Tag Archive for Segmentation

25 Oct 2010
Marketing Plan

Genetics Affects Survey Response

Genes are responsible for 45% of the variance in people’s response to surveys, according to a survey of more than 1,000 sets of twins. “There is a pretty strong genetic predisposition to not respond to surveys,” says lead researcher Lori Foster Thompson of North Carolina State. The paper, “Genetic underpinnings of survey response,” was co-authored by Dr. Zhen Zhang of Arizona State University and Dr. Richard Arvey of the National University of Singapore.

It will be interesting to learn if genetics plays a role in other types of response, including response to direct mail.

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27 Jul 2010
Buying Behavior

Happiness Depends on Age

The New York Times reported on a Gallup Poll that found that people start out at age 18 feeling pretty good about themselves, and then, apparently, life begins to get challenging. They feel worse and worse until they hit 50. At that point, there is a sharp reversal, and people keep getting happier as they age. By the time they are 85, they are even more satisfied with themselves than they were at 18.

We hope you see opportunities and optimism with this information. Not only do you know that life will continue to get better, but you now have great information as you craft your marketing messages. Understanding some of the emotions of your target audience will help you as you write compelling appeals. This is a great complement to marketing to people during life changing events.

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23 Jul 2010
Advertising • Buying Behavior • Direct Mail

Interruption Response Depends on Age

Chart of interruption preferences

Interruption Preferences

Retrovo, a seller of consumer electronics, publishes a report titled, “The Retrevo Gadgetology Report”. They found that almost half (49%) of those under 25 years old did not mind being interrupted during a meal with a text or electronic message, but only 27% of those over 25 felt that way. That means that 73% of those over 25 don’t want to be interrupted during a meal. In general only 33% of those under 25 agree with the statement “I don’t like interruptions” while 62% of those over 25 do.

Clearly, we need to really think about who we are trying to reach as we craft marketing messages and choose communication channels. Direct mail is desired communication, even among younger adults.

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06 Jul 2010
Buying Behavior • List • Marketing Strategy

Business to Business Data Management

The Wellesley Hills Group published a study about trends in Lead Generation. They found leads generated by companies fall into one of three categories, 25% were ready to be contacted by a salesperson, 50% of the leads need more “nurturing”, and 25% were not really qualified to be leads.

We want to help you with nurturing your sales leads. Before you can sell your service or product to an organization you will need to educate your customers about what problems you solve, provide some specific information, solidify your reputation, give some specific answers and perhaps tell about a case study.

Direct mail is a great way to communicate some or all of this information because not only will you be guiding your prospects through a stepped process to get them ready for your sales staff, you are also putting something that can be touched and felt into their hands.

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19 May 2010
List

Smarter Selling

The Aberdeen Group published a report of survey results titled: “Sales Intelligence: Preparing for Smarter Selling”. They found that within Best-in-Class companies, an average 52% of sales representatives are currently achieving quota, as compared to a 26% average among Laggard organizations.

Best-in-Class companies see a 9% year-over-year reduction in time sales reps spend searching for relevant company/contact information, as compared to a 5% increase in time among Laggard performers.

Best-in-Class companies boast an average 5% year-over-year reduction in the sales cycle time, as compared to a 7% increase in sales cycle time among Laggards.

These numbers tell the story of the economy and the what a difference implementing good sales lead management and generation can do.

How can we help you find great, relevant leads?

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17 May 2010
Business • List

Business to Business Sales Leads

Marketo provided the inspiration for these tips. They propose a process for growing business to business sales leads.

1. Nurture. Lead nurturing is the process of using many channels including the mail, phone, web, email, and other channels to build relationships with qualified prospects who are not ready for sales efforts. Many leads are still in research mode, so communication and offers should provide best practices, statistics, research, etc. to help the customer frame their research.

