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