Targeted marketing communications used to be something of a pipe-dream for many businesses.  Database analysis could establish an all round view of each customer, but the processes of translating this intelligence into targeted, personalised communications was either unwieldy or unaffordable.  However, three things have come to pass over the last two years.  Personalised colour printing has become affordable for all sizes of company, rather than just the large ones.  The ability to create a tailored set of contents for each customer’s envelope has become very sophisticated and in addition to this, businesses have established the initial proof that personalised content on the website improves customer retention, satisfaction, cross-sales, and ultimately profitability.

Recent developments in variable colour printing – where content and text can be altered for each document printed – are revolutionising the extent to which communications with existing and potential customers can be personalised.  Recent research from GI Insight has confirmed the close correlation between the personalisation and relevance of customer communications and the levels of customer satisfaction achieved.  So personalised communications and reporting tangibly help to cement and develop customer relationships (and therefore the amount of business done with each customer).  Digital print means that there is now no need for minimum quantities.  And because the technology can now operate at high speed, then the economies of production scale are available to commercial printers to pass on more affordable pricing to customers.

Personalised marketing and customer communications used to be very much a service only for the highest value customer segments.  This is no longer the case.  The economics offered by high-speed variable colour printing mean that even the low value customers can receive such a service.  This is a critical point for the whole theory of database marketing.  Here, the job is not just to identify who the lower and higher value customers are, but also spot the segments with the greatest value growth potential and create strategies to migrate them from a lower value to higher value group.  If we cannot afford to communicate in a personalised fashion with the lower value groups, how can they ever be persuaded to upgrade?

Finally, the new capabilities and economics of variable colour printing are also being harnessed to greater web usage.  Here the process can become very interesting – we know of at least one firm that is using personalised colour to encourage the whole (connected) customer base onto the web, which then encourages the customer to create and use a personalised version of the firm’s website, where they can access all their details online. Throughout this process, targeted additional product advertising is served up to the customer with the aim of increasing their value via product offers they are likely to be interested in.

So much for the new capabilities of communicating in personalised colour.  How should the outcomes of this targeted activity be measured? In order to answer that question we need to examine the key underlying business measurement, which should result from efficient and effective database marketing.

As a result of the Internet, available markets have expanded enormously.  The tiniest firm can now access global markets.  Yet at the same time, the transparency – especially in terms of price – which the Web has allowed has also meant that competition has increased enormously at the same time as national boundaries and local anomalies have disappeared.  Consequently, product differential has diminished and the customer relationship will become virtually the be-all and end-all of a successful ongoing commercial relationship.

This has made business focus on two things:  firstly, to ensure that they provide such a good proposition for customers that they stay, increase their spend (if possible) and become more profitable; secondly, to understand better the cost of winning, keeping and growing customers, so that value is returned to shareholders.

The database marketing industry has produced extremely affordable customer relationship management tools (increasingly on a pay-as-you-go basis), with which to analyse and target the right people with the right offers.  But unless one understands profitability trends at the individual customer level, then companies will not know who to target, why, and with what.

Profit per customer helps to measure the value of different customer groups and the efficiency with which that value is produced.  It reveals whether firms have to recruit twice as many customers to achieve the same profit growth – and therefore whether or not current growth rates are sustainable.  By extension, profit per customer is the final output of earnings minus costs of obtaining, keeping and growing the customer.  Also by association, the quality of the value proposition being put to customers is being measured – i.e. more compelling proposition, greater efficiency, higher profit per customer.

In summary then, new print and web technology capabilities mean that organisations can now affordably generate personalised, high-quality marketing and customer communications. However, none of this is of any use unless a sound, accurate database drives such communications and campaigns.

Contributed by: Yolanda Noble, Chief Executive, dsicmm

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