Hierarchy Of Optimization

by David Baker, Monday, January 25, 2010

As Abraham Lincoln said, "I walk slowly, but I don't walk backwards."  We've made amazing strides in the email and marketing automation space with regard to our strategic thinking, technology advances and how we link disparate technologies to solve problems -- but have organizations followed our lead?    Looking back over the years, I find there is a natural progression to how people use email and the relative complexity of implementing ideas and the costs/risks and ROI of these activities. 

 I've used this sliding scale for years to illustrate where a company is today, what they hope to achieve so we don't get lost in some high-level-growth goal associated with "creating 1:1 dialogues" that are very hard to attain.   The hierarchy of optimization is best illustrated by the following areas,  beginning with the bottom and migrating upwards with increasing levels of investment to optimize, with potentially higher return on the activities.

1.       Acquisition:  historic list growth, customer touch-points, file aging and list cross-over activities usually fill this area of optimization, all associated with better understanding the value of a new customer/lead and how we interact at the front-end of the funnel.. 

2.       Deliverability: All the basic elements we do day in and day out: domain analysis, ISP relations, list hygiene.  With the maturation of the lists we have in play today and the increasing discrepancies of the ISPs' practices, this has increasingly become a mission-critical area we don't talk about enough, test enough or have enough resources to support.  Most companies could use a good "review" by a deliverability expert once a year.

3.       Interest Generation:  Today we could call this "engagement." It includes offer selection, creative/copy testing, frequency, subject line testing, and  preference center design -- anything that supports understanding customers' intent and how to reach them. 

4.       Personalization and targeting: We speak a lot about this, but most think it's the infusion of personalization in a subject line or body copy.  It's not!   Personalization is both an email and company-wide initiative that is far more complex than an email.  It includes data integration, geo/demo overlays, triggered messaging behavioral messaging, site/email and messaging - and, of course, integration of share components.

5.       Segmentation:  The farther we get into segmentation, the more complicated and intertwined it becomes.  Behavioral segmentation, attitudinal ovelays, MVC analysis, RFM strategy, longitudinal response, and cross-channel testing all present challenges for companies to optimize in channel and cross channel. 

6.       Conversion Efficiency:  Places more pressure on your ability to measure to conversion and control some of the variables responsible for supporting a sale - for example,  offer targeting, timing, sequenced messaging, and remarketing, path to conversion

7.       Cross-Sell - Upsell:   This presents the finest opportunity.  It means you have intelligence on what and why customer buy, and some predictive measures in place to assess risk to market to certain segments and the potential outcomes associated with the market.  These activities include: list overlap analysis, cross-product affinities, customer lifecycle, predictive modeling, campaign decision trees -- all of which support "decisions" and "migration."

While every company has a slightly different view and classification, by looking at this through an evolutionary view you can assess where you fit on this scale and what you hope to evolve to over time. In large companies, it can be difficult to organize around this progression. In small companies, it can be difficult to grasp the scale of return on some. But remember this: the vehicle you're riding in (train/car) may be going 60 MPH, but are you sitting still during this ride?

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