Segmentation Comes to Mobile Marketing

I'm not typically a huge fan of off-the-shelf segmentation packages. We've all seen them from leading companies such as Claritas, Experian and Acxiom. These data firms each sell their version of a consumer classification scheme that attempts to categorize each consumer/household into one of 50+ clusters.

And, they've come up with excellent names to allow us to visualize the segments (I especially love the Prizm cluster called "Shotguns and Pick-ups"!)

Typically, my take on using these off-the-shelf tools is that a marketer would be much better served developing their own customer segmentation strategy. I find that 50+ segments is simply too many clusters to act on. If you do the data mining exercise to find your own clusters, you'll end up with a manageable and actionable segmentation system--one that's more powerful than the non-customized version. By the way, if you'd like to see a sample segmentation deliverable from RRW, just request it here.

With that said, I was still quite pleased to hear that segmentation is being applied to mobile marketing! Check out this press release:

Nielsen Delivers PRIZM Insight for Mobile Advertisers
Combining Consumer Segments With Mobile Media Targeting Enables Advertisers to Connect More Effectively With Mobile Audiences

Neilsen's idea is to combine mobile usage patterns with Claritas PRIZM clusters to paint a full picture of mobile audiences. Makes sense to me! From the article:

By combining Nielsen Claritas' PRIZM lifestyle segmentation data with Nielsen Mobile's Mobile Media Marketplace, Nielsen is positioned to provide unique insights into consumer media habits.

For example, analysis of one PRIZM segment -- Bohemian Mix (a progressive mix of young singles and couples, students and professionals who are quick to check out the latest movie, nightclub, laptop or microbrew) -- shows that this group leads all other categories in mobile Internet usage, with 27 percent accessing the mobile Internet in the last 30 days (compared to an average 16.7 percent across all other segments).

"Targeted customized analysis of mobile usage patterns for PRIZM's 66 consumer segments allows advertisers to make more informed decisions about where to place mobile advertising," said Kanishka Agarwal, vice president of mobile media at Nielsen Mobile. "Mobile-PRIZM drives a stronger advertising ROI for our clients," he added.

I love to see technology mingling successfully with data (a passion of mine!), so I'm definitely going to learn more about this offering.

Customer Segmentation Information

You know that we're firm believers in the power of customer segmentation. We've even written a game-plan that we're happy to share with you. If you can target your segment with the absolute right-on message, creative that resonates with them and an irresistible offer, your direct marketing campaign results will reflect this extra work.

Sometimes segments are based on the products a customer purchases from you. Sometimes they are more related to what's going on in the customers' life. As a marketer, you rarely have significant insight into your customers' and prospects' personal life. Luckily for us, there is a wealth of external data and experts who know how to mine that external data to make the job of really understanding our customer segments a heck of a lot easier.

Check out this article from DM News. Four data experts have each focused on a niche segment that they have experience in. They provide some pretty valuable insight into how to best message to each group. Here are the groups discussed in the article:

• Bob Stein of Trinity Direct talks about nuances in targeting the Catholic market (hint--they are older, highly mail-responsive and like to donate).
• Amy Benicewicz of ListBargains: "Marketers seeking a target audi­ence of luxury lifestyles and frequent travelers fare very well with prospecting to Double Income No Kids (DINK) families." Caveat--this group is hard to target (based on available data), but if you sell luxury goods, or are in the travel/tourism industry, you need to reach the DINKs.
• Sandy Ostrander of ListSolutions shares her perspective on marketing to military families. It's a growing group that is under-served and may just represent an untapped opportunity.
• Rob Odri of ALC talks about marketing to gay and lesbian consumers. The key takeaway here is that this is a large group of people (they command $1 billion in spending power) who also tend to be early-adopters AND they share their views with their friends and family. The opportunity: many mainstream marketers tend to ignore this group.

Altogether some interesting information on four discreet segments, and some good food for thought. If you'd like more info on Segmentation, and specifically, an overview of the approach that we take, we'd be happy to share our White Paper, called: Advanced Segmentation Game-Plan.

Case Study Monday: Growing Lists and Lift ing Response with Effective Segmentation

Happy Cinco de Mayo!

