Data Detective: Cracking the Code of Customer Behaviour with Jim Harenchar

If you're wondering where your customers are coming from, and if you're thinking you've got all these different channels on social and they're all working for you, but you just don't know which ones. My guest today is going to be fantastic for you because the answer he tells me lies in the data. Your question back to me will be great. I've got so much data, how on earth do I possibly understand any of it? And that's why we brought Jim Harenchar, who is the CEO of a company called Response Marketing Group, joining us from Richmond, Virginia, because he's got the answer. He's got clients, including the Ritz Carlton, who rely on him for response attribution. Jim, welcome to the show.

Thank you, Jim. Good to be here.

It's good to have you. Because let's face it, we've got more and more data. And as entrepreneurs, it feels like we've got data overload or certainly data overwhelm. Facebook, LinkedIn, TikTok. How on earth do we know which ones are working? So, Jim, tell us about a little bit about RMG and how can we know and plan our marketing activities?

Sure, absolutely. So Response Marketing Group was founded in 1986. So in October we will celebrate our 38th year anniversary, I guess.

Congratulations. That's some real data.

Yeah, very true. Thank you. And we started in an era, Jim, when there were really only two forms of direct to consumer marketing. There was telemarketing, which everyone hated because the phone call came in between five and seven o'clock at night. And the other was direct mail. So I think we were slightly less hated, but we were very, very heavily leveraged into the direct mail business. We would mail hundreds of millions of pieces of direct mail, but that was an output of our focus on data as a foundational aspect to marketing. And so we first started in the business with financial services companies because back in the mid to late 80s and early 90s, banks were very acquisitory. They were very aggressive in terms of recruiting new clients into the market space. And telemarketing was a piece of that. Direct mail was a huge piece of that. And so we would use the data that our clients maintained and we would build predictive models. So if Jim James was an existing client of XYZ bank and we wanted to find more Jim James, we would use all of your demographic attributes, your age, your income, presence of children, the car you drive. One never knows what turns out to be predictive. And we would load that into a model to find more gyms and then we would do direct mail to everybody that looked like Jim and hope that just like Jim, they. They took that product or service. And so that was, as I say, the foundational aspect to RMG in. In the 80s, in the 90s, as we had a expansion of the available channels that were available for marketing, we grew with those. And fast forward to today, we have more channels than we ever had before. And so we are believers and advocate in our engagements that nothing has changed as it relates to data being the foundational aspect of that. Whether it's the data you have, many of our clients are overwhelmed with data or the data you don't. We have some very small clients that we refer to. It is a digital shoebox, right? They're collecting names and putting them in Excel spreadsheet and keeping that on a laptop computer. That works too. So there is quite a span on the landscape of sophistication around database marketing and specifically marketing in the mid-2000s.

Well, Jim, what we'll do is we'll go through some of the technology and keep it so that for those of us that are not tech heads, we can understand where you're coming from. And then we're going to look at some customer segmentation, which we know is so important, and went over the Ritz Carlton, which you helped improve their room, stays by 33% by some of your attributions. So it says on your website, know every visitor. And I'm assuming that means to your website or to any social channel you've got, Jim. So I thought that in this age of GDPR and cookieless marketing, that as a consumer I was anonymous. Are you saying that that's not the case? If so, what's happening?

Well, I think that you're probably less anonymous than you think you are, Jim, and most of us. And we find that typically when we walk through with clients what our capabilities are and what they're exposed to without knowing, most are shocked, to be quite honest. Obviously, I'll speak to U.S. compliance and regulatory requirements. But appreciative of GDPR, we have been fortunate to build a robust database over our 30 plus years. And so we have nearly 150 million households in the U.S. or individuals where we're tracking some level of information. And when I say tracking, we've either purchased, acquired or licensed publicly available information. And so there are technologies like what we offer, like what our peers and others offer that certainly now de anonymize you to your question, regardless of whether, whether or where you are. So if you're On a website, you may think you are not being tracked. And it is possible that you certainly can remain anonymous depending upon, you know, whether you have rejected cookies or pixels or anything or if you've rejected location tracking, though that anonymity still does exist. But what we have found in, I think it was 2023, Deloitte actually published a fascinating survey of when exposed to an opt in or opt out to someone who lands on a website, 82% of people choose to do nothing. And so in the US we work off of implied consent. So that means that most companies are then assuming that you chose to be tracked and they're getting a lot more information on you and you're no longer anonymous.

