For list managers, the most rewarding aspect of their work is offering clients the most critical component to their success: an exact profile of their market. Of course, it's a continual learning process with the goal of constantly improving from one mailing to the next. But by going deeper, combining analytical techniques, you can truly articulate the most qualified prospects and mail more profitably. The following case study provides a basic framework to help you enhance the value of your list acquisition strategies:
The challenge. Historically, the Fortune 500 firm's direct marketing campaigns for new store openings were limited to very broad grand opening celebrations and other special events. Of course, they had a general idea of their audience, but they wanted to know more. They also wanted to increase awareness and attract new customers on an ongoing basis.
The process. First, the company needed to develop an accurate profile of their current customer. Generally, customer profiling involves analyzing the demographics and lifestyle characteristics of the customer. Since the company's database was not structured in this manner, it needed to enhance its file by appending such things as age, income, gender, length of residence, home ownership, presence of children and P$YCLE codes. P$YCLE codes, developed by Claritas, is a segmentation system that classifies households into one of 42 categories based on their financial behavior. To pinpoint the audience even further, geography also played a crucial role in devising a strategy to drive new customers to the locations.
With all the data appended to the client's database, it was time to build the customer profile with statistical software. After analyzing the data, a unique customer profile for each branch was developed. The customer profiles revealed valuable marketing information concerning the customers' length of residence, income level, age and P$YCLE code distribution. After analyzing the profiles at each of the 55 locations, the cluster analysis software revealed similarities that resulted in 11 profiles — not 55! This finding alone clarified the company's understanding of its market and simplified list ordering.
The perfect lists. Next, it was time to order lists from one of the major consumer databases. List selection criteria were different for each of the 11 groups, based on their profiles. P$YCLE codes were combined with age, income and length of residence, isolating the best prospects within a predetermined radius of each store location. Next, in order to perform post-campaign analysis, the list supplier overlaid and coded demographics, such as exact age, income, gender, distance from branch and length of residence, to the rented list. The combination of demographic and geographic profiles provided a pinpoint strategy and, most importantly, an outstanding group of qualified prospects.
Reaching the goal. The job isn't complete without post-campaign analysis. It helps develop list selection strategies for future mailings. CHAID analysis allows one to analyze the characteristics of responders vs. nonresponders. It segments a mailing universe based on the best predictors of response and generates an easy-to-read tree diagram. This tree diagram can be converted to a gains summary table, to help isolate top performing segments. Based on the table, one can quickly re-mail to only the most responsive segments of the list. CHAID analysis provides excellent marketing information that not only drives future list strategies but also supports overall marketing strategy.
After completing this process, the company distributed these research findings to every store manager. Now, each manager has a clear definition of their local customer base. The findings provided the basis of individual store promotions, allowing the managers to feature market-appropriate products.
Brian Hession is manager of List Services & Analytics at Dickinson Direct, Braintree, MA, a full-service direct marketing company. His e-mail address is [email protected]