And, welcome to another Case Study Monday. Today's case study comes to us from Marketing Sherpa and it's a great one! Take a look at how this e-retailer used segmentation on its email campaigns to help weather an economic downturn.

SUMMARY
An e-retailer has been using gender- and store-specific email promotions to lift revenue and grow their customer mailing list.

CHALLENGE
With consumers tightening their spending habits, many email marketers will be happy to see any kind of sales increase this year. James Connell, Senior Director for Ecommerce, Digital Marketing & New Media, Roots, a Canadian-based clothing multichannel retailer, realized late last year that his company might be affected, too. That’s why he and his team decided it was a perfect time to boost the relevancy of their emails.

“We needed to do a much better job of driving people to something that’s relevant,” Connell says. “I had been signing up for our competitors’ emails, and I had been getting mostly messages that didn’t apply to me. That was educational.”

Connell saw more relevancy as a competitive advantage their brand could pounce on. And with response rates dropping and consumer spending falling, he wanted to test some new ideas to optimize their email program.

Connell and his team were already following best practices on privacy and deliverability, but they were essentially sending the same offer to their whole email list over and over again. They knew the next step should be list segmentation … and time was of the essence because of the gloomy economic forecast.

CAMPAIGN
First, Connell began by identifying some key areas where they could improve email relevancy.

Three areas:
o Targeting women and men with gender-specific offers
o Segmenting email lists even further based on their 128 store locations
o Identifying which days of the week were best for email by testing *every* day -- not just the industry-proven midweek days

Here are the five major tactics Connell and his team followed:

Tactic #1. Segment customer list by store location and gender
To deliver more targeted messages, Connell organized their list names into separate files according to store locations. They took the ZIP Code attached to each name from past online purchases and then assigned it to the closest store.

Then, he and his team divided the customer list even further into separate files for men and women. They manually went through their customer list to make the new files. For customers without distinctly male or female first names and purchase patterns, they created another file they labeled “undetermined.”

Tactic #2. Identify ‘un-determineds’
They didn’t stop with simply segmenting their customer list. Every ‘un-determined’ name was emailed a survey to get seven data points:
o Name
o Gender
o State/province
o Last purchase date at Roots.com
o Last purchase date in a Roots factory outlet store
o Favorite department
o If they were interested in Roots’ yoga department

The survey of “un-determineds” allowed Connell and his team to further segment their customer files by gender and their 124 Canadian and 4 US stores.

Tactic #3. Promote sign-ups at each store
The survey process also involved creating email sign-up forms for each store. New customers were offered the chance to win various prizes if they signed up. Store managers turned the names into Connell and his team by shop and city location.

Tactic #4. Create segmented offers
In the end, customers received both store- and gender-specific offers that involved printing out an email coupon (usually a discount on an item) to take to the nearby outlet.

• The copy pointed out that the offer was good not only online but also at their local Roots store.
• The address and a directions link were included to encourage redemption at the stores.

If a customer walked into the store without the email coupon but still mentioned the promotion, the stores gave them the same discount. Each store manager was responsible for reporting the number of redemptions back to Connell by phone or email after the promotion expired. There was no digitally computable coupon code.

Customers who were not within driving distance of the stores did not receive these offers. They were put into a separate online-only customer file. They received gender-specific offers that were designed to purely drive online sales.

Tactic #5. Test emailing *every* day of the week
Connell didn’t want to leave any money on the table by taking for granted the industry’s almost de facto ‘best days’ [Monday through Thursday] for emails. So, they tested every day of the week, including Saturday and Sunday.

RESULTS
Connell has no doubt that the segmentation tactics have increased the relevancy of the clothier’s email campaigns. At the same time, email-based sales have increased by 14% compared to the same period the year before.

“We’re happy to be getting a lift in these difficult economical times and expect the percent to continue to grow as we do more segmentation. We are seeing higher opens, click-throughs and better ROI. And because of the increased relevance, our emails get forwarded more often and we are increasing our subscriber base.”

Connell and his team grew their subscriber base by 22% during the first six weeks of the campaign with the in-store email component. “About half the stores have participated in the email promotions so far, and that number is increasing.”

