How the DMA achieved 400% growth in new members by focussing on Lifetime ValueB2B Marketing Conference14 June, 2012
Agenda
• Core Principles: lifetime value
• Developing a Value Proposition
• The importance of brand in B2B
• Segmentation and Relevance
• Success metrics
Who are the DMA?
• Membership organisation
• Represent all channels using personal data
• Tri-Partite Membership– Clients– Agencies– Supplier
The value of a customerWhere do you start?
Not all members are equal
Rank these profiles for Value of a member
• Ecommerce company who thinks DMA is mail only• Small mailing house: displays logo/ uses no services• Lapsed member after 1 year, never came back• Large agency who enters and wins DMA awards• FTSE 250 client maximum fee payer, 48 contacts • Mid-fee data supplier who spends £70,000 on
sponsorship, attends every event, chairs a council, refers clients and uses the free legal help desk 3 times per month
Transactional Data
Frequency
Recency
Value
“Lifetime” alters value
• How long to customers stay active for?
• What revenue will they generate per year?
• Work this out for the whole database
• Then for customer segments
• That gives a lifetime value (LTV)
• What about different acquisition source?
Different Metrics, Different Conclusions
• Click-through rate
• New or repeat visitors
• Bounce Rate
• Engagement
• Micro-conversion
• Conversion to Sale
“All of the above is focusing on short term success.
Even measuring “Visitor Conversion Rates” is akin to declaring success
after a one night stand.
Visit based conversion rates promote bad marketing behaviour.”
www.kaushik.net
How about adding these?
• First month sales
• 6 months sales
• 3 years sales
A Hypothetical Example
Best Average Customers Customers
Purchases per year 4 2
Average Order Value £70 £50
Annual Revenue £280 £100
Gross Profit Margin 10% 10%
Gross Profit £28 £10
Acquisition Cost £8 £4
Net Profit £20 £6
A Hypothetical Example Part 2
Best Average Customers Customers
Life Expectancy 3 years 2 yearsRevenue Year 1 £280 £100Revenue Year 2 £220 £ 60Revenue Year 3 £180 £ 0Lifetime Revenue £680 £160Gross Profit Margin 10% 10%Lifetime Gross Profit £68 £16Acquisition Costs £8 £4Lifetime Net Profit £60 £12
»
Looking at the lapsed members:• Average order value: £1,597• Average membership: 4.3 years• Average life time value: £6,867
Looking at the existing members:• Average order value: £2,105• Average membership: 6.1 years• Average life time value: £12,838
DMA Lifetime value
What did they spend on sponsorship?
Did they enter the awards?
Did they buy a table at summer lunch? Attend data conference? Play golf?
Use the legal helpdesk?
Volunteer on a council?
Creating a single view – building a new database
Solve tomorrow’s problems today
• You’re a B2B subscription publisher
• Or an PI insurance company
• You need sales today
• And repeat sales next year
• Better start working on LTV then...
Two lead sources
We pay £50 to lead source A
and £70 to lead source B
You need customers in year 2
• 2,000 customers start Year 1
• 1,000 from source A convert at 10%
• 1,000 from source B convert at 30%
You start Year 2 with 100 customers from Source A and 300 customers from B
Original Acquisition costs...
• I spent £50 on Partner A customers
• £70 on partner B customers
• But I need to go and buy 200 more from A to make up the difference at the start of Year 2
• So, here’s the exciting bit...
Tell this to your Finance Director
• I could have saved £6,000 if I’d spent £4,000 more this year
• For year 2 we’ll have to “buy” 200 customers from Partner A at £50
• That’s £10,000 extra cost in year 2
• If I got them from Partner B in Year 1 it would only have cost me £4,000extra (200 x £20)
DMA growth strategy 2011-12
• Use future value to amortise investment
• Big challenges: 4 years declining membership and relevance
• New Brand identity• New Value proposition• New Audiences • Segmentation of proposition and
content
A Strong Value Proposition
• Clients
• Agencies
• Suppliers
• All have different needs• All have different reasons for joining• How to create a strong value proposition?
DMA - Branding
How do we want people to feel when they see the DMA?
“The DMA is an exciting, vibrant organisation that I must be a part of.”
“The DMA can really help me and my business.”
“The DMA has changed, I need to take another look.”
A strong brand creates lifetime value –an enduring bond
The vision
To be a vital and inspiring partner – always positive, always in touch.
Together, we will create and champion a vibrant future for all our members.
GenuineWe are transparent and honest in all that we do.
In-touchWe are open, intelligent and never lose sight of the needs of our industry and members.
InspiringWe are vibrant, energetic and creative.
HelpfulWe work as a team, sharing goals and supporting all our stakeholders.
Our values
Modern DM is about starting conversations
A simple, flexible mark – representing a conversation, a stamp and a single pixel.
There’s a collective approach and inclusive feel around the use of the word ‘we’.
Genuine. Inspiring. In-Touch. Helpful
The conversation
Delivery: 2011
Create an overarching communications campaign championing the business value of data:
• High profile public relations to be driving force of campaign
• Enlist ‘supporters’ to endorse the campaign• Supported by other marketing to business audiences (social, mail, email, open letter ads, posters etc)
• Member communication campaign and toolkit
Communications campaign
Data
Positioning data at the heart of business success
• Data Protection regulations• Privacy and security• Measurement and attribution• Cookies• Targeting and efficiency• Value of data• Making better business decisions
A segmentation strategy
Overarching• PR• Brand• Bulletin, Legal, Events
Segmented by interest:• Doordrop• Email• Mailing Houses• Social Media
IS IT WORKING?Is it working?
Results so far
• 400% increase in new members
• 31% on multi-year contracts
• 90% retention
• Short term loss in 2011-12
• BUT 1,000% ROI by lifetime
Membership trends
No of members
700
750
800
850
900
950
31/03/2008 31/03/2009 31/03/2010 31/03/2011 31/03/12
FORECAST
New member acquisition
No of new members
0
50
100
150
200
250
2007/2008 2008/2009 2009/2010 2010/2011 2011/2012FORECAST
2010/11 Actual
2011/12 Target
2011/12 Achieved
Enquiries 536 1440 887
Conversion Enquiry to Meeting 37% 50% 52%
Meetings 196 720 461
Conversion Meeting to Member 58% 50% 45%
New Members 114 360 209
Conversion Enquiry to Member 21% 25% 24%
Lead generation 2011/2012
•31% on multi year contracts
•Average contract length 1.57 years
•Average 6.4 contacts per member
•Average 90% renewal
New Member Lifetime Forecast
At 4.3 years: £1,225,500
At 6.1 years: £1,738,500
ROI over 1000% from investment of £150,000
New member lifetime forecast
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