The Istobe eCommerce Analytics Blog

Over the past two weeks, I’ve been watching the fallout from two important conferences taking place on the West Coast (where I would much rather be right now given the latest round of snow in Boston.)  The first annual Predicitive Analytics World ’09 was staged in San Francisco on Feb 18th and 19th and eTail West 2009 took place last week and drew in a host of e-Marketers from around the country. One common theme that I seem to be hearing from the blogs and articles I’ve read from both: make sure you’re using your customer data effectively and, most importantly, keep it simple.
Read Simplicity is Key for Marketing Analytics »

Last week in Weather Marketing we talked about ways to use freely available temperature and precipitation data to make sure you’re not marketing parkas to your customers in Texas. The rub was that the National Oceanic and Atmospheric Administration dosn’t exactly make the data available in the friendliest of formats. 

We’ve put our data manipulation skills to work and reworked the data in a way that will make it easy to import into a database table or append to your customer file. The following files provide the average annual and seasonal temperature (in Fahrenheit) and precipitation (in inches) for each state and for the US as a whole. It also lists standard deviation for each value in case you want to go super-nerdy on your analysis.

Have at it in the format of your choice!

Comma separated value: temp_and_precip_by_state.csv

Excel 2007: temp_and_precip_by_state.xlsx

It is a wintry, slushy mess in Boston today. Rivers of ice cold water line every street and each passing car sprays pedestrians unfortunate enough to have to walk to work.

I am one of these pedestrians. Worse, as a Boston transplant, I am woefully ill-equipped to stay dry. At this moment my feet and legs are soaked and I have never been more willing to part with money for a good pair of boots.  Really, I’m ready to buy right now. It’s urgent.

Read Weather Marketing »

With today’s news peppered with articles about the possible demise of Circuit City, the sinking Dow, and the continued decline in consumer spending, many companies are concerned about how their customers are going to respond to the tough times ahead. Several online retailers are already going down the discount path to try and get customers to spend their money early– well before their credit dries up. I’m sure many of you have already been hit up like I have with numerous discounts from shops that don’t typically give discounts – I’ve been surprised by the recent emails I’ve received from the likes of JCrew, a company that never seems to discount their merchandise.

Read Finding Customers Who Will Weather This Storm: Customer Segmentation in a Down Economy »

First things first, no matter who you support, I hope all of you have either gone out to vote today, or are planning to go out to vote. Although I’m usually not this dedicated, I woke up at 6:30 this morning to try and make it to the polls by 7. I was hoping I might be able to get their before the crowds, but by the time I got there at 6:55, the line was already two blocks long. I’ve voted at the same polling station for over 10 years now, and I have to admit that I’ve never seen such an incredible turn out for any election thus far. It took me about an hour to make it through, which was actually less than what I originally thought, but glad I beat the long lines I know will be there later this evening.

Read Obama Leading in the Polls? Perhaps it’s Due to Better Marketing »

Marketing Sherpa put out the 2009 Email Marketing Benchmark Guide today. One of the insights from the report is that email, in a down economy, is the comfort food that direct marketers curl up with next to the fire. That is, retailers will depend on it more than ever. At Istobe, we’re not surprised. Email marketing, after all, is a mature medium where smart retailers can meaningfully personalize content at a low cost.

Read Marketing Sherpa Says Importance of Targeted Email Will Increase During Economic Downturn »

One question that we constantly come up against is why online retailers shouldn’t blast their entire customer base with every email promotion they create. Granted, most companies use some form of segmentation to track email responses (the usual 0-12 month buyers vs. 12-24 buyers is a common example) , but besides being defined by arbitrary recency and monetary spend cut-offs, these groups have no real bearing how the customers contained in those groups will respond to a given ad. My colleague Matt wrote a nice entry about this back in July (see Does your email response rate depend on how many emails you send?), but I recently came across some new metrics that I think help drive the point home.

Read Timing and targeting: why you shouldn’t blast all your customers with every offer »

I was going through my usual news download this morning when I happened across the following blog article (here) from the washingtonpost.com that talks about the recent disclosure by major search providers that they are tracking ever increasing information on their users without their users’ explicit consent. The reason why their collecting this information? Better ad targeting.

For many online retailers, this may not seem like the worst idea - better information from search providers means a better understanding of who’s buying their products, when they’re buying them, and what they’re most likely to buy next.  For many consumers though, there is an increasingly fuzzy line between companies collecting information about their buying habits to better meet their needs and companies invading their privacy.  Rep. Ed Markey (D - Mass) is actually proposing new legislation that would limit what businesses could collect and ultimately do with their data, whether it be analyzing clickstream data to track customer behavior on their own site or trading information with data providers and other retailers to get better qualified lead information.

As someone who is entrenched in the analytics business, I fear the backlash from overzealous companies that trade on customer trust in return for increased revenue streams. There is much discussion online over NebuAd’s deep packet inspection technology being deployed by many ISPs to track individual user’s web activity for micro-advertising. While they provide an opt-out service for consumers, it’s still unclear whether you are opting out of receiving micro-ads or opting out of being tracked by the service. There was a similar outcry with the launch of Facebook’s Beacon technology which sent data from external websites back to Facebook for better ad targeting. Although they too now provide an opt-out for users, many bloggers and websites have resorted to publishing step by step instructions for completely blocking the Beacon technology through your browser.

Clearly, there is a middle ground where both consumers and businesses will feel comfortable with the amount of data being tracked and analyzed - my hope would be that this is can be found through best practices and not legislated through Congress. In the meantime, companies should focus on the following to maintain a level of trust with their customers:

• Transparency - Most important, let your customers know what information you intend to collect and how you intend to use it - and more importantly make this statement prominent and easily accessible on your website. Many customers don’t mind being targeted as long as they know up front how the company aims to target them.
• Opt-Out and Opt-Down - All companies should provide an opt-out of targeted advertising, but most should also provide an opt-down - the ability to decrease (or in the rare case, increase) how often or which types of products get advertised to the individual user.
• Anonymization and Obfuscation - While email targeting usually comes down to the individual level, most data analysis is done in aggregate and doesn’t necessarily need personally identifiable information to come up with important rules and formulas. If you’re working with a data analysis provider, they should be able to outline what information they need and what information can by anonymized or obfuscated to hide the identity of the underlying customer.

If all companies could follow these simple guidelines, I think we could find a happy medium between information collection and consumer privacy that wouldn’t necessitate legislative intervention.

With today’s news that the retail sector is experiencing a slowdown, now is a better time than ever for multi-channel retailers to do two things: turn to cheaper forms of advertising (email) and use quick-return customer analytics to compete with gargantuan discounters like Wal-Mart that threaten to swallow retail whole. The truth is that Wal-Mart will continue to invest in analytics during the tough economy because they will see immediate ROI from understanding which customers are poised to buy, which items they want, and how much those customers are willing to spend. I can think of two, good reasons for smaller multi-channel retailers to follow suit.

Harvest your current customers
Most would say that the thick of a poor economy is a poor time to invest in new marketing projects. If these projects are tied to new customer acquisition, I might agree. It’s damned expensive to acquire customers and you tend to forget what you already have while you’re out prospecting, buying lists, etc. Sometimes, the answer is in front of you. In a poor economy, isn’t it imperative that you retreat to your base? Multi-channel retailers need to figure out ways to:

A. Not lose your current customers to competition (like Wal-Mart)
B. Harvest your existing customers by making them feel as though you understand them

Really, achieving B is the answer to question A. A redoubling of your customer service effort will always make your customers more loyal and less likely to jump ship. But we have to remember that larger players can always offer deeper discounts in an effort to combat your superior customer understanding. One way around this is to deepen your customer understanding on the marketing front with timely, personalized emails to your customer base. Ultimately, if you can address your customers’ needs first - make your customers offers at the cusp of when they need those products - then you are likely to win their business. This is the advantage that predictive models based on your customers behaviors provide you: the ability to beat your larger competition on timing as opposed to discounting.

Quick ROI
Customer analytics like those that Istobe proposes are great because the analysis takes advantage of data that you, as a multi-channel retailer, already possess. You’ve already got a record of your cusotmers’ purchases. In other words, there is no up-front infrastructure or talent investment. What this ultimately means is that your ROI emerges quickly. How quick? Well, let’s just say that you’re in the black (or, green) around month two. This is especially true if you’re already used to sending your customer data to a co-op database (like Abacus or NextAction); you’ve already made your data collection and transfer investment. Now it’s simply about turning those investments to a different use - customer development not acquisition - by focusing how that data helps you pull in the monetary margins in your current customer base.

These days even the most technophobic consumers have inboxes full of marketing from companies they have interacted with. As responsible marketers, we have ensured that these customers have opted in to our communications and we know that we must promptly remove them from our house file when they no longer want to hear from us. However, according to Marketing Sherpa’s Email Marketing Benchmark Guide 2008 (summary here), ensuring opt-in may no longer be enough to keep our company’s image clean.

In a survey of over 4000 consumers, half consider email to be spam if it arrives too frequently, even if it comes from a known sender. This has serious consequences for email marketers using “carpet-bombing” strategies to spur customers to purchase. Even if consumers have opted in and know a company well, they may come to think it as a spammer if they are receiving marketing emails every day or every week.

The sentiment that, regardless of permission, frequent email marketing is spam will only grow as inboxes become even more flooded. Marketers will be forced to migrate to a “surgical-strike” strategy where customers are targeted with highly personalized messages only at the most likely time to buy, and probably no more than once a month.

In an environment where consumer trust is hard to gain and can vanish with one misstep, nobody wants to be seen as a spammer. Unfortunately, the risk of marketing too frequently is now beginning to outweigh the benefit. If email marketers do not adapt through better targeting, they may find themselves relegated to the junk folder for good.