Enough is Enough! The Fine Line in Executing Multichannel Relational Communications

By Andrea Godfrey, Kathleen Seiders, & Glenn B. Voss

Multichannel

"Preference for postal mail surprised the researchers, because customers presumably are overwhelmed with junk mail. However, it appears that customers view physical mail as less intrusive than emails or phone calls."

Source:  Journal of Marketing, Vol. 75 (July 2011), 94 –109.

 

Material/Activity Tested:
 

The ideal level, mix, and alignment  of multichannel personalized communications (telephone, email, direct mail) with customers and alignment of those channels with customers’ preferences, with the goal of maximizing customer spending. Examples of communications: remind customers of needed services, announce new products and locations, survey satisfaction, and announce promotions.
 

Methodology:

The survey sampling frame included 3,370 randomly selected customers of a large auto dealership with a high-volume service department who had visited the service department within the past year. Two mailings offering a $5 gift card, produced 1,162 complete responses, for a 36% effective response rate.  The majority of respondents were men (57%) and were between the ages of 35 and 64 years (60%). Sixty-nine percent had some technical or university education, and 66% had an average household income exceeding $63,000.

Metrics:

Longitudinal analysis of 39 months of phone, mail, and e-mail communication matched with customer contact history and repurchase transaction data.  Contact records included the dates each customer was contacted and communication channel used.  The transaction database captured the date of the customers visit and the amount the customer spent.

Dependent variables:  repurchase visits or spending.

Independent variables:  customer self-reported communication channel preferences, the volume of relational (personalized) communication the company sent to its customers by telephone, email, and direct mail.

Top-Line Results:
 

• "In an effort to build long-term, profitable relationships, many companies systematically engage in multichannel relational communication—personalized messages sent to existing customers through various channels as part of a broader relationship marketing strategy. However, what if such marketing communication drives customers away from rather than closer to the company? Despite its widespread use, multichannel relational communication has only recently gained attention in the marketing literature, and its effects on customer repurchase are not well understood. Although general consensus exists that some amount of communication is better than none, relevant marketing theories and the limited empirical evidence are equivocal as to whether there is an ideal level beyond which additional communication leads to diminishing or even negative returns," states the journal's executive summary of the study.
  

• The results indicate that there is an ideal level of communication volume that varies across channels and, after the ideal level is exceeded, customers react negatively. This negative response can be exacerbated by the use of multiple channels; however, aligning the channels with customer preferences can attenuate such negative effects.

• Researchers were surprised to find that direct mail was such an effective communication method.  Customers were accepting of about twice as much direct mail, compared to phone calls and e-mails, before their spending levels started to decrease.  The researchers hypothesize that customers view physical mail as less intrusive than telephone calls or e-mail – they can view such messages at their own convenience.

 

• Using three-month increments, the ideal level of communication to spark customer interest in this particular study, for this particular auto dealership, was 3 telephone calls, 3 to4 e-mails and between 9 to 10 direct mailings.

 

• The ideal level of communication through one channel decreases as volume in other channels increases.  This is in contrast to previous studies that found synergies when communication occurred in multiple channels. For example, when there was one direct mailing, the ideal number of e-mail contacts was approximately five, but the ideal number of e-mail contacts drops to one when the number the direct mailings is five.

Take-Aways:  

"Because shifts in the ideal point directly influence repurchase behavior, the research provides substantive insights that can lead to more effective customer relationship strategies. The results highlight the importance of considering the impact of specific channels, individually and in combination, rather than aggregate volume as a means to manage the communication channel mix more effectively. The study’s findings also underscore the need to avoid inefficient allocation of marketing resources by developing protocols that limit total communication through all channels and specify effective channel combinations. Taken together, the evidence suggests that multichannel communication must be carefully managed on multiple dimensions to avoid generating reactance and potentially driving customers away from rather than closer to a company."

“The results challenge a popular marketing theory that constant communication with customers is essential to building a strong relationship,” one of the authors, Andrea Godfrey is quoted as saying.

 

Complexity rating of original source: 3  (Complex statistical analysis scale:  1= easy, 2= moderate, 3 = difficult)

Access the study:  Enough is Enough! The Fine Line in Executing Multichannel Relational Communication and the Journal of Marketing Executive Summary.