They also saw “a steady 40%” completion rate of the surveys sent to clarify a customer's gender and local store and they’ve been getting a 15% redemption rate for the email-exclusive offers as reported by the store managers.

Giving discounts to people who mentioned the email offer -- without proof that they received an email -- also appears to have been the right move. “We encourage email sign-ups in the store, so it makes sense to accept the promotions in that setting to help create more of a multi-channel identity.”

Connell couldn’t offer specific numbers on the best days for emails. But he says Tuesday and Wednesday proved to be their best send days. Still, team members were intrigued by the numbers they received on the Sunday tests.

“We are seeing surprisingly high click-throughs on Sunday emails. There’s a lag time in sends for that day where people open up and click on Monday and even Tuesday. With the click-throughs you see midweek, they happen very quickly or they don’t happen at all.”

Case Study Monday - Another Segmentation Story!

We have lots of experience using segmentation in the direct marketing world. But, we love to see other channels embrace the strategy. Lyris, a provider of e-mail marketing campaign tools has released a white paper that reviews how online marketers are (or should be) embracing segmentation as a great way to boost e-mail campaign results.

From the paper:

"In case you didn’t get the memo, batch-and-blast email marketing is out. Sending out a single email message to every address in your database whenever you wanted is so 20th Century now!"

Ah, we couldn't agree more.

We're happy to share these success stories that illustrate the power of employing a segmentation strategy, directly from the Lyris white paper.

Real-World Examples: Ice.com and Frederick’s of Hollywood
Ice.com, the leading online retailer of high-end diamond and gemstone jewelry and a Lyris customer, has about a million subscribers in its email-marketing program. With numbers like those, and given the intensely personal and individual relationship its customers have with their jewelry, a single email message sent to the entire database was not going to deliver the results the company needed.

Under its previous vendor, Ice.com could create only two segments: those who had purchased and those who had not. Using Lyris’ segmentation function, however, the company can create personalized emails based on what each customer tells the company he or she most wants to receive.

By being able to add any kind of variable – product, lifecycle position, whatever! – to any customer record, Ice.com can create a relevant segment based on that variable and build a targeted campaign around it. Using segmentation and other functions in Lyris ListManager, Ice.com was able to report a 10% increase in average sale and triple the number and variety of email campaigns – proving once and for all that diamonds really are a girl’s best friend.

Frederick’s of Hollywood taps into women’s other love, for silk and lingerie. Here’s how the lingerie retailer, through its online division, uses segmentation to drive more sales from current customers:

Frederick’s of Hollywood maintains two mailing lists, one for prospects who subscribe to company mailings but haven’t bought yet, and one for customers. The company uses purchase history data to create segments of buyers who are interested in non-lingerie products such as shoes and swimwear.

As long as you have a reliable web analytics program embedded with your list-management software, you can use a similar technique to cross-sell customers who have purchased one kind of product to explore an expanded product line or to upsell them to products of higher quality.

So, there you have it--examples of how to use segmentation both through up-sell and cross-sell strategies. Think about the data that you collect on your customers and prospects. And, consider external data that is available that you might append to your customer list. Opportunities for clever messaging and new offers abound when you embrace the segmentation concept.

Case Study Monday: Boosting ROI With Segmentation

As you probably know by now, we're bullish on taking an analytical approach to your direct marketing strategy. We believe that by using the right data with analytics will give you the best bang for your DM buck. We continually preach this perspective because we still see many companies continuing to direct market using just data with no real intelligence behind it -- just a gut feeling. This sort of stuff just drives us crazy!

Hence, this week's Case Study on utilizing segmentation to increase your ROI. It comes to us from Experian via a DM News webinar. The Case Study looks at a few different firms and how they utilize custom segmentation systems to add to their profitability. We hope you enjoy it!

Correct Household Segmentation Boosts ROI

Choosing the right household segmentation can help increase your return on investment by more than 37 percent.

That was a key finding from a DM News webinar sponsored by Costa Mesa, CA-based Experian, a provider of analytical and information services to organizations and consumers.

"The data at a household level and geo-demographic level [are] very important," said Cindy Eisenhard, vertical segment leader at Experian Marketing Services. "But the most important component is selecting the right segmentation systems."

