Monday, March 3, 2008

Case Study Monday - Segmentation = Success!

By now, you probably know our stance on segmentation. We believe in it! RRW specializes in building customized segmentation systems for our clients. But, we're happy to report on results of a more off-the-shelf approach, such as this one offered by Claritas. Here's their case study in-full.

Improving Direct Mail Response with Segmentation

Situation Overview
Lettuce Entertain You Enterprises, a Chicago restaurant company, wanted to implement a direct mail program to help increase patronage at its two restaurant concepts (Tucci Benucch and Twin City Grill) located in the Mall of America in Minneapolis, MN. Location had posed a challenge in the past in developing a consistent customer base for the restaurants. Their goal with this direct mail program was to develop a regular, local clientele and improve the frequency of visits.

Lettuce Entertain You Enterprises used a Claritas lifestyle segmentation system to study the Minneapolis market in-depth from the point of growth and site selection. They used that in-depth information to decide which specific Claritas lifestyle segments to target for their direct mail campaign, which included a $10-off dinner coupon.

Upon analysis, two target lifestyle segments were chosen which best fit their targeted age demographic of 35-49 years old, and also indexed very high in their propensity to dine out at Causal Italian and Casual Bar & Grill restaurant concepts (indexes ranged from 156 to 214).

To determine the target-market-area coverage for the segments, Lettuce Entertain You Enterprises selected the geographic areas by ZIP Code that corresponded to the strongest areas identified via the original site selection information: Bloomington, Eagan, Apple Valley, Burnsville, Savage, Eden Prairie, and Edina. This represented a much wider geographic area than they would normally use in their direct mail campaigns, but the high concentration of target segments within these areas made this a gamble worth taking.

Using Claritas segmentation to help target their mailing list, they were able to get a 6.1% redemption rate on the 27,000-piece mailer. Typical direct mail programs of this quantity have generally resulted in a redemption level at or below 2%. Mark Katz, Director of Advertising & Consumer Research, said, "I believe that the strong redemption rates were driven entirely by the list selection of segments and markets chosen the through the use of Claritas' segmentation system."

The direct mail campaign resulted in a promotional profit in excess of $12,000! Of even more importance, Lettuce Entertain You was able to identify a very targeted group of likely customers, while at the same time, stimulating a great deal of trade for both restaurants.

Based on in-store survey results, they found that first-time visitation was very high, and of the remaining respondents who had been to the restaurants before, their level of visit frequency had been very low. Mark Katz said, "the results seem to validate our original hypothesis that if we identify high-probability prospects using segmentation, in the general geographic area of the Mall of America, we can successfully drive those customers into our restaurants. Given that these respondents are high-probability customers that are geographically favorable, they should translate into regular, local clientele."

What an excellent example of using segmentation to boost campaign results! And, I loved the measurement piece--where they have proven the concept. RRW has recently launched a new website that focuses specifically on our analytical capabilities. The site is pretty new and we welcome your input and comments. Check it out:

And, have a GREAT WEEK!

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