Pronounced “air”, the AER strategy for our group is a framework to help our group focus our marketing efforts. Often I am asked whether or not AER is unique to our group or something that I developed out of thin-“air”. I developed the framework from scratch for our organization, but the concept is hardly new as it’s simply an altered view of the marketing funnel. Here is what it all stands for and means:
A - awareness
A - acquisition
E - engagement
R - redemption
R - retention
R – referral
Taking this a step further, the true purpose of AER is to develop data fueled strategies for each program, partner, or product. This includes building segmentations and targeting based on member data insights for each partner and service. In turn, this leads to personalized communications, behaviors, and experience. Finally, we can’t lose sight of what is good for the business. Some members may be a positive margin to our business while others may be negative to our bottom line. Because our organization includes points and cashback incentives, AER also focuses on insights and modeling dedicated to turning negative margin behaviors into positive margin behaviors – more on this in a moment.
AAERRR Funnel: Awareness, Acquisition, Engagement, Retention, Redemption, Referral
Let’s talk about the divide halfway through at the engagement step. A moment ago I pointed out that the framework accounts what is good for the business and focuses on turning negative margin behaviors into positive margin behaviors. This tactic starts at the engagement stage, because this marks the point in which a member is fully considered to be part of our ecosystem, and whose actions from this point moving forward will determine whether they are good or harmful to the bottom line of the business (positive or negative margin as a result of our organizations ecosystem being partially based on points and cashback discounts/ incentives). The behavior throughout the next three stages, Engagement, Redemption, Retention, are marketing funnel stages that require different tactics depending on how the member impacts the business.
In a nutshell, we take persona level data on our positive margin members and create look-alike models that feed back into our awareness and acquisition funnel stages. As for our negative margin members, the strategy is to break away from our core marketing practices and target to change the fundamental behavior and actions of our members through the methods in which we communicate with them and incentivize them to take actions that are believed to turn negative margin-based behavior into positive based behavior.
Finally the framework reconvenes at the final R – referral. Studies, as well as our internal data, show that a referral from a friend or colleague is nearly 5X more likely to connect and engage within our ecosystem.
The Activation & Growth team is developing holistic cross-channel campaigns supported by data and behavioral insights across the entire ecosystem inclusive of partner, product, and services. It is the team’s responsibility to survey the landscape and develop horizontally designed strategies that sit across each partner/ product/ service vertical. (i.e. understand how all the pieces fit together). Using the comprehensive strategy framework we designed specific to our team, called the AAERRR (“air”) strategy. AAERRR helps strategy teams understand where in a fluid-based lifecycle a member is in relation to a specific partner or service (awareness, acquisition, engagement, retention, redemption, and referral). From a health-of-business perspective, AAERRR separates what attributes facilitate a positive vs. negative margin member in relation to each of these touchpoints (A-A-E-R-R-R). In action, we leverage this data for targeting to not only keep positive margin members positive, but also to change the behavior of negative margin members so that they ultimately become positive margin to the business. The last piece is utilizing a positive margin look-alike model to then use for acquisition targeting. This strategy is being created out as the foundation to each and every one of our products, partners, and services. This creates custom targeting and insights based on member behavior and engagement.
This is an incredibly detailed and complex matrix of data. Not only do we look at each member in relation to each stage they engage with, we also use cross program data to build out theories and messaging to create more retention and in turn higher MNOPs. Our ecosystem is unique in that it isn’t a single “brand”. We have the ability to gather data insights from our partners, build daily journeys for our members, and impact behavior changes. The Activation & Growth team looks beyond just acquisition, as our strategies allow us to view the ecosystem holistically, end to end, across an entire lifetime of a member and how we can earn that member’s trust and affinity to become a brand ambassador and utilize referral to then grow our brand. This is the 1:1:many halo effect central to other leading strategy departments at organizations such as Google and Facebook.
Beyond the strategy itself, AAERRR impacts other major components central to the Activation & Growth team, and SYW strategy at large. One of the biggest pieces that gets developed based on this strategy is our comprehensive “bottoms up” plans. These plans create the week over week campaign and omni channel plan to hit our goals, stay in budget, and grow ROI. We develop a plan around internal vs. external marketing channels and integration into our organization as a whole. We can forecast investment, acquisition, and build out CPAs. As part of this foundational strategy to our marketing, our growth team acts as the innovative arm of our group to enhance every touchpoint. The growth team develops gamification, community activation, local activation, influencer & networks, and behavioral economic strategies to externalize and amplify our communications and marketing messaging.
Finally, everything we design, create and externalize is backed by our Strategy & Research division. This team develops the data insights and visualizations that give us the full backing to understand how to develop our strategy, test our strategy, and optimize campaigns. We rely on them to provide full insights and theories as to what results are and why they happened, so that the rest of the activation team can then utilize those insights in the next iteration of their strategy.
The AAERRR strategy is our foundation to grow a successful and sustainable business. We use a complex matrix of data to understand our members and customize their experience. It is the A&G team’s goal to give our members a seamless personalized experience every day, to grow affinity, engagement, and MNOP across our team as a whole and across all the individual programs, products, and services.
Some final thoughts. The reality of our AER framework is that it’s only the tip of the iceberg. Ultimately we need to build a strong foundation to our data and marketing practices, and this is where we need to start – get really good at this, and add additional layers of insights, automation, forecasting, and modeling into the equation to build a better member experience that provides both value to them and to the business.
Today we’ve built AER version 1.0. Tomorrow we’ll look to build AER version 1.X – more on this once we get there.
-Alex