So the de anonymizing, as you say. So we leave digital footprints and digital crumbs all over the place for a smaller business. How does this work, Jim? And you know, what can we do? What guidance do you give at RMG when it comes to, if you like the thinking about data? Because we could talk about the management of data maybe next. But what about just the mindset, the approach? Because we do have this kind of overwhelm, I certainly do, with all the different channels and the analytics. So where do you help people to start, Jim, with their approach? Let's start there.

Well, I think from our perspective, Jim, it's critical to understand that where others may see data as throwaway, meaning it's not meaningful, we think that everything may very well provide some sort of insight to an individual. We do a lot of work in the tourism industry and I'll give you again a fairly crude example. But in a conversation with one of the southeastern states, we were talking about data that they maintain and they say, well, we just don't really capture that much information. We have people that walk into a visitor center and, and say, hey, I'd love to get a visitor's guide or can you tell me something? Or we have someone that goes to a website and fills out a form and says, will you send me a printed visitor's guide or can I download a digital visitor's guide? Because I'm thinking of coming to New Orleans, for example. This particular state happened to have a good old fashioned three ring binder at visitor center. And so when you entered the state and you got off, you might be buying a refreshment, you might be going to the restroom. Whatever the case might be, it was an opportunity for people to enter their name, their address, where they were going in the state and how long they were staying. And I said, well, how Many of those do you have? And my contact said, well, probably about 700,000 from last year. I was like, are you kidding me? 700,000 people have voluntarily provided you with information. They considered that a throwaway. But to us, my goodness, it if we can enter that even into a crude spreadsheet, we have information that tells us who is visiting your state, where they're coming from, how long they're staying, where they're going to, more than surveys or research or anything else could provide us. So point being, what you might think is a throwaway actually is valuable information that you ought to save. To your point, every crumb of information that you can may lead to building a more robust profile of your customer.

So to that point then Jim, if you like a, even just a simple rudimentary offline survey in a store, with or without an incentive to fill in the form, could be a value, right, which you could then I guess scan into your database.

Absolutely. Yeah, absolutely. You know that we've advised some clients from time to time who want to build their E. Newsletter audience or they want to identify people that would like to sign up to receive promotional sale opportunities and things of that nature. And we've told them create just a small little, a little postcard size piece that sits next to your, I call it a cash register. No one uses cash anymore but to your checkout area and they can voluntarily take that. It has a QR code on it. You're not asking them to collect information. Because if you're like me, Jim, anytime I show up at a retail store and someone says can I, I have your email address, 90% of the time I say no, I'm not going to give that to you. I don't, I don't need more email. But if a person is interested, they can take a postcard, it has a QR code on it. They can then with their phone snap it. They can sign up for an E Newsletter to receive your promotions. All that's cost you is literally less than $100 to print out maybe a hundred small postcards with a QR code that you keep live.

That's a really, really good piece of advice. And Jim, just for those people that don't know, that's quick response code, isn't it? You can make them with the QR generator or even Canva now actually you can put in the URL and very, very easy to do. So this is really important, as you say, to gather data even at a small amount. What do you do at Response Marketing Group with helping people to understand customer journeys. Because you talk about someone coming in the store, that's part of their journey, isn't it? And as a, as a company, online or offline, profit or non profit, we know that the customer is on a journey not always to purchase, but sometimes to investigate, to research. Jim Harencho, what do you guide your clients to do, to think about that customer journey from a data perspective?

