Database : Put Yourself in the Driver's Seat
Expand markets and optimize costs with a new segmentation and modeling strategy
January 2009 By Rick WitsellI arrived for a visit with my friend Bosley the other day. He appeared more than a bit stressed.
“It can’t be done!” he wailed. “I just don’t see any way to bring down our acquisition costs. If I have to mail my housefile again this year, our customers are going to come after me with pitchforks and torches! It used to be that I had less than 10 channels to manage for customer acquisition, retention and upsell. Today there are at least 25—and most of them now allow for infinite and affordable customization. And no matter what we do, response is down and costs are up,” he moaned.
He wiped a tear from his eye with a key code report.
“What am I going to do? I can’t live in my car; I have a cat to take care of.”
Look to the Data
If “Bosley’s Lament” strikes a chord with you, you’re not alone. The days of developing and milking a “control offer” for years are gone forever. Clearly, the customer drives the marketing bus now.
Consumers have more messages than ever coming at them, from more directions. Everyone talks about reaching the right consumer with the right offer at the right time, but how do you deliver on that promise? The answer lies in a thorough re-examination of your customer segmentation strategy.
Most marketers do a great job capturing, tracking and leveraging customer data. They know what segments work and which don’t. But today, every marketer’s “ideal customer segment” is a moving target—and growing increasingly fragmented as consumer attention flits from medium to medium. In this environment, it doesn’t make much sense to expect your legacy segmentation strategy to be the reliable workhorse it once was.
It’s time to look deep into the data and rethink your approach. The first question to ask yourself is: Are your existing segmentations meeting your business objectives? Everyone seeks higher response, but is that enough? What about net payment rates? Or lifetime value?
Today, most marketers have a mandate to increase their ROI. And they are coming to understand that achieving higher ROI requires an ability to predict the interactions of channel, offer and price point on a given set of consumer interests and demographics.
