Model Citizens

by Richard Lewis, Director of Analysis

Whenever I talk to my marketing clients about what they’re doing in the area of multi-channel marketing they all seem to say the same thing. Rather than confuse everyone with a direct quote, the principle behind these conversations
can be distilled into 2 separate points:
1. multi-channel marketing must mean more than just having access to a range of contact channels
2. marketers often have trouble convincing others in their business to buy into actually running a multi-channel strategy

I don’t think anyone disagrees with point one (even the so-called rebutters alluded to in point two). The trouble is, without a proper definition or proof for stakeholders to buy into, then there is no reason they should take the risk in changing how they do things. But let’s start by trying to define the term … “multi-channel marketing is the use of more than one communication methods to strengthen and grow the bond with a customer”. Done!

Next we need proof that it works, so let’s look to the masters. TV shows often provide great case studies of multi-channel marketing done well. A big show, lots of supportive online content, a Twitter feed, discussions happening on Facebook, posters at train stations, adverts in the press, independents writing critiques in the press, stars going on the chat show circuit, emails going out to registered interest subscribers, voting via text or phone. We could all probably list a dozen shows that have done multi-channel well (Doctor Who, The X Factor, Strictly Come Dancing, etc.). So there are interactive parts, trusted advisors, active promoters within the community, gossip around the content and advertising of multiple aspects with the same single product in mind.

Everyone is now agreed on what multi-channel is and we can all call on at least one example of where it’s done well. So why the lack of progress in many organisations? Well, TV shows are easy examples as they are content rich. When you have lots of content, working up strategies for each channel becomes an editorial exercise. Despite numerous marketing agencies using TV show case studies (which they weren’t involved in) in order to sell the concept of the multi-channel prize they can bring to your business, the world outside of television has got to work a little bit harder. If the only thing you’ve got to say is “coming soon, our summer season selection” then working up a diverse content strategy across your channels isn’t easy to do.

There are many case studies of businesses getting multi-channel wrong. After looking to the TV shows as the benchmark they begin experimenting, for example, in social media channels. Usually one of two scenarios happens; either a marketing manager sets up a Twitter feed or a Facebook site but without full backing of the business the content is fairly dry; or full backing is given and a person is given responsibility and budget to run their channel, which inevitably is independent of the other consumer channels. It’s great to get social media working - but this is not the achieving the original multi-channel goal.

It is unfair to pick on social media channels but the example is useful. Social media should stand up on its own as a revenue generating channel, but we shouldn’t make the mistake of thinking that multi-channel is just about use of new channels.

A multi-channel team in a supermarket didn’t get side tracked into new media and concentrated on getting more out of the old-school channels. They published vouchers in the national press giving the customer a discount in branch. The customers redeemed and received their discount but were then encouraged to register their receipts on-line for validation. Validated entrants were notified of success/failure and mailed vouchers. A call centre team was trained in handling any customer queries. The results were significant. Customers were encouraged to exhibit behaviour before the big rewards were sent, reducing risk. New and existing customers took part in the newspaper promotion. Over 50% went on to engage through an online channel and signed up to email and direct mail contact in the future - most participants being ones who’s details were unknown before. Press, branch, web, email, mail, call centre - true multi-channel marketing that drove an increase in profit and growth in the marketable universe.

Think about how many individual managers key performance indicators (KPI’s) the above initiative contributed to. They made this work by putting together a multi-channel team - a team that treated the multiple channels “as one” for their campaigning. This doesn’t mean firing the same messages out on all channels at the same time, but rather creating a communication strategy that will disseminate a consistent story across the channels. This has worked well for them in other areas and the company now has something very similar to an editorial board that sits back from all the operational functions to ensure that the right communications go through the right channels but are still consistent in terms of message, image and copy.

So it makes sense for the KPI’s to be tracked back not to the channel owners, but to the owners of the customers. A major department store recently started to attribute online spend back to the nearest store if the customer lived within the catchment area. An innovative solution to getting the channel owners (branch and online) to work better together which led to shop floor staff encouraging (and often helping in store) the customer to order an out of stock item on-line instead.