Well, we've developed technology, Jim, that allows us now, when someone is on your website, to be able to better understand where you came from and what pages you're viewing on our site. So you know, we've all had access to Google Analytics and that has been the de facto reporting and measurement tool for success of any type of web based activity. But that tool, granted it has been updated with GA4, but it still has a legacy to 1990 or 2000. Yeah, 1994, I think, believe it or not. So there are better ways. So we happen to have a product and I won't go too deep into that at this point in time, but the technology exists to de anonymize website visitors. So what you can do in tracking that customer journey is validate the dollars that we're spending across all of the different channels that we have to choose from are actually driving return on our investment, which we see as a critical element of what everybody should be doing. Whether you are elementary in your marketing capabilities or whether you are ultra sophisticated, making sure that you are ascribing some level of response attribution so that you understand that the budget that you have available is being used to generate the greatest return on investment. And so for us it's deploying, whether it's ad technology products. We have Smart Pixel as you have up on the site now. Bullseye is another product of ours where we're actually capable of building a geoframe around a, a space that would identify the people that are inside that space. So with this image here, for example, we can geo frame that tennis facility and, and we can tell the promoter or the sponsor or the owner who those people are who are actually sitting in those seats.

That's very powerful. And all of that is done with compliance. Jim, just to clarify that this is all not in some way black hat or dark web stuff. I mean you look at like a perfectly respectable man and you've been in business for a long time. All the tracking that you're doing at RMG is just using obviously proprietary technology, but within the compliance of U.S. regulations.

Absolutely. Yeah, you're spot on, Jim. So in the US we have a small team of attorneys which are following regulatory changes that occur. And from year to year, states roll out different types of requirements. We have 12 states in the US which have a higher level of compliance requirements than others do. But there is a baseline. And so, yes, I mean, we are dealing in what we call publicly available information, which we're not dealing in pii, whether that's information that we have subscribed to or licensed, whether that's collection of publicly available information, for example, DMV data, Division of Motor Vehicles. Right. So driver information, that's publicly available information. So we can get VIN data. We know what kind of car you drive. We know what make, model and year of that vehicle. There are subscriptions to magazines. Those publishers resell that information. So we know that Jim is a golfer and we know that he subscribes to Golf Digest and Golf Magaz. So all of that information is publicly available, and that is what we use. And that's what our 150 million database is comprised of.

Wow, that is so smart. I'd never really thought about how you can map all the data from these different publicly available data sets and overlay them. Jim, let's just talk about a case study, because you did mention the case study of a fairly famous hotel. And just to give people an idea of what data could sort of help in terms of looking at market segmentation and also really campaign planning, because segmentation is upstream and then it's about campaign planning, isn't it? Do you want to just take us through the Ritz Carlton case? What did you guys do for them there?

Yeah, so we were invited in. One of the things that they recognized was there was a real challenge in the ability to be able to identify their most profitable customer segments. And so we were fortunate to get several million guest records that they shared with us. Just simple information, name, address. We overlaid that against our database to understand what we were able to track. And so then we ended up identifying nine total customer segments. And each of those segments got a name. And we identified that the top three revenue generating segments were all unique. And you can see, you know, here that what we're trying to find out is of those people that are business travelers, for example, is their booking behavior different than the person who might be a celebrator? A celebrator is somebody that shows up on a Thursday or Friday and stays till a Sunday or Monday, and they're celebrating something, could be an anniversary, a birthday, 10 years clear of cancer, who knows, whatever. And so we identified those top three revenue generating segments and the uniqueness of each of those to understand what are the specifics that we can incorporate in our advertising and even going so far as develop custom landing pages for each of those segments. So if I serve Jim James, who falls into a, let's just say empty nester, you know, no kids over the age of 60, income of this level, well, that person's going to get exposed a certain type of ad that others will not. And so we identified those segments and the lift in booking rates that I mentioned was a result of recognizing that a celebrator books within six months before an event. And we serve him a particular type of messaging and he lands on a particular landing page that is representative of most likely what he is like. Same thing with a, what we call the well traveled executive. The person that would book 60 days or, or less from their arrival date and then last was a, a sun seeker. So a person that went to a beach location every year, booked 11 months or more in advance and we showed kids on stand up paddle boards, kids building sandcastles, which traditionally you would have never seen in a Ritz Carlton ad. So it was aligning what we identified in the segments with the copy, the creative and the messaging that resonated with that audience.

