate those CLVs.   For instance, a 3-year customer group’s CLV is $100 and a 4-year customer group’s CLV grows to $150.   Now you know how much you can afford to keep a 3-year customer an additional year.

Knowing long-term customer value is important for budgeting investment in customer retention.   Use creative lifts in response to maximize your investment and boost long term customer profitability.


More Consumers Are Unplugging

Consumer with MobileToday, for the first time, more than half of all US households contain a cell phone but no landline telephone according to a recent report from the U.S. Department of Health and Human Services, Centers for Disease Control and Prevention.   That percentage drops just slightly to 45.2% for adults ages 45 – 64 … and, jumps up to 70% when you focus on adult renters ages 25 – 35.

To capitalize on the consumers increased reliance on mobile devices, marketers will need to align audience data with appropriately developed and tagged content.   Advertisers should craft content marketing strategies in a way that delivers a compelling mobile experience, including a plan that supports the increase in mobile content consumption.   For some marketers, that can mean increases of over 30% in content consumption.   Keep these three important points in mind as you craft your content program:

  1. Over 60% of consumers are unlikely to return to a mobile site they had trouble accessing, and worse, 40% will visit a competitor’s site … mobile responsive sites are critical.
  2. Account for mobile-specific behaviors when developing content strategies.   Structure content to break well on mobile responsive sites and use shorter, more descriptive titles, subheads, bullets and articles.
  3. Construct content for better mobile consumption and experiences.   Create new content ready for multiscreen delivery, and in smaller content “chunks” to optimize repurposing efforts.   Also, confirm the content is properly tagged according to location, topic, or purpose.


How To Build Personas For Direct Marketing Success

PSlide1ersonas are effective in explaining the “why” behind a response or non-response.   

Direct marketers are well experienced in using target lists that are descriptive in nature.   Gender, age education, wealth, family, home demographics, customer status, memberships and reader lists describe the “what” and “who” of a mailing list.   A copy writer can weave a story around these to obtain a response to a good offer.

However, because there are so many potential benefits to cover, the reader is overwhelmed with copy.   Somewhere in the kit hides the magic key to response.

A persona-based copy platform gets to the kernel of the response trigger, explaining the pitch in the reader’s environment.

How To Create An Effective Persona

Odds are, there are 2 or 3 main personas that drive your response rates.   Here’s how to define them.

  1. Break out your main response groups by common demographic and behavior clusters, eg: age, source, RFM, longevity.
  2. Interview some people from each group with questions that reveal their context relative to your product.   Ask open-ended questions that encourage story telling about lifestyle, habits, beliefs, values, needs, challenges, ideals, purchases with respect to your product.   Listen carefully.
  3. Assemble the responses in ways that finds the most common characteristics among the groups.   Distill these to a small manageable number, 5 maximum.
  4. Describe a persona and give it a name, for example, for a pet insurance offer:
    • Larry, age 40-55 married, family man, and living in the country, works in the city.   Has two dogs and a cat which he worries could be injured or get diseased, carefully evaluates and buys pet insurance to be protected against hefty veterinarian bills.
    • Joanne, age 25-40, single, urban dweller, career business leader.   Has a cat and a dog which are central to her home life.   Buys complete pet insurance because she will not allow any financial challenge to be more important than her love for her pets.
  5. Test these personas with lists and copy targeted to these specific needs and motives.

Personas help writers to empathize more closely to their targets to get maximum response.   Look at your customer files for a new way to segment prospects for better results!


When Will They Leave?

Understanding Slide1the churn in your customer base is important for survival.  

Fortunately, many enterprises have contractual relationships with customers that define probable churn opportunities.   Services such as phone, mobile, internet, cable, magazines, insurance, landscaping, garbage pickup, you name it: there is a defined event during which a customer may choose to leave.

For these business models, renewals is a well practiced routine.   It is also a significant opportunity to extend revenues.   So knowing when a customer is likely to leave is a trigger for catching that valuable asset before they do leave.   The expense of saving the customer is far less than the cost of acquiring a new one.