Having dismissed focussing on new channels to get a multi-channel strategy up and running, it is always important to keep track of the latest technology and emerging trends. Some of the latest technology used in multi-channel marketing is 2d barcodes which have the ability to point customers from print directly to online content. The opportunities for utilising this capability are diverse and include complex forms of customer identification and payment. At its most simple you could attach a barcode above a clothing rail in store with a note saying - “Can’t see your size? Photograph this barcode to purchase instantly online.” I personally feel that there is a lot that can be made of these barcodes if the marketing and communications objective is kept simple.

Dos of Multi-Channel Marketing
• Do create one team behind the whole multi-channel initiative and put the customer objective at the heart of every plan.
• Do keep your call to action simple and easy for the customer to understand the value of taking part.
• Do keep your content rich and rewarding from the customer perspective.

Don’ts of Multi-Channel Marketing
• Don’t tread across other business managers KPI’s unless they or their interests are represented on your multi-channel project team.
• Don’t use multi-channel unnecessarily, the use of each channel should be as relevant as the content you are trying to communicate.
• Don’t dominate with multiple unrewarding links straight to your company home page. Your homepage is not part of your campaign.

by Richard Lewis, Director of Analysis

In my line of work, I find that churn models are a very common occurrence.  From an agency perspective, in the traditional world of marketing analysis, there is no doubt that churn models are seen as a commodity.  There is no end to the line of analytical consultancies pitching to develop churn models for almost every type of industry and sector, often without a true description, or even understanding, of how the client organisation is going to realise value from this basic analytical deliverable.

I have sometimes the thought that if Model Citizens were to offer churn modelling as a primary proposition in our toolbox, then we could win a significant amount of business. 

It’s an appealing thought.  Most of the marketers who have retention KPIs (Key Performance Indicators) associated with their objectives view the existence of a churn model as a key building block of their strategy. 

Agencies have typically responded to this perceived need and most have added the proposition to their own box of tricks without further thought.  Each agency promises a ‘better’ model to their prospective clients than their competitors (based on an often unfounded self-belief). The abundance of these un-varied propositions serves to both confuse the marketplace and reinforces the necessity to the marketer of having one. 

So, should Model Citizens, as a marketing analysis consultancy, join the ‘me too’ bandwagon of churn modellers?  In all the confusion, we might win the incremental business, we might not. But what we most certainly would not win is the trusted relationships that we currently have the luxury of enjoying with our clients.  Why is this? 

The truth of the matter is, quite literally, a churn model is no good!

For Model Citizens, any issue with churn modelling is not related to the technical, data, mathematical or even statistical skills required.  Data mining and predictive analytics is what we do!  This issue is one of proven business benefit or, more specifically, a lack of it.

In order to understand why, it is necessary to standardise a definition of a churn model.  A churn model delivers, at a customer level, a score that reflects the customer’s likelihood to churn, ideally within a fixed time period in the future.  This score is developed by taking customers who have previously churned in the past, and comparing them to customers who could have churned in the same period in the past but didn’t.  The identified differences between the two groups are overlaid on existing and currently live customers.  In this way, groups of currently live customers can be split into two groups.  Those who look more like the churned group are deemed to have high likelihood to churn in the next time period. Those who look like the customers that did not churn are deemed to have a low likelihood to churn within the next time period.

Outwardly this seems eminently sensible and a bit of god send to the marketer tasked with reducing churn.  An ability to identify sub sets of the customer base that are more likely to churn than others – what more could they ask for?  Trouble is that the marketer will soon find out that this insight will prove fruitless.

The simple reason for this is that, no matter how accurately the model separates out future churners from future non churners, the model does not tell the marketer what, if anything, to do about it.   Every analyst who’s worth their salt knows that in an analytical project it is essential to identify the business objectives before identifying the data driven solution.  Every sales person in an analytical agency will say that their analysts do this too.  But every time a churn model is identified as the solution is a classic case of ignoring or even missing out altogether this crucial business understanding phase.

To get to the bottom of this, let’s explore the real business objectives.  What the marketer is interested in achieving is a reduction in churn.  The plan is to achieve this through the targeting (hence need for a predictive model) of a retention proposition to specific customer groups for which the promotion demonstrates the highest profitable reduction in churn.

