Communicating to Consumers at the Right Frequency

The concept of dialogue frequency management (DFM) is at the core of
customer relationship building and CRM principles. Not until recently has it become the topic of heated discussions in the headquarters of companies relentlessly looking for ways to maximize the value of their customers.
On- and offline advertising principles are based on the promise of delivering the right message to the right individual at the right time through the right medium. However, a critical element is still missing in this equation to deliver on this promise: communicating to consumers at the right frequency. Companies struggle in their attempts to determine the optimal frequency and often wonder how much is too much or simply not enough. Although marketers may have different opinions on how to best accomplish this, they all agree that implementing DFM requires careful thinking and planning.
Too Much of a Good Thing
Marketers have discovered that digital media, like email, can be a highly cost-effective way to engage in a dialogue with customers, and they are planning their marketing initiatives accordingly. As email marketing and online advertising usage increases, consumers are more likely to feel that they are constantly bombarded with commercial messages on their desktops.
This is not a hypothesis; we are all experiencing these symptoms as customers. Aggressively communicating with your client base does not always lead to poor or deteriorating relationships. But unless it is carefully planned and executed, it may ruin your chances to build long-term customer equity. Suddenly, loyal customers become dangerously comfortable with the unsubscribe option, the "delete" keys of their keyboards, and the filtering capabilities of their email software. Your
so-called targeted messages now go automatically from the mailbox to the trash bin.
Finding the Optimal Frequency
To avoid double-digit unsubscribe rates and rapidly declining conversion rates, companies need to consider at what frequency they should communicate to their customers. First, set a frequency cap, such as no more than one message a day and no more than three a week. Then define the "floor level," the minimum level of dialogue required to maintain a relationship and keep a minimum level of customer mindshare, such as no less than one message a quarter. Track customer activity very carefully: open, click-through, conversion, and unsubscribe rates. Using this information, marketers can now identify the optimal frequency for their businesses -- the difference between revenue gains associated with frequent communication and loss of future profits due to an increase in opt-outs (see chart). Lets take an example to illustrate this: ACME
Company wants to determine the most effective and profitable dialogue frequency strategy for its upcoming email promotional strategy.
CustWeekly Unsubr.# MessagesDelivery CostConv. Rate RevenueNet
Profit
1x/wk50,0000.5%1,133,465$34,0041.0%$226,693$192,689
2x/wk50,0001.5%2,028,159$60,8450.6%$243,379$182,534

Notes: The following calculation is based on a $0.03 per email delivery cost and a $20 average order.
Assumptions have been made about the estimated unsubscribe and conversion rates based on two frequency scenarios.
As you can see, although sending email twice a week helps generate higher revenue (by more than $16,000) than only once a week, the net profit goes up at lower frequency (by $10,000) due to lower delivery costs. In conclusion, do your math religiously before deciding to increase customer dialogue frequency. Remember: In advertising, less can be more! Empowering Customers Is a Powerful Alternative
Savvy marketers are relationship builders and skilled testers. To build meaningful and long-lasting customer relationships, companies need to test various approaches, proactively collect consumer data, and act on it by taking into consideration customer preferences. By empowering customers and asking them how often they want to receive information, whether its daily, weekly, or monthly, we are giving control back to the consumers, reducing unsubscribe rates, and ultimately increasing ROI.

About the Author

Bruno Gralpois has served as General Manager of Precision E-mail, a suite of e-mail solutions offered by avenue a since October 1999. Formerly Director of Database and New-Media Strategies for DDB Direct, he headed efforts in emerging new-media technologies to develop targeted advertising programs that result from data mining. Bruno joined the direct response agency in early 1998 from Seattle-based Visio Corporation, where he was responsible for worldwide direct advertising and database marketing. A native of Nantes, France, Bruno also has worked in sales and product marketing positions at Hachette, one of the worlds largest publishers. He has published numerous articles on technology, direct marketing, and Internet marketing in Europe and in the United States. Hes an occasional speaker at national marketing conferences.

:To contact Bruno online see details below.


brunog@avenuea.com