Set up a churn model in your business.   It may be used to identify potential:

  • Defectors: customers who cancel
  • Laggards: customers who fail to renew
  • Returns: customers who leave and then return later
  • Loss time: how long they will be gone before returning
  • Upgraders: customers who cancel to take a better service from you

Statistical analysis can be exhausting, and best left to the mathematicians.   Nevertheless, you have a responsibility to understand the causes and revenue impacts of churn.   You can achieve this insight in a number of ways:

  1. Reviewing customer records for timely incidents such as inquiries, purchases, product variety, payments, complaints, service calls, tenure, seasonality.
  2. Attribution of customers by source, channel, offer, promotion, referral, competitor.
  3. Overlaying customers with socio-demographic markers, eg. age, gender, marital status, children, own, rent, income, education for example.  There are literally hundreds of descriptors to choose from.

All of the above data-points are possible flags of a coming churn event.   Group your  churned customers separate from actives so you can inspect the suspect drivers of churn.   This is an oversimplification of the task, admittedly, but it is the foundation for building a churn model.  Leave the heavy lifting to the math experts.

The business case for building and using a churn model is easy.   You are extending stable revenue.   You are cutting the future expense of customer replacement and customer education.   Added to these, your oldest customers are your strongest asset for referrals, upgrades and low cost revenues.


How Propensity Modeling Can Accelerate Your Results

Graph Pict

Behavioral scoring is not a new science, but it always has new applications.   If you are like most direct marketers, you probably have a propensity model for some segment of your campaign efforts.   But odds are, it’s for customer acquisition.

That particular focus employs numerous factors which you have manipulated to determine who will respond to your prospecting campaigns.   The algorithm is applied to rented lists which are screened according to your model scoring system.

Beyond prospecting though, here are some additional fruitful areas where propensity modeling can help you improve results, both top line and bottom line:

  1. Churn Prevention: identifying key groups of expiring customers who are on the bubble.   These lapsed or soon-to-cancel buyers will require special handling to keep them active.
  2. Upgrades:   these are folks whose past behaviors indicate their likely interest in buying more service-rich or premium versions of your product line.
  3. Autopay and AutoRenew:  within your customer ranks are buyers who are more likely to post a credit card with you for automatic billing or renewal, given the right set of conditions or offer.
  4. Reactivation:   these lapsed and departed customers will likely return to you without the need of a special offer to do so.  You just need to ask them.
  5. Eager New Buyers:   these are brand new customers, perhaps less than 6 months on the books, who will likely buy more frequently and in larger values than most new buyers.
  6. Promoters and Advocates: within your customer files are loyal and active customers who are likely to refer their friends to you in member-get-a-member, and buyer-get-a-buyer promotions.
  7. Testers and Samplers:   your most longstanding customers may live in a comfortable groove; but among them, there are many who will try something radically new if you present it.   This may be a new product, but it could also be a new sales channel too.

The purpose of scoring propensity isn’t to select a group of candidates in a binary sense: “in or out”.   Rather, scoring gives you the ability to incrementally weigh projected returns against the additional costs.   Scoring allows you to adjust to the optimum investment, eg. list size, for an expected return, keeping you inside your ROI guardrails.

Look for marketing efforts that generate cost, and decide whether a propensity model could improve ROI for those activities.


House Committee Announces 2017 Postal Reform Bill

6a014e89d79f06970d01b8d25c012d970c-120wiOn February 1, the House Oversight and Government Reform Committee leaders introduced H.R. 756, which is known as the “Postal Service Reform Act of 2017.”   Bipartisan cosponsors of the bill aim to make the Postal Service more efficient by cutting costs, streamlining mail delivery, and improving oversight.   On Tuesday, February 7, the Committee will be conducting a hearing on the bill.  


Click Here for more information regarding reform bill details, including 7 key provisions, access


PRC Releases Approval For USPS 2017 Price Increase

Postal Bld 2On Tuesday, November 15, 2016, the Postal Regulatory Commission (PRC) issued its decision regarding the Postal Service’s 2017 Market Dominant Price Case.   The PRC approved implementation of the January 22, 2017 proposed price changes for: First-Class Mail, Standard Mail, Periodical, and Package Service.   Concluding that, “the proposed classification changes for these classes are consistent with applicable law and regulations.”

