road to direct mail marketing presentation (8.6.16)
TRANSCRIPT
©2014 Epsilon. Private & Confidential
The Road to Direct Mail Marketing
2 More London
Wednesday 8th June 2016
2
10.00am - 10.10am: Introductions & objectives for the morning
10.10am – 10.20am: Economic overview
10.20am - 10.40am: The direct mail roadmap
10.40am – 10.55am: Targeting households using transaction data
10.55am - 11.25am: How do you create a fit for purpose B2C catalogue?
(John Ellis, Citipost)
11.25am – 11.35am: Measuring campaign performance
11.35am - 12.00pm: Q&A
12.00pm - 1.00pm: Lunch & Networking
Morning Agenda
3
Introductions and objectives for the morning
10am-10.10am
4
Today’s economy & what it means for retailers
10.10am-10.20am
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• British economic recovery “largely on track”
• 2.2% expansion in 2015 (second of all the G7)
• Households’ real disposable income up 3.5% on average
in 2015 (low fuel, energy and food prices)
• Unemployment decline from 5.6% to 5.1%
• Real household earnings up 2.4%
• House prices up 4.5% YOY and 33% since 2009 low
• 5.6% increase in non-property consumer borrowing
• Projected 2.2% growth in 2016 despite likely hike in
interest rates
• Risks associated with Brexit look minimal
The UK Economy
in 2015
https://issuu.com/
epsilonabacus/doc
s/wr_abacus_tren
d_report
(pages 42-47)
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• 2015 under-delivered in comparison to 2014
• Price deflation of 2.3%, volume increase of 2.2%
• Strong growth in the direct channel (mainly internet) at the
expense of store visits (declined for 8th year in a row)
• Non-store sales grew 15.7% YOY and share of total sales
grew from 7.9% to 8.4%
• The non-store channel is predicted to grow in 2016
The UK Retail
Sector in 2015
https://issuu.com/
epsilonabacus/doc
s/wr_abacus_tren
d_report
(pages 42-47)
7
Overall home
shopping sector
trends
• 11.9% growth in
2015 (10.4% in
2014)
• Growth across
all 12 months
• AOV stable
• Direct mail a
significant
contributor
82 75 89 84 81 92 83 84 97 109 146 111 92 85 96 98 93 104 92 89 115 123 161 121 -
20
40
60
80
100
120
140
160
180
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Revenue and mailing volumes, 2014-2015
Revenue 2014 Revenue 2015 Index
8
The direct mail roadmap
10.20am-10.40am
9
Top 10 reasons to send direct mail marketing
1. It’s proactive
2. You can directly target lookalikes of
your best customers
3. It drives sales to all channels
4. You’ll recruit brand buyers, not product
buyers
5. Customers will buy at higher price
points…
6. …and spend more frequently…
7. …meaning greater customer loyalty
8. You can test, measure and scale up
with confidence…
9. …allowing you to accurately forecast
for growth & stock levels
10. Campaigns can be refined based on
previous learnings
10
Some statistics
c. 75% of people that buy having received a catalogue do so online (Royal Mail,
2014)
44% of direct mail recipients will visit your website (DMA, 2014)
vs email - 63% take direct mail more seriously, 57% feel more valued and 55%
have a better perception of the company (Royal Mail, 2015)
54% open a catalogue from a new brand and 71% from a brand they’ve bought
from (Royal Mail, 2015)
11
Interview: Dara O’Malley (Head of Marketing, JD Williams)
“Whilst the digital channel was strong for us (in 2015) and it is
becoming increasingly more important, we are conscious not to take our
eye off the more traditional channels such as direct mail and press which
have been the bedrock of our marketing…
…We have more to compete against and need to respond by adding variety
to our product and making our brand something that our customers
really connect with…
…If you can get the right mix of traditional higher cost paper led
marketing activities with lower cost digital activity, you have more
chance of communicating with customers in the right way for them and
giving them a personalised experience of your brand.”
12
Interview: Rob McMahon (UK Director of Marketing & Sales, Madeleine)
“2015 saw the continued shift towards people buying online, we’re not
alone in saying that online is becoming the order channel of choice.
