The 2001 economic downturn forced many companies to significantly reduce or, in some cases, freeze their marketing budgets.
By cutting marketing budgets, many companies lost a golden opportunity to differentiate themselves, build brand awareness and drive sales. However, some saw an opportunity to increase market share and sought to implement marketing programs that were both cost-efficient and had a high return on investment (ROI).
Precision e-mail marketing, which builds customer relationships by targeting customers with the right offer at the right time, has a low cost per contact and high ROI. Since it is measurable, marketers can win management's support by tracing program results directly to sales.
e-Dialog, an outsourced provider of precision e-mail marketing based near Boston, Massachusetts, saw its clients — despite layoffs and budget cuts — increase spending in the first quarter of 2001 compared with the previous quarter. To ensure that the e-mail marketing campaigns it implements on behalf of its clients are as effectively targeted as possible, e-Dialog uses data mining tools from SPSS Inc.
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In mid-2001, the U.S. economy was stricken with mass layoffs by Fortune 500 companies and flagging consumer confidence. In addition, U.S. promotional expenses for the first quarter of 2001 fell more than 10% from a year earlier — the first spending drop in more than 10 years.
IT market analysis firm Aberdeen reasoned that in a down economy, spending on precision e-mail marketing would increase due to its relatively cheap cost, high response rate and measurability. Aberdeen was able to confirm this hypothesis by analyzing the marketing expenditures of the client base of e-Dialog, an outsourced provider of precision e-mail marketing. Sixty percent of e-Dialog's customers spent more in the first quarter of 2001 than in the fourth quarter of 2000, with a nine percent average increase across all clients.
In contrast to its tech-oriented competitors who happen to dabble in marketing, e-Dialog's people pride themselves on being marketers by trade. To further hone their precision e-mail campaigns, e-Dialog's team relies on SPSS Inc.'s suite of analytic and data mining products. "PASW Statistics and PASW Modeler enable us to offer a higher level of sophistication and a different level of services than we could provide on our own," said e-Dialog Director of Research Michael Wexler.
Well-known brands such as Charles Schwab, Harvard Business School Publishing, and the NFL chose e-Dialog because they were able to grasp client needs and effectively deliver results at exceptional value. For similar reasons, e-Dialog picked SPSS Inc. Wexler explained, "SPSS Inc. understood our needs as a growing company. They hit the ground running very quickly and provided a lot of bang for the buck."
SPSS Inc. understands our needs as a growing company. They hit the ground running very quickly and provided a lot of bang for the buck.
Michael Wexler
Michael Wexler, e-Dialog Director of Research
PASW Statistics and PASW Modeler enable us to offer a higher level of sophistication and a different level of services than we could provide on our own.
e-Dialog Director of Research
Precision e-mail marketing campaigns begin when a user signs up for an e-mail newsletter on the client Web site. E-mails are then sent to solicit responses that will be used to create a customer profile. For example, to build fan loyalty, the NFL tailored e-mails to fans with news on their favorite teams.
With each new e-mail, more data is generated and customer profiles become increasingly complex. e-Dialog uses PASW Statistics, PASW Custom Tables and other products to sort through the numerous variables and determine which are truly meaningful. SPSS Inc. tools allow Mr. Wexler to back his own intuition with hard numbers.
Retail clients like to understand which combination of offers can drive purchases without, as Wexler puts it, "having to sell the farm." A platinum customer might expect a 10% coupon with free shipping, while a general consumer might be satisfied with only a 5% coupon. By determining the minimum set of offers that lead to purchases, e-Dialog maximizes ROI for its clients.
Wexler uses SPSS Inc.'s powerful data mining analysis tool, PASW Modeler, to group people by behaviors and interests. He prefers PASW Modeler because it is easy to use and has a superior user interface.
Before signing a contract with e-Dialog, one retail client sent customers e-mails that contained links to a random assortment of items on sale. Wexler used PASW Modeler to determine that these customers could be effectively segmented based on the sale item's purchase price. By targeting more lavish spenders with sales on expensive items and frugal consumers with cheaper items, e-Dialog enabled the retailer to achieve a 15% increase in click rates on sale items.
As technology and marketing continue to merge, smart marketers realize that the two disciplines must work together in order to achieve the best results. e-Dialog's work with SPSS Inc. is an example of just how effective this combination can be.
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