• by Sarah Mahoney  @mahoney_sarah, February 24, 2010

Struggling with shrinking budgets, reduced headcount and more pressure than ever to prove their marketing programs work, CMOs have longed for more precise marketing tools. So the CMO Council recently sponsored a research initiative it calls "Routes to Revenues," with some surprising results, including the news that email marketing messages -- a weapon that CMOs think of as effective and affordable -- are so irritating that 91% of consumers are opting out, says Sandra Zoratti, a member of the CMO Council's board and VP/global solutions marketing for Ricoh/IBM InfoPrint Solutions, which co-sponsored the study. "And 41% of them say that irrelevant emails make them consider abandoning the brand entirely," she says.

For CMOs, that kind of large-scale defection is a major concern. Only 46.5% say they have good insights into their retention rates, and nearly two-thirds of the CMO Council's members are plagued by customer churn higher than 5% per year. (For 31%, it's greater than 10%.) And while getting dumped by those customers leads to lost revenues and profits, it also drives up marketing and re-acquisition costs. Yet 67% have no system for trying to reclaim lost or dormant customers.

Zoratti talks to Marketing Daily about the research:

Q: What's the best description of this "precision marketing" concept?

A: The idea is that we use data-driven customer insights to the right person at the right time in the right channel. We know that consumers are increasingly in control -- they're unsubscribing, opting out, and putting up tougher spam filters. What they're saying is, 'I will tune you out and defect from your brand unless you prove that you know me.' Consumers are very focused on what they can choose and unchoose, and through social media, very aware that they have a viral voice, too. Email is a great example -- it is so broad-brushed that it is irrelevant. It's the new junk mail.

Q: But marketers think it's effective?

A: The problem is that marketers are focused on how they execute and what channels they use, and not on content. Marketers need to make that shift -- they are lagging consumers.

Q: What's the downside?

A: They're turning off their customers. There's this attitude that email is so cheap, why not send out 10 bazillion messages, "spray and pray," and skim off 1%. They don't see that they're alienating 99% of their audience.

Q: So what are better ways for personalizing marketing messages?

A: We did an eight-week test for Best Western meant to boost reservations and promote its branded credit card, delivering a personalized campaign on the face of its monthly mailings: One half of a 100,000 test group of "rewards" customers got the control, and the other half received a mailer with personalized messaging -- reflecting the best seasonal promotion for them, as well as specific credit card offers. We were stunned: Revenue gained 30%, the number of nights stayed gained 34%, and the ROI on the project was 278%. There was even a green advantage, since we got rid of some of the more static inserts -- it generated a 40% savings on paper costs.

Q: So what changes will marketers make now?

A: We think these results will encourage more marketers to use things like monthly billing statements as a marketing opportunity. When we asked about the primary benefits of precision promotion programs, 56% of respondents felt the programs will be cost-effective, 47% believed these tactics to be a relevant and contextual way to deliver messages, and 40% think the messages have the opportunity to cut through clutter and grab their customers' attention.