Note that the actual churn rate is not mentioned, neither is churn likelihood or propensity, or any language typically deployed in the selling of a Churn Model.  The only customer measure of interest, which is stated in the business objective, is the change in the level of churn from churn without promotion to the new churn with promotion. 

Underlying churn rate is of no importance whatsoever.  What is importance is the difference that can be made to churn regardless of whether it is achieved from customer segments with high or even low churn likelihood.

Looking at the business objective, the real analytical response and solution would be to model the customers with a high likelihood to respond positively to the retentions proposition.  That is to say, identify the differences between those that would have churned, but as a direct result of the retentions proposition now won’t.  True it doesn’t sound as ‘whizzy’ or even as ‘simple’ as a churn model, but it is the correct solution in response to the posed business objective.

So why aren’t marketers being offered the correct solution to the problem.  The answer is simple:

·         It requires a new type of modelling called Uplift Modelling that isn’t widely known by analysts.  This means fewer agencies are offering the solution and visibility of the technique in client side marketing roles is suppressed.

·         A churn model is a simple concept for un-analytical salesmen to sell.  More complex analytical solutions such as Uplift Modelling require analytical people to explain and sell.

·         Often marketers, unaware of the real alternative specifically ask for a churn model.

In my own view, not knowing the technicalities of Uplift Modelling is no excuse for miss-selling churn models as a full retentions solution.  Uplift modelling is relatively new – but it is also a tested and proven method.  It most certainly is a better use of precious resources in tough times.

Ask yourself a question.   Is the churn model being considered because it is being pushed on you by external forces, or is it truly a direct response to a clearly stated business need that you have imparted?

If the former, or if you want to know more about Uplift Modelling or Model Citizens Retentions solutions and what they could actually achieve for your business, please email churn@model-citizens.biz

by Richard Lewis

A recent article in the Times on management theory and its applications can be summarised by its title “Goodbye to glib gurus and their gobbledegook”. The article is quite strong in its criticism of management consultants and their application of generic business process reengineering theory and techniques regardless of the industry or directorate of application. As any good strongly opinionated article should it has generated a swathe of equally strongly responses.

With today’s pressing economic conditions weighing down on many managers and budget holders, only a few are turning to management consultants to help them through. This is a function of the fact that it is difficult to accurately demonstrate a return on investment – even the quick remedies of cutting down on costs will usually reduce the overall business benefits especially when measured over a longer time period. This lack of demonstrable improvement means many managers cannot justify the expense, and they don’t have the patience to wait for improvements that will be delivered by 3 year strategic proposals. So it may not be that management consulting isn’t working, just that it isn’t timely enough to be relevant in a tough economic climate.

There is however an alternative form of consulting that is relevant and timely to a business environment in recession, one that is high on impact and low on cost, one that can and will drive short term benefits that are not at the expense of long term strategy, one that is above all measurable. This is the role of operational consultancy.

Rather than applying generic management theory to improve the efficiency of a process, an operational consultant will apply actual techniques to a business operation and see the implementation through to deployment. In applying techniques rather than theory, the return on investment is demonstrable. A management consultant tells you how; an operational consultant will show you how.

As with a lot of disciplines there is a lot of overlap, and one shouldn’t label all management consultants as having a lack subject matter expertise, as this is almost always incorrect. Instead think of it more in terms of how consultancies are engaged, both in terms of how they work with their clients and on what their client’s expect from them. Management consultancy isn’t invalid, it just needs to adapt. Advice is one thing, example is another.

In analytical marketing, our own sphere of expertise, we have devised, introduced and developed customer relationship strategies. In recent times it has been the actual delivery using existing , rather than new and cutting edge, capabilities that has been most sought after and relevant in the marketplace.

In a lot of cases the services we provide are to marketing departments that already have the vision, but with the economic downturn struggle to find the budgets for either full time recruitment or a defined fully scoped project with a high cost agency. They need something in the middle - an expert who doesn’t have to be full time and who is available at short notice, who can work without micro-management, and in short someone who will both do and deliver, and do that quickly.