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Evidence-Based Marketing

How Horizontal Selection enables Contact Optimization

Posted by Antje Monaghan on Jun 3, 2019

A key challenge for marketers is getting the right message, to the right customer, via the right channel, at the right time. This short, fun video explains what contact optimization is and how it delivers the best contact strategy for each unique customer using horizontal selection.

"This is Tim, a marketing manager at Avalanche Clothing. Every year, he has the same impossible task, to do even more with even less. In other words, he's supposed to grow revenue while spending the same or less on marketing. And every year, Tim employs the same strategy, invents new campaigns, and jam them into the already bloated schedule. 

And, of course, he needs to cut spending so he's concentrating on the cheapest campaigns and channels, reshuffling creative, sending a virtual avalanche of emails and hopes that some will ring the money bell. Tim's job is made more difficult by coworkers and competitors who are also reaching out to the same people at the same time. In Tim's case, more is no longer better. More is actually worse. 

Now, Tim's a glass-half-full kind of guy, but he realizes adding yet another campaign won't produce the incremental revenue it used to or generate the numbers upper management is not so timidly requesting. So, Tim turns to his traditional campaign centric tools and models, which, unfortunately, tell him the same thing every time, "Keep sending to your best customers. Ignore your worst." It seems logical, but this leads to wasted resources and missed opportunities. 

While Susie here gets inundated with more emails, or campaigns, or offers than she could possibly view or would want to view, next-door neighbor, Skip, is left out of the more expensive channels because he doesn't purchase from Avalanche as often as Susie or spend as much. Poor forgotten Skip. None of this was apparent to Tim when he had fewer customers and 12 catalog campaigns a year. But now, he must contend with 8 million customers with 117 campaigns through multiple channels. Oh, and that's for one brand. Avalanche has 10.

Avalanche also has Larry and Bob who are using the same tools as Tim, sending their own campaigns to the same revered customers without knowing it. Avalanche's more-is-better approach doesn't recognize that each customer has a unique revenue potential. More campaigns won't increase revenue beyond this potential. Instead, revenue just shifts to the added campaign from existing campaigns. We call this revenue cannibalization. 

What Tim wants and desperately needs is a completely new perspective, a breath of fresh air, a new decision-making method to make sense of all the data and to make it easier for him to connect the right campaign with the right customers at the right times via the right channel. What Tim needs is Contact Optimization. Contact Optimization shifts Tim's perspective, giving him a customer-centric view.

Back to Susie. Susie's nuts about stripes, especially red stripes. Why? If we'd let her, she dressed like a barber pole nearly every day. Skip, on the other hand, enjoys a different style. While the traditional approach is to choose customers for each campaign, Contact Optimization looks at all campaigns and chooses the best fit for each customer based on predictions of a customer's interests and revenue potential. 

Using the data wizardry of Contact Optimization, Tim can select the most attractive and most profitable campaigns for all of his customers. But before Tim finalizes his campaign for Susie and her 10 million likabees [SP], he can now search for and disqualify similar campaigns that might cannibalize revenue and waste marketing dollars. Smart. That's the beauty of Contact Optimization. 

Now, Tim can easily compare the similarity of campaigns, predict a point of diminishing returns on an individual level, and in doing so, spend less to achieve each customer's unique revenue potential. This means good customers will no longer be overwhelmed by too many campaigns, and picky customers will enjoy more relevant campaigns. More is no longer better. Now, smarter is better. This message is brought to you by Clario, the leader in Contact Optimization."

 

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