The webinar offered examples of several Experian case studies that used either fixed or custom segmentation, focusing on demographic information, attitudinal information or purchase behavior.

There are many differences between fixed- and custom-segmentation systems, Ms. Eisenhard said.

"Fixed systems have been proven in the marketplace," she said, "while custom systems are validated based on method and vendor."

She said fixed segmentation systems have more accurate projection to household-level, rich-psychographic and geo-demographic data and a direct link to media-planning tools such as syndicated days. They are most cost-effective, too.

One case study discussed a leading beverage company that needed to improve customer loyalty and marketing ROI. It selected an attitudinal, fixed-household segmentation system built from primary and syndicated research.

The segmentation system was able to identify customer loyalty and profitability, and the company received a 12 percent increase in customer loyalty - "its most valuable customer segmentation performance was even better," said Regina Gray, vice president of analytics at Experian Decision Services, who also participated in the webinar.

The other case study discussed a pre-paid-wireless-phone service provider whose objective was to improve win-back and reduce churn by using a custom attitudinal-household-segmentation system to identify what motivates heavy brand users.

The results? The company saw a reactivation rate of 27 percent. It decreased win-back spend by half, and new customer churn was reduced by 30 percent, Ms. Gray said.

The final case study involved Advil PM. The brand used a custom geo-demographic household segmentation system to help target ads on AOL for its new brand launch online. The target was women of the ages of 35 to 64 who take over-the-counter medication for sleeplessness due to pain.

As a result of the system, Advil PM was successfully launched online using the same insight-driven targeted households.

In closing, Ms. Eisenhard reiterated the importance of choosing the right segmentation system for the brand.

She explained the importance of making sure that the segmentation system chosen is aligned to the primary need of the brand, actionable, clear to use, quick to implement and measurable.

"These are the key criteria to drive a successful segmentation implementation," she said.

Direct Marketing Skills Still Valued

In these turbulent economic times, it's refreshing to see some good news for our industry. It seems that the core skills of database marketing and analytics continue to be valued by employers. From BtoB Online's Daily Report:

"Two-thirds of marketers (67%) says resources for database and analytics to support online marketing efforts call for the most marketing investment this year, according to Alterian, an enterprise marketing company, which released the results of its fifth annual marketing survey on Tuesday."

Interesting that this survey calls out "online" marketing, but we'll take that! Database marketing and analytics expertise are definitely transferable.

We challenge direct marketers to think outside the box and consider how your skills can apply to many different areas of marketing. Even if you've only had specific experience in, say, direct mail, so many of the disciplines you use can be translated to online marketing. And, if that is where companies are investing, then it might be a good idea to highlight your resume with examples of how your skills can improve online programs.

Here are a couple of examples that come to mind immediately:

1. Apply segmentation strategies to e-mail campaigns. While e-mail remains an inexpensive channel, it's no longer good enough to blast the same message to your entire list (and then do it over and over and over again). Increasingly, e-mail marketers are segmenting their customer and prospect lists and presenting the appropriate offer and message. They're starting to understand the importance of understanding how frequency impacts results. Who better than traditional direct marketers (who may only have segmented a postal mailing list so far) to teach e-mail marketers how to mine their database and understand customer segments?
2. Use ROI techniques to understand and measure the effectiveness of social media campaigns. Like database and analytics, social media is another area that corporations believe that they need to invest in (or miss the boat). As a leader in using numbers and results to justify your direct marketing spending, take those skills over to the world of social marketing. Attempt to quantify every investment (even if it's only the costs of someone's time taken to blog, for instance). Articulate to senior management, for example, how your social marketing efforts are targeting your market with pinpoint precision. Simply take your deep understanding of building your ROI for each campaign/program to the world of social marketing, and you'll be ahead of most of your competitors.

The above are only two examples of how you can migrate your direct marketing expertise to other, potentially more high-growth, areas within your organization.

Think about where your specific skills can apply (or have applied) to high-growth online marketing initiatives. And, please, share them here!