Lead nurturing:

  • Builds relationships with prospects
  • Creates understanding of needs
  • Facilitates lead scoring

2. Frame the research. Lead nurturing is not sending a newsletter to your entire database, or calling prospects every few weeks to see if they are ready to buy yet. B2B purchases are, by their nature, complex. Buyers need help to see possibilities and issues they wouldn’t think about on their own. If you can help frame the discussion, you will be seen as a trusted advisor and thought leader. This will help buyers believe that your company understands their problems and knows how to solve them. Lead nurturing is your opportunity to demonstrate the value you can provide and to position yourself as a resource.

3. Define what makes a lead “ready”. Work with your sales team to build criteria that determine the steps prospects should take before they are ready for a sales call. Criteria could include:

  • Demographic information – Geographic location, company size, etc.
  • “Push” actions – What have you done to interact with the lead, what have you told them?
  • “Pull” actions – What has the lead done to pull information to them? What pages have they visited? Have they downloaded special information?

4. Score the lead. The prospect is in control of the buying process. Monitor their efforts to pull information and interaction to know when they’re ready to move to the next stage. Interest level should be defined not just by their words but their actions. Actions speak louder than words. Track all the actions and update scores accordingly.

5. Provide detailed information to sales when leads are determined to be “ready”. Don’t just toss the lead over and leave it up to the sales rep to create a continuous experience for the customer.

  • Let sales know what marketing activities the prospect has responded to, and indicate which product the prospect is most likely to purchase based on responses to date.
  • Create tools such as templates, qualifying questions, and call scripts to guide sales reps during their initial contact with the lead. Be sure to refer to the marketing activities they have responded to.

6. Track follow up. Work with sales to create the scoring criteria to build goodwill with them. After that, regularly analyze the leads that were determined to be sales-ready to further refine your lead scoring criteria.

  • Adjust lead score thresholds based on business conditions.
  • Make sure sales follows up with leads and reassign leads that don’t get contacted.
  • When leads aren’t closed by sales as expected, recycle them back into marketing for further nurturing.

7. Track every marketing activity. Tracking every marketing activity is critical to understanding which marketing programs work. What programs directly contributed to sales? What programs generated the highest quality leads? Which programs had the greatest influence on the sales pipeline? You need to know the impact of all the programs.

8. Understand prospects needs. As you build a relationship with your prospects, you should also be learning more about their needs. Every campaign the prospect responds to tells you about their interests. Every page they visit on your website tells you about their interests. Every link they click, and every piece of information they fill out on a form, tells you more about them. Be clever with your forms – don’t ask prospects to enter information you already know, and use the opportunity to find out something new!

9. Track all traffic and tie to new leads. Simple code on your Web pages help you track prospects, whether anonymous or known. This helps tell you which companies are interested in your products. As anonymous prospects complete forms on your website or landing pages, any previous web visits can be automatically attributed to the new lead. This is important to determine the sales readiness of new leads, since you know the entire history of the relationship with that prospect – including which campaign helped them find you in the first place.

10. Data quality standards, including de-duplication. Demographic analysis has long been a part of the sales process, and the Web makes it easier to collect this information. Certain information such as company size can help you determine the lead score. With many demand generation and lead nurturing activities running concurrently, automatic deduplication is imperative. Forms which auto-complete if the visitor is recognized not only help your prospects but can also facilitate the collection of additional information for profiling and scoring.

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27 Apr 2010
List • Marketing Strategy

Restore Old Customers

Traditional customer re-activation strategies are struggling to deliver the results they once did. This has been fueled by cuts in consumer spending and communication channel fragmentation, forcing marketers to develop new approaches. A Target Marketing Magazine article told the stories of innovators who are leveraging customer data, analytical tools and new customer touchpoints to fuel their remarketing efforts with results.

Start With the Basics
The fundamentals haven’t changed. Identify your best customers and the attributes that make them the best. Analyze purchasing trends, patronage patterns and channel usage to bring to light key behavioral characteristics of the ideal candidates.

Don’t stop there. Demographics, wealth data, transactional information and other lists can be used to enrich the customer profile. This information is useful for assessing the value of former customers who had sparse purchase histories but may still be good candidates.