And for those people that want to go to the website, it's rmg-usa.com and you can see the case study in the numbers. For example, they've got a 10% improvement in engagement. They analyzed 3.3 million guest records and identified three top segments driving 72% of revenue. So you've kind of got that 8020 rule. It sounds as, as though Pareto is at work there as well. But Jim, then are you saying that a company can have more than one avatar? Because we often are cajoled into thinking that we should niche, niche, niche. And that a company, whatever the size Ritz Carlton or a small motel, should really be focused on one customer avatar. And what you've really detailed there is that there are multiple customer avatars, segments going to the same place but for entirely different reasons. How do you reconcile that a company has multiple segments?

Well, I think as consumers we all view those companies that we do business with through our own lens, whatever our point of engagement is. And that is typically predicated on kind of where you are in life, right? If you are 35 years old with three kids, you view life differently than 65 years old with no kids. And so we're just advising clients to recognize that's the case. It is not a one size Fits all. And if, you know, there's been so much talk over the last 15 years about the user experience, customer experience and making sure that the marketing touches that we have an opportunity to have with our prospects and our clients align with the way they want us to understand them and communicate with them. And, and to me, you know, the, the cable business I credit, I find fascinating. They, they developed something called advanced advertising years ago where you and I could be neighbors, Jim. And at the simultaneous time we're watching the exact same program and we're served two completely different ads. And so to your question, I think that it is, I think it's responsible on the part of the companies to recognize that their consumers look all sorts of different shapes and sizes. And so the better that we are at understanding what those profiles and segments are so that we can deliver messaging that's relevant to them. You know, I'm far more likely to open an email that speaks to me based on knowing who I am and with something that is, that is interesting to me as opposed to something that's absolutely not. I'm not buying baby diapers anymore. So.

No, you and me both. Although I'm only a bit alarmed that Jim has thought I'm over 60 with no children. I am actually still just under 60.

Oh no, that was an example. I had to have two opposite ends of the spectrum, Jim.

I could have been the 35 year old with a cup, but I'm not. I recognize that. But also what you've identified there is, other than my age of course, is the impact of kind of customer responsive marketing platforms, for example, where websites can serve up individual pages. I had a guest called Sander Nachtal from Holland, for example, serving up from his company, serving up unique web pages according to, as you say, geography, age and all the demographics. So the same organization, healthcare in this particular case we talked about was serving entirely different pages of content depending on the demographic that was reaching the page. This was during COVID so it was very interesting. Jim, we can't get away from a question about budget. I'm not going to ask you for a quote by the way, because that'd be pretty unfair. But how affordable is not so much response marketing group, because obviously you're dealing with big and small companies and people can come to you for a quote. But are the kind of technologies and approaches that you talk about only accessible to big companies? Or is this something that now people running a medium sized organization or even a solopreneur can access?

Yeah, I would say, Jim, like all things I'll give you probably an inappropriate or crude comparison, but you know, we can all buy a car and we can buy a hundred thousand dollar car, but we can probably also, I think you can still buy cars in the $20,000, I don't know, but we'll use, use that as our example and you know, you're not going to get the same thing.

You just buy an old one.

Yeah, very true, very true. But, but point being that I think there's a, there's a wide range and depending upon what your investment level is, you know, I, I can't, I can't advocate strongly enough, Jim, for the fact that, that folks just recognize that at any price point you're capable of being able to understand where the dollars are being spent and to measure that effectiveness. And so for us we feel like we're highly competitive. We're a small privately held company. We feel like we've got a very competitive price point based on what we're delivering. We tend to focus on really just a small set of things. We don't want to be everything to everybody. We are kind of data geeks if you will. A data boutique as some refer to us. And so I think that depending upon a size of a company and their range of services and where their expertise is, you can absolutely find something at an affordable level and you can then go up market as much as you, as you desire.

That's good to know. So data is universal, but it's also universally accessible, just probably with different levels of data management and analysis. And some of these tools as well are very affordable now in terms of delivery of content. Jim, I couldn't ask someone that knows so much about data. I couldn't let you go on without asking about AI. Jim, what's your view of the impact of AI on the entrepreneur's ability to manage data?