However, we understand the importance of the catalogue in getting
people onsite and because of this the catalogue remains an integral part of
our marketing strategy, enabling us to convey the quality of our brand
effectively and it is a strong motivator to purchase. By making our
catalogue a high end printed item with coffee table appeal, it stays in the
home much longer and serves as a continuing reminder of our brand.”
13
Interview: Arun Mundle (MD, Easylife)
“We saw a growth in online trade, however, our proportionate organic traffic
remained static; ultimately our offline activity is still the driving force behind
the sales. The website is simply being used more as the channel of
preference to make the purchase. With consumer spending on the increase,
we altered our customer direct mail strategy by putting more emphasis on
contacting customers with recent purchases rather than focusing on how
much they spent. We assumed the general increase in consumer confidence
and increased spending power would naturally increase the average order value
anyway and this worked with a fairly high degree of success. This success, as
well as new customer recruitment mailings using Abacus Alliance data,
grew our customer file exponentially and we saw a clean profit on our
campaigns as a result.”
14
Bedtime reading
https://issuu.com/epsilonabacus/docs/wr_abacus_trend_report
http://www.mailmen.co.uk/
https://www.youtube.com/results?search_query=abacus+alliance
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New direct mail customers…
…have higher spend than
new customers from other
channels…
…and on average they spend
$24 more per transaction.
18% …make 11% more
repeat purchases than
other channels…
…and spend $10 more per
transaction.
Repeat direct mail customers…
16
The direct mail roadmap
1 Planning 2 Content 3 Production 4 Data selections 5 ROI Analysis
• Budgeting
• Forecasting
• Objectives
• Mail dates
• Printer
scheduling
• Data
selections
• Merchandise
• Photography
• Layout &
design
• Square inch
analysis
• Printing
• Catalogue
size
• Prospects
• Existing
customers
• Permissions
• Testing
• Rollout
• Metrics?
• What is
acceptable?
• How scalable?
• How valuable
is direct mail to
your business
growth?
12 weeks before mail date Mail date
17
Targeting households using transaction data
10.40am-10.55am
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The Abacus
Alliance
insight into
market
modelled
customer files
responsive
prospects
Member B
Member C
Member A
Abacus
Alliance
Database
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The Abacus Alliance in numbers
4800 transaction, demographic
& lifestyle variables
£20bn spend
540m total transactions (30+ per
household in the last 5 years)
customer browsing data
26m individuals
508 contributing multi-channel
retailers & publishers
18m households
59 pureplays new to direct mail have
joined the Alliance since 2014
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How well do you know your customers?
What you know about
your customer What Epsilon Abacus knows
about your customer
Only bought
once Spent £169
2 months ago
Male
Spent £305 on Gifts
4 months ago
Spent £183 on Clothing 2
months ago
Aged 41-45
Browsed gardening websites 11
times in the last two months
Postal address Browsed food & wine
websites 6 times this month
Household
income of £100k+ Subscribes to a home
interiors magazine Bought 12 times from Food &
Wine in the last 12 months
Male
Bought 6 times from
High End Clothing in
the last 24 months
Postal address
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How does it work?
Analyse consumer transactions and browsing behaviour across the Alliance to
target lookalikes of your best customers with the right message at the right time.
Your best customer Shared attributes
Buys online
Bought 6 times from High End
Clothing in the last 24 months
Household income of £100k+
Spent £183 on Clothing 2 months ago
Bought 12 times from Food & Wine in
the last 12 months
Spent £305 on Gifts 4 months ago
Prospects most likely to buy
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Stage 1: Identifying best buyers & modelling universe
Best Buyers
• Most recent buyers
• Seasonal buyers
• Multi buyers etc.
Alliance Universe
Modelling Universe
Best buyers
Modelling Universe
• Min. 0-18mth purchase
• Model type
• Recency, Frequency, Value
• Gender
• Category etc.