However, the PRC did not provide its approval on Special Services.   This category includes services such as Address Correction, BRM, Shipper Paid Forwarding, and instead stated, “the Commission will address the proposed Special Services price adjustments and classification changes in a separate order.”

 Click Here for all of the information, or access




USPS Files for 2017 Price Increase

Post Office BldToday the U.S. Postal Service filed with the Postal Regulatory Commission (PRC) a price adjustment notice associated with changes in the Consumer Price Index for All Urban Consumers (CPI-U) on market-dominant products.   Based on data from the Bureau of Labor Statistics, the Postal Service has inflation-based price adjustment authority of 0.422% for First-Class Mail and Standard Mail, and 0.871% for Periodicals, Package Services, and Special Services.   Within the filing, the USPS is seeking approval on several structural changes as well as a name change from Standard Mail to Marketing Mail which it feels better aligns with its customer’s use of this mail class.


 Click Here for more information including a summary and chart of the proposed 2017 USPS postal price increases, or access



Increase Loyalty With A “Leg Up”

Consumer LadderReward programs are used by many different organizations to help drive consumer behavior and increase customer loyalty.   To help maximize the entry and effectiveness of your loyalty program, make sure you provide your members with a “Leg Up” by including instant progress or a head start into the program.

Consumer researchers Joseph Nunes and Xaiver Dreze tested the effect of loyalty cards that offered instant rewards.   The researchers distributed car wash loyalty cards, with stamps, that allowed users to get a free car wash after 8 or 10 previous washes.   Two different loyalty cards were provided to participants:

  • One card required 8 stamps to get the free car wash, but had no initial stamps, all of the stamp spaces were blank - 0 of 8 stamps, or 0% progress.
  • The second card required 10 minimal purchases, but two of the stamps were affixed as a “special promotion” and entry into the program. Eight washes were still needed to get the free wash - 2 of 10 stamps, or 20% progress.

In the end, the researchers found that only 19% of participants with the first card, no initial stamps, purchased enough times to get their free car wash … whereas 34% of participants with the second card, two initial stamps, made it to the free wash.   Nearly double the loyalty.

Researchers also discovered a decrease in the number of days between car washes for the group with the two initial stamps.   On average, this group had 2.9 days less between visits, and the time between visits decreased by 0.5 days on average with each additional car wash purchased.   The decrease in time between car washes pointed to the increase in effort as the participants got closer to the reward.

To maximize your loyalty program consider offering sign-up bonuses, initial stamps or extra points.   Provide a member incentive that communicates "instant" progress and steps forward towards completing their goal.   Your members will be more likely to stick with it until completion, reach their goal quicker, and in turn you will boost your member loyalty.



The Most Powerful Emerging Market

WomenWith incomes predicted to reach $18 trillion by 2018, control of an estimated 75% of discretionary spending, and power over approximately 60% of all online shopping … Women have quickly evolved into today’s most powerful emerging market.

These statistics may prompt you to look at your own marketing efforts and come to the conclusion to “target more women!”    And it would be great if it was as easy as creating and implementing a single marketing strategy.   But, marketing to women is a complex venture.   The truth is, every woman is an individual and to truly benefit from this powerful group thought needs to be given to demographics, lifestyles and preferences.   These factors strongly influence the type of content and engagement that will resonate with women.   For example, industry research shows that a woman under 40 is more likely to check her smartphone first thing in the morning, whereas a woman over 40 is more likely to check her computer and/or watch TV … and preferences change if the woman is employed full-time or if she is a homemaker.

Use these 3 guidelines to create brand experiences that will help draw women to your brand:

  1. Analytics, segmentation and testing are valuable tools, use these tools to help you discover and address distinct preferences within this market
  2. Seek to engage and build a relationship with your female audience using messaging that empowers her, and helps her strike a balance between time, money and well-being
  3. Remember, a woman can be an influencer, buyer, owner, and user, so help her to fully understand your product or service benefits so she can make an informed decision

When marketers get it right, the female consumer can have a multiplier effect through her social sharing and sales referrals.  

The women’s market is a driving force!   Targeting and tailoring communications to women that empower and meet her individual needs can help deliver more profit to your bottom line.