Parts one and two of this series discussed a proven way to segment a database based on the time-tested recency, frequency, and monetary (RFM) approach long used by direct marketers. Today, we’ll talk about crafting offers and messages for the 125 permutations the chart below represents.
Using this simple matrix, a "5" under recency means the cell represents the best 20 percent of your database in terms of when the last purchase was made. Similarly, a "1" under recency means those customers haven’t purchased recently. A "1" under monetary means they’re in the bottom 20 percent in terms of amount spent, while a "5" means they’re top spenders. A 5-5-5 represents your best customer, while a 1-1-1 represents your worst.
Today we’ll discuss offers and messaging for the groups that emerge from this exercise. Offers and messages to 5-5-5 customers should be very different from those to 1-1-1 customers. On the other hand, offers and messages for 5-5-5 consumers may be the same or very similar to 5-5-4 consumers.
The offer is at the heart of email designed to:
Let’s look at three groups from the matrix and the type of offers you might construct for each:
I don’t expect you to develop 125 offers unless you have a gigantic database containing large numbers of consumers in every cell. Target the top three to six permutations first. If the results prove the method, do the next 10, and so on.
Messaging is straightforward once offers are in place. Your email formula or template should consist of:
A consideration here is having two-three messages for each of the above bullet points that deliver the most relevant message based on the RFM group.
A Really, Really, Really Important Warning
A catalog company recently went out of business due primarily to the fact catalogs were sent to the company’s worst customers.
Before you send a single email, make sure you have a fail-safe testing process in place, one that requires multiple confirmations the messages are sent to the correct groups. Though the financial costs of making the mistake of sending a 1-1-1 offer and message to a 5-5-5 customer aren’t as great as they would be for a catalog, return on advertising spend (ROAS) and top-line sales will meet with even greater effect. Consumers expect a higher level of personalization from email marketing. Negative response to irrelevant email is much greater than to print marketing communications.
Make sure that never happens, and keep reading...
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Paul Soltoff is the chief executive officer of SendTec, Inc., a direct marketing services company specializing in customer acquisition. SendTec combines extensive direct response experience with proprietary technologies to produce scalable results. Principal services include performance-based online marketing, offline direct response marketing and direct response television. SendTec represents advertising agencies and advertisers such as RealNetworks, AARP, Monster.com, AAA, Punch Software, MyPoints, Grey Worldwide, CosmetÍque Cosmetics, Columbia House, and Euro-Pro. Prior to starting SendTec, Paul was a founder and EVP of Saatchi and Saatchi's DRTV division in New York and has over 25 years of advertising, media and direct marketing experience.
March 19, 2014