Archive for List

24 Mar 2010
List • Marketing Strategy

Expand Markets And Optimize Costs With Segmentation Strategy Part 2

This is a continuation of Target Marketing Magazine’s article about customer segmentation.

Third Party Information

The data you have on your customers, great as it is, just isn’t a complete picture. Understanding what, when, where and how consumers do business across a large group of marketers gives you insight you can’t get from your housefile. New sources of data can help you create broad-based, descriptive segments that provide opportunity for product development, channel selection and increased lifetime value. Understanding your customers through the prism of third-party data sources helps you see far deeper into your customers and gives you a more intensive understanding of their buying interests and behaviors. Consider some of the outside data attributes you can use:

  • RFM: Recency, frequency, monetary value.
  • Product Type: Continuity, one-shot, online subscriber, magazine, music, video, sweeps.
  • Affinity Type: History, health, gardening, sports, cooking, home, crafts, kids.
  • Acquisition Channel: Mail, telemarketing, e-mail, Web store, package insert.
  • Performance: Fast payer, slow payer, returner, write-off, repeat buyer, renewer.

Suppose you discover that many of your customers have a strong interest in something you don’t sell, like gardening products. Or if your customers have a strong affinity for video, you might consider offering a DVD as a premium. As you develop insight into which groups prefer specific offers via specific channels, you run the risk of making your segments so small that they are no longer truly predictive. Segments can only show you that, on average, a certain group is likely to perform in a certain way. Groups can be too small to be statistically predictive.

Make sure your segments are statistically significant, big enough to be actionable, and likely to remain stable and consistent while you execute your expanded marketing plans. Chances are you’ll begin to see a pickup in response as you reach out to new prospects in new ways.

In the next post we will look at what can be gained by modeling your lists.

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23 Mar 2010
List • Marketing Strategy

Expand Markets And Optimize Costs With Segmentation Strategy Part 1

Target Marketing Magazine published an article about customer segmentation.

Why Rethink?

Everyone talks about reaching the right consumer with the right offer at the right time, but how do you deliver? Many marketers do a great job capturing, tracking and leveraging customer data. They know what segments work and which don’t. But today, every marketer’s “ideal customer segment” is a moving target—and growing increasingly fragmented as consumer attention flits from medium to medium. In this environment, it doesn’t make sense to expect your legacy segmentation strategy to be as reliable as it once was.

The first question to ask yourself is: Are your existing segmentations meeting your business objectives? Everyone seeks higher response, but is that enough? What about net payment rates? Or lifetime value?

Looking Into—and Beyond—Your Customer List (Housefile)

Building a segmentation strategy that gives you the flexibility to operate profitably in a multichannel world starts with reviewing your housefile. Simple segmentations are readily apparent: actives and expires; payers and nonpayers; product interests and demographics. These descriptions are great for doing things like selecting list sources and segments for mailings. Descriptive segments are useful for customizing creative. For instance, if you are fielding an offer for political biographies, you use your descriptive segmentation to change the copy and featured book for the Republicans versus the Democrats you’re targeting.

Successful descriptive segmentations move beyond intuitive target groups by using statistical techniques to uncover correlations and segments that may not be readily apparent. Overlaying additional data can significantly deepen and broaden the resulting segments.

Four rules for developing descriptive marketing segmentations.

  1. Mutual exclusivity. Groups of households or individuals should be homogenous and unique.
  2. Business rules. Only consider segmenting based on variables that are appropriate and actionable for the entire available universe.
  3. Actionable. A good segmentation provides basic guides for crafting custom offers and customer relationship management.
  4. Statistical data discovery methods. Develop segmentation rules that identify data-driven variations in your populations.

In the next post we will look at what can be gained by enriching your list with demographic or purchase of other products information.

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10 Feb 2010
Direct Mail • List

List selection strategies

The list could be the most significant factor in the success or failure of a direct mail campaign. Regardless of how strong the creative and message may be, if the message isn’t communicated to the right audience, the impact will be compromised.

Surprisingly, few marketers spend the time and energy to accurately identify their audience. In an effort to make sure everyone knows about the promotion, they often communicate with people on the fringes, thus lowering the overall performance and value of the campaign.

One option is to build customer “profiles” for your products or services. If you can determine conversion as a percentage of desirable market segments, you can make an educated decision regarding which segment will produce a positive return on investment. Marketing only to those people with the highest propensity to purchase from you inevitably increases your campaign’s success, performance and value.

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