Checklist: Direct Marketing Segmentation Ideas

As we work with our clients, it becomes more and more apparent that having an advanced segmentation game plan is important to your success. This is such an important idea that we've written a white paper on this very topic. In today's post, we wanted to give you an overview of our thought-process on this concept. In our humble opinions, if you use analytics, smart business sense and tactical/practical deployment, you'll be able to better target and sell to your customers and prospects.

Here's our Checklist for Effective Direct Marketing Segmentation:

1. It's all in the Analytics! It's important to have an analyst who not only knows statistics, but who also has an excellent grasp on real business needs and objectives. Oftentimes, we've seen our customers engage really intelligent statisticians who don't understand what the business is attempting to accomplish. This is a recipe for disaster and a lot of wasted time and money. Statistics alone don't get you a lot. Additionally, if you have to take your valuable time to figure out how to utilize them -- or force them to fit your business scenario -- it equates to a lot of lost effort and frustration.

2. Make It Actually Work. Sometimes, if you don't plan correctly, segmentation systems are too complicated to actually use. I know, logic tells us that we are too smart to allow this to happen -- but we've seen really bright people who didn't put enough forethought into how they were going to use their segmentation schemes, and were actually stymied as to how to make them work once they were delivered. Start simply -- and ensure that you've mapped out the important business factors that will drive your segmentation schemes. Ensure that you're not over-customizing or making your system overly complex because, we've seen that when this happens, the segmentation systems sit on the shelves and never get used because they are so difficult to understand and implement.

3. Now, Use Your Segmentation Schemes! Now that you've gotten the insight from your business-savvy analyst, and she's provided you with a system that is simple -- yet accurate -- it's time to have some fun! Perhaps you'll start with tweaking a couple of your creatives to better speak to those segments that are found to be most highly profitable. Look at who your customers are and figure out how to best get your message to them -- and to have them react to it in a positive way.

It's really that simple. If you put some thought into who you use and what direct marketing problem that you want to solve through the creation of a solid segmentation scheme, you are going to be able to more accurately speak to those customers and prospects with the important messages about your products or services. We've seen some great successes with our clients when we've worked with them on building intelligent segmentation schemes. This can prove to be highly profitable -- because you are marketing intelligently and using the right messaging for each customer segment.

If you'd like to read our full white paper on this subject, either comment on this post or send us an email to info@rrwconsulting.com. We'll send it over to you!

Nine New Customer Segments

I love it when advertisers get involved in understanding and defining consumer segments. They normally package the data nicely to really bring segments to life (something all of us Direct Marketers and analytical folks could learn from).

See this Ad Age article, The Latest Consumers You Need to Get to Know.

"Consumer Eyes, a New York-based marketing firm, recently released its first collection of data on the subject in a book titled "Karma Queens, Geek Gods, and Innerpreneurs." After culling thousands of brand insights -- S.C. Johnson & Son, Motorola, PepsiCo, and P&G are on its client roster -- using the consultancy's Consumer Immersion process, founder Ron Rentel and his team selected nine C-Types of true-to-life consumers who they believe should be on every marketer's radar."

In an attempt to coin the next Metrosexual or Soccer Mom classification (ones we all are now very familiar with), Consumer Eyes has identified nine new customer segments, all complete with their celebrity representative. Here is a flavor of the nine: "Culture Crossers" represented by Gwen Stefani, "Innerpreneurs" represented by Rachael Ray and "E-Litists" as personified by Al Gore.

It's a really interesting way to approach customer segmentation and the article also provides a nice PDF of the 9 groups, complete with pictures.

We love it when attention is focussed on customer segmentation--a topic near and dear to our hearts. Typically, when we approach the task of identifying discreet customer segments within an overall customer portfolio, we don't rely on off-the-shelf, pre-determined customer segments. Instead, we let statistical techniques do their job of finding clusters. If a marketer has the bandwidth to personalize offers and messages, segmentation is a super way to boost response rates and sales results.

It's always great to speak to your customers and prospects with a message that resonates with them. We've found that customized segmentation is the best way to go. We've put together a paper, called "Advanced Segmentation Game Plan". Click on that button on our website and we'll gladly send it to you.

Markets Evolve.

I found this interesting piece of research from Vertis Communications, a leading marketing agency: HISPANICS ARE TECH-SAVVY CONSUMERS.

