Segment by Households to Bolster Offers

Stop thinking about your job for a minute. Think about who you are and how you spend your leisure time. Are you an outdoors enthusiast, always hiking, biking, skiing or running? Or do you focus on spending time with your children? Perhaps you love nesting on weekends, crafting projects in the wood shop or concocting new recipes in the kitchen? These are our passions, our lifestyles, the reasons why we work.

Are you taking these differences into consideration in your marketing initiatives? Consumers are not statistics. They are not response rates. They are multifaceted people with distinctive characteristics that define them. Recognize these differences in your positioning and leverage that information into successful marketing campaigns.

People are attracted to others who share their interests and passions. That attraction works in marketing. Consumers are attracted to mail pieces and ads that reflect who they are. They want to do business with companies that understand them, cater to them and care about them.

So why have we reduced consumers to numerical scores in models and projected response rates? Direct marketers spend outrageous amounts of time and money building models to determine the absolute best people to mail, then we send the same message to all of them. Shame on us!

When you build models or perform analysis on your database, certain types of people are over-represented. Of course they are the best people to model for prospecting purposes. But never lose sight of the fact that database analysis is historic, and you’ve created bias in your database from the messages and offers you have in the marketplace. Those over-represented consumers are really the ones with the highest affinity for what you are currently doing. What would happen if you made your message/offer relevant to different kinds of consumers?

It’s all about getting the right message to the right household. You don’t have to change your products or services; you just need to show consumers why they are relevant to them. For example, an upscale, single career woman has different wants and needs than a mid-scale family with school-age children. The career woman wants convenience, style and things that are out of the ordinary, delivered with a high level of service. The mid-scale family will forgo some of the service to save money. Their children are the focus of the household.

For years, marketers have lamented the 98 percent barrier: 2 percent respond, and 98 percent don’t. Better targeting will break into the 98 percent. While one-to-one marketing is a great concept, it is virtually impossible to implement cost-effectively. But properly executed market segmentation identifies groups of consumers homogeneous enough for specific messaging and also large enough to capture print and mail cost efficiencies. Just make sure the segments are household-based. Neighbors do not look like one another; you must look at households distinctively.

The key to finding homogenous groups is household-based segmentation, which overlays directly onto the customer households on your database. When the transaction behavior of your customers links to the segments, you can understand how different types of consumers interact with you. All that information helps you version future offers and messages and cull inactive customers from your database that look like your best customers, but are not.

Household-level market segmentation also links to other information, like syndicated data. Using this information will help you understand more than just how your customers interact with you; you’ll know what magazines they read, other companies they buy from, cable channels they watch and more. This information will help you build a media strategy beyond your direct marketing as well as identify strategic marketing partnerships to delight your consumers.

There’s no doubt that versioning is more expensive and requires more work. But direct marketers are the champions of testing, right? Even though versioning is more expensive initially, doubling or tripling response rates would make it worth it. Try it, you’ll like it. And so will your customers.

I’ve seen companies experience up to 300 percent lifts in response when versioning messages. Not only is the marketing ROI fantastic, the long-term customer satisfaction and loyalty makes the effort exponentially beneficial.

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