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How engaged with your brand are the majority of your database contacts? This fundamental question should determine how your entire emarketing communications strategy is structured.

Until recently, email marketers have been under huge commercial pressure internally to continue doing the same 'load and blast' mass email marketing they've always done.

However, for some, response rates are waning as consumers become fussier about the marketing messages they consume. The advent of the intelligent inbox (Hotmail, Gmail, Yahoo) means ISPs are working hard to ensure only the most wanted email is at the top of the pile.

ISPs are helping recipients to prioritise their inboxes, helping them to de-prioritise or block email that they no longer want. Google priority inbox, for example, prioritises your email automatically based on what you respond to; so encouraging response is now critical to your ongoing relationship with customers.

Without proper targeting, your emails can be seen as spam, becoming de-prioritised or blocked by the recipients, encouraging customer disengagement.

New Challenges

For those marketers keen to make the most of the email channel, new challenges have arisen. How can we make email marketing more relevant, timelier and more attuned to the recipient’s stage in the customer lifecycle? 

This thinking is not new to some marketers, especially those who aim to squeeze the best ROI out of expensive marketing media such as Direct Mail. But for those that love to load up as many email addresses as they can find into their favourite email platform and eagerly press the “spam now” button, it’s a different language.

Taking a leaf out of the book on tried and trusted segmentation methods, and adding the sophistication of the web and modern database technology, let’s take a look at what modern email segmentation looks like.  

Engagement-RFM. Why do we need it?

Combining behavioural data and RFM (Recency, Frequency, Monetary value) creates Engagement-RFM (eRFM). Using this methodology can improve the accuracy of segmentation, strengthen influence and engagement, and lead to an increased ROI.

RFM uses transactional behaviour to predict future purchases. eRFM adds the extra dimension of online behaviour to predict future actions. eRFM identifies a person’s intention to act using web behaviour, email engagement and RFM. Each individual element is powerful but incomplete; combining them creates the full story. 

The best time to communicate with customers is when they are in a position to buy. Identifying this intent to purchase means your communications will be most relevant, more likely to go into the inbox and customers are much more likely to respond. 

e-RFM and the customer lifecycle

e-RFM is used to define the stages within the customer lifecycle and can help predict movement from one stage to another (see Fig. 1). Each user can be positioned somewhere on the lifecycle.

Fig. 1:

Traditional RFM is based on straightforward transactional segmentation. If someone has bought recently, it follows they are more likely to buy in the future; the bigger the gap after the first purchase, the less likely they are to buy again.

Also, RFM helps to focus expensive channels, such as DM, on the most responsive customers. With online there is more data to add (beyond transactional), such as response to email, how often they visit your website and how engaged they are on social channels. Taking all this into consideration moves you up to a whole new engagement level.

As the most relevant communications are based on user activity, plan to build automated rules so a particular segment will receive a specific type of campaign or automated process. Once set up these can run for months, if appropriate.

The number/complexity of segments is governed simply by the financial viability of each. If it doesn’t produce ROI, don’t do it. Start at the most valuable stage, people who abandon baskets  (their potential has the highest value of anyone who hasn’t bought from you). Further up the conversion process identify key pages/actions that highlight people with key intent. These people will have looked at multiple web pages, have a high RFM, but have not bought.

When people start showing defection, it is important to keep sending emails, but only if they are still influenced. Using traditional RFM techniques you would reduce marketing activity, however eRFM can show if users are still reading your emails and looking at your website.

Though a user may not have purchased in a while, this type of behaviour shows they are still engaged and therefore have a huge potential to purchase in the future.

Some people don’t mind hearing from you more often, and would buy more if they did. They are fully engaged with you and they love your brand. These are super-engagers. It’s well worth sending more email to those who want to buy as they are in the buying window and are ready to be influenced.

These behaviourally targeted campaigns evolve to take over from regular campaign activity, sending less email to people who don’t want them and more to people who do. Communicate more frequently with people with the highest revenue potential (maybe three emails a week, against once a month).

Engagement and touch points

The Holy Grail for every company in terms of data capture is effectively using engagement marketing that encapsulates all touch points including online, mobile, contact centre, branch and social. It’s important to use channels appropriately and in an integrated way.

So, utilise online data (eRFM) to target high value people who are engaged and identify subsequent action required:

  • With high RFM customers, who have visited your site, are loyal, but may not have purchased for a while, their potential value is so high it may be worth a phone call via your company call centre.
  • For loyal customers, who are buying, but may not be engaged with email it’s a good idea to take it offline. Call them, send DM  and incentivise them to re-subscribe to (or engage with) email communication.

The advent of social media has raised awareness of engagement, and organisations now consider it important. When online, engagement is evident everywhere and good email marketing is way beyond just blasting out mass communications.

Also with the growth of the mobile web, segmentation is even more important. If a customer is showing intent online, use all the relevant channels to engage with them.

One database or a satellite database?

Keeping a single customer view is vital to modern direct marketing (especially for MI and strategy reporting), but whether it all needs to be stored in the same location is up for debate.

Modern offline/online segmentation is dynamic and real time; offline data can be updated with epos and offline channel data feeds, and online data can be kept updated with email response information and data from web activity coming in real time.

A traditional CRM system will struggle to use this data to build real time segments, making it difficult to immediately send an email or initiate a call centre contact via data feed.  

e-RFM summary

e-RFM provides a solid framework for combining online and offline data in a way that effectively describes the customer.  It makes sense to the marketing department and will easily dovetail into existing and proven segmentation systems.

It’s a segmentation method that can be started at the most basic level, but offers the opportunity to develop in the future and help beleaguered marketers to return good ROI. 

Using e-RFM

e-RFM gives the marketer the ability to:

  • Determine the correct frequency of communication for each customer.
  • Select who to talk to and when.
  • Define the customers’ stage in the customer lifecycle.
  • Influence behaviour.
  • Increase customer engagement.
  •  Increase Lifetime Value by reducing attrition and increase overall ROI.
Tim Roe

Published 25 June, 2012 by Tim Roe

Tim Roe is Director of Data and Deliverability at Redeye International and a contributor to Econsultancy. Follow him on Twitter, Google+ or connect via LinkedIn

22 more posts from this author

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