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I've been following Drayton Bird's '51 helpful direct marketing ideas' over the past week. Today, Drayton's helpul idea (no. 4) is on database advice, which includes words of wisdom from database expert, Jon Epstein of r-cubed. Jon provides valuable advice in database filtering, focusing around the fact that "it's all about the return-on-investment" and advises to "deselect your worst customers":
"Only invest in data if you can see it's likely to produce more money than it costs. Direct Marketing is about spending your money where it does most good. So what's better? £80 sales for £20 cost, or £100 for £50? The answer should be obvious—but it isn't to many marketers.Finding the worst is far easier than finding the best... It's far easier to predict the many least likely than the few most likely to respond—and you need far less data. You lose very few sales by dropping the worst but you save lots of money. You can reinvest that money in talking to the best or testing. You must find the 20% that delivers the 80%."
Refreshingly obvious—why bother contacting your worst customers if they're not going to deliver ROI to your campaign? My guess, and experience, is that too many organisations often forget this. Filtering 80% of customers who don't deliver results is the easy part. The trick is in effectively reaching the 20% who do.
Posted on Monday, 10 March 2008 at 9:18 PM | TrackBack: http://www.veedeepee.com/cgi-bin/mt-tb.cgi/98