Last year at this time, I worked with a customer to produce a very successful direct mail referral marketing campaign. The campaign featured $10 gift cards with their loyalty card ID number, and another $10 off bonus for referring a friend, as long as they made a purchase – but they had to also sign up for the loyalty program. It was a relatively inexpensive direct mail piece to produce, mail or track. The main cost was related to the premium offered, with each piece costing the customer $22 per qualified new customer. However, I was told that the subsequent lifetime customer sales attributed to this mailing were well worth the expense. Additionally, this was able to be determined within less than one year. This particular marketer realized that their company could find qualified new customers through referrals given by the customers she already had. The current customer base that the mailing was sent to was assumed to have had friends with similar budgets, tastes, needs, demographics and more. It is a low tech way of marketing that probably has its roots in conversations that took place over the back fence hundreds of years ago when a local merchant offered to give the same great deal that they gave to a particular customer to their friends. That merchant assumed and probably correctly, that if this person liked the offer then friends of theirs would probably like it too and that letting the customer make the offer made them appear a benefactor to their friends. “Look what I got for you”. A win, win, win.
I was reminded of this when I read an article in Internet Computing March/April 2010 (vol. 14 no. 2) Homophily in the Digital World a Live Journal Case Study. To sum the article up, the researchers took the premise of homophily and tested it in the digital world. “Are two users more likely to be friends if they share common interests? Are two users more likely to share common interests if they are friends? The authors study the phenomenon of homophily in the digital world by answering these central questions. Unlike the physical world, the digital world doesn’t impose any geographic or organizational constraints on friendships. “ The answer they came up with was yes and no, unlike the clear correlation that a referral by a physical customer provides. In digital advertising the path is very measurable but with low tech physical referrals monitored digitally, the purchase path is also very measurable and more predictable. But a physical referral begins with a stronger correlation of characteristics and demographics between the referred party and the one giving the referral. Attribution in the low tech referral can often be distilled into a single low tech marketing channel , for example a well designed, strategically on point direct mail piece that is linked to and monitored by unique customer codes and later input into a CRM.
Digital marketing provides many advantages to today’s marketer but it isn’t the only way to add to our customer base and make a sale. We are probably well served to also think back to the time honored ways of growing our business and perhaps save some marketing dollars by employing low tech methodology when appropriate. Just think of that single direct mail piece this marketer used.