Well, an oversimplification from my perspective, Jim, I think AI allows. Let me tie it back to your previous question. It allows the smaller business that doesn't have an unlimited budget, has a finite budget to be as effective and to write copy and to develop creative as if they worked with the Martin Agency, one of our great agencies right here in, in Richmond, Virginia, known worldwide. AI presents the opportunity to do these things that otherwise folks would, would not have had access to. They, they didn't have the staff, they couldn't afford to hire an expensive agency. And I think AI also makes the job easier such that you can now plan in adv know we use it in the application of, we want to continue to engage with our customers and our prospects, we've built out a robust CRM of our own. And so if we can find and deploy AI to help us in terms of writing those emails faster, doing more work in terms of research, we often use it. We're actually including it in our normative database such that if you, for example, let's go back to our Ritz Carlton example. If you say I'm looking for 35 to 45 year old women who have kids and live in a household that makes more than $100,000, AI now gives you the ability to do an infinite number of searches to identify what markets have a similar representation of those folks and then you can drill down even deeper to find those individuals. So I think it's been exponentially helpful. I don't think it's the panacea. It's a glorified firm, a form of machine learning to some degree, but it allows us to be able to crunch huge and vast arrays of data far faster than ever before. And deployed appropriately, I think is highly successful.

That's wonderful news. And I think my experience as well is that it really does. It gives us superpowers, but it doesn't rob us of our powers. Right. Which has got to be a good thing, Jim.

Very true.

Jim Harenschar, with your long standing from 1986, that's a credit to you to keep a business going for that long. So you've got a lot of history, but also what would you say is your view on the trends? What would you say is one hard trend that you see taking place over the next three to five years? What should entrepreneurs be looking for when it comes to data attribution?

Well, to your last point, Jim, I think AI is the wild card in that how much it's going to change the marketing and advertising business. Let me speak to that in general. Right. I think that, you know, we've, we now have data systems that can process data so much faster. We can deploy things like artificial intelligence. At the end of the day, I'm going to be curious to see and I'm, I'm, I'm not a futurist, unfortunately, but, but I'm going to be curious to see how much we migrate ultimately back to the sincerity of marketing and advertising, taking all the information that we're able to glean from the data sources from the AI that'll help us to understand the Jim James and Jim Horrenshars better and making it as much of a personal experience as it possibly can be. I think that's where folks are migrating and companies are trying to figure this landscape out so that my user whether I'm booking an airplane flight, whether I'm booking a hotel room, whether I'm going to buy a car, whether I'm choosing to decide what TV program I'm going to watch tonight, it's customized to me and it's relevant. I think we'll continue to see new technology emerge and customers and all of the infrastructure that supports marketing continue to work around that.

Jim I agree. I think we might move from personalization at scale to authenticity at scale. Jim what about a podcast or a book? Because you're plainly someone who is thinking a lot and reading a lot. What would you refer to us to read or to listen to?

So I recently, this summer on a beach vacation, read a book called Trillion Dollar, which was written by May Habib. And it's a story about Bill Campbell, one of the great silicon investors, Silicon Valley investors who kind of created the whole concept of private equity and investment in small startups. I found it fascinating and so something I would definitely recommend.

Jim Arencha I'd recommend anyone interested in data to come and talk to you. If people want to come and find you. Jim how can they do that?

Sure. So our website address is RMG USA. So robertmarygeorge-usa.com and on that is my email address, our team's email address and our phone numbers.

That's one of and of course we'll include those details in the show notes. Joining me all the way from Richmond, Virginia. We've had a very, very interesting talk and really given me some insights but also some inspiration. Jim that data can be managed, but also data is enabling us to unlock multiple customer profiles for one business. I think it's actually very liberating their insight that also it's helping us to efficiently allocate our time and money to the marketing using data that's readily available and legally available as well. So Jim, thank you so much for sharing so many wonderful, wonderful insights with me and my fellow unnoticed entrepreneurs today.

Absolutely, Jim, thanks for having me.

You've been listening to me, Jim James from the UK talking to Jim Harenchar, who is the founder and CEO of a company called Resource Marketing Group. And of course, as always I will put his details in the show notes. And until we meet again, I just do encourage you to keep on communicating.