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How the DMA achieved 400%
growth in new members by
focussing on Lifetime Value
B2B Marketing Conference
14 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 customer
Where 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



                      Value
Frequency




            Recency
“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 years
Revenue Year 1          £280        £100
Revenue Year 2          £220        £ 60
Revenue Year 3          £180        £ 0
Lifetime Revenue        £680        £160
Gross Profit Margin     10%         10%
Lifetime Gross Profit   £68         £16
Acquisition Costs       £8          £4
Lifetime Net Profit     £60         £12

                »
DMA Lifetime value

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
Creating a single view –
building a new database
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?
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 £4,000
  extra (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?
Understanding the value of your customers to deliver business growth - DMA
Understanding the value of your customers to deliver business growth - DMA
Understanding the value of your customers to deliver business growth - DMA
Understanding the value of your customers to deliver business growth - DMA
Understanding the value of your customers to deliver business growth - DMA
Understanding the value of your customers to deliver business growth - DMA
Understanding the value of your customers to deliver business growth - DMA
Understanding the value of your customers to deliver business growth - DMA
Understanding the value of your customers to deliver business growth - DMA
Understanding the value of your customers to deliver business growth - DMA
Understanding the value of your customers to deliver business growth - DMA
Understanding the value of your customers to deliver business growth - DMA
DMA - Branding
A strong brand creates lifetime
value –an enduring bond

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.”
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.
Our values
Genuine
We are transparent and honest in all that we do.

In-touch
We are open, intelligent and never lose sight of
the needs of our industry and members.

Inspiring
We are vibrant, energetic and creative.

Helpful
We work as a team, sharing goals and
supporting all our stakeholders.
The conversation
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
Understanding the value of your customers to deliver business growth - DMA
Delivery: 2011
Understanding the value of your customers to deliver business growth - DMA
Understanding the value of your customers to deliver business growth - DMA
Communications campaign

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
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
Understanding the value of your customers to deliver business growth - DMA
Understanding the value of your customers to deliver business growth - DMA
Understanding the value of your customers to deliver business growth - DMA
Understanding the value of your customers to deliver business growth - DMA
Understanding the value of your customers to deliver business growth - DMA
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

  950

  900

  850

  800

  750

  700
        31/ 03/ 2008   31/ 03/ 2009   31/ 03/ 2010   31/ 03/ 2011    31/ 03/ 12
                                                                    FORECAST
New member acquisition

                       No of new members

 250


 200


  150


  100


  50


   0
        2007/ 2008   2008/ 2009   2009/ 2010   2010/ 2011    2011/ 2012
                                                            FORECAST
Lead generation 2011/2012
              2010/11     2011/12     2011/12
              Actual      Target      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%
New Member Lifetime Forecast

• 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

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Understanding the value of your customers to deliver business growth - DMA

  • 1. How the DMA achieved 400% growth in new members by focussing on Lifetime Value B2B Marketing Conference 14 June, 2012
  • 2. Agenda • Core Principles: lifetime value • Developing a Value Proposition • The importance of brand in B2B • Segmentation and Relevance • Success metrics
  • 3. Who are the DMA? • Membership organisation • Represent all channels using personal data • Tri-Partite Membership – Clients – Agencies – Supplier
  • 4. The value of a customer Where do you start?
  • 5. 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
  • 6. Transactional Data Value Frequency Recency
  • 7. “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?
  • 8. Different Metrics, Different Conclusions • Click-through rate • New or repeat visitors • Bounce Rate • Engagement • Micro-conversion • Conversion to Sale
  • 9. “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
  • 10. How about adding these? • First month sales • 6 months sales • 3 years sales
  • 11. 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
  • 12. A Hypothetical Example Part 2 Best Average Customers Customers Life Expectancy 3 years 2 years Revenue Year 1 £280 £100 Revenue Year 2 £220 £ 60 Revenue Year 3 £180 £ 0 Lifetime Revenue £680 £160 Gross Profit Margin 10% 10% Lifetime Gross Profit £68 £16 Acquisition Costs £8 £4 Lifetime Net Profit £60 £12 »
  • 13. DMA Lifetime value 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
  • 14. Creating a single view – building a new database 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?
  • 15. 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...
  • 16. Two lead sources We pay £50 to lead source A and £70 to lead source B
  • 17. 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
  • 18. 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...
  • 19. 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 £4,000 extra (200 x £20)
  • 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
  • 21. A Strong Value Proposition • Clients • Agencies • Suppliers • All have different needs • All have different reasons for joining • How to create a strong value proposition?
  • 35. A strong brand creates lifetime value –an enduring bond 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.”
  • 36. 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.
  • 37. Our values Genuine We are transparent and honest in all that we do. In-touch We are open, intelligent and never lose sight of the needs of our industry and members. Inspiring We are vibrant, energetic and creative. Helpful We work as a team, sharing goals and supporting all our stakeholders.
  • 38. The conversation 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
  • 43. Communications campaign 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
  • 44. 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
  • 45. A segmentation strategy Overarching • PR • Brand • Bulletin, Legal, Events Segmented by interest: • Doordrop • Email • Mailing Houses • Social Media
  • 51. IS IT WORKING? Is it working?
  • 52. 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
  • 53. Membership trends No of members 950 900 850 800 750 700 31/ 03/ 2008 31/ 03/ 2009 31/ 03/ 2010 31/ 03/ 2011 31/ 03/ 12 FORECAST
  • 54. New member acquisition No of new members 250 200 150 100 50 0 2007/ 2008 2008/ 2009 2009/ 2010 2010/ 2011 2011/ 2012 FORECAST
  • 55. Lead generation 2011/2012 2010/11 2011/12 2011/12 Actual Target 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%
  • 56. New Member Lifetime Forecast • 31% on multi year contracts • Average contract length 1.57 years • Average 6.4 contacts per member • Average 90% renewal
  • 57. 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

Editor's Notes

  1. Make people feel like the DMA has changed To perceive the DMA as relevant in a digital age An organisation that they would like to be part of