Last, match these reactivation profiles against dormant customer files to “pop” the segments most likely to yield a profitable level of response.

Reactivation efforts most often are targeted at customers who have not shopped or purchased in the last year or more. While these consumers may not be shopping with you, they are buying from someone.

Reactivation Rundown
Reactivation is a form of advanced prospecting. By applying predictive scores to dormant customer files before fielding a reactivation campaign, resources can be prioritized toward those households with the greatest likelihood of response.

A good reactivation strategy encompasses not only who to target, but how to target them. In today’s multichannel environment, opportunities to blend print and other media into an optimum delivery stream for each target segment exist. For example, leads might be generated via a print mail campaign. These leads might then be further qualified using lead scoring and either prioritized for rapid follow-up by phone for high potentials or routed to another channel for less qualified candidates. This blended approach can yield more profitable results. Marketers should choose the medium that optimizes reach and response, according to budget.

Using Predictive Scoring
Aim for a clear view of your best customers. While it is possible, and sometimes economical, to target all former customers, it’s more often the case that a campaign targeting high-value or niche segments produces the best financial results. Focus on predicting who will respond, and then determine the best channel and sequence for the message.

Build New Relationships
A reactivation strategy should include follow-up plans and next steps as well as an outline with how often customers would like to receive communication. Lastly, update files with new customer information and data to ensure future campaigns maximize the information available.

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16 Apr 2010
List

Customer Data Best Practices

The Aberdeen Group published a report in December, 2009 that explored customer database practices to reveal how organizations are capturing, storing, analyzing and acting on customer data.

The Best Performing Organizations:

  • Currently achieve 163% mean class Return on Marketing Investment (ROMI); 9% average year over year growth in ROMI
  • 51% year over year mean class growth in revenue

The best performing firms shared several common characteristics, including:

  • 46% access a full view of customers across all departments and functions in the organization (versus 14% among laggards)
  • 52% improve or enhance customer data through regular marketing and IT collaboration (versus 21% of laggards)

The study recommended that companies wishing to become more like a best performing organization:

  • Develop a formal data hygiene (cleansing, enrichment, de-duplication and regular updates) strategy. A lack of formal data hygiene can prevent organizations from using customer data in more personalized engagement.
  • Enhance existing records with periodic augmentation and enrichment. Only 32% of all respondents actively augmented customer data for accuracy. But, 48% plan to incorporate database enrichment services in their 2010 budget for improving the customer database.

What can you do to maintain and enrich your customer information?

  1. Even if you don’t want to send mail to your customers right now, process your list through the National Change of Address database. This is a simple service that will provide move information for individuals, families, and businesses. Learn more about your current and previous customers by obtaining their current addresses. Our reports will identify undeliverable and incomplete addresses. You will know that some of your valuable customers have had changes in their lives and organizations.
  2. Think about enriching your customer list with more information. For consumers we can add income, demographic and home characteristic information to your existing data file. For businesses we can add “firmographic” data including number of years in business, number of employees, industry classification and estimated annual revenue.

If you are not sure what information would be best for your business, we are great at asking the right questions to get you started.

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14 Apr 2010
List

Go Beyond Customer Segmentation and Explore Predictive Analytics Part 2

Direct Marketing Magazine shared some ideas about predictive analytics.

Predictive Analytics Road Map

To get the most out of customer segmentation analysis, organizations could create road maps incorporating the following steps:

  1. Determine the Overall Business Objective. Get everyone on the same path and in agreement with what you want to accomplish, such as improving the yield on lead-generation efforts, identifying cross-sell opportunities or identifying customers most likely to go to a competitor.
  2. Capture All Potential Customer Data. Segmentation begins with gathering customer data from a wide variety of resources, including data warehouses, point-of-sale systems and loyalty programs. A database of static customer information is valuable, but until key active knowledge is applied—like preferences or motivations—there’s an incomplete picture of the customer. Capturing feedback from any touchpoint—in any language—provides a clearer understanding of customers’ needs, preferences and attitudes, and improves the segmentation process.
  3. Perform Recency, Frequency and Monetary (RFM) Analysis. To obtain the most accurate picture of customer lifetime value, organizations first should perform RFM analysis to classify customers according to: those who have spent the most—the most often and most recently; those who have spent the most—the most monetarily, but may not have purchased in a long time; those who spend the most in the fewest number of transactions; and those who spend the least, or rarely, and have not purchased in a long time.
  4. Outline the Segmentation Process. Once customers have been identified based on purchasing patterns, then segmentation analysis can begin to get to the core of the audience you want to target. The key to a successful segmentation program is to first define the many ways the results can be used. An approach might take the following path:
    • Create customer segments to enable differential marketing programs.
    • Use past purchase data and demographics to construct customer subgroups.
    • Isolate key performance factors linked to long-term customer value as major data drivers for the segmentation.
    • Use cluster analysis to form homogenous groups of differently valued customers.
    • Use techniques such as rule induction to automatically extract the profile of each cluster.
    • Align the marketing spending priorities against each subgroup.
    • Link product line or category affinity to each subgroup.
    • Develop marketing plans incorporating value-based budgeting and category affinity to make programs more relevant and efficient.
  5. Auto-Segmentation. With a customer base more clearly defined through effective segmentation, organizations then can add predictive modeling functionality within each segment to produce greater insight that’s required to more effectively and efficiently acquire, grow and retain the right customers, and also identify fraud and minimize risk. The modeling functionality in predictive analytics technology helps organizations accurately determine which customers best match specific offers or campaigns. By eliminating the guesswork when targeting customer groups, organizations quickly increase ROI through more efficient use of resources and reduced spending.
  6. Deploy and Share Results Throughout the Business. The final step is to create an environment in which an organization can manage and automate its analytical processes and easily deploy the results across the enterprise—thus improving productivity and collaboration and increasing ROI. This includes the ability to automate the database scoring process, publish and distribute output and reports, and integrate the analytical process into other business applications. For example, when a customer calls a call center, that agent should be able to pull up information on that specific customer and know what type of offer should be made at that particular time.

Hit the Target

With predictive analytics technology, organizations can move toward a one-to-one conversation with customers. Insight gained from even the most elementary analysis of customer characteristics can have profound implications on the business and result in marketing success.

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13 Apr 2010
List

Go Beyond Customer Segmentation and Explore Predictive Analytics Part 1

Direct Marketing Magazine shared some ideas about predictive analytics.

Personalize Customer Relationships

Segmentation is a way of grouping people or organizations with similar demographic profiles, attitudes, purchasing patterns, buying behaviors or other attributes. This helps to understand customers more thoroughly and thus market to them more effectively.

Many businesses use segmentation to recognize that customers have some unique characteristics. But they stop when going further may be possible, for this reason, segmentation can be a “blunt instrument,” leading to “one-to-some” marketing. It can perpetuate “accepted wisdom” about customers and the market that are not necessarily accurate.

Marketers can add predictive analytics to the segmentation process to generate insight needed to more effectively and efficiently acquire, grow and retain the right customers. The result could be a better understanding of what products and services customers are likely to want next. Predictive analytics can be thought of as auto-segmentation. This technology can discover groupings in customer data and find relevant patterns that are likely to be more subtle, extracting greater predictive insight than traditional segmentation. This would ensure that insight obtained into what customers want and how they behave, and marketing decisions made would be evidence-based and result in more profitable outcomes from one-to-one customer interactions.

Predictive analytics incorporates data collection, statistics, modeling and deployment capabilities. This drives the entire segmentation process, from gathering customer information at every interaction to analyzing the data and providing specific, real-time recommendations on the best action to take at a particular time, with a particular customer. The result is more effective customer relationship management strategies, including advertising and marketing campaigns; upsell and cross-sell initiatives; and long-term customer loyalty, retention and rewards programs.

In the next post we will look at a predictive analytics “road map”.

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