What Works? An Analysis of Campaign Results and Best Practices – Part 2 Featuring Marquis’ CMO, Dr. Tony Rizzo

 

Video Transcription 

What Works? An Analysis of Campaign Results and Best Practices.

Part 2: Campaign Parameters 

Dr. Tony Rizzo, CMO, Marquis

One of the questions I get asked frequently is, “What works?” So, taking that question to heart, we executed a very extensive analysis of campaign performance throughout campaigns that we managed and produced over 2019. I’m going to share those results with you today.

We stratified the results also by assets. I was curious to know that the smaller you were, did you do worse than someone much larger? You can see the numbers. Not really. So consumers are consumers. Your asset size does not really play a factor in your ability to be successful with this approach.

We looked at the strategy as well. We stratified across three primary strategies: acquisition, cross sell and retention. And here’s how to think of these – red to green. Red, the farther away you are from the product or institution. Green, the closer you are to the product or institution.

So what does that mean? I’m going to do a checking promotion, a prospecting acquisition campaign. Or I’m going to do a checking retention campaign where I already have the checking account. But you’re going to sell me something like access, convenience services, perhaps a safe deposit box and add on a bolt so I’m closer to the product.

When I’m closer to the product, I already understand that you’ve already captured my attention. My psychological fence, if you will, has been opened versus the acquisition side of that where I may or may not know you. I don’t have this product. I have to think harder. So it’s kind of common sensical that you would think that acquisition all the way to retention, you’re going to have lower to higher response rates, lower to higher marginal ROI.

Next, we looked at the difference between a campaign and a matrix. What does that mean? Campaign – one-time event. Matrix – ongoing frequency – onboarding, reboarding, for example. Or perhaps it was an auto loan campaign that had multiple flights and multiple touch points. In every case, one-time versus multi-times, multi-times outperforms in spades versus the one-time wonder. And you can see that’s true amongst response rates, accounts open and average balances.

Now let’s take a look at channels by direct response and indirect response. Remember direct response, you promoted an auto loan, you bought an auto loan. And you can see we’ve stratified this across direct mail only, direct mail plus email, and then email only.

And here’s the thing that’s interesting. You look at these from a response rate, they’re all fine. There’s nothing wrong with them. They’re pretty good response rates. But look at the balances. If you look at the balances, they’re 126% better when you use those two channels. You’re going to see that throughout the rest of this presentation. The combination of channels substantially, I think, in every case but one, lifts balances.

Why do I care? I’ve never seen an annual report that says we had 7% response rate. I have seen annual reports that speak to marketing’s ability to bring in dollars. So I’m going to focus on dollars – balances per account that come in the door. The numbers hold up when I also look at direct plus indirect response. Same thing, while not as dramatic, same kind of premise will hold.

Let’s take a look at data use and package design.

When we talk about the use of data, we categorize data six different ways, in terms of how we weaponize that data to communicate with the consumer. Could be FICO based data. Could be based on the timing, that’s marketing automation, the timing of the offer. Could be based on variable use of content. In other words, I can go in and send you a letter that says your home, based on what sold within your neighborhood, is worth X. Is it time to buy a new home? Is it time to refi? That’s using content in a variable sense to drive a better connection with that consumer.

Could be branch based. Could be payment based. We do an extensive amount of work with payments, to be relevant, to be personal, and more importantly, to be specific to answer questions ahead of time that the consumer, the member, might have.

I would also use the life stage as a variable driver. We’ll show some examples of that as well. One of those you’re seeing here.

So our typical direct mail letter package looks very similar to what you’re seeing here. A lot of variable photography, variable copy. I’m going to have different offers going in based on what the data is telling me. I’m using a non-window envelope. And in a lot of cases we use a lot of live stamps. It reduces a lot of the clutter on the envelopes.

Again, I’m trying to be personal with you. This envelope that you’re looking at is more personal than one that, say, has a mailing indicia. So that’s our standard package. That’s when I talk about letters. This is really what I’m talking about.

As we go through this now, if I’m doing postcards, same kind of approach. They’re highly data based. They are all oversized. We do oversized cards so they stand out in a stack of mail. Your postcard rises to the top.

If I’m doing email, we do all manner shapes and sizes of email. They are all highly databased. But they’re also very what I call code simple, one column designs that are designed to easily render on 90% plus of the platforms that are out there. Keep your email simple. Don’t do a lot of columning. Don’t do a lot of special effects within the email. It ends up not working as well as something very simple and straight to the point.

What Works? An Analysis of Campaign Results and Best Practices – Part 1 Featuring Marquis’ CMO, Dr. Tony Rizzo

 

Video Transcription 

What Works? An Analysis of Campaign Results and Best Practices.

Part 1: The Theories Behind Marketing Automation

Dr. Tony Rizzo, CMO, Marquis

One of the questions I get asked frequently is, “What works?” So taking that question to heart, we executed a very extensive analysis of campaign performance throughout campaigns that we managed and produced over 2019. I’m going to share those results with you today.

For those of you that are homeschooling in and amongst the pandemic, bring the kids in the room, we’re going to give them a quick psychology lesson.

