SEPTEMBER / OCTOBER 2010: THE HUB PROFILES

Understanding from Data
Spencer L. Hapoienu, co-founder and president, Insight Out of Chaos

First and foremost, we consider ourselves to be a marketing company. We just happen to use data, technology, and creativity to help our clients achieve their goals. We make a genuine connection with customers in a highly targeted and results-driven environment.

Twenty-five years ago, when I was still at Ogilvy, it became clear that advertising was no longer going to be the core component of marketing, as a result of customer segmentation and the explosion of technology innovation.

Our point of view was that the ideal company to leverage these changes would be one that understands consumer behavior, has the technology skills to manage large volumes of data, and cultivates a culture of creativity that makes our client’s brand relevant to customers.

Creativity is not only important in the classic sense of designing communications to reflect a brands ethos, it is also about using creative techniques to build technology that provides our clients with the greatest flexibility. Technology platforms tend to be highly rigid and do not allow for the necessary nuances required for every business. 

As a result, brands are forced to adapt to the technology. We built our technology platform from scratch. This allows us to provide our clients with maximum flexibility to add, edit, or adjust everything from websites for consumers to data warehouse structures and analyses.

Every client has the same goal: how do I reach customers efficiently to maintain their loyalty and increase my share of their business?

Almost ten years ago, True Value hired us to design a loyalty program for them. Over the previous 20 years, the independent hardware industry had suffered huge losses, as a result of the big boxes and discounters. Most of these independent retailers, even though they were good operators, were looking at the world and thinking that they didn’t know how to compete anymore.

They didn’t have confidence that they should investment-spend in their business, that they should maintain a full shelf of inventory. As a result, there were out-of-stocks and old-fashioned looking stores, which further depressed sales.

True Value learned that a loyalty program provided a competitive advantage, by allowing them to know more about their customers than the big boxes knew about their customers. While the big boxes bludgeoned the market with high-spend mass marketing, the local True Value hardware store owners fought a guerrilla battle on a one-to-one basis, and won.

We help each True Value store owner learn what a customer is buying or responding to, and how to get a customer to add one or two visits that would have gone to a big box. One or two extra visits per year become a significant incremental lift to their business. As these independent hardware retailers see that happening, it changes their mindset about their business.

Once they could see the marketing working, as a result of having the data, they grew in confidence. They started to investment-spend in the business. They kept the shelves stocked and remodeled their stores. By doing so, they began turning inventory and increasing sales.

The majority of the 700 True Value stores that became members of the loyalty program and operated the program successfully have enjoyed growth in their business. They have outpaced the average for the industry and for other True Value stores.

We are being given more and more tools every day to talk to customers. With every turn of the technology wheel, we’re given a new tool to work with. Social media and location-based technology, like Foursquare, provide new methods of immediacy. The iPad provides an entirely new mobile experience with a high degree of creativity.

We’re working with a company that has developed an HTML-like platform for text which will provide another new creative platform to reach customers with a sense of urgency.

The skill is in blending the new communications channels with traditional channels to create the optimum experience for the consumer and the highest productivity and effectiveness for the client’s business. At the end of the day, we cannot rely on any one channel, due to its low cost or immediacy, because it’s always about making an impact on the client’s business.

For example, if you send a direct mail piece through the US Postal Service to customers, you may get a 15 to 50 percent response, depending on what you’re sending. If you send that same communication through email, you’ll probably get a 6 or 8 percent response. While email is so much more efficient, we still have to drive sales. We have to consider everything. Everything is on the table.

Another one of the companies we’re working with is a software firm that’s a leader in understanding pricing optimization and all that goes into consumer decision-making. We can collect information on why a customer walked into a store or placed an order on any given day. Did it come from a radio spot, a direct mail coupon, or Twitter? Importantly what impact did it have on the customer’s behavior? Can we replicate it and apply it to other segments?

When we put all that data together it makes our clients much more efficient and more effective in the marketplace. It also increases customer gratification, because they’re getting communications, information, and offers in a way that is relevant and convenient for them.

The concept of junk mail and spam shouldn’t exist. If all businesses understood the concept of relevant marketing, we wouldn’t have the need for “don’t call” or “don’t email” lists.

IOOC is a little like Avis: always trying harder to over-deliver. We’re not a billion-dollar company, even though we work for billion-dollar companies. We hire people who are capable of making only good decisions, who always put the client first. We make sure they understand what we expect of them and what our clients expect. Our clients expect that whatever it takes, we get it done. We instill that point of view into everybody who works here, and then we just leave them alone to do it.

We have a very flat organization. There are two founders and department leaders. We don’t use officer titles. There’s always a fair amount of excitement, as there should be in entrepreneurial companies. We have very little turnover, because we treat our employees like we advise our clients to treat their customers.

We do everything we can to make it convenient and profitable for our employees to work for IOOC. Many of our staff work from home, from all over the country. This allows us to hire great people, regardless of where they are, giving them the freedom of no commute. In turn, having low corporate overhead allows us to be a low-cost provider.

The most important thing to know about Insight Out of Chaos is that we know how to execute. In most companies, there’s too much talk about strategy and analysis, and too much time is spent on meetings to determine how to do something. We work primarily (but not exclusively) in retail. There isn’t time to overanalyze and perfect anything. Because we’ve done it so many times, we have a faster response time in getting “it” done — we don’t require as many meetings.

The difference between us and everybody else — and we hear this from every client — is that we get it done, we execute. One of our clients said that we provide flawless execution.

When Lou Gerstner took over IBM, he changed the mentality from strategy to execution. Even though Lou started his career at McKinsey, he said the dirty little secret was that it was always about who could execute better, not who had the best strategy. That’s IOOC.



SPENCER L. HAPOIENU is president and co-founder of Insight Out of Chaos, a database and direct marketing company.


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