Their research "revealed that Hispanic adults in the United States are just as likely, and in some cases more likely, to use technology as are non-Hispanic adults." Technology adoption does, however, vary based on different traits, such as whether the consumer speaks only Spanish, which country they or their ancestors came from and how long they've been in the country.

But, overall, the research shows that Hispanics are using the Internet; they are text messaging like the rest of the world and are no strangers to IM.

What this pointed out to me, especially considering the amount of ethnic data that is currently embedded in several of my clients' customer segmentation systems, is that we need to constantly be aware of evolving markets. We need to constantly be thinking of how to best maximize our knowledge of the segments.

This study tells me that we should probably re-evaluate channel strategies for the Hispanic market. Interactive marketing may now be a good fit. Further, it highlights the need to seek a deeper understanding. Do we understand their language preferences? Do we know how long an individual prospect or customer has been in the country? All of these nuances within the overall Hispanic segment are very important, and this Vertis research proves that one more time.

Be on the look-out for behavior changes in your core customer groups. By understanding your segments, you can continually tweak messages, offers and channel strategies in order to better-serve your customers. And, of course, in the end, if you're doing it right, ultimately you'll reap the highest possible profit from each customer.

P.S. This article also provides a link to the entire research results. It gets pretty specific as to what offers Hispanics prefer and tend to respond to and overall is a great resource.

A New Dimension to Customer Segmentation

I attended a business forum at Intel last week and was quite impressed by the insight gained from their keynote speaker, Bob Wendover from The Center for Generational Studies.

Bob and his firm are expert in understanding the differences between generations. The thought being that we need to understand what makes various consumer groups 'tick' to effectively market and sell to them.

For example, Gen X'ers (age 26-42) place significant importance on time and time management. Bob shared examples of how this group will leave the office on-time. They have no time for office chit-chat and they really don't like face-to-face sales calls. They are suspicious of advertising and they pride themselves on "purchasing smarter".

And, Millennials (adults under age 25) rely almost completely on their computer and digital information; they need information at their fingertips, when they want it. They are highly influenced by friends and peers (hence the popularity of the social websites, such as Myspace.com) and they are savvy shoppers.

The reason I bring this up (other than the fact that I find this topic fascinating), is that marketers should be cognizant of different generational traits when we are developing customer segmentation approaches. Sure, age is typically a component of segmentation, but I believe that generational attributes might just add some missing nuances that will make your segmentation even more powerful.

For example, if you know that Millennials prefer to get their information about a product on your website, then your marketing should definitely direct them to your website. Do NOT ask them to call an 800 #. They'll never do it. And, by the way, when they're at your site, make sure that the info is easy to find. Further, make it a fun experience. Try to incorporate some type of interaction to get your Millennial prospect involved in your site. If you succeed, you may have just acquired a new customer.

RRW (mostly for our own benefit) has put together a re-cap of the attributes of today's living generations. Click the button on our site called: "Impact of Generational Attributes on Marketing."

It's always great to understand your customers and prospects. By looking at them in the context of Generational Attributes, I think you'll learn a ton and come away with some good ideas on marketing more cleverly to them.

Beyond CRM -- Customer Experience Management

Continuing on our theme from yesterday's blog posting of acquiring -- and keeping -- customers, author Bill Porter of Porter Research has written an interesting article on CEM -- Customer Experience Management. According to Porter, "Customer Experience Management is a multi-dimensional phenomenon including both process and product and differs greatly from earlier simplistic movements like customer delight or the magic three questions to ask customers today. On the process side CEM seeks to measure customer expectations all the way from early customer encounters in the buying process – customer identification and customer acquisition - through support help requests and additional purchases of products and services throughout the customer life cycle (or the customer retention phase). On the product side, key factors like partnership and transparency matter a lot while customers traverse the phases above with a supplier or vendor."

As direct marketers, CEM is key to effectively planning campaigns -- whether they are fueling your acquisition or retention efforts. In fact, we would argue that the three key phases of CEM -- as outlined by Porter-- act as a strategic roadmap for your marketing plan. Paying close attention to your customer segments as they move through these phases will allow you to increase the success rate of each direct marketing campaign, and assist you in reaching your profitability goals.

TGIF!