Direct marketing needs to accomplish two things. One, it has to capture attention and two, it can’t manipulate. There’s two theories at work. The first is called the Capacity Theory of Attention. And the Capacity Theory of Attention is simply this: We have a limited bandwidth in terms of our subconscious ability to process information. Only those things that are familiar to us tend to break through that filter so we can move from the subconscious to the conscious level of cognition. This is why we do things like personalization. We make things more familiar to that customer/member to open up that filter, so the offer can move to a higher level of process.

The next is called the Psychological Reactance Theory. And for anyone that’s ever had kids, or been a kid themselves, you’ve been told not to do something, “Don’t touch the stove!” and you touch the stove. Here’s why that happens. We are creatures of free will. And if someone tells us not to do something, our gut instinct is to do the exact opposite. From a marketing perspective, if someone senses that you are using data to manipulate them, they will affirm their autonomy in doing the exact opposite. We have to run a balance of creating things that are familiar to a consumer while not manipulating him or her as to create an environment where “I am open to processing your message.” Those two theories are the foundation of everything.

Our study was the sample size that you see here on the screen, a pretty extensive look in terms of the number of campaigns that we executed throughout 2019. Globally or strategically, we approach marketing with something called Predisposition of Response. What does that mean? It means the campaigns that you’re going to look at, if it’s a campaign, a one-time event, for example, there are over 20 different filters that went into putting the target audience together. Could have been geographic, psychographic, demographic, balances. Could be exclusions, delinquencies. Could be tenure. All of those things, all of these different attributes, went into building a campaign profile.

Why? To get that Predisposition of Response. Not everyone. I’m looking for the one.

Now, from a marketing automation standpoint, on average, 30 different filters were put in place to build or to get to that audience of one. The heavy lifting with a lot of this work, and work in your campaigns, is done on the front end. I’m trying to capture attention. I’m trying not to manipulate. One of the ways that I can do that is by filtering appropriately. All of the campaigns that you’re looking at have this Predisposition of Response and this maniacal focus on the target market, in order to get to that look-alike profile.

Now, if we do that, when we do that, it leads to an increased response rate. In particular, I’m going to speak to the power of marketing automation. Because one of the things that I’ve really questioned is, “Is marketing automation worth the effort?” It’s a lot of effort to do daily marketing, right? All the way from the front end of segmentation to the back end of production. A lot of work. Is the juice worth the squeeze?

We’re going to show you that it is.

What also leads to increased response rates across the segment of campaigns that we looked at, over 400 campaigns, was, again, maniacal focus on brand. If you put your marketing materials on a table and look at them from a direct marketing standpoint across the board, and they look boring to you, you’re doing the right thing. You are focusing on your brand. Why is that important? Remember, we talked about capturing attention and not manipulating? That Capacity Theory of Attention basically tells me I only have a limited brand bandwidth, right? So if your stuff doesn’t look consistent, psychologically, people are going to ignore it. Not that they want to ignore it, but they will ignore it. So brand consistency, across the board, played into higher response rates.

Now, from a data perspective, we have seen the number of data sources we use to put together our Predisposition of Response explode over the past several years. A lot more data sources are being added – transactional data. It could be from a credit card. It could be from ACH, we’ve seen a lot of that come into the system. A lot more demographics. A lot more psychographics. A lot more geographics. So all of that is coming to fruition as we look to do a better job of segmentation. So practically, what does that look like?

You’re looking at a profile of 100,000 Home Equity users. Primary indicators of Home Equity skewed around several different elements; invitation to apply ITA, income, net worth, loan-to-value, the year the home was built. These were primary indicators of propensity to own a home equity loan.

Secondarily, we have some propensity models. On a scale of one to 100, were you in the market for a home equity loan? On a scale of one to 20, were you in the market to refinance your home equity loan? Were you a mail order buyer? Did you have children? What was your tenure? It’s those things (remember, we talked about the other 20 or 30 different filters) that go into creating this funnel. Well, this is what it practically looks like. These are things that we think through in order to break through the barrier of offer resistance.

Across the board, globally, I’m going to share three numbers. The first is $5. For every dollar invested in our approach, this Predisposition of Response, we generated $5 in profit on the back end. I’ll take that bet any day. The second number is 5%. This is representative of the number of consumers that we mail to, on average. So not big numbers, right? These are small numbers. The last one is 13%. And this is our average combined response rate compared to an average DMA number of 9%. We do much better than the national benchmark. Again, working on this Predisposition of Response, using our data to focus on most likely buyers.

We categorized the results across a number of different categories. The first was categorically channel, right? We did direct mail only, email only, and then a mix of email and direct mail. We categorized across campaign type, be it preapproval, reboarding, onboarding, prospecting … we categorized it that way so we could look at the data.

Two big key findings that we found in the study: the first was that if we use direct mail and email together, your balances go up by 2x in almost every case. The second finding that we found, when we use time personalization, also known as marketing automation, your performance, overall balance performance, response performance, goes up by 4x.

So there is something to marketing automation, there is something to recognizing an event in the consumer’s life with you and doing something with it that creates a lift. It creates greater receptivity. It creates better response.