The year 2000 has finally arrived. Promotion planning meetings are behind you, calendars are set, budgets are in place. Or are they?
In the ever-changing business environment facing retailers today, planning for effective promotions, targeted to meet new business challenges and objectives, is an ongoing effort.
Lessons learned from last year’s successes and failures, combined with new developments in the retail landscape, are the basis for creating a new calendar for this year. The good news is that it’s never too late to look back and learn from the past in order to meet the future. So, whether you have already completed your schedules for the coming year or you are still in the midst of planning for 2000, the following suggestions can help guide you toward creating a promotional calendar that really delivers. Where do you begin? With your customers, of course.
Start with what you know. Your customer database is a great place to learn from last year’s promotions. What new opportunities have you identified from the database? How are the demographics and purchasing patterns of your customers changing? Have your targeting efforts been successful? Have you turned your better customers into best customers?
Basic reporting can help you find the answers to these questions. Examine customers who were active a year ago – those customers who have been active in the past 12 months – and new customers. Analyze the demographic and behavioral distributions (recency, frequency, monetary) to help build a profile of your current customers.
Compare your new and active customers to your older customers. Note the differences and similarities between your new and active customers to your older customers. What, if anything, has changed in the profiles of your customers over the last 12 months, and why? Do your new customers fit the same profile as your existing customers? And, finally, do the customers on the database fit the profile of your company’s target?
Track purchases. Be sure to take into account the types of purchases you can track on your database and adjust your conclusions accordingly (i.e., if you don’t capture cash transactions, your database may represent the upper demographic tiers of your customer base). In particular, if the new customers on the database don’t match your company’s current target audience, you will need to plan on testing new promotions designed to more effectively reach that group.
Look at the promotions you ran in 1999. The easiest way to analyze the promotions you ran last year is to score and rank them based on a variety of measurements: response rate, cost/sales per name mailed, lift and ROI. As you move down the rankings, you may come to some promotions that did well on one measure but fell short on others.
These promotions merit some additional analysis. First, you will need to revisit how and why customers were selected for the mailings. Examine which cells performed well and compare them to those that didn’t. If several cells performed well, but were equaled or overshadowed by under-performing cells, you may be able to make the program into a winner by re-balancing the promotion.
Make adjustments as necessary. Take another look at your database. Do you have enough similar customers to expand the top performing cells and fill out the mailing? If not, will the
numbers work for a smaller mailing quantity? Keep in mind the impact of a smaller mailing on your production costs. If you find that you can adjust quantities by expanding cells, develop a rough estimate of the program’s potential ROI and response rate by examining the new quantities and what you know about how the promotion performed last year. If the numbers look good, add them back to your scorecard for the overall analysis.
Maximize on past disappointments. You may be left with a few promotions that didn’t make the grade. The cause may be they just didn’t work out, or because they were marginal and couldn’t be fine-tuned enough to be workable.
With each of these promotions you will want to examine them from several perspectives. What was the original objective of the promotion in terms of sales, target audience and offer? Do you know why it didn’t work? Was it the offer? The promotion’s creative? The timing? Or was it the promotion’s targeting? To answer these questions, you will need to use your intuition, as well as any insight you can gain from the database. Remember, it’s as important to learn as much as you can from the promotions that didn’t make the grade as it is to learn from the ones that did.
Build your schedule. Finally, lay all of the promotions that were successful out on a calendar that includes your overall advertising program on it. You have probably got a few holes. You may also have a few promotions that worked well in the past but that just don’t seem to fit anywhere. Now, make a list of the direct marketing programs and promotions that you will need to develop or redesign to fit the overall program for the year. With these pieces in place, you are armed and ready to map out your new schedule.
Promotion planning is an interative process, one driven by the spirit of continuous improvement. The suggestions outlined above provide a simplified approach to analyzing the performance of your 1999 calendar. Hopefully, these tips will help you find the highs and the lows, and turn your learnings into positive actions.
Karen Clymer is a retail client development manager for Harte-Hanks Data Technologies, Billerica, MA. Her e-mail address is [email protected].