Hitmetrix - User behavior analytics & recording

Tactics and strategies: Model behavior for greater list efficiency

Marketing budgets may ebb and flow, but one area of investment is always essential: lists and data. Database marketing is a key part of any successful campaign, whether through direct mail, e-mail or an integrated effort. The following expert articles focus on issues such as list efficiency, database quality and processing costs.

The first half of 2009 is shaping up to be another challenging period for marketers. Not only are they facing a widely predicted reduction in consumer spending, but internal financial pressures are resulting in cuts in their budgets, making it even harder to attract consumers and encourage increased spend.

As bleak as it may appear, this tough environment offers a tremendous opportunity for those marketers who are able to effectively use a smarter approach to developing targeted prospect lists, and who can create a compelling plan to reach those prospects with timely and relevant messaging that will drive traffic.

List rental for mail and e-mail prospecting has been and will continue to be one of the key tools that marketers can use to attract new customers. However, low response rates for many prospecting campaigns only serve to highlight the expense of traditional list rental — and increasing pressures on marketing budgets demand a better return.

One effective way to reduce a prospecting campaign’s cost per response/acquisition is to reduce the number of non-productive names mailed. An upfront investment in behavioral modeling — not simply response modeling — goes beyond basic list affinities and demographic selection strategies and allows marketers to narrow the target base to only those who resemble good, profitable customers. Done properly, this approach allows specific demand generation at a relatively low cost, and results only get better as you build experience – future campaigns benefit from the learnings of past efforts.

In recent work with a national restaurant chain, we identified characteristics of consumers who were highly likely to be heavy category users, with a specific propensity for a particular day part. Using a combination of internal research, syndicated data and demographic profiles, our model identified six different target groups, and suggested the specific product offerings with the most appeal for each group.

We applied this model to a compiled list and reached out to only those consumers who lived within a three-mile radius of specific restaurant locations and fell into one of our target groups. For our client, this provided a surgical method to reach the highest-value prospects without paying for blanket coverage, and also countered competitive activity without requiring significant mass marketing expenditures. The overwhelming response to the mailing drove growth in both same-stores sales and market share in a down economic environment, providing a good return on investment.

Especially with reduced budgets in the near term, marketers will be expected to deliver results exceeding those of past campaigns — in fact, it will be demanded. Achieving substantial returns requires being smarter about who you are targeting and the message you convey. Taking the time to model a path toward a better response prior to launching a campaign is a crucial step, and one that is especially relevant in today’s business environment.

John Keenan is managing partner at Anthem Marketing Solutions. Reach him at [email protected]

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