The Return On Relevance (ROR)

On Monday I talked about the barriers to relevance - those human and organizational tendencies that get in the way of an operational shift that embraces a strategy of relevance over broadcasting in consumer communications. What I pre-supposed is that relevance is worthwhile. I.e., that it's profitable. And, that it's more profitable than a broadcast communications approach.

The discussion of a return on relevance begins with Jupiter Research’s 2006 report “The ROI of Relevance.” In the world of digital direct marketing especially, this report was the objective, authoritative source of credibility for companies like Knotice for which relevance is a cornerstone of our brand position, our pitch, and our strategic roadmap.

In “The ROI of Relevance” analyst David Daniels concludes clearly that “despite additional campaign costs, relevant campaigns increase net profits by an average of 18 times more than do broadcast mailings.”

Back in 2006, however, the realization of relevance was still in its nascence with a lot of ground to be made up. Daniels, “Sixty-percent of consumers who make immediate purchases from email messages did so because messages contained products they were already considering, but only one-third of promotional email marketers said relevance was one of their top three goals.”

Finding objective support for the value of relevance in communications, despite a potential increase in up front campaign cost, is found across the Internet. So yes, the up front campaign cost rises when relevance is in play. A marketer must reference more data points than the email address, like a customer’s shopping history, demographic profile, anniversary date… anything. The reference to these additional data points must be supported by some basic variance in content. Therefore your costs will increase – even if it’s basic segmentation and adjusting an email subject line or product feature. But, the return on this additional work is exponential increases in profitability. This can be measured. And, your boss will not argue.

My career in marketing started not on the technology side but as a brand manager – a more nebulous definition of an advertising account manager. In my perspective the argument for relevance is deeper than a numbers game. The numbers bear out the ROI math in very simple formulas such as 1 email sent = $2 revenue. But, every marketer is responsible for understanding that relevance is about the brand. This is about creating a brand voice that has informative, interesting and worthwhile things to say to all its constituents and customers, not simply generating noise and chatter. This distinction is slightly tougher to measure. It can be summed up as: noise and chatter brands are not good brands while relevance is.

In his blog “Marketability” David Kinard suggests this brand-relevance concept is better expressed as “pertinence.” Kinard, “To me, pertinence is possibly the most critical element in marketing as it drives the focus away from my-product-my-company to the customer, audience, and consumer. To be pertinent means to be both IMPORTANT and RELEVANT.” I think this is a great rubric for evaluating your marketing efforts.

Essentially “relevance” or “pertinence” is the discipline of audience-centric communication. The my-product-my-company mindset produces noise and chatter. Audience-centricity values understanding the information the consumer provides, the feedback they are willing to give, and behaving in kind – whether proactively or reactively. Shouldn’t we all strive to have our brands as pertinent to as many consumers as possible?

The return on relevance in digital direct marketing is clear, and the human and organizational barriers need to be overcome. On Friday I will talk more about the technological and “how-to” factors in the realization of relevance.