Direct marketer Publishers Clearing House combines online and offline data, including e-mail information, for a multichannel customer approach
Publishers Clearing House has been known for 50 years for its popular sweepstakes connected with discounted magazine subscription offers, as well as its TV ads featuring the Prize Patrol that shows up at the winner’s home with a big check and a fistful of balloons.
In the late 1990s, the direct marketer and its then main rival American Family Publishers, were mired in a class action suit involving the sweepstakes’ advertising and marketing practices, which culminated in the marketer paying a $30 million settlement.
After that, though PCH kept its magazine sales heritage, it has retooled its product base considerably to include items such as collectibles, home entertainment and household items, as well as As Seen on TV items. In fact, magazines are no longer its primary business.
“Many people still think of Publishers Clearing House as primarily magazines,” says John Princiotta, SVP of marketing at PCH. “Our majority of business is in various lines of products, like As Seen on TV products. Every year, merchandise counts for more and more of sales.”
Publishers Clearing House also expanded its operation to include e-commerce. Adding to its core Web site, the company’s additional online properties, include PCHLotto.com, PCHSearch&Win.com and PCHGames.com.
Unfortunately, its online operation had operated as a siloed business unit, and data for online customers existed separately from offline data. With the online business growing rapidly, “there was never a good time to step back and take a look at the overall enterprise,” says Rob Befumo, director of ecommerce for PCH. “We had a wealth of historical data from consumers, and many had migrated online,” he adds.
At the time, PCH was managing its e-mail program in-house, and its process for accessing data was crude. The marketing team would pre-define customer segments that were produced by an internal database administrator. This administrator would code and develop the file segments and upload them to the company’s e-mail vendor weekly. PCH was unable to perform independent analysis or observe merging trends with the data.
“We literally had dozens and dozens of valuable data points, but we did not have enough of the right tools to leverage them to communicate better with customers,” Befumo explains.
In addition, even though many traditional offline customers had gone online, past purchase history was stored in an offline system, Benfumo continues. “Behavioral patterns were not leveraged when the person visited us online,” he notes.
It was also difficult to keep up with new information because data was uploaded on a weekly basis, leading to lag time in PCH’s communication with customers.
Finally, the old model provided minimal measurable data, so gaining insights on existing programs was not an option.
PCH decided to merge its online and offline customer data to support a multichannel approach. As part of that process, the company worked with e-Dialog, an e-mail marketing company, to sift through a sea of customer data to determine which elements it would carry over to the new system.
Once it began that process, it changed the primary data file identifier from e-mail address to the customer ID it used in its offline database.
When that was done, and the information was better organized, PCH worked with eDialog to create customer profiles and build automated segmentation models to keep data fresh.
“Every day, data and profiles are refreshed and processed,” Befumo says.
The entire database project took about six months to execute. PCH’s database has 21 million customer records, which includes purchase history.
The obvious benefit has been a holistic customer view. Because direct mail is still the lion’s share of PCH’s overall business, the company doesn’t see too much of a channel shift as customers move online.
“We get a full picture of the customer’s interest and we put appropriate offers in front of them,” Benfumo says. “We see a lot of traditional offline customers becoming multichannel customers.”
The direct marketer has about eight to 10 statisticians on staff to handle segmentation, modeling and analysis.
“Our analytics team is interested in future value,” Princiotta says. “When it comes to investing in a buyer, we know pretty much how much a specific segment of customers are worth for the next one to three years. We know by the type of list what future value should be, so we can make an educated guess on how much to invest in that customer.”
Statisticians, working with the creative team, are “ultimately responsible for who we mail and how many we mail,” he adds.
Deborah Holland, EVP of creative communications and consumer affairs for Publishers
Clearing House, says the marketer “was one of the pioneers of computer personalization and statistical modeling back when people were only dreaming about it.”
“It’s embedded in our corporate culture to invest in modeling and tailoring our product offerings to various customer groups,” she says.
The results of the database investment have been tangible. Befumo said PCH had great improvements in overall e-mail deliverability.
“In terms of tracked delivery rates, we’re consistently in excess of 98% delivery,” he says. “We keep our files clean and we keep our customers engaged.”
PCH reduced mailing volume, and it has seen annual cost savings of $200,000, but still sends an enormous amount of mail to customers. In a typical week, 1 million to 2 million e-mails are sent, and the company sends out mail to prospects about 10 times each year.
In addition, during its sweepstakes promotions tied to the TV campaign, the company sends more than 10 million pieces of mail to US consumers.
PCH works with several list brokers on an ongoing basis, and it makes use of cooperative databases and compiled lists also.
“We’re pushing as many cylinders as possible to ensure we have the best, most profitable names to mail,” Princiotta says.
PCH has also seen a major lift in orders, registering a 120% increase in order conversions year over year, and opens and clickthrough rates have nearly doubled.
“It’s through database marketing we’ve been able to achieve this,” Holland says.
