Be a Prude. You will like the experience

I was at a conference last week listening to a presenter talking about reporting and measurement of Campaign success. Of course we all measure things such as sales / cost to determine success and profitability, and some of us even monitor the sales / opt-out rate to determine if the campaign is killing our future potential, ie. Opt-out reduces the number of customers we can contact in the future.

This presenter mentioned a measurement that I hadn’t come across before they called it the Prudex Index – which they used to measure the overall Customer Equity for a campaign. Personally, I thought it would provide a good measure of Customer Experience. In any case it was simply the comparison of the weighted positive and negative responses obtained for a particular campaign.

Even though customers may not buy a product, they are still happy if they have a positive experience of the contact. Conversely, if customers view a campaign contact negatively, this can affect not only the current campaign, but the overall experience and future customer actions.

Prudex Index = Weighted sum of Positive responses / Weighted sum of Negative responses.

The responses include sales, opt-outs as well as simple positive and negative responses. Thus a score greater than 1 means that the campaign is mostly positive and less than 1 means that it is a mostly negative experience. Obviously the higher the score, the better the Campaign/Experience.

The above got me thinking and I decided to revisit the EFMA CRM research that was done 18 months ago. The research detailed actual results obtained for different marketing techniques from 65 banks in over 30 countries (see my other blog on this or our website).

I had data for positive and negative responses as well as sales and opt-out rates for different campaign approaches so I applied a Prudex approach to the data and this is what I found.

In Eastern Europe, the overall customer experience for ANY type of campaign approach is mostly negative. They may make enough sales to cover their costs and make good profits but overall their customers are not happy. These guys are fighting an uphill battle!

In Southern Europe again their results were not much better than those from EE apart from the responses provide from a couple of Banks who had obtained dramatic results from their EDM projects (who also happened to be our customers :-). This was nice to see.

Finally in Western Europe we can see how using simple targeting or ad-hoc campaigns fare in terms of positive customer experience compared to accurate models or Events.

Another interesting thing that was presented at the seminar was an ROI calculation for a particular campaign. It showed that by selecting the top 4 deciles of a selection that the average response rate would be an average of 2.7% (10% for the top decile) with an overall ROI of 83% for the campaign (>500% for the top decile).

So what does this tell us? Well, for me this means that even with response rates of less than 3%, the bank is going to make money on their campaigns.

However, if you take into account the Prudex Index (Customer Experience) you might find that although the campaign made money, it reduced the Customer Experience (and long term equity), ie. The money you are making today can sacrifice the long term relations (and future profits).

Go on. Be a prude!

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