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Stage 2: Scoring and Segmenting modelling universe
• Modelling universe scored and segmented
• From best to worst look-alikes
• Segment size set according to future plans
• Testing random sample
• Rolling out
Modelling Universe
Segment 1
Segment 2
Segment 3
Segment 4
Segment 5
Segment 6
Segment 7
Segment 8
Segment 9
Segment 10
Best
Worst
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Case study – Collectible coin brand
March 2015 – “we want to grow
our business”
Met with Abacus to discuss
targeting prospects in the mail
Ran 3 campaigns in 2015 –
proved out performance and scale Dec 2015 - Identified direct mail
as their best recruitment
channel
Mailed each month of 2016 to date
£140k profit after year 1 across 9
mailings and 33% database growth
25
Optimising print & postage
10.55am-11.25am
The Road to
Catalogue Marketing
Data
- Driven from IT team
and marketing heads
“the dark art”
Design
- Use standard template
or copy from another
format Mailing
- Our printer knows all
about mail “doesn’t he?”.
- Use the same printer for
everything “they will do”
The typical approach to mailing projects
Postage
- “There are no
alternatives we will just
send it with Royal Mail”.
Typically
55%-60% of your overall project costs
Why is postage so important?
Downstream Access
Step 1
Understand postage
costs
- Select the most efficient format for
you and maximise in size and weight
Step 2
Drive your data
- Maximise your data
requirement ensuring that the
correct criteria are used.
Step 4
- Ensure that your print partner
is the right “fit” on size,
quantity, quality and price
Step 3
Design
- Design your pack
around the most
efficient costs for
postage and for print
production
A more considered mailing approach
Step 5
Mailing
- Consider the best
options available to you
on speed of turnaround,
expertise and formats
Type of mailing
Newsletter
Postcard
Catalogue/Brochure
Letter/Invoice/Statement
Volume
per mailing
per annum
Reason for mailing
New product launch
Acquisition
Monthly Mailing
Of ers/Sale mailing
Customer remail
Research/Questionnaire
Other – give reason
Pack Format
Size x x mm
Weight gms
Poly - Polywrapped/poly bagged
Paper - Envelope
Naked - unwrapped
Current service level
Premium - 2 day delivery
Economy - 5 day delivery
Other
Mail Classification
Advertising Mail
Business Mail
Publishing Mail
Sustainable Mail
- Entry Level
- Intermediate level
2
Mailing Specification
The format of your mailing campaign is the most important factor when analysing your postalcosts. In order to gain the very best rates and help advise of any improvements the morecomplete this information is the better or more complete your results will be . The supply of asample file of your data is also critical so that a complete 360 degrees analysis can be madeand our experts can provide the very best advice , ensuring that your mailing costs are e f cientas they can be.
240 165 3
80
128,000
7,536,000
t his is my usual mont hly catalogue, i
send t he same to al l of my exisit ing
customer s and pr ospect s al ike.
55x System
Simple questions
Early Stage
Understand your business
Give you the right advice
Trays
Mailing Options
Our experts opinion Which means that you could save
per annum
£
MailMark
Sustainable
Entry Level
Intermediate Level
Bags
Ad
ve
rtis
ing
Lo
w S
ort
Total
Not Sustainable
Barcode
(Customer
barcode / CBC)
Sustainable
Entry Level
Intermediate Level
Not Sustainable
Sustainable
Intermediate Level
Not Sustainable
Hig
h S
ort
Directs
Residue
Entry Level
Directs
Residue
16.24p 16.44p £20,787.20
16.74p 16.94p £21,427.20
17.24p 17.44p £22,067.20
16.24p 16.44p £20,787.20
16.74p 16.94p £21,427.20
17.24p 17.44p £22,067.20
18.511p 18.711p
20.42p 20.62p
£23,816.26
19.011p 19.211p
20.92p 21.12p
£24,456.26
19.511p 19.711p
£25,096.26
Directs
Residue 21.42p 21.62p
44,028.72This is a good for mat , but changing t o polywr ap or an envel ope woul d
al low access t o Low Sor t , and moving up t o Int er mediat e l evel of
sust ainabl e woul d pay for it sel f in no t ime at al l .
Step 1 – The basics of mail
Business
Publishing
Advertising
3 Types of mail
Pack Sizes
Mechanical
&
None Mechanical
Why do costs differ so much?
Mailmark OCR CBC
Low Sort
High Sort
This is why…
Client A mails 20k per week Approximately 1 Million per packs per year Was paying 19.69p per pack I helped move them to Low Sort Sustainable (Intermediate) Now pays 16.992p per pack A saving of 2.698p per pack or £26.98 per k
Annualised saving of £26,980
Some Quick Figures…
Outer Envelopes £9.79 per k 0.033% Printed Brochure £71.02 per k 24.1% Mailing Costs £16.25 per k 5.52% Old Postage £196.9p per k 66.9% Total Pack cost £293.96 per k
In Context
New Total Pack cost £266.98 per k
New postage £169.92 per k
Saving just under
10% off the
entire pack cost.
Already spoke about size of packs Format choice: Postcard One piece mailer Envelope Naked Polythene
Ok where do I start?
Postage costs increase
First time User Discount Incentive for Growth Tailor Made Incentives Sustainable Mail Advertising Mail
What initiatives are available to me?
20% saving for first 3 mailings 2.5p to 10.5p discount Designed around you .5p or 1p per pack 4.7p saving against Business mail
Maximise your budgets Lower your pack cost Increase your ROI Breakeven position lower Cheaper to win new prospects Can fish deeper into the data pond Sustainable mail ready data
Step 2 - Data
Citipost provide software for free Sort your data by Royal Mail Depots Sort into geographic areas by depots Directs and Residues Produce Mailsort reports
Mailsorting your data
What should I mail? Postcard, Existing brochure, New Brochure? Use your best sellers to draw in the prospects Nurture your brand Continue it through from your digital platform Use the best advantages of each format Understand the response that you are after and maximise that drive Design your packs / contents to meet the need
Step 3 - Design
The use of the format e.g. up to 100gms or 101-250gms Elaborate on the pack format e.g. large letter 240mm x 165mm doesn’t have to be A5 What incentive is in the pack how and when is that actioned? Anything quirky you can do to stand out? Levels of personalisation.
Maximise your format
Stamped Mail
Choose your printer wisely Could be first tactile communication of your brand High quality paper Cheap / expensive brand Select on Quantity, Quality, Format sizes Price – based upon total price Consider your AOV What image do you want to convey based upon this Constantly benchmark (especially as you scale up your campaigns)
Step 4 - Printing
Can you get your own paper deals??
Choosing your Mailing house Speed of turnaround Saving money on deliveries Expertise Mailmark Polywrapping Someone who understands your business Get references off people who know Go to the site and see for yourself
Step 5 - Mailing
Usually sorts the data
Personalises the packs
Laser printing Letter
Inkjetting name and address onto outside of pack
Encloses or wraps the packs
Bundles and bags or puts into trays
Hands over the work to mail carrier
What does a mailing house do?
CITIPOS
T
Day of the week best to land Peak seasons Periods to avoid Relevant to the prospect i.e. Swimsuits in winter Garden equipment when they live in a flat
When should I Mail?
Went live in March 2014
Tracking & control
2d Barcode
Cheapest possible postage
Mailmark
Lookbook Not direct sales tool Mail existing collateral Brand orientated Ultimate goal is to drive sales through your chosen channel: Web Instore Call centre
Common Mailing Mistakes
A. Use your own skills in house
B. Get someone like me to help you
C. Put your head between your knees and hope and pray!
But please get some assistance.
Next Steps
54
Measuring campaign performance
11.25am-11.35am
55
Campaign Costs
• Cost per catalogue (print and postage)
• Data cost
Campaign Sales
• Total sales
• Net sales (total sales minus returns/refunds)
• Margin
• Response Rate
• Average Order Value
Performance Metrics
• £ per catalogue mailed
• Cost/contribution per new customer
What to consider?
56
Example ROI
Analysis
57
Q&A
11.35am-12pm
58
Abacus Insights Event
Thursday 6th October, 2016
30 Euston Square, London