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National Mail Order Association

Accountable Marketing:
 The Economics of Data-Driven Marketing


by Peter J. Rosenwald

The search for greater efficiency and the elimination of waste have been the two eternal targets of corporate management. But despite such new ideas as Customer Relationship Management, marketing has been relatively immune to such efforts. But that has changed. Marketers are searching for new metrics and new models for cutting waste and improving efficiency.

That is why Accountable Marketing was written and why it must be read. The author, a seasoned veteran the entire spectrum of marketing activities, provides a model based on the most basic and most important management principle: test and measure. He shows how to applies that model to all forms of marketing—from “hard- umbers”-based CRM and other kinds of data- riven marketing to all different kinds of “softer-side” sales promotion and image advertising. Tests and measures of all these different marketing forms are used to establish the ACPO (Allowable Cost Per Order), which drives all assessments of marketing efficiency and profitability for all kinds and types of programs, from single offers to continuity programs to upsell and cross-sell efforts.

But what makes Accountable Marketing truly unique among marketing books is the accompanying CD, which enables the reader to plug his or her own data into templates of the forms and formulas in the book and play out the possibilities of different scenarios.

Marketers and their senior-level managements have been looking for new rules and measurements to use in the new world of measurable performance. Accountable Marketing is the new rulebook for that new world.

Table of contents

1 Understanding the Economics of the Marketing Continuum
Where Accountable Marketing Started and How
The Marketing Continuum
Building the Brand is Paramount: But at What Cost?
The Real Cost of a Free Lunch
Strict Accountability: The Special Strength of Direct Marketing and CRM
Investing in the Future
Average:The Most Dangerous Word in Contemporary Marketing

2 Understanding Allowable Cost per Order (ACPO)
The ACPO Informs All Marketing Actions
Targeting Sales Promotions
The “Micro” View: Better than the Big Picture
Where Accountability Begins
Moving from “Case Rate” to Customer Rate
Customer Identification Potential at Retail
The Challenge: Minimizing Waste
Calculating the ACPO
The Dynamic Effect of Different Response Percentages on Profits
Sometimes It Is Better Not to Promote to Everyone
It Is Almost Always Possible to Test
Believing the Unbelievable is Dangerous
Determining the Allowable Cost per Name for a Customer Database
Making Customers for Life

3 The Importance of Customer Focus
Calculating the Relative Value of a Square Foot of Retail Space and of a Customer
The Marketing Database: Much More than a List of Names
Data: Understanding and Insight
The Most Likely Prospects Are Almost Always Better and Less Expensive
The “Household”: A Better Marketing Unit than the “Individual”
Attrition: The Enemy of Profit
The Best Time to Stop Attrition: At the Beginning of a Purchasing Sequence
Keeping the Customer Happy, Well Served and Fulfilled

4 Customer Relationship Management
The Location of the Most Effective and Efficient Integrated Marketing Database
How Much Can We Afford to Spend for CRM?
Is It Better to Keep the Customer You Have or Get a New One?
Segmentation: The Key
Small is Beautiful
Making Choices
Exercising Judgment
Sensitivity Is Key
Where Do We Want to Go and What’s the Best (and Most Economical) Way of Getting There?
Is Corporate Management Really On-Board for CRM?

5 The Economics of Different Direct Selling Sequences
Choosing the Right Selling Sequence
Selling Single Items
Cost of Access to Market: A Key Factor in DM Pricing
The Necessity for Price Testing
Just Start Dating
Continuity Sales
Thinking of “Contribution and/or Profit” as a “Cost” is Essential
Enhancing Continuity Selling with Load-Ups
Club Selling
Catalogs: The 24/7 Store in the Home
Establishing the Right Balance Between Catalog Customers and Prospects
Selling by Subscription
Up-Selling and Cross-Selling
Up-Selling: Moving the Customer up the Value Ladder
Cross-Selling: Selling a Variety of Goods
Understanding the “Profit Dynamic”

6 Complex Products and Services: Their Special Characteristics and Economics
Give Away the Razors and the Cameras: Sell the Blades and the Film
The Challenge of “Combination” Transactions
Are You Going to Sell a Product, a Service, or Both?
Good Content is the Most Important Churn Reducer
Making Planning Calculations Should Be Easy
Content is King: Consumers Will Subscribe and Pay for Superior Content
To Test or Not to Test: Always Test and Compare
Which Offer to Go with?
Clubs May Be Exclusive: Their Economics Are Not
Financial Service Products: Complex Products Needing a Unique Perspective
Credit Cards
Giving Credit Where Credit Is Due
Unused Credit Cards Share Space in Wallet, Not Share of Wallet
Unique Aspects of Selling Insurance
Keeping the Insurance in Force: Where the Profit Is
Don’t Sell Only One Policy: Sell as Many as Possible

7 Using Incentives to Stimulate and Enhance Sales and for CRM
Incentives or Bribes: A Two-Edged Sword
Incentives Come in All Forms and Sizes
Reward and/or Recognition
Free Gifts, Self-Liquidators, and Profitable Premiums
Sweepstakes & Prize Drawings
Points and Bonus Miles: The “In” Incentive

8 Testing and Archiving: The Foundation Stone for Marketing Improvement
Testing: The Key to Success
The Highest Response Percentage Is Not Always the Most Profitable Segment
Reading Test Results Takes a Combination of History and Judgment
The Sooner You Can Predict Final Test Results, The Sooner You Are Ready to Rollout
Archiving is Critical: It Paves the Way to a Successful Future

9 Promotional Planning and Control
The 175% Solution
Cost Per “Contact” Conditions Cost Per Order
The Prospect Is Almost Always Multidimensional
While Driving on the Highway, Stop and Eat Where Lots of Trucks Are Parked
Required: Rigorous Analysis and Experience
Direct Mail
Smart Mailers Pay Only for Net Names
Print Advertising
Package Inserts & Take-Ones
Broadcast: Radio and Television
The Internet and E-Commerce
E-Mail: Direct Mail without Having to Pay the Postman or the Printer
The Economics of Marketing on the World Wide Web
Media Planning and Testing
Choosing the Right Media: An Exercise in Making Comparisons

10 Strategic Planning for Accountability
Marketing Objectives and the Product: Where Planning Begins
Developing the Marketing Objectives
Focusing on the Detailed Planning Issues
Briefing Internal Departments and Outside Agencies
Building the Business Plan
Project Implementation
Planning Customer Contact and CRM Strategy
Selling the Plan to Management

11 Postcript

What world-class experts are already saying about Accountable Marketing

"He's been there, done that and got the T-shirt. Now he's written the book and all you have to do is read it…. If you're in business…and seeking to maximise your share of your customer's wallet, this book is priceless. Buy this book and become accountable."
– Andrew Fraser CMG
Global Marketing Consultant

"…an excellent foundation for anyone looking for a reliable, practical method of ensuring their marketing dollars are well spent…very practical, easy to read and full of helpful examples. A must have for everyone's marketing library."
– Peter Jupp

"…a must read for any today's marketer…a truly breakthrough tool that any serious marketer will find of enormous value."
– Jerry I. Reitman
Executive Vice President (retired) The Leo Burnett Company
Author of Beyond 2000: The Future of Direct Marketing

"There is no better book when you want to learn the economics of reaching the people who count, as opposed to counting the people you reach."
– Reimer Thedens
Chairman/CEO Worldwide
OgilvyOne worldwide Ltd., London

"This is math for even the quantitatively challenged. The formulas alone are worth buying the book for."
– Ron Jacobs
President, Jacobs & Clevenger
Co-author, Successful Direct Marketing Methods

"…fills a real need in the market…a practical, how-to approach to bringing accountability to marketing where it wasn't before with examples that are clear and concise, and easy to apply to new situations…"
– Alan Weber
President, Marketing Analytics Group
Co-author, Desktop Database Marketing

" …a necessary primer and source of wisdom for every marketer Accountable Marketing should be required reading for any one engaged the usiness of marketing…. even as a marketing veteran, I learned something valuable from every chapter. The book is readable, informative and constantly interesting. "
– Lester Wunderman
Founder and Chairman Emeritus, Wunderman Worldwide

About the author of Accountable Marketing

Best known as founder and Chief Executive of both Wunderman Worldwide and Saatchi & Saatchi Direct Worldwide, Peter J. Rosenwald has been marketing and strategic planning consultant to a wide variety of consumer and business-to-business companies throughout his career, including Metromail, Disney Consumer Products, Citibank, Hachette, Time-Life Books, Epsilon and the Franklin Mint., Most recently he has served as Vice President, Direct Marketing at Grupo Abril, one of the largest communications companies in Latin America.

He also has been a much sought-after speaker and lecturer in North and South America and Europe, including keynotes at three Montreux Symposia, the Direct Marketing Association Conference on Latin American Direct Marketing, and the DM News Conference on International Direct Marketing. He has been a professor at FGV, Brazil’s leading school of business, and was winner of the 1988 Montreux Direct Marketing Award.

Rosenwald is creator of the Allowable Cost Per Order (ACPO) computer software and contributor to several business and trade magazines in the U.S., and Europe. In Brazil he has written extensively for Exame, the